Commission refuses application for additional 10 pokies at Valley Inn Hotel in Geelong

On 16 and 17 March 2022, the Victorian Gambling and Casino Control Commission heard an application by A.P.D. Group Pty Ltd to increase the number of pokies at the Valley Inn Hotel in Geelong from 29 to 39.

The City of Greater Geelong opposed the application and appeared at the hearing.

On 26 April 2022, the commission refused the application and published its reasons for decision.

Under section 3.4.20(1)(c) of the Gambling Regulation Act 2003, the commission is required to weigh the likely positive social and economic impacts of an application against the likely negative social and economic impacts. The test will be satisfied if, following the weighing of any likely impacts, the commission is satisfied that the net economic and social impact of approval on the well-being of a relevant community will be either neutral or positive. This is known as the 'no net detriment' test.

After considering the economic benefits of the application and balanced against the economic disbenefits, the commission considered there was likely to be a slightly positive economic impact if the application was granted.

After considering the social benefits of the application balanced against the social disbenefits, the commission considered there was likely to be a neutral social impact if the application was granted

After consideration of the material before it, including the evidence provided at the hearing, the commission was satisfied that the social and economic impact on the well-being of the Greater Geelong community would not be detrimental. Accordingly, the pre-condition set out in section 3.4.20(1)(c) of the Gambling Regulation Act 2003 was satisfied.

Under the Gambling Regulation Act 2003, the commission retains an ultimate discretion whether to grant or refuse an application, once the mandatory preconditions set out in section 3.4.20(1) have been found to be satisfied.

In exercising its discretion whether or not to approve an application, the commission may take into account relevant matters. These include broader policy considerations, drawn from the content and objectives of the Gambling Regulation Act 2003 as a whole.

The commission noted that the 'policy context' of the Gambling Regulation Act 2003 is referenced through a number of principles set out in the second reading speech for the Bill, including:

• accepting gambling is a valid activity for many Victorians who are entitled to expect ongoing high standards of service, transparency and accountability from the gambling sector.

In deciding whether to exercise its discretion to refuse to grant its approval to the application, the commission considered it not only may, but should, give appropriate weight to relevant events in the past and to stated intentions for the future.

Specific to this application, the commission referred to the 2016 premises approval and the conditions imposed in relation to community contributions offered by the applicant during that application. These conditions included publishing newspaper notices each year giving local not-for-profit community and sporting organisations the opportunity to apply for community contribution funding, establishing a committee to assess applications and allocate funds, and distributing $30,000 each year in community contributions up until 15 August 2022.

In the commission’s decision and reasons in that matter, the commission placed weight on those community contributions in balancing the economic and social impacts of the proposal, and determined that it was appropriate to impose the conditions in order to secure those payments as part of the approval.

In his statement, a director of the applicant acknowledged the underpayment of the community contributions and provided reasons for the non-payments.

In a further statement to the commission, the director stated that the applicant was not able to refinance during 2020 and 2021 due to the COVID-19 pandemic and outstanding ATO debt. However, the applicant was recently able to secure refinancing and had subsequently repaid the majority of outstanding community contributions during the period 4 to 7 March 2022, with the final outstanding amount being paid on 9 March 2022

The commission considered that the specific circumstances of this case bring into question the same issues of probity and accountability as referred to in the Robin Hood Hotel decision. Further, unlike the situation in the Robin Hood Hotel (in which an undertaking had been given in relation to community contributions – thus creating a social and perhaps not legally enforceable obligation), in the present case, the 2016 premises approval decision contained clear conditions legally requiring the annual community contributions to be paid, and paid in a timely manner and allocated by a specifically constituted committee following specified advertising. While the applicant has now made the outstanding community contribution payments in this case, the commission finds that the totality of the applicant’s conduct in relation to its community contribution obligations arising out of the 2016 premises approval is inconsistent with its stated commitment to the very same community those funds were intended to support.

Importantly, the commission relied on the totality of the evidence including:

(a) the conscious and deliberate decision of the applicant to meet all of its business obligations in priority to, and in preference to, its regulatory obligations;

(b) this prioritisation which put the applicant’s commercial needs ahead of the community benefit it was obliged to support (through the legal obligations imposed as conditions in line with the conditions proposed by the applicant in 2016). This prioritisation even included the preference of preparation for and lodging this application prior to making the outstanding payments;

(c) the non- or under-payment of the promised community contributions occurred in each of the five years leading up to the application in 2021, reflecting a continuing course of conduct rather than a single isolated incident;

(d) the failure of the applicant to contact either the Greater Geelong Council or the commission to discuss the noncompliance between mid-2017 and late-2021 until the lodgement of the application thus denying the commission the timely opportunity to:

i. consider granting a deferral or restructuring of those obligations;

ii. conduct an investigation into the failure to comply; and/or

iii. take other action, as appropriate ; and

(e) the continued failure of the applicant to make any attempt to meet its community contribution obligations in accordance with the terms of the conditions (which were put forward by the applicant in 2016) and accordingly formed part of the 2016 premises approval conditions (i.e. the formation of the committee and the newspaper notification process).

The commission notes the applicant’s evidence that the applicant has not, and does not wish to form the committee for the remaining 2016 conditioned community contributions or for any newly conditioned community contributions if the application were granted.

The commission considers that the exercise of its discretion to refuse to approve the application is consistent with furthering the objects of the Gambling Regulation Act 2003 and the broader policy principles underpinning it.

Having regard to these above considerations, the commission considers that this is one of those relatively rare or exceptional cases where the ultimate discretion militates against an approval despite the ‘no net detriment’ test having been satisfied.

On the material that was put before it, the commission determined that, despite the mandatory pre-conditions for approval set out in section 3.4.20(1) having been satisfied, it was appropriate for the commission to exercise its discretion in this matter and refuse the application.

Read the commission'sreasons for decision on the VGCCC website.

Read more about pokies in City of Greater Geelong on the Foundation website.