Speculation Mounts On NSW PoC Tax Hike

RUMBLINGS that the NSW Government is floating the idea of increasing the state's Point of Consumption (PoC) tax rate is gaining momentum.

Racenet understands the three racing codes have held meetings with NSW Treasury in recent weeks where the notion of the tax increasing from 15 to 20 per cent – a surge of 33 per cent – has been proposed.

The mooted move has been met with fierce opposition from quarters of the racing industry and has been the catalyst for the three codes unifying in their stance on the matter.

First introduced in 2019 at a tax rate of 10 per cent before increasing to 15 per cent in 2022, PoC tax is a levy paid by online bookmakers on all wagers placed by NSW punters, regardless of the location of the wagering operator.

Since its inception, PoC has raked in hundreds of millions of dollars for the NSW Government which in turn has added an extra layer of funding to the three-codes of racing.

READ: An unbalanced ecosystem: Shining a light on the wagering industry

Of the tax collected, 33 per cent is returned to the racing industry, with 72 per cent going the way of thoroughbred racing while the remainder is shared between greyhound (13%) and harness (15%) racing.

In the last four years, NSW racing has received more than $200m in tax returns alone, with that figure set to balloon yet again, at least in the short term, if the proposed increase is given the green light.

But while the recent revenue surge has assisted in participants revelling in record returns, it's come with a word of warning from major wagering operators, declaring any additional tax grabs are “shortsighted” and “not sustainable for the future of racing in the long term”.

“Bookmakers essentially pass the additional cost on to the punter, making racing as a betting medium less desirable, therefore disengaging customers instead of acquiring them,” said one wagering insider.

“The whole premise is extremely shortsighted and I'm not surprised it doesn't have the support of the racing industry.”

Racenet understands there is vehement opposition to the suggested tax hike given the potential long term ramifications that could arise, particularly around future funding and participation.

That opposition follows an overhaul of the NSW Government's taxation targets from racing, curbing their initial projections down from $1.66b to $1.25b in the next three years, a downturn of $400m.

If the NSW Government proceeds with another PoC tax rise the move will draw comparisons to the decision by the Queensland Government to increase its rate from 15 to 20 per cent midway through 2022.

At the time, bookmakers were said to be “blindsided” by the announcement which led to major operators such as Sportsbet and Ladbrokes greatly diminishing their offering on Queensland racing for a lengthy stretch of time.

If the tax hike is rubber-stamped, NSW will join Queensland atop of the PoC levies at 20 per cent.

For NSW, it would represent a 100 per cent increase from when the tax was first established in 2019.

From July, Victoria will rise from 10 to 15 per cent where half of all monies collected will return to the state's racing industry.

It's understood the Victoria Government was toying with the prospect of increasing the levy to 20 per cent but following strong representations from stakeholders, ultimately resisted the temptation.