Crown comes under fire as it tries to escape NSW tax deal

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The NSW government is hardening against any reversal of Crown’s $1 billion tax guarantee signed 10 years ago when it secured the rights to the Barangaroo development, with Premier Chris Minns saying he was obliged to negotiate with the casino but no more.

Separately, two senior government sources, speaking on condition of anonymity as the talks were ongoing, said Labor would not accede to Crown’s request to pay less tax and was prepared to legislate to bind Crown to its agreement.

Crown argues it is suffering from regulatory changes and a sustained lull in international high-rollers, partly as a result of COVID-19.Credit: Dominic Lorrimer

However, a 2014 deed between the government and Crown indicates taxpayers may be compelled to ensure the casino is not worse off because of gaming tax changes or the COVID-19 pandemic.

The Herald revealed on Wednesday that Crown was in talks with the government to rewrite the terms of its 2013 deal, which committed the Sydney casino to paying at least $1 billion in gaming tax over the first 15 years of its full operations.

Treasury confirmed it was “in negotiations with Crown about its tax obligations”, but Minns said on Wednesday nobody should assume that would result in the government collecting less tax from the casino.

“As part of the agreement that was signed by the previous government with casinos in NSW, we’re obliged to have – in fact, we have to have – negotiations about tax scales, tax arrangements to the state,” Minns said.

Premier Chris Minns said he would not get into a public negotiation with Crown over its long-standing tax guarantee.Credit: Jessica Hromas

“People shouldn’t jump the gun and presume it’ll mean a net reduction in tax take for casinos in the state. But I’m not going to have a public negotiation with these casinos. If we have a change to those tax rates we’ll announce them publicly.”

A common terms deed between the government and Crown, dated July 8, 2014, stipulates Crown and the government will negotiate in good faith to amend the tax guarantee so that Crown is not worse off due to a “trigger event” or “force majeure event”.

A trigger event includes any change to the agreed tax regime for VIP gaming (Crown Sydney does not have poker machines), while a force majeure event includes an epidemic.

Independent MP for Sydney Alex Greenwich, who opposed the Crown project and called it “a blight on our city” when the casino floor opened last year, said the government should reject any changes to the tax guarantee.

“Crown got the site for next to nothing based on a deal that they would continue to provide tax revenue to the state. For them now to cry poor is really an insult to all Sydneysiders,” he said.

“The reason their bottom line is being impacted is that they are no longer able to have money laundered through their casinos, and they are no longer able to accept the proceeds of crime being gambled through their casinos.

“That is not a legitimate reason for now needing a further tax break. If they can’t honour their deal with the people of NSW, they should hand the land back.”

That land is now home to Sydney’s tallest building, containing Crown’s luxury hotel, the casino, restaurants and residential units.

In return for the right to develop the site, Crown agreed to pay a $100 million upfront licence fee and contribute at least $1 billion in gaming revenue over the first 15 years of the casino’s operation.

The Minns government threw The Star a tax lifeline earlier this year.Credit: Bloomberg

Crown now argues the economic and regulatory situation has changed, and it is suffering from a sustained lull in international high-rollers, partly as a result of COVID-19.

Former Liberal premier Barry O’Farrell, who announced the deal in 2013, declined to comment, as did successor Mike Baird. Crown was also contacted for comment.

In August, Treasurer Daniel Mookhey announced a reprieve for rival casino the Star Sydney, which was facing higher duties on poker machine profits under changes made by the former Coalition government.

He instead introduced a transitional arrangement that delays the higher tax rate until 2030. Star, which Mookhey said would be “unviable” if the tax hike had proceeded, agreed to maintain more than 3000 jobs and participate in a cashless gaming trial.

The Business Sydney lobby group urged the government to keep negotiating with Crown, saying the tax reprieve for Star was necessary. “It makes just as much sense to ensure Crown can also operate successfully”.

“Their contribution to tourism is important with Sydney yet to recover pre-COVID international visitor numbers,” executive director Paul Nicolaou said. “We need more international visitors to return.”

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