Federal Group has its say over Tasmania’s new pokies legislation
The oldest run family casino business in Australia, Federal Group, has pushed back against plans to end its exclusive licence to operate poker machines in Tasmania.
The ABC reports that the Federal Group’s submission to the Future Gaming Markets draft legislation reveals the company is claiming that the earliest date the new gaming arrangements can commence under their agreement with the Crown is July 1, 2026 and overruling would “create a sovereign risk”.
Federal Group said the state government has not properly notified it of the changes and to force them through would be “highly inappropriate”.
It is a move likely to create tension within the industry from a company with a long history in Tasmania.
It was 1973 when Federal Group opened the country’s first legal casino at Wrest Point in the Hobart suburb of Sandy Bay.
Less than a decade later, it developed the Country Club Casino and Resort near Launceston.
Federal Group monopoly set to end
For almost 50 years, it has been the exclusive licence holder for Tasmania’s electronic gaming machines.
But if Tasmania’s government has its way, that monopoly will end on July 1, 2023, with pubs and clubs offered licences to operate their own pokies.
Draft legislation released in July revealed that under the new arrangements, the group is predicted to lose almost $25 million per year.
To put that in perspective, that is almost a quarter of the $108 million it made from gaming in the 2018-19 financial year.
Despite this, Federal Group’s statement at the time was rather bland, promising to “undertake a comprehensive review of the draft legislation”.
Since then, it has stayed quiet, at least publicly.
Behind the scenes it may be a different story.
The Tasmanian Hospitality Association, which has historically supported the family gambling business, has welcomed the proposed changes, saying they would create a fairer model for hospitality operators.
Federal, on the other hand, clearly holds “concerns” about the proposal.
Its submission to the legislation, written by executive general manager Daniel Hanna, does not hold back.
Conjecture over date of pokies change
In it, Dr Hanna describes the government’s proposal to bring in the changes by 2023, thus voiding its deed with the Crown through legislation, as an “egregious use of the legislative power of the parliament”.
The submission identifies “six general issues of concern”, but the focus is on when the policy comes into play.
According to the company, the 2003 Deed between the Crown and Federal Group includes a Rolling Term that “ensures the company is provided with at least four years’ notice of any changes to the arrangements”.
Under the term, Federal Group argues the arrangements continue “unless the Minister provides formal written notice otherwise”.
It claims the government has yet to do this and if the changes were to take effect on July 1, 2023, “the company should have been provided with a formal written notice by June 30, 2019.”
Dr Hanna writes that as no such notice was given, the earliest end date is now June 30, 2026.
It has backed up its claim with legal advice from senior counsel, which it claims confirms that “the Minister has not exercised the power under…the Deed”.
Instead, Dr Hanna writes, it is through “public utterances and correspondence with the Federal Group” that the government has ‘informally foreshadowed an intention to cease Federal Group’s exclusivity through legislation”.
In a statement, the Tasmanian government said whilst the Federal Group had “been a good corporate citizen and managed its responsibilities well,” the group’s monopoly over gaming would end in Tasmania in 2023.
“The legislation, which will be introduced into the Parliament later this year, implements the government’s policy which was clear that the new arrangements would start in 2023 and Federal Group supported this policy at the 2018 election,” it said.