Stakes rise in casino’s bid for tax breaks

The continued erosion of Burswood Ltd’s foreign high-roller business has highlighted how critical it is for the Perth casino operator to win tax concessions from the West Australian Government to remain competitive in a market that the company pioneered in Australia.

The contrast in fortunes between Burswood and Melbourne’s Crown casino¬†Pengeluaran HK ¬†has also provided Mr Kerry Packer’s Publishing & Broadcasting Ltd with a persuasive case to put before the WA Government to scrap Burswood’s 10 per cent individual shareholding cap.

In its 2001 results released last week, Burswood revealed a further deterioration in its international commission business revenues, which declined 31 per cent to $54.5 million. Five years ago, that figure was $238 million.

To generate those ICB revenues, Burswood had to pay $38.4 million in junket commissions and rebates.

Its effective tax rate of 16 per cent (including a 1 per cent park board levy) would have cost a further $8.7 million, suggesting meagre overall ICB returns once various other operating expenses were accounted for.

While a similar crimp on ICB earnings forced Sydney’s Star City casino to abandon its pursuit of foreign high-rollers, Burswood’s managing director, Mr John Schaap, reaffirmed last week his commitment to the sector.

“For us, it’s a very fundamental part of our business,” he said.

“To give you an example, if we have someone that comes and plays for three or four days with us, it’s not unusual for them to bring an entourage of up to 20 people who shop, spend time in the hotel, who visit a lot of the attractions here.”

But whether or not Burswood can stay in the ICB game probably rests with the State Government.

Under legislation enacted 16 years ago, the Government can increase Burswood’s tax rate by one percentage point a year to a maximum of 20 per cent, excluding the 1per cent levy.

While Mr Schaap has asked for tax breaks in confidential talks with the Racing and Gaming Minister, Mr Nick Griffiths, the odds of Burswood winning the Government over appear to be widening.

Already, the Premier, Dr Geoff Gallop, has shown his anti-gambling colours by ruling out poker machines at Burswood’s Perth casino, along with the prospect of any further casino licences ever being issued.

And as his Labor Government searches for fresh revenue streams to balance the State’s precarious financial position, an extra tax slug on Burswood might have more fiscal appeal than a tax cut.

Burswood’s ICB tax conundrum could play into the hands of its 4.9 per cent shareholder, Mr Packer’s PBL.

By sending former ALP powerbroker Mr Graham Richardson to Perth last month to discuss Burswood’s shareholding restrictions with Dr Gallop, Mr Packer has effectively declared Burswood a potential target.

While it is understood Mr Packer is still assessing his options for Burswood, Crown’s stellar performance in attracting high-rollers provides a compelling financial case to put to Dr Gallop.