The Alliance for Gambling Reform today expressed dismay with the Andrews Government for ending the long-standing 50-50 pokies split between pubs and clubs and instead allocating 414 lapsed club entitlements to the more aggressive pubs sector.
Alliance director and spokesman Tim Costello today revealed the Ministerial order by Gaming Minister Marlene Kairouz was gazetted on July 9 but the government did not issue a media release announcing the controversial move.
Under the orders, once the 27,372 new 20 year pokies licences come into effect on August 16, 2022, clubs will only hold 48.49% of statewide machines, whereas the hotels sector, led by the world’s largest suburban operator of pokies, Woolworths, will have 51.51%.
“The Government knows that pokies pubs are significantly more lucrative than clubs, so this decision to hand over 414 lapsed club entitlements to the hotels sector will further increase losses by an estimated $20 million a year,” Mr Costello said.
“These surplus club licences should have been retired to reduce gambling harm in the community, especially in suburbs suffering above average levels of stress, but instead the big pub chains such as Woolworths, Castello and Black Rhino will be will be able to expand their empires.”
Pubs are already extracting about $1.7 billion a year from Victorian pokies gamblers compared with only $900 million for clubs, with Woolworths gouging $666 million or approximately 40% of all hotel pokies revenue in 2016-17.
Under the current longstanding rules, clubs and pubs are each capped at 13,686 machines but the pubs sector will now increase to 14,100 whilst club licences will be capped at 13,272. Woolworths is capped at 35% of all pub entitlements so this will increase the maximum number of machines Woolworths can run by 145 to 4935. Chains of clubs are all capped at 840 machines or just 6.33% of the new overall clubs cap of 13,272 machines.
Woolworths told ABC Melbourne this morning that it will not take up the extra 145 machines, prompting Tim Costello to call for them to get out of the industry altogether if a relatively small increase is considered so toxic.
Mr Costello said Australians are already the world’s biggest gamblers in per capita terms and this decision by Victoria’s Labor Government to spread pokies harm further into the pubs sector will only make the situation worse.
“Giving hotels a majority of Victoria’s poker machine is expected to further increase overall losses by at least $20 million a year on top of the troubling 6% rise that has occurred since the reckless bipartisan deal last November to legislate for new 20 year licences,” Mr Costello said.
The 2017-18 venue loss data is expected to be released by the VCGLR at 11am on Friday, July 27, and with $2472 million already lost in the first 11 months of the year, an overall rise of about $91 million to $2.7 billion is expected. This would represent the biggest increase since the $94 million jump to the all-time record annual loss of $2707 million in 2008-09, when communities were stressed by the GFC and the Rudd Government was making large cash hand-outs.
The past 10 years of losses have been as follows:
2008-09: up $94m to $2707m 2009-10: down $110m to $2597m 2010-11: up $54m to $2651m 2011-12: up $30m to $2681m 2012-13: down $191m to $2490m 2013-14: up $14m to $2504m 2014-15: up $68m to $2572m 2015-16: up $44m to $2616m 2016-17: down $7m to $2609m 2017-18: up $91m to $2700m
As The Alliance noted in this statement when the 2016-17 venue loss data was released, there is only one club in the top 25 venues across the state and Woolworths is extracting approximately 25% of all losses from Victorian gamblers at its 80 Victorian pokies venues.
The typical club only makes about $80,000 per year on its poker machine whereas hotel operators extract about $130,000 and the Woolworths ALH division is operating at more than $140,000 in annual losses per machine.
“Handing over club entitlements to pubs will make this worse because it is the pubs which operate 20 hours a day, offer sophisticated loyalty schemes like the Woolworths Monty’s Rewards program and pursue aggressive marketing strategies such as ‘kids eat free’ offers,” Mr Costello said.
The Alliance distributed this flyer to Woolworths shareholders at the 2017 AGM listing the 51 Victorian venues which it operates 20 hours a day. We have engaged extensively with Woolworths over the past year but there has been little movement, as was outlined in this statement.
Alliance director Dr Susan Rennie stood for the Woolworths board at the 2017 AGM and delivered this speech in support of her candidacy. The Alliance is contemplating further action in 2018 if the Woolworths board continues to do nothing to address concerns about the enormous harm it is causing as the world’s biggest suburban poker machine operator.
“The Woolworths market share is highest in Victoria courtesy of the permissive regulatory regime tolerated by the Andrews Government and declining to take up an extra 145 entitlements when you already have more than 12,000 across Australia is tokenistic at best,” Dr Rennie said.
Alliance for Gambling Reform director and spokesman Tim Costello