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Friday, December 20, 2013
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Australia's Crown Faces Slot Machine Levy - December 2013
SYDNEY--Shares in Australian casino company Crown Ltd. (CWN.AU) came under pressure Friday after lawmakers proposed a new tax on slot machines at its flagship Crown casino in Melbourne.
Victoria state proposed an annual levy of A$22,175 (US$19,800) per slot machine to raise A$56.8 million a year, as it attempts to fund infrastructure developments such as roads and schools while holding onto its AAA credit rating.
Crown shares fell as much as 6% in Sydney before closing down 4.3% at A$15.90 in a overall strong market.
"In these challenging economic times the coalition government must maintain a disciplined budget to ensure we can continue to invest in the critical infrastructure and services that Victorian families and businesses deserve," the state's Treasurer, Michael O'Brien said in a statement.
Any changes to tax arrangements between Crown and the Victorian government need to be agreed by both parties.
Crown, which is controlled by billionaire James Packer, confirmed that it was in discussions with lawmakers and expects talks to conclude early next year.
Describing the discussions as "positive", Mr. Packer said he hoped they would create an outcome that allowed the casino to continue competing effectively with international and interstate rivals.
"Both Crown and the Victorian government would like to see the Crown Melbourne resort continue to grow and to attract more overseas and interstate tourists," Mr. Packer said.
Still, the decision comes at a tough time for Australia's gambling sector, which is being hurt by fragile consumer confidence as the country's long mining boom fades.
Crown's underlying profit for the year through June, which removes one-off items like asset sales, swelled by 14% to A$473.2 million. The result, however, was boosted by a large jump in earnings from the company's joint venture in Macau with Lawrence Ho.
Crown Melbourne remains the biggest contributor to the company's profits and suffered a 12% decrease in operating earnings last financial year.
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