Poker machine reform and alternative club revenue opportunities
Poker machine gambling reform in NSW developed as a major issue in the lead-up to the March 2023 NSW state election.
Prior to the election, both major political parties announced their positions, which generated passionate commentary from those who believed the proposed reforms went too far matched by those who believed they didn’t go far enough.
With the Labor Party now in government, their Gambling Reform initiatives can be summarised as follows:
Expanded Mandatory Cashless Gaming Trial – a mandatory 12-month cashless gaming trial will commence on 1 July 2023. The trial will include at least 500 machines in a mix of pubs and clubs across metro and regional areas. and will be overseen by an independent panel that will deliver their findings to Cabinet. The panel will be tasked with providing a roadmap to implementation of gaming reform across NSW.
Introduce poker machine cash input limits – From 1 July 2023, cash feed-in limits will be reduced to $500 per machine for all new poker machines. This will also apply to newer machines where the changes can be made rapidly. The Government will then work to reduce feed-in limits in existing older machines where possible.
Ban all external gaming related signage – The Government plans to work with industry on a sensible time frame for implementation.
Reduce the number of poker machines in NSW – The gaming machine entitlement cap will be reduced immediately to be in line with the existing number of entitlements. The number of machines will be reduced by moving to a simple 1 in 2 forfeiture for all future trades between clubs and pubs. As the number of gaming machine entitlements are removed from circulation, the cap will be reset each year at the new, lower number of machine entitlements.
The Government plans to invest in harm minimisation programs through a $100 million fund
Introduction of Responsible Gaming Officers in venues with more than 20 poker machines
By 30 June 2024, introduce third party exclusion and mandatory facial recognition technology to enhance self-exclusion.
While no one is sure where regulation will settle in the long term, it’s clear that increased oversight is inevitable and the volume of revenue generated from poker machines is at risk.
In this environment, now more than ever, club boards, executives and members would be well served by focussing on reducing their reliance of gaming revenue by establishing diversified revenue streams to support and sustain the important role club’s play in the community.
Augusta Advisors has worked closely with a number of clubs that have successfully diversified their revenue streams.
Club Auburn is a great example of a club successfully diversifying away their reliance on revenue from its gaming machines.
The Club’s chairman wrote in the latest annual report:
The Club decided to build new premises on the Club's landholdings. The program has ensured the financial future of the club for many years to come by diversifying our income streams to include long term leases of the Station Road property, the leasing of the entire ground floor of 5-7 Northumberland Road, as well as the leasing of the three units in the same complex.
And the CEO wrote:
…one of the major reasons for embarking on the three stage development program was to give the Club an alternative income source other than relying on gaming revenue. This has been achieved by obtaining long term leases of the club’s new commercial areas.
Augusta Advisors worked closely with the Club to identify the development potential of the Club’s land to maximise the return to the Club, including cash, new club premises and additional commercial space to generate long term rental income to support the operations of the Club. We created and executed a strategy to identify an appropriate development partner to deliver the best commercial and operational return to the Club while minimising risk.
To learn more about how we can help you get the most out of your Club Property, please contact us on 02 9966 8898 or email us at admin@augustaadvisors.com.au.