Taxes and product fees
Australia’s licensed online wagering service providers pay some of the highest tax rates in the world, attracting an effective tax rate of 36 percent before GST, company tax and payroll taxes are added.
A Point of Consumption Tax (POCT) was introduced by the state and territory governments, which is essentially a levy on individual customer winnings. POCT is taxed at differing rates depending on the location of the customer within Australia at the time the bet was placed.
Administered by separate state/territory legislative instruments and levied at different rates across states and territories, POCT creates significant regulatory complexity and compliance costs.
Additionally, Australian licensed wagering providers must pay product fees to Australian sporting and racing bodies for the rights to run books on their products (sporting matches and races).
Responsible Wagering Australia is calling for major reform in this area; high tax rates coupled with product fees leave little margin for business operating costs, staff pay roll, capital expenditure and consumer protection. And the fragmented tax system needlessly puts at risk the potential of achieving nationally harmonised approaches to taxation and consumer protection measures.
The current set up seriously hinders the ability of licensed Australian online wagering providers to compete against unlicensed and illegal overseas gambling websites. Australian consumers can freely access these unregulated, websites (offering products such as pokies and casino games that are illegal in Australia) at any time. These sites pay no taxes, make no financial contributions to Australian domestic sport nor racing and flout the consumer protections that Australian licensed providers adhere to.
More and more Australian consumers are gravitating towards these illegally run, unsafe gambling websites to seek more favourable returns. This deprives Australian governments of taxation revenue totaling over $360 million per annum, threatens the integrity of Australian sports and racing while depleting critical income streams. On top of this, the protection of individuals playing on overseas gambling websites is left wide-open resulting in significantly worse consumer protection and harm minimisation outcomes.