Continuing the gambling posts of recent days it is interesting to observe the punch-up currently going on between Tabcorp and the government of the ‘poker machine state’, NSW.
Tabcorp has a licence to operate the Star City Casino as the only casino in the state. This licence expired last night.
The likelihood of the NSW government awarding a second casino licence is low but plans to extend the Star City lease have stalled because the NSW government wishes to increase the tax take on pokies from 24.5% to 30% which would strip $35 million from Tabcorp’s bottom line.
Currently NSW’s biggest clubs pay a tax of 39.99% on pokies.
Star City is claimed to be a big tourism drawcard and Tabcorp is threatening to take its gambling investments to Queensland where the pokie tax is the lowest in Australia at 21%.
Competition between the states for the tourist dollar is being used to limit the ability of the State governments to recoup as taxes the revenues they create in providing monopoly power by means of exclusive casino contracts. The state governments should get together and do a deal to provide uniform taxes across the industry to prevent this happening.
The huge profits the parasitic casinos generate are a product of the monopoly power assigned to them by the state. Casino operators should earn at most a normal rate of return on capital invested with all other profits going to the governments which provide this power. This having happened, additional charges should be levied on the casinos for the social damage they inflict as externalities on society through problem gambling.
Tabcorp has been hit in recent times by the horse flu virus which will impact on its gambling revenues from racing and over recent years has been hit by the effect of smoking bans in its casinos. I have no sympathy at all for these social parasites – they are feeding off government monopoly regulations and harming the community through their impacts on problem gambling primarily through the pokies.
The greed here is not only private sector greed. The greed of state governments in allowing themselves to be held over a barrel by firms like Tabcorp also deserve criticism. (99)