Darebin City Council Response to the Gaming Machine Review by the Victorian State Government.

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1 Darebin City Council Response to the Gaming Machine Review by the Victorian State Government. 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? The Objectives of the venue operator model were specifically written to guide the transfer of EGM s from the duopoly model (Operated by Tatts and Tattersall s) the venue operator model. Despite the focus on fairness and probity in these objectives, it has been Council s experience that these objectives have been used to privilege operators at the expense of communities. These objectives and their application have had little relevance or influence in modifying gambling behaviour, gambling losses or opportunistic incentive programs. Council recommends that the current narrow objectives that focus on consumers are reviewed and widened to include clear community benefit principles and a stronger Statement of Outcomes that includes harm minimisation. Do you think the current distribution limits are appropriate? If not, what changes would you suggest and why? Current distribution limits (State wide limits, Venue limits, Metropolitan / Regional limits and Club / Hotel limits) are adequate and have in the broader EGM environment probably resulted in some harm reduction. However Darebin Council recommends that the regional caps system requires reform. This reform should consider two components: 1. Regional CAPS set at the Victorian Average; and 2. An additional more nuanced system of neighbourhood CAPS based on SEIFA, other health and social indicators and existing EGM densities at a sub municipal level. 1

2 It is Council s view that in tandem, this would reduce the further concentration of EGM s in areas of high disadvantage and provide Council s as the Planning Authority some leverage to better manage EGM s at a local level. Are the ownership restrictions appropriate? If not, should they be increased or decreased, and why? The ownership of EGM s (Both hotel and club equally) do not serve the public interest. Even the current ownership restrictions have led to a concentration (and therefore a disproportionate influence) of holdings by some. The same principles that prohibit the Melbourne Casino from holding EGM entitlements should apply to all operators. What mechanism should be used by the government to obtain its share of value of EGM entitlements? As a key principle EGM entitlements should be determined by premium payments up front on an EGM by EGM basis. The premium payments (and minimum price) would be determined by (but not restricted to) the following factors: The amount of money generated by the EGM The location of the EGM (EGM s in areas of high disadvantage are likely to generate greater future revenues) A sliding time scale up to five years (to introduce some flexibility / agility into the system for operators and governments. A density premium for EGM s where densities are likely to be higher than the Victorian Average The Government should then make these minimum prices available in the public realm on the VCGLR website. Taxation should only be applied to the actual income generated once entitlements are in place. 2

3 Should the tax bands or rates in the progressive tax structure be varied? If so why? Yes. The tax free threshold for all should be removed from the progressive tax structure. The main reason for this is that it creates a perverse incentive where it may be financially beneficial for operators to maintain or increase the number of under performing EGM s in order to reduce their overall tax burden. Under the current arrangement EGM losses continue to mount and at the same time there is less taxation revenue. There should be some consideration given to a super profits tax. Should the tax differential for clubs and hotels be maintained and, if so, why? The tax differential for clubs and hotels should be removed. The tax differential is based on the assumption that clubs deliver actual benefits to the community via an 8.33% distribution of revenue to community purposes. This is neither transparent, nor in almost all cases genuine. Based on Council s analysis of the Community Benefits Statements (CBS) lodged by local clubs, indicates that over 81% community benefit claims listed by clubs is allocated to operating costs of the venues themselves. Further that since the introduction of the CBS there has been only a single one off contribution of $500 made by one club towards Problem Gambling Programs. Secondly the removal of the tax differential should also trigger a review and reform of the Community Support Fund in a more transparent way and to support those clubs who have made legitimate local community contributions using the current taxation arrangements. Should changes be made to the way clubs are required to demonstrate their community benefit? If the tax differential is not removed, Clubs via the Community Benefit Statement should be required to demonstrate that the income retained due to their current tax status (8.33% of NGR) is directly transferred to (but not limited to): charitable or benevolent organisations with tax deductible gift status; 3

4 local sporting or community-based services within the LGA of the venue and NOT affiliated with the club; Programs and services provided by gambling counselling or welfare organisations to support recovering gamblers, veterans or health and welfare services. Universities or other research bodies to increase understanding of problem gambling. Should any future gaming machine entitlements be issued for a 10-year term, a shorter term or a longer fixed term or in perpetuity and why? There should be no entitlements issued in perpetuity. Perennial rights are likely to result in entrenched industry influence and may lead to significant resistance to necessary reform, and regulatory capture by industry. Further, governments need to ensure some built in agility in order to respond to changing circumstances and to provide the public a level of comfort. Ten year entitlements could continue but only where an appropriate premium is paid by the operator. What types of allocation process would be appropriate to allocate any new gaming machine entitlements and why? No new entitlements should be issued. Further exiting entitlements should be grand fathered and the State wide total reduced where these entitlements are not used. Should the State extract a share of any increased value of entitlements through the transfer market? Yes. Any increased value should be treated like any capital gains and entitlements should be taxed at the time of sale. 4

5 Do you have any suggestions to improve the regulatory framework for gaming machines? Reducing maximum bets on Electronic Gambling Machines to one dollar per spin Based on the available evidence, it appears that a reduction of maximum bets to one dollar would have little effect on so-called 'recreational' gamblers and would have a positive effect for 'problem' gamblers who consistently bet at levels above one dollar. Amend the Gambling Regulation Act 2003 to: require decision-makers at the Victorian Commission for Gambling and Liquor Regulation (VCGLR) to consider the social and economic impacts of increasing densities of EGMs in vulnerable communities at the local level or census collection district level require community benefits to be genuine and benefit those at most risk of harm from EGM gambling. The applicant would also be required to prove that there is a positive community benefit from increasing the number of EGMs, as opposed to the current will not be detrimental test prohibit applications for new or increased numbers of EGMs in local communities (at suburb or statistical local area level) with below-average socio-economic indexes for areas scores where the EGM density is currently above, or will become above, the state average. Specifically the amendments we seek include: a. Remove fostering competition as an excuse for more machines and require the VCGLR to judge that an area already has enough pokies. S3.1.1: There are two amendments here. One is intended to remove the provision about fostering competition, in order to permit the Commission to decide that an area already has enough EGMs and that no more are required. The second is to require the Commission to decide whether the EGM facilities in the area are sufficient to meet the needs of those who gamble without hurting themselves or others. b. Allow the Commission enough time to make the right decision s3.3.8: This amendment is to remove the obligation from the Commission to make decisions within 60 days this is likely to allow for more reflection on applications and give the Commission more room for better decisions. c. Allow councils enough time to develop comprehensive submissions 5

6 s.3.3.6: This amendment is to allow the responsible authority (local councils) 90 days for submissions regarding EGM applications, on the basis that they use their best endeavours to complete the application within that time. d. A stronger requirement for the Commission to take council submissions into account s (3): This amendment is to require the Commission to have regard to rather than consider any submission by the responsible authority. The effect of this change is to increase the extent to which the Commission must take the submission into account in determining the application. e. Make the applicant meet social and economic impact tests s (1): This amendment is to require the Commission to be satisfied by the applicant that the economic and social impact test has been met, thus placing the onus on the applicant to demonstrate this. f. Only grant applications that benefit the community s (1) (c): This amendment is to modify the social and economic impact test to require the effect of the application to be beneficial to the local community. g. Consider the specific community, not just a municipality-wide approach s (4): This amendment is to require the Commission to have particular regard to the social effects of the application on the immediate vicinity of the venue not just the municipal district Finally it is our belief that as with alcohol licencing, the Victorian Commission for Gambling and Liquor Regulation should be the final arbiter of decisions. - End- 6