In exchange, Tabcorp will pay the NSW government $75m – $50m upfront, the rest in installments over a 10-year period beginning in 2024. Tabcorp CEO David Attenborough called the deal “a great outcome” for both parties, noting that NSW’s thoroughbred, harness and greyhound racing industries had reaped $238.6m via Tabcorp’s operations in 2012.
There were apparently no rival bidders seeking the NSW monopoly, so Tabcorp was likely bargaining from a position of strength. The NSW government just turned in a budget projecting a $329m deficit for the coming financial year, so any guaranteed cash injection is appreciated. The budget also projected total gambling tax revenue would reach $1.94b in 2013-14 and grow an average of 4.1% per year over the next four years. Gambling accounted for 8.8% of total government revenue in 2011-12 but is projected to account for 7.8% by 2016-17.
Video poker (pokies) machines are expected to contribute 63% of the total gambling tax haul in 2013-14. Given its Sydney monopoly won’t expire until (at least) 2019, tax generated by Echo Entertainment’s The Star casino is projected to grow 6.4% per year. By 2016-17, The Star is expected to contribute $71m more than NSW derives from racing revenue, whereas the contributions were equal amounts just two years ago. Racing’s decline is attributed to weaker tote wagers “as a result of interstate and online competition.” NSW imposes a 19% duty on ‘player losses,’ making online wagers with companies based out of more charitably inclined states an attractive option for punters.