Clubs that operate poker machines have misrepresented the amount of gambling losses they reinvest in the community in an attempt to help reduce their tax bills, a council has alleged.
Hume city council has criticised the Victorian government for not closing what it considers to be an “egregious loophole” that it alleges is being “rorted” by clubs, despite directly raising concerns this year.
The council’s mayor, Joseph Haweil, said all councils across the country should pay close attention to how clubs have spent gambling revenue, given Australians lost $14.5bn to poker machines last financial year.
In Victoria clubs that return 8.33% of gambling revenue to community initiatives receive a tax break. They must list expenditure in community benefit statements that are published by the regulator. A similar scheme exists in New South Wales, which has the highest concentration of poker machines and the largest losses.
Hume city council assessed five years’ worth of statements and found many clubs claimed “waste and removal costs, Foxtel subscription, staff wages and expenses, leasing costs and free entertainment for members” as community benefits. The majority of claims related to “operating costs”.
“Direct donations, gifts and sponsorships is as low as 4.4% of the money that is being claimed,” Haweil said. “That is how egregious this loophole is …
“I know for a fact that this is not confined to our municipality. It is something that stretches much further across Victoria and the rest of the country.”
When the council’s concerns were reported by the Age this year, the state’s gaming minister, Melissa Horne, said the government was “open to considering reforms”. Haweil said he was frustrated that no action had been taken since then.
“As of yet we have not had any tangible outcomes or changes,” Haweil said, while noting the Victorian government had introduced other changes including reducing the spending cap on poker machines from $1,000 to $100.
“We are frustrated by that because we know that every year that passes with this loophole in place, clubs are able to continue to not delivering on what should be positive investments into the community,” Haweil said.
“That is money that could otherwise go to helping to community and seniors, veterans, people living poverty. Instead, it’s being spent on operating costs.”
The minister’s office was contacted for comment.
In a submission to an ongoing parliamentary inquiry, the council raised “significant concern” about the alleged “misrepresentation of claimed community benefits by clubs”, while accusing them of “legally minimising liabilities under the pretext of philanthropic, charitable or benevolent causes”.
The council claims that over the five years, no club in the region reported spending on “the provision of responsible gambling measures and activities excluded from those required by law”.
All clubs that have recently reported poker machine revenue in the Hume city council were contacted for comment. There is no suggestion they broke any laws. Community Clubs Victoria, the peak body for the sector, was also contacted.
The spokesperson for the Victorian Gambling and Casino Control Commission said that “we look forward to the findings and recommendations coming out of the inquiry” and that it would work with government to implement them.
On average residents in Hume city council lose an average of $388,663 a day to poker machines, or $104m over an entire year.
The council believes gambling has “significant health, social and economic impacts” on the community. In Victoria, around $3bn was lost on pokies last financial year.
Last month a landmark study of coroner’s court data found gambling addiction had contributed to 184 suicides in Victoria over eight years, although the true figure could be much higher.
In NSW an average of about $22m was lost to poker machines each day during the first six months of 2023, totalling $3.9bn over that period.
