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Patrons head for the exit as gaming and liquor restrictions tighten

• Ibis World

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22 September 2011Based on this industry profile, gambling revenue for pubs is forecast to decline over the next five years, while total revenue will increase for operators that cater to changes in market demands. NOTE: Subscription only access to this report

This industry profile relates to clubs or associations in the sporting (e.g. lawn bowls, golf, surf lifesaving, rugby, football and soccer), social (such as RSL clubs) or recreational areas that are licensed to sell alcoholic beverages. It also covers unlicensed clubs, which do not have a liquor licence, and clubs that have gambling licences.

The Clubs industry has been going through some turbulent times. Before 2006, a steady increase in gaming machines along with lax smoking laws brought prosperity to the industry. However, many state governments have now introduced caps on the total number of gaming machines allowed in each club, in addition to other operational restrictions. Restrictions on gaming machines initiated by state governments will significantly affect the performance of the industry over the medium term. Furthermore, strict smoking bans have forced the industry to adjust its operations and rely further on gaming machine revenue, which have come into force from 2006 in some states.

In addition, the industry faces intense competition from other licensed venues, particularly hotels, pubs and casinos, which also offer gaming facilities. Competition from pubs and casinos with gaming machines has increased significantly over the past five years and this is expected to continue into the longer term. As a result of these factors, industry revenue is estimated to decline at an average annual rate of 0.5% in the five years through 2011-12, with 2011-12 specifically showing 2.0% growth from the previous as a result of forecast solid economic growth and lower unemployment. Thus, the industry during 2011-12 will generate $9.91 billion in revenue.

Over the five years through 2016-17, the industry is expected to continue to be affected by tightening restrictions and regulations. New restrictions and changes to the industry's operating environment will vary from state to state. For example, a significant change to the ownership and allocation of gaming machines is expected to apply in Victoria from 2012. In many ways, the state is moving towards the system that already applies in New South Wales and Queensland, although with a far lower number of gaming machines available.The likely prospect of the federal scheme to introduce a mandatory precommitment scheme for gaming machines also has the industry heavily worried. Thus, revenue for the Clubs industry is expected to decrease over the next five years at an average annual rate of 4.1%. IBISWorld estimates that in 2016-17 the industry will generate revenue of $8.05 billion.