Tasmania Institutes Point of Consumption Tax on Gambling

The cost of online gambling in Tasmania is about to go up. According to recent reports, the Tasmania government is about to institute a 15 percent point-of-consumption tax on all net gaming revenues from online gambling operators in Tasmania.

This move is being touted as a way to increase tax revenue. However, some are criticizing the government for levying the highest tax amongst all Australian states.

Tasmania Government Looking to Impost a 15% POC Tax

According to recent reports, the Tasmania government is imposing a 15 percent Point of Consumption tax on gambling operators serving the state. The new tax will go into effect on January 2020. Tasmania is the last Australian state to impose a POC tax. Their tax is one of the highest in the nation.

The 15 percent tax is on par with the same tax in Queensland, Western Australia, and South Australia. In NSW, the tax is 10 percent. Victoria has the lowest POC at just 8 percent.

The government is enacting this tax in hopes of improving governmental operations. Government officials estimate the tax to bring in approximately $3.4 million per year.

Tasmania Passes POC Tax

Tasmania Parliament passes POC tax on gambling.

What is a Point of Consumption Tax?

The Point of Consumption, or POC, tax is essentially an additional income tax on revenues. Operators collect taxes where the bettors live and bet rather than where the company operates. Generally, this tax is in additional to any tax already being paid by a casino

For example, let’s say that an online gambling company operates in NSW and provides services to Tasmania. Wagers placed from NSW would not be subject to the POC tax. However, any wagers placed in Tasmania would have the 15% tax tacked on.

Betfair gave an example on their website breaking down how the POC impacts their tax rates. In the UK, they pay a 10.8 percent tax and the 15 percent POC tax raises it to 25.8 percent. Australian operators can expect the same.

Betfair POC Tax Chart

The impact of the POC tax on Betfair’s operations. Photo credit Betfair.

How Will This Tax Impact Services?

The impact of the POC tax depends on the operator but varies. For Betfair, they started blocking certain countries from earning player reward points. For other regions, the impacts could be far greater. Responsible Wagering Australia Chairman Nick Minchin reported that “The 15% point-of-consumption tax introduced in South Australia threw a handbrake on that state’s racing industry and has almost brought it to its knees.

In South Australia, prize money has been cut, field sizes have shrunk, participants have fled interstate and jobs have been lost. Starting off a much lower base, the Tasmanian government has today put that same handbrake onto Tasmanian racing and thrown its future into massive uncertainty.”

One thing to note here is that the Tasmania POC tax will give operators some wiggle room regarding free bets. According to reports, the 15 percent rate will exclude the value of free bets or free spins at online gambling establishments. This could help to prevent Aussie operators from taking the drastic step that Betfair took.

Operators Will Adapt

Not to sound cold or calloused against online operators, but this type of tax is nothing new in the gambling industry. If anything, it is a “cost of doing business” in some countries. While it certainly cuts into the profit margin for online gambling operators, it has yet to cause a catastrophic reduction in online gambling services.

While there will certainly be an adjustment by some operators, overall we don’t expect a significant change in gambling services. However, we do predict that once online casino gambling is legal, smaller operators may choose to be more selective with the types of gaming they offer. Online casinos in areas with more favorable POC rates will have more flexibility. In the end, it may cause some smaller operators to back out of the market. However, larger brands will find a way to adapt and thrive in the region.