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
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
"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
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
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
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.