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Woolworths and ALH connection comes under fire

Fri, May 31, 8:58am by Staff Writer

Woolworths’ pokies business has come under the spotlight again, with Yahoo Finance reporting that major shareholder Perpetual Investments is putting pressure on the company to rid its store of all gambling machines.

The push has since taken on a life of its own.

Not only because of shareholder concerns, but as a result of last year’s report on Woolworths’ misuse of the pokies.

The list of complaints included details recorded of bettors’ activities and bribing high-value customers with free drinks to gamble more.

Woolworths has been a business in Australia since 1924 and has grown consistently.

The New South Wales-based company employs more than 115,000 workers and claimed $56.7 billion in revenue in 2018.

The Woolworths Group parent company has the strongest ties to pokies.

In fact, the company is the largest hotel and gaming pokies operator in Australia.

In 2005, Woolworths expanded into the hotel industry, partnering with ALH Group to acquire properties.

ALH (Australian Leisure and Hospitality), is Australia’s largest pokies operator and incorporated pokies into their properties.

Those machines subsequently ended up comprising a significant portion of overall revenue.

As it stands, Woolworths owns 75 per cent of the ALH Group, which operates more than 12,650 pokies throughout Australia.

Those machines generate $1.2 billion in net revenue annually, Casino Australia reports.

Staff gave special service to value customers

A whistleblower blew the lid off a situation at Woolworths in 2018 that led to an investigation and protracted discussion about its relationship with ALH Group and pokies in general.

There was a discovery made that Woolworths’ staff recorded punters and their habits and tried to induce them to play more.

The venue also categorised customers, and ones deemed of “high value” were given specialized customer service.

This included free drinks, to keep them gambling.

The “customer service program” lasted six months.

An extensive investigation led to staff fired and disciplined at 22 locations, including 20 hotels in Queensland and pubs in New South Wales and South Australia.

It also led to federal MP Andrew Wilkie calling for a revision of regulations that failed to catch and reprimand the company.

Another demand was for the removal of all pokies from Woolworths supermarkets.

ALH Group did admit that “poor management” was at fault and that it was not in line with the company’s commitment to responsible gambling.

The company vowed to review customer privacy rules and provide more staff training to ensure it didn’t happen again.

Woolworths chairman Gordon Cairns said at the time: “the practices outlined in the investigation, at a limited number of hotels, are at odds with the priorities and values of our customers and the communities where we operate.”

The latest concerns came about when a New South Wales government report showed that gamblers lost approximately $6.8 million on pokies in 2018.

National losses amounted to $12 billion per year.

That led Perpetual Investments, one of the company’s most influential shareholders, to call for Woolworths to get rid of its gambling machines.

The requests have been more consistent of late, coming with a sentiment that the pokies are a threat to the entire brand and its reputation.

They are also seen as incompatible with Woolworths’ expressed values.

Perpetual Investments first raised the issue in 2016, but increased the intensity of the discussions in the past year.

Cairns told investors in the past that Woolworths had looked at various options for parting ways with the ALH Group, but it was complex.

Concerning the recent revelation about Perpetual Investments, Cairns did not provide a specific comment except to say it would continue working to enhance responsible gambling practices at locations with pokies.

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