Critic: “Endless cycle of expansion”
A development boom is ongoing in western Sydney, funded by the area’s so-called “casino clubs.” The Sydney Morning Herald reports that the clubs are funding luxury beachside apartments, a shopping center, an office tower, and a 2,000-seat performing arts venue.
Club owners call the developments an investment in the community, but gaming critics say they have been enriched by “over-generous tax concessions that distort government spending.”
“It’s this endless cycle of expansion,” said Dr. Charles Livingstone, senior lecturer at Monash University’s School of Public Health and Preventive Medicine. “They wouldn’t do it if it didn’t work.”
To date, the biggest development is a $160 million renovation of the hospitality complex Harbord Diggers, owned by the Mounties Group, the biggest-earning poker-machine club in New South Wales. Though Harbord Diggers posted an $8 million loss in 2017 and made less than $3 million in profits from its pokies, it financed the redevelopment thanks to the Mounties club in Mount Pritchard, which the Herald called one of Sydney’s poorest neighborhoods. Last year gamblers plowed tens of millions of dollars’ worth of wagers into the club’s 599 poker machines, netting $50 million in profits, according to the Mounties Group annual report.
Mounties CEO Greg Pickering conceded the revenue “paved the way for this project. Using the strength of Mounties’ balance sheet, the construction of the project has been 100 percent debt-funded and is secured against a mortgage of the Harbord property only.”
According to the latest data, punters lost $1.2 billion in the year to November 30 in Fairfield, Canterbury-Bankstown, Cumberland, Blacktown, Parramatta, and the Northern Beaches local government areas.
Chief Executive of ClubsNSW Anthony Ball said the decision by clubs to reinvest in their own facilities instead of donating more to community projects and charities is a valid choice. “It makes clubs more sustainable, more relevant and less reliant on gaming revenue. Increasingly, clubs are addressing areas of need within their communities and delivering services local residents want and need.”
Ball said NSW clubs had contributed over $1 billion “to a range of worthy causes including charities, sporting clubs and not-for-profit community groups,” since 2000.
However, critics said the government’s generous tax rate for clubs, which sees their pokie profits taxed at a lower rate than pubs, has inflated their profits and power. Former Treasury official Betty Con Walker said the concessions means millions of dollars in lost revenue for the government each year—more than $13 billion over the last 20 years. Clubs must pay an additional 1.85 percent on profits over $1 million unless they contribute the same amount to community projects under the ClubGrants scheme.
The controversy around pokies has been felt throughout Australia. Former senator Nick Xenophon, now leading the centrist SA Best party in South Australia, built his campaign around tighter regulation, including a one-third reduction in gaming machines over five years, a reduction in maximum bets from $5 to $1, and banning political donations from gaming interests.
The Australian Hotels Association said such actions would put 26,000 jobs at risk.
The Guardian newspaper reports that Tim Costello, spokesman for the Alliance for Gambling Reform, likens the politically influential pokies industry to the National Rifle Association in the United States.
Both Xenophon and Costello point to supermarket giant Woolworths Ltd. as a major offender through its stake in Australian Leisure and Hospitality, which operates hotels and their poker machines around the country.
A statement from Woolworths Chairman Gordon Cairns said, “At Woolworths, our priorities and values must always match those of our customers and communities we operate in and this includes taking important steps to ensure we, through ALH, are a responsible gaming operator.”
Costello countered that Woolworths “is actually interfering in the March election. They’re doing it at arm’s length through the hotels association. Most South Australians would be staggered to know that Woolworths is the biggest pokies operator in Australia and the biggest here in South Australia.”
