Mount Alexander Shire Council is appealing the Victorian Commission for Gambling Regulation's (VCGR) decision earlier this year to grant Maryborough Highland Society (MHS) a licence to open a club, complete with 65 poker machines, in the old railway goods shed, in Kennedy Street, Castlemaine.
The matter is being heard by VCAT Deputy President Mark Dwyer.
The hearing was adjourned on August 24 after the first five days of legal argument; a further five days was set aside for the hearing to be completed this week.
No blogs
Mr Dwyer set the scene by reminding the media and members of the gallery that no blogs, social media comments or mobile phone calls could be made or received in the courtroom during the proceedings.
Further clarification from the VCAT registrar during the break revealed blogs and social media comments could be made outside of the courtroom so long as they didn’t prejudice the hearing.
Mr Dwyer said that during the three-month adjournment period he had visited Castlemaine and Maryborough and checked out the Maryborough Highland Society Club as well as the proposed venue in Castlemaine.
“I am certainly familiar with the sites,” Mr Dwyer said.
The morning proceeded with some intense questioning of the first two witnesses by opposing legal parties.
Less pokie revenue
Expert witness, Dr Charles Livingtone spoke about the social and economic impacts that more pokies could have on a community.
Dr Livingstone said there had been a decline in poker machine revenue in Victoria in the past decade, falling (per annaum) from $845 per adult in 2001 to $565 per adult in 2011.
“There are a number of reasons why this has occurred,” Dr Livingstone said. “These include the introduction of caps on gaming machines, the reduction in the maximum bets that can be made, and a restraint on the amount of money that can be withdrawn from ATMs (at venues) plus a prohibition on smoking in venues.
“The other key element is a change in the load-up on each machine, which means a reduction in the amount of money that can be inserted into a machine at any one time."
Economic climate
Dr Livingstone said the economic climate, in particular the Global Financial Crisis, had also had an effect on the declining revenue from gaming machines.
He said there had also been a decrease in the participation rate and supported the Productivity Commission’s estimate that around 60 per cent of gaming machine revenue was contributed by people who were moderate to severe problem gamblers.
Dr Livingstone said research had shown that if there were more machines in an area, the problem gambling rate would increase.
“For every extra poker machine introduced into an area, it generates the equivalent of .08 problem gamblers. If that ratio is applied to the Castlemaine proposal where a further 65 gaming machines are proposed, it equates to an extra 52 problems gamblers and 177 moderate risk gamblers.”
He said gambling venues generally create three jobs per $1m of expenditure compared to restaurants which generate 20 jobs per $1m.
A crusader?
Maryborough Highland Society barrister Peter Caillard asked Dr Livingstone if he knew that he had been hailed as `a crusader against gaming machines’.
Dr Livingstone said he was not aware of the description adding “I am not anti-gambling”.
Mr Caillard asked if he was being paid for his report and Dr Livingstone said he normally charged $1200 a day for his services but in this case he had discounted the fee by 50 per cent. He said he didn’t receive any of the money and that it all went to his employer, Monash University.
Homework done
Maryborough Highland Society’s general manager, Malcolm Blandthorn was next on the stand to show that he had done his homework, as requested by EPIC’S legal representative Ron Merkel QC.
Before the hearing was adjourned, Mr Merkel had asked Mr Blandthorn to work out the minimum spend required at the proposed Castlemaine venue to repay the MHS loans over the next nine years.
Mr Blandthorn said $33.69 million in gaming revenue would be needed to cover all the loans and expenses in the first nine years. This breaks down to $3.5 million of gaming revenue that would be needed in the first year of operation.
Mr Merkel had also asked about the situation at the Kyneton Bowling Club, which MHS bailed out last year; the legality of the MHS constitution; and, the state of play with the lease of the old Railway Goods Shed in Castlemaine.
Mr Blandthorn said MHS members had been kept “well informed” about the Castlemaine proposal and that the constitution had been changed to include the `wider provincial community’.
VicTrack lease
He said the VicTrack agreement had been secured and gave MHS tenure over the old railway goods shed.
“We have two years to get all of our licences in place and then we will move into a further nine-and-a-half year term.
He said the Castlemaine Sports and Community Club Inc (The Club) had been made a sub-tenant of the building.
It was revealed the lease was for $35,000 per annum effective from November 1, 2012.
Budgets questioned
There was extensive debate over the comparison between the previous budget and Mr Blandthorn’s latest “hypothetical” budget based on the nine-year scenario.
Mr Blandthorn said the Castlemaine venue would make a profit from the first year onwards but it would have an additional $1 million loan to cover the cost of purchasing the gaming machines, which had previously been on a lease agreement, over the first three years.
“That’s the main difference between the two budgets.”
The Castlemaine venue will be operated by The Club and managed by the Maryborough Highland Society, which will receive a fee of $250,000 per annum.
The tribunal also heard MHS would make a minimum contribution of $200,000 per annum, consisting of a $150,000 in-kind donation and $50,000 cash grant to be distributed to local community groups.
Mr Blandthorn said the $50,000 component would be paid before the MHS received anything.
Kyneton quiz
EPIC’s legal representative Susan Brennan quizzed Mr Blandthorn over the Kyneton Bowling Club operation.
Ms Brennan questioned the forecast figures that had been made for the venue in 2011 which showed MHS initially expected $610,000 in gaming revenue and to make a $20,000 donation to the community.
“But it turns out the venue made almost $200,000 less in gaming revenue and only $2,000 was donated to the community,” Ms Brennan said.
Ms Brennan also highlighted the fact that MHS intends to transfer the whole of the Kyneton Bowling Club operation to the Society’s control next year.
“Is it fair it say that the only way that the Kyneton Bowling Club can make money is for the Society to own and operate it?”
Mr Blandthorn didn’t agree with the suggestion but did confirm the operation of the business would merge with MHS in 2013.
He said the membership of the Kyneton venue had doubled in the past five months and “we are moving ahead with it”.
Mr Blandthorn added that the new tax regime, introduced in 2012, had made a significant difference (to the profitability) of the Kyneton venue.
Mortgage questioned
Ms Brennan also put it to Mr Blandthorn that no commitment had yet been made by the MHS membership for the board to mortgage the all of Maryborough Highland Society’s assets to support the Castlemaine venture.
“Correct,” said Mr Blandthorn. “We are waiting until the decision has been made here (at VCAT) before moving to the next step.”
In the afternoon, Mr Caillard called three members of The Club to take the stand – Bill Jefferies, Janet Rixon and Ian Braybrook. More in the next report.
In the afternoon, Mr Caillard called four witnesses including three members of The Club to take the stand – Bill Jefferies, Janet Rixon and Ian Braybrook. More in the next report.
