Submission to
Department of
Justice and Regulation
Gaming Machine
Arrangements Review
February 2016
Contact: Malcolm Roberts-Palmer
Senior Social Policy and Research Officer
Social Policy and Partnerships
[email protected]
Introduction
The City of Maribyrnong is a diverse and vibrant community undergoing significant changes
with population growth and new residential development. These changes create
opportunities for social and economic development in the municipality.
However, they also create a number of complex challenges for local residents in areas such
as housing affordability, access to community services and facilities along with and
opportunities for employment and education.
Maribyrnong City Council has an ongoing commitment to reduce the harm and minimise the
negative impacts of gambling to the City of Maribyrnong community. The Council Gambling
Advocacy Campaign 2015/16 reflects this commitment and highlights Council’s advocacy
and community engagement actions to reduce the health and wellbeing impacts of
gambling on local residents.
The Gaming Machine Arrangements Review Consultation Paper outlines a number of issues
associated with the regulation of electronic gaming machines (EGMs) in Victoria. This
includes metropolitan and regional limits for EGMs, what hotels and clubs can claim as
community benefit, the term allowed for EGM entitlements and the transfer market for
EGM entitlements.
This submission considers some of the issues raised in the consultation paper and the
impact that the current regulatory arrangements have on the City of Maribyrnong
community. The submission considers the following:
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EGM caps and population growth
EGM caps in disadvantaged areas such as Braybrook
Gambling Taxation and the tax structure for EGM expenditure in Victoria.
The claiming of expenses in Community Benefit Statements by pubs and clubs
The term limits for EGM entitlements
The transfer of EGM entitlements between venue operators
Changes to the Gambling Regulation Act to reduce the harm caused by gambling in
local communities
Maribyrnong City Council Submission to Gaming Machine Arrangements Review
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Electronic Gaming Machine Caps
As outlined in the Gaming Machine Arrangements Review Consultation Paper, the Victorian
cap for EGMs is 27,372 with a limit of 105 EGMs allowed per venue.
The cap on EGMs is set at a maximum of 10 per 1000 adults or at the gaming machine
density in the region at the date the cap was imposed, whichever is lower. There are
currently 20 regional caps in Victoria.
Caps were introduced by the State Government to prevent the further concentration of
EGMs in areas of Victoria identified as being vulnerable to the harm cause by problem
gambling.
The City of Maribyrnong has a cap of 511 EGMs, which was established in 2006. There are
currently 415 licensed EGMs in nine venues across the municipality representing an EGM
density of 6 per 1000 adults. Despite this figure being below the State limit of 10 per 1000
adults, the municipality still experienced significant losses in the order of $52.9 million in
2014-15. This equates to EGM losses of $798 per adult, which is the third highest in Victoria
after Greater Dandenong and Brimbank.
The City of Maribyrnong is projected to have significant population growth, with a forecast
increase of 80 per cent between 2016 and 2041, from 86,975 to 156,291.
Any future review of EGM caps that reflects this population increase would potentially allow
for increase in size of existing venues and the creation of new venues in the municipality.
Council firmly believes that the City of Maribyrnong EGM cap should be maintained at the
current level regardless of the projected population increase in the City of Maribyrnong.
Council also believes that any future review of EGM caps should take account of the
increased harm caused by gambling to local communities, particularly in areas of significant
social and economic disadvantage, such as Braybrook.
The following table outlines the gaming venues in the City of Maribyrnong and the losses
from EGMs at these venues. It should be noted that four of the 10 venues are clustered
along Ballarat Road from Footscray to Braybrook.
Venue
Address
Attached
Entitlements
Licensed
EGM's
Venue
Type
Expenditure (July 2014June 2015)
ASHLEY HOTEL
226 BALLARAT ROAD
BRAYBROOK VIC
50
50
Hotel
$9,320,119.02
AUSTRALIAN CROATIAN
ASSOCIATION
72 WHITEHALL STREET
FOOTSCRAY VIC
0
0
Club
$0.00
BRAYBROOK HOTEL*
353 BALLARAT ROAD
31
31
Hotel
$5,543,282.80
Maribyrnong City Council Submission to Gaming Machine Arrangements Review
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BRAYBROOK
CLUB LEEDS
17 LEEDS STREET
FOOTSCRAY
25
30
Club
$3,511,636.81
COURT HOUSE HOTEL
(FOOTSCRAY)
166 NICHOLSON STREET
FOOTSCRAY
21
21
Hotel
$3,191,341.63
HIGHPOINT TAVERNER
HIGHPOINT SHOPPING CENTRE, 200
ROSAMOND ROAD
MARIBYRNONG VIC
52
70
Hotel
$6,863,305.21
POWELL HOTEL
202 BALLARAT ROAD
FOOTSCRAY VIC
30
30
Hotel
$4,313,191.08
YARRAVILLE-FOOTSCRAY
BOWLING CLUB
CNR FRANCIS & HAWKHURST STREET
YARRAVILLE VIC
29
29
Club
$1,954,220.98
YARRAVILLE CLUB
135 STEPHEN STREET
YARRAVILLE VIC
78
78
Club
$4,690,168.39
YARRAVILLE CLUB CRICKET
CLUB*
CORNER BALLARAT & ROSAMOND
ROADS
MAIDSTONE VIC
76
76
Club
$13,606,750.17
VICTORIA ON HYDE HOTEL
188 HYDE STREET
YARRAVILLE VIC
24
0
Hotel
$0.00
(closed)
Source: VCGLR 2015
(*Note: The Braybrook Hotel has received approval from VCAT for an increase of 14 EGMs)
(**The Yarraville Club Cricket Club is the official venue title for the Palms Bingo)
The current EGM cap for the City of Maribyrnong should also be maintained to reduce the
opportunity for convenience gambling. Hotels and clubs are often located in or around
activity centres or near local shopping areas. Gaming venues may also be located in venues
in close proximity community facilities and social housing.
This makes it more likely that people conducting other business in their local area will
engage in gambling.
90 per cent of people living in metropolitan Melbourne reside within a 2.5 kilometre radius
of a club or hotel with EGMs and 55 per cent in non metropolitan areas. A survey of 8,500
Victorian residents by KPMG found that 32 per cent of gamblers travelled an average of 2.5
kilometres to a venue and 57 per cent less than 5 kilometres.
EGM caps in disadvantaged areas
Victoria’s EGMs are concentrated in disadvantaged communities, such as Braybrook, which
have significantly higher levels of losses from EGMs and high rates of gambling harm,
including problem gambling.
Maribyrnong City Council Submission to Gaming Machine Arrangements Review
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Braybrook is the fourth most disadvantaged suburb in metropolitan Melbourne, with a
SEIFA Index of Disadvantage rank of 801.1. Braybrook also has significant levels of
disadvantage across a range of indicators including educational attainment, qualifications,
and unemployment.
Braybrook has the lowest level of completion of Year 12 of any suburb in the City of
Maribyrnong, and in comparison with Greater Melbourne.
In addition, Braybrook has the highest proportion of people without qualifications, with 53.7
per cent, compared to 40 per cent for the City of Maribyrnong and 42.5 per cent for Greater
Melbourne. People with no qualifications are classified as people who do not have a
unversity, TAFE, technical or trade qualification. This can restrict people to unskilled
occupations, which are frequently low paid.
Braybrook’s unemployment rate is 12.9 per cent as of March 2015 compared to 7 per cent
for the City of Maribyrnong and more than doubles the 6.3 per cent unemployment rate for
Victoria.
Braybrook has historically had a very high concentration of social housing. Social Housing in
Victoria is characterised by people on low incomes either renting from a government
authority such as the Victoria Office of Housing, or from a social housing cooperative. Based
on ID Census 2011 data, 19.3 per cent of Braybrook’s housing is classified as social housing.
This is nearly three times the level of social housing for the City of Maribyrnong of 6.2 per
cent and six times the level for Greater Melbourne of 2.9 per cent.
Braybrook has 81 EGMs with losses of $14.86 million in 2014-15, from two venues, the
Braybrook Hotel and the Ashley Hotel. The density of EGMs is often higher in disadvantaged
local areas than the Victorian ceiling of 10 EGMs per 1,000 adults. The number of EGMs in
Braybrook equates to 15 EGMs per 1000 adults. Higher EGM densities in disadvantaged
suburbs are linked to increased risk of gambling harm increasing the significant risk to the
health and wellbeing of the local community.
Council believes that EGM caps should be introduced in disadvantaged suburbs such as
Braybrook to reduce the impact of gaming machines in these areas. Without EGM caps in
these area, venue operators will continue to target disadvantaged communities for
increases in gaming machines.
Gambling Taxation and the tax structure for EGM expenditure in Victoria
The Victorian State Government relies heavily on taxation revenue from gambling. Based on
ABS data for 2013-14, 10 per cent of State Government taxation revenue is derived from
gambling. This compares to 8 per cent for NSW and 9 per cent for Queensland.
In 2013-14, $1.5 billion was collected in taxation revenue from gambling in Victoria.
As a percentage breakdown this shows the following:
Maribyrnong City Council Submission to Gaming Machine Arrangements Review
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EGMs outside the Crown Casino - 57 per cent
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Crown Casino - 14 per cent
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Lotteries - 26 per cent
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Wagering - 4 per cent
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Club Keno - 0.2 per cent
This breakdown demonstrates that EGM gambling represents by far the largest source of
revenue from gambling for the Victorian Government, with over twice the level of taxation
revenue as lotteries, and over four times the taxation revenue collected from Crown Casino.
As outlined in the consultation paper, there is a progressive tax structure that applies to net
gaming machine expenditure as outlined in the table below:
STATE TAXATION RATE from 1 May 2014
Hotels
Clubs
Average monthly net gaming
expenditure per machine
Rate
Rate
0 to $2,666
8.33 per cent
0.00 per cent
Above $2,666 and below $12,500
55.03 per cent
46.70 per cent
$12,500 and above
62.53 per cent
54.20 per cent
Council believes that the State Government should adopt a more progressive tax structure
for EGMs that imposes higher rates of taxation on higher earning venues in Victoria. This
would allow the State Government to continue to collect revenue from EGMs at the same
time as recognising the harm caused by high performing venues in local communities across
Victoria.
Community Benefit Statements
A Community Benefit Statement requires hotels and clubs which operate EGMs to provide
an indication of what support they are providing to their local community to offset the
losses from EGMs. The purpose of these statements is to mitigate the impacts of problem
gambling on local communities.
Under section 3.6.6(2) of the Gambling Regulation Act 2003, net gaming revenues from
hotel venues are subject to an additional tax of 8.33 per cent which is paid into the
Community Support Fund. The Community Support Fund was established in 1991, the
Community Support Fund is a trust fund governed by the Gambling Regulation Act 2003 to
direct a portion of gaming revenues back into the community.
The Community Support Fund provides funding for the following:
Maribyrnong City Council Submission to Gaming Machine Arrangements Review
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Addressing problem gambling
Drug education, treatment and rehabilitation
Financial counselling support for families in crisis
Youth programs
Sport and recreation
Arts and Tourism
Advancement of the community as determined by the Minister
Costs Associated with administering the Community Support Fund
Under Section 3.6.9 of the Gambling Regulation Act 2003, all hotel and club operators are
required to lodge an audited community benefit statement with the Victorian Commission
for Gambling and Liquor Regulation on an annual basis.
A Victorian Government Ministerial direction issued in 2008 requires clubs to give a clear
indication of how they are providing a community benefit. A club must demonstrate that it
has spent 8.33 per cent of its net gaming revenue on activities that benefit the community.
These include:
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Donations, gifts, sponsorships made to the community;
providing and maintaining sporting facilities;
subsidised goods or services provide to club members and the community; and
voluntary services provided by club members and staff to the community.
What can be classified as community benefit under the act allows hotels and clubs
considerable flexibility in what they can claim as community benefit. It is also not clear if all
venues are completing a Community Benefit Statement on an annual basis. The VCGLR web
site for community benefit statements for 2015 show that those statements for several
venues in the City of Maribyrnong have not yet been listed for 2015.
Council believes that the definition of what is classified as community benefit should be
restricted to genuine philanthropic organisations or charities as defined by tax deductable
status or grass routes activities. The definition of community benefit also needs to reflect
the commitment to minimise harm from gambling in the City of Maribyrnong community.
Council also believes that the process for the allocation of funding through the Community
Support Fund needs to be reviewed to ensure there is a transparent and targeted return of
funding to the communities from where the losses from EGMs occur.
Terms for EGM Entitlements
An EGM entitlement allows venue operators the right to operate an EGM. Venue operators
are only permitted to operate an EGM if they hold an EGM entitlement. The entitlement
must also be attached to a venue approved by the VCGLR for the number of machines the
venue intends to operate.
Maribyrnong City Council Submission to Gaming Machine Arrangements Review
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A venue operator must also apply to the Victorian Commission for Gambling and Liquor
Regulation (VCGLR) for a license to operate EGMs and to their local council for a planning
permit.
As outlined in the consultation paper, each EGM entitlement in Victoria has a 10 year term,
running from 16 August 2012 to 15 August 2022. Venue operators and gambling industry
peak bodies have indicated that the 10 year term for entitlements is too short and would
like to see entitlements issued for a much longer period or in perpetuity.
The allocation of entitlements for a longer period or in perpetuity would allow some venue
operators to continue to locate EGMs in areas where they are causing significant harm to
local communities. This includes in areas with significant levels of social and economic
disadvantage and in areas where venues with EGMs are in convenient locations such as
activity centres, strip shopping centres and next to public transport hubs.
90 per cent of people living in metropolitan Melbourne reside within a 2.5 kilometre radius
of a club or hotel with EGMs and 55 per cent in non metropolitan areas. A survey of 8,500
Victorian residents by KPMG found that 32 per cent of gamblers travelled an average of 2.5
kilometres to a venue and 57 per cent less than 5 kilometres. As outlined in the section on
EGM caps, the City of Maribyrnong has at least four venues within a five kilometre radius of
each other along Ballarat Road.
One of the key issues associated with moderate and problem gambling is the location of
gambling venues in local areas. A study by the Department of Justice found that:
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Over 53 per cent of EGM players travelled no more than 5 kilometres.
Over 42 per cent of problem gamblers travelled between 2-5 kilometres compared
to 46 per cent for moderate gamblers and 41 per cent for low risk gamblers.
Over 12 per cent of problem gamblers were prepared to travel between 6-10
kilometres and 26 per cent over 10 kilometres.
Council believes that the 10 year term for EGM entitlements should be maintained.
Furthermore, any review of the term of EGM entitlements should take account of the
impact of EGMs in areas with high levels of social and economic disadvantage and
accessibility of EGMs in venues in convenient locations.
Transfer of EGM Entitlements
As outlined in the consultation paper, EGM entitlements are transferrable between venue
operators. The transfer market is administered by the VCGLR and allows venue operators to
advertise EGM entitlements online. The consultation paper further states that to date, 197
transfers have been registered for the transfer of 4,684 EGM entitlements.
The VCGLR Entitlements Transfer Register outlines the price paid for some EGM
entitlements that have been transferred from one venue operator to another. Not all of the
Maribyrnong City Council Submission to Gaming Machine Arrangements Review
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entitlement transfer prices are listed in the register. However, analysis of the prices paid for
the transfer of entitlements, shows that an average of over $40,800 was paid and in some
cases up to $100,000. This is significantly higher than the original price paid at the auction
for EGM entitlements in 2010.
Council is concerned that the increasing price paid for entitlements will put pressure for
EGMs to be placed in high performing venues which are often located venues in areas of
high social and economic disadvantage and in venues in convenient locations such as in
activity areas, shopping strips or near public transport.
Council believes that the State Government should consider placing a ceiling on the price of
entitlements in the transfer market to discourage the location of licensed EGMs in high
performing venues in disadvantaged areas and convenient locations.
Changes to the Gambling Regulation Act
Electronic Gaming Machine Design
The design of gaming machines encourage people to gamble at very high expenditure levels.
To reduce the potential for very significant losses, and as a first step in effective harm
minimisation, a $1 maximum bet limit with a maximum $120.00 limit per hour should be
phased in over a period of five years, commencing as soon as possible.
The $1 maximum bet limit is a key area of advocacy for the Alliance for Gambling Reform.
The Alliance is national campaign that brings together organisations with a shared concern
about the harmful impacts of gambling in Australia. Maribyrnong City Council is a member
of the Alliance for Gambling Reform as are a number Councils across Victoria.
Council believes that changes should be made to the Gambling Regulation Act 2003 be
amended to support the introduction of a maximum $1 bet limit in Victoria.
Definition and determination of community benefit for EGM applications by venue
operators
Under the Gambling Regulation Act, the VCGLR and the Victorian Civil and Administrative
Tribunal (VCAT) must not grant an application for the approval of premises as suitable for
gaming unless the net economic and social impact of the approval will not be detrimental to
the wellbeing of the community of the municipal district in which the premises are located.
Achieving this ‘no net detriment' test is a mandatory precondition to approval under the
Gambling Regulation Act. In Macedon Ranges Shire Council v Romsey Hotel Pty Ltd [2008]
VSCA 45 (Romsey), the Victorian Court of Appeal observed the matters to be considered in
deciding the ‘no net detriment’ test is satisfied are not specified in the Gambling Regulation
Act 2003, but the statutory signposts (in that case) are provided by the test itself:
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the likely economic impacts of approval;
Maribyrnong City Council Submission to Gaming Machine Arrangements Review
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the likely social impacts of approval; and
the net effect of those impacts on the wellbeing of the relevant community.
This test requires the VCGLR and VCAT to consider and weigh all of the economic and social
benefits and dis-benefits of a proposal for EGM's. The decision maker must be satisfied
there is 'no net detriment' arising from the approval through positively and objectively
establishing that the net economic and social impact will not be detrimental on the
wellbeing of the community. This effectively means that the VCGLR and VCAT must establish
that the impact will be either neutral or positive.
Council believes that the 'no net detriment' test contained in the Gambling Regulation Act
needs to be based on sufficient evidence. Various VCAT members have observed in recent
times about the quality and sufficiency of expert evidence in gaming matters in relation to
the 'no net detriment' test, such as evidence about gaming expenditure and transferred
expenditure.
Given the increasing number of gaming matters before the VCGLR and VCAT and increasing
levels of scrutiny by Council and objectors, more work needs to be done in this regard. The
VCGLR could also assist in providing relevant information from its research and collection of
statistics over time.
Response time for Local Government to EGM application by venue operators
Under the Victorian Gambling Regulation Act, the owner of premises may apply to the
Victorian Commission for Gambling and Liquor Regulation (VCGLR) for the approval of the
premises as suitable for gaming. Council, as the relevant responsible authority may make a
submission to the VCGLR on an application for approval of premises or an amendment of an
application for approval of premises.
Under the Act, councils are empowered to make submissions in response to applications for
gaming approval. These submissions must address, as relevant:
1. the social and economic impact of the proposal for approval on the well-being of the
community of the municipal district; and
2. take into account the impact of the proposal on the surrounding municipal districts.
Any submission by Council must be lodged with the VCGLR within 60 days after Council
receives notice of the application (or a copy of the amended application).
Council believes at least 90 days is required to allow a more adequate period to consider
and assess the social and economic impact of an application including obtaining
independent advice and/or material and evidence (as may be appropriate).
Maribyrnong City Council Submission to Gaming Machine Arrangements Review
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Recommendations
Council believes that the State Government should make the following changes to the
gaming machine arrangements in Victoria:
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Maintain the current State and Regional EGM caps including the City of Maribyrnong
cap of 511 EGMs
Introduce EGM caps in disadvantaged areas such as Braybrook.
Adopt a more progressive tax structure for EGMs that imposes higher rates of
taxation on higher performing venues in Victoria.
Change the definition of what is classified as community benefit to genuine
philanthropic organisations or charities as defined by tax deductable status or grass
routes activities.
Maintain the current 10 year terms for EGM entitlements and ensure the caps take
account of harm caused by gambling in local communities.
Place a ceiling on the transfer price for EGM entitlements to discourage the location
of EGMs in high performing venues in disadvantaged areas and in convenient
locations.
Amend the Gambling Regulation Act 2003 to include the following changes:
o Introduce maximum $1 bet limit for EGMs in Victoria
o Provide clear direction and definition for determination of community benefit
for EGM applications
o Give Victorian Local Government 90 days to consider application to the VCGLR
by gaming venues to increase the number of gaming machines.
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