Sat, Jun 22, 8:59pm by Kevin Pitstock
Pokies players in New South Wales should expect no disruption in their gaming source for the next twenty years. While the battle still rages to see whether TAB’s subsidiary, Echo Entertainment, keeps its casino monopoly in New South Wales, a new deal assures a 20-year extension for TABCORP in NSW clubs and pubs.
The new deal includes a payment of $75 million to the New South Wales government in order to secure the monopolistic advantages for TAB. Given the drawn-out process of deciding whether an outside competitor will be allowed to expand the casino gaming in Sydney, some wondered if a new outfit might be called on to handle gambling machines in New South Wales. This proved to be little concern, as NSW and TAB are comfortable with one another after many years working together.
After the new deal was announced, a spokesman for TABCORP said no one at their company ever feared a bargain would be made between the state government and another gambling entity. In fact, a company statement said the deal was already figured into the company’s stock price.
Since NSW is the most important state from a money making standard, such a sanguine attitude might be hard for some to believe. In the end, TAB paid a large chunk of money to assure no dark horse came into the bargaining. The company agreed to pay $50 million up front and $75 million in total to secure the 20-year monopoly. The remaining $25 million will be paid to NSW over a coming ten-year period, which ends in 2024.
This kind of service is what TAB does best. TABCORP came into being in 1994 as a privatization of the Victorian TAB. TABCORP began as a gambling company, with games in clubs and pubs, but also a full casino wing. The casino interest was spun off into its own financial entity: Echo Entertainment Group, the owner of the Star Sydney Casino.
Since 1994, TABCORP has owned the monopoly for New South Wales small venue gambling. If someone wanted to play the pokies in the pubs, then the TABCORP had a hand in the proverbial pot. If somebody wanted to play poker machines in their favourite night club, this also was possible through the control of TAB. Along the way, TABCORP has added a media wing to their growing empire.
It’s unknown whether the TABCORP decision (to favour a monopoly) is an indication the New South Wales government might make a similar decision in the ongoing Sydney Harbour casino complex project approval case.
In that situation, James Packer and Crown Limited want to secure rights to build a $1.5 billion casino complex which they’ll name Crown Melbourne. Echo Entertainment Group and its CEO, John Redmond, are eager to maintain their long monopoly which they’ve long enjoyed with Star Sydney Casino. They suggest cannibalisation of high roller gamblers could lower government gaming revenues by 2025.
If anyone in the decision making process from NSW believes that notion, then NSW might be leaning towards supporting Echo Entertainment in the bid process. The final decision is forthcoming soon.
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