New gaming machine allocation system and tax rates announced

Monday, 14 August 2017

The Victorian government has announced further details of the post-2022 gaming machine arrangements, including the allocation and pricing of future gaming machine entitlements, and new tax arrangements to apply from August 2022.

Background

On 7 July 2017, the Minister for Consumer Affairs, Gaming and Liquor Regulation, Marlene Kairouz, announced new gaming machine arrangements to apply from August 2022, when the current arrangements will expire.

Information has now been provided on how the post-2022 gaming machine entitlements will be allocated and priced.

Entitlement allocation process

All venue operators who held gaming machine entitlements as at 7 July 2017 will have the opportunity to acquire the same number of entitlements for 2022 and beyond. This is subject to any changes the minister may make to the maximum number of entitlements permitted to operate under a regional cap or municipal limit.

Following each venue operator's application, the minister will allocate the nominated number of entitlements (where possible) to each existing club and hotel venue operator.

'Left over' club entitlements

After the minister has allocated the nominated number of club entitlements to existing club venue operators, any 'left over' entitlements will be allocated to existing clubs seeking additional gaming machines or new club entrants, using a priority system.

If there are any club entitlements left over after this process is completed, the minister will make a decision as to how many unallocated club entitlements (if any) will be transferred into the hotel entitlement pool.

After the allocation to clubs is completed, the minister will allocate any unallocated hotel entitlements first to new hotel entrants, and second to existing hotel venue operators seeking additional gaming machines.

If demand exceeds supply at any stage in the allocation process, entitlements will be allocated on a proportional basis (where possible).

Entitlement pricing formula

The price venue operators will pay for each entitlement will be based on each venue's average gaming revenue per machine for the four years from 2013–14 to 2016–17.

The weighted average gaming revenue per machine for each venue will then be multiplied by a state multiplier of 46.35 per cent to arrive at the entitlement price for that venue.

Where a venue operator holds non-operating entitlements in addition to operating entitlements, the price of the non-operating entitlements will be the same as that calculated for the operating entitlements.

For new venue operators, the price of entitlements will be based on the gaming revenue of a venue of similar size, type and location as the new operator's proposed venue.

Minimum price

There will be a minimum price for all entitlements, regardless of the price determined by the pricing formula. The minimum price will be $5,170 per entitlement for club entitlements and $32,714 per entitlement for hotel entitlements.

Payment arrangements

Venue operators will be required to pay a deposit for the entitlements they are allocated. Clubs must pay a five per cent deposit and hotels must pay a 10 per cent deposit, due to be paid by the end of February 2018 (based on current timelines and subject to change). Hardship arrangements for payment of the deposit will be available upon application.

The balance of the entitlement price will be due on 16 August 2022. Venue operators will have the option of paying the outstanding amount as a deferred payment arrangement over a maximum period of five years, Interest will be charged on deferred payments, with the interest rate to be advised at a later date.

Tax arrangements from August 2022

Tax on gaming machines from 2022 will continue to be calculated on the monthly average per machine revenue at each venue.

However, the current three tax brackets will be replaced by four brackets and a higher tax rate will apply to the top bracket. The current tax differential of 8.33 per cent for clubs will also be reduced for high performing clubs. This will result in hotels paying a top tax rate of 65.00 per cent (up from 62.53 per cent) and clubs paying a top tax rate of 60.67 per cent (up from 54.20 per cent).

More information

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