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November 23, 2021

Jackpot The Future of Pubs and Pokies

Given the issues surrounding pokies and the general shift in hospitality to quality over quantity, do they have a place in the Aussie pubs of the future?

Words: Fred Siggins

Header Image: Jacqui Munoz

The tinny jangle of electronic noise fills the stale air in the gaming lounge of Hervey Bay’s Torquay Hotel in Queensland. Whirring images and flashing lights emanate from the machines in the dim light, making it hard to focus on anything else. Animated mermaids beckon and Chinese emperors wink knowingly, hinting at the riches hidden in each glowing terminal.

Throughout most of Australia, pokies are a ubiquitous part of pub life. In fact, Australia is home to 18% of the world’s electronic gaming machines, despite having only 0.3% of the global population. For many venues, pokies are a lifeline, keeping businesses afloat, creating jobs and providing state governments with much needed tax revenue. According to a 2017 report by the Centre for International Economics, electronic gaming machines can be found in over 5,000 pubs and clubs around Australia, contribute over $8 billion per year to the Australian economy (including $5.5 billion in state and Commonwealth tax revenue), and directly employ over 42,000 Australians.

Given the issues surrounding pokies and the general shift in hospitality to quality over quantity, do they have a place in the Aussie pubs of the future?

But the harms associated with pokies are well documented, leading to negative financial and social outcomes as well as being associated with problems such as increased substance abuse, domestic violence and suicide rates. This is especially true in economically depressed areas, and places with a high proportion of retirees, like Hervey Bay. According to a recent Monash University study, communities with easier access to pokies experienced more harm, and those harms “are most acutely felt by groups that are often more vulnerable, such as the young and those with low income and low cognitive ability.” And while most people who play the pokies do not have a gambling problem, according to the Productivity Commission, 40% of the money that goes into pokies comes from problem gamblers.

So it’s no surprise that pokies elicit strong emotions. There have been community campaigns, big-money political donations and entire state elections dedicated to the issue. But alongside the public health concerns, the politics, and the community outcry, Australia’s pubs are changing, along with the tastes of pub-goers. Given the issues surrounding pokies and the general shift in hospitality to quality over quantity, do they have a place in the Aussie pubs of the future?

While pokies represent a strong revenue stream for pubs and clubs, their importance to the broader pub-going public may be waning. According to a 2015 report by accountancy firm ShineWing Australia, access to gaming ranks among the lowest level of importance to pub goers when asked about the things that motivate them to go out. Topping the list were service, quality and safety. The report also shows that publicans tend to overestimate the importance of gaming to their patrons. Increasingly, factors such as health, social responsibility and environmental sustainability are foremost in the minds of customers, with pokies barely getting a thought.

Hotel Sorrento on the Mornington Peninsula, where the hotel’s owners have chosen to remove the poker machines that once lived on the lower level. Image by Fred Siggins

According to a 2020 study published in the International Journal of Mental Health and Addiction, “Participation in electronic gaming machine (EGM) gambling has declined sharply in Australia over the last two decades,” and “EGM gamblers are now older and are not necessarily being replaced by a new generation of younger gamblers.” In South Australia, despite a recent surge in pokies expenditure attributed to pent-up demand coming out of lockdown, revenue from electronic gaming machines has been on a steady decline for nearly 20 years. While no one factor can be pinpointed, the reduction is blamed on a combination of things: the rise in online gambling; competition from small bars and more food-focused venues; and access to other forms of entertainment such as music, comedy and sports.

Jake Smyth is one of the founders of Sydney dude food empire Mary’s Group, who in recent years have taken over and revamped two inner city pubs, The Unicorn and The Lansdowne. Both venues once had pokies, and at the time Smyth and his partners took over, both venues could have kept them. “The option to have poker machines was clearly offered to us,” says Smyth, “and we categorically rejected them. We believe that community is key to any great pub, and that every aspect of our pubs should reflect that.”

The Lansdowne pub in Sydney, where Mary's Group has forgone the option of pokies and focuses instead on live music and other amenities. Courtesy Mary's Group

“Poker machines are very carefully designed to be violently addictive, as well as gamed for the player to lose,” Smyth says. “These players have names. They have families. Their losses have an immense impact on their communities. We asked ourselves how ethical it was to build one community whilst simultaneously encouraging the degradation of another.”

Ethics aside, demographic changes may be the stronger force behind the waning importance of pokies in Australia’s pubs. Covid-19 notwithstanding, as a long-term trend, hospitality is booming, riding a wave of foodie obsession, craft beer, and millennial knowledge that they’ll never be able to afford a house anyway so they may as well have fun. Australia’s young professionals, who underpin hospitality’s bottom line, don’t want cheap lager and sticky carpets anymore. As old pubs are taken over by savvy operators like Smyth, some are choosing to remove pokies in favour of exposed brick and Instagramable food.

Even regional areas and outer suburbs - where entertainment options are limited - are seeing the shift. As the regions boom and tree-changers flee cities en masse, inner-city sensibilities are moving with them. The iconic Beach Hotel in Byron Bay is an example of a regional pub that has done away with pokies in recent years, increasing the value of the business in the process.

“We worked with the Van Haandels, who ran the hotel, to get rid of the Beachie's pokies, and build a whole new space focused on the best of local Byron food and drink,” explained a spokesperson from Impact Investment Group, the former owner of The Beach. “It was a fantastic result, taking away a grotty bit of the venue, and giving the whole hotel a real lift. When we sold the pub at the end of 2019 the whole venue and business was more valuable than when we acquired it - a fantastic result for us and for the local community.”

Hotel Sorrento on Mornington Peninsula outside of Melbourne has a similar story. In 2010 the hotel’s owners made the choice to remove the small number of poker machines that once lived on the lower level. It's a reflection, explains director Anne Pitt, of changing community attitudes. “In any era, community values and expectations change,” she says. “Just as our community attitude to smoking has changed. We are sensitive and respectful that Hotel Sorrento reflects [those values] and is a force for social cohesion. Gaming was not something we wanted to be associated with any longer.”

The community, it turned out, was very happy with the decision. “The avalanche of public support was both humbling and overwhelming,” says Pitt. “We received hundreds of letters, phone calls. We did not forecast any interest in what we had decided to do, but the public, as well as the media's reaction, was a testament to the very strong community opinion on gaming machines.”

The Unicorn hotel in Sydney, where savvy operators have chosen to remove pokies in favour of exposed brick and Instagramable food. Courtesy Mary's Group

At a time when hospitality is suffering, jobs and revenue provided by pokies are all the more important to a struggling industry.

And while Bryon Bay and Sorrento are affluent areas, the shift towards a more premium hospitality offering is hardly unique to cashed-up beach communities. In Melbourne’s traditionally rough-around-the-edges suburb of St Kilda, the Village Bell Hotel has taken a sort of middle ground, incorporating their gaming room into a multi-million dollar renovation that’s seen major improvements to this once seedy pub. Design firm Techne worked on the new fit-out, working towards “a sensitive solution which is a combination of the interior design of the gaming space itself, but more importantly in its relationship to the rest of the venue,” says Techne’s Nick Travers. It’s a result, he says, of the venue investing in a design and concept-lead approach rather than seeing gaming as separate from the overall offering.

Similar examples of renovating around gaming machines can also be seen at Brisbane’s Regatta Hotel and the Moama Bowling Club on the Victoria/NSW border. The former was once the host of meat raffles and plastic jugs of cheap beer -- it now sports a dedicated whisky bar and strict dress code, its pokies carefully hidden in the basement. The latter’s gaming room is still a large part of the business, but recent years have seen the addition of the glitzy Junction restaurant, complete with canvas-aproned staff and native Australian ingredients.

The front bar of Hotel Sorrento, where horse racing and sports on TV remain a draw. Image by Fred Siggins

But abandoning or hiding pokie machines is not possible for every venue. At a time when hospitality is suffering as Covid-19 lockdowns and restrictions force venues to cap numbers or close altogether, jobs and revenue provided by pokies are all the more important to a struggling industry. According to a 2018 statement by the Tasmanian State Liberal Government in response to Labor’s pokies removal policy (which they took to the state election and lost), “The gaming industry estimates that around 5,000 [Tasmanian] jobs are at risk if electronic gaming machines are removed from pubs and clubs.”

It was a sentiment echoed by several Tasmanian publicans at the time. Former Glenorchy RSL President John Chivers was quoted in the ABC as saying that his club, which had 30 poker machines, would likely have to close if Labor’s proposed policies were implemented. "We rely on those poker machines to raise revenue, to do the job that we are here to do, and that is service all our community programs," he said. "If they are taken away, we won't survive."

(The Glenorchy RSL did in fact close in 2019, despite Labor’s loss at the election and the pokies remaining.)

Some also argue that pokies actually increase community amenity. According to an Australian Hotels Association submission to the Productivity Commission Inquiry into Gambling, pubs and clubs with pokies were more likely to host other kinds of entertainment like live music and pool tables, as well as community and sporting group meetings. However, competing studies also link pokies to a decrease in live music. The live music industry continues to struggle as Australian cities move out of lockdown, and pubs have the opportunity to play an integral role in reestablishing strong arts scenes - another potential draw for the next generation of punters.

For those willing to take a gamble (pun absolutely intended), the rewards of an improved offering can be significant. Sean Donovan has overseen the revival of several of Melbourne’s suburban pubs in recent years, including Footscray’s Station Hotel, Fitzroy’s Town Hall and the Mount Erica Hotel in Prahran, turning each into family friendly pubs with great wine and better steaks. But he hasn’t yet managed to find a pokies pub willing to let go. “In many cases a well-run pub with a good food and beverage offering will exceed revenue to a badly run pokie pub,” he explains. “But the pokies provide an easy source of revenue. That makes it a little frustrating given there are a few pubs around that could definitely benefit from a makeover that locals would absolutely support.”

It’s unlikely the pokies are going anywhere soon. There’s too much money to be made, too many jobs and businesses at stake, and too many entrenched interests. But as the tastes of Australian pub-goers evolve, pokies may not be the jackpot they once were.

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