By Amelia McGuire
The boss of Star Entertainment has hit out at the former NSW government following state treasurer Daniel Mookhey’s late-night decision to delay a looming tax rise on the profits from poker machines in the Sydney casino.
The casino group’s chief executive Robbie Cooke accused former treasurer Matt Kean of giving no regard to The Star Sydney’s 4000 employees when he announced the surprise tax increase in December. Under the proposal, profits from The Star’s poker machines would be taxed at a top rate of 60.7 per cent to generate $364 million in extra revenue for the state over the next three years.
Kean was quick to hit back at the troubled company, pointing to its record of “appalling behaviour”.
Star CEO Robbie Cooke.Credit: Louie Douvis
The proposed tax increase, said Cooke, was “policy on the run by the former treasurer, was ill-conceived with no consultation and had no regard to the capacity of our Sydney operation to afford the impost.
“If implemented as originally proposed, the additional duty would significantly challenge the economic viability of the Sydney business and put the jobs of up to 4000 hardworking Sydney employees in jeopardy.”
Kean retorted that The Star’s “prior appalling behaviour” had not been caused by the NSW government. NSW Treasury modelling at the time of the proposal indicated the group could support the increase in tax on its profits, he said.
“As the Star management is legally obliged to reveal its true financial situation to the ASX, NSW Treasury modelled the increase based on The Star’s filings and other public statements and found the group could support the increase,” Kean told this masthead.
“The only ill-conceived idea I can see here is the behaviour that saw The Star get caught co-ordinating fraudulent activities designed to subvert the law and support criminals via widespread money laundering.”
Star Entertainment said in an ASX release on Tuesday morning it appreciated the willingness of the new state government to engage with the business on this issue and said talks “to guarantee the jobs of our team members” continue.
The Star also flagged the process to refinance its existing debt facilities and increase its debt covenants was “materially” challenged by the looming tax hike.
NSW Treasurer Daniel Mookhey revealed on Monday evening the government would delay legislation for the duty rate increase – which would have been imposed on the profits from poker machine and table game earnings from July 1 – until at least August to allow discussions with the cash-strapped casino giant to continue.
The tax increase was due to begin within a fortnight. However, the change was never legislated, even though it was written into the budget. The current tax leveraged from the group’s poker machine profits is less than half this amount.
“The government has been having discussions with the casinos about implementing these new tax arrangements,” Mookhey said on Monday. “To permit these conversations to continue, the government plans to pursue the legislation following the forthcoming parliamentary winter recess.”
The NSW parliament is due to return in early August, giving both sides the chance to negotiate changes to the tax increase.
Mookhey’s statement suggests the government is committed to legislating the tax, but may settle on several changes. One option would be to delay the hike by several years to allow the financially strained gambling giant to stabilise its short-term position free from the pressure of a higher tax burden on its Pyrmont casino.
Two independent inquiries stripped the gaming giant of its casino licences in NSW and Queensland last year following an investigation by the Herald in October 2021. The inquiries found the casino operator had enabled suspected money laundering, large-scale fraud, organised crime and foreign interference in its Australian casinos.
The NSW Independent Casino Commission was criticised over its decision to allow Star Sydney to keep its doors open under the eye of an independent monitor, rather than close down the casino entirely when it suspended The Star’s casino licence in October. The regulator’s boss Philip Crawford said he would have shut down the casino if it were not for the livelihoods of the employees.
If the tax goes ahead in its current form, The Star will need to extract $100 million from Star Sydney’s $450 million cost base, which would mean further job cuts. The Star is already in the midst of making 500 employees redundant following its dismal half-year results.
In further bad news for the group, The Star announced on Tuesday its planned sale and partial lease-back of its Queensland Treasury casino to property investment manager Charter Hall has been called off, leaving it to now “consider its options”.
The Star’s share price slumped 3.2 per cent on Tuesday to close at $1.07.
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