Australia to Exclude Gambling Industry from R&D Tax Incentives
Starting July 2025, Australian gambling companies will no longer qualify for the nation’s Research and Development (R&D) tax incentive. The move is part of a broader effort by the government to address societal harms and improve fiscal responsibility while aligning public funding with projects that deliver clear benefits.
Gambling Industry Cut from R&D Incentive Program
The Australian government has announced that businesses in the gambling sector will no longer be eligible for R&D tax incentives. This decision, included in the Mid-Year Economic and Fiscal Outlook (MYEFO) papers, reflects a commitment to prevent public funds from supporting industries linked to addiction and other societal harms.
The exclusion, which also applies to the tobacco industry, will come into effect on July 1, 2025. According to the MYEFO report, R&D in gambling was deemed a potential driver of addiction and associated health risks. By removing gambling and tobacco-related activities from eligibility, the government aims to ensure that public subsidies align with societal well-being and public health priorities.
Substantial Claims by Gambling Companies
Recent data from the Australian Tax Office (ATO) revealed that gambling companies claimed nearly A$90 million in R&D tax credits during the 2021/22 financial year. Notable beneficiaries included Tabcorp (A$39.5 million), Aristocrat (A$22.2 million), Ainsworth Game Technology (A$15 million), and PointsBet (A$9.95 million).
This policy shift comes amid broader efforts to address Australia’s federal budget deficit, projected at A$27 billion, and national debt, expected to reach A$1 trillion by 2025/26. Tightening eligibility for R&D tax credits is seen as a necessary step toward fiscal responsibility and ensuring that public funds are directed to projects with clear societal benefits.
Advocates and Critics Respond
The decision has been welcomed by advocacy groups, which have long criticized the use of public funds to support industries associated with gambling addiction. These groups argue that the policy change aligns with broader efforts to mitigate gambling-related harm and prioritize public health.
However, the decision also raises questions within the gambling industry about the balance between fostering innovation and addressing social costs. Critics within the sector have pointed out that R&D initiatives can drive technological advancements, though their broader impact remains a point of contention.
As part of its push for greater accountability, the government will enhance transparency around R&D tax claims. The ATO will now publish annual data on R&D tax credit usage, starting two years after each relevant financial year. The most recent report for 2021/22 offered a detailed breakdown of claims, revealing the scale of benefits enjoyed by gambling companies under the program.
