The state government has announced it will proceed with the sale of gaming agency TAB and introduce a new 15 per cent consumption tax on all betting in Western Australia.
The state government has announced it will proceed with the sale of gaming agency TAB and introduce a new 15 per cent consumption tax on all betting in Western Australia.
Investment bank Morgan Stanley has estimated a value of $280 million for the betting agency, but Business News understands a valuation of more than $500 million is more realistic.
Speaking at Dumas House this afternoon, Treasurer Ben Wyatt refused to be drawn on a price tag.
Under the deal, 35 per cent of the sale proceeds will be set aside for a racing infrastructure fund.
The government will also create a 15 per cent point of consumption tax, which will take effect next year.
The tax will be levied on the profits made by all betting operators from bets placed in WA.
Under current arrangements, wagering taxes in WA are levied on the basis of where the betting operator is licensed.
The local racing industry will receive 30 per cent of revenue generated from the new tax.
Mr Wyatt said he was hopeful of a sale occurring next year.
“I think it’s important it gets done,” he said.
“The point of consumption provides a sustainable revenue source, the sale next year provides the infrastructure fund.
“I think it’s important to happen next year because the TAB can’t compete and you’ve had now the uncertainty over a long period of time (and that) has led to a lack of investment.
“I think providing the certainty, getting both pieces of legislation through will actually allow the industry to set off in a much more sustainable way.”
Mr Wyatt said the deal would likely be structured as a long-term lease.
Morgan Stanley released a report on TAB earlier this year, which estimated a sale price of $280 million for the betting agency, using an earnings multiple of eight.
There have also been reports that Kerry Stokes could be interested in purchasing the TAB, which have valued the business at more than $500 million.
Mr Wyatt said the government expected offers from the larger players in the market.
That would likely include Tabcorp, CrownBet, SportsBet and Ladbrokes.
The point of consumption tax would be the equal highest in Australia, while the revenue share going to industry will be the most generous in the country.
Racing and Gaming Minister Paul Papalia said the government had the support of the industry.
"The majority view of the WA racing industry is that selling the TAB is in the best interest of the industry across the state, from Perth and throughout regional WA,” he said.
"The reforms deliver an ongoing funding stream for the industry that will increase in line with future growth in wagering in Western Australia, including from online betting."
Racing and Gaming Shadow Minister John McGrath described the announcement as one of the biggest backflips in the history of parliament, but said it is a good outcome for the racing industry.
"When we as a Liberal government wanted to bring in the sale of the TAB four or five years ago, we faced enormous opposition, mainly from the Labor opposition," he said.
The Nationals WA said the party would only support the sale if the government demonstrated that the racing industry would benefit.
Racing and gaming spokesperson Colin Holt said the local racing industry had an infrastructure backlog in excess of $150 million.
“At this stage the Minister has said 35 per cent of the sale proceeds will be set aside for a dedicated racing infrastructure fund,” he said.
“Until an offer is on the table we don’t know what 35 per cent is.
“If it’s not at least $150 million the industry is getting short-changed.
“Country race clubs in particular are suffering from dated facilities.”
Racing and Wagering Western Australia chief executive Richard Burt said the organisation supported the state government's decision.
“Since 2014, the WA racing industry has been impacted by ongoing speculation regarding privatisation," he said.
"The government’s framework for progressing the sale of the WATAB, together with the POC tax commitment is expected to provide a positive outcome for racing."
“RWWA is supportive of the no worse off funding principles, the 35 per cent of the net sale proceeds to address racing infrastructure, legislating to provide virtual racing in TAB retail outlets and other key principles included as part of the sale of the WATAB package”.
Chamber of Commerce and Industry of WA chief executive Chris Rodwell welcomed the announcement.
"The government should sell assets when the private sector can provide the service more efficiently such that the public interest is better served.
"CCI has long called for the sale of government assets, where appropriate, to pay down debt, boost investment and regain Western Australia’s AAA credit rating, so the government’s decision to direct 65 per cent of the sale proceeds to reducing State debt is especially welcome."
Australian Hotels Association WA chief executive also praised the state government.
“The reforms acknowledge recent shifts in technology and the subsequent need to deliver support to WA TAB operators and by extension, the state’s racing industry,” he said.
“The AHA congratulates the state government on the constructive way it has engaged with industry and stakeholders throughout this comprehensive consultation process.”
