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Sep 27, 2011

Transparency please! Why the tax breaks for pokies clubs?

Has there ever been a more self-serving public campaign than the one being mounted by Clubs Australia? It's time for a closer look at the alleged benefits of clubs to the Australian community.

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Has there ever been a more self-serving public campaign than the one being mounted by Clubs Australia?

Clubs have long justified their gaming activities due to their value to the community. As Clubs Australia’s website says on its home page: “Clubs are not-for-profit community-based organisations whose central activity is to provide infrastructure and services for the community.”

And if there’s one thing that hard-pressed Labor parliamentarians have been stressing, it is that they value the important services and benefits to their local communities that clubs provide.

Attorney-General Robert McClelland was spreading the message in his local electorate this week. “Clubs are a big employer and play an important role in the St George area as they do in many communities,” McClelland apparently told the St George and Sutherland Shire Leader. “I am a big supporter of clubs and I also support action to deal with problem gambling.”

McClelland even argued that clubs contribute to national security. “In my national security role, I think the support clubs give to sport is great for the community,” he told the Shire Leader‘s Murray Trembath. “The Dragons team, for instance, brings together residents from different backgrounds into one cohesive mix.”

McClelland has since clarified his support for the government’s mandatory pre-commitment policy, but there are plenty of backbenchers in marginal electorates in NSW and Queensland feeling the heat.

But how seriously should we take the argument about the value of clubs to local communities? Not very. Clubs may have a legal structure as not-for-profit entities, but even a cursory glance at their operating activities and their financial statements shows they are essentially gaming operations with a philanthropic sideline.

A glance at the 2010 annual report of one of Australia’s largest clubs, the Panthers Group, shows how hollow the argument about community benefits really is. Panthers raked in $91.7 million from gaming in 2010, or 60% of its operating revenue. Against this, the amount Panthers spent back in its local community was relatively small: $617,000 in junior development, $2.9 million in member promotions, $1.4 million in donations, $698,000 in sponsorship, $2.4 million in artists and entertainment expenses for its members and $2.2 million in “other promotions”. Panthers also paid out $47 million in wages and employment benefits and paid the NSW government $28 million in poker machine tax. All told, the amount that Panthers could reasonably be said to be “returning to the community” still adds up to less than the amount it extracts from gamblers.

Or examine the Rooty Hill RSL, also in Sydney’s western suburbs. Its 2010 annual report features a prominent drop quote from none other than Donald Trump: “As long as you’re going to be thinking anyway, think big.” The club is certainly thinking big when it comes to poker machines: it enjoys “Australia’s largest non-casino installation of electronic gaming machines” with an amazing 726 gaming machine licences. Poker machines raked in $43.2 million of the club’s total operating revenue of $64.7 million — a neat two-thirds of its revenue. Against this, the club spent $5.7 million on entertainment, marketing and promotional costs, $1.8 million on members amenities and a miserly $601,000 on donations. $13.1 million was paid out in poker machine taxes and wages and staff costs accounted for $18.6 million, but the club was still able to record a healthy operating surplus of $5.2 million for its 2010 financial year.

For some clubs, the equation is even more imbalanced. In McClelland’s own electorate, poker machine revenue accounts for an amazing 81% of the St George Leagues Club’s total operating revenue of $39 million. Only $3.3 million found its way back to what the club calls “football clubs and community development and support” expenditure.

Clubs have of course long enjoyed support from local sporting communities. But these days the gambling seems to be taking over the sport. Perhaps that’s because gambling represents an ever-increasing share of many football club revenues. If you watch football in 2011, it’s hard to escape the hard sell pushed by the gaming and betting industry. The AFL club St Kilda  is sponsored by Centrebet to the tune of millions (how much is not disclosed), while Hawthorn makes $4.6 million a year, or about 20% of its revenue, from pokies — only $300,000 less than it makes from its match day receipts.

The pokies push by big sporting clubs is nothing if not brazen. Fairfax’s Phil Lutton has a fine piece of long-form reportage in the Brisbane Times today about the Brisbane Lions’ new social club, called LIONS@Springwood, located in Brisbane’s southern mortgage belt of Logan. It’s an elegant exploration of the reality behind the debate about poker machines and clubs. “It’s exceedingly clear what the owners see as the biggest selling point,” he wrote. “As you drive towards the car park, the signs declare you are entering a promised land of ‘200 pokies’. Just in case you missed it, the message is repeated in bold lettering on the club’s facade.”

Let’s remind ourselves that the Productivity Commission has already examined the beneficial aspects of gambling in clubs in some detail. An entire chapter of the 2010 gambling inquiry report is devoted to assessing them. The Productivity Commission found the “claimed benefits of gambling revenue on sporting activities and volunteering do not appear strong” and that “the [gross] value of social contributions by clubs is likely to be significantly less than the support governments provides to clubs through tax and other concessions”. In other words: far from clubs subsidising the community, the rest of the community is subsidising clubs

It’s true that clubs do spend considerable sums on sporting and recreation facilities in local communities. But are they necessarily the best organisations to perform this community service? As the Productivity Commission notes: “Even if it were accepted that clubs might have superior local knowledge about where to spend money for sport and recreation, the conventional government outsourcing model when hundreds of millions of dollars were at stake would involve appropriate budgetary controls, public scrutiny and transparency.”

The Rooty Hill RSL featured in the 2010 election campaign with a leader’s forum in which citizens were able to ask questions of Julia Gillard and Tony Abbott, but perhaps its time our nation’s leaders started to ask some hard questions of the clubs industry

First and foremost among these should be this: why should clubs that are essentially medium-sized suburban casinos continue to pay no company tax as “not-for-profit” entities, and their substantial tax concessions on gaming taxes compared to commercial bars and hotels?

The clubs lobby has opened up a broad front in its assault on government policy. Perhaps its time the government and the community demanded some extra transparency and scrutiny from clubs themselves, in the form of an inquiry into whether large clubs with hundreds of poker machines should be stripped of their tax-exempt status.

Ben Eltham —

Ben Eltham

Crikey arts commentator

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41 thoughts on “Transparency please! Why the tax breaks for pokies clubs?

  1. Mark Lucas

    As president of inner-western Sydney’s favourite pokie-free bowlo, Petersham Bowling Club, I can report that we’re painfully aware of the politics of this. As a true community club we are run by a board of volunteers who give their time freely & with enthusiasm. We are dedicated to preserving the open space & community amenity (the community took over in the first place in order to oust developers), & in 5 years or so, have turned an ailing club into a thriving community asset. We have a strong commitment to reducing our environmental footprint & we are also engaged in cementing our relationships with local sporting clubs based not on gambling income, but on shared enthusiasm & maintaining free access to the open space & other club facilities.

    That said- as little as a year or so ago when things were still looking very tough indeed, we soon found out where we stood in the eyes of the “peak industry body” & the traditional club world. We were having difficulty making ends meet but, despite being a small, well managed & largely self-sufficient club & carrying minimal debt, – it was made pretty clear to us that should we attempt to seek help from other local clubs we would be promptly swallowed up &, in time, redeveloped in order to improve their amenities. There was certainly no money available in the kitty to help support a genuine community asset.

    I’m therefore pleased to advise that we are, for the first time since we became pokie-free, quietly in the black at the end of the traditionally challenging winter months (largely on the back of an increasingly successful live music program). There’s still a tough road ahead but we don’t need to bleed the community to survive & we can give without taking. Time for a new business model folks- it can be done. http://www.thepbc.org.au

  2. Policeman MacCruiskeen

    Der are no problem gamblers here on Mutton Bird Island. None. There are pokies everywhere so there’s nivver a problem havin’ a bet. We fixed it so’s yez can have a bet in any public space at any toim a day or noight. Even the extensive National Parks have water and foir proof pokies in em. The whole setup is run tighter than a Health Services Union front office – Mrs MacCruiskeen and her tirty seven cousins are all employed in tha Mutton Bird Slaughterhole Memorial Bowling Club and Returned Veterans Resthome (Inc). Moi cousins, fifty three o’ the dears, are employed doin’ tha extensive grounds and kiddies play cell. Most o’ moi unregistered offspring work as counsellors with the Bowlo’s Committe for tha Impoverished and Chronically Drunk and they do a grand job keepin’ ’em on their stools and all.

    And pump money into tha’ community we do, day and noight, to keep tha’ community sozzled and bettin’ which is their preferred loifestoil and God Given Roight. Free Mutton Bird Fingers ‘n Chips mornin’ noon and noight on tha’ hour to keep ’em fed and on their stools; free buses (well, rickshaws since that last boatload snuck in but they’re cheap and funny as hell ta watch with their skinny little legs pumpin’ up hill and down dale) ta’ pick people up and come to the club fer a bet and tek ’em home agin whether they want to or not. AND we do entertainment – Mutton Bird’s Got Talent every evening. And sportin’ subsidies too – guernseys fer da Muttono Maulers Under Eights and toiny little skirts fer tha Muttono Ballbreakers Netball Team.

    So don’t be tellin’ us how ta live or phwat values t’abide boi, boyo Gillard.

    Policeman Mac
    (Post Restante, Monaco, Fr).

  3. Policeman MacCruiskeen

    The Oligarchs o’ Mutton Bird Island are proud to announce our new Mental Health Initiative called ‘Beyond a Joke’ to address the causes and co-morbidities o’ depression. Sponsored by the Bowlo and the Aristocrat Employee Assistance Scheme the public faces o’ Beyond a Joke will be Packer the Younger and Puttynose McGreedy when he’s not bouncin’ th’unruly outta the Bowlo. Upcoming events include the ‘Loser Loser Walk o’ Shame’ down the main street o’ Mutton Bird designed to prevent problem gamblers from goin’ on national TV and scarin’ tha kiddes with their tales o’ woe and misrery. First Proize’ll be a whole month’s accommodation fer the whole family in the old Bongo Van in the back car park durin’ winter. This’ll be followed by the ‘Whose a Wowser’ Taunt Fest in which tha’ citizens of Mutton Bird get ta abuse anyone who won’t have a bet and a beer with his mates; the worst wowser’ll be tarred and feathered and paraded around the ground as pre-match entertainment on Grand Final Day. Finally, there’ll be an old fashioned Telethon, fer 24 hours, ta prove that we’re all good blokes and raise funds for a Suicide Prevention Measure which’ll be a bleddy big electric fence over at Suicide Cliffs Scenic Lookout. Suicide, a tragic thing that can be so simply prevented with proper fencing. Yez can’t say we’re not a carin’ community and nor that we don’t have a handle on effective social policy that doesn’t inconvenience the daily lives o’ the normal.

  4. Peter Ormonde

    Top of the morning constable…

    Here at Wollibuddha we can show you isolated rustics a thing or two about dedication and respect…

    We of the Woolibuddha Progress Association have launched a plan to have each of the pokies at the local RSL dedicated to the memory of a fallen soldier – a small plaque, something discrete in flashing red neon … that reminds the punters with every puch of the button that their constant contributions are really a sacred mark of respect to the memory of one of our local fallen diggers. We reckon that would be just what they would have wanted.

    The Woolibuddha Bowling Club – across the road from the rissole – has gone downhill since the white leghorns took over in 1973. They just have to go one better of course. They propose to have each of their machines earmarked for a local worthy cause … so they’ll be having each of their machines tagged up as sloshing funds to the CWA, Vinnies, the chook breeders, the quilters and the local primary schools. Talk about transparency!!!!

    But no doubt it’ll give the punters great comfort to know that each press of the button will see a river of gold flowing through the town all the way down to the kiddies and the stoney broke. After all that’s really what it’s all about isn’t it?

    Only trouble is that with the town shrinking like a dam in a drought, we’ve now got a few more poker machines than we’ve got people in town. What with two pubs and two clubs we’re actually overendowed with recreational facilities of a rigged odds nature.

    Personally I’d be blaming the school. Those do-gooder teachers are doing such a top job that the kiddies have the wherewithall to get up off the lounge and go off to live in the city rather than just go onto Newstart and hang about smoking dope or sucking coldies like their parents. If it keeps up like this there won’t be enough pensioners to keep our clubs afloat at all.

    Maybe we should make the pokies compulsory. I’d appreciate your advice.

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