By Clyde Mooney

The Victorian Auditor-General’s Office has released an extensive report on last year’s auction of poker machine licenses in that state, raising major questions about the previous government’s handling of the sale.

The findings conclude that Victorian pub and club owners were lucky participants in a fire sale of the state’s poker machine licenses that came up $3 billion short.

The Labor government in power at the time made the decision to sell the rights to own and operate poker machines in Victorian pubs, clubs and hotels, in a move directly intended to break the duopoly enjoyed by gaming giants Tatts Group and Tabcorp.

In May 2010 the 10-year licenses for 27,500 poker machines went under the hammer to a bargain-hungry audience of hotel and club owners.

Rather than the amounts of over $70,000 per machine expected within the industry, the auction fetched an average of just $37,500, totalling just $981 million.

The entitlements were distributed evenly between hotels and clubs, and a number of club venues paid as little as $5,500 for their permit to operate a poker machine for the next decade.

The ALH Group, chiefly backed by Woolworths, were quick to grab their maximum allowance of over 4800 machines, paying an average of around $33,500 each.

In November of last year the Victorian people voted out the incumbent John Brumby and his Labor party in favour of the Liberal/National Coalition headed by Ted Baillieu.

The scandal of the failed poker machine license auction has haunted the outgoing government, with plenty of excuses for the 75 percent shortfall including a claim that far higher tax rates under the new system would justify the low sale prices.

However the new Liberal/National government has ruled this out as an unjustifiable burden on some of the new entitlement owners.

“While most hotels and most clubs picked up these pokie entitlements for an absolute bargain, a number have paid a very significant amount of money for them. If we were to simply raise tax rates because of Labor’s mismanagement, you may actually see some pubs and clubs going out of business not through their own fault,” said Gaming Minister, Michael O’Brien on ABC1’s 7:30 Victoria.

The Shout Team

The leading online news service for Australia's beer, wine, spirits and hospitality industries.

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