Thursday, 28 December 2017

What is Libs' pokie policy?

The Xmas break couldn’t have come quick enough for the Liberals in Tasmania. Barely three months from an election finds it completely stranded without a  poker machine policy post 2023.

Rebecca White hasn’t just shifted the goalposts. She’s moved grounds.

The Libs no doubt expected a policy from Labor that fell roughly within their policy position determined by five guiding principles announced in 2016 as a precursor to the parliamentary inquiry. Any policy differences would be minor and easily addressed by hanging on in the clinches and scaring the daylights out of the electorate with predictions of impending havoc caused by job destroying latte sipping greenies and other lefties.

But Ms White has decided she wasn’t going to be defined by the rules set by the government.

So how are the Libs going to rejoin the public discussion without being seen to be doing the bidding of the Federal Group?

The government’s stated policy position was to allocate future licenses to conduct gaming operations via a market mechanism such as a tender. However the Federal Group/THA jointly rejected the notion of a market based solution as one “which would be very costly and generate uncertainty and massive disruption for all stakeholders”. So much for the genius of capitalism in finding efficient market based solutions . If those guys don’t believe in it then who does?

The joint proponents suggested the government gift perpetual licenses to existing EGM operators rather than having them bid and pay for them via a tender or other market process.

Ms White has instead proposed removing pokies from the community. The biggest impact on the Federal Group is not the loss of jobs in gaming venues but the loss of Network Gaming’s 20 year bonanza which has mostly flowed out of the State via dividends to shareholders plus the loss of $100 million in value of the twelve pubs in Federal’s Vantage Group. These pubs will lose an estimated 60% of their value if pokies are removed compared to a situation where existing operators are gifted licenses in perpetuity. Federal Group’s CEO referred to this recently when he said:

“We would believe that for a large number of venues that are financed, the loss of their gaming contribution to their businesses would put them at-risk through loan to valuation ratios,” Mr Farrell said. Although speaking in the third person, it is likely he was speaking of his own problems.

Federal Group’s employees may believe they’re waving placards about job losses but they’re deluding themselves. It’s principally about the $100 million hit to Federal’s balance sheet and the drying up of the rivers of gold that have swept $250 million out of the State since 1997.

As part of the Federal Group/THA joint proposal Federal asked for a 60% cut in the tax rate that applies to EGMs in casinos from 26% to 11%. This is best seen in the following chart.

Federal Group wants to increase its share of player losses in casinos to 80%.

In a nutshell, Federal Group was prepared to cease diverting 31% of EGM player losses from pubs into Network Gaming provided it got perpetual licenses at the pub level thus advantaging its Vantage Group and a slashing of taxes on EGMs in casinos.

Ms White’s proposal takes Network Gaming and perpetual licenses out of play.

So what will the Libs do?

·       Cut casino EGM taxes as Federal Group/THA has requested when the recent inquiry recommended a de facto increase via a Community Support Levy?

·       Ignore its own policy to allocate licenses via a market based system and just hand them out to existing operators?

·       Entrench EGMs in the community by creating perpetual licenses so that existing operators get a huge windfall gain for nil consideration and future governments are burdened with future compensation should they wish to change policy?

It’ll be a challenge for the Libs to keep a bit of distance between themselves and the Federal Group and at the same time try to bridge the yawning gap that’s opened up between its current policy free position and the rest of the community.

No comments:

Post a Comment