Gambling firms Tatts Group and Tabcorp say the government in the Australian province of Victoria is charging them an exorbitant levy on poker machines that they no longer operate, and have threatened a lawsuit in retaliation.
Both companies said on Monday that they had received a letter from the Victorian Treasurer advising that they must pay a health benefit levy of around AUS$42 million each in respect of gaming operations conducted over the 2012/13 financial year.
What’s more, the horse racing industry will also be charged 25% of the amount Tabcorp owes because that company operated its gaming machines as a joint venture with the racing industry.
The health benefit levy was introduced by Victoria’s government in July 2000 and applied to poker machines operated in the province to help fund hospitals and charities.
However, the companies in questions lost their licence to operate poker machines outside of Melbourne’s Crown casino, on 15 August 2012.
As a result, Tatts and Tabcorp say their gaming operations in Victoria were limited to 46 days, generating earnings before interest, tax and depreciation of about AUS$29 million – much less than the amount of the levy sought by the province.
“Tatts strongly disputes the reasonableness of the determination made by the Treasurer and its legal sustainability,” the company said in a statement.
It added that would also rely on an indemnity granted by Victoria in 2009 in consideration of Tatts consenting to an extension of its licence from 14 April 2012 to August 2012.
“This defies any test of common sense,” Tatts chief executive Robbie Cooke said. “We have had no conversation with government. First we knew that they were going to levy this amount was the letter in the mail this morning.”
In a statement to the Australian Stock Exchange (ASX), Tatts said it strongly disputed the “reasonableness of the determination” and its “legal sustainability.”
Both companies warned they would take legal action over the latest demands, but said they hoped to resolve the issue in talks with the state Treasurer.
According to ASX filings, Tabcorp had allocated AUS$3.7 million in its accounts towards its levy bill, while Tatts has earmarked AUS$7 million.
Tabcorp’s bill will be slightly less than Tatts’ because it operated some poker machines under a joint venture with Racing Victoria, which will pay some of the bill.
In comments to the Herald Sun, Racing Victoria chief executive Bernard Saundry said, “We are surprised, shocked in fact… We are looking at our options and that starts with an immediate meeting with Tabcorp and then the government.” “The surprise is the extra AUS$8.5 million we have just been informed about. Racing’s share of that is about 70% (trots and dogs make up the rest),” added Saundry. “It would hurt our budget badly”.
In a statement to The Australian, a spokesperson for the Treasurer said, “The Health Benefit Levy is applied consistent with the Gambling Regulation Act, and has been levied in the same way for more than a decade… There is no discretion under the (legislation) to apply the levy in any other way.”