a second casino for “backflip” o’farrell

James Packer’s “unsolicited proposal” for a second casino in Sydney has received a major boost. While NSW Premier Barry O’Farrell has been keen on the idea for some time, the NSW Opposition have now come to the party and formally endorsed the proposal, paving the way for legislative changes which will deliver a high-roller, poker-machine-free casino and hotel complex in Barangaroo.

This proposal will go ahead, and the effects will be widely felt. Star Casino will be relegated to little more than a sprawling RSL, which is how most locals see it anyway. And as a bargaining chip, Star will give up their exclusive rights to unrestricted multi-terminal gaming machines (MTGMs) such as electronic roulette and blackjack, allowing O’Farrell to fulfil his promise to the clubs industry to give them unrestricted scope to install these machines in clubs across the state. They’re not quite poker machines, so any reforms currently on the table won’t apply.

It must give the people of NSW a warm, fuzzy feeling to know that their leaders and aspiring leaders agree wholeheartedly on such important issues. There are few issues in politics that receive bi-partisan support, but apparently “more gambling” is one of them.

Mind you, the last time we saw such a unified, bi-partisan stance on gambling in NSW, especially with regards to a second casino, was almost exactly five years ago… and it was a very different story then.

It was in October 2007 that Premier Morris Iemma announced that there would NOT be a second casino in NSW. This is what he had to say at the time:

“What I’ve come along today is to end this silliness, end the nonsense that is going on. NSW remains a one-casino state. Exclusivity has been negotiated and I’m able to say that at a point in which I am advised, we’ve got a very good deal for the NSW taxpayer.”

That announcement came hot on the heels of a new exclusivity contract for Star City Casino (now simply “Star”) which doesn’t run out until 2019.

The NSW Opposition was in furious agreement. This was the reaction from the Opposition Leader:

“The real winners today are the community. This is the first sign in 12 years that this State Government understands that there is damage caused by the amount of gambling that is introduced into this state.”

And who was the NSW Opposition Leader in 2007?

Barry O’Farrell.

I guess he’s had a change of heart.

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11 Responses

  1. fAMILYMAN says:

    So Packer won’t put in poker machines but will he put in MTGM’s or later on say guess what I am not making enough so I need poker machines in or I will fire a lot of people. This is beyond a joke Will the clubs now get rid of poker machines and we start all over again with getting MTGM’s regulated because people are suicidal over them.

  2. Jeremy Bath says:

    Tom, your claim about MTGMs and clubs is incorrect.

    Star does not have exclusive rights to MTGMs.

    NSW registered clubs have had MTGMs for the best part of 15 years. In fact they were the first gambling venues in Australia to have them.

    Furthermore, under NSW gaming law, a single MTGM requires ownership of 4 or 5 gaming machine entitlements depending on whether it has 4 or 5 screens. Given the NSW Government has said a second casino will not be entitled to gaming entitlements, it would NOT be able to offer MTGMs.

    Regards

    Jeremy Bath
    Media Relations Manager
    ClubsNSW / Clubs Australia

  3. cyenne says:

    Thanks for the feedback Jeremy.

    You’re right about “exclusive rights”; I should have said:

    “Star will give up their exclusive rights to unrestricted multi-terminal gaming machines”.

    I know that clubs in NSW have had them for years; I also know that they’re capped, so that the maximum number of MTGM terminals cannot exceed 15% of a club’s gaming machine entitlements. Star has no such “capping” restriction.

    ClubsNSW has been stridently critical of this situation, as you no doubt know… seeing as you issued the Clubs NSW media release complaining about the government’s “secret deal” with the casino regarding MTGMs.

    And I know that that criticism stemmed from the MOU between Clubs NSW and the NSW Coalition, which included a promise to lift restrictions on MTGMs in clubs… a promise that can’t be met without paying Star significant compensation.

    Which is why it’s clear that should pressure be placed on Star to waive their right to this compensation, for any reason, Clubs NSW would not be unduly upset.

    But you’re a little off the mark with your comments about gaming entitlements. In NSW, MTGMs are classified as poker machines for clubs… but for casinos, they’re classified as table games. As gaming entitlements only relate to poker machines, the new casino’s lack of entitlements will most likely have no impact on their ability to install MTGMs.

  4. Jeremy Bath says:

    just to be clear, the 15% cap for clubs doesn’t yet apply. It’s due to commence sometime in 2014.

    Cheers

  5. cyenne says:

    That’s also a little incorrect. The 15% cap applies right now; it’s detailed in the Gaming Machines Act 2001 (section 61A).

    “An application for authorisation to keep a MTGM on the premises of a club cannot be granted if… the total number of terminals forming part of MTGMs kept on the premises is more than 15% of the total number of gaming machine entitlements held in respect of the club licence concerned.”

    There’s more, but that’s the gist of it.

    I think you’re referring to clubs that already had MTGMs in excess of the 15% cap when the laws were passed. They have until the end of this year, or early 2014, to reduce their MTGM numbers to comply with the cap.

    Time is getting tight on that one.

  6. Jeremy Bath says:

    Given the purchase price (around $125K), it’s been quite some years since a club purchased a MTGM. Of course i’m referring to already purchased MTGMs.

  7. Sam says:

    “And as a bargaining chip, Star will give up their exclusive rights to multi-terminal gaming machines (MTGMs) such as electronic roulette and blackjack, allowing O’Farrell to fulfil his promise to the clubs industry to give them unrestricted scope to install these machines in clubs across the state.”

    Tom, I think your logic here is a little messed up. Not only does Star not have exclusive rights to MTGMs in NSW but I’m more confused by why you think ‘The Star’ would give up anything to help a rival casino become licenced. James Packer has made clear he isn’t interested in majority ownership of Echo (the owner of the Star), and the NSW Government has said a second casino licence will be required to establish a second casino. That’s why the proposal submitted in September and revealed by the Government today is from Crown…the soon to be bitter rival of Echo.

  8. cyenne says:

    Thanks Sam.

    I’ve already covered the “exclusive rights” thing, as you’ll see in the previous comments between Jeremy Bath and myself. For clarity, I’ve now updated the post to refer to unrestricted multi-terminal gaming machines.

    Not sure where you’re heading with the second point. I never suggested that Star would want to help the new casino; I said that their rights, in the form of the agreement between them and the government of the day, forms a bargaining chip. The current government wants that agreement to end so they can fulfill a promise to the clubs industry; and it’s no secret that Star and Barry O’Farrell did not see eye to eye even before Barry fell in love with the prospect of a Packer-backed second casino.

    If this progresses to a point where the relevant parties are talking and compromises are on the table, you can bet that this will indeed be a bargaining chip. Star may even offer to give up their right to compensation, if the government imposes even stricter regulations on any second casino. It’s one of the few leverage points Star still has.

  9. Sam says:

    Are you serious? You think Star might give up their right to compensation of tens of millions of dollars to help the NSW Government help their immediate rival (i.e. the big Sydney clubs) in order to secure stricter conditions on the second casino that they most likely don’t even want i.e. MTGMs. (Look at Macau. Just a few thousand pokies…it’s all table based gambling. That’s what the wealthy Chinese gambler wants).

    I can’t see the Echo shareholders agreeing to such a deal even if the NSW Government tried it on. Even the hapless Echo management aren’t that stupid. Echo have already started repairing relations with the Premier. They are dumping anyone who was associated with the former management that tried to take on the NSW Government.

    The Star has no power whatsoever. Their agreement expires in 2019 and from that moment on they are cactus.

  10. cyenne says:

    Thanks again Sam… you’re more than welcome to disagree with me.

  11. Braveheart says:

    On hearing that the new casino was planned to be a high roller business, I wasn’t too concerned. I’ve always believed that if we must have gambling, let it be casino based, where people have to actually travel to gamble. I think it’s called destination gambling.

    The danger for most ordinary folk in Victoria, at least, lies in the availability of EGMs in local pubs and clubs which are so omnipresent.

    But the potential flow-on effects are concerning. Until reading this post I had not heard of MTGMs. It would be awful if these machines ultimately become as available as EGMs.

    The NSW ALP endorsement of the Casino also did not surprise me. Karl Bitar and Mark Arbib, former prominent NSW and Federal Labor figures, went to work for James Packer soon after leaving the Federal political scene.

    I think those two and the NSW Labour Right sabotaged Gillard’s deal with Wilkie over the proposed pokie reforms earlier this year. Clubs Australia’s heartland lies in the midst of Labour’s NSW western suburbs heartland. Bitar and Arbib would have used their influence for Packer in undermining the reforms. Labor can’t afford to lose the west.

    Anne Summers wrote an interesting analysis of this earlier this year.

    I am not fully informed of all the twists and turns, no doubt. I’m personally grateful to be free and hope eventually to assist others and to continue my quiet personal lobbying :).

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