Commission refuses application for additional 25 pokies at Players Hotel

On 11 June and 2-3 July 2019, the Victorian Commission for Gambling and Liquor Regulation heard an application from Castello Players Hotel Pty Ltd to increase the number of pokies at Players Hotel in Dandenong from 25 to 50.

The application was unusual in that, if the application was successful, the Castello Group would close its other gaming venue (the Jim Dandy Hotel) in the City of Greater Dandenong and remove its 30 pokies. As a result, it would mean one less venue and five fewer pokies operating in Greater Dandenong.

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

On 1 August 2019, the commission refused the application.

After considering the material before it, the commission was not satisfied that the social and economic impact of the application would not be detrimental to the wellbeing of the Greater Dandenong community. Accordingly, the 'no net detriment' test was not met and the application was refused.

In making this determination, the commission weighed the following economic benefits and disbenefits.

Benefits

Expenditure on capital works was given positive impact, with marginal to low weight.

• The applicant proposed to undertake renovations at the hotel at an estimated cost of $750,000. The renovations include the introduction of a café/bistro dining area, relocation and refurbishment of the gaming room and refurbishment of the TAB and sports bar. The commission accepted these renovations were modest in nature and that local contractors from Greater Dandenong would likely be used.

Additional employment was given positive impact, with marginal weight.

• It was proposed that all eight current staff at the Jim Dandy Hotel would be redeployed at Players Hotel. In addition, four additional EFT positions at the Players Hotel would be created, consisting of three positions in the kitchen as chefs and one position as food and beverage attendants. Considering the high unemployment rate within Greater Dandenong, the commission viewed the scale of the additional employment as an economic benefit to the community, and attributed marginal weight.

Increased gaming competition in Greater Dandenong was given positive impact, with no to marginal weight.

• The installation of 25 additional pokies at the hotel would improve its attractiveness in a competitive market. The impact on competition resulting from the closure of the Jim Dandy Hotel was considered minimal due to the relative underperformance of that hotel and the fact that it and the Players Hotel are both operated by the Castello Group. The commission noted that, even with the removal of 5 pokies from Greater Dandenong, the gaming machine density in the LGA would remain as the second highest in Melbourne (7.3 machines per 1000 adults), and almost 50 per cent higher than the metropolitan average (4.9 machines per 1000 adults).

Gaming expenditure not associated with problem gambling was given positive impact, with no to marginal weight.

• The portion of new expenditure not attributable to problem gambling is an economic benefit. It was estimated that the additional 25 pokies would result in player losses at the hotel increasing by $4.11 million in the first year of operation, with up to $742,381 being new expenditure in Greater Dandenong. Due to the highly disadvantaged profile of the catchment area surrounding the hotel, the commission considered a substantial proportion of the new expenditure would likely be associated with problem gambling, and so gave this impact no to marginal weight.

Disbenefits

Gaming expenditure associated with problem gambling was given negative impact, with low to moderate weight.

• The portion of new expenditure attributable to problem gambling is an economic disbenefit. The additional 25 pokies would generate new expenditure of up to $742,381 in the first year of operation. The majority of the hotels' gaming room patrons have a significant level of socio-economic disadvantage and financial vulnerability that would make them more susceptible to gambling-related harms. The commission found many of the proposed RSG measures to mitigate this harm are existing RSG measures that would remain in place regardless of the application. The proposed additional floorwalker was more likely to maintain, rather than improve, the existing level of supervision within the gaming room. While there would be some benefit associated with the relocation of the gaming room from the front to the rear of the hotel, this factor must be balanced with the consequential impacts of the proposed new gaming room, including the increased density of machines, more restrictive surveillance opportunities, and the requirement for patrons to walk through the gaming room to access toilet facilities at times when the bistro is closed.

Diversion of trade from gaming businesses was given negative impact, with no to marginal weight.

• It was estimated that at least 82 per cent of the anticipated increased expenditure would be derived from other gaming venues in Greater Dandenong and neighbouring LGAs. While a transfer rate of this size is not insignificant, the diversion of trade would have a negligible detrimental economic impact on other venue operators due to the competitive market and relative stability of the affected venues.

Diversion of trade from non-gaming businesses was given no weight.

• It is possible that local non-gaming businesses could see a reduction in expenditure of up to $742,381 in the first year if the additional 25 pokies were installed. However, the commission found it difficult to determine whether that expenditure would necessarily have been spent elsewhere in Greater Dandenong, and noted there was no direct evidence presented regarding the diversion of trade from retail facilities or other businesses. Accordingly, the commission gave this impact no weight.

In making this determination, the commission weighed the following social impact benefits and disbenefits.

Benefits

Closure of one gaming venue and decreased EGM density was given neutral impact, with no weight.

• The closure of the Jim Dandy Hotel and the removal of five pokies operating within Greater Dandenong, together with the transfer of 25 pokies to the Players Hotel, were considered to be an impact of the application. While the closure of a gaming venue and a reduction in the number of pokies would constitute a benefit to the local community, the application would result in new gaming expenditure in Greater Dandenong. This was due to the transfer of 25 pokies from an under-performing venue in the Jim Dandy Hotel to a higher-performing venue in the Players Hotel. The hotel would also have increased attractiveness following the proposed renovations.

Increased gaming opportunities for those who enjoy gaming was given positive impact, with no to marginal weight.

• Increased gaming opportunities is a positive impact if the application will better serve the needs of gaming patrons by providing additional opportunities and choice for those who choose to play pokies responsibly. Approval of the application would likely better serve the needs of gaming patrons through the improved pokies offering and access at the Players Hotel, even with the closure of the Jim Dandy Hotel. However, there are currently 322 pokies across six venues (including the existing 25 pokies at the Players Hotel and 30 pokies at the Jim Dandy Hotel) within the trade area of this hotel. In addition, Greater Dandenong is ranked 2nd of 31 metropolitan LGAs for gaming machine density per 1000 adults.

Improved facilities enabling a greater range of services was given positive impact, with no to marginal weight.

• The community's access to, and use of, the proposed increased facilities at the hotel would provide a social benefit to the community of Greater Dandenong, with the addition of the bistro being the most significant change. The commission found the renovation works would predominantly only improve existing facilities at the hotel, and the addition of the bistro should be balanced in light of the existing food offering at other businesses close to the hotel.

Increased community contributions was given positive impact, with marginal to low weight.

• The commission took into account both the economic (financial benefit enjoyed by recipients) and social (improvement to the social fabric of the community) benefits associated with the proposed community contributions. The hotel committed to make community contributions of $20,300 each year to organisations providing services and facilities to residents of Greater Dandenong. The commission gave this benefit marginal to low weight.

Disbenefits

Possibility of an increased incidence and potential impact of problem gambling on the community was given negative impact, with moderate weight.

• Wherever accessibility to pokies is increased, there is a risk of an increase in problem gambling, which leads to other costs such as adverse health outcomes, family breakdowns and other social costs. The commission referred to, and relied on, its findings in relation to the economic impact of gambling expenditure associated with problem gambling on the community. The commission found there was potential for increased risk in gambling-related harms from this application, as the majority of the hotel's gaming room patrons are more susceptible to gambling-related harms, given the location of the hotel in Greater Dandenong and the socio-economic disadvantage of residents within the catchment area of the hotel.

Community attitude was given negative impact, with marginal weight.

• The submissions received from community groups and individuals indicated there was some limited negative attitude within Greater Dandenong to this application. The Council, as the representative body of the relevant community, objected to the application and provided evidence in support of its objection.

Read the gaming decision - EGM increase - Castello Players Hotel Pty Ltd

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