CLUBS

The implementation of the Venue Operator System places a significant responsibility on club management and committees to make quality commercial decisions regarding the pricing of gaming machine entitlements and the potential future operating returns that may be generated from operating a gaming venue post 2012

The move to the Venue Operator system together with the need to participate in a competitive bidding process for gaming entitlements presents a number of unique challenges for the Club industry

Over the next twelve months many clubs will need to make important and far reaching decisions regarding their future participation in the gaming industry

IMPLICATIONS OF THE POST 2012 GAMING INDUSTRY ARRANGEMENTS FOR CLUBS

A SIGNIFICANT FUTURE FINANCIAL INVESTMENT

An investment in the post 2012 gaming industry represents a significant financial commitment for a club and and should only follow an extensive thorough planing process. Clubs that consider their revenue will remain unchanged following the introduction of the various harm minimisation initiatives (ie the removal of ATM's from gaming venues) could be in for a very
unpleasant surprise post 2012

The progressive taxation system that is to be implemented with the post 2012 gaming arrangements is anticipated to provide additional revenue to meet the cost of gaming entitlements (capital invested in entitlements) and gaming machines together with the new and additional operating costs such as gaming machine maintenance and monitoring fees

The key challenge for clubs will be to understand the extent and timing of potential costs and cash flows associated with operating a gaming room post 2012. An incorrect pricing strategy could have disastrous financial consequences and inadequate provision for borrowing money could equally have disastrous consequences for Clubs

It is clear that the transition to the venue operator gaming arrangements will involve lumpy cash flow obligations that may put financial pressure on a club that is not adequately prepared for the transition to the new gaming environment

Gaming and Leisure Services have extensive experience with venue operator based gaming venues and are in a unique position to assist your club to successfully prepare for the competitive bidding process for the gaming machine entitlements and the implications of operating in the post 2012 gaming arrangement

PAYMENT FOR ENTITLEMENTS

Clubs will be required to pay 5% of the entitlement price within 28 days of the competitve bidding process. A second 5% payment will be payable in 2012 before commencement of the new arrangements. The balance of the 90% of the price of the entitlements can be paid in quarterly instalments over a four year period. Alternatively, successful bidders will be able to pay the full amount early without incurring a penalty.

PROGRESSIVE TAX STRUCTURE

The proposed progressive tax scale will apply to clubs as follows:

Clubs that earn less than $32,000 per year from gaming machines will not have to pay state tax.

Contact Gaming and Leisure Services to arrange an appointment to discuss your needs

Quality gaming advice based on extensive National experience