Mon, May 27, 12:34pm by Staff Writer
Woolworths investors and anti-gambling activities that want the supermarket to divest from its pub business should not expect movement on the issue anytime soon.
The Sydney Morning Herald is reporting that sources in the company are reluctant to make a decision on their pokies involvement, with management’s focus on fixing its loss-making Big W chain.
The retail giant owns a majority stake in ALH Group, which is Australia’s biggest poker machine operator, with more than 12,000 machines across its 323 pubs and clubs.
That has long made it a target for anti-gambling campaigners, with one of its major investors joining the push recently.
Perpetual investments, which is Woolworths’ third largest shareholder, has told the company that it should sell its 75 per cent stake in ALH because it was a risk to its supermarket brand and reputation in the community.
As the largest investor in Tabcorp and the Star Entertainment casino group, Perpetual had no ethical qualms over investing in gambling companies and took its position on Woolworth’s ALH stake purely on business grounds, sources said.
There have been reports dating back several years that Woolworths and its joint venture partner, hotelier Bruce Mathieson, were looking to change ALH’s ownership structure, including through a potential IPO.
But sources close to Woolworths said there was no transaction currently on the cards, and it would likely not look at any change in ownership until Woolworths boss Brad Banducci had dealt with Big W.
Department store retailer Big W has been the biggest pain point for Woolworths since it closed its hardware chain Masters in 2016.
The discount department store ran at a $110 million loss last year, and Woolworths expects it to lose another $80-100 million this year.
Woolworths won't get out of its pubs business any time soon, sources close to the company said, with management's focus instead firmly on fixing its loss-making Big W chain. https://t.co/AM8scBdOne
— Blue Streak Daily (@bluestreakdaily) May 25, 2019
Woolworths is in the process of closing 30 of its worst performing stores in an effort to improve returns.
The risk to Woolworth’s reputation from poker machines was highlighted last year, when it was revealed staff at ALH pubs were keeping personal information on high turnover gamblers and giving them free drinks to encourage them to gamble more.
The revelation prompted a number of investigations by state and federal liquor and gaming authorities.
A report by the ABC has revealed that dozen of Woolworths pubs are being investigated over claims staff illegally gave free drinks to pokie players to keep them gambling longer, as a whistleblower alleges staff were instructed on how to cover up the practice.
The NSW gaming regulator has told the ABC it is investigating more than 50 venues run by Australian Leisure and Hospitality (ALH), which is 75 per cent owned by supermarket giant Woolworths.
Liquor and Gaming NSW has hold the ABC it has “issued coercive notices to obtain a significant volume of information and records, and formally interviewed current and former ALH staff and patrons.”
The investigation has been going for close to a year and has been described as “comprehensive” by a spokesman for the regulator.
It is a criminal offence in NSW to provide free or discount alcohol to induce gambling.
Any move to divest from ALH will be complicated by liquor laws in Queensland, where bottle shop owners must also own a pub license.
An outright exit from ALH would therefore create issues for Woolworth’s network of several hundred BWS and Dan Murphy’s liquor stores in that state.
Coles claims that it solved this problem earlier this year through a deal for its hotels arm.
Under the deal revenue from its pubs and associated poker machines go to its joint venture partner, but Coles retains the right to run its Liquorland, First Choice and Vintage Cellars bottle shops in Queensland.
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