Pokie jobs, jobs,jobs?

Local parliamentarian Adam Brooks left no room for doubt. He confided to The Advocate that Rebecca White’s ”latte-sipping, lefty agenda ... will shut down jobs and will shut down the hospitality industry in the North-West Coast.”

Gosh, the entire hospitality industry?

How many jobs are there in pokie pubs? Let’s have a look at what an industry participant submitted to the recent parliamentary inquiry.

The above sets out the financial aspects of EGM operations at an average Tasmanian pub with pokies. The annual gross profit or player losses are $1.04 million. It is likely to be a venue with 20 pokies altho’ that’s not explicitly stated. The average player losses per EGM is therefore $52k just slightly more than the statewide average for 2016/17 of $46k.

The wages component of the EGM operations are $75k .....which represents 7.2% of player losses. The above case study was presented to the inquiry trying to establish the low level of returns to venues. Hence it is unlikely the wages figure is understated.

There it is, straight from the horse’s mouth. EGM wages are only 7.2% of player losses.

But even if wages are low relative to player losses, perhaps the remaining player losses benefit towns in other ways. If only they remained...?  Unfortunately most of player losses are creamed off by Federal Group’s Network Gaming and leave town, as this chart shows.

Pubs (and clubs) receive 30% of player losses via a commission from Network Gaming. Venues pay part of this back to Network Gaming to cover the hire of EGMs. This means that the worst performing EGMs end up with only about 10% of player losses whilst the top performers with player losses approaching $100k pa manage to hang on to about 25% . The remainder, highlighted in ‘red’ in the above chart is taken by Network Gaming. There’s not much ‘blue’ in the chart. There’s not much that stays in towns.

The following table has the relevant figures for regional areas, all those area outside the urban areas of Launceston and Hobart. (NB a more detailed break up for regional towns is shown in the Appendix at the end of the blog).

	no EGMs	Player losses $'000	Town losses $'000	Pubs retain $'000	Wages $'000	FTEs
Regional areas
South	270	9,797	8,073	1,724	705	17.6
North	295	8,163	7,042	1,121	588	14.7
North West	765	36,880	29,258	7,621	2,655	66.4
Total regional	1,330	54,839	44,372	10,467	3,948	98.7

Total player losses are $54.8 million. Half the Statewide losses in pubs and clubs accrue in regional areas. But $44.4 million leaves town courtesy of Network Gaming. Of the remaining $10.5 million, $3.9 million is paid in wages for 98.7 FTE employees. That’s 7.2% of player losses.

Whatever job losses may initially occur in EGM pubs if Labor implements its policy, they will be more than offset by job gains in other sections of hospitality, even in casinos and keno as some spending migrates, not to mention other areas of local economies that will attract more spending. One thing is glaringly obvious. By stopping the massive drain to Network Gaming how can regional areas not be better off if pokies disappear from the streets?

APPENDIX

REGIONS IN DETAIL	no EGMs	Player losses $'000	Town losses $'000	Pubs retain $'000	Wages $'000	FTEs
South
Brighton/Bridgewater	60	4,020	3,084	936	289	7.2
Sorell/Dodges Ferry/Dunalley	90	2,898	2,434	464	209	5.2
New Norfolk	48	1,008	922	86	73	1.8
Huonville	25	800	673	128	58	1.4
Snug	20	490	433	57	35	0.9
Orford	15	323	293	29	23	0.6
Dover	12	258	235	23	19	0.5
Total	270	9,797	8,073	1,724	705	17.6
North
George Town	55	1,750	1,473	278	126	3.2
Longford/Perth/C'belltown	60	1,525	1,338	188	110	2.7
St Helens	45	1,433	1,205	227	103	2.6
Scotsdale/Bridport	45	1,393	1,178	215	100	2.5
Deloraine/Westbury	35	873	768	104	63	1.6
Exeter/Beauty Point	35	700	648	53	50	1.3
Bicheno	20	490	433	57	35	0.9
Total	295	8,163	7,042	1,121	588	14.7
North West
Devonport	230	10,615	8,466	2,150	764	19.1
Burnie	110	7,096	5,462	1,634	511	12.8
Ulverstone	110	6,316	4,916	1,400	455	11.4
Somerset	60	2,800	2,230	570	202	5.0
Wynyard	50	2,469	1,953	516	178	4.4
Smithton	50	2,000	1,625	375	144	3.6
West Coast	65	1,866	1,599	267	134	3.4
Latrobe	30	1,800	1,395	405	130	3.2
Penguin	25	1,000	813	188	72	1.8
Shearwater	20	550	475	75	40	1.0
Sheffield	15	368	325	43	26	0.7
Total	765	36,880	29,258	7,621	2,655	66.4
Total regional	1,330	54,839	44,372	10,467	3,948	98.7

Note to the above table.

·       The table is based on data from Tasmanian Liquor and Gaming Commission where player losses are provided for local government areas. Where LGAs include more than one town or where LGA data is aggregated for LGAs with two venues or less, a model was used to estimate player losses.

·       ‘Pubs retain’ = commission of 30% of player losses less EGM hire of $4,500 per EGM.

·       ‘Town losses’ = Player losses less ‘pubs retain’.

·       Wages = 7.2% player losses

·       FTEs shows the estimated number of FTEs assuming an FTE wage of $40,000.