Lay your bets on Australia gambling tax reform

As an Irishman who enjoys the banter and craic of a Dublin pub, having a pint in an Australian boozer is an altogether mediocre experience.

Wall-to-wall televisions broadcasting horseracing, greyhound racing and myriad other pursuits that can attract a wager dominate my local in Sydney. If I let my eyes wander for a moment they risk being dazzled by “pokies”, rows of electronic slot machines that flash and beep incessantly as they suck money from gullible punters. 

Betting is a national obsession in Australia, which has the world’s highest gambling loss per head at US$1,130, according to H2 Gambling Capital, a UK consultancy. 

There are about 200,000 pokies in pubs, clubs and casinos, which account for about half of punters’ US$20bn gambling losses every year. Bookmakers are allowed to advertise on television and are invited on to sport shows to provide live odds before matches. 

Betting plays a prominent role on Anzac Day, the national day of remembrance for Australians who lost their lives in service. On April 25, punters cram into pubs to play two-up, a game that involves spinning two coins into the air and betting on whether they land heads or tails up. 

And then there is the Melbourne Cup, the horse race that “stops the nation” in early November. 

Until now successive Australian governments, which rake in A$5.5bn (US$4.2bn) a year in taxes, have overseen one of the world’s most pro-gambling regimes. It is little wonder that international bookmakers, including market leaders Bet365, Paddy Power and William Hill, have flocked to set up shop Down Under . 

But there are signs of change in the air following the recent re-election of two anti-gambling campaigners — Nick Xenophon, an independent senator, and Andrew Wilkie, an independent MP, on whom the government will have to rely to pass laws in a narrowly divided parliament. Both men are pressing the government of Liberal Prime Minister Malcolm Turnbull to tighten gambling regulations.

Last month New South Wales, Australia’s most populous state, announced a ban on greyhound racing, citing “systematic animal cruelty”. For Glenn Starr, a greyhound breeder and owner of Starr Kennels, this is bad news. “I’m gone, I’m buggered,” he told me. It is a blow for Australia’s biggest bookmaker, too; A$145m was knocked off the value of Tabcorp when shares slumped 6 per cent on the stock exchange on the news of the ban. 

Bookmakers are also contending with the decision by the South Australia state government to levy a 15 per cent “point of consumption” tax on their net revenue from betting . Under current laws, online bets in Australia are subject to taxes levied by the state where a bookmaker’s headquarters is located rather than on the location of the punter. This system enabled bookies to reduce liabilities by basing themselves in low-tax jurisdictions. But by implementing a point of consumption tax, an idea borrowed from the UK, South Australia aims to raise an extra A$10m a year from the industry.

Fearful that states with bigger populations will follow suit, the bookies are hoping their “Stop the punters tax” campaign will press South Australia to back down. Adverts in newspapers implore the public to contact their MPs to demand an end to a policy the bookies claim would mean “worse odds, less promotions and less money in your pocket”. 

But the bookmakers don’t have the lobbying power of the pokie operators, which donate vast sums to both the Liberal and the opposition Labor party. A study by Monash University in Melbourne found 31 politicians or re-election campaigns in 2010-11 that attracted donations from Clubs NSW, an industry body for the 1,400 bowling, social and sporting clubs that operate 70 per cent of the state’s pokie machines. 

Few political commentators were surprised when in 2012 the government of Julia Gillard, then prime minister, was forced to dilute its attempts to introduce restrictions on pokies. 

I am not betting on being able to enjoy a quiet pint in a Sydney pub any time soon.

jamie.smyth@ft.com

Letter in response to this column

Enjoy a quiet 450ml in a Sydney pub / From Chris Hill