DAVY VIEW

As part of the New South Wales (NSW) state budget, it was announced overnight that there will be an increase in the point of consumption tax (POCT) from 10% to 15%. It follows the recent similar announcement that Queensland expects to increase its gambling POCT rate (and calculation methodology). While such changes will impact near-term earnings, the continued creep in tax rates is an inevitable characteristic of the industry evolution. We also view a more expensive operating environment as a catalyst for additional market share concentration among the more scaled operators – just as we saw with the country-wide introduction of POCTs in 2019. When coupled with a still strong structural growth backdrop, the medium-term earnings opportunity in Australia remains attractive for the likes of Flutter and Entain.