Kate Roberts PhD Student Monash University and Chairperson Gambling Impact Society (NSW) Inc. 1
Overview New South Wales is the most populated state in Australia with a population of around 7 million. EGMs in NSW -most significant gambling development in Australia! NSW continues to be the hub of EGM gambling in Australia . Australia has 198,300 EGM’s– NSW 97,065 Annual revenue per EGM $59,700 in 2008-9 Annual gaming machine losses per NSW EGM player - $3,700 But 70 - 75 % of surveyed adults don’t use them 2 Source: PC Report 2010
Share of Gambling Revenue by Activity-Australia Wide Source: PC Report 2010 3
Gambling Expenditure & Tax $19 billion spent nationally $7.1 billion in NSW of which $4.7 billion on EGMs hotels and clubs $1,610 million NSW Tax revenue from gambling in 2008-9 4 Source: PC Report 2010
Clubs and Hotels in NSW Source: PC Report 2010 5
History of Clubs in NSW Established for the benefit for members and the concept of “mutuality” By law they are regarded as not for profit organisations and have favourable tax concessions-valued at about $600 million in foregone tax each year. The Club industry in NSW market themselves as a community service established for members - but is this really the case? 6
Clubs Own View “Registered and licensed clubs (hereafter simply referred to as clubs) are not-for-profit community- based organisations, formed and sustained by people with common interests to pursue those interests. They are immensely popular social and entertainment venues and have become an intrinsic part of the social life of a majority of people in Australia.” (ClubsAustralia,PC, 2009) 7
Is this really the case? How many club members in reality? What is their core business? Social engagement? Gambling? What is their primary goal ? Community engagement? Growth of revenue? Myth of the folk model Is it tax avoidance masquerading as a social good? What is the true economic impact of Clubland? Are clubs undermining other businesses? 8
Who benefits from club revenues? Club Members – social facilities, cheap (as in pokies subsidised) meals & drinks Local Communities-recreational entertainment & Community facilities, employment Community services - “donation” - funding NSW Government - 9% State Tax revenue 9
However.... 15% of regular gamblers contribute up to 60% of gambling revenue. (Productivity Commission Report 2010) Every person gambling problematically affects between 5-10 other people In 1999 there were 300,000 people defined as “problem gamblers” in Australia Clubs earn an average 65% of their total revenue from poker machines. “Big clubs” are concentrated in areas of socio - economic disadvantage 10
Clubs’ Role In Gambling Pokies lawfully available from 1956 Small local social clubs grew into major business during the 1980’s and 90’s. These “big clubs” dominate NSW gambling 11
From Folk Model to Corporate Model 12
A Challenge to their legitimacy This change in focus from legalised machine gambling for community benefit, to gambling as a corporate business, challenges the very basis of clubs’ legitimacy. Clubs’ success in dominating the gambling market has led them to being complicit in community harm. This undermines their legitimacy as creators of “social benefit”. 13
Clubs Indistinguishable From Casinos Wilcox Victorian Board of Inquiry (1983) into poker machines specifically noted the commercialisation of the NSW club movement Concluded that NSW clubswere indistinguishable from casinos. 14
Lack Of Common Interest “What is the ‘common interest which causes the members to join? “ (Wilcox, 1983) The “Big Clubs” by their very size and nature of their business, attract users and members well beyond their ability to truly identify their members or have a sense of an identifiable social network within them . 15
Penrith Panthers from little Cub to mighty CLUB Penrith Rugby League Club, originally a ‘pokey single storey building with eight poker machines, one pool table, one bar and a small dedicated membership’ when it was founded in 1956. By1995, 52,000 members, 900 staff 800 gaming machines, six bars, five restaurants, a nightclub, a cinema, tennis courts, a golf driving range, cable skiing, waterslides, a miniature railway and more than 200 four- star motel rooms set on its 81 hectares. Daily, 6,000 patrons visited the club, with $72 million turnover the club reported in 1994- 95. Some $40 million of this came from the club’s poker machines (Martin, 1996:16), The club provided about $650,000 a year for community charities and sporting organisations other than football” (Verrender, 1996:39). The club has recently expanded its gaming machine installation to 1,262 machines “ (SMH, 28 August 1998, p. 41 as cited in Hing, 2006) 16
Panthers Group Annual Report 2009 The Panthers Group has: 14 ‘entertainment’ venues across NSW 142,284 members state wide 614 post codes in NSW had at least one Panther member as a resident 1,016 employees 315,756,000 in total assets 189,624,000 in net assets “We have grown the value of our net assets by more than $100 million and seen a 100 per cent growth in Panthers Club membership” (Barry Walsh, Chairman, Panther Group) http://penrith.panthers.com.au/Home 17
“2009 was a landmark year for Panthers Group. On 3 rd December, the Deputy Prime Minister Julia Gillard, launched the new Penrith Panthers Club. The completion of the $30 million renovation project was a strategic decision to invest in the future of the Group and the role we play within the community” (Panthers Group Annual Report, 2009) 18
Panthers Group Gambling Revenue 2009 A decrease in gaming revenues of $2,110,000 or 2.27% to $90,847,000 (2008: $92,957,000) which was mainly attributable to the impacts of the ongoing effects of the extensions and renovations of the Penrith site. The reduction in gaming revenue was offset by the resultant decrease in poker machine tax of $1,063,000 or 3.7% to $27,848,000 (2008: $28,911,000). 19
Clubs & Pokies In 2006 Hing noted that 44 NSW clubs had over 200 poker machines per venue and that the larger installations were found at : Penrith Panthers Leagues Club 1,262 Twin Towns Service Club 770 Canterbury-Bankstown Leagues Club 643 South Sydney Juniors 579 1999 Productivity Commission inquiry found that poker machine revenue accounted for approximately 60% of the collective NSW club income across NSW “ on average in NSW about 63% of their income comes from gaming revenue. It used to be higher. It was 68% not four years ago.” (Anthony Ball, CLubsNSW, SBS Insight, (2008) 90% of the Mounties (Mount Pritchard Club) revenue comes from its 502 poker machines.(SBS Insight,2008) 20
Clubs Not So Community Minded Many clubs operate a range of activities that compete with commercial providers . Some clubs have engaged in takeovers of other clubs many miles from their home base. Larger clubs have a poor track record in contributing to the community (Con Walker, 2009 , p.1) Mt Pritchard – 1.35% of expenditure Penrith – 1.01% Parramatta – 1.37% 21
So Keep This In Perspective Mounties donates over $5 million to local community 22
Social Facilities But At What Cost? Club expansions have created mega centres for recreational activities. Replacing leisure facilities often previously provided by the private sector or local councils. But, they have undermined other business and restricted consumer choice Negatively impacted the music industry Anti- competititive in a “free market” 23
TAX Perk or Lurk? “The rational for the preferential tax and regulatory treatment of registered clubs has been , in addition to their “mutual’ status, the widely held belief that they are major contributors of financial and other assistance to the community .” But... After taking into account the government subsidy received on community contributions under the CDSE scheme, in 2006, clubs as a whole distributed to the community around $30 million in cash or only 0.9% of their total gaming profits”. (Con Walker, 2009, p 29) 24
Not So Sporting Either... In addition “many of the large clubs have evolved from supporters of rugby league football and have fostered the perceptions that club revenues support sporting activities and the local team. The evidence indicates the opposite: major clubs actually make a profit from football” Con Walker, 2009 p1) 25
Club Marketing vs. Community Realities Clubs are significant commercial enterprizes whilst maintaining a privileged not for profit taxation status. Their self promotion as an industry of “Social Good” masks their significant role in promoting gambling in the community, their impact on areas of social disadvantage (where many “big clubs” are located) and their contribution to problem gambling 26
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