From the President

Gaming Trading Round System in Need of Overhaul

DAVID BASHEER – AHA|SA PRESIDENT

WATCH VIDEO: https://youtu.be/2lT4kouHMTg

In 2005, amidst great fanfare, the Rann Government mistakenly believed removing 3000 machines from South Australian pubs would assist problem gamblers. As up to eight machines were compulsorily acquired from our venues with no compensation, in their place were positioned the most expensive pot plants any publican ever purchased.

Industry participants at the time would recall pubs were discriminated against, with neither the casino nor machines in clubs subject to a reduction.

Out of that flawed policy was born the trading round, with high expectations of a quick reduction of more machines and high prices for entitlements. This was required because when clubs were exempt from the cull of machines, as an afterthought, the Government needed to make up the resultant shortfall of the 3000 machine reduction.

By any measure, the trading system has been an expensive dud. The AHA|SA is lobbying heavily to have it streamlined and fit for purpose.

Fundamentally, the AHA|SA argues for two critical changes to the trading round:

1. The removal of the requirement to reduce gaming machine numbers in South Australia by a total of 3000 from the 2005 level.

2. That the trading system in South Australia should move to an open market model of trading, with CBS having regulatory oversight.

THE FACTS

After 17 years, South Australia is still around 650 machines short of reaching its target of removing 3000 machines. There is no evidence at all to suggest removing machines assists problem gambling. In fact, the financial year of 2006/07 (immediately after the major cull of 2200 machines) ended as the highest annual net gaming revenue on record and remains so some fifteen years later.

When COVID-19 restrictions were heavily enforced, and capacity restrictions meant venues had between 25% and 50% of machines in play, revenues rose.

Back in 2006, the SA Centre of Economic Studies unsurprisingly found the removal of machines had no impact on revenues.

It is time to end the fantasy and disruption of the machine reduction strategy as being an effective tool in harm minimisation. ATM and Eftpos changes, along with changes to smoking regulations, ARMS and facial recognition have all been introduced in this time as far more effective harm minimisation tools.

Of course, Ministers and regulators need to be constantly reminded we have the most stringent harm minimisation measures in the country - mostly funded by industry. We also have the nation’s highest gaming tax rate.

And back in 2005, online gambling was just a fledging industry. Too much has moved in that time and the trading round is a relic of a bygone era. It is red tape for red tape’s sake.

THE ALTERNATIVE

The AHA|SA submits that licence holders should be able to buy and sell entitlements in an open market, rather than being restricted to (generally) two designated periods of trading per year.

It is envisaged that an open market model would be managed by Consumer and Business Services, but that venue operators would be free at any time to advertise and request the transfer of gaming machine entitlements, and that gaming machine operators would negotiate the sale and settlement of proceeds directly. Parties would be required to notify CBS of the sale and request the transfer of the entitlement.

Under this option, the current mechanism for every fourth entitlement sold by ‘for-profit’ venues being cancelled would be removed.

It is acknowledged that this option does not assist in meeting the statutory objective of reducing the number of gaming machines in South Australia. However, for the reasons outlined above, the objective does not serve the purpose of reducing problem gambling, rendering its continued pursuit pointless. The benefit of this option would be a simplified trading model.

FINAL EASING OF RESTRICTIONS

Before the election, the AHA|SA heavily lobbied both sides of politics about restrictions, close contact rules and - critically - the mechanism used to make decisions. It was comforting to hear the announcements made by the new Premier in his first days in office very much reflected those discussions. Further successful discussions took place over the abolition of masks, QR codes and Covid-marshals and ultimately, the relaxing of close contact isolation laws at the end of April that had made staffing of our pubs impossible.

Hopefully, with the Emergency Health Declaration set to ease, finally we will have total control back of our own businesses and can plan with far greater certainty for our future trading.

TOURISM RECOVERY

One of the good news Industry stories has been the immediate and strong bounce back of our accommodation sector, as we rebuild our previous $8.1billon per year visitor economy.

The most recent published March figures showed Adelaide as the number two destination amongst Australian capital cites for RevPAR Par and an exceptionally good occupancy of 85.7%. In our regions, it is an even stronger story, with numbers up to 15% higher than pre-COVID-19.

Domestic travel numbers are approaching - or in some cases eclipsing - those of pre-COVID-19, although international travel still lags some way behind, and the full recovery is not expected until 2025. One of our barriers is that Adelaide has gone from 48 international flights a week down to only nine. As we seek to restore those numbers, it is critical our domestic routes remain strong.

The new State Government has a stated ambition to increase our spend on major events to assist hotel occupancy. The recent announcements around the return of the Adelaide 500 and the Wallabies playing here in August certainly support that.

But the competition amongst the states is white hot. The flurry of events announced for Perth in the coming months, including a Wallabies game against England, a State of Origin rugby match and four of England’s leading soccer teams, including Manchester United, is no accident after the WA Government announced a $24 million funding boost. The eastern states are following, so we need to keep investing to keep our rooms filled.

Conferences are also returning. Recently, the Australasian Hotel Industry Conference and Exhibition (AHICE) was hosted in Adelaide. AHICE has grown into the largest and most significant hotel industry conference in the world outside the United States, and all week Adelaide and have South Australia was firmly in the spotlight of the global industry, with more than 1,200 delegates from over 40 countries around the world

And at the conclusion of the conference, it was announced the event would return to SA in 2023.

These events and conferences are critical as our accommodation venues and those that feed off tourism play ‘Covid catch up’ over the next few years.

UKRAINE REFUGEE LUNCH

Last Tuesday at the Arkaba, the AHA|SA was delighted to be the major sponsor of the Advertiser Foundation’s Refugee Welcome Lunch. The funding, through our charity arm Pubs With Heart, comes from subscriptions made by gaming members to the Independent Gaming Corporation.

The event was attended by the Premier, Lord Mayor and both the Ukranian and Lithuanian ambassadors from Canberra, along with a number of families that had relocated to Adelaide fleeing the war. Typically, the father stayed behind to assist fighting the cause. Their personal stories are harrowing.

Thank you to Peter and Jenny Hurley, along with West End, who were also sponsors of this wonderful event.

You can read more about the event on page 8 in this issue.