A new way to understand the impact of pokies on communities

Posted November 14, 2018

  • State government
SGS Economics and Planning Pokies

A new dual approach to estimating the impact of electronic gaming machine venues delivers better outcomes for Victorian communities.

Electronic gaming machines (EGMs) have been legal in Victoria for more than 25 years. When introduced, around 27,000 EGM entitlements were issued by the Victorian Government and split between Victoria’s pubs and clubs, with a further 3,000 released for the exclusive use of Crown Casino.

Since this time, EGMs have become a part of the fabric of Victorian communities, with state government and many community clubs to some extent reliant upon the regular financial windfalls generated by EGMs.

In 2017/18, Victoria’s EGMs attracted approximately $2.6 billion in expenditure – or net losses – equivalent to more than $550 for every person aged 18 or over in Victoria. Setting aside the estimated 70 per cent of Victorians[1] who do not play EGMs in a given year, the estimated average loss per annum for every person who uses EGMs at least once in a given year is more than $1,850. To put this figure into perspective, the average pre-tax income of Australians who file a tax return is less than $45,000[2].

Electronic gaming machines – friend or foe?

Given the cost of living pressures felt across all parts of Victoria, and with EGM venues often located adjacent to some of Victoria’s most vulnerable populations, it is unsurprising that EGM expenditure can be linked to significant personal and family hardship.

On the other hand, EGMs can be linked to some important benefits for local communities. These include recreational benefits, venue improvements, and community contributions.
Victorian legislation recognises the potential for EGMs to cause harm to Victorian communities, requiring that applications for new or expanded EGM venues across Victoria submit to, and pass, the ‘no net detriment test’.

The objective of this test is to ensure that new EGMs generate benefits for local communities that offset any detriments associated with their establishment. In other words, it requires that they generate a net community benefit.

Historically, both applicants and opponents have sought to demonstrate the net community benefit of EGM applications through a qualitative approach in which weightings are subjectively applied to a range of impact categories concluding the net community benefit associated with EGM applications. This approach is useful in that it is exhaustive, with the full breadth of probable impacts identified and assessed.

A more comprehensive and equitable way forward

However, there are some drawbacks in using a purely qualitative approach to assess the net community impacts of EGMs. For this reason, the SGS Economics and Planning team has developed a new approach to estimating and communicating net community impacts of new or expanded EGM venues. This approach is informed by our extensive experience developing cost-benefit analyses (CBAs) for federal, state and local government clients.

The dual approach to estimating the impacts of EGMs provides the Victorian Commission for Gambling and Liquor Regulation (VCGLR) with a superior basis to understand the overall and relative scale of impacts, removing so much of the subjectivity that mars the purely qualitative approach.

Ultimately, this dual approach helps the VCGLR make fully-informed decisions and create better outcomes for Victorian communities. Importantly, we do not approach this issue as advocates for or against EGMs in general: We consider each application on a case-by-case basis.

We recognise that EGM venues provide important benefits for the communities in which they locate and that these should always be accounted for when considering the question of net community benefit related to a new or expanded EGM venue. Ultimately, we believe that approaching the emotive issues of EGMs with a spirit of impartiality and independence increases the probability that VCGLR decision-making in this area will be in the best interests of the Victorian community.

Better outcomes for Victorian communities

Examples of EGM Social and Economic Impact Assessments we prepared for local councils:

Lynbrook Hotel, City of Casey

The Lynbrook Hotel was seeking an expansion of the number of EGMs at the venue. We argued that the proposal would deliver few benefits to the local community, and further, that the venue’s position adjacent to a relatively disadvantaged community would present an unacceptable risk of increased problem gambling. The VCGLR refused the application.

Hotel Officer, Cardinia Shire Council

A new venue on the edge of the emerging Officer Town Centre was proposed. We argued that the proposed venue was likely to expose a large number of new people within the rapidly growing Officer area to electronic gaming, with a potential to significantly increase harm associated with problem gambling. The prominent location of the venue on a major intersection within a town centre was also an important consideration. The VCGLR refused the application.

Commercial Hotel, City of Whittlesea

The Commercial Hotel is a long-established licenced venue in the suburb of South Morang. We argued that the venue’s prominent location on a major intersection, the vulnerability of much of the surrounding population, and the loss of one of the few remaining non-EGM venues in Melbourne’s outer northern suburbs would have a detrimental impact on the local community. The application was refused by the VCGLR and subsequently appealed. We gave evidence at the appeal, held at the Victorian Civil and Administrative Tribunal, which upheld the VCGLR’s finding.

[1] Responsible Gambling Advocacy Centre,

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Julian Szafraniec

National Leader for Data & Spatial Analysis | Principal & Partner I Executive Director

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