Commission grants application for additional 20 pokies at Castello's Cardinia Hotel

On 23 and 24 August 2018, the Victorian Commission for Gambling and Liquor Regulation heard an application from Castello's Cardinia Hotel Pty Ltd to increase the number of pokies at Castello's Cardinia Hotel in the Shire of Cardinia from 50 to 70.

The Shire of Cardinia opposed the application and appeared at the hearing.

On 10 September 2018, the commission granted the application with conditions. The reasons for decision were published on 9 October 2018.

The commission found the social and economic impact to the wellbeing of the Cardinia community if the application was approved will be slightly positive, and hence the 'no net detriment' test was met.

The commission's approval is subject to the following conditions:

• the hotel must continue to makes its existing cash contributions of $20,000 per year
• the hotel must make additional cash contributions of $40,000 per year for as long as the additional 20 pokies are in operation. The contributions must be increased by $500 each year
• the contributions must be made to not-for-profit community groups and sporting organisations providing services and facilities to residents in the Shire of Cardinia
• the contributions must be made in equal quarterly payments and evidence of the payments must be provided to VCGLR if requested
• if the contributions are not made as required, the additional 20 pokies must cease operation immediately until the outstanding contribution amounts are made
• building renovation works at the hotel must be substantially completed by 10 September 2020
• the commission may extend the time for completion of the building works. If an extension is granted, the commission may require that any additional pokies cease operation during the period of the extension
• from the time the additional pokies become operational, and for as long as they are in operation at the hotel, the rear entrance from the car park to the gaming room must be closed at 10 pm each night and not reopen until 9 am the following day
• the hotel must install appropriate screening and doors for the gaming room before the additional pokies can be operated.

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

Benefits

Expenditure on capital works was given postive impact, with low weight.

• It was estimated that $2.5 million will be spent on renovations to the hotel, including redevelopment of the bistro area, a new parent's room, redevelopment and relocation of the children's play area, redevelopment of the main entry foyer, redevelopment of the sports bar and TAB area, and refurbishment and reconfiguration of the gaming room (including screening to reduce visibility from the remainder of the premises). If the application was not approved, only minor refurbishments to the value of $500,000 would be made at the hotel. The building renovation works will be made in two stages over two years, with the changes to the gaming room being competed in Stage 1. As there was some uncertainty that trades and supplies would be obtained from within Shire of Cardinia, this benefit was given low weight by the commission.

Community contributions was given positive impact, with low weight.

• The hotel will make additional cash contributions of $40,000 per year (increased each year by $500) to local not-for-profit community groups and sporting organisations. These contributions are in addition to existing community contributions made by the hotel, which are largely "in-kind" contributions.

Additional employment was given positive impact, with low weight.

• The improved facilities and changes to the operation of the gaming room will result in the creation of 5.5 new full-time equivalent (FTE) employees at the hotel. This will include 3.5 new FTE staff in the gaming room, including a full-time gaming room manager and a part-time YourPlay Ambassador.

Gaming expenditure not associated with problem gambling was given positive impact, with marginal weight.

• The portion of new gaming expenditure not attributable to problem gambling is an economic benefit. It is anticipated there will be additional expenditure of $1.9 million in the first 12 months of the additional 20 pokies being installed, with $700,000 of this being new expenditure. This new expenditure equates to an increase of 2.6 per cent in total gaming expenditure in the Shire of Cardinia. The commission considered that various factors suggest the expenditure associated with problem gambling will be low to moderate, due to population growth in the area, the lower levels of socio-economic disadvantage and RSG practices at the hotel.

Increased gaming competition in the Shire of Cardinia was given positive impact, with low weight.

• This is an existing venue in an area with several gaming venues. The proposed building renovations will make the hotel more attractive to both gaming and non-gaming patrons, so has the potential to draw patrons away from other venues in the Shire of Cardinia.

Disbenefits

Gambling expenditure associated with problem gambling was given negative impact, with low weight.

• The portion of new gaming expenditure attributable to problem gambling is an economic disbenefit. The commission accepts there will be new expenditure of $700,000 each year at the hotel with a proportion of this associated with problem gambling. While the hotel is located in a catchment area exhibiting mixed levels of socio-economic disadvantage making the community more vulnerable to the risks of gambling-related harm, the commission's view is that the current RSG practices will assist to mitigate the risk of problem gambling and gambling-related harm.

Diversion of trade from other gaming venues was given negative impact, with nil weight.

• Evidence was given that 63 per cent of the additional expenditure at the hotel is projected to be transferred expenditure from other gaming venues in the Shire of Cardinia. Given the number of gaming venues in the area, the commission noted the transferred expenditure is predicted to be spread across a number of venues and the impact of the diversion of trade is unlikely to be felt by a single venue.

Diversion of trade from non-gaming venues was given negative impact, with nil to marginal weight.

• Improvements to the hotel, including changes to the bistro and sports bar, may attract new patrons from non-gaming venues, such as some restaurants and sporting clubs in the Shire of Cardinia. While the commission considered the diversion of trade from non-gaming venues will have a negative economic impact on the community, this is likely to be lessened by the increasing population in the area.

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

Benefits

Improved facilities enabling a greater range of services was given positive impact, with low weight.

• There will be no real change to the range of services at the hotel and the children's play area will be reduced in size. However, the existing facilities will be improved to better cater for the anticipated population growth in the region.

Increased gaming opportunities for those who enjoy gaming was given positive impact, with low weight.

• The additional 20 pokies will improve the number and type of machines on offer at the hotel. The increase in the number of pokies available will help meet demand during peak utilisation periods at the hotel.

Social benefit derived from increased community contributions was given positive impact, with low weight.

• Community contributions to not-for-profit community and sporting organisations in the Shire of Cardinia will provide a direct positive social benefit.

Disbenefits

Possibility of increased incidence of problem gaming and the potential impact on the community was given negative impact, with low weight.

• Wherever accessibility to pokies is increased, there is always a risk of an increase in problem gambling and gambling-related harms, which may lead to other costs such as adverse health outcomes, relationship breakdowns, emotional harms and other social costs. The commission accepted that a proportion of the new expenditure at the hotel will be associated with problem gambling. However, the commission considered the additional 20 pokies will not have a significant impact on gambling-related harm due to mitigating factors, such as the mixed levels of socio-economic disadvantage in the catchment area, the Shire of Cardinia being a mature gaming marketplace, the current RSG practices at the hotel and management's demonstrated commitment to the welfare of its patrons.

Community attitude was given negative impact, with low weight.

• The commission acknowledged submissions from members of the local community and several community support organisations expressing concerns in relation to gambling generally and to the additional pokies in the area. The submissions raised concerns that the community is vulnerable to gambling-related harm, there are already too many pokies in Shire of Cardinia, and the hotel attracts families and exposes children to gambling. The commission noted that the quantity of submissions from the community was relatively low and primarily indicated concerns with pokies in general rather than concerns with the hotel operations.

Increased exposure of children to gambling activity was given negative impact, with nil weight.

• The gaming room is currently highly visible from the entrance of the premises. However, the renovation works will see the children's play area enclosed and relocated to a different part of the hotel, while the gaming room will be screened to decrease the level of exposure of children to gambling activity.

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

See our infographic on the Shire of Cardinia and compare pokies statistics with other councils across Victoria.