The ACT government expected a "windfall" from the highest tax rate in Australia, but instead it's continued to cost its coffers millions in revenue.
Responsible Wagering Australia chief executive Kai Cantwell warned the government about the 25 per cent betting operations tax driving Australians to "illegal offshore operators".
When the government ramped up the tax by five per cent in 2023, it estimated revenue would jump to $32 million - an increase of $10 million.
But it actually led to a $600,000 fall in revenue to $21.7 million.
Revised estimates saw the government raise the expected $23.7 million in the past financial year - up $1.7 million on last year - but that was still a massive $13.2 million below what was expected when it first raised the tax, also known as a point-of-consumption tax.
After initially predicting massive growth in revenue from the tax, the government's now saying growth will align "broadly with household income growth" over the next four years.
Despite its PoC tax being the highest in Australia, the ACT's the only jurisdiction where racing doesn't receive a share of it - anywhere from 20-80 per cent is returned to the industry depending on the state.
Instead, Canberra's racing industry receives an annual grant through a memorandum of understanding, which was estimated to be $8.5 million this financial year.
Cantwell warned excessive taxation could reduce expected revenue.
"The ACT government increased its tax rate expecting a revenue windfall," he said.
"Instead, the budget papers show revenue remains well below expectations and future forecasts have been revised down yet again."
An RWA report estimated Australians were betting about $4 billion with illegal offshore options.
The federal government announced in April it will crackdown on illegal offshore gambling providers as part of a range of measures, a move which Cantwell welcomed.
"Illegal offshore gambling continues to surge to almost $4 billion and is forecast to reach $5 billion by 2029," he said.
"People in the ACT have not stopped gambling.
"What we're seeing is more consumers choosing illegal offshore operators over licensed Australian providers.
"Price matters. Illegal offshore operators can offer better prices because they don't pay tax, comply with Australian regulations or invest in safer gambling protections.
"The ACT's experience shows that if governments want to protect consumers and preserve tax revenue, they need policies that strengthen the regulated market and crack down on illegal offshore gambling, not tax settings that undermine the competitiveness of licensed Australian operators."
