Operators hit by South Australia tax bombshell

Operators say they will fight to stop South Australia from introducing what one wagering exec described as a “nonsense” 15% point of consumption (PoC) tax after the state’s government surprised bookies by confirming plans for the levy earlier today.

As part of its 2016-17 state budget, South Australia treasurer Tom Koutsantonis said the net wagering revenue-based tax would come into effect on 1 July 2017 and raise around $9.2m (?4.7m) annually.

“If betting companies are making profits from South Australian punters they should be paying tax in South Australia, not in whichever jurisdiction their head office and servers happen to be located,” Koutsantonis said.

“By implementing a wagering tax based on the place of consumption, we are ensuring that businesses are paying taxes in the jurisdiction in which they are making their money,” he added.

Speaking to EGR, a senior figure at an Australia-facing bookie said while a PoC tax had been mooted previously, the timing of the announcement came as a shock with no prior consultation having taken place.

“The first we knew of it [the tax] was when we saw the press release this morning,” he said. “There’s been no consultation and this is another example of a state trying to squeeze more out of the industry – we’ll certainly try and stop this coming in.”

Meanwhile, an executive at another bookie described the tax plans as “nonsense” and said the absence of a consultation had led to a “clear lack of understanding” from South Australia politicians.

“There has been no industry consultation, if there was then Tom Koutsantonis would know that all the corporate bookmakers already contribute taxes to South Australia through product fees paid directly to Racing SA,” he said.

“This amounts to around 20% of gross win and 10% GST which we pay to the federal government which then gets distributed to the states, then if we make a profit we pay company tax to the ATO like every other Australian company.

“We won’t be double taxed, no business should have to endure that burden,” he added. “We are considering our legal position and failing that we will be in the unfortunate position of having to consider discontinuing our product fee arrangements with Racing SA once this PoC comes in.”

Another bookmaker told EGR they would be forced to stop marketing in the state should the levy be introduced and would only result in a growth of customers using unlicensed sites.

While South Australia is a relatively small state with around 6-7% of the national population, bookies fear the introduction of a PoC tax there could see other larger states follow suit.