Daniel Williams

City Council Alleges Poker Machine Clubs in Victoria in Taking Advantage of Existing Tax Breaks Loophole

A City Council in Victoria has alleged that clubs that operate so-called pokies across the state have misrepresented the amount of gambling losses they bring back to the community as part of their effort to reduce their tax bills.

The Government of the state of Victoria has been slammed by Hume City Council for not taking care of what has been described as a shockingly large loophole. That loophole has allegedly been made even bigger by local clubs, although some concerns have already been raised so far in 2023.

Joseph Haweil, who heads the Council, revealed that all councils across the country should pay close attention to how gambling revenue has been spent by clubs that operate poker machines, especially considering the fact that Australians’ poker machine losses amounted to AU$14.5 billion in the last financial year.

For the time being, clubs in Victoria that return 8.33% of their gambling revenue to local community initiatives are granted a tax break. In order to get that, they are required to list their expenditure in so-called community benefit statements that are handed to the local regulatory body and published by it. A similar scheme is available in New South Wales (NSW), which is currently the state with the highest concentration of pokies and the state where the largest losses are generated.

Hume City Council made an assessment of the five years’ worth of statements and found that a large number of clubs that host and offer poker machines claimed leasing costs, staff wages and expenses, Foxtel subscription, free members’ entertainment, and waste and removal costs as community benefits. Most of the claims are linked to so-called “operating costs”. However, the assessment found that the rate of direct donations, sponsorships and gifts is no more than 4.4% of the money that was being claimed, making the aforementioned loophole enormous.

Government Ready to Consider the Implementation of Some Gambling Reforms

Following the reports of the Council’s concerns, Victorian gaming minister, Melissa Horne, noted that the Government was ready to take reforms into consideration. However, no action has been taken since that statement.

Mr Haweil shared his disappointment with the Government’s lack of action and highlighted the fact that Victoria’s lawmakers had introduced other changes, such as the reduced poker machine spending limit that was cut from AU$1,000 to AU$100. The head of the Council further said that the competent lawmakers did nothing to close the loophole and prevent the clubs from failing to deliver on what has been supposed as positive investments into the community.

According to reports, Hume residents generated average poker machine losses of AU$388,663, or AU$104 million a year. The local City Council has also noted that the controversial pokies have had a significant negative impact on people’s social and economic status, as well as on their physical and mental health. Residents of Victoria lost around AU$3 billion on poker machines over the last financial year.

As mentioned above, the Council made a subscription to an ongoing parliamentary inquiry in which it raised significant concerns regarding the alleged misrepresentation of the community benefits claimed by local poker machine clubs. At the same time, the Hume City Council also accused the clubs of legally minimising liabilities by citing charitable, philanthropic, or benevolent causes. It further claims that no club in the region reported spending on the provision of safe and responsible gambling measures over the five years.

Although the Council has criticised Victorian clubs offering poker machines for taking advantage of the existing loophole, it has not suggested that they broke any of the state and federal laws.

Olivia Cole

Olivia Cole has worked as a journalist for several years now. Over the last couple of years she has been engaged in writing about a number of industries and has developed an interest for the gambling market in the UK.

Daniel Williams

Author: Jerry Lewis