Treasurer Jim Chalmers has signalled a government clampdown on betting companies’ use of tax breaks to develop new poker machines and gaming apps, saying he considers the practice “problematic”.
As the government works on a package of betting advertising reforms to help curb problem gambling, Chalmers this month also came under pressure from backbench MP Mike Freelander to review the R&D tax credits system.
Asked at a press conference on Monday whether subsidising poker machine developments through the incentive was an appropriate use of taxpayer money, Chalmers said: “I have a personal view about that, which is that it’s problematic.
Australia’s gambling and poker machine companies are big beneficiaries of R&D tax credits.Credit: Jason South
“That’s the sort of issue that warrants our attention. It will warrant, and it will receive, our attention.”
Companies can claim the cost of carrying out research and technological breakthroughs that lead to improvements in their core business, reducing the amount of tax they pay under the scheme that is designed to foster Australian innovation.
Australian Tax Office data this month showed Australia’s gambling and poker machine companies were beneficiaries of the scheme, claiming more than $90 million in research and development expenses in 2021-22.
ASX-listed Tabcorp had an R&D budget of nearly $40 million, while poker machine giant Aristocrat’s was $22 million, slot maker Ainsworth Game Technology’s was $15 million and bookmaker PointsBet was $10 million.
An Aristocrat spokesperson said the company applied for R&D tax credits within strict terms established by the government.
The company typically spent its R&D budget on developing new machines and games, the spokesperson said, including cabinets and electronics, innovations to support new system applications, and on materials recovery and recycling.
“The tax credits we are entitled to claim in Australia are small relative to the overall time and cost Aristocrat incurs in R&D activity generally,” the spokesperson said.
“However, they do help encourage investment in R&D jobs, skills and services in Australia rather than overseas, which is what the policy is designed to do.”
Gaming Technologies Association (GTA) chief executive Jinesh Patel said he was surprised by Chalmers’ comments and was seeking an early opportunity to discuss the R&D tax incentives with the government.
“No alleged ‘loophole’ is being exploited,” he said, noting all applicants for R&D tax credits were independently assessed by the Tax Office and AusIndustry.
“The program was established by the Gillard government in 2011 with the purpose of encouraging Australian businesses to invest R&D dollars locally, to create jobs and an R&D skills base, rather than investing offshore. The gaming manufacturing sector has done just that.”
Patel also said the association and its members were working with all governments and regulators on harm-minimisation initiatives.
“Some technologies currently being trialled in licensed venues have been developed through R&D dollars invested by GTA members,” he said.
“All Australian industries should continue to be given the same opportunity … without arbitrary exclusions.”
Will Richards, co-founder of tech start-up newsletter Overnight Success, told this masthead last week that Australia’s R&D tax offset was one of the most generous programs of its type globally.
“If I were to redesign the system, I would want to ensure the development of gambling and wagering technology to be removed from eligibility, especially when they’re profitable businesses,” he said.
Tabcorp, Ainsworth Game Technology and PointsBet were contacted for comment.
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