The New South Wales Premier Christopher Minns reproached the former government for its decision to increase the tax rates imposed on the two landbased gambling companies operating in the state as Star Entertainment has started to struggle financially. Mr Minns hinted he is willing to reconsider the gambling tax hike that is about to come into effect this summer. The Premier described the increase as unsustainable because it lacks due diligence. As Casino Guardian reported earlier this week, the planned increase caused concerns among the employees of the Star Sydney casino, who called for a reassessment of the decision, fearing it could result in thousands of layoffs. The workers subsequently requested an urgent meeting with the NSW Treasurer Daniel Mookhey and David Harris, who currently serves as Minister of Gaming and Racing.
The tax increase was proposed by Mookhey’s predecessor, Matthew John Kean, who left office in March. The former government allegedly aimed to align the gaming tax rates in the state with those in Victoria. However, Premier Minns insists that the government must first ensure the operators would be able to pay their taxes before the new rates are imposed. Minns called for a more adequate assessment of the effect the looming tax hike will have on the employment rates in the Star Entertainment and Crown NSW properties. The Premier explained that while the proposed increase was not legislated, it was still put on the budget. The hike is expected to raise around $120 million annually for the state coffers.
Star Share Prices Drop by 7% as the Group’s Financial Struggles Come to Light
The Star Entertainment Group has been subjected to some serious scrutiny in recent years as the company was found guilty of various regulatory breaches in Queensland and New South Wales. After thorough inquiries conducted by the authorities of the two states, the gaming and hospitality giant was served two separate fines of $100 million each. The company has earmarked $150 million more for other penalties and is now starting to show signs of financial trouble. Minns is open to the idea of reassessing the tax rates but the size of the fines imposed on the group is non-negotiable.
As a result of these tribulations, the company warned its shareholders yesterday that its earnings for the full fiscal year would be considerably lower compared to previous estimates. This triggered a sharp decline in the prices of the company’s shares, which dropped by 7% following the announcement before experiencing a modest recovery shortly after. The group followed up with another grim announcement as it unveiled plans to lay off 500 full-time employees while it considers the fate of its flagship property in Sydney, which houses the second biggest casino in the country.
The Star Entertainment Group employs approximately 8,000 people, 4,500 of whom work in Sydney alone. The decision for the layoffs came as a result of the company’s poor financial performance, which it said is at ‘unprecedented low levels’ not counting the period during the coronavirus pandemic.
The group also revealed that it has hired the Sydney-based financial advisory firm Barrenjoey Capital Partners to help it review the operations of Star Sydney. It is yet unclear what will happen with the property but a potential sale is not out of the question. Last month, the struggling company announced it will sell its beachside property Sheraton Grand Mirage Resort in Queensland for at least $200 million. The company said it was suffering from what it described as a ‘rapid deterioration in operating conditions’ and plans to ask the governments of the two states for more flexibility in the payment terms for its fines.
- Author
Olivia Cole
