Crown to pay higher slot tax and boost casino tables

The tax will rise by 1.72 percentage points annually for six years starting from the 12 months ending June 2010, Melbourne-based Crown said in a statement today. The changes will increase the rate to 32.57 % in 2015 from 22.25 % now, the government said in a separate statement.

Crown Melbourne, the only casino in Australia’s second- largest city, will be allowed to boost gambling table numbers by as much as 43 % with new permits for poker and roulette. Victoria is the second state in the past six months to raise casino taxes after Queensland boosted slot levies to as much as 30 % on venues owned by Tabcorp Holding Ltd.

The tax increase “underscores the regulatory risk inherent within the sector, particularly in a mature market and when budget deficits are widening,” Jenny Owen, an analyst at Citigroup Inc., said in a note to clients today. “Crown has achieved a better outcome on tax increases than its local competitor Tabcorp, who recently saw taxes rise at Queensland casinos with no net offset to grow revenue,” wrote Owen, who rates Crown shares “hold.”

Crown shares gained 2 cents to us$ 5.61 at the 4:10 p.m. market close in Sydney. The stock has climbed 23 % this year, compared with a 5.5 % gain for the benchmark S&P/ASX 200 Index.

The government has agreed to make no further tax or levy amendments before June 2022 with the new arrangements subject to approval from the Victorian Commission for Gambling Regulation, it said.

Crown will be allowed to expand its gaming area to have 100 tables dedicated to poker while those for games such as roulette can rise to 400 from a current limit of 350. The casino currently has 50 poker tables within the 350 table restriction.

Billionaire James Packer, Crown’s chairman and largest shareholder, said the changes will allow the Melbourne venue to host international poker tournaments and compete with Las Vegas and Macau. “Crown Melbourne’s gaming capacity has long been constrained by its license restrictions,” Packer said in the statement.

Queensland last year said the tax rate on slot machines at Tabcorp’s Brisbane and Gold Coast casinos would rise to 30 % from 20 %, with the increase to take effect from July 1. At its Townsville property, the rate doubled to 20 % from 10 %.