Will the sky fall in if pokies are removed?

The sky will fall in if pokies are removed from regional Tasmania???

The impending devastation will be obvious from the figures. A close look at say the Braddon electorate, will reveal all, surely? It’s the most regional of the Tasmanian electorate, the most distant from the State’s two casinos and currently home to 730 or 30% of EGMs outside casinos.

Alas the figures fail to give any support for Federal Group’s doomsday predictions.

Treasury modelled the effects of EGM removal for the recent parliamentary inquiry. Unbundling the model and introducing the latest figures for player losses from the Tasmanian Liquor and Gaming Commission for venues gives a detailed look at Braddon.

Town	No. Pubs	No. EGMs	Existing $m
			Player losses	Pub   retain	Out    flow
Burnie	4	110	7.1	1.6	5.5
Devonport	8	230	10.6	2.1	8.5
Latrobe	1	30	2.0	0.5	1.5
Penguin	1	25	1.0	0.2	0.8
Smithton	2	50	2.0	0.4	1.6
Somerset	2	60	2.8	0.6	2.2
Ulverstone	4	110	5.8	1.2	4.6
Wynyard	2	50	2.5	0.5	2.0
West Coast	5	65	1.9	0.3	1.6
TOTAL	29	730	35.7	7.4	28.3

Players lost $35.7 million in 2016/17. The pubs (including one club at Ulverstone) managed to retain only $7.4 million via commissions from Network Gaming after paying for the costs of hiring the EGMs. The balance of player losses of $28.3 million flowed out of the electorate to Network Gaming. To be fair, about $3 million of this is remitted as GST and another $3 million goes to the EGM financiers, so it doesn’t all remain with Network Gaming. Most of it does tho’.

The electorate totals are broken up in the table so the suffering of each town can be seen.

Over half of the EGMs in Braddon are in pubs owned by two large groups, Federal Group’s Vantage chain with 120 EGMs and Goodstone Group with 265 EGMs. With large groups there is more likelihood the amounts initially retained by their EGM venues will flow out of town.

However in this instance let’s be charitable and say the $7.4 million is all retained in local towns out of the $35.7 million lost by punters. That’s about 20% which is average for pubs across Tasmania.

Given industry norms, that translates into $2.5 million of EGM wages, or about 60 FTEs.

Treasury modelled three scenarios where pokies were removed from pubs and clubs, with varying amounts of migration to the two casinos, each with a different level of substitution of the non migration amounts for Keno.

The median impact model which the Labor party mentions in its newly released EGM policy assumes 5% of current EGM spending will migrate to casinos and 50% of the non migratory amounts will be spent on Keno. This is what the Braddon electorate will look like, both the existing situation and the situation after 2023 assuming the median impact scenario.

Town	Existing player losses	Existing		Medium impact
		Pub retain	Out   flow	Pub retain	Player retain	Out     flow
Burnie	7.1	1.6	5.5	0.7	3.4	3.0
Devonport	10.6	2.1	8.5	1.0	5.0	4.6
Latrobe	2.0	0.5	1.5	0.2	1.0	0.9
Penguin	1.0	0.2	0.8	0.1	0.5	0.4
Smithton	2.0	0.4	1.6	0.2	1.0	0.9
Somerset	2.8	0.6	2.2	0.3	1.3	1.2
Ulverstone	5.8	1.2	4.6	0.6	2.8	2.5
Wynyard	2.5	0.5	2.0	0.2	1.2	1.1
West Coast	1.9	0.3	1.6	0.2	0.9	0.8
TOTAL	35.7	7.4	28.3	3.4	16.9	15.3

Cast your eye over the last three columns. The amount pubs retain will fall by $4 million to $3.4 million. However players’ pockets will be boosted by an extra $16.9 million. The outflow will reduce from $28.3 million to $15.3 million. The latter amount comprises the migration to casino EGMs and the Keno spending other than the Keno commissions included in ‘pub retain’ amounts.

How can Federal Group argue Braddon will be worse off? There’s an extra $16.9 million retained locally.

Treasury’s high impact model assumes less migration to casinos at only 2.5% and a lower level of substitution of Keno at 25%. The high impact results for Braddon are as follows:

Town	Existing player losses	Existing		High impact
		Pub retain	Out   flow	Pub retain	Player retain	Out     flow
Burnie	7.1	1.6	5.5	0.3	5.2	1.6
Devonport	10.6	2.1	8.5	0.5	7.8	2.3
Latrobe	2.0	0.5	1.5	0.1	1.5	0.4
Penguin	1.0	0.2	0.8	0.0	0.7	0.2
Smithton	2.0	0.4	1.6	0.1	1.5	0.4
Somerset	2.8	0.6	2.2	0.1	2.0	0.6
Ulverstone	5.8	1.2	4.6	0.3	4.2	1.3
Wynyard	2.5	0.5	2.0	0.1	1.8	0.6
West Coast	1.9	0.3	1.6	0.1	1.4	0.4
TOTAL	35.7	7.4	28.3	1.7	26.1	7.8

Outflows are cut to $7.8 million. Players retain $26.1 million of amounts currently spent on EGMs. The ‘pub retain’ amounts fall to $1.7 million, meaning a fall in jobs of maybe 45 FTEs  from the current position before any change to pubs’ business models are made to capture some of the extra $26.1 million in players’ pockets?

Any reduction in pubs’ revenue is completely dwarfed by the extra cash in players’ pockets. What are the chances a regional area like Braddon will not be better off?

I’d bet on it.