State governments in Australia are coming in for some criticism by gaming companies. SkyCity Entertainment has said there is little point in investing in its Adelaide casino because of the stance taken by the government of South Australia. Tatts Group says a bid for a wagering licence in Victoria would need to be very profitable because of the state government being prepared to shift the ground rules.

SkyCity, which has just been assigned a BBB- investment grade rating by international ratings agency Standard & Poor's, says that its casino in Adelaide is the highest-taxed, monitored and regulated casino in Australia. The company has not been given exemption from anti-smoking laws in order to boost its high roller and international visitor revenues, unlike other casinos in other states.

In Victoria there is talk of a possible merger of Tabcorp and Tatts Group to strengthen the position of the companies in an increasingly competitive market. TATTS Group chief executive Dick McIlwain has said the case for a merger had been bolstered by recent Victorian Government decisions, including ending the poker machine duopoly beyond 2012 and allowing corporate and 24-hour bookmakers. Tabcorp and Tatts have signalled potential legal action to pursue what they say is an entitlement to $600 million each compensation as a result of the restructure.

"We believe any fair-minded person would see it that way given that that compensation payment was negotiated in the early 1990s in return for an additional tax payment," McIlwain said. "So, we think, if any fair-minded person could see it that way, the court might see it that way." Under the new venue-based model, no single operator will be able to own more than 35% of the machines in pubs when Tabcorp and Tatts lose duopoly control over the 27,500 poker machines operating in pubs and clubs outside Crown Casino. (E-07.14.08)

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