Federal Group’s poker machine monopoly in Tasmania set to end

by William Brown Last Updated
Advocates want more Tassie pokies funds steered towards problem gambling help

Major upheaval has been proposed to the Tasmanian gaming sector, with longstanding sole operator Federal Group set to lose its poker machine monopoly in the Apple Isle.

The ABC reports that the almost 50-year monopoly will end in July 2023 under proposed legislation, which will result in a $30.62 million annual loss to the company.

Among other proposed changes include the tax rate for poker machines at Tasmania’s casino almost halving, which has sparked outrage from critics.

The Federal Group will be almost $25 million worse off under the long-awaited move to break up its grip on the state’s gambling licences.

Tax rate changes to dent Federal Group bottom line

An increase in the Keno tax rate at pubs and clubs will cost the group a further $5.28 million, but an almost 12 percentage point decrease in casino poker machine tax rate somewhat cushions the blow, with the Tasmanian government projecting it will boost its annual revenue by an extra $11.2 million.

Despite having a poker machine monopoly in Tasmania, the changes mean Federal Group’s annual revenue will drop from $108.75 million in the 2018-19 financial year to $84.07 million in future financial years, according to projections.

The annual Social and Economic Impact Study, tabled in the Tasmanian Parliament in early July, found 47 per cent of adults gambled in 2020, down from 58 per cent in 2017.

The report found Tasmanians spent an average of $773 on gaming in 2020, which was the lowest per capita spend in Australia.

The prevalence of problem gambling reduced slightly, dropping from 4.6 per cent of gamblers in 2017 to 4.4 per cent in 2020.

Finance Minister Michael Ferguson said the tax rates are in line with those in Far North Queensland and strike the right balance.

“The new arrangement…will return more revenue to the state, more to the community, more to pubs and clubs and less to the Federal Group, meaning we are delivering what we said we would,” he said.

“Breaking that monopoly means that we’ve had to also find tax rates that are defensible and consistent with the other like jurisdictions, so you can’t just take the pluses and not the minuses, we’ve had to do that prudently and that’s what we’ve done by following the north Queensland benchmarks,” he said.

Mr Ferguson said it was a “difficult day” for Federal Group, who he said has been “solid corporate citizens in many respects”.

The tax rate on electronic gaming machines at pubs will increase by 8.03 per cent under the change, while the tax rate on EGMs at clubs will increase by 7.03 per cent.

Those increases, plus hikes in the Community Support Levy paid by gambling operators, will result in the state government raking in $8.5 million more in revenue than it did in the 2018-19 financial year, according to the government’s modelling.

The policy is largely identical to the government’s gaming policy announced in 2018, except for setting licence fees and tax rates.

The proposed legislation also reduces the cap on the number of poker machines in the state by 150.

Public consultation on the proposed changes, which need to be endorsed by both Houses of Parliament to come into effect, will run for five weeks.

Federal Group comments on proposed changes

In a statement, Federal Group executive general manager Daniel Hanna said the company which has a poker machine monopoly in Tasmania will comprehensively review the draft legislation.

“As Tasmania’s largest private-sector employer and major tourism and hospitality operator, we need to consider the full impact that these arrangements would have on our company,” he said.

“Federal Group is extremely proud of the way we have managed Tasmania’s gaming industry as the exclusive licence holder for nearly 50 years.”

Independent federal MP Andrew Wilkie said the tax rates are “even more outrageous than feared”.

For a start, Federal Group will enjoy a thumping big tax cut on their casino poker machines. And while the Tasmanian government will try to make a virtue of the fact that Federal is worse off in gross terms, the reality is they had no inherent right to the old tax rate,” he said.

“Moreover, they own some of the state’s most lucrative hotels, which will all steeply increase in value with the issue of their individual licences, that previously they have not held but which are contained in the government’s poker machine package.”

Mr Wilkie said the policy is a “payday for the parasites in the poker machine industry who bankrolled the Liberal Party’s 2018 election win,” and claimed they would be “delighted with this fabulous return on their investment”.

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