Commission approves application for additional 20 pokies at Hogan's Hotel

On 2 and 3 April 2019, the Victorian Commission for Gambling and Liquor Regulation heard an application from Hogan's Hotel Pty Ltd to increase the number of pokies at Hogan's Hotel in Wallan from 45 to 65.

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

On 9 May 2019, the commission approved the application with conditions.

The commission found the social and economic impact to the wellbeing of the Shire of Mitchell community, if the application was approved, will not be detrimental. Hence the ‘no net detriment’ test was met.

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

• building renovation works must be substantially completed before the commencement of the operation of any of the additional 20 pokies at the hotel
• the hotel must make annual cash contributions of $100,000 (increased each year by the increase in CPI) to not-for profit community groups and sporting organisations which provide services and facilities primarily to residents of the Shire of Mitchell
• if the contributions are not allocated in full each year as required, operation of the additional 20 pokies must cease immediately until the outstanding contributions are made
• the gaming room may only operate between 7am and 1am the following morning (Sunday between 10am and 1am the following day, Good Friday and Anzac Day between 12 noon and 1am the following day).

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 hotel proposed to undertake renovations at the venue at an estimated cost of $2.45 million if the additional 20 pokies were approved. The major renovations are: new lounge and lobby extension ($840,000), restaurant and group dining works ($400,000), kitchen extension ($240,000) and alterations to the existing gaming lounge ($180,000). While there will be a benefit to the Shire of Mitchell , the specific extent of the benefit was unable to be determined, as no evidence was presented on whether local businesses would be engaged to carry out the works.

Complementary expenditure was given positive impact, with marginal weight.

• The hotel estimated there will be an increase to complementary expenditure of approximately $1 million in the first 12 months as a result of the redevelopment of the venue. While the commission considered there is likely to be an increase in non-gaming expenditure at the venue, no specific evidence was given quantifying the extent of this benefit and to what extent this will simply be driven by population growth in the area.

Supply contracts was given positive impact, with marginal weight.

• The commission noted that, while the hotel is likely to procure goods and services from local suppliers within Shire of Mitchell, there is no guarantee this will be the case.

Additional employment was given positive impact, with marginal weight.

• The hotel estimated that six equivalent full time (EFT) positions will be created as a result of the additional 20 pokies being installed. The additional positions will be 1.5 EFT positions in the gaming room and 4.5 EFT positions associated with the preparation and service of food. While the hotel has no specific policy requiring that employees be hired from within the local area, the hotel's evidence suggested that the new jobs will be filled by candidates from within the Shire of Mitchell. The commission regarded the anticipated additional employment of six EFT positions as a benefit to the Shire of Mitchell, but also noted that some employment may be transferred from within the LGA.

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

• The hotel committed to make annual cash contributions of $100,000 to local sporting clubs, charities and community groups should the application be approved. The hotel submitted it had made approximately $56,000 per year in cash contributions averaged over the past five years. The hotel was committed to maintaining its current level of cash contributions and the new commitment would represent an annual increase in benefits of approximately $44,000.

Increased gaming competition in the Shire of Mitchell was given positive impact, with nil to marginal weight.

• The additional 20 pokies at the hotel, relative to the total number in the Shire of Mitchell, would not likely result in a substantive increase in gaming competition. Following the removal of all pokies from the Magpie and Stump Hotel, there will be no other gaming venue located within 5km of the hotel and only two located within 10km of the hotel. Accordingly, it is unlikely that the new pokies will significantly contribute towards increased gaming competition in the LGA.

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

• The portion of new expenditure not attributable to problem gambling is an economic benefit. It is estimated that the additional 20 pokies will result in new expenditure of $552,313 per year in the Shire of Mitchell. The commission considered new expenditure at the hotel is likely to be modest and the evidence suggested that there will be a marginal benefit to the Shire of Mitchell from new expenditure not associated with problem gambling.

Disbenefits

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

• The portion of new gaming expenditure attributable to problem gambling is an economic disbenefit. The commission found that the SEIFA indices indicated that the majority of the hotel's gaming room patrons surveyed had an average level of socio-economic disadvantage and financial vulnerability that would not make them significantly more susceptible to gambling-related harms. The commission considered that a portion of the estimated $552,000 of new expenditure generated by the additional 20 pokies in the first 12 months would be associated with problem gambling. However, the commission noted that no new pokies would commence operation until after the renovation works are completed. This included frosted screens to obscure vision into the gaming room. The commission also regarded the proposed condition restricting gaming room hours to no later than 1am on any day as a significant factor mitigating the incidence of problem gambling.

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

• The commission recognised that new gaming expenditure at the hotel (estimated to be approximately $552,313 in the first year) could divert trade from local gaming and non-gaming businesses in the Shire of Mitchell. However, the commission was unable to determine whether that expenditure would necessarily have been spent elsewhere within or outside the LGA. While the commission considered that there will be a negative impact associated with the diversion of trade from non-gaming venues, the negative impact is likely to be minimal as it would most likely be spread across numerous venues and would be lessened by the anticipated and substantial growth in the population of the Shire of Mitchell.

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

• It was estimated that 30 per cent of the new expenditure is likely to be transferred from other venues, but only 10 per cent would be transferred from gaming venues within the Shire of Mitchell .As the expected transferred expenditure from within the LGA is low and there are no gaming venues within 2.5km of the venue, this negative impact was given nil weight.

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

Benefits

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

• The additional pokies will better serve the needs of gaming patrons by providing additional opportunities and choice for those who choose to play pokies. This is relevant due to the recent removal of pokies from the Magpie and Stump Hotel and the current absence of gaming venues within a 2.5km radius of the hotel. The commission considered approval of the application will provide some additional opportunity for patrons to play pokies during peak periods, however the new expenditure estimates indicate that this will be moderate.

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

• The commission considered that the community's ability to access and use the proposed improved facilities at the venue will provide a social benefit to the community of the Shire of Mitchell. However, the commission recognised that the proposed renovations will improve the venue's existing offerings rather than create completely new facilities.

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

• In addition to providing an economic benefit, increased community contributions can have a positive social impact by improving the social fabric of the community in which they are made. The commission considered that letters from local community groups, and provided by the hotel with its application, indicated the hotel's level of contribution to the community and how existing community contributions have benefitted the community. These provided the commission with an indication of how the hotel's increased contributions (as described in the conditions) will enhance the social fabric of the community.

Disbenefits

Possibility of an increased incidence and potential impact of problem gambling on the community (including family violence) was given negative impact, with low to 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 considered that there is potential for increased risk in gambling-related harm as a result of the additional 20 pokies, which gives rise to possible negative social impact. However, strategies to be put in place by the hotel, including the reduction in opening hours of the venue, will mitigate some risk associated with problem gambling.

Community attitude was given negative impact, with low weight.

• A number of individuals and community groups opposed the application, however the opposition generally expressed opposition to pokies in general rather than the specific proposal. The commission noted that the council's objection to the application was made after soliciting an independent report and making an assessment on the benefits and disbenefits of the application.

Read the gaming decision - EGM increase - Hogan's Hotel Pty Ltd

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