Revised pokie laws a fillip for pubs

Carolyn Cummins Commercial Property Editor

February 21, 2009

NEW gaming machine laws could provide a fillip for the pub sector, where falling patronage and revenue have led to an increasing number of pubs being put on the market.

In its half-year results, ING Real Estate Entertainment Fund, which owns pubs such as The Bourbon at Kings Cross and the Commodore at North Sydney, reported a $28.9 million loss to December 31 compared with a previous figure of $12.5 million profit. Revenue rose 3.6 per cent to $20 million.

The fund attributed the loss to contractions in the value of its interest rate hedges following significant falls in interest rates.

However, long-awaited changes to the NSW Gaming Machines Act are tipped to provide tangible benefits for the hotel industry, according to CBRE Hotels director Joel Fisher.

The changes, which came into force this year, represent the first significant review of the act for many years.

Mr Fisher said the review would provide a more strategic approach to the distribution of poker machine and hotel licences within NSW at the start of what was tipped to be a more active year for the hotel investment market.

"These changes will, I believe, lead to activity in the relocation of licences and machines within the state, particularly in areas with a lower density of gaming machines," Mr Fisher said.

"We're expecting publicans to take advantage of the changes, which should make it easier to relocate licences in certain geographic areas to serve the needs of the community more efficiently.

"Overall, the changes are a positive for both the hotel industry and community as a whole, as they should lead to a more efficient allocation of machines and licences."

One of the changes to the act involves the relaxation of regulations relating to the removal of hotel licences.

Previously, if a publican wanted to move a hotel licence, there was a requirement to forfeit one gaming machine to the Government for every three machines relocated, unless the new property was within a one-kilometre radius.

Under the new laws, no forfeiture is required if the property is within the same local government area and the licence is moved with the machines.

Assessments were based on a new system which classified local government areas into three bands, based on gaming machine density, gaming machine expenditure and certain socio-economic indices. These classifications will be reviewed quarterly.

Mr Fisher said Band 1 involved generally low-density gaming areas with a low expenditure on gaming and a high socio-economic index. Band 2 areas were generally rated as moderate on all three counts.

Band 3 areas were characterised by high-density gaming, high expenditure on gaming and a low socio-economic index.

For increases in gaming machines in Band 2 areas, publicans would have to prove the increase in machines would have a positive impact on the local community.

For increases in gaming machines in Band 3, the requirements were far more stringent, with a requirement to prove that the increase would have an "overall positive" contribution.