In the garish neon halls where the only clocks are those that count down the megabucks for the next jackpot, there are big winners and even bigger losers.
But as NSW Premier Bob Carr is discovering, the stakes can be just as high when business and politics blur.
The once cosy relations between Carr and the State’s club industry have soured since a government clampdown last month on poker machine numbers.
The former allies are now embroiled in a bitter brawl which puts several multimillion-dollar leisure and sporting developments at risk and threatens to reshape the club industry.
The flare in tensions is nothing new for Carr. Three years ago, the club industry declared war on the Government and refused to join the float of the NSW TAB because their poker-machine profits were threatened by increased tax.
Now the Government again finds itself wedged between a rock and a hard place: it’s as addicted to tax revenue from pokies as the punters are to pokies, but must be seen to react to community concerns over gambling addiction.
The response has been to cap machine numbers at 104,000, impose a six-hour shutdown at poker machine palaces (excluding Star City casino) and ban promotional giveaways aimed at luring punters. But it’s been at the expense of the clubs, which are a big source of Labor Party campaign funds.
At least 13 sporting and recreational clubs already have Online Casino Malaysia hardship applications before the NSW Liquor Administration Board in a bid to overcome the State’s poker machine restrictions.
The main club industry body, Clubs NSW, is also mapping out a submission that urges the Government to reconsider the six-hour trading ban announced as part of last month’s reforms.
It’s the Carr Government’s apparent backflip on pokies that has enraged clubs, which accuse the Premier of back-pedalling after requesting they provide around-the-clock service in the lead-up to last year’s Olympics. Poker machine pits have boosted State government coffers since their introduction to NSW pubs on April Fool’s Day 1997. The State now accounts for 10 per cent of the world’s poker machines.
The figure of 10 per cent is relative – it is also the percentage of tax revenue the government reaps from gaming, an annual $1.2 billion take.
And according to the Australian Institute for Gambling Research, more than 41 per cent of national gambling expenditure in 1999-2000 was sourced from NSW.
Anti-gambling crusader Tim Costello says most Australian States are jackpot junkies, as addicted to gambling revenue as the most ardent punters are to the revolving reels.
“State governments are the biggest gambling addicts in the country,” he says. “It’s because State governments are utterly and irresponsibly addicted to this revenue.”
The reason for this, according to the AIGR, is that gambling was once organised by the local community in the local club. Now it has been corporatised and privatised, so much so that the lines have blurred.
“We have to understand the power relationship between the industry and the government,” says institute director Jan McMillen. “Because of the [NSW] Government’s reliance on gambling revenue and the political role played by the club and hotel industry in NSW, it is a partnership.”
McMillen says the relationship between political power and the hotel and club industry in NSW is “institutionalised”.
Since the Government put pokies in pubs, political donations to the NSW branch of the ALP from hoteliers and clubs have blossomed. About $120,000 was handed to the Labor party in NSW recently by 17 hotels, according to the ALP’s return to the Australian Electoral Commission. Clubs chipped in more than $25,000.
The gaming industry also has its fair share of political lobbyists.
Former ALP president and NSW Right strongman John Ducker kept the long-running connection between the ALP and the punting fraternity burning when he joined poker machine group Aristocrat Leisure as chairman in 1999.
But the political jockeying didn’t stop there. Former NSW Labor minister Pat Rogan is president of Clubs NSW and the Labor MP for the Sydney seat of Banks, Daryl Melham, is a director of Revesby Workers Club.
The Minister for Police, Paul Whelan, owns several hotels – including the Orient Hotel in Sydney’s The Rocks and the Hunters Hill Hotel – which operate poker machines.
The ties of the State Treasurer, Michael Egan, with the club industry stretch back to his appointment to rescue the now defunct Cronulla Workers Club in Sydney’s south. (Egan says he was appointed to salvage operations after the club went into receivership.) But Whelan’s interests would never have been allowed in other States.
While the State’s Liberal Opposition also has links to the gaming industry, McMillen says the Carr Government should urgently review its policy to identify the failings in its policy framework.
But the Government still has not responded to the findings of a 1998 Independent Pricing and Regulatory Tribunal report which urged the appointment of an independent commission to monitor the relationship between government and industry.
“There’s been an extraordinary policy lag and it has taken NSW a long time to develop its policy approach in comparison to other States,” McMillen says. “Victoria and Queensland have statutory commissions who are charged to protect the public interest with regard to gambling policy.”
McMillen believes the NSW Government’s policy package on gaming will allow for continuing market growth and would make it easy for clubs and hotels to replace old machines with new, faster, more productive machines that increase expenditure and revenue.
Publicly, the listed gaming and casino groups are staying tight-lipped on the implications of the Government’s pokies purge. Privately, they are apprehensive and annoyed. They say the Government has turned from an expansionist, taxation base to a contractionist state. The reforms appear neutral for the listed gaming groups, including Aristocrat, Star City owner Tabcorp Holdings and the Sydney-based TAB Ltd.
However, the restrictions have hit a nerve with Queensland-based Jupiters Ltd which, while it has no gaming machines in NSW, is prevented from introducing variations to its Keno game in the State’s clubs and pubs. Jupiters wants to raise the issue with the Carr Government, arguing that Keno and other soft gaming options should be treated differently from poker machines.
Jupiters boss Rob Hines says: “The moratorium that the Government has prevents us putting any variations on that Keno game. That has held us back a bit, which we’re disappointed about.”
Aristocrat boss Des Randall believes the NSW reforms are “fairly balanced”. But he admits the company has had to bolster its software and machine replacement business to compensate for a significant revenue hit.
“We basically had to make up 10 to 15 per cent of our revenues in the software area to maintain our revenues as flat.”
Aristocrat is now less reliant on poker machine sales, with 49.3 per cent of its revenue in the six months to June 30 derived from software sales and game conversions.
Star City at Pyrmont in Sydney is expected to lure gamblers from other venues after winning an exemption from the six-hour shutdown, which could potentially produce a revenue windfall for its gaming machine operations. The move has angered other Sydney clubs, notably Balmain Leagues Club, situated just five minutes from the casino in Sydney’s inner west. While it would be forced to close for six hours, Star City’s slot machines would remain open for business.
It’s a point not missed on Bulldogs rugby league club chairman Gary McIntyre, who claims the poker machine cap and trading restrictions will erode revenue and force clubs to scrap leisure and entertainment developments.
A master plan by the Bulldogs for the Oasis, a $1 billion development at Woodward Park incorporating a licensed club and sports arena, is already under threat. That club is seeking another 151 machines, in addition to its 649 machines, to fund the expansion.
At least 12 other clubs are also mapping out applications that could see them add at least another 550 machines.
“It is seriously prejudiced by the government decision to substantially reduce the income of the Belmore Club which will be funding the Liverpool Club for the next 10 years,” McIntyre says. “They are taking away 10 per cent of our machines and 25 per cent of our trading hours, which will substantially reduce our income, which is estimated at a minimum of $5 million and $8 million per annum net.”
The State’s third-largest club, Bankstown Sports, has been forced to renounce its management agreement over one of Sydney’s main Olympic venues, the Dunc Gray velodrome, in a bid to fight the State’s new gaming package.
Secretary-manager John Mackay accused the Government of “pulling the rug” after requesting it provide 24-hour services in the lead-up to the Olympics. He claims the Government’s gaming changes would cut the club’s net income by more than $8 million a year, causing the loss of 33 jobs.
Despite suggestions that the issue threatens to divide the Government, Gaming Minister Richard Face insists the latest reforms, to go before Parliament in the next session, were “a whole of government” response.
Whether Carr caves in to the club industry remains to be seen. One thing is certain, not everyone can win. It is, after all, a gamble.