Posted on: May 3, 2023, 07:00h.
Last updated on: May 3, 2023, 07:00h.
Sports bettors in Victoria, Australia, could soon see unwelcome changes through state-licensed online sportsbooks. An effort is underway to increase the point of consumption tax (POCT) once again, the second increase in three years.
The current POCT for the segment is 10%, but new legislation would increase it to 15%. While any new tax is never welcome, this would put the rate in line with what is found in New South Wales and Western Australia. However, it’s still cheaper than Queensland’s 20%.
The legislative initiative began this week with the idea that any newfound money would go to help Victoria’s horse racing industry. If approved, the new POCT would take hold starting July 2024.
Closing The Loopholes
Victoria’s POCT for the online gaming segment emerged in 2019 as a means to force gaming operators active in the state to contribute to the government. Until then, some foreign-owned companies avoided paying taxes there through a technicality.
By holding a license in Australia’s Northern Territory, despite offering their services across the country, the operators didn’t have to pay the state. That changed with the arrival of the POCT, although it was initially just 8%.
In 2021, the rate moved up to 10%. With horse racing still struggling to recover from COVID-19, Victoria wants to increase it again to help offset some of the losses the segment has incurred.
When Queensland moved from 15% to 20%, it expected the new tax rate to provide a major windfall. In the 2020 fiscal year, the state’s racing industry took in AUD32.5 million (US$23.4 million). The 5% jump was to effectively increase it by 250%.
Victoria hopes to see similar results, although it hasn’t shared a specific goal in its projections. When it introduced the 8% POCT, it predicted AUD30 million (US$19.99 million) in new tax revenue.
Horse Racing Loses Ground
Victoria’s population is 1.6 million more than that of Queensland, and it’s also home to several important races, including the Melbourne Cup, WS Cox Plate and the Australian Cup. However, this doesn’t necessarily translate into more money.
Last year’s Melbourne Cup lost significant ground in attendance. Since before COVID-19, the average attendance has been dropping, with official data putting last year’s attendance at around 70,000.
This is much lower than the 102,000 from 10 years ago; however, the 2022 Melbourne Cup had to deal with a lot of rain. The 2020 and 2021 events were virtual write-offs because of the coronavirus pandemic.
The good news for sportsbooks is that, although attitudes are changing, horse race betting is still a strong option. 72% of Australians surveyed by The Guardian said the Melbourne Cup is a major part of Australia’s identity. This is 6% less than the figure from the same survey in 2019.
However, betting is on the rise. The same survey found that 47% of the respondents were going to place a wager on the race. That was 11% higher than in 2020 and 5% better than in 2020.