Woolworths and pokies Following the speech by Senator Nick Xenophon about the pokies crisis, it is timely to consider whether corporate responsibility to the community or to shareholders can be. Woolworths is the biggest operator of pokies, the most damaging type of gambling, making an outrageous $2.4 billion out of its pokies business over the past 12 years. On average, that's $200 million a year! Woolies generates 11.7% of its annual profit from its pokie business. Woolworths CEO Brad Banducci was wrong this morning to claim pokies only deliver about 7% of the $10 billion in revenue for the enlarged Endeavour Group and I call on Woolies to immediately release its total pokies revenue, something it refused to do when asked at the 2018 AGM.
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In May, Woolworths came under fire from some of its shareholders for unethical practices involving its pokies at some stores. Allegations of recording details of bettor activities and bribing high-value customers with free drinks to keep gambling put Woolworths under a bright spotlight.
Not even two months later, the company now faces more scrutiny as two of its New South Wales venues are under investigation by the NSW Independent Liquor and Gaming Authority.
Woolworths Investigations Ongoing
The reports continue to put Woolworths in front of a potential scandal and facing penalties.
The NSW Liquor and Gaming Authority officially filed a complaint, as revealed this month, regarding practices that took place in 2017 at the Westower Tavern in West Ballina and South Tweed Tavern on the northern coast. The Australian Leisure and Hospitality Group (ALH) operates both venues.
How does Woolworths play into it? The company has a 75% stake in ALH.
The two locations are under investigation for providing free alcohol to customers playing poker machines in order to coerce them into gambling longer.
As a result of the complaint and allegations, the investigation has been ongoing and consisted of inquiries at 50 venues. And the complaint is the first of its kind in New South Wales and in Australia as a whole. Deputy Secretary Paul Newson called the inquiry exhausting and comprehensive.
The venues could receive a fine of more than $100,000 if found guilty of supplying customers with free alcohol.
Tough Consequences
The ALH Group is facing tough consequences beyond the fine. The anger stirred by the allegations alone has brought much unwanted attention to the company, Woolworths, and the pokies industry.
Woolworths Pokies Images
NSW MP Justin Field expressed his anger: “These are not victimless crimes. Many people who suffer gambling addictions have serious impacts on themselves and their families. If that’s encouraged by venues, then that has really significant impacts on communities and those individuals.”
Field also added: “I hope the independent authority uses the powers it has including suspending or revoking these licences.”
The Alliance for Gambling Reform has been pushing for hard penalties for the Woolworths and the ALH Group. As spokesman Tim Costello noted:
“You shouldn’t be surprised when there’s so much easy money to be made from people who are addicted. … Australia has the greatest gambling losses of any country in the world…and Woolworths is right at the front of all of this.”
ALH Response
When asked to comment on the investigation and allegations, the ALH Group simply said via a spokesperson:
“An independent management review into ALH responsible gambling practices was conducted in 2018. As a result of the investigation, ALH took a number of steps to enhance its responsible gaming practices. As the matter is now before ILGA, we will be making no further comment at this stage.”
And Woolworths responded with an even shorter statement:
“What we’re focussed on with ALH is how to continue to enhance its responsible gaming practices and quality service at the hotels.”
Background Information
Woolworths has 995 locations in Australia, having been in business since 1924. The company is based in New South Wales and employs more than 115,000 workers. In 2018 alone, Woolworths collected $56.7 billion in revenue.
But it is the ALH Group, of which Woolworths owns 75%, that operates more than 12,650 pokies around the country that generate more than $1 billion in net revenue each year.
The allegations about pokies and unethical – some illegal – behaviours came from a whistleblower in 2018. Evidence came to the surface that Woolworths’ staff members at several locations recorded gamblers and their habits. They then deemed some of “high value” and proceeded to offer them more specialised customer service, including free drinks. That program lasted for about six months.
An internal investigation led to Woolworths firing and disciplining staff at 22 locations, including hotels in Queensland and pubs in New South Wales and South Australia. ALH Group admitted to poor management in some cases and vowed to review customer privacy rules and provide more comprehensive staff training.
Woolworths Pokies On Instagram
Woolworths Chairman Gordon Cairns said at the time: “The practices outlined in the investigation, at a limited number of hotels, are at odds with the priorities and values of our customers and the communities where we operate.”
Woolworths Pokies Images
Primary Woolworths shareholder Perpetual Investments expressed anger and called for Woolworths to abandon all of its pokies. The investment firm subsequently said that the machines were a threat to the entire brand and its reputation. Pressure remains on Woolworths to reconsider their entire policies involving pokies.
WOOLWORTHS has emerged as a potential big winner after the Victorian Government smashed the pokie machine duopoly between Tabcorp and Tatts.
Shares in Tabcorp and Tattersalls were placed in a trading halt yesterday after the announcement that they will lose their control over the state's 27,500 poker machines in 2012.
Experts say that since Woolworths owns so many pubs and bars in Victoria, it is perfectly placed to benefit and bid for its own licences.
Angus Geddes, of stock market newsletter Fat Profits, said: 'There will be blood on the market tomorrow. This is bad news for the two companies and Woolworths will probably be rubbing its hands together and opening the champagne.'
From 2012, owners of venues will own and run their own poker machines - and keep the revenue.
Craig Shepherd, an analyst at Commsec, said the announcement was a blow for both gaming companies.
'It was a shock decision and the value that the market thought was in the stocks from 2012 onwards has been wiped out. People thought they would retain the licences for poker machines but they haven't. Even though a change was always on the cards, nobody expected it to be this dramatic,' he said.
Tabcorp and Tattersalls had enjoyed a duopoly where the two companies were in charge of sourcing, buying and collecting the revenue from poker machines in Victoria.
From 2012, however, venues of any size will be able to bid for pokie machine licences for up to 10 years.
'Currently in Victoria, revenue from pokie machines is shared between Tattersalls or Tabcorp, the venue, and the government. But the changes move to a more NSW-style system where the venue owns and runs everything,' Mr Shepherd said.
He said Tatts and Tabcorp derived about 30 per cent of their earnings from the gaming machines, but still own significant assets such as their wagering licences.
Tabcorp chairman John Story said the company was disappointed by the decision and would review all available options to gain a refund on its $597 million licence fee.
The Victorian Government said yesterday neither Tatts nor Tabcorp were entitled to compensation as a result of the restructure.
'We are both surprised and deeply disappointed by the Government's statement that it disputes its obligation to refund the licence fee,' Mr Story said.
'Tabcorp's 216,000 shareholders, including 60,000 in Victoria, are relying on the Government to honour its commitment.'
Tabcorp said the gaming business was an important contributor to earnings, adding $118.7 million before interest and tax in the first half of 2008.
The Government said it would maintain total poker machine numbers at 27,500 and enforce a cap on ownership so that no one venue operator could own more than 35 per cent of machines available to hotels.
- news.com.au
Woolworth Poker
Originally published asWoolies to win on pokies