A weakening wagering market has led the New South Wales government to revise its revenue predictions from Point Of Consumption Tax by $92 million over the next four years and $20 million in the current financial year.
The 2024/25 NSW state budget released in June had predicted $320 million in POCT revenue for the current financial year, 33 per cent of which is passed through the three racing codes.
But continued downward trends in wagering has seen that amount revised when the half-year-budget update was announced last week.
The estimated revenue for POCT in New South Wales for the current financial year is now $300 million, while projections for the following years have also been slashed.
In 2025/26 it was estimated in the state budget that revenue would be $323 million, and that projection is now $301 million. Further forward to 2026/27, and the initial estimated POCT revenue of $340 million is now $316 million. In 2027/28, the new number is $332 million, slashed from $358 million.
The overall difference between the two figures across the next four years is $92 million, meaning the three racing codes will be, under the current funding agreement, some $30 million worse off than the government projected six months ago.
Extraordinarily, when the previous NSW government lifted the Point Of Consumption Tax to 15 per cent in 2022, it had forecasted revenue for the Racing Tax, as it was then termed, to be $555 million in 2024/25. Those predictions appear to have been out by $254 million as wagering has cooled.
When POCT was first increased in 2022, the projection was that it would lift revenue from taxes by $740 million over the four years to 2025/26. The actual upside, on the figures published by the government, has been less than half of that.
The government of the time also provided $30 million in compensation to Tabcorp as part of the changes.
Future taxation projections are an inexact science, especially in a market as dynamic as wagering, but given racing industry funding is tied to taxation revenues, such variation makes it difficult for racing bodies to forward plan.
This has been an issue with state government forecasts across Australia, who have all overestimated taxation revenue from POCT, especially of the back of the post-pandemic wagering bubble bursting.
The Victorian government revised its revenue from racing and betting taxes this year by $36 million this financial year in its recent half-year review.
The New South Wales situation is particularly interesting as the government is currently re-assessing the long-term deal it has in place with Tabcorp.
Bren O’Brien
Tabcorp wants to exit the deal, which extends to 2033, to achieve what it says is a level playing field with its competitors, similar to what it has in Victoria and Queensland.
However, both of those agreements involved a further increase in POCT. In Victoria, POCT went up to 15 per cent in July this year, while in Queensland it increased to 20 per cent in late 2022.
Aushorse Investor’s Guide 2025
- More Races worth $1 million+ than Europe & America combined
- More than 140,000 Australians involved in racehorse ownership
The Straight understands that neither the NSW racing industry nor Tabcorp want an increase of POCT to 20 per cent as they think the taxation has reached its tipping point and a further increase would have a major impact on wagering.
Both the Queensland and Victoria deals also involved a greater share of POCT revenue flowing to the industry. Queensland’s racing industry receives 80 percent of POCT receipts, while in Victoria it is now 50 per cent.
Bren O’Brien
While in theory that is good for the bottom line, it also means racing funding is heavily tied to future wagering turnover.
An outcome of the NSW government review in to racing funding and the Tabcorp deal’s role in this is expected in early 2025.
