Acquiring a gaming machine
Under NSW law, there are several licences and authorisations you must have in place before operating gaming machines.
It is against the law to be in possession of a gaming machine in NSW unless properly authorised, with maximum penalties up to $11,000 and/or 12 months imprisonment.
To operate gaming machines you need:
- a club liquor licence or a hotel liquor licence
- sufficient Gaming Machine Threshold (GMT) for the number of machines you want to operate in your venue
- a Gaming Machine Entitlement (GME) or a poker machine permit (PMP) for each gaming machine installed at the venue
Note - The Independent Liquor Gaming Authority (ILGA) takes a risk-based approach to discharging its functions. This means that ILGA will refer to the statutory objects and specific statutory criteria for making decisions set out in the liquor and gaming legislation. ILGA will also consider relevant liquor and gaming related research and evidence, including crime, demographic and health statistics.
Once you have the required authorisations and licences you will need to:
- buy a gaming machine from a licensed dealer or seller, or from another hotel or club
- contact Data Monitoring Systems (DMS) to arrange for the CMS equipment to be installed at your venue
- provide direct debit details to Revenue Assurance Integrity Unit - via assurance.integrity@liquorandgaming.nsw.gov.au
- apply through Quickchange for authorisation to keep and operate the machine
- connect the gaming machine to the Centralised Monitoring System (CMS)
Note:
- Only clubs are permitted to operate multi-terminal gaming machines (MTGMs)
- Only hotels have poker machine permits
- Hotels with more than 10 gaming machines must have a Hotel Gaming Room
Financial arrangements to acquire gaming machines
If you buy gaming machines:
- payment must be in full and made within 90 days of the delivery date
- trade-ins are allowed as part of the purchase price
- payment can be in cash or a combination of cash and trade-in.
You can defer the 90 day payment however you must have a financial agreement approved by the Independent Liquor and Gaming Authority Board (ILGA) already in place.
Your application for approval of a financial arrangement should be in the form of a letter detailing how the proposed arrangements meet the guidelines and clause 9 of the Gaming Machines Regulation 2019. The application must include a copy of the proposed financial arrangement.
Authorisation to keep or dispose of a gaming machine
To install a new gaming machine, change your existing gaming machine, or to dispose of a gaming machine in your venue, you must apply for authorisation.
?Fees
Example of how installation fees work:
- authorising one new device counts as one change
- de-authorising a device and replacing it with a new device counts as two changes
- authorising one device and attaching it to a progressive jackpot controller counts as two changes.
Fees are direct debited a month after approval, from the account nominated for payment of your gaming machine tax.
Hotel and club gaming licences
In order to operate gaming machines, you must have a licence. There are two types of licences that allow you to operate gaming machines:
?Hotel Gaming Licences?: are in the form of gaming machine entitlements (GMEs) and poker machine permits (PMPs)
Late-night gaming applications
The Independent Liquor and Gaming Authority (the Authority) determines gaming related applications as venues move, trade and lease gaming machine entitlements and seek to vary their gaming machine shutdown hours.
The Authority has particular concerns with applications that increase the availability of gaming machines after midnight in Band 3 SA2 and after 2:00am in a Band 1 or 2 SA2. The Authority has developed Guideline 16 (Authority Guideline 16 - Late-night gaming applications PDF, 705.65 KB) to assist applicants in demonstrating due regard to gambling harm minimisation and fostering the responsible conduct of gambling.
The Guideline applies to applicants seeking:
- a gaming machine threshold increase under section 34 of the Gaming Machines Act 2001,
- to transfer gaming machine entitlements or permits, or
- a reduction or variation to the gaming machine shutdown period under sections 40, 40A and 41 of the Act.
In considering what is in the public interest the Authority will consider the objects of the Gaming Machines Act and the matters set out in Guideline 16, including any submissions made by the applicant under Guideline 16.
Guideline 16 states that the Authority will look more favourably upon late night gaming applications where a venue has implemented or proposes implementing strategies to prevent and reduce gambling harm beyond the minimum legislative requirements. In considering how Guideline 16 applies to your application, we encourage you to:
- refer to the Office of Responsible Gambling fact sheet titled ‘Going above and beyond'. Responsible conduct of gambling for venues’ (Annexure C to the Guideline) and to provide the Authority with information on what harm minimisation strategies are in place at the venue and/or will be in place at the venue if the application is approved. Guideline 16 states that applicants should be able to demonstrate they have multiple Foundational Level strategies in place. Applicants with higher risk applications (including but not limited to those for venues in a Band 3 SA2 or any venue trading past 2 am) should be able to demonstrate they have multiple Intermediate and Advanced level strategies in place.
Gaming Plan of Management
If you are applying to increase the availability of gaming machines at your venue then you should submit a Gaming Plan of Management (GPOM). A GPOM provides a framework for both patrons and staff in understanding and managing the potential impacts of gambling.
A GPOM identifies a venue’s responsible conduct of gambling (RCG) obligations and goals and commits the venue to implementing appropriate harm minimisation measures. It provides guidance to you and your staff on the actions that will be taken to not only ensure compliance with your obligations under the gaming laws and your licence, but also to support best practice in your approach to RCG.
It is recommended that all gaming venues develop a GPOM. Note that a GPOM can be used to support an application.
Read the Gaming Plan of Management Factsheet PDF, 211.35 KB for more information about what should be included in a GPOM.
Revised ILGA delegations how Guideline 16 applies
If your application involves an increase in the availability of gaming your application is likely to be determined by the Authority rather than under delegation. Examples of late night gaming applications likely to be determined by the Authority include:
Gaming machine threshold increases without entitlement or permit transfers or leases:
- any application where a venue is located in a Band 3 and the venue trades past midnight, or
- any application where the venue is licenced to trade past 2:00am
Gaming machine threshold increases with entitlement or permit transfers or leases:
- where the movement will from a band 1 to a band 2 SA2 and the receiving venue trades past 2am
- where the movement is within the same band between venues with the same trading hours and there is no forfeiture of gaming machine entitlements
- any new lease agreement that replaces an existing lease agreement which would result in a net increase in the availability of late-night gaming machines at the venue
- transfers between venues where the receiving venue has longer trading hours than the source venue and/or significantly higher turnover per machine, even if the venues are within the same SA2 or two same-banded SA2s.
Extended trading applications and gaming machine shutdown related applications:
- any application to vary shutdown or trading hours that will result in the increase in the availability of gaming during the late-night period.
If you have any questions about current delegations, please email Liquor Gaming NSW.
Hotel Gaming Licences?
In addition to selling and serving alcohol on and off premises, a hotel licence allows you to operate gaming machines.
Gaming machine entitlements and thresholds
There must be one GME and/or one PMP for each gaming machine at the hotel.
The Gaming Machine Threshold (GMT) defines the maximum number of GMEs and PMPs for your premises, i.e. the maximum number of gaming machines that you can operate in your hotel.
A hotel’s GMT is limited by the floor space of the premises of the hotel. Hotels can have up to a maximum of 30 gaming machines. If you have more than 10 gaming machines you must have them in a separate Hotel Gaming Room.
Applying for a GMT increase
For new hotel licences, or when a hotel relocates to a different premises, the GMT for the hotel is automatically set to zero.
To operate gaming machines you need to apply for an increase in your GMT.
Note: GMT cannot be increased if the hotel is (or will be) in a retail shopping center or in the immediate vicinity of:
- a school
- a place of public worship
- a hospital.
In most cases a Local Impact Assessment (LIA) must accompany an application for a GMT increase. The application will only be granted if the GMT increase will have a positive impact to the community.
ILGA takes a risk-based approach to discharging its functions. This means that ILGA will refer to the statutory objects and specific statutory criteria for making decisions set out in the liquor and gaming legislation. ILGA will also consider relevant liquor and gaming related research and evidence, including crime, demographic and health statistics.
Acquiring gaming machine entitlements
As part of the NSW Governments gradual reduction strategy, each hotel must acquire gaming machine entitlements and permits from within the existing supply of other hotels.
Transfer of entitlements attracts a compulsory forfeiture of one entitlement in every block of two or three entitlements being transferred from other hotels.
In limited cases, GMT for a hotel premises can be increased with a simultaneous transfer of gaming machine entitlements or poker machine permits.
Club Gaming Licences
In addition to selling and serving alcohol on and off premises, a club licence allows you to operate gaming machines.
Gaming machine entitlements and thresholds
You must have one GME for each gaming machine.
The Gaming Machine Threshold (GMT) defines the maximum number of GMEs for your premises, i.e. the maximum number of gaming machines that you can operate in your club.
A club’s GMT is limited by the floor space of the premises of the club.
Applying for a GMT increase
For new club licences, or when a club relocates to a different premises, the GMT for the club is automatically set to zero.
To operate gaming machines you need to apply for an increase in your GMT.
Note: GMT cannot be increased if the club is (or will be) in a retail shopping center, or in the immediate vicinity of:
- a school
- a place of public worship
- a hospital.
In most cases a Local Impact Assessment (LIA) must accompany an application for a GMT increase. The application will only be granted if the GMT increase will have a positive impact to the community.
Clubs wishing to increase their GMT over 450 who do not have to complete an LIA, must still demonstrate that:
- approving the application will provide additional benefits to club members or the community
- the club
will manage any negative impact from the additional gaming machines on the amenity of the local area.
ILGA takes a risk-based approach to discharging its functions. This means that ILGA will refer to the statutory objects and specific statutory criteria for making decisions set out in the liquor and gaming legislation. ILGA will also consider relevant liquor and gaming related research and evidence, including crime, demographic and health statistics.
Acquiring gaming machine entitlements
As part of the NSW Governments gradual reduction strategy, each club must acquire gaming machine entitlements from within the existing supply of other clubs.
Subject to exemptions, transfer of entitlements attracts a compulsory forfeiture of the one entitlement in every block of two, or three, entitlements being transferred from other clubs.
In limited cases, GMT for a club premises can be increased with a simultaneous transfer of gaming machine entitlements.
$1 billion and counting: Investigator reveals size of poker machine crime
Pubs and clubs with poker machines need a wake-up call, says NSW gaming s chief investigator in a rare interview as footage shows one brazen money laundering operation in action.
November 28, 2021
Authorities believe $1 billion or more of criminal dollars are laundered through poker machines in pubs and clubs. Credit:
State and federal authorities have evidence NSW s 95,000 poker machines are being used as laundering machines for illicit cash that is easily in the hundreds of millions of dollars, with allegations that, nationwide, more than $1 billion from the proceeds of crime is likely being cleansed through pubs and clubs with gaming machines.
The scale of Australia s pokies crime problem has been revealed by one of the nation s most senior gambling industry officials and comes as CCTV video from a central Sydney pokies venue shows a money-laundering syndicate operating with impunity.
The vision, obtained by The Age, The Sydney Morning Herald and 60 Minutes, reveals the syndicate effectively commandeering the pokies venue to launder tens of thousands of dollars, with a large number of people apparently involved in the co-ordinated scheme. It shows two different methods: some in the group are working on linked gaming machines chasing an almost guaranteed jackpot, while another figure is feeding banknotes into two poker machines at once. In an hour, the man feeds $27,000 into the machine, then bets just $1 and claims the rest as clean gambling winnings.
The group is suspected to have operated in several venues and is one of several criminal syndicates using poker machines in pubs, clubs and casinos down Australia s east coast.
In a rare interview, chief NSW gaming investigator David Byrne said multi-agency investigations indicated the sheer size of the pokies dirty money problem in the state, in comments likely to put pressure on the Perrottet government to act to counter organised crime. Extrapolated to other states with pokies, the figure could be more than $1billion, Mr Byrne said.
In the first four weeks after the COVID-19 lockdown ended, Mr Byrne s teams of investigators at the NSW Gaming and Liquor department identified 140 pubs and clubs and more than 130 individual gamblers associated with money laundering activity.
That s only in the Sydney metro area, that s not the entire NSW landscape, he said.
Money laundering is the process of taking illicit cash from criminal enterprises and making it look like legitimate earnings, or, in this case, winnings from gambling.
In a rare interview, David Byrne, Liquor Gaming NSW s director of investigations and intervention, has spoken of the need for cashless gambling cards. Credit: Dean Sewell
You re talking about, at the worst level, child exploitation, human trafficking, firearms trafficking . terrorism funding all of those can be packaged up in the same conversation as money laundering, Mr Byrne said.
Mr Byrne said it was almost certain pokies states such as Victoria faced similar issues, and urged the gambling industry and groups such as industry lobbyists ClubsNSW to take the issue seriously.
I don t think that clubs, where good, family orientated people across NSW go to have dinner, want [patrons] to be walking past organised criminals laundering cash, he said. I think, based on what we re finding, they [pokies venues] need a wake-up call, definitely.
Mr Byrne said scrutiny of smaller poker machine venues should be similar in scope as that recently applied to the giant casino firms Crown Resorts and Star Entertainment Group.
If it s good for them, then it s probably good for the clubs as well, Mr Byrne said.
Investigations by state and federal agencies have suggested pubs and clubs are failing to report these concerns. Since January 2018, only 5.5 per cent of NSW venues with electronic gaming machines have submitted a suspicious transaction report to money laundering agency Austrac, despite evidence and intelligence suggesting the problem involves many more venues.
Surveillance video shows a woman paying a large number of poker machine players trying to win a linked jackpot.
The clubs and pubs that did submit the reports often filed them too late or under-reported the suspected money laundering and proceeds of crime gambling, undermining the ability of law enforcement officials and regulators to investigate the suspected criminals behind the activity.
Mr Byrne has become the first senior government official to challenge the claims of Australia s powerful gaming lobby that money laundering and organised crime in pokies venues is a myth. His concerns have been privately backed by senior state and federal police officials.
In NSW, customer service minister Victor Dominello s planned reforms to counter money laundering in pubs and clubs have been stymied by opposition from his colleagues and the gambling lobby, while the Andrews government in Victoria is still considering recommendations from the Finkelstein royal commission into Crown Resorts to introduce major pokies industry reforms to prevent problem gambling.
This masthead can also reveal Mr Dominello s office has been privately threatened by gaming industry figures that it would be targeted if it continued to champion pokies reform, including the proposal for a cashless card that allows a punter to limit the amount they intend to bet.
One pokies industry lobbyist warned Mr Dominello s office that it would get ugly if he persisted with his reforms, while another said the state Coalition government would be subject to a similar campaign that led former prime minister Julia Gillard to drop her pokies reform package before the 2013 election.
Surveillance video shows a man feeding $27,000 in dirty cash into two machines, then betting $1 and withdrawing it again.
Mr Byrne said a cashless card would help fight the significant money laundering and proceeds of crime problems identified by his analysts and investigators in partnership with the NSW Crime Commission and anti-money laundering agency Austrac. The cards would negate the ability for people to walk in with a bag of cash and put $30,000 into a machine.
It s definitely a disruption if nothing more and would go a long way to reducing the frequency of this type of behaviour.
In a statement, ClubsNSW downplayed concerns there may be a significant dirty money problem infecting the industry it represents or that more reform is needed, noting clubs had already funded a centralised poker-machine data system used by authorities to track suspicious play. It said it would assist Austrac if and where money laundering was occurring.
At the conclusion of last year s damning NSW inquiry into the organised crime infiltration of Crown Resorts casinos, commissioner Patricia Bergin described the introduction of a cashless gambling card as a powerful mechanism to combat money laundering .
In his recent royal commission report into Crown in Victoria, Commissioner Ray Finkelstein recommended requiring any Australian resident using a poker machine at Crown to use a special card that makes them set a daily, weekly or monthly limit on how long they can play and how much they can lose.
An investigation by The Age, the Herald and 60 Minutes has uncovered evidence of an Asian crime syndicate involved in illegal prostitution and suspected human trafficking washing funds via pokies venues in Queensland. Another case study uncovered by federal law enforcement agencies involves a woman involved in the suspected laundering of $38 million in pokies venues and casinos in Sydney, the ACT and Victoria.
We ve identified an individual who won in excess of $1 million from an RSL club and was also associated with about 30-odd million dollars worth of activity across casinos in Australia, Mr Byrne said. So not just NSW, the person travelled to other states and is associated with [suspected money laundering] activity.
The crackdown on money laundering and organised crime in casinos is also pushing money laundering to pokies venues, four law enforcement sources said.
The groups and the people who are suspicious in the casino environment are often identified in the registered club and pub space, Mr Byrne said.
The challenge has always been finding the resources and time and budget to address money laundering in the gaming environment, Mr Byrne said.
NSW s 95,000 poker machines bring in $1 billion in state taxes each year and create as many as 100,000 jobs, including in sophisticated gaming machine manufacture.
The state government anticipates it will generate $2.8 billion in gambling taxes this financial year, a 27 per cent increase from 2019-20.
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Value poker machine entitlements nsw
A Poker Machine Entitlement is the Right to Install and Operate a Poker Machine in a Club or Hotel.
Poker machines entitlements are extremely valuable. As such, lenders often require poker machine entitlements to be taken as security.
Can Poker Machine Entitlements be Transferred Separately From a Hotelier's Licence?
Poker machine entitlements are capable of being held and transferred.
As a general rule:
2. poker machine entitlements can be transferred separately from one hotelier's licence to another, with the approval of the Liquor Administration Board. In such cases, applicants must demonstrate to the Board that the proposed transfer is supported by each person who has a financial interest in the hotelier s licence. A person is taken to have a financial interest if they are entitled to receive any income derived from the business carried on under the authority of the hotelier's licence or any other financial benefit or financial advantage from the carrying on of the business. Provided the parties who have a financial interest consent to the transfer of the licence, the transfer is approved by the Board.
Forfeiture of Poker Machine Entitlements
Transfers of poker machine entitlements from one location to another must be in blocks of 3 poker machine entitlements. As a general rule, for every block transferred (ie. 3 poker machine entitlements), 1 entitlement must be forfeited into a forfeiture pool maintained by the Liquor Administration Board.
Forfeiture will not be required if poker machine entitlements are transferred to a new venue within 1 kilometre of the old venue.
Problems for the Owner When Transferring Poker Machine Entitlements
The owner of a hotel premises does not automatically have a financial interest in the hotelier s licence just by being the owner, even where that owner has the benefit of a lease that gives the owner the capacity to take control of the licence at the end of the lease term. The owner may however have a financial interest if, for example, the lease states that the owner is to receive an income/payment from the business carried on under the authority of the hotelier's licence.
What Does This Mean?
This means that a licensee can transfer poker machine entitlements without the approval or support of the owner of the hotel premises if the owner cannot demonstrate that it has a financial interest in the licence.
As an owner does not automatically have a financial interest in the licence, it is important to review covenants in leases to see if a financial interest can be established and to ultimately determine what right the licensee has to transfer entitlements without the approval of the owner.
Lenders must be careful when taking security over poker machine entitlements to ensure that the licensee cannot transfer the poker machine entitlements without the owner's approval or support.
Article by Anna Comino
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
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