BUSINESS

Aussie pokie reform introduced; social media investigated; consolidation resisted

TAGs: Australia, Betstar, pokies, Social Media, Tom Waterhouse, victoria racing club

australia-video-poker-machine-reformsAustralia’s long-overdue video poker machine (pokies) reforms were introduced into parliament on Thursday, following a surprise agreement between Prime Minister Julia Gillard’s ruling Labor party and the opposition Greens the day before. The reforms are basically the same ones the government proposed earlier this year following the dustup between Gillard and Independent MP Andrew Wilkie, who had been pushing for much stricter reforms.

The proposed reforms will give pokies clubs until the end of 2013 to ensure that each new machine features pre-commitment technology that allows players to voluntarily set wagering limits in advance. The machines must also display electronic warnings about the dangers of gambling. Existing machines must be retrofitted with the technology by 2016, although smaller clubs may be granted more time to make the switch. ATM withdrawals in pokies venues are to be limited to $250/day and the government has agreed to provide $1.5m/year to fund a national gambling research institute.

The reforms do not include the $1 bet limit originally sought by both the Greens and Wilkie, who nonetheless said some reform was better than none. Wilkie also said the reforms would allow a trial of mandatory pre-commitment technology to be conducted in the Australian Capital Territory (ACT) in the second half of 2013. However, the trial is dependent on the unanimous participation of the ACT’s pokies clubs, which is far from assured, despite the government agreeing to give the clubs $36m as compensation for revenue lost during the trial. Noted gambling scold Senator Nick Xenophon didn’t mince words in his review of the reforms, describing them as “absolutely piss-weak.”

SOCIAL MEDIA SCRUTINY
In a separate action, federal and state governments are collaborating on an investigation into social media use by gambling companies. The Nyngan Observer reported that the state government in Victoria had issued a tender for conducting the study, the intent of which is to determine ‘how industry promotes gambling opportunities using social media, who is being targeted and how access is provided to the gambling product.” The study will examine ”potential impacts that exposure to gambling style services has on young children and particularly with respect to normalizing gambling.”

VICTORIA RACING GOES WIFI
The Victoria Racing Club (VRC) has inked a deal with Cisco Systems to develop a WiFi network that will allow punters in the stands to bypass congested mobile networks and thus more easily wager on their smartphones. The Age reports that the VRC is still mulling whether to charge multiple companies a license fee to access the network or whether to grant one firm an exclusive license. (Tabcorp holds an exclusive wagering license in Victoria but it doesn’t apply to digital bets.) Regardless, companies not approved by the VRC will be locked out of the system, which should be completed by next November, just in time for the 2013 Melbourne Cup.

PRIVATE OPERATORS FEND OFF INTERNATIONAL ADVANCES
Australia’s betting industry is primed for more takeovers and consolidation, according to the Australian Financial Review, but the country’s independent operators don’t intend to go quietly. Even with online in-play betting yet to be officially sanctioned by the government, the Aussie market has shown more revenue and profit growth than European markets, which likely encouraged Paddy Power to acquire Sportsbet, Bet365 to establish an Aussie subsidiary and William Hill to launch a takeover bid of Sportingbet (which derives the overwhelming bulk of its profit from Aussie punters).

Private operators like Betstar and Tom Waterhouse are facing increased competition from new arrivals like Bet365, who Waterhouse says have a lot more money to plow into marketing, “making it harder for independent operators like us.” Nonetheless, Australia’s betting biz continues to be a tide that lifts all boats. Betstar managing director Alan Eskander says revenue has doubled since 2009 while Waterhouse has gone from just three employees to 120 and “from having 500 clients to 100,000 clients in that time as well.” Both Waterhouse and Eskander say they’ve received offers to sell out to international operators, but neither has any intention of doing so. Waterhouse says he prefers to keep his company in Aussie hands, while Eskander says he doesn’t want to “sit on the beach” for the next 30 years.

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