Royal Hotel Benalla v Victorian Commission for Gambling Regulation

Royal Hotel Benalla v Victorian Commission for Gambling Regulation - [2012] VCAT 1972 - VCAT 2012 case summary — Zoe

[5]

In Proceeding P2083/2012, the Tribunal declares that no permit is required under the Benalla Planning Scheme or the Planning and Environment Act 1987 for the proposal embodied in the applicant's permit application to the Responsible Authority P0068/11.
In Proceeding P3620/2011, direct that no permit issue on the ground that no permit is required.
In Proceeding B206/2011, the respondent's determination is set aside and there is substituted therefor a determination that the applicant's venue operator's licence for Royal Hotel, 2 Bridge Street, West Benalla ('the premises') be varied so as to increase the number of electronic gaming machines permitted at its venue from 20 to 30 upon the following conditions:
- (a) The increase does not take effect until 28 days from this day.
- (b) If the works to the premises as depicted on the plans to be endorsed pursuant to Planning Permit P0065/12 (the works) are not completed by 16 August 2014 (or such later date as agreed in writing by the respondent) this approval will lapse and the maximum number of electronic gaming machines that may be operated at the premises will revert to 20.
- (c) The venue operator must advise the respondent as soon as the works are completed. If the respondent has not been advised prior to 16 August 2014 (or such later time as agreed in writing by the respondent) that the works have been completed, this approval will lapse and the maximum number of electronic gaming machines that may be operated at the premises will revert to 20.
- (d) The respondent may, upon request by the venue operator, agree to extend the time that the additional 10 machines may be operated at the premises prior to completion of the works. That request must be made no later than 30 days prior to 16 August 2014. Any request for extension of time must include an explanation as to why the work cannot be completed by 16 August 2014.
- (e) During the period of 10 years following the installation of the additional machines the venue operator will donate amounts totalling $50,000 per year to community and not-for-profit organisations. This annual amount of $50,000 will include an annual payment of $10,000 to Benalla Hospital and $10,000 to the St Vincent de Paul Food Share organisation. The balance of $30,000 will be distributed annually to community-based not-for-profit organisations.
- (f) Should the contributions required by the last preceding paragraphs of the conditions not be made in their entirety in any 12 month period, the number of electronic gaming machines that may be operated at the premises will revert to 20.

[18]

The speech is notable for the emphasis it places on economic benefits of the machines, the need to establish firm regulation to maintain probity and the benefits to the community in the support of various 'good causes'. There seems to be no mention of the phenomenon of 'problem gambling'. The matter is touched on only briefly with the reference to the establishment of programs to monitor 'the social impact of gaming'.
The regulation of electronic gaming machines is now part of a mammoth statute known as the Gambling Regulation Act 2003. The current reprint of this statute occupies two telephone book size volumes and a full binder in the collection of Reprinted Victorian Acts.
The issue of problem gambling which seems to have attracted so little attention in 1991 has now assumed far greater prominence in public discourse. The Commonwealth's Productivity Commission has conducted a number of investigations and reports into the gambling regulation regimes of the States and Territories. It seems to be generally accepted that perhaps 40% of the turnover on electronic gaming machines comes from 'problem gamblers'. In the Productivity Commission's analysis this group is constituted by approximately 1% of the adult population who are classed as problem gamblers and a further approximately 1% who are potential problem gamblers.
These proceedings which deal with a proposal by the applicant Royal Hotel Pty Ltd to increase the number of electronic gaming machines in the gaming room at its hotel in Benalla in the State's north from 20 to 30 raise a number of legal and factual issues under the Gambling Regulation Act 2003, the Planning and Environment Act 1987 and the Rural City of Benalla Planning Scheme; nevertheless the focus was primarily on the issue of problem gambling.
The applicant holds a Venue Operator's Licence to operate 20 electronic gaming machines at its premises being the Royal Hotel corner Bridge Street and Arundel Street, Benalla, adjacent to the Botanic Gardens. The hotel was built in the 1850s and is apparently on the Register of the National Estate as a Heritage Building. Bridge Street is the local name of the Midland Highway which runs through the Rural City of Benalla as it is officially known. The hotel is across the Broken River from the main business district of the city. The hotel includes a drive-through bottle shop in the car park at the rear. This bottle shop has been leased to and is run by an independent operator. The present buildings include the heritage listed hotel building of two storeys at the front with a one storey extension at the rear. The site has a frontage to Bridge Street West and Arundel Street with a total area of approximately 4,800 sq m.
In addition to the gambling room, the hotel includes a public bar, a bistro and a children's play area. It is located in a Business 1 Zone under the Benalla Planning Scheme.
Arundel Street runs approximately north-south and Bridge Street runs approximately east-west. The main frontage of the site is on the east side of Arundel Street. Immediately to the north on Arundel Street are residentially zoned properties. Across the road on the eastern side of Arundel Street is a formerly vacant building now occupied by a pump and irrigation suppliers, a vacant building previously operated as a veterinary clinic and dog grooming service, a Government office and St Joseph's Catholic Church. Further to the north on that side of Arundel Street is the Benalla Bowls Club which, as will appear, is also a gaming venue with no fewer than 50 electronic gaming machines.
On the south-east corner of Bridge Street and Arundel Street is a drill hall owned by the Commonwealth of Australia and used for a variety of community purposes. Diagonally opposite the hotel on the south-western corner is the Benalla Police Station. Also meeting Bridge Street at its intersection with Arundel Street and running from the south-west to the north-east is Thomas Street. The Police Station is on the corner of Thomas Street and to the south-west is found a group of shops, predominately supplying 'fast food', including a Chinese restaurant, a milk bar, fish and chip shop, a pizza parlour, an Indian restaurant and a picture framing shop. To the south of the intersection on Arundel Street are a butcher shop and a vacant shop formerly used as a homewares/gift shop.
From 1997 to the present, some 12 planning permits have been issued for various developments and uses on the site, principally relative to various extensions or renovations and signs. According to Mr Michael Barlow, a planning consultant engaged by the applicant, who gave evidence on its behalf in these proceedings:

[28]

The Rural City of Benalla is a rural municipality whose centre is located 192 km north-east of Melbourne. The municipality occupies 2,352 square kilometres with borders to the municipalities of Mansfield, Wangaratta, Strathbogie, Moira and Greater Shepparton. The 1999 Census population for the entire municipality was 13,980 with some 9,420 people living in the urban centre and some 4,560 living in the surrounding rural area. According to projections by the Department of Planning and Community Development for 2002, the population of the municipality has risen to 14,090 within its urban centre including 9,640 persons in the rural surrounds 4,450. There seems to have been no significant population growth between 2006 and 2011 and population growth is below the average for country Victoria.
There are three gaming venues in the Rural City of Benalla. The Benalla Bowls Club at 25 Arundel Street, and therefore in close proximity to the Royal Hotel, has 50 electronic gaming machines. The Benalla Golf Club in Mansfield Road has 25. When these numbers are added to the 20 now installed at the Royal Hotel, the total electronic gaming machines in the municipality stands at 95. In the financial year 2010 to 2011, some $2,617,07 was spent at the machines in the Bowls Club. $1,013,144 was spent on the games machines at the golf club and $1,673,986 was spent on the 20 machines at the hotel. This means the total expenditure on electronic gaming machines in the municipality was $5,304,216.
As at 30 June, according to Mr Quick, one of the applicant's witnesses, there were 8.38 electronic gaming machines for every thousand adults in the municipality, a figure which exceeds the average for country Victoria of 6.52 electronic gaming machines per 1,000 adults. In 2010 to 2011 the net expenditure per adult (total losses by players) in Benalla was $468 compared with $507 average for rural Victoria generally.
The Royal Hotel has previously had as many as 35 electronic gaming machines. In 2006 ten of the then 30 machines were removed and redeployed. As Mr Kennan explained in his Second Reading Speech in 1991, the model adopted in Victoria for electronic gaming machines was to have them owned and operated by two established gaming companies, namely Tattersalls and TabCorp. Under that regime it was open to one of these two operators to make a determination that a machine or machines would be more profitable in one location than in another. It was as a result of such a judgment by TabCorp that, in June 2006, ten machines were removed from the Royal Hotel.
The duopoly held by Tattersalls and TabCorp has now been abolished as a result of amendments to the Gaming Regulation Act. Venue operators now own their own machines. They have the responsibility of supplying and repairing the machines but are not at the mercy of the sort of redeployment that affected the Royal Hotel in 2006.
On 17 October 2012, the Benalla Rural City Council issued Permit P0065/12 to Royal Hotel for the alterations and additions to the hotel building proposed by the hotel, proposed in association with the increase in the number of gaming machines sought. The works include a first floor addition to the existing children's play area and the addition of a meeting room at the first floor level in the hotel at its Bridge Street frontage. The hotel says that it will proceed with these development works if, and only if, it is successful in these proceedings.

[75]

In accordance with these definitions, Mr Barlow appears to be correct in his statement that, insofar as Mr Brewer contended that the pump shop should be regarded as a 'shop', this cannot be accepted if the definitions in the Planning Scheme are to be applied. Mr Milner, who gave evidence for the Responsible Authority, did not agree with Mr Brewer that the pump shop, even although in premises which are constructed in classic shop style with display windows, should be regarded as a shop.
The intersection on which the hotel is situated is a complex one: on one of the corners is a drill hall used for a variety of community purposes. This is clearly not a shop. The hotel is not a shop, whether one applies the scheme definition or some popular view as to what is or is not a shop. Mr Milner would include in the popular definition of shop:
- the Fine Wear shop;
- the butcher's shop;
- the fish and chip shop;
- the pizza shop;
- the artist frame shop; and
- the bottle shop.
He excluded from the definition of shop:
- the Royal Hotel;
- the Chinese and Indian restaurant; and
- the vehicle exhaust business.
His calculation was therefore that approximately 60% of the buildings 'are used or would be perceived as shop and this constitutes a significant proportion'.
If, in accordance with the views expressed by the Tribunal in its determination in Melkat Pty Ltd v Campaspe Shire Council [2012] VCAT 657, it is proper to apply a popular view of what a shop is rather than the definition to be found in the Planning Scheme, I wonder why it would not be appropriate to apply the popular definition of what a strip shopping centre is. Applying the popular view of what a strip shopping centre is, based on the evidence before me and my inspection, I would have not the slightest doubt that this hotel is not situated in a strip shopping centre. Whilst there might be 'strips' of things that are arguably shops in the general vicinity, they are across a very busy intersection and separate and distinct and in no way part of the same group of occupancies as the hotel.
The most favourable view of things for those objecting to the hotel's proposal is that the Scheme definition of strip shopping centre applies, but that a popular view rather than the Scheme definition of 'shop' governs. Applying that view, in my opinion the hotel is not to be regarded as in a strip shopping centre. I accept that, if one treats the entire area abutting the complex highway intersection on which the hotel is located as a single area, one might come to the view that a significant proportion of the occupancies in that area are shops. In my view, however, the premises across the highway to the north-east and east are in no sense to be regarded as part of the same area as the area in which the hotel is situated. In my view, the restrictions or prohibition relative to gaming machines in strip shopping centres are simply not engaged.

[132]

Mr Larkins and Mr Kane contended that the test was whether the net economic and social impact of approving the additional 10 EGMs would be detrimental to the well being of the City of Rural Benalla as a whole. The determination of the application did not turn on whether its success would:
- Incrementally increase the risk of problem gambling within the City of Rural Benalla or within urban Victoria; or
- Reduce the gaming expenditure of other gaming venues within the City of Rural Benalla, specifically the Benalla Bowling Club; or
- Reduce the tax that the State Government receives from the Royal Hotel; or
- Result in too many functions/meeting rooms within Benalla.
What was required, they submitted, was a balancing of factors and this was the process which the Commission had undertaken.
They said, the evidence, which had been called on behalf of Royal Hotel, established the success of the application would result in a positive impact on the community viewed as a whole (bearing in mind that it is not necessary for a positive result to be achieved, merely that the impact on the community of the municipality is not negative).
They said the Tribunal was not called upon to determine whether the introduction of electronic gaming machines into Victoria was a wise decision. They referred to the Tribunal's determination in Bendigo Stadium Limited v Greater Bendigo City Council [2012] VCAT 1698 at [14].
They said it was necessary to bear in mind that electronic gaming machines were legal and that some people in the community enjoyed playing them. This is a recreational pursuit for those people and recreational gamblers enjoy choice and diversity of playing a range of EGMs. They said the demand for modern, family-friendly entertainment, dining and social facilities would continue to increase and the Benalla community would benefit from the modernised hotel with a range of entertainment options. The proposed benefits going along with the hotel's proposal had been revised since the Commission had made its determination. In particular, the present proposal would include the upgrade of the existing children's play room to create more play area with existing rooms on the first floor of the hotel to be converted into a function/meeting room which would be made available to any community group or mothers' group completely free of charge. A permit for these works had now been issued. These building works would cost $480,000. A letter from a builder, indicating willingness to commence work in March 2013, had been put into evidence. The proposed annual donations to community not-for-profit organisations would be increased from $10,000 to $50,000 per year. The hotel, they said, would accept a condition on the approval of the additional EGMs ensuring that the building works are completed.
They said that Victoria had a comprehensive legislative framework requiring responsible gambling measures to be introduced in gaming venues. They said the Gambling Regulation Act 2003 required venue operators to implement an improved self-exclusion program and an approved responsible gambling code of conduct.
They said that Royal Hotel acknowledged this and was 'acutely aware, that any application for EGMs increases the risk of problem gambling'. They relied on the evidence of Mr Walker to demonstrate that the hotel had an established history of commitment to adhering to legislative guidelines and industry practice in relation to responsible gambling and the operation of EGMs and it implemented measures which ameliorate the potential affects on problem gambling and the risk of problem gambling. The evidence showed they had long-term gaming staff that were familiar with the regular players at the EGM and had engaged Leigh Barrett and Associates to provide on-going responsible gambling professional development for the staff at Royal Hotel. The evidence, they said, showed a relatively low utilisation rate for the machines at the hotel. They relied on the evidence of the hotel's witness, Mr Clyne, that the level of transfer expenditure and the Government's responsible gambling initiatives meant that there would be a relatively modest increase in gaming expenditure in Benalla of approximately 2.27% if the application were approved. Since this was a modest increase, assuming it to be a negative, it did not counterbalance the important benefits that the application would bring to the Rural City of Benalla.
The effect of Section 3.4.20(1)(c) was to implement what was described as the 'no net detriment' test. They referred to the Tribunal's decision in Bendigo Stadium v Greater Bendigo City Council and the decision of the Court of Appeal in Macedon Ranges Shire Council v Romsey Hotel Pty Ltd [2008] VSCA 45; (2008) 19 VR 422, 434-5 [42] - [43].
They submitted that, in applying the 'no net detriment test', the following matters should be noted: the gaming industry could not stand still 'existing venues should be subject to competition, which drives renewal and higher standards of service'. Competition, they said, was an objective of the Gambling Regulation Act. They said it was difficult to weigh social benefits against economic detriment and therefore the judgment must 'at least in substantial part, be intuitive'. They said that the future could be predicted by reference to the past and Royal Hotel was a:

[146]

They said there were also positive social and economic impacts from the proposal and this was in accordance with the analysis of Morris J. in Branbeau.
- Increased choice for recreational gamblers;
- Greater convenience for recreational gamblers;
- Increase in net economic expenditure within the municipality as a whole;
- Upgrading of a Club's/Hotel's facilities for the benefit of all patrons, not just patrons who chose to play gaming machines;
- An increase in support for local sporting and community groups;
- A return of a large proportion of gaming revenue to the Victorian community in the form of taxation.
They noted the evidence of one of Royal Hotel's directors to the effect that the hotel would not be able to carry out the building works or make the contributions without the approval of the additional machines. They said, according to Mr Wood, the Hotel would 'make an undertaking to the Tribunal that it will provide further financial contributions to local community and sporting groups if this application is successful'.
As to the matter of problem gambling, they noted that a key objective of the Gambling Regulation Act was to minimise harm caused by problem gambling. They noted that the objective was to minimise, not to prevent or eliminate it completely. They referred to the evidence of the applicant's witness, Mr Quick, to the effect that an increase in gambling does not necessarily mean an increase in problem gambling. The increase, they said, created merely a potential problem.
They said, I should accept the evidence of Mr Walker as to the responsible gaming policies of the hotel. The gaming room was relatively small and would not be enlarged, and problem gamblers could not 'hide', being known to the gaming staff.
In any event, they said, the hotel provided 'a wide range of entertainment and eating activities'. They referred to the evidence of director Mr Cowle and the gaming room staff, Ms Horan and Ms Hanann, showing the Hotel's commitment to best practice and care for customers, implementing strategies for responsible gambling and alcohol consumption.
They said that an increase in the number of EGMs would not attract additional problem gamblers. They referred to the Tribunal's decision in the Bendigo Stadium case at [52]. They said Council, in its opposition to the proposal, has produced no evidence that its success would likely increase problem gambling.
They said that access to a greater choice of EGMs was, in itself, a benefit, and this had been accepted by a number of determinations by the Commission and the Tribunal. They referred to Ocean Grove Bowling Club Inc v VCGR [2006] VCAT 1921 [16] and Kilsyth and Mountain District Basketball Association v VCGR [2007] VCAT 2 [40] and Prizac Investments Pty Ltd v Maribyrnong City Council [2010] VCAT 2616 [217].
They said, the post-August 2012 regime 'has provided a new set of challenges for EGM operators in Victoria'. They referred to the decision of the Commission in the matter of an application by Italia Sports Club Inc (July 2012) [24].
They submitted, I should accept the analysis of applicant's witness Mr Clyne. The market in Victoria for gaming machines was now 'mature', therefore a high proportion of expenditure would be transferred from existing operators rather than the generation of new business. They conceded that prediction on these matters is, at best, an inexact science.
They referred to Drayton Manor Pty Ltd v Greater Bendigo City Council [2011] VCAT 626 and Branbeau at [52].
They said that the hotel and the Commission were agreed, based on a comparison of the evidence of Mr Clyne and Mr Gill, that the likely increase in gross expenditure at the hotel would be in the range of $328,400. Fifty percent of that would be transferred expenditure and therefore, the net increase in EGM expenditure in the Rural City of Benalla would be in the range of $164,000 to $200,000. Whilst this position was agreed before the Commission, it was not agreed in the hearing before the Tribunal. They said, Mr Clyne's evidence should be accepted. They said, he took a conservative approach and estimated that approximately 60% of the expenditure created by the additional EGMs would be transferred. They said, Mr Gill's disagreement with Mr Clyne's evidence was that there would be a higher level of expenditure at the hotel than Mr Clyne allowed for. Mr Clyne estimated the expenditure at $301,374; Mr Gill at $412,500. Mr Clyne estimated 60% transfer, Mr Gill estimated 50% transfer. The result was that new expenditure according to Mr Clyne's estimate, was $120,550 per annum but $206,250 according to Mr Gill, this represents 2.2% on Mr Clyne's estimate of Benalla's total gaming expenditure or 4% according to Mr Gill's estimate. They said 'therefore the difference in the predictions is approximately 1.7%'. They said it was submitted that:

[155]

Council was represented by Mr Appudurai and contended that the Commission's determination should be affirmed. He said that, when regard was had to the evidence of Council's witnesses: Mr Colin Gill on gaming expenditure; Mr Rob Milner on planning and socio-economic impacts and Mr Graham, Chairman of the Benalla Bowls Club, it would be seen that the 'no detriment' test laid down by the Gambling Regulation Act could not be met and that the application for additional gaming machine entitlements should be refused.
The Tribunal's functions, said Mr Appudurai, were to reach the correct or preferable decision and to determine the matter de novo. He referred to Transport Accident Commission v Bausch [1998] 4 VR 249, 263 per Tadgell JA. The central question for determination, he said, was whether the 'no net detriment' test under Section 3.4.20(1)(c) of the Gambling Regulation Act was met. He referred to Macedon Ranges Shire Council v Romsey Hotel [2008] VSCA 45; (2008) 19 VR 422, 434-5 [42] and [43] where the Court was dealing with the 'no net detriment' test under Section 3.3.7(1)(c) of the Act. He said that, whilst there was no formal burden of proof lying upon the Hotel in the proceeding, it did have a burden of persuasion. Unless it could point to material which would satisfy the test, none might be found by the Tribunal in the application and the application would fail. He referred to New Theme Pty Ltd v Victorian Casino and Gaming Authority [2002] VSC 80 (Eames JA and O'Bryan A JA). He said it was clear that:
- The person who seeks the benefit of being able to install new, or an increased number of, EGMs must persuade the decision-maker of the relevant outcome under the applicable section; and
- In the present case, persuade the Tribunal that the 'no net detriment' test has been satisfied.
He said, the Commission had accepted that there was a burden of persuasion in its determination in the matter of Club Italia Sporting Inc (15 December 2010) at [57]. Here, said Mr Appudurai, the Tribunal could not be satisfied that there would be no net detriment.
He said:

[157]

He said the negative impact on the Bowls Club of this proposal must be given consideration in the application of the test. He said 'nothing advised on behalf of the hotel amounts to any support for the proposition that the 'correct or preferable' decision is one which leads to an approval for the amendment sought'. He referred to the Romsey case [2008] VSCA 45; (2008) 19 VR 422, 437 [52] and [53]. Mr Appudurai said that, in this passage the Court of Appeal stressed that, if this Tribunal were to depart from the Commission, it was incumbent upon it to explain why, and to come to grips with the reasons which led the Commission to its determination. The Commission was an expert body and proper consideration should be given to its determination.
Mr Appudurai said a cautious approach was necessary. He characterised the Hotel's case on social impact of increased numbers of EGMs and the effect on problem gambling as 'stabbing in the dark'. The Commission, he said, had reached the correct determination. It had the same evidence before it as was placed before me.
The evidence relied on by the Hotel from Mr Quick did not, according to Mr Appudurai, meet or deal with the adverse affect of this proposal upon the Bowls Club.
As to the 'benefits' by way of community donations and building works were concerned, Mr Appudurai submitted that the approach by imposition of conditions adopted by the Tribunal in the Bendigo Stadium case was not appropriate. The benefits were to be provided in the future and, according to those conditions, there was a potential forfeiture of the entitlement to operate EGMs if the benefits were not bestowed. This necessarily meant, said Mr Appudurai, that there would be a period before the delivery of the benefits where no benefit at all would be derived, and there remained a possibility that the benefits never would be provided. Therefore, these alleged benefits being in futurity, should not be considered for the purposes of the no net detriment test.
He said, on the Hotel's own case, there were no major peaks of demand which required the success of this application. For this application to be successful would, in effect, undo the advantage which had been given to the Bowls Club some years ago when it was allowed to increase its number of EGMs from 44 to the present 50.
Mr Appudurai noted that the parties were in agreement as to the characterisation of the Benalla community. There was a statutory cap on the number of EGMs in the municipality at 107 representing 10 machines for each 1,000 of population over the age of 18 which was, he said, a merely 'broad brush' limit. The present level he said was 7.57 not 8.38 as postulated by the hotel's expert, Mr Clyne. Mr Appudurai submitted that Mr Clyne's analysis was not transparent. Mr Clyne's analysis on the level of expenditure that would be transferred from existing venues as distinct from generated anew ought not to be accepted. Problem gambling he said, unlike alcoholism, was not visible. The concerns expressed by the Productivity Commission were valid. They should be given appropriate weight even to the rejection of this application.

[165]

He referred to the Court of Appeal's judgment in the Romsey case [2008] VSCA 45; (2008) 19 VR 422, 437. It was necessary, he said, for the social and economic effects of the proposal to be determined and weighed so as to determine the net effect. It was necessary, he said, to consider the marginal impact of the proposal, if implemented. He referred to the determination of Morris J in Branbeau v VCGR [2005] VCAT 2606 [47]. Mr Brown said, the weighing of each benefit or disbenefit must be made 'in light of the scope, subject matter and purpose of the act'.
As to the objectives, he noted Section 1.1(2) of the Act which established an objective of minimising harm caused by problem gambling, whilst accommodating those who gamble without harming themselves or others. There was also, according to the same sub-section, an objective of the promotion of tourism, employment and economic development. The same objectives were, he said, to be found at Section 3.1.1 as objectives specifically of the Chapter of the statute dealing with electronic gaming machines. This Chapter had an objective allocating gaming machine entitlements to maximise the financial and social benefits to the Victorian community under an appropriate regulatory framework. There was also a statutory purpose of promoting a competitive gaming industry. He referred to six principles which were stated by the Minister in his Second Reading Speech for the 2003 Act.
- developing and reinforcing the government's commitment to responsible gambling through measures that assist and protect problem gamblers and those at risk of becoming problem gamblers, their families and the wider community.
- developing and maintaining the state's commitment to the highest standards of probity for gambling service providers;
- accepting gambling is a valid activity for many Victorians who are entitled to expect ongoing high standards of service, transparency and accountability from the gambling sector;
- ensuring that the legitimate financial benefits of gambling (both private and public) are transparent, appropriately recognisable and fairly distributed to the Victorian community;
- that to the extent possible consistent with the other principles, gaming service providers operate in a competitive environment; and
- establishing proper consultative processes to ensure that appropriate information is given to, and input is received from, the wide variety of persons interested in gambling including stakeholders, affected parties and, to the widest extent possible, the broader Victorian community.
He noted that one of the purposes of amending the statute in 2000 to abolish the duopoly which had previously existed, was to promote a competitive gaming industry. This was a stated purpose of the amendment appearing in the Minister's Second Reading Speech. It was proper to interpret the legislation in light of that. He referred to the Interpretation of Legislation Act 1984, Section 35(b)(ii). Therefore, he said, the task of determining should be approached on the basis that the provision and use of electronic gaming machines were lawful activities which nevertheless caused harm to some people. The benefits of these processes should be spread throughout the community and competition between venues should be promoted. He concluded 'in other words, there should be a precautionary approach to approval, as embodied in the no detriment test'.
Mr Brown said the Hotel needed to persuade the Tribunal but:

[189]

I generally accept the analysis of the issue put by Mr Brown on behalf of the Commission.
Whilst there is much to be said for a precautionary approach in these gaming matters, the true precautionary approach would be to continue the ban which existed in Victoria until just over 20 years ago upon electronic gaming machines and their predecessors, the mechanical poker machines. Cynics at the time suggested that the exclusion of these machines from Victoria was dictated in the decision-making of some Governments, not so much by the desire to protect the community from problem gambling, but rather to entrench the share of the gambling dollar available to, for instance, thoroughbred horse racing. Meanwhile, large numbers of Victorian citizens travelled to locations in New South Wales and elsewhere such as Moama to 'play the pokies'. Whatever the virtues of this approach may be, the State has turned aside from it two decades ago. The legislation to which reference has been made requires a balancing of factors. I agree with Mr Appudurai that, in coming to grips or attempting to come to grips with the issue of problem gambling, decision-makers are doing no more than 'stabbing in the dark'. This only goes to show how difficult it is to come by reliable data on these difficult issues. The element of 'stabbing in the dark' is further emphasised by the difficulty in comparing putative benefits and disbenefits against one another. How does one value, for instance, the damage to the lives of some problem gamblers as against a community contribution of say $50,000 or the benefit to the local economy of a major renovation? Problem gambling is a phenomenon that cannot be accurately measured and even if it could, its consequences are impalpable and difficult to subject to a purely economic analysis. It behoves decision-makers at all levels under the Gambling Regulation Act to be cautious; but the truest application of the precautionary principle was abandoned when electronic gaming machines were introduced to the State.
I agree with the Commission's submission that the competitive effects of this proposal on the Bowling Club should be given only minimal effect. The passages quoted from the statute show that it is an objective of this regime to generate competition. Mr Appudurai, on behalf of the Council, contended that the competition objective was confined solely to the destruction of the duopoly. In a sense he was correct; but, once the duopoly has been destroyed, the only persons who are left competing with one another are the venue operators. Whilst the statute controls the numbers of electronic gaming machines, it does not evince an intention to provide an immunity from competition to incumbent operators.
Mr Graham, the Chairman of the Bowls Club, offered some very sobering assessments as to the consequences of success of this proposal. These conclusions were open to question on a number of bases. The club was setting out to amortise its expenditure on electronic gaming machine entitlements entirely by the expiry of their time period. A very laudable and conservative approach, but the club cannot be regarded as having an absolute guarantee of ability to affect that amortisation.
The figures which Mr Clyne postulated as to new expenditure were, in my view, unduly conservative, concentrating as they did on the immediately following year from implementation of the proposal, if adopted. Mr Gill said that there would be an element of 'ramp up' in the later periods. I accept that submission.
Too much should not be made of the contrast between the fact-finding role of a court and of a body such as this Tribunal. The Commission's submission might give the impression that Courts deal only in making findings as to present existing facts, whereas an administrative review such as this one, confronts the uncertainties of predicting the future. This is an adequate enough description of this Tribunal's review function but the Courts are frequently required to make projections into the future. The assessment of damages in personal injury matters is the most obvious example. The Court must ask what level of income the uninjured plaintiff might have been able to earn over his or her lifetime but for the accident for which damages are being awarded. The problems become even more acute where, as is sometimes necessary, a court is required to value a 'chance'.
What, then, is the likely affect of implementation of the Hotel's proposal. if permitted, upon problem gambling? The Commission raised the to some extent inconsistent views expressed by the Productivity Commission in its report as to the effect of increasing the numbers of gaming machines where gaming machines are already readily accessible. Based on the evidence I have heard and my own observations upon an inspection conducted in the early afternoon of a Thursday, despite Mr Brewer's contention, it is not obvious that there is a large pedestrian passing parade of vulnerable people to be enticed into the hotel. Even if there were, there is no reason to think that the temptation to such passersby would be any greater by reason of an additional 10 gaming machines being placed in the already established gaming room. Whilst it is possible to play these machines without 'signing in' as one is required to do at a club venue, Benalla, on my observation and upon the statistics, is a sufficiently small community that most customers will be known either to the gaming room staff or to others in the gaming room. The sort of anonymity that one might find in the electronic gaming machine room of Crown Casino Melbourne is entirely absent in Benalla. In my view, there is no reason to think that the marginal affect of this proposal, if implemented, will significantly worsen whatever problem gambling already exists in the Rural City.
I accept the evidence of Mr Walker, called on behalf of the Hotel, as to the various programs which exist to cope with problem gambling. Doubtless, the elimination of electronic gaming machines would be a far more effective protection to problem gamblers, but for the reasons explained earlier, this is not what the Victorian statute contemplates should occur.
Obliged as I am to pay proper regard and give appropriate consideration to the negative views of the Commission in its primary determination, I note, as Mr Brown observed, that the benefits offered as a quid pro quo for approval of this proposal are more significant than those which were found by the Commission to be 'quite modest' and not to outweigh the potential negative. The renovations proposed have moved much further towards potential implementation than they had when the matter was before the Commission. A planning permit has been issued and evidence was placed before me of the availability and willingness of a builder to undertake the work commencing early next year. The philanthropic community donation scheme has been enhanced substantially.
The Commission's finding that the 'no net detriment' test had not been met was not, as I read it, a downright determination. Rather, the Commission felt that the matter was relatively finely balanced but ultimately the test was not met. The enhancements which are now offered, in my view, are sufficient to tip the balance favourably to the applicant such that the no net detriment test is met. Though again, this is not a very downright decision but one reached cautiously and only on balance.
Mr Appudurai, on behalf of the Council, contended that the benefits which were necessarily thrown into the balance to meet the test ought not be countered because they would be derived only into the future, whilst the intention was to implement the proposal much earlier, leaving a period where the negative elements of the proposal were operating but the promised benefits had not accrued. In my view, this over-simplifies the situation. Whilst Rome was not built in a day; if this proposal goes ahead the Royal Hotel will not be renovated in a day, but if the proposal is approved on condition that the renovation and the other benefits will accrue over time, the very promise of those benefits is, in my view, a benefit in itself. So, for instance, though a bond issued by a solvent party promising to pay a thousand dollars three years hence does not have the same value as the proffer of $1,000 in legal tender forthwith, it does have a value. The difference between the value of the bond and the legal tender 'on the nail' takes account first, of the delay in receipt, the so called 'time value of money' and secondly, any credit risk, that is, any risk that the promise will not be carried out. Here, by appropriate use of condition, a strong likelihood of delivery of the benefits can be created so that one may have greater confidence that the benefits will in fact be bestowed. This means that the promise of benefits has a value, albeit not as great as if those benefits were delivered forthwith and immediately; but the benefits do have sufficient value that, when thrown in the balance, they meet the no net detriment test. I propose, in accordance with the suggestions made by the Hotel, imposing conditions modelled on those imposed by the Tribunal in the Bendigo Stadium case.
One of the matters raised by the Commissioner in its determination was the consequence of a sale of the applicant Hotel company's business upon the promised benefit. If the venue operator's licence were an entitlement of the same type as a planning permit or a liquor licence, no problem would arise. In the case of a planning permit, it attaches to the subject land and binds successors in title. Even if a condition did not, in a direct sense, bind a new owner or occupier of premises to which it attached, a provision which operated as a forfeiture or a penal modification in the event that certain requirements were not met, would create an effective incentive to any successor in title to ensure that the relevant benefits were delivered. The venue operator's licence however, in accordance with Section 3.4.15 of the Gambling Regulation Act, is not transferrable. There is a transfer process for gaming machine entitlements under Section 3.4A.3 of the Act published by the Minister in Gazette A43 of 15 March 2012 but that, as I read it, is a state-wide market controlled by the Minister in which gaming machine entitlements are offered for sale, detached from particular premises. Precisely how a situation, where for instance, a hotel company which sells the hotel business, arranges to put the purchaser company in possession of the right to operate electronic gaming machines at the hotel was not examined in the course of the hearing before me. The applicant company, through its counsel, proposed a condition requiring the use of best endeavours to include a provision in any contract of sale for the Hotel which would ensure the performance of the benefits which are proffered by the applicant. In light of Section 3.4.15 referred to above, the entitlement to operate the machines at the hotel cannot simply be transferred without some further approval process by the Commission. In the circumstances, I proceed upon the footing that that further approval process would enable the imposition of corresponding conditions upon any new operator of machines at this venue to ensure that the benefits promised were delivered, or alternatively, that the entitlement to operate the additional machines would be revoked if the benefits were not delivered. In that belief I have not included the transferee condition suggested by the applicant.

At a glance

Court

Decision date

Source

Judgment (189 paragraphs)

Royal Hotel Benalla v Victorian Commission for Gambling Regulation (Occupational and Business Regulation) [2012] VCAT 1972 (19 December 2012)

Parties

Cases Cited (5)