In its submission to the state parliamentary inquiry into gambling, Victoria’s Hume City Council has criticized the state government for allowing pokie operators to make use of a ‘community benefits’ loophole in order to receive tax breaks.
Waste removal and Foxtel subscriptions listed as ‘community benefits’ in financial reports
Under Victorian law, any club that operates pokie machines receives a tax break once at least 8.33% of its gambling revenue is directed towards community initiatives. A similar incentive scheme exists in New South Wales.
However, Hume City Council has spoken out to criticize the state government after discovering that many pokie venue operators were taking advantage of the system to minimize their tax liabilities.
Misinterpretation of ‘Community Benefits’
According to a report in the Guardian, the council analyzed club financial statements across five years and found that many businesses were claiming standard operating costs as ‘community benefits’. The council listed “waste and removal costs, Foxtel subscription, staff wages and expenses, leasing costs and free entertainment for members” as benefits. As a result, these costs were considered returns to community initiatives allowing the companies to meet the 8.33% threshold for a tax break.
Speaking of the loophole Mayor Joseph Haweil said:
“Direct donations, gifts and sponsorships is as low as 4.4% of the money that is being claimed. That is how egregious this loophole is.
I know for a fact that this is not confined to our municipality. It is something that stretches much further across Victoria and the rest of the country.”
The council had previously brought the matter to the state’s minister for gaming Melissa Horne. However, no action has been taken on this particular aspect of the pokie industry despite there being heavy focus on gambling reforms in the current political climate throughout Australia. This included a spending cap on pokie machines from AU$1000 to AU$100 among other reforms.
Haweil added:
“As of yet we have not had any tangible outcomes or changes. We are frustrated by that because we know that every year that passes with this loophole in place, clubs are able to continue to not delivering on what should be positive investments into the community.
That is money that could otherwise go to helping to community and seniors, veterans, people living poverty. Instead, it’s being spent on operating costs.”
The council also claimed that while there was no suggestion that clubs were breaking any laws, the loophole meant that across the previous five years no pokie machine operator had reported spending on responsible gambling measures and activities.
Record Losses
Earlier in October the council reported that Hume City residents lost AU$139 million ($89.1 million/€84 million) on pokie machines during 2022/23 fiscal year. This was a 33.6% increase on the AU$104 million ($66.7 million/€62.9 million) lost during the previous year and represents the highest losses ever recorded in a single year.
During the council’s Gambling Harm Symposium held in October, Mayor Haweil said:
“What concerns me greatly as Mayor, is knowing that Hume’s diversity and socio-economic status make our residents vulnerable to methods used to lure people into gambling.”
According to the latest Global Gambling Statistics, Australians have the highest gambling losses per person in the world. Each year the average gambler loses approximately AU$1870 ($1200/€1118).
Olivia has worked as an editor and writer for major brands across multiple niches. She now focuses on the iGaming and sports betting industries.