Commission refuses application for new pokies venue at Commercial Hotel, South Morang

From 15 to 17 November 2016, the Victorian Commission for Gambling and Liquor Regulation heard an application from Australian Leisure and Hospitality Group Pty Ltd (ALH) to introduce 40 pokies at the Commercial Hotel in the City of Whittlesea.

The City of Whittlesea opposed the application and appeared at the hearing.

The commission was invited to consider the application on the basis that if it were granted, a substantial ($2.3 million) refurbishment of the premises would be undertaken to upgrade the public bar, create a rooftop beer garden, convert the drive-through bottle shop attached to the premises into a function room and create a gaming room for a total of 40 gaming machines (20 new machines, along with a further 20 to be relocated from other ALH venues within the City of Whittlesea).

On 8 December 2016, the commission refused the application, providing written reasons for decision its on 12 December 2016.

As a new pokies venue, the commission first considered the proposed plans for the premises and determined that it was, in principle, suitable for the management and operation of pokies.

It then went on to determine that there would be a net negative social and economic impact on the wellbeing of the Whittlesea community if the application was approved, and hence the 'no net detriment' test was not met.

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

Benefits

Gaming expenditure not associated with problem gambling was given marginal weight.Expenditure on capital works was given marginal to low weight.Employment creation was given marginal to low weight.Supply contracts was given marginal weight.Complementary expenditure was given no weight.Increased community contributions was given low weight.Increased gaming competition in the City of Whittlesea was given marginal weight.

• The portion of new expenditure not attributable to problem gambling is considered an economic benefit. In discussing anticipated expenditure, the commission noted with some concern that ALH did not provide the results of financial modelling it had conducted showing the impact that approving the application would have on its other venues in Whittlesea. Taking this into account, the commission reduced the anticipated transfer rate from 60 per cent to 50 per cent.
• The commission also considered that the premises is in an area of lower socio-economic disadvantage to other parts of Whittlesea, and the area is expected to experience population growth. Residents in those lower socio-economic areas also have existing high accessibility to pokies at other, closer venues.
• While the amount of proposed expenditure ($2.3 million) is substantial, there was limited evidence produced that the goods and services would be procured locally within the Whittlesea area.
• It was argued that the application would result in the creation of 20 jobs, including nine new full-time equivalent positions (five relating to gaming operations, and four relating to food and hospitality). The likely anticipated transferred employment was not significant enough to offset the creation of the additional positions. Nonetheless, the proposed additional employment was considered ‘positive but uncertain’.
• An estimated 60 per cent increase in food and beverage sales at the premises was considered uncertain, as was the degree to which any increased expenditure would be retained in the Whittlesea area.
• While it was agreed that redevelopment would increase the appeal of the venue, the extent of anticipated increase in food and beverage sales and the extent this would benefit economic activity in the Whittlesea area was considered negligible.
• The proposed contributions included an increase of $100,000 a year for 10 years, with $40,000 of this to be provided to the council for problem gambling initiatives. The contribution amount would then be reduced to $25,000 a year for the remainder of the period pokies were in operation.
• As Whittlesea is a competitive gaming market with a range of venue options, enhancing the competitiveness of the venue would be of limited benefit.

Disbenefits

Gambling expenditure associated with problem gambling was given low to moderate weight.Potential diversion of trade from retail facilities was given marginal weight.Diversion of trade from other gaming venues was given marginal weight.Increased demand for community support was given low weight.

• The portion of new expenditure attributable to problem gambling is a disbenefit. The catchment area of the venue rates has a higher socio-economic level than the municipality as a whole. However, the Vulnerability Analysis of Mortgage, Petrol and Inflation Risks and Expenditure Index showed that several populated parts of Whittlesea that are financially vulnerable fall within the catchment area of the venue, making the catchment area more vulnerable to gambling-related harms.
• Despite this, it was noted that ALH is an experienced gambling provider with robust responsible service of gambling practices.
• The installation of pokies at the venue would have a detrimental impact on local businesses due to a substitution of expenditure within the community. However, any diversion of trade is likely to be dispersed to the point that it would be unlikely to significantly impact any one retailer.
• The anticipated transferred expenditure rate of 50 per cent was expected to be spread across a number of existing venues inside and outside of Whittlesea. As 20 per cent of expenditure transfer was expected to come from other ALH venues, only 30 per cent would impact other venue operators.
• Any increase in gambling-related harms would be likely to increase demand on existing community support services in Whittlesea. Given the high existing need for support, additional resources would be required to cover new demand.
• No evidence suggested that current services would not be able to handle any increases associated with granting the application.

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

Benefits

Improved facilities adding to appeal of the Commercial Hotel was given low weight.Increased gaming opportunities for those who enjoy gaming was given marginal weight.Social benefit derived from increased community contributions was given low weight.

• The major renovation would provide a better range of services, however, other than the addition of the gaming room, the redevelopment would simply provide an improvement to the existing function and hospitality facilities at the venue, not provide additional facilities.
• Granting the application would provide gaming patrons with an additional venue in Whittlesea at which to play the pokies. However, the existing high number of pokies within the Whittlesea area means an additional venue would have marginal impact on gaming patrons.
• The level of contributions and the impact on local community organisations would be a moderate social benefit.

Disbenefits

Possibility of increased incidence and impact of problem gambling on the community was given low to moderate weight.Community attitude was given low to moderate weight.Increase to gambling-related crime and social disturbance (including family violence) was given marginal weight.Increased exposure of children to gambling activity was given low weight.

• A proportion of existing accessibility within the area will be associated with problem gambling which can have adverse health, employment, financial, emotional and relationship implications. The public health approach to considering this and ‘burden of harm’ research are both relatively new.
• Several parts of Whittlesea that are financially vulnerable fall within the catchment area of the venue, making them more vulnerable to gambling-related harms, although venue design factors and responsible gambling procedures would reduce the risk.
• The commission noted the consistent and sustained objection from the community, including objection from a number of individuals (outlined in a video presentation), as well as community organisations with concerns about further gambling-related harm, and demand for support services being affected if the application was granted.
• A community survey showed strong negative attitudes about the application, although it had a relatively small sample size, respondents’ demographics were not representative of the South Morang or Whittlesea community and it did not set out all benefits of the application.
• There was also limited evidence that patrons would cease using the venue if the application was granted and it stopped being a pokies-free venue.
• ALH did not provide any community support for the application.
• A range of factors were weighed including: no evidence was given that crime in the local area of Whittlesea would increase; new research showed a correlation between pokies density and family violence; Whittlesea has high family violence statistics, with above average population growth likely to further contribute to risk of family violence occurring; and minimal risk of an increase in existing levels of social disturbance (including family violence) if the application was granted.
• Granting the application would result in the loss of a pokies-free venue. However, the hotel is, and would continue to be, a family-friendly venue even though there would be possible exposure of children to the sights and sounds of the gaming room. This is based on the proposed layout of the entrances which would require families attending the bistro to pass in close proximity to the entrance of the gaming room.

See our infographic on the City of Whittlesea and compare its pokies statistics with other councils across Victoria.