Discussion paper

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

Electronic gambling machines Corporate social responsibility Gambling Business enterprises Business ethics Government accountability State governments Problem gambling Tasmania

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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