The Star Entertainment Group Ltd (ASX: SGT) share price is sinking today amid a NSW Government proposal to increase taxes on casinos.
Star Casino shares are currently falling 11% and are trading at $2.285. For perspective, the S&P/ASX 200 Index (ASX: XJO) is 0.26% in the red at the moment.
So what is this new tax and how is Star Casino reacting?
New gambling tax
Star Casino shares are descending today amid a proposed plan from the NSW Government to reform casino tax rates.
Star Casino has responded to a media release from NSW Treasurer Matt Kean on Saturday where he announced a proposal to lift tax rates on gaming tables and poker machines at casinos from 1 July 2023. This plan is expected to raise $364 million over the next three years for the government.
Star Casino said it is seeking to "urgently engage" with the NSW Government on the "sustainability" of the potential tax changes and the impact on the company. Managing director Robbie Cooke said:
We are not sure how the Government modelled its financials nor the basis for suggesting The Star does not pay its fair share of taxes.
Specifically, in addition to state gaming taxes, The Star also pays millions in corporate taxes, with total taxes paid as a percentage of The Star's profits being around 70%, and as high as 80% in the last 5 years when all the tax regimes are considered.
Star Casino highlighted it is seeking to fast-track cashless gambling and carded play to "deliver safer gambling".
Minister Kean said the proposed changes would ensure casinos continue to make an "appropriate contribution" to the community. He added:
It's important that casinos pay their fair share of tax. These reformed tax rates will replace the existing regime under which casinos pay less tax on poker machines than hotels and clubs.
Star Casino share price snapshot
The share price has fallen 35% in the last year. In the past month, Star Casino shares have slipped 21.75%.
fool_stock_chart ticker=ASX:SGT
Star Casino has a market capitalisation of about $2.2 billion based on the current share price.
