Keep the Pokies Shut: Australians are saving $38 million a day

by | Apr 13, 2020 | Business

The pokies are shut. Thousands of Australians believe they should stay shut for as long as possible. Meanwhile, more of the big pokies players are looking to quit the toxic industry. Journalist and anti-gambling campaigner Stephen Mayne reports on the latest dramatic developments in pokies-land, particularly RSL Victoria as its overpaid “pokies manager” Tabcorp tries to sell out.

These are amazing times for the global gambling industry and particularly in its most lucrative global market, Australia, where the industry was all set to seize a record $25 billion in losses from gamblers in 2020.

However, all 5000 pokie dens across Australia were summarily shut down on Sunday, March 22, and since then gamblers have saved $38 million a day, providing community stimulus of more than $800 million so far. The record $14 billion in pokies losses the industry was targeting for 2020 might now struggle to even reach $10 billion, but it all depends on when the shut-down is lifted.

Ask anyone you know and there is clearly a lot of community support for the pokie shut-down to continue for as long as possible, with more than 5500 retweets of this suggestion on Good Friday

Time to ban political donations by gambling interests

Australia’s pubs, clubs and casinos are notoriously large political donors and participants in the ongoing scandal of revolving doors and cash for access. They have literally hired more than 30 former political staffers and MPs over the past two decades whilst directly donating more than $10 million to registered Australian political parties over that same period, not to mention the $30 million-plus they’ve spent on their own political campaigning, such as destroying the Wilkie-Gillard pre-commitment deal of 2011 and re-electing the pro-pokies Tasmanian Liberal Government last year.

Labor in Tasmania was proposing to remove all pokies from Apple Isle pubs and clubs and got smashed by a multi-million industry campaign designed to scare all future state and territory governments everywhere from trying that one on again.

Democracy Gamed: how Tasmania was sold to a pokies family from interstate

Most Australian MPs hate the ruthless pokies lobby but are too scared to take them on. Therefore, many will be quietly cheering if the pokies remains silent for the rest of 2020.

However, you can bet your last dollar the ruthless industry will be lobbying like mad for the earliest possible re-opening, promising big donations to the party branches running state and territory governments which move first. The NRL is pretty much a wholly owned subsidiary of the pokies industry and you can see how immorally they are playing the re-opening game so far.

This prospect of huge corrupting “re-open the pokies” donations is a massive conflict of interest for our 8 state and territory governments. In order to manage this conflict, the Lib-Lab political duopoly should broaden their admirable voluntary ban on tobacco industry donations and apply it to all the gambling companies they licences in Australia, along with their peak bodies such as Clubs NSW and the AHA.

Pokie Profits Investigation: clubs put executive pay, the state and empire building before community service

If they don’t do this, history suggests the whatever it takes pokies industry will literally promise millions in donations from July 1 onwards if governments move promptly to re-open their destructive businesses. The July 1 date is important because any payments received in the 2020-21 financial year wouldn’t be disclosed until February 1, 2022, under Australia’s pathetic campaign finance disclosure laws.

I personally think the casinos should be allowed to re-open their gaming floors before the pubs and clubs, because gambling is what they do and they are far more heavily regulated. The pubs and clubs should be challenged to first prove they can operate responsibly and secondly test whether they are even prepared to open their bars and bistros without the adjacent gaming rooms in operation.

The casinos, led by Crown Melbourne, were impressive with the speed in which they implemented social distancing policies closing every second poker machine in the week before the complete shut down. By way of contrast, I visited a Woolworths pokies pub, the Doncaster Hotel, and 3 Victorian RSLs (Highett, Caulfield and Springvale) during the same period and none of them had made any voluntary changes to their operating model.

Desperate RSL Victoria trying it on again

In other gambling moves, we’ve got an interesting update on developments inside RSL Victoria, the state’s second biggest pokies operator after Woolworths. Back in November last year, this website revealed a controversial round robin of $500,000 payments between RSL Victoria branches diverting charitable funds which should be spent on veteran welfare to instead pay off a pokies debt owed to gambling behemoth Tabcorp.

It was a remarkable tale which didn’t generate any mainstream media follow-up but caused enormous consternation inside the Victorian RSL, particularly when the Australian Charities and Not-for-Profit Commission (ACNC) launched its own investigation into the revelations.

For reasons which it is yet to explain publicly, the ACNC ended up signing off on these round robin payments between the pokies dominated Rye RSL and the defunct East Malvern RSL, as the new RSL Victoria CEO Jamie Twidale explained in this February 12 letter to branch Presidents.

Indeed, the pokies-captured cronies at head office took the ACNC letter as a green light and are now planning a similar scheme, albeit this time six times bigger involving $3.2 million of charitable funds.

From Beaumauris, to Box Hill, to Beaumaris, to ANZAC House, to ANZ Bank

It goes like this. ANZAC House is pretty brutal on its RSL Victoria pokies branches which lose money or go into debt, particularly when the debt is owed to head office. ANZ is the house banker across the Victorian branch network and is comfortable lending tens of millions because the branch network owns almost $1 billion worth of land and buildings.

However, most of the sub-branches don’t have a lot of cash and can’t afford to own their own pokies licences, so head office cooked up a scheme where gambling giant Tabcorp buys and maintains most of the 2800 machines spread across 50 venues in return for a daily fee of $28 per machine. It’s a nice little earner for Tabcorp which brings in about $25 million a year in revenue out of the $200 million-plus lost by gamblers on machines in RSL venues.

The one RSL Victoria pokie den which does own its own machines is the Box Hill RSL, the richest sub-branch in the state because it is sitting on prime land worth at least $70 million and is competently run by Denis Fernando, a former senior pokies executive for Bruce Mathieson and Woolworths.

Tabcorp’s welfare payment from RSL veterans fund keeps pokie losses ticking

It also benefits from being one of only two pokies venues in the dry area known as Box Hill, which  has a large and prosperous Chinese community, many of whom love to gamble. Think of the battle for the Federal seat of Chisholm last year between Coalition candidate Gladys Liu and Labor’s Jennifer Yang and you get the picture.

Anyway, it takes two to tango with a round robin charity-to-pokies push so the other branch in on this giggle is the Beaumaris RSL, which was forced to ditch its pokies and sell its land and buildings for $9 million in 2013, as this lengthy ABC report explained at the time.

The Beaumaris RSL subsequently closed its doors in 2015 and, five years later, the homeless branch is still sitting on around $4 million in cash, which is legally classified as “patriotic” or charitable funds because it came from the sale of hard assets.

Facing a cash crisis in head office after a group of younger veterans put a stop to the regular closure and sale of an average of two pokies venues a year (see a partial list here) to prop up the rest of the struggling gambling network, the gambling-captured executive management team inside ANZAC House have come up with a new scheme.

The proposal sees, as noted in this recent Presidential letter to Beaumauris members, the Beaumaris RSL making a charitable donation of $3.2 million to the Box Hill RSL, with Box Hill donating it straight back as a commercial donation.

Bingo! Beaumaris is then free to donate the $3.2 million to ANZAC House for commercial purposes and the old cronies on the main board have resolved to use these funds to pay off various commercial debts to head office racked up by other poorly performing pokies branches.

Poppy appeal cancelled, how does RSL Victoria raise charity funds?

Where does welfare spending on veterans fit into all of this, you might ask? Nowhere. Even though the 2020 ANZAC appeal has been devastated by Covid-19 restrictions and the cancellation of ANZAC Day events, the league is not using the Beaumaris cash to prop up its suddenly decimated 2020 veteran welfare budget.

The ANZ Bank must be holding its nose watching all of this go on, but it stands to benefit through reduced loans to the struggling league. ANZ is easily Australia’s biggest lender to the gambling industry and has long been Crown’s main banker. Ironically, Tabcorp chair Paula Dwyer is a mainboard ANZ director who chairs the ANZ audit committee.

Can debt-laden Tabcorp get out of the pokies?

Meanwhile, Tabcorp has decided pokies management is a toxic business with which it longer wishes to be associated, so its Gaming Services division is up for sale, as you can see in this ASX release from February outlining its latest half year results. Tabcorp has also ruthlessly just told 374 landlords of its traditional TAB outlets across the country that it will be taking a 6 month holiday on rental payments as The Saturday Paper’s Lisa Martin revealed over the Easter break.

Coles was the biggest player to ditch its pokies business last year and Woolworths was also planning to demerge its giant ALH pokies joint venture with Bruce Mathieson before the Covid-19 crisis prompted it to delay this until 2021, at the earliest. Ironically, as the Nine papers reported over Easter, the 8000 workers in the 330 Woolworths-Mathieson hotels won’t quality for the Job Keeper payment because Woolworths generates more than $1 billion a year in revenue and has actually seen overall sales revenue go up during this crisis, particularly from packaged liquor and grocery sales.

Hopefully, Woolies and the ruthless billionaire Mathieson will look after these team member with some payments or redeployment into the supermarkets and retail liquor businesses rather than heartlessly dumping thousands of hotel workers onto leave without pay for the next few months. The pokies have been good to them over the years so they can afford to be generous.

Anti-pokies younger veterans to challenge old guard RSL Victoria board

Whilst Tabcorp is currently trying to sell, this might be difficult because there’s a fair prospect RSL Victoria will also be substantially reducing its pokies footprint if a group of younger veterans are successful in sweeping the board elections at the upcoming AGM in July.

The Hawthorn RSL, a pokies free operation and the largest RSL sub-branch in the state for modern service members (post-Vietnam), last week nominated Dan Cairnes to run for RSL State President, along with two other members for general board positions. Showing the future, they held a virtual meeting on Zoom to endorse the nominations and the 50-plus faces appearing on the big screen shocked a few of the older branches who dialled in to watch proceedings.

The Hawthorn RSL President, Lucas Moon, is set to run for RSL Victoria Treasurer. He’s the one standing to the immediate left of Senator Jacqui Lambie in this feature photo from a Hawthorn RSL branch function last year.

Moon is a CPA with an MBA who was also a pretty handy M113 APC tank driver back in the day and is associated with the broader military digger network rather than the snooty Officer/Duntroon brigade. He has held senior positions with big companies such as Lend Lease, Transurban and CIMIC and is responsible for managing large teams delivering big projects.

Cleaning up the RSL’s governance and finances and setting strategy will be a walk in the park for Moon who is used to dealing with the CFMEU, state government contracting partners, blue blood law firms and public company CEOs.

Cairnes was a Major but of the younger generation and never reached 4 star general territory which is common with other RSL or government military appointments, such as with the pedigrees seen in multiple past and present governors and governors general appointed across the country over the years.

Cairnes is also politically connected with the union and Labor movement in Victoria and was co-founder of the Veterans in Construction business with former SAS veteran Dave Farrell, which, unlike RSL Victoria with its 3000 staff, prioritises actually finding civilian work for veterans.

Additionally, Glen Ferrarotto, a current ordinary RSL Victoria board member (there are 12 in total) has declared his hand to run for RSL State President, attempting to knock off incumbent Rob Webster who has been a director for nearly 30 years and wants to go again. This is the first time in the 102 Year history of RSL Victoria that a current board member is running against the incumbent President. Ferrarotto, the youngest RSL Victoria director on a board still heavy with Vietnam veterans, runs a successful recruitment agency business focusing on ex defence and blue collar workers.  

New board to stop residential care fire sale

The incumbent RSL board, driven by President Webster, also seem to have a death wish as they plough ahead with outrageous directions to flog off the league’s 50% stake in RSL Vasey Care, a business which provides residential accommodation to around 500 veterans across Victoria, many of whom are vulnerable and need support.

Given the epidemic of veteran suicide we’ve seen widely reported in recent months, if there’s one business RSL Victoria should be in it is keeping troubled veterans off the street by putting a roof over their heads. And selling in the middle of a crisis makes absolutely no sense either.

Pokies: the Rise of the Machines

The other 50% stake in RSL Vasey Care is held by the War Widows Guild but there are so few war widows left, RSL Victoria treats them like a doormat and is attempting to force through the sale of the entire business in spite of increasing opposition from inside and outside the Vasey and RSL Victoria board rooms.

And what do the old cronies who dominate the current RSL Victoria board plan to do with the $100 million plus they would raise from a fire sale of RSL Vasey Care, which declared net assets of $197.2 million in its 2018-19 annual report?

Well, they’ve contracted to pay another $68 million to the cash-strapped Andrews Government for new 10 year pokies licences in August 2022, so with the Vasey cash they might be able to pull that one off without having to borrow $50 million-plus from the ANZ Bank.

The younger veterans don’t like the bad business with pokies and are planning to contest 8 of the 10 board seats which are up for grabs this year. The ticket will include Vietnam veterans and regional RSL nominees but the common theme will be the absence of any old guard.

It will be interesting to see if Tabcorp manages to flog its underperforming Tabcorp Gaming Services division before the potential change of direction comes about at this year’s RSL Victoria AGM. You see, RSL Victoria is one of their 2 biggest pokies clients across Australia. They are used to playing the old cronies off a break, raking in lucrative profits for delivering an underperforming gambling business which causes much community harm whilst failing to deliver substantial profits back to the league, let alone a big boost for veteran welfare services.

And if the best these cronies can come up with is a dubious $3.2 million round robin transaction between the Box Hill and Beaumaris sub-branches, they don’t have much of a record to run on.

Particularly given this scheme was conceived before the Covid-19 closures caused a financial crisis inside RSL Victoria when its 50 pokie dens were suddenly shuttered overnight.

More than 3000 staff were impacted, although most are students or part-timers and very few are actual veterans. The Federal Government’s Job Keeper scheme will kick in from May 1 but you’ve got to wonder if many of these 50 RSL pokies rooms across Victoria will ever open again. We are yet to see what RSL Victoria board has implemented to protect veteran assets during this economic crisis. 

Given that Tabcorp owns the machines rather than RSL Victoria, a new board could very easily just tell Tabcorp to come in and take the 2800 pokies away. That would make selling Tabcorp’s pokies management division a far more difficult prospect.

With $3.8 billion in debt and a plunging share price, Tabcorp has more than enough problems on its plate. It sees a brighter future in lotteries, wagering and sports gambling, much of which is rapidly migrating online, but it remains to be seen if it can get out of the toxic pokies business before RSL Victoria does likewise.

As for RSL Victoria, it remains a governance and transparency basket case under the current board. Major generational changes are needed to bring in a more professional and contemporary leadership team.

And once that is achieved, you might just see the Victorian RSL championing improvements in RSL governance across the country, including ending the practice of the pokies industry abusing the league by using their good name to operate, whist sharing in very little of the actual pokies profits.

Unlike in NSW and Queensland, the Victorian RSL actually owns all the buildings which house their pokies rooms and, besides leaking $25 million a year in management fees to Tabcorp, they are in full control of their destiny with a property portfolio worth close to $1 billion.

Sadly, RSL Victoria has been way too captured by the pokies industry ever since Jeff Kennett aggressively rolled out more than 25,000 of Victoria’s 30,000 machines during his 7 year term as Liberal Premier up until October 1999.

These days, Kennett is chairman of Hawthorn Football Club, the biggest AFL pokies clubs (see this pokies league ladder), and is also the majority shareholder in a business called Amtek, which has a lucrative contract to service Crown Melbourne’s circa 2800 poker machines.

When James Packer wanted to stop Crown’s Sydney-based rival Star Entertainment from moving aggressively into the high roller business a few years back, he bought a hostile stake in the business and proposed appoint Jeff Kennett as “independent chair”. 

Talk about revolving doors!

As an ex military man himself and a current member of the Camberwell RSL, a proudly pokies free establishment, maybe Jeff should think about totalling quitting all his pokies gigs and instead jumping on the RSL Victoria reform bandwagon.

Donate to help clean up RSL Victoria and boost independent journalism

As ANZAC Day approaches, why not donate to the Hawthorn RSL, knowing it is a vibrant pokies free branch full of younger veterans genuinely focused on the RSL mission of improving veteran welfare. 

And speaking of donations, why not match Stephen Mayne in donating $20 a month to keep this wonderful investigative journalism website going with its growing stable of regular contributors. We need the likes of Michael West and his crew more than ever at times like this when there are huge stories to cover and resources are tragically being stripped from many of the mainstream media outlets designed to keep our politicians, corporates and not-for-profit institutions like the RSL honest. Click here to become a regulator contributor to michaelwest.com.au.

Love a flutter? Here’s a flutter!

Editor’s Note: hear hear!

ABOUT THE AUTHOR

Stephen Mayne

Stephen Mayne

Stephen Mayne is a Walkley Award journalist, shareholder activist, former City of Melbourne councillor, former spindoctor for Jeff Kennett’s Victorian Liberal Government, founder of crikey.com and publisher of wwww.maynereport.com. He can be reached on [email protected]

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