The success of a new tax on wagering in South Australia will be watched closely by the Andrews government amid estimates it could raise up to $150 million if implemented in Victoria.
From July, South Australia will impose a 15 per cent point of consumption tax on punter losses made in the state. The policy has been resisted by online bookmakers such as Sportsbet, Ladbrokes and Bet365 which last year joined forces in a campaign to "stop the punters tax".
A Credit Suisse analysis of the potential impact of the new tax regime on gambling giant Tabcorp, published last week, shows that if implemented in Victoria it could raise about $150 million.
In South Australia it is estimated the tax would raise $30 million.
Currently Tabcorp, Tatts Group and WA racing pay nearly 100 per cent of Australia's wagering taxes, about $289 million through their retail betting licences, the TAB in Victoria, while commanding 71 per cent market share.
"Corporate bookmakers licensed in the NT pay, in aggregate, less than $10 million in state taxes," the Credit Suisse report says.
The analysis suggested if Victoria imposed just a 10 per cent tax rate on the $1.4 billion of wagering revenue it could raise $140 million, this would include a $30 million cost increase to Tabcorp with the rest of the tax burden placed on corporate bookies.
If the policy was implemented around Australia and returned wagering tax levels to previous levels "it would just about wipe out all bookmakers' EBITDA (earnings before interest, taxation, depreciation and amortisation) in Australia," according to Credit Suisse.
Last year UBS predicted that should more states adopt the tax it would hit corporate bookmakers harder than Tatts and Tabcorp, which would affect profits and marketing budgets.
Bookmakers are spending millions of dollars on advertising in an effort to grab market share.
The Credit Suisse analysis shows that when a point of consumption was implemented in the UK in 2014 it did reduce profits of some bookies but did not send any into the red.
Industry sources in Australia highlight how corporate bookies are already paying product fees to sport they offer markets on, unlike the UK.
Tabcorp chief executive David Attenborough recently told shareholders that his company would encourage "other state and territory governments to consider similar models".
The tax in South Australia has potential legal challenges with most corporate bookies based in the Northern Territory and some argument about what constitutes the point of consumption.
The Victorian government will monitor the tax's impact in South Australia on the state budget and the gambling sector, but a spokesman for Treasurer Tim Pallas said the government had no current plans to implement the tax.