On 12 June 2008, the Victorian Department of Justice advertised for public submissions upon Gaming Machines and other forms of gambling. It invited comment upon its discussion paper titled "Gaming Machines Post 2012". You can download your own copy of the discussion paper and read the submissions made by clicking here.

In summary, the government seeks public input as to the best way to move from the present situation where Tattersall's and Tabcorp operate all gaming machines to where pubs and clubs can own and operate their own machines.

Set out below is the the PokieWatch.org Submission to the Gambling License Review. This submission was censored by the Department of Justice. The copy that can be downloaded from the Department's website has paragraphs blacked out. Set out below is the full uncensored submission.

This submission is divided into three parts;
1. Background
2. Guiding principles
3. Responses to the template

1. Background

I created the not for profit web site, www.PokieWatch.org , with the goal of improving responsible gaming practices in Victoria. The web site attempts to provide information about actual practices. While it is intended to report upon every venue in Victoria, reports so far have been limited to venues associated with Woolworths Limited and its associates. Woolworths Limited is the largest owner of Victorian poker machine venues. It also operates the Safeway chain of supermarkets and other businesses in Victoria.
As a result of my inspection of over 87 venues (some on several occasions), meetings with local government bodies, examination of past decisions of the VCGR and its predecessor, I suggest that any decision about the transition to 2012 should have regard to the following:

Self-regulation is not effective

The PokieWatch.org website provides users with a basis to compare the statements made by the Chief Executive Officer of Safeway/Woolworths at the company’s 2007 annual general meeting about its responsible pokie practices with observations of its associated venues. Despite Mr. Luscombe’s forceful language, it appears to me that no venue accords with his statements.
I believe that self regulation of responsible gaming practices is not effective. My opinion is that Woolworths Limited will do no more than is legally required. Accordingly, it is essential not only that conditions with which Government expects holders of entitlements to comply should be clearly set out in the legislation prior to the competitive bidding phase, but also that compliance with those conditions should be summarily enforced thereafter.

Minimal community regard

Safeway/Woolworths’ recent application to increase the number of pokies at the Matthew Flinders Hotel is indicative of their future intent. The hotel is located in a capped region and has been subject of a government ordered reduction in the pokies. The company intends purchasing pokie entitlements from an RSL club in the region. If successful, the number of pokies in the community in which the venue is located will exceed 10 pokies per 1000 persons aged over 18. Past government and VCGR findings indicate that relocating pokies from a club to a hotel will result in increased pokie expenditure. This all takes place in a region that already capped.
I argue that this action demonstrates that Safeway / Woolworths will aggressively bid for pokie entitlements without regard to impact on the local community. The fiscal resources available to Safeway/Woolworths’ due to its enormous profitability should be taken into account

Avoidance of entitlement limits reducing competition

Safeway/Woolworths is associated with a number of venues it does not own. It seems that it manages these venues. These venues are licensed as clubs, not hotels. My argument is that these arrangements allow Safeway/Woolworths to control or at least influence the manner in which pokies operate at these venues that they do not own. This practice may lead to an effective avoidance of the government limitation on entitlements.
It will also defeat the guiding principle that there be a competitive marketplace. Past prosecutions against Woolworths’ anti-competitive practices should be taken into account. Weight should also be given to the views formally expressed on behalf of Safeway/Woolworths to the Gambling Licence Review on 26 July 2006 that clubs would benefit by having “expert management and large group synergies”.

2. Guiding Principles

35% Cap

The government policy of a 35% cap on ownership should be enforced with respect to all aspects of the operation of the pokie industry. Put simply, ownership should be the same as "Association" as presently defined in the Gaming Regulation Act. In this way, no one person or corporation can be allowed to be associated with any more than 35% of all venues whether they be hotels or clubs and whether such association is made up through ownership or an agreement for services, let alone, an agreement for profit sharing.

Local Impact Assessment – The NSW Review

A local impact assessment must be made with respect to each venue and upon any transaction. This would include adhering to existing regional caps and gaming machine density and expenditure per gaming machine in the relevant catchment of each venue. Such assessment may include undertakings by an applicant or intending purchaser. The findings of the Supreme Court of Victoria in Macedon Shire Council v. Romsey Hotel Pty. Ltd. should be codified in any new regulations.
The concept of “Local Impact Assessment” appears in the recent NSW report reviewing its own practices of creating and transferring pokie entitlements. While there are significant differences, given the long history of pokie operations in NSW, I believe that their findings and resultant recommendations not only on Local Impact Assesments, but also the other matters the subject of this review, should be adopted in Victoria wherever practical.

(A copy of the NSW Report can be downloaded by clicking here)

All the following responses in this submission should be read incorporating these two important principles.

3. Responses to the Template

1. Competition

Do you have any views on how to best facilitate competition in the bidding process, in particular:
a. opportunities for hotels and clubs currently outside the gaming machine industry to participate in the competitive bidding process
The interests of viability of existing businesses and introducing new participants should be balanced so that existing pokie entitlements can not be completely lost.
b. aspects of ensuring a fair, transparent and competitive process.
Provided that each bidder satisfies the VCGR as to certain standards and thereby becomes qualified to bid, all bidding should be by public auction.

2. The Bidding Process

Do you have any comment on preparing for the bidding process and transitioning to the new venue operator structure, in particular:
a. the information required by venues to assist them in making an informed decision on whether to participate in the venue operator model and the bidding process
A procedure should be set up within the legislation which pre-qualifies bidders to hold the entitlements they intend to bid for.
b. the skills/training venues require to assist them transition to and operate in the venue operator model
The pre-qualification process will require each applicant to satisfy the commission as to its ability to meet conditions of its license.
c. the most effective tools for communication of the training, for example, online training, hardcopy manuals, regional face-to-face training
Face to face training is the only effective means. Provision of such services in accordance with the 35% cap will allow strong competitive organizations to provide best practices in such training.
d. any other factors to enable a venue to decide to participate in the Compettitive Bidding Process
Full information should be provided by the Victorian government as to the means and rates of taxation.

3. Transfer of Entitlements

Do you have any views on the mechanics of a transfer scheme, in particular:
a. the relative benefits of the transfer approaches used in other states or other alternative options
The regulatory structure proposed in the NSW review should be adopted.
b. the possibility of a non-transfer period following the initial allocation of entitlements, including its use to discourage speculative bidding
Provided there is no concept of issue or discount of licenses pursuant to a “hardship” structure there should be no non-transfer period.
c. other conditions relevant to the transfer of entitlements.
No transfer should occur without strict compliance by the vendor of existing license conditions including compliance with responsible gaming practices.

4. Monitoring

Do you have any views on the operation of an independent monitoring function, in particular:
a. the relevant benefit of the different monitoring approaches of New South Wales, Queensland and South Australia
While the ultimate responsibility of independent monitoring of pokies should remain with the Government, it is open to the government to contract with others to provide this service. If multiple organizations can effectively interface with one another, it would be preferable for multiple monitors to be appointed.
b. the range of services provided by monitors
No response.
c. other matters relevant to establishing a monitoring function.
All information lodged with independent monitor must be available to the public. All proceedings save for exceptional circumstances should be conducted in public. The reasons for such exceptional circumstances must be made available to the public.

5. Other Service Providers

Do you have any views about the preferred approach to the establishment of these services, in particular:
a. other types of services that may be required
All services should be allowed to be performed by persons or entities other than the venue licensee.
b. issues relating to contracts between service providers and venues including profit sharing arrangements
All arrangements irrespective of their terms must be lodged with the Gaming Commission and be available for public inspection. Profit sharing arrangements should be prohibited.
c. any other comment on service providers.
No response.

6. Transition

Do you have any comment on the transition process, in particular:
a. any critical matters that should be considered during the transition to the new arrangements
The independent monitoring authority must be adequately funded so that it attracts both the quantity and quality of people to be able to process the transition. It is recognized that this will require significant expenditure. An immediate benefit will be vastly enhanced dynamic knowledge of impact and regulation of pokies in Victoria. For example, in the decision concerning the Ocean Grove Bowling Club, Justice Morris indicated how much he would be assisted to know not only gaming density but also what the likely gaming expenditure per machine might be in a particular locality.
b. any other comment on the transition process.
Safeway/Woolworths and its associates are associated with 101 hotel and club venues that operate 6,769 pokies. The ownership of hotel licences alone exceeds the 35% cap. To ensure that
• the bidding process is certain and unconditional
• the intentions of Government are carried out
Woolworths Limited and its associates should be required to divest itself of all interests and associations above the 35% cap (including any service agreements with respect to clubs) prior to bidding for any pokie entitlement.

7. Competitive Bidding Phase

Considering all the topics covered previously in this Discussion paper, do you have any other comments you wish to make on the transition arrangements for the venue system in the competitive bidding phase?
Please refer to Background and Guiding principles above.