Net wagering revenue
The tax payable on a wagering and betting entity’s net wagering revenue is calculated as follows:
- For entities that take wagers and bets directly from customers – 15% of the net amount of revenue earned (total amount of all bets minus winnings paid).
- For entities that facilitate wagers and bets (i.e. operating a totalisator, a betting exchange or acting as an agent) – 15% of the commissions earned from facilitating the wagering and betting activity.
Entities that directly take wagers and bets and also facilitate wagering and betting activity combine their revenue from each source to determine their total net wagering revenue.
| Month | Net wagering revenue for month | Net wagering revenue for year to date | Tax-free balance (of $1,000,000) | Taxable net wagering revenue for month | Tax payable |
|---|---|---|---|---|---|
| July | $300,000 | $300,000 | $700,000 | Nil | Nil |
| August | $200,000 | $500,000 | $500,000 | Nil | Nil |
| September | $400,000 | $900,000 | $100,000 | Nil | Nil |
| October | $600,000 | $1,500,000 | Nil | $500,000 | $75,000 |
| November | $300,000 | $1,800,000 | Nil | $300,000 | $45,000 |
| December | $200,000 | $2,000,000 | Nil | $200,000 | $30,000 |
| Total | $150,000 |
| Month | Net wagering revenue for month | Net wagering revenue for year to date | Tax-free balance (of $1,000,000) | Taxable net wagering revenue for month | Tax payable |
|---|---|---|---|---|---|
| July | $300,000 | $300,000 | $700,000 | Nil | Nil |
| August | –$100,000 | $200,000 | $800,000 | Nil | Nil |
| September | $1,200,000 | $1,400,000 | Nil | $400,000 | $60,000 |
| October | –$50,000 | $1,350,000 | Nil | Nil | Nil |
| November | $200,000 | $1,550,000 | Nil | $200,000 – $50,000 = $150,000 | $22,500 |
| December | $300,000 | $1,850,000 | Nil | $300,000 | $45,000 |
| Total | $127,500 |
Net wagering revenue can depend on the type of bet or entity.
Fixed odds bets
Net wagering revenue equals:
- The total amount of all bets (including free bets) placed with the entity during the relevant period by people located in Victoria at the time of making the bets.
- Plus the total amount of any bet-backs received from another entity located in Victoria.
- Minus the total amount of all winnings paid or payable during the relevant period to people located in Victoria at the time of making the bets (excluding the amount of any bet-backs made by the entity in respect of those bets with another entity).
Pari-mutuel bets (when an entity operates a totalisator or acts as an agent)
Net wagering revenue equals:
- The total commissions received by the entity for accepting bets made, or providing a service through which bets are made, by people located in Victoria at the time of making the bets or using the service.
- Plus the total amount retained by the entity because of rounding fractions in the calculation of winnings paid out in respect of the bets.
Betting exchanges
Net wagering revenue equals the total commissions received by the entity in relation to bets made through the betting exchange by people located in Victoria at the time of making the bets.
Entities that take direct bets and facilitate wagering and betting activity
Entities that take bets directly and also facilitate wagering and betting activity will combine their revenue from each source to determine their total net wagering revenue.
Free bets
Free bets made with a wagering and betting entity are included as bets accepted in calculating net wagering revenue, with no reduction in net wagering revenue allowed for awarding or providing free bets to customers.
Where a free bet is offered in conjunction with customer consideration, the face value of the free bet is the total bet amount.
Calculating net wagering revenue inclusive of free bets
Net wagering revenue = bets received (including face value of free bets) – winnings paid or payable (including net winnings in relation to free bets).
Example 3
ABC Pty Ltd offers a free bet with a face value of $10 to a customer. The customer places a $30 bet ($20 of their own money and the $10 free bet). This entire bet is considered a free bet with a face value of $30.
Calculating net wagering revenue where free bets are offered
Example 4
ABC Pty Ltd gives a customer a free bet with a face value of $25. The customer places a bet with odds of 3.4 to win. The bet wins and returns gross winnings of $85.
The effect of the net wagering revenue for the above bet is calculated as follows:
- Step 1 – calculate the net winnings for a free bet
- Net winnings for a free bet = gross winnings for a free bet – face value of the free bet
- Net winnings: $85 – $25 = $60
- Step 2 – calculate the net wagering revenue
- Net wagering revenue = bets received (including face value of free bets) – winnings paid or payable (including net winnings in relation to free bets)
- Net wagering revenue: $25 – $60 = –$35
Example 5
ABC Pty Ltd takes the following bets from Victorian players for the month of July:
- Fixed-odds bets: $200,000
- Free bets: $50,000
- Winnings in relation to ordinary bets: $100,000
- Face value of winning free bets: $10,000
- Gross winnings in relation to free bets: $25,000
Net wagering revenue is calculated as follows:
- Step 1 – calculate the net winnings for free bets
- Net winnings for a free bet = gross winnings for a free bet – face value of the free bet
- Net winnings: $25,000 – $10,000 = $15,000
- Step 2 – calculate the net wagering revenue
- Net wagering revenue = bets received (including face value of free bets) – winnings paid or payable (including net winnings in relation to free bets)
- Bets received: $200,000 + $50,000 = $250,000
- Winnings: $100,000 + $15,000 = $115,000
- Net wagering revenue: $250,000 – $115,000 = $135,000
Bet-backs
Bet-backs are treated as any ordinary bet received.
Example 6
A customer makes a $10 bet with Bookmaker 1 (located in Victoria), who lays off the bet with Bookmaker 2. The bet wins and returns $12 to Bookmaker 1, who must also return $12 to the customer.
Bookmaker 1:
- $10 bet from the customer is included as net wagering revenue.
- $12 paid in winnings to the customer is included in net wagering revenue.
- Net $2 return from the bet-back ($12 winnings minus $10 lay-off bet) is not included in net wagering revenue.
- Bookmaker 1’s net wagering revenue is –$2.
Bookmaker 2:
- $10 bet-back received is included in net wagering revenue.
- $12 return paid out on the bet-back received is included in net wagering revenue.
- Bookmaker 2’s net wagering revenue is –$2.
