While the Australian Government’s mid-year economic and fiscal outlook (MYEFO) seldom flags anything new to the market, lurking within yesterday afternoon’s mid-year budget papers was a missive that appears to have taken two sectors by complete surprise.
As of 1 July 2025, the Albanese Government has decided to exclude tobacco and gambling-related activities from receiving Research and Development (R&D) tax incentives. While these juicy concessions help companies grow and innovate, the government made it clear within its MYEFO budget papers that its sees R&D for gambling as a two-edged sword.
MYEFO budget papers were unambiguous in their sentiment towards these sectors when they stated that gambling can “exacerbate addiction and associated harms, while activities related to tobacco can increase health risks”.
“Excluding these activities will ensure that the government is not subsidising this type of research and development,” the papers said.
According to recent Australian Taxation Office figures, gambling companies receive around $90 million in tax concessions in a single year.
High level casualties of the government’s decision to axe R&D for the gambling sector include ASX-listed Tabcorp (ASX: TAB), which in 2021-22 had a research and development budget ($39.5 million). Then there is poker machine giant Aristocrat (ASX: ALL) $22.1 million, rival slot maker Ainsworth Game Technology (ASX: AIG) $15 million, plus bookmaker PointsBet (ASX: PBH) $9.95 million.
None too pleased by the government's decision, the gambling industry lobby group was quick to accuse it of making “moral judgement”.
Kai Cantwell, chief executive of Responsible Wagering Australia, said it was poor form that his industry had not been consulted by the government on this decision.
“The Government’s announcement sets a dangerous precedent for how tax policy could be misused in the future – today it’s gambling companies being targeted, but any industry could be next. This cherry-picking approach undermines the neutrality of the tax system and leaves businesses guessing who will be targeted next,” Cantwell said.
Cantwell also inferred that sectors like fast food, alcohol, fossil fuels or any other industry that face similar criticisms were now at risk of future political horse-trading.