Gambling Taxation in Australia: Following Malta’s Experience

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A dynamic change is reshaping Australia’s traditional gambling taxation landscape. At the forefront of this transformation are Australian players who use Australia-based and offshore online casinos.

Their government and state authorities are looking for the best ways to benefit from players’ activity, protect them from bad operators and problem gambling, and regulate the thriving market.

Sydney Casinos Gambling

Before we go into detail and discuss taxation, let’s mention that the Interactive Gambling Act of 2001 was the first legal act dealing with online gambling in this country. Of course, gambling has been part of Australian history since the earliest ages, and today, their online gambling market is worth around $4.5 billion, with an annual growth rate of about 7%.

We should also note that not all Australian territories have the same laws regarding online gambling and taxation.

Malta, a small European island country, is considered one of the global leaders in the online gambling scene, and compared to Australia, they adopted a law related to online gambling a bit later – in 2004.

Still, this more detailed law didn’t leave much space for dilemmas as dozens of online gambling companies have headquarters in Malta, and it has proven to be liberal and proactive regarding this activity. This being an export industry primarily, the Maltese taxation approach is more progressive compared to Australia.

Obvious Discrepancies in Taxation Imposes Need for Change

When discussing taxation laws related to gambling, we should consider two aspects. First, we should consider the players.

In most cases, winnings from gambling activities in land-based or online casinos in Australia are not taxed. People getting money from something considered a recreational activity or hobby like gambling are not taxed. This is a fair approach and a favorable one for gamblers.

On the other hand, the gambling operators licensed and operating in Australia are taxed. Still, this taxation depends on the specific state where they are active.

Another interesting thing is that the taxes also depend on the type of game and where they are found (physically or online).

Let’s take New South Wales, Australia’s most populous state, as an example.

Casinos with electronic game machines in hotels pay up to 50% of quarterly player loss, while the ones in clubs pay up to 28.05%. On the other hand, land-based and online casino pay between 16.41% and 38.91%. Keno and table games pay up to 14.91% of player loss or up to 38,91% of gross revenue, respectively.

Malta Gambling Taxation

As far as Maltese players are concerned, they are exempt from taxing their winnings. The only exception is the situation in which players whose primary source of income is gambling. They have to pay a 5% tax on their winnings.

The operator taxation is pretty detailed. Like Australian operators, Malta-based gambling sites must pay a license fee of around $22.000 annually. They may have to pay more after the first year based on their revenue.

Additionally, online casinos in Malta pay 5% of the income from players based in Malta. They don’t have to pay anything for their earnings from international customers.

What Different Steps Did Maltese Lawmakers Take?

If we take a close look at Maltese taxation solutions, we will notice that there’s a high level of regulation. Beside the compliance contribution, we have the gaming tax regulated with the Gaming Tax Regulations and the personal income tax for specific categories of players. Still, this makes Malta one of the most desired destinations for operators looking to move their business operations.

Heavy regulation doesn’t necessarily mean the market is restricted and not liberal. On the contrary, there are strict rules, but they are easy to understand, and every company knows what to expect.

Most of the government’s revenue is from annual licenses, but the income from Malta-based players (as noted before) contributes, too. As mentioned, there’s a minimum cost for the yearly license of around $22,000, regardless of the operator’s income. However, if they pass specific thresholds (four thresholds), they can expect a so-called Compliance Contribution that can reach up to $450,000.

This looks to be a fair solution as it charges gambling companies progressively while the maximum contribution is limited and not drastically different than the previous level. This way, online casinos and operators don’t feel punished for making more money.

This is How “Down Under” Can Go Up

Australia definitely needs more regulation in this area, and we’re not talking only about taxation of gambling activities. The solutions regarding players are more than fair because players don’t have to pay anything for their winnings except in specific situations where gamblers act as professionals.

However, there’s more room for improvement regarding online gambling operators, and Australia is not yet ready to liberalize its market by making obtaining licenses easier for those interested in entering this market.

In general, offshore casinos can’t get licenses, but they are still tolerated, which doesn’t make sense. Australian players spend a lot of money on these sites, and the country doesn’t benefit from these transactions.

They are looking for ways to attract new operators from other countries and try to become a hub for these activities in this part of the world by implementing some of the solutions available in Malta.

One big obstacle that should be considered during this process is the different legislation in the states. State authorities must look for uniform solutions together with the federal government, which needs some political slaloming.

A Lot to Learn Still, Even from Others

By offering a clear pathway to obtain licenses, Australia could attract operators worldwide, boosting the local economy and providing consumers with safer and more reliable options for online casino for real money. Implementing measures such as progressive licensing fees, where contributions are based on revenue thresholds, could further incentivize operators to thrive and contribute somewhat to the tax system.

While Malta is an exemplar, other jurisdictions offer valuable insights that Australia and Malta could consider adopting or adapting.

The United Kingdom, for instance, has established a robust system that prioritizes consumer protection and industry integrity through stringent licensing requirements and responsible gambling measures.

We must mention the Gambling Act 2005, which is the primary legislation that manages the different types of gambling in the United Kingdom and outlines the regulatory framework for gambling operators. Then there is the Remote Gambling Duty that regulates the tax applied to foreign operators offering gambling services in the UK, which is something that Australia should consider.

Curacao Gambling Taxation

Similarly, Curacao’s reputation as a hub for online gambling demonstrates the potential benefits of fostering an environment that attracts international operators while maintaining regulatory control. This is especially true for crypto-friendly casinos.

Curacao provides various types of licenses, including Master Licenses and Sub-Licenses. They even have several authorities that grant licenses even though starting from September 2023 they will unite into one regulatory body.

Australia should analyze both options since it’s a federal state.

Enhancing gambling taxation in Australia requires collaboration and harmonization among federal and state authorities. Achieving a unified vision will necessitate addressing the intricacies of diverse legislative structures and priorities. Introducing changes incrementally, starting with a pilot in one state and expanding across the country, could provide valuable insights into the effectiveness of proposed modifications.