Gaming firms slapped with higher duties

But impact depends on how operators manage marketing strategies

Source: Star Biz

PETALING JAYA: Gaming companies have been hit with higher betting duties which will apply to draws held from June 2010.

In separate filings with Bursa Malaysia yesterday, Multi-Purpose Holdings Bhd (MPHB), Tanjong plc and Berjaya Sports Toto Bhd (BToto) said their subsidiaries had been notified by the Finance Ministry on June 29 that betting duties had been raised to 8% from 6% previously.

The respective subsidiaries are Magnum Corp Sdn Bhd, Pan Malaysian Pools Sdn Bhd and Sports Toto Malaysia Sdn Bhd.

Betting duties are based on gross sales proceeds after deducting gaming tax of 8%.

Tanjong said with the revision, the effective rate of betting duties would be increased to 7.36% from 5.52% previously.

A file picture shows a Tanjong plc’s gaming business outlet. Multi-Purpose Holdings, Tanjong and BToto say the Government has notified their subsidiaries that betting duties have been rai sed to 8% from 6%.

“This revision is not expected to have any material impact on the results of Tanjong group.”

Despite the duty hike, BToto said it was optimistic that the group’s operating performance for the financial year ending April 30, 2011 would be good.

This is barring any other unforeseen circumstances and taking into account the launch of its new game, Supreme Toto 6/58, in March.

Nevertheless, a research head with a local stockbroking firm said the rise in betting duties would have an initial impact on gaming companies’ earnings.

“To compensate for the hike, these companies will have to improve revenue and bottomline by attracting more people to gamble. It all depends on how they manage their marketing strategies,” he said.

An analyst with a bank-backed research house remains positive about the gaming sector.

He believes more people will continue to be attracted to numbers-forecast activities and casino games in the hope of winning high money prizes, especially when times are bad.

This bodes well for gaming companies, as they can expect better ticket sales.

“Hence, earnings of these gaming companies are expected to remain intact despite the hike,” the analyst said.

However, shares of MPHB, Tanjong and BToto were in the red yesterday prior to the announcement.

MPHB lost 8 sen to close at RM1.96 with 3.78 million shares traded, Tanjong fell 14 sen to RM17.30 with 1.3 million shares changing hands and BToto slipped 5 sen to RM4.22 with 16.6 million shares transacted.