Point of Consumption FAQ’s

In response to various Australian State/Territory Governments introducing Point of Consumption (POC) taxes on wagering revenue, we hope the following FAQ’s section covers any questions you may have.


What is Point of Consumption Tax (POC)?

A POC is a new tax being introduced by Australian State/Territory Governments that seeks to levy a consumption tax on all bets placed with any Australian licensed wagering operator by residents of their State or Territory. “Point of Consumption” refers to the location of the customer. This is different from “Point of Supply” which is where Betfair is licenced, which is the Northern Territory and where we pay a tax for our licence.


Does Betfair already pay a Consumption tax in the form of GST?

Yes.

All Australian licensed wagering operators including Betfair remit GST on the net margin they receive from gambling supplies provided to Australian consumers.  GST was introduced in Australia in 2000 as an indirect tax reform aimed to remove tax barriers between states and create a single market. GST is collected by the Australian federal government and distributed to the states and territories, however the formula for distribution is not based on the actual point of consumption.


Why are Australian State/Territory Governments introducing a POC?

We understand each state government may have different reasons, however the following provides a guide on what these reasons may relate to.  We encourage customers to contact their local members and ask directly.

1) The United Kingdom (UK) POC model

It’s understood the State/Territory governments have sought to copy the United Kingdom (UK) POC model, however that model was introduced in an environment where most wagering operators were located off-shore and did not contribute any taxes in the form of licence fees or GST (VAT) to the UK government or product fees to UK racing/sports bodies.  The UK model now has these operators paying a POC to the UK government and a levy to UK thoroughbred racing via the Horserace Betting Levy Board, but this is still far less onerous than the heavy tax/fee regime in Australia for on-shore operators which includes:

  1. Wagering licence fees;
  2. Wagering taxes;
  3. GST;
  4. Product Fees; and now
  5. POC

Comparison of taxes/fees paid by Betfair in Australia (by State/Territory) on Australian racing compared to off-shore wagering operators in the UK on UK racing:

 

2) The Reduction in Wagering Taxes Received From State Licensed TAB Operators

Currently, state governments charge wagering taxes to the licensed TAB operator in their State.  The wagering taxes the State Governments charge to the TAB operator in each State allows the TAB operator (Tabcorp) to enjoy ‘retail’ exclusivity as well as the exclusive pari-mutuel licence.

Due to the changing landscape where customers can bet freely online with any wagering operator and not in a retail outlet, wagering taxes from state-based TAB operators have been in decline and will continue to decline, which impacts state government revenues.  State governments are seeking to address the changing nature in how their residents bet.


What is the status of POC by State?

State Status
South Australia The South Australian Government introduced a 15% POC on net wagering revenue on 1 July 2017.
Queensland The Queensland Government is introducing a 15% POC on net wagering revenue on 1 October 2018.
ACT The ACT Government is introducing a 15% POC on net wagering revenue on 1 January 2019.
Western Australia The WA Government is introducing a 15% POC on net wagering revenue on 1 January 2019.
New South Wales The NSW Government is introducing a 10% POC on net wagering revenue on 1 January 2019.
Victoria The Victorian Government is introducing an 8% POC on net wagering revenue on 1 January 2019.
Tasmania The Tasmanian Government has not made any representations on a potential POC model at this stage.
Northern Territory The Northern Territory Government has not made any representations on a potential POC model at this stage.

What is the impact of a POC on Betfair?

Currently Betfair pays 51% of its wagering revenues in fees and taxes, increasing to 66% in States/Territories where the POC rate is 15%.

Nationally, the blended POC rate is 11%, representing a 21.5% increase in fees and taxes paid on top of an already high cost base, and leaves little margin for operating costs, consumer protection and capital expenditure.


What is Betfair doing and what impact will it have on customers?

In response to the 15% of wagering revenue POC introduced in South Australia, the decision was made to alter Betfair’s Terms and Conditions so that South Australian customers would no longer be eligible to earn Betfair Points (and thus would not be eligible to receive Betfair’s Discount Rate).

Over 12 months on, and with the majority of Australian States/Territories introducing an incremental POC within the next six months, Betfair has worked hard to find an alternative solution to removing our customers access to the Betfair Discount Rate.

Recognising that our customers are not responsible for the decisions made by their State/Territory Governments, we’ve introduced two changes that we believe will keep the betting exchange vibrant and provide the fairest outcome to all our customers.  In addition, we’re pleased to announce that South Australian customers will once again be eligible to earn a discount as outlined below.

The changes are:

The points table for earning a Discount Rate has been altered from 2% increments to 10% increments. The new table is as follows:

Betfair Points  
From To Discount Rate
6,999 0%
7,000 16,999 10%
17,000 28,999 20%
29,000 48,999 30%
49,000 79,999 40%
80,000 149,999 50%
150,000 60%
  • A customer’s address will determine the maximum discount rate they are eligible to receive. The maximum discount rates have been set taking into account the POC tax charged in each State/Territory as follows:
Resident of POC tax rate on wagering revenue Maximum Discount Rate Date Applicable
South Australia 15% 40% From 1 October 2018
Queensland 15% 40% From 1 October 2018
Australian Capital Territory 15% 40% From 1 January 2019*
Western Australia 15% 40% From 1 January 2019*
New South Wales 10% 50% From 1 January 2019*
Victoria 8% 50% From 1 January 2019*
Tasmania 0% 60% Current
Northern Territory 0% 60% Current
New Zealand 0% 60% Current

Why is Betfair changing the ladder for residents of States/Territories on 1 October 2018, when the POC rates don’t start until 1 January 2019?

Betfair works hard to educate State/Territory politicians as to the uniqueness of the betting exchange and the importance of our punters to the broader wagering industry.  We will continue to work hard to provide our customers the best possible prices while remaining a viable business.

The new ladder was the best solution to ensure all customers are treated equally, to ensure the betting exchange remains vibrant, and does not disadvantage a customer based on where they live.  This is evident by Betfair putting in place a solution that now allows South Australian customers to be eligible for the Discount Rate again.

Unfortunately, the ladder change by itself is not enough to deal with the significant incremental tax, and therefore Betfair has made the decision to introduce caps on the Discount Rate by State/Territory.


Why is Betfair changing the ladder for residents of Tasmania or the Northern Territory when there is no POC being charged in either locations?

Betfair works hard to educate State/Territory politicians as to the uniqueness of the betting exchange and the importance of our punters to the broader wagering industry.  We will continue to work hard to provide our customers the best possible prices while remaining a viable business.

The new ladder was the best solution to ensure all customers are treated equally, to ensure the betting exchange remains vibrant, and does not disadvantage a customer based on where they live.  This is evident by Betfair putting in place a solution that now allows South Australian customers to be eligible for the Discount Rate again.

Unfortunately, the ladder change by itself is not enough to deal with the significant incremental tax, and therefore Betfair has made the decision to introduce caps on the Discount Rate by State/Territory.


What Betfair charges are impacted by the Discount Rate change?

The following is a guide on what charges will be impacted and how.

Charge Type Impacted By The Charge? Explanation
Commision Yes The increase in increments from 2% to 10% may result in customers paying a higher Commission (Market Base Rate less Discount Rate) as their Discount Rate will be lower. Each customer will be impacted differently based on their individual activity and results.
Premium Charge Indirectly If a customer pays higher Commission than previously, it may result in paying lower Premium Charge. Each customer will be impacted differently based on their individual activity and results.
Turnover Charge Indirectly Like Premium Charge, if a customer pays higher Commission than previously, it may result in paying lower Turnover Charge. Each customer will be impacted differently based on their individual activity and results.

Where can I view my current Betfair Points balance?

 To view your current Betfair Points balance, log in at www.betfair.com.au, head to My Account, and select My Betfair Account from the drop down menu.

Amended Customer Terms and Conditions - Effective 1 October 2018

By clicking on the link below, you will be able to see the amendments to the Customer Terms and Conditions which will come into effect on 1 October 2018.

Download Here