the figures don’t add up in darebin

Something curious is happening in the City of Darebin.

A local paper, the Northcote Leader, ran a couple of stories recently (here and here) about Darebin Council’s new tough gaming policy, and the recent decision (by the council) to issue a permit for 30 new poker machines to the Stolberg Beer Cafe hotel.

It seems strange that the council would talk up their tough stance on pokies on the one hand, while approving new machines on the other. Apparently that’s because the old policy allowed the permit to be granted because there were only two objections. That’s a far cry from the people-power actions taken recently in Romsey, Jan Juc and Port Fairy!

But that’s not what puzzles me.

You see, when it comes to pokies, the state of Victoria is completely covered by regional and municipal caps. The City of Darebin falls entirely under a regional cap that states that they can have no more than 986 pokies in the area.

By strange coincidence, that’s exactly how many pokies Darebin already has. 986 poker machines, spread across fifteen venues in five suburbs. That’s nine hotels and six clubs, ranging from the Reservoir Bowling Club with 23 machines, right up to a quartet of hotels (Cramers Hotel, Croxton Park Hotel, Edwardes Lake Hotel and Summerhill Hotel) with 100 machines each.

That’s a lot of machines… and it begs the question, what was the council doing by approving 30 additional machines?

I believe the answer lies in the recent Gaming Machine Entitlement auction that was held in May of this year. This auction sold off pokie entitlements that had previously been help by Tatts and TabCorp, and comes into effect in late 2012. One of the stipulations of the auction was that no single individual or company could hold more than 35% of the available entitlements for hotels, or for clubs.

This brings me to the Australian Leisure and Hospitality Group (ALH), that strange partnership between Woolworths and pokie king Bruce Mathieson. On current figures, ALH hotels have more than 43% of Victoria’s hotel-based pokies (that’s just under 6,000 machines!)… so when the auction was held, ALH was faced with the need to slash their pokie numbers.

Which they did. The reason this affects Darebin is that currently, the five ALH hotels in Darebin house 366 pokies. But in the auction, ALH only purchased 260 entitlements for the City of Darebin. Some of the other Darebin venues also dropped their numbers in the auction, but the ALH’s decrease was by far the most significant. The end result was that the number of pokies in existing venues in Darebin will drop in 2012, by more than 100.

This circumstance opened the door for other parties to get involved… and one of those was Cafe De Biere, the company behind the Stolberg Beer Cafe Hotel. Back in October 2009, the VCGR approved Cafe De Biere’s application for a gaming licence, “without approved venue”. This means that they hold a gaming licence, but have nowhere to use it. Interestingly, the Pink Hill Hotel’s gaming licence application (without approved venue) was approved at the same time… but I digress.

So in October 2009, a full seven months before the GME auction, and a time when Darebin’s regional cap was full, the VCGR gave Cafe De Biere a gaming licence. Doesn’t seem to make sense, does it? The VCGR couldn’t have know for sure that Darebin’s total number of pokies would drop enough to allow a new player to get involved… could they?

Hmmm.

So, the bottom line as I see it, is that the Stolberg Beer Cafe has council approval for 30 machines. They hold a gaming licence. But they don’t have an approved venue, and even if they did, they couldn’t install the machines until August 2012… two years from now. Because that’s when their entitlements kick in.

And all this means that while the people of Darebin will have fewer pokies to contend with by the end of 2012, they will also have an extra venue to worry about… unless VCAT upholds an objection to the council’s permit. I’ll be keeping an eye on that one.

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