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Discussion paper

Estimating the revenue share of the Farrell Group and other gambling industry participants from gambling operations in Tasmania

7 Feb 2018
Description

Tasmanian legislation provides for a single operator for electronic gambling machines (EGMs) located in hotel and club EGM venues in Tasmania, and for a monopoly operator of the state’s two casinos.

Hotels and clubs wishing to operate EGMs must reach agreement with the monopoly operator, the Farrell Group, and be a licensed operator. There are 89 hotel EGM venues, and 7 club venues in Tasmania. Twelve hotel venues are also directly operated by a subsidiary of the Farrell Group, Vantage Hotels. Farrell Group is also the state’s monopoly casino operator.

In 2016-17, EGMs in Tasmanian clubs and hotels generated net gambling revenue (NGR) of $109,940,256. Of this, the author estimates that Vantage Hotels venues generated NGR of $29,287,244. Hotels operated by non-Farrell Group entities generated NGR of $77,753,803 and clubs generated revenue of $3,033,395.

Of the total NGR generated by each venue, 32% is retained by clubs ($970,686, or 0.9% of total NGR) and 30% by non-Vantage Group hotels ($23,326,141, or 21.2% of total NGR). Tax, the community support levy and license charges amount to $33,106,751, or 30.1% of aggregate NGR. Vantage Group hotels retained NGR of $8,745,917.

Network Gaming, a Farrell Group subsidiary, collected a total of $43,790,760 in fees for provision of EGMs and associated services, including $11,657,147 notionally charged by Network Gaming to Vantage Hotels. This amounts to 39.8% of total Tasmanian NGR. In aggregate, Farrell Group companies retained an estimated $52,536,677 from the operation of EGMs in hotels and clubs in Tasmania in 2016-17. This amounts to 47.8% of total EGM revenue.

Additionally, the Farrell Group retained revenue of $51.7 million from operation of the state’s two casinos. In total, EGM and casino operations in Tasmania are estimated to have generated post gambling tax revenue of $104.24 million in 2016-17.

The paper also estimates the costs of gambling harm to the Tasmanian as $341.58 million, more than three times the total gambling tax revenue accrued by the state in 2016-17.

Policy implications of the policies advanced by the Liberal Party, ALP, Tasmanian Greens and Jacqui Lambie Network are also discussed.

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2018
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