Online sports bookies have a win in Victoria with the new tax policy, but it seems Tabcorp gets the best out of the deal. Tabcorp will have to pay the tax too, but it is a favorable situation.
Tabcorp is a land-based sports bookie that might have been worried about the point-of-consumption tax rules, except an announcement states they will not be any worse off than the online betting locations.
The new tax law in Victoria was announced at the beginning of the week. It might have caused a bit of worry given that no one knew what to expect. However, Victoria is offering a lower tax than other states making it a friendlier state all around.
The Sydney Morning Herald said Tabcorp will get rebates on product fees when it remits to the Victorian racing industry, which will help to counteract the eight percent online gambling tax Victoria will start charging in 2019.
Tabcorp will see about a 1.5 percent average tax rate in Victoria instead of what it pays now, which is 6.5 percent on revenue. The offset will come through the retail license. As a land-based business, it pays for its retail license through the state. Unlike some of the sports betting companies, which are solely online, the company should see a break in its financial strain.
Competition for Tabcorp
The downside is that Tabcorp suffers from a highly competitive industry. The Australian betting market is full of companies internationally-licensed to offer sports betting and casino products. Under the new policy, there is a limit to how many competitors will be able to remain in the Aussie industry.
The tax is not a good thing in any state for the companies who must pay it. Victoria is offering a lower tax, which is going to attract more competition. However, there may need to be limits, as to how many companies jump ship from other states to benefit from the lower tax.
There is also the situation of cheaper odds offshore than in Australia, which tends to send clients to the online companies versus Tabcorp. But, even a lower tax than other states can still have a detrimental effect when there is too much competition. Tabcorp with its easy to reach land-based sports betting still has good odds.
The tax is set to start in January 2019, but it is dependent on the legislation process and thus the passing of the bill through state parliament.