Pubs with pokies stand to make over $15 million more than normal if the state government's proposed gaming legislation is approved, according to modelling by a respected economist.
Subscribe now for unlimited access.
$0/
(min cost $0)
or signup to continue reading
The modelling, done by Tasmanian economist and former accountant John Lawrence, filled a hole in the electronic gaming machine discussion highlighting the changes to pub pokies profit for various groups.
According to Mr Lawrence's modelling, under the proposed legislation the 95 pubs with 2350 pokies would profit $28.5 million each year.
Under his model an average pub with 30 EGMs would make an extra $200,040.
Prior to undertaking the modelling, Mr Lawrence said he knew profits would be high but that the final figures had been "staggering".
Every time I try to explain it to people, they say 'that can't be true'.
- John Lawrence, economist
Mr Lawrence's modelling was based on gambling expenditure released by the Treasury Department, figures from Network Gaming and leaked loss figures for each pub in 2015/16.
Under current legislation operators make about 30 cents on every dollar put into each machine. They lose a further 10 cents on variable costs like wages and electricity, meaning every $5 maximum spin on a machine nets the venue $1.
The proposed legislation would see that 20-cent profit increase 42 cents, so a $5 bet would net $2.10.
Data from the state government's Treasury Department showed the 366 pokies in Launceston had $1,463,341 tipped into them by punters.
Based on Mr Lawrence's model, under the current legislation this would have made the operators a combined $292,668 and $614,603 under the proposed legislation.
Part of Mr Lawrence's model also ranked venues based how much players lost on the machines, which was gleaned by the leaked loss figures.
A venue with 30 machines that fell under the highest rank - venues which on average have player losses in the top 10 per cent - would net the operator an extra $567,333, a 115 per cent increase in profit.
Mr Lawrence said a number of Federal Group venues fell into this category.
Conversely, a venue that averaged player losses in the bottom ten per cent would see an 835 per cent increase on their profits, but only receive $8023.
For Federal Group pokies, Mr Lawrence projected profits from each EGM would be significantly higher than other pub pokies, despite the proposed legislation being aimed at breaking the group's stronghold on the gaming industry in the state.
Federal Group pokies profits for each EGM were projected to jump from $12,440 to $26,844, resulting in $5.2 million more for the group across their 360 machines.
The state government released a summary of the modelling it used to develop the Future of Gaming proposal which indicated similar windfalls for pubs with pokies to Mr Lawrence's projections.
It showed their net profits, combined with those from clubs, would jump up by $17.3 million, before outlaying variable costs. It also indicated Federal Group's Network Gaming arm stood to lose $30.6 million and $24.7 million overall after profiting more from its casino operations.
The draft Future of Gaming legislation is open for public comment until August 9. It will then be introduced into Tasmania's lower house, which it was understood would happen after the state budget is released at the end of August.
The Tasmanian Hospitality Association, whose members stand to benefit from the Future of Gaming legislation, remained tight lipped about the projections.
"The THA is working through the draft legislation over the consultation period. Our primary focus is ensuring that the smaller venues are looked after in this process, particularly those in regional and rural areas," THA chief executive Steve Old said.
Federal Group general manager Dr Daniel Hanna was less reserved. He said the legislation changes would have an "indisputable impact" on the company.
He said the group had undertaken its own analysis which projected heavy losses for the company.
This has found that if the proposed arrangements were applied to gaming activities in the 2018-19 financial year, then Federal Group would have been $20 million worse off in that year.
- Federal Group general manager Dr Daniel Hanna
"This is after taking into consideration any offsetting increases related to pubs owned by Federal Group."
According to the state government's modelling, it would mean Federal Group generated $84.1 million instead of $108.7 million.
Non-Federal Group pokies in pubs and clubs revenue was projected to rise from $42.2 million to $59.5 million.
Mr Lawrence's modelling showed the same number, without the inclusion of clubs and as a gross profit, from jumped from $8.6 million to $18.5 million.
While the government has stated its intention with the Future of Gaming legislation is to break Federal Group's monopoly on the industry, Mr Lawrence said there was a discussion lost in the debate.
"Yes they're breaking the monopoly, but it's overlooked that the existing system is already very, very profitable. All the pubs and clubs want more but they're all making a heap already," he said.
Yes they're breaking the monopoly, but it's overlooked that the existing system is already very, very profitable. All the pubs and clubs want more but they're all making a heap already."
- John Lawrence, economist
Finance Minister Michael Ferguson said Mr Lawrence's projections reiterated the government's aims with the proposed legislation.
"The new arrangements ... will return more revenue to the state, more to the community, more to pubs and clubs, and less to the Federal Group. The comments merely reflect what the Government has been saying for three years now," he said.
"The future gaming market model will result in pubs and clubs retaining a greater share of EGM gross profit under the future model."
What do you think? Send us a letter to the editor: