Tabcorp Responds To Racing Queensland and Prepares Vigorous Defense in UBET Tax Issue

Tabcorp Responds To Racing Queensland and Prepares Vigorous Defense in UBET Tax Issue

Australian operator, Tabcorp, is harshly rejecting claims that its UBET subsidiary wasn’t entitled to withhold AU$11m (£6.2m/€6.9m/US$7.7m) following the introduction of the state’s point of consumption tax.

Racing Queensland is seeking compensation for alleged underpayment of taxes by this operator, as a filing with the Supreme Court of Queensland states.

The initial claim was filed back in June, but the details regarding the issue came to light only recently. With room for doubt, the horseracing organization decided to pursue legal action.

Racing Queensland Claim Against the Brand

Racing Queensland is requesting UBET to pay the tax under two contractual arrangements:

  • The Queensland Product and Program Deed (QPP) between UBET and Racing Queensland. This will set out the long-term commercial relationship between the parties, including fees payable by UBET.
  • Deed of Understanding (DOU) between Tabcorp and Racing Queensland, including minimum financial commitments UBET, was to make to Racing Queensland. This action will set out annual top-up payments for the calendar years 2018 to 2020 should UBET not meet these commitments.

Rejecting accusations and Preparing Vigorous Defense

Tabcorp has harshly rejected Racing Queensland’s claims, saying it “intends to defend its position vigorously.” The company is also in the process of preparing its formal defense to the claim.

Regarding Queensland Product and Program Deed, the brand believes UBET is entitled to reduce or offset the fees paid to Racing Queensland by the amount of the increase in wagering tax paid…

… as a result of the 15% net betting revenue tax introduced from 1st October 2018.

However…

… Racing Queensland believes that while UBET is entitled to reduce or offset its contribution, it can only do so by a smaller amount.

“The difference in view relates, in part, to how the ‘increase’ in tax is calculated. Rather than referring to the actual increase in wagering tax paid by UBET, Racing Queensland’s position appears, based on the claim, to be that it is only the increase attributable to the change in specified percentages that are relevant, being from 14% to 15% for totalizator wagering and 10% to 15% for fixed-odds wagering.

Racing Queensland’s position does not appear to reflect other differences between the wagering tax regimes, including that the [previous tax regime] had a deduction for [goods and services tax] that is not contained in the point of consumption tax,” Tabcorp explained.

The operator views Queensland’s stance as being that its subsidiary should receive no reduction or offset to reflect the increase in tax on sports wagering revenue.

Once the increase in tax is calculated, UBET is only permitted to reduce or offset fees paid to Racing Queensland by a sum equal to 39% of the increase.

“Accordingly, Racing Queensland alleges that, under its reading of the QPP, UBET has underpaid it by an amount of approximately $11m (inclusive of GST) for the period October to December 2018.

The potential impact of the alleged underpayment is then extended across the term of the QPP until 2044, although the precise impact is variable and dependent on several factors, including future trading performance,”

As UBET believes that it is entitled to be ‘made whole’ in respect of the impact of the [point of consumption tax] for the duration of the QPP, it does not consider that there has been an underpayment”, said the leading gaming operator in Australia.

Also Defensive about Breach of the DOU

In the matter, the Deed of Understanding, the operator is stating that based on the claim, Queensland appears to believe that the payment calculations should not factor in any reductions or mitigation measures…

… to factor in the impact of the point of consumption tax.

If that is indeed the case, the brand assumes that UBET would be required to pay the full, increased wagering tax increase for the period…

… irrespective of the outcome on the Queensland Product and Program Deed.

As such, Tabcorp concludes that the DOU doesn’t require any such repayment.

Source:

“Tabcorp hits back at Racing Queensland in UBET tax row”, igamingbusiness.com, July 24, 2019.

Leave a Reply

Your email address will not be published. Required fields are marked *

*
*
*