Gaming Machine Arrangements
Review
Consultation Paper
Office of Liquor, Gaming and Racing
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CD/15/571754
15 December 2015
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Office of Liquor, Gaming and Racing
Gaming Machine Arrangements Review
Contents
Introduction ............................................................................................................................................. 3
Structure................................................................................................................................................... 3
Terms of reference .................................................................................................................................. 3
Submissions ............................................................................................................................................ 3
Publication of submissions .............................................................................................................. 4
SECTION 1 BACKGROUND .................................................................................................................... 5
1.1
1.2
1.3
1.4
1.5
Regulatory context ................................................................................................................ 5
Industry structure .................................................................................................................. 5
Industry snapshot ................................................................................................................. 5
Gaming machine expenditure ............................................................................................... 5
Gaming machine taxation ..................................................................................................... 6
SECTION 2 GAMING MACHINE ARRANGEMENTS .............................................................................. 8
2
Objectives of the venue operator model .................................................................................... 8
3
Distribution of gaming machines ................................................................................................ 8
3.1
3.2
3.3
3.4
State-wide limit...................................................................................................................... 8
Venue limit ............................................................................................................................ 9
Metropolitan – regional limits ................................................................................................ 9
Club – Hotel limits ................................................................................................................. 9
4
Ownership restrictions ................................................................................................................. 9
5
Revenue distribution .................................................................................................................. 10
5.1
5.2
5.3
Value of gaming machine entitlements ............................................................................... 10
Taxation structure ............................................................................................................... 11
Club and hotel tax differential ............................................................................................. 12
6
Term of entitlements ................................................................................................................... 13
7
Allocation of entitlements .......................................................................................................... 13
8
Entitlement price ......................................................................................................................... 13
9
Payment terms for entitlements ................................................................................................ 14
10
Transfer market ........................................................................................................................... 14
11
Other issues ................................................................................................................................ 15
SECTION 3 QUESTIONS ....................................................................................................................... 16
REFERENCE MATERIAL....................................................................................................................... 17
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Introduction
On 7 August 2015, the Victorian Government announced that it was undertaking a review of the
regulatory arrangements for gaming machines to enable the government to make decisions on the
future gaming machine arrangements well before the gaming machine entitlements expire in 2022 (the
review).
The review is being undertaken by the Department of Justice & Regulation and will report to the
Minister for Consumer Affairs, Gaming and Liquor Regulation in July 2016.
This consultation paper is seeking industry and community views on issues and options relevant to the
review.
Structure
The consultation paper is structured as follows:

Section 1 provides background information for the review.

Section 2 outlines the key matters for your consideration in respect of the review.

Section 3 lists questions to assist you to make a submission.
Terms of reference
The review will consider the following matters:
1)
2)
3)
4)
5)
6)
7)
8)
whether the gaming venue operator model has met its objectives
whether the regulatory settings for the venue operator model should be retained (the 27,372
cap on the number of entitlements, 105 machine venue level cap, the 35 per cent ownership
restriction, the requirement that 20 per cent of entitlements are used in non-metropolitan
municipalities and that entitlements are divided equally between clubs and hotels)
whether revenue from gaming is fairly distributed (the structure of gaming machine taxes and
the tax differential between clubs and hotels, including how clubs demonstrate their community
benefit)
the appropriateness of the current 10-year term or whether entitlements should be issued for a
shorter or longer fixed-term, or in perpetuity
how any new entitlements should be allocated
how the price of any new entitlements should be determined
how and when entitlements should be paid for
how the entitlement transfer market should operate.
The review will assist the government to make these decisions well before the gaming machine
entitlements expire in 2022. This will give government, industry and the community certainty about
future industry arrangements.
The review will not consider the arrangements for gaming machines at the Melbourne casino.
Submissions
Interested persons and organisations are encouraged to make a submission on all or any matters
raised in this consultation paper.
While the department is particularly interested in responses to the questions posed throughout this
paper, submissions need not answer these questions and may address other related issues.
A response form is available on the department’s website to assist you to prepare a submission. The
form may be found at myviews.justice.vic.gov.au/gamingmachinearrangementsreview
Use of the response form is optional.
The preferred method of submitting your response is online via the department’s website.
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Submissions may also be forwarded, in writing, to:
Post:
Gaming Machine Arrangements Review
Office of Liquor, Gaming and Racing
Department of Justice and Regulation
PO Box 18055
Collins Street East
MELBOURNE VIC 8003
or
Email: [email protected]
Submissions must be received by 5pm, 26 February 2016.
Publication of submissions
All submissions will be published on the department’s website.
You should therefore ensure that your submission does not include confidential, commercial-inconfidence or personal information.
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SECTION 1 - BACKGROUND
1.1
Regulatory context
The Gambling Regulation Act 2003 (the Act) provides that the conduct of gaming on gaming machines
is illegal unless conducted in an approved venue or casino in accordance with Chapter 3 of the Act.
The Act authorises licensed venue operators who hold gaming machine entitlements to conduct
gaming at approved premises.
1.2
Industry structure
In April 2008, the government announced new gaming machine industry arrangements to apply from
August 2012. Under the changes, Victoria went from a duopoly gaming operator model to a venue
operator model.
Under the new industry arrangements, a venue operator may operate gaming machines if they hold
gaming machine entitlements. A gaming machine entitlement authorises a venue operator to operate
one gaming machine in an approved premises for the term of the entitlement.
In 2010, 27,500 gaming machine entitlements were created and offered to venue operators through a
competitive process.
In total, 27,300 entitlements were allocated to club and hotel venue operators for a value of
approximately $980 million, with 200 club entitlements remaining unallocated.
Each entitlement has a 10-year term from 16 August 2012 to 15 August 2022.
Venue operators are now directly responsible for the conduct of gaming in their venues. This includes
responsibility for acquiring and operating gaming machines and paying the monitoring services fee, the
supervision charge and gaming machine taxes.
1.3
Industry snapshot
As at 30 June 2015, there were 26,532 gaming machines operating in 505 Victorian clubs and hotels.
There are 13,591 gaming machine entitlements attached to hotel venues and 12,941 currently
attached to club venues.
Of the 27,236 gaming machine entitlements, 71.2 per cent carry a geographic area condition in
metropolitan Melbourne. The remaining 28.8 per cent have a geographic area condition outside
metropolitan Melbourne.
1.4
Gaming machine expenditure
The gaming machine industry in Victoria is mature, with low growth in net gaming machine expenditure
(total gaming machine turnover less amounts returned to players).
The graph below shows net gaming machine expenditure since 2005-06 in nominal and real terms (in
2014-15 prices).
Two significant decreases in net gaming machine expenditure occurred in 2009-10, (attributed to the
Global Financial Crisis) and in 2012-13. Whilst net gaming machine expenditure declined in 2012-13,
this was due to the removal of ATMs from gaming venues in July 2012, rather than the commencement
of the venue operator model (Thomas et al. 2013).
In 2014-15, real net gaming machine expenditure grew by 1.3 per cent, the largest increase in real net
gaming machine expenditure since 2001-02.
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Figure 1: Real and nominal net gaming machine expenditure in 2014-15 prices
SOURCE : Department of Justice & Regulation
1.5
Gaming machine taxation
The introduction of the venue operator model included the introduction of progressive taxation
arrangements. When these arrangements were announced by the government it was stated that they
were designed to:

ensure venues with low revenues are not significantly affected by the tax arrangements

maintain the 8.33 per cent difference in the tax rates applying to hotels and clubs

ensure that the State derives a share of gaming machine expenditure that is broadly similar under
the venue operator model to the gaming operator model (Victorian Government, 2009, p.33).
The State’s revenue from gaming machine taxes averaged between 36 and 38 per cent of net gaming
machine expenditure under the gaming operator model. However, this share declined in the first two
years of the venue operator model.
In 2013-14, the new taxation arrangements were reviewed to ensure the State was deriving a share of
net gaming machine expenditure under the venue operator model similar to the share it received under
the gaming operator model. As a result of that review, new tax rates came into effect on 1 May 2014.
In 2014-15, revenue from gaming machine taxes was $964.2 million, equating to approximately 37 per
cent of net gaming machine expenditure.
The table below sets out taxation revenue from club and hotel gaming machines between 2009-10 and
2014-15. It includes contributions to the Community Support Fund (CSF).
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Figure 2: Gaming machine taxation revenue (clubs and hotels) 2009-10 to 2014-15
SOURCE: Department of Treasury and Finance & VCGLR 2014-15 Annual Report
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SECTION 2 - GAMING MACHINE ARRANGEMENTS
2
Objectives of the venue operator model
When announcing the venue operator model in 2008, the government released a document outlining
the outcomes of the Gambling Licences Review. The Review of the Electronic Gaming Machine, Club
Keno and Wagering Licences and Funding Arrangements for the Racing Industry Post 2012 –
Regulatory Review Phase Statement of Outcomes (Statement of Outcomes), states that the
introduction of the venue operator model would provide:
1)
2)
3)
a venue-based model that ensures that the financial benefits of gaming are fairly and more
broadly distributed to the Victorian community
continued high standards of probity through a strengthened Victorian Commission for Gambling
Regulation and an independent monitoring system to ensure the integrity and transparency of
gaming venues
opportunities for venue operators to better respond to consumer demands and choice (p. 13).
As can be seen from these three objectives, the government’s intention was that the venue operator
model would deliver broad community benefits, in addition to the outcomes for venue operators and
the gaming machine industry.
The financial benefits of gaming machines are distributed to the community through:

taxation revenue used by the government to fund services for the whole Victorian community

direct community benefits provided by gaming venues, particularly clubs

economic activity created by venue operators in their local community

broader economic activity arising from the gaming machine industry.
Under the venue operator model, probity is maintained by requiring venue operators and relevant
gaming industry participants to be licensed, which involves a probity assessment by the Victorian
Commission for Gaming and Liquor Regulation (VCGLR).
The independent monitoring system ensures the integrity of gaming machine transactions through
continuous, on-line real-time recording, monitoring and control of game play transactions.
The Statement of Outcomes states that the new structure would give direct control to venue operators
and “…will empower venues to take more responsibility for their own gaming machine decisions, taking
more control over their business planning and development” (p. 14).
QUESTIONS
 Do you think that the venue operator model is meeting the three objectives listed above and why?
How do you think the venue operator model could better achieve its objectives?
3
Distribution of gaming machines
The distribution of gaming machines is affected by various limits and caps, including:

a state-wide cap on the number of gaming machines

limits on gaming machines that can be operated by clubs and hotels and in metropolitan areas

regional caps in areas identified as vulnerable to harm from problem gambling

limits on gaming machines in local government areas.
These limits could be maintained, reduced, increased or removed. Changes to the limits and caps may
alter the distribution of gaming machines, subject to premises approval requirements.
The state-wide cap, club-hotel limits and metropolitan-regional limits are being considered as part of
the review and are outlined below.
3.1
State-wide limit
The number of gaming machines in Victoria grew dramatically between 1992 and 1996.
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A state-wide cap on the number of gaming machines was imposed in response to concerns about the
increasing number of gaming machines and the harm caused by problem gambling.
The number of gaming machines allowed to operate in Victoria is capped at 30,000. This includes a
maximum of 2,628 in the Melbourne casino and 27,372 in hotels and clubs.
Most other Australian jurisdictions have a cap or limit on the number of gaming machines that can be
operated. The level of caps in other states and territories varies from 99,000 gaming machines in New
South Wales to 2,500 in Tasmania.
3.2
Venue limit
Victoria imposes a limit of 105 gaming machines per venue.
This restriction prevents the concentration of too many gaming machines in individual venues and
ensures the broad distribution of gaming machines and their benefits throughout Victoria.
In some other jurisdictions, different venue limits apply to hotels and clubs. For example, in
Queensland, hotel venues are only permitted to operate a maximum of 45 gaming machines, whilst
clubs can operate a maximum of 300.
3.3
Metropolitan – regional limits
A minimum of 20 per cent of gaming machines must be located in regions or municipal districts outside
metropolitan Melbourne.
The objective of this restriction is to ensure that the benefits associated with gaming are available to
non-metropolitan areas. The proportion of gaming machines in non-metropolitan areas has consistently
been around 27 to 29 per cent during the last ten years.
No other Australian jurisdictions have limits on the number of gaming machines that must be located in
metropolitan and regional areas.
3.4
Club – Hotel limits
Gaming machine entitlements must be evenly divided between clubs and hotels, meaning there are
currently 13,686 hotel entitlements and 13,686 club entitlements in existence.
The aim of this restriction is to ensure that the benefits of gaming machines are shared between notfor-profit clubs and hotels.
Currently, there are 13,685 hotel entitlements (99.9 per cent of existing entitlements) and 13,436 club
entitlements (98 per cent of existing entitlements) allocated to venue operators. The remaining
entitlements are held by the State.
QUESTIONS
 Do you think the current distribution limits are appropriate? If not, what changes would you suggest
and why? You can comment on any or all of the distribution limits identified.
4
Ownership restrictions
Ownership restrictions were imposed as part of the venue operator model to limit the concentration of
gaming machine ownership and ensure there would be a competitive gaming machine industry.
Entitlement ownership restrictions provide that:

no-one can hold more than 35 per cent of hotel gaming machine entitlements

no-one can hold more than 420 club gaming machine entitlements.
The objective of restricting the ownership of gaming machine entitlements is to ensure that the benefits
of gaming machines are widely spread.
Gaming machine entitlements can only be held by a licensed venue operator. The Melbourne casino
operator is prohibited from holding gaming machine entitlements.
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QUESTIONS
 Are the ownership restrictions appropriate? If not, should they be increased or decreased, and why?
 Should different ownership restrictions apply to hotel entitlements and club entitlements and, if so,
why?
5
Revenue distribution
Gambling on gaming machines is a source of income for the State and venue operators.
Net gaming machine expenditure (the amount bet on gaming machines less the amount returned to
players in winnings) in 2014-15 was $2,571.9 million. This expenditure is distributed between venue
operators and the State.
The distribution of net gaming machine expenditure in 2014-15 is shown in the graph below.
Figure 3: Distribution of net gaming machine expenditure 2014-15
SOURCE: VCGLR 2014-15 Annual Report and DJR analysis
Gaming machine taxes in 2014-15 equated to 37 per cent of net gaming machine expenditure. This is
similar to the amount of net gaming machine expenditure paid as tax under the gaming operator model
(see section 1.5).
Entitlement premiums are the prices paid by venue operators for the entitlements allocated in 2010.
The allocation of entitlements raised $980 million.
Supervision charges are excluded from the State’s share of net gaming machine expenditure as the
supervision charge recovers the cost of the VCGLR regulating gaming machines.
5.1
Value of gaming machine entitlements
Gaming machine entitlements are assets allocated to venue operators by the government.
Entitlements have value because of the potential to earn revenue from operating a gaming machine
under the entitlement. This value is high because of the limited number of entitlements and the
substantial revenue generated by some gaming machines.
The value of entitlements varies. For example, hotel entitlements tend to be more valuable than club
entitlements because, historically, hotel gaming machines have generated more net gaming machine
expenditure. Entitlements in capped areas also tend to be more valuable because the supply of
entitlements in these areas is limited.
Entitlements provide a return to the venue operator for its investment and a return to the State.
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A key question for the government prior to allocating any new gaming machine entitlements is what its
share of the return from entitlements should be and how this should be recouped (see sections 7 and
8).
Government recoups a share of the value through premium payments for entitlements and gaming
machines taxes. However, there are alternative mechanisms that could be used to obtain a share of
the value of entitlements. For example, under the previous gaming operator model, in addition to
premium payments and gaming machine taxes, the State also obtained revenue from the imposition of
an annual levy on each gaming machine.
There are other ways to obtain a return from entitlements. For example, Tattersall’s paid the
government seven per cent of net gaming machine expenditure as a licence payment under the
previous gaming operator model.
QUESTION
 What mechanism should be used by the government to obtain its share of the value of gaming
machine entitlements, for example, taxation, premium payments or other mechanisms?
5.2
Taxation structure
A progressive tax structure applies to net gaming machine expenditure, as outlined in the table below.
Table 1: Gaming machine taxation structure
STATE TAXATION RATE from 1 May 2014
Average monthly net gaming machine expenditure per
machine
0 to $2,666
Above $2,666 and below $12,500
$12,500 and above
HOTELS
CLUBS
Rate
8.33%
55.03%
Rate
0.00%
46.70%
62.53%
54.20%
Other jurisdictions also have progressive tax structures for gaming machines, including New South
Wales and Tasmania. In Queensland, there is a progressive tax structure for clubs and a flat tax rate
for hotels.
Tax is calculated on the average net gaming machine expenditure per gaming machine. An example of
how tax is calculated is provided below.
Table 2: Example of calculation of gaming machine tax rate
Hotel
Club
Average revenue per gaming machine per month
$
14,000.00
$
Tax payable on first $2,666
$
222.08
$
Taxable amount above $2,666 and below $12,500
$
9,834.00
$
9,834.00
Tax payable on amount above $2,666 and below $12,500
$
5,411.65
$
4,592.48
Taxable amount $12,500 and above
$
1,500.00
$
1,500.00
Tax payable on amount $12,500 and above
$
937.95
$
813.00
Total monthly tax payable per gaming machine
$
6,571.68
$
5,405.48
Aggregate tax rate
47%
14,000.00
-
39%
The progressive tax structure enables venue operators with low gaming machine expenditure to be
taxed at a lower rate and venue operators with higher than normal profits to be taxed at a higher rate in
order to recoup a greater share of net gaming machine expenditure for the State.
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QUESTIONS
 Does the progressive tax structure provide for a fair distribution of the revenue from gaming
machines?
 Should the tax bands or rates in the progressive tax structure be varied and, if so, how and why?
 Is there an alternative tax structure that should be considered?
5.3
Club and hotel tax differential
Clubs have a lower tax rate in recognition of the inherent benefits they provide to the community.
Clubs must demonstrate that an equivalent of 8.33 per cent of net gaming machine expenditure is
applied to community benefits.
Each year, clubs must submit an independently audited Community Benefit Statement (CBS) that
demonstrates how that 8.33 per cent of gaming revenue has been applied. A club that fails to lodge an
audited CBS or fails to meet its required community benefit contribution is required to pay the same tax
rate as a hotel on part or all of its gaming machine revenue.
Items that can be claimed as a community benefit are divided into three classes:

Class A items – direct community benefits including donations, sponsorships, provision of sporting
facilities and volunteer services

Class B items – indirect community benefits such as capital expenditure, financing, provision of
buildings, plant and equipment (with exclusions), and operating costs such as overheads and staff
wages

Class C items – miscellaneous expenses including the provision of responsible gambling
measures (other than those required by law), the cost of preparing the community benefit
statement and expenses incurred by volunteers.
Clubs can claim up to 100 per cent of their expenditure on community benefits in Class A or Class C
and an amount equal to the proportion of a club’s non-gaming revenue for expenditure on items in
Class B.
Clubs cannot claim items such as gaming equipment or capital expenditure on the gaming machine
area, gaming machine entitlements or associated finance costs, the management of gambling activities
or customer loyalty schemes, promotion of any form of gambling, buildings, plant and equipment
valued at less than $10,000 per item and subsidised alcohol.
Issues about the CBS process include:

The ability of clubs to claim staff employment costs and other operating expenses as community
benefit contributions has been highlighted in the media and criticised by community groups.

Clubs are not required to report any community contributions exceeding 8.33 per cent. The items
listed in a CBS do not necessarily represent the club’s total expenditure on claimable items.

Clubs appear to rely on a narrow range of items to establish the required community benefit
contribution as it is relatively easy to meet their 8.33 per cent requirement by claiming operating
costs.
Clubs have previously argued that they should not have to submit a CBS given the intrinsic community
benefit they provide as non-profit entities.
In New South Wales, clubs are permitted to earn up to $1 million in net gaming machine expenditure
before paying tax under the progressive tax structure. An additional amount equal to 1.85 per cent of
net gaming machine expenditure is payable at the end of the tax year if the club does not contribute an
equivalent amount to eligible community projects during the year.
QUESTIONS
 Should the tax differential for clubs and hotels be maintained and, if so, why?
 Should changes be made to the way clubs are required to demonstrate their community benefit?
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Gaming Machine Arrangements Review
Term of entitlements
Each gaming machine entitlement has a ten year term, running from 16 August 2012 to 15 August
2022.
Industry peak bodies have indicated that the 10-year term for entitlements is too short. According to the
industry, the 10-year term:

comes at a cost to industry as it distorts venue operator decisions on long-term capital financing
and planning; and

is inflexible to the changing nature of the market.
Conversely, community groups and some local councils have said that a shorter entitlement term
enables the State to review the policy settings for gaming machines regularly.
One of the factors to be considered by the review will be the appropriateness of the 10-year term. Any
new gaming machine entitlements could be issued for a shorter or longer fixed term or in perpetuity.
In New South Wales, Queensland, Northern Territory and South Australia, gaming machine
entitlements are perpetual.
QUESTION
 Should any future gaming machine entitlements be issued for a 10-year term, a shorter or longer
fixed term or in perpetuity and why?
7
Allocation of entitlements
The Act empowers the Minister to create and allocate gaming machine entitlements.
The process and rules for allocating gaming machine entitlements are determined by the Minister.
The allocation process should be fair and transparent and capture an appropriate value for the State.
In economic terms, the allocation should be effective and efficient.
When the new industry structure was implemented, gaming machine entitlements were allocated
through a two-stage process:

a pre-auction club offer (PACO) – through which clubs could acquire some gaming machine
entitlements at a fixed price

a competitive auction – where all remaining entitlements were offered for allocation.
Broadly speaking there are two types of allocation processes – an administrative allocation and a
competitive allocation.
An administrative allocation would involve the government determining who is allocated entitlements
and how much they are required to pay for those entitlements.
In a competitive allocation process, such as an auction, the market would determine who is allocated
entitlements based on how much they are prepared to pay.
QUESTION
 What type of allocation process would be appropriate to allocate any new gaming machine
entitlements and why?
8
Entitlement price
Venue operators will be required to pay a price for entitlements.
The price could take the form of a premium payment or be factored into the tax rate (as discussed in
section 5.1). The price could also be determined by government or as an outcome of a competitive
allocation process (as discussed in section 7).
The value of gaming machine entitlements varies (as discussed in section 5.1). To take account of this,
the price for entitlements could be different for different categories of entitlements.
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The following factors can all affect the price of entitlements:

the value that the State places on entitlements

the type (club and hotel) and geographic location of the entitlement

whether the entitlement is being offered for a fixed-term or in perpetuity.
QUESTIONS
 How should the price of any new gaming machine entitlements be determined and why?
 Should the price of any new gaming machine entitlements be paid by way of a premium payment,
be factored into the tax rate or be via another payment option? Please explain why.
9
Payment terms for entitlements
If a premium payment is to be paid for entitlements, it will be necessary to determine appropriate
payment terms.
For the current gaming machine entitlements, venue operators were able to enter into deferred
payment terms over four years for hotels and 4.5 years for clubs. Payments are made quarterly under
payment agreements between venue operators and the State.
If premium payments are required for entitlements, these payments could be paid at allocation, in
instalments over a stated period of the entitlement term or over the full term of the entitlement.
QUESTION
 If premium payments are required, what are the preferred terms for those payments and why?
10
Transfer market
Gaming machine entitlements are transferrable between venue operators.
The transfer market is administered by the VCGLR and allows venue operators to advertise gaming
machine entitlements for sale or purchase.
Since the commencement of the transfer market (to 14 November 2015), 197 transfers have been
registered by the VCGLR involving 4,684 entitlements.
There is more demand for hotel entitlements than club entitlements. In 2014-15, 48 transfers were
registered for 763 entitlements. Of these, 77 per cent were hotel entitlements (589) and 23 per cent
were club entitlements (174).
Over time, the value of entitlements is likely to change. For example, the entitlement transfer register
indicates that some hotel entitlements have recently been transferred for twice the amount paid for the
entitlements when they were allocated.
There is currently no way for the State to capture a share of the increased value, despite this being a
product of the limited number of entitlements available.
However, there are ways to enable a share of the proceeds from sales of entitlements to be recouped
by the State. For example, in Queensland, the seller of a gaming machine operating authority (the
equivalent of hotel gaming machine entitlement) must pay 33 per cent of the sale price to the State.
Sales of gaming machine operating authorities are undertaken through a tender process administered
by the Public Trustee of Queensland.
QUESTIONS
 Are there any improvements that could be made to the transfer market?
 Should the State extract a share of any increased value of entitlements through the transfer market
and, if so, how?
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Gaming Machine Arrangements Review
Other issues
The transition to the venue operator model required venue operators to take greater responsibility for
managing their gaming machine operations, including decisions about when to purchase new gaming
machines and games, business analysis and ensuring gaming machine technology and equipment is
maintained.
The new industry arrangements have now been in place for three years. The review provides an
opportunity to identify ways to improve the regulatory framework governing the operation of gaming
machines.
You are invited to make submissions on any other issues or options to improve the regulatory
framework for gaming machines.
QUESTION
 Do you have any suggestions to improve the regulatory framework for gaming machines?
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SECTION 3 - QUESTIONS
GAMING MACHINE ARRANGEMENTS REVIEW
 Do you think that the venue operator model is meeting the three objectives listed and why? How do
you think the venue operator model could better achieve its objectives?
 Do you think the current distribution limits are appropriate? If not, what changes would you suggest
and why? You can comment on any or all of the distribution limits identified.
 Are the ownership restrictions appropriate? If not, should they be increased or decreased, and why?
 Should different ownership restrictions apply to hotel entitlements and club entitlements and, if so,
why?
 What mechanism should be used by the government to obtain its share of the value of gaming
machine entitlements, for example, taxation, premium payments or other mechanisms?
 Does the progressive tax structure provide for a fair distribution of the revenue from gaming
machines?
 Should the tax bands or rates in the progressive tax structure be varied, and if so, how and why?
 Is there an alternative tax structure that should be considered?
 Should the tax differential for clubs and hotels be maintained and, if so, why?
 Should changes be made to the way clubs are required to demonstrate their community benefit?
 Should any future gaming machine entitlements be issued for a 10-year term, a shorter or longer
fixed term or in perpetuity and why?
 What type of allocation process would be appropriate to allocate any new gaming machine
entitlements and why?
 How should the price of any new gaming machine entitlements be determined and why?
 Should the price of any new gaming machine entitlements be paid by way of a premium payment,
be factored into the tax rate or be via another payment option? Please explain why.
 If premium payments are required, what are the preferred terms for those payments and why?
 Are there any improvements that could be made to the transfer market?
 Should the State extract a share of any increased value of entitlements through the transfer market
and, if so, how?
 Do you have any suggestions to improve the regulatory framework for gaming machines?
TRIM ID: CD/15/571754
Final – 1.0
15 December 2015
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Office of Liquor, Gaming and Racing
Gaming Machine Arrangements Review
REFERENCE MATERIAL
Bibliography
Thomas, A., Pfeifer, J., Moore, S., Meyer, D., Yap, L. and Armstrong, A. 2013 Evaluation of the removal of ATMs
from gaming venues in Victoria, Australia, Department of Justice, State of Victoria, September 2013
Victorian Government 2008, Review of the Electronic Gaming Machine, Club Keno and Wagering Licences and
Funding Arrangements for the Racing Industry Post 2012 – Regulatory Review Phase Statement of Outcomes,
Department of Justice
Victorian Government 2009, Overview of the Victorian Gaming Industry, Second Edition, Department of Justice,
September 2009
Acronyms
Description
ACT
Australian Capital Territory
ATM
Automatic Teller Machine
CBS
Community Benefit Statement
CSF
Community Support Fund
EFTPOS
Electronic funds transfer at point of sale
GST
Goods and Services Tax
PACO
Pre-auction club offer
VCGLR
Victorian Commission for Gambling and Liquor Regulation
Terms
Description
Act
Gambling Regulation Act 2003
Gaming machine revenue
Net gaming machine expenditure
Net gaming machine expenditure
Gaming machine turnover (total amount bet on gaming machines) less the
amount returned to players as winnings
TRIM ID: CD/15/571754
Final – 1.0
15 December 2015
Page 17 of 17