poker machine spending approaches record levels

I came across a couple of articles during the week that made me stop and think. The first was a relatively innocuous article in the Entertainment section of the Sydney Morning Herald. Titled “Hitting The Jackpot”, it was all about how Sydney’s clubs are diversifying, with better menus, gymnasiums, swimming pools and so on.

The article opened with this line:

With pokie revenues in decline, venues find creative new ways to lure punters.

Excuse me? I didn’t realise poker machine revenues were in decline. I scanned the rest of the article for some justification for this statement but none was forthcoming; not surprising though, as this was a restaurant-based article. But Clubs Australia CEO Anthony Ball was quoted as saying:

There’s now a lot of competition for people’s disposable income so clubs have been diversifying and changing their business strategies to include better food, accommodation and other innovative things, particularly to attract families.

I thought about this for a while. Seems to me that the implication from Ball (and article author Sue Williams) is that clubs now have to compete with other entertainment options, and that this is behind not only the drive to diversify, but also the alleged drop in poker machine revenue.

Not sold on that, personally.

The second article was a press release from market research corporation Roy Morgan. They regularly release the Roy Morgan Gambling Monitor, in which they make pronouncements and predictions about gambling revenue based on market research surveys that they carry out.

The latest Roy Morgan Gambling Monitor stated that Australians spent $10.3 billion on poker machines in the 12 months to March 2012, which was a sharp drop from $12.3 billion in the 12 months to March 2011. Sharp indeed; that represents a drop of over just 16% in 12 months.

I’m not sold on this either. Roy Morgan source their figures from market research surveys, not actual financial information, and everything I’ve seen shows that poker machine spending is still increasing, and is certainly not in decline. Sure, maybe they look at the data in a different way… but the report containing this data costs $9,500. It’s a little out of my price range. But on the face of it, their assertion that poker machine spending has dropped by $2 billion seems a little odd.

So I decided to take a look.

Unfortunately, not every poker machine jurisdiction in the country makes their financial information available. The Northern Territory, the ACT and poker machine giants NSW obstinately refuse to publish revenue figures for poker machines. That, however, is not the case for the rest of the country. I was able to extract and collate figures for Tasmania, South Australia, Victoria and Queensland, and the tale they tell is compelling.

The Good

The good news is that, in some states, poker machine revenue is indeed in decline… if only marginally.

In Tasmania (according to the Tasmanian Department of Treasury and Finance), there has been a decline in poker machine revenue of around 3.3% over the past 8 months (since the beginning of the 2011/12 financial year). That equates to a drop of approximately $4.9 million from the previous period, from $146.8 million (July 2010 – February 2011) to $141.9 million (July 2011 – February 2012). Further information is not available, but there is a steady if small decline from month to month.

Tasmania poker machine spending

In South Australia (according to the South Australian Office of the Liquor and Gambling Commissioner), there has also been a drop in poker machine revenue since the beginning of the 2011/12 financial year. South Australia publishes data quarterly, and only data for the first half of the financial year is available; but from this, there has been a decline in poker machine revenue of around 1.1% over this 6 month period, when compared to the first half of the 2010/11 financial year. That equates to a drop of approximately $4.35 million, from $389.7 million (July 2010 – December 2010) to $385.3 million (July 2011 – December 2011).

South Australia poker machine spending

The reduction in poker machine revenue in Tasmania and South Australia may be small, but it is still a decrease on previous earnings. This is not the case for Victoria or Queensland.

The Bad

In Victoria (according to the Victorian Commission for Gambling and Liquor Regulation), there has been an increase in poker machine revenue of around 1.5% in the 12 months to March 2012. That equates to a jump of approximately $39.3 million from the previous period, from $2.636 billion (12 months to March 2011) to $2.676 billion (12 months to March 2012).

What’s more disturbing is that since November 2010, poker machine revenue in Victoria has increased every month bar one, when compared to the same month the previous year. And poker machine revenue in February 2012 ($202.9 million) and March 2012 ($228 million) was higher than for any other February or March since poker machines were introduced to Victoria 20 years ago.

In fact, Victoria is very close to recording an all-time high for poker machine spending in a financial year.

Victoria poker machine spending

In Queensland (according to the Queensland Office of Liquor and Gaming Regulation), there has been an increase in poker machine revenue of around 4.04% in the 12 months to March 2012. That equates to a jump of approximately $74.57 million from the previous period, from $1.84 billion (12 months to March 2011) to $1.92 billion (12 months to March 2012).

That’s a massive increase, almost double Victoria’s increase, but more alarming is the trend. Poker machine revenue in Queensland has been increasing month-to-month since the 2009/2010 financial year; every month has seen an increase on the same month the year before. This shows a steady and consistent increase in poker machine spending in Queensland.

Queensland poker machine spending

The combined increase in poker machine revenue in Victoria and Queensland ($113.8 million) over the past 12 months more than offsets the modest combined decrease in revenue in Tasmania and South Australia which, when adjusted to allow for the fact that they only cover a partial period, comes to around $16 million.

This suggests that there has in fact been a significant increase in poker machine revenue, not a decrease as has been stated; and it is the states with the strongest and most pervasive poker machine industries that are leading this surge in spending.

The Ugly

This suggestion naturally leads to the question mark that is NSW. As I said earlier, the NSW Office of Liquor and Gaming Regulation does not release financial information about the poker machine industry. That’s a real shame, as with more than twice as many poker machines as any other state, it would be informative to analyse NSW’s poker machine revenue over time and see exactly what is happening there.

Without access to the NSW OLGR’s data, I decided to take a look at a number of annual financial reports from clubs around NSW and see what they said. I chose the clubs movement as they are the strongest sector of the NSW poker machine industry, with fewer restrictions and regulations than the hotel industry.

I looked at Dee Why RSL, King of Clubs (Campbelltown Catholic Club), Parramatta Leagues Club and Blacktown Workers’ Club. I also looked at the annual reports for the Panthers and Mounties groups, as they both encompass a number of venues.

The results were in keeping with what is happening in both Victoria and Queensland. While the Panthers group had a decline in poker machine revenue of 0.33% (or $299 thousand) and Parramatta Leagues Club had a decline in poker machine revenue of 2.74% (or $1.3 million), the other clubs all showed strong growth over the past financial year.

Dee Why RSL had an increase of 7.68% ($2.5 million), the Mounties group had an increase of 11.13% ($7.26 million), Blacktown Workers’ Club had an increase of 5.45% ($1.89 million) and King of Clubs had an increase of a whopping 14.66% ($3.67 million).

Between them, these six clubs/groups recorded an increase in poker machine revenue of $13.7 million over the past financial year, which is a 4.6% jump; far more than was seen in Victoria or Queensland.

Admittedly this is only a subset of venues in NSW, but the trend of increasing poker machine revenue is consistent with the other states that have a high number of poker machines. As such, it is not unreasonable to suggest that nationally, poker machine revenue is continuing to rise and that this increase is driven by the three states with the most machines.

In fact, far from falling to $10.3 billion it seems likely that poker machine revenue in Australia is pushing onwards and upwards, and may even be approaching $13 billion, a record that would surely be an indictment on the industry.

This is not an industry in decline. Despite all efforts to persuade us otherwise, spending on poker machines continues to rise. Poker machine gambling still dwarfs every other form of gambling in Australia, and unless changes are made, always will. Given the high concentration of poker machines in low socio-economic areas (a circumstance that is repeated in every state in the country), this is a problem indeed.

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4 Responses

  1. Cathy says:

    I had a bit of a chuckle while listening to the radio on my way home tonight. There was an advertisement which stated (in jest ‘I presume’) something about a tunnel being built from the CBD to Rooty Hill RSL. This ad was encouraging people to come and play ten pin bowling etc.

    Well, maybe but I would imagine the real message is, yes come and spend your $20 playing bowls or whatever and hopefully another $200 of yours will find its way into at least one of our hundreds of poker machines.

  2. fAMILYMAN says:

    The clubs have two poodles .two poodles.two poodles.the clubs have two poodles.they call them Julia and Craig.they bark when the clubs whistle whistle whistle they bark when the clubs whistle the two little silly poodles.

  3. Peter says:

    so even though you can’t get exact figures from the state who has the most machines, you assume that pokie spending is on the rise???

    another good scare campaign from a disgruntled ex pokie player…

  4. cyenne says:

    Peter,

    The uncertainty surrounding the NSW figures was made very clear. I notice you have nothing to say about Queensland or Victoria and their consistent month-by-month growth in revenue.

    What you also fail to realise is that every comment you have made on this blog has been approved by me. You’ve consistently abused that privilege, and your comments about problem gamblers here and on Twitter show what you really think. You are a trouble-maker, one who supplies services to the poker machine industry, and you think this is all a great joke.

    Congratulations. You are the first person to have been blacklisted from this blog.

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