Clubs hit the jackpot in overhaul of pokie legislation

THE State Government has caved in to pressure from the clubs industry, deciding to remove the cap on the number of poker machines they are able to own, raising fears it will lead to more mega-clubs while smaller clubs continue to disappear.

But while ceding ground to clubs in its long-awaited overhaul of gaming machine legislation, the Government has blocked the ambitions of hotels to gain more poker machines, with the present cap of 30 machines to remain. The hotels industry had wanted its cap raised to 40.

Retaining the caps for both clubs and pubs was a major plank of the Government's initial overhaul of the gaming machine legislation. Under the legislation put before Parliament yesterday, the Government is to cut the statewide cap on the number of gaming machines to 99,000, a reduction of 5000 machines, which brings the cap into line with the number of machines in operation at present.

The big winners in the legislative overhaul are clubs. The removal of the cap of 450 machines comes amid persistent speculation the Government is to raise the levy on poker machines for hotels in the November 11 mini-budget. In 2006, the Government undertook not to raise poker machine taxes on clubs until at least 2012.

The Premier, Nathan Rees, yesterday denied that the easing of the cap for clubs may be linked with plans to raise poker machine levies. The cap was lifted because "there is churn in the industry, whether it's poker machine-related or not, some clubs are very professionally run and others aren't", he said.

"There's a process, longstanding now, of some smaller clubs being swallowed up by bigger clubs."

Removing the poker machine cap for clubs would make it easier for clubs to merge at a time when the club industry was under mounting financial pressures due to smoking bans and the economic slowdown.

"The change facilitates the amalgamation process which, despite a record number of clubs now seeking help, has slowed to a virtual crawl," Clubs NSW's spokesman, Jeremy Bath, said. "Under the existing system, a large club with 450 machines was unwilling to consider amalgamating with another club as it had the potential to see them exceed their existing cap.

"Penrith Panthers can't take on any more clubs. The Bulldogs can't take on any more clubs.This will give smaller clubs the opportunity to pitch their case to the larger clubs."

Earlier this year, the Independent Pricing and Regulatory Tribunal, IPART, found clubs play an important social role which government needs to foster, while arguing that measures need to be taken to make it easier for clubs to amalgamate.

Over the past two years, for example, 35 clubs have gone into administration, with only 12 merging with another club, with the limited number of mergers due to the poker machine cap. Since 1995, 106 clubs have merged, with 169 closing.

Late last year the Government foreshadowed an overhaul of gaming machine legislation as part of the regular five-year review process. The proposals include banning credit card cash withdrawals from ATMs and EFTPOS facilities at gaming venues, as well as restricting increases in gaming machine numbers in the Sydney suburbs of Canterbury, Ashfield, Penrith, Auburn, Marrickville, Fairfield, Burwood, Bankstown and Kogarah, which already have a "high density" of gaming machines.

In so-called "band one" areas, with few gaming machines, there will not be any need for "local impact assessment" of the number of machines when pubs or clubs apply for any increase.

"We would have liked to see the equivalent of 'seat belts and airbags' introduced - that is, smart card technology … so you are able to control the amount of time and the amount of money you want to play with," said Kate Roberts, chairwoman of the Gambling Impact Society.

Sydney Morning Herald

News Added: 29 October, 2008

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