Shortly before the NSW election in March 2011, then-opposition leader Barry O’Farrell trumped the ruling Labor Party by signing a memorandum of understanding (MOU) with ClubsNSW, the lobby group representing the powerful registered clubs movement. The purpose of the agreement was to “neutralise” registered clubs by persuading them not to campaign against the Coalition (as they had done at previous elections). In return, clubs got the promise of a sweet licensing deal — and that ship’s just come in.

The deal between the Coalition and clubland was negotiated by shadow racing minister George Souris, then MP for Upper Hunter and a former leader of the NSW Nationals. Included in the MOU was a lucrative “sweetener”: that a future Coalition government would extend the ClubsNSW licence for the electronic Keno game from 2022 to 2050.

The Coalition has now delivered on the deal. Deputy Premier, Racing Minister and Nationals leader Troy Grant has give the joint Keno licence-holders ClubsNSW and Tabcorp an unfettered exclusive licence to run the random numbers game in 1800 clubs and pubs across NSW, until April 1, 2050.

Grant, a former police officer from Dubbo, has hailed the licence extension as a victory for taxpayers, saying that Treasury would receive $231.2 million in licence fees. (Previously no licence fee was paid under an agreement with earlier Labor governments.)

“This represents additional money that can be invested into services and infrastructure for NSW,” he said.

In fact, any additional Keno revenue will be grabbed for motorway and road building, the twin infrastructure obsessions of Premier Mike Baird’s Coalition government.

Grant, who is also Arts Minister, seems blissfully unaware of the overseas trend of using gambling revenue for the arts. In Britain, the Big Lottery Fund has successfully financed filmmaking, art galleries, writing, opera and music over the past decade, distributing $15 billion to 130,000 projects across the UK.

But in NSW, the Coalition approach is quite the reverse: starve the arts to build more traffic jams.

The extension of the Keno licence to the middle of the century is a windfall for the licence-holders and a nice little earner for the NSW Treasury with its twin addictions: colossal revenue from stamp duty on property transactions and gambling tax.

As successive state governments have privatised public utilities — the most recent being electricity networks — so its revenue base is eroded. In this situation, the reliance on tax from the over-heated real estate market and gambling has become addictive.

No politician is brave enough to turn off the drug and allow Treasury to go “cold turkey”.

The generational licence extension is great news for ClubsNSW, whose overheads for running the game are absolutely minimal. (It has a Keno staff of fewer than 10.)

Keno’s other co-owner, Tabcorp, sits in the top 100 companies listed on the ASX and holds the Keno licence in Queensland until 2047, and 2064 in the ACT.

Its current Keno licence in Victoria with Premier Dan Andrews’ Labor government expires in 2022 and is currently under renegotiation.

Last year Tabcorp paid dividends to shareholders in March and September, and it is currently spending almost $1 billion to refit, renovate and expand The Star venue in Sydney’s Darling Harbour, which is situated opposite James Packer’s proposed Asian high-rollers casino at Barangaroo.

Tabcorp’s chair is Paula Dwyer, a former director of Leighton Holdings, Suncorp and Foster’s and she is an ex-board member of the Victorian Casino and Gaming Authority.

Non-executive director and chairman of Tabcorp’s remuneration committee is Ziggy Switkowski, former CEO of Telstra and a director of Oil Search Ltd.

NSW Racing Minister Troy Grant will need amendments to the Public Lotteries Act 1996 to gain approval for his Keno licence agreement.

While Greens MPs have vowed to scrutinise the Coalition’s overly generous Keno deal, Luke Foley’s opposition is approaching the issue with caution bordering on timidity. No surprises there.

Peter Fray

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