Gaming Machine Entitlements: What You Need to Know

Background

Under the NSW Gaming Machine Act (2001) (GMA) a GME must be held to operate a gaming machine. 

An object of the GMA (Section 1e) is to provide for an ongoing reduction of GMEs in NSW via a GME trading scheme. In 2001, the GMA established the initial GME trading scheme and a state cap for the number of GMEs available in NSW. The cap meant no new GMEs would be granted in NSW and any new or existing venues looking to increase their gaming offering would need to be sourced within that 104,000 cap via a trading scheme.

On 1 July 2023, the state government lowered the state cap to 95,994.

Within the 95,994 available GMEs in NSW, 72,670 GMEs are available to the club sector and 22,347 to hotels. Note: Star Casino was issued 1500 within the original 104,000 entitlements which has remained unchanged.

In March 2018, the NSW Parliament passed amendments to introduce the GME leasing scheme to support small venues that may be struggling financially and improve their ongoing financial viability. 

A summary of GMEs

• All venues with gaming have a gaming machine threshold (GMT) which is the maximum number of entitlements a club is authorised to hold. The GMT for your club/s is listed on your club’s licence.
• When a club leases GMEs, the club’s GMT is reduced by the number of entitlements leased and is considered to be held by the club leasing the entitlements during the lease. A substantial benefit of leasing is that the club retains the asset while resourcefully exploiting the holding to suit the club’s business structure or economic sustainability. 
• Any trade of a GME attracts the forfeiture of one GME per every block of two or three entitlements — over time this will reduce the number of GMEs and gaming machines in the market. Leasing does not require a forfeiture.
• A club may need to apply for a GMT increase to enable it to transfer or lease GMEs. The application will require a Local Impact Assessment (LIA) that demonstrates a positive impact on the community and other supporting information. 
• All gaming clubs in NSW are classified under a risk ranking system which determines the LIA band of the club based on the location of the club. Under the LIA scheme, clubs are put into a Statistical Area Level 2 (SA2) which is then ranked according to the relative risk of introducing additional gaming machines into that area.
• ILGA must approve any GME transfer and increase to a club’s GMT. In assessing gaming-related applications, ILGA uses a risk-based approach and may consider relevant data, including:
  • Club licence trading hours.
  • Socio-demographic problematic gambling risk factors for the local area compared to the state average such as minors, lower education and income, higher unemployment, above average single households, a high percentage of indigenous or non-English speaking residents, and local support networks. 
  • Crime statistics for the suburb and LGA. 
  • The venue’s compliance history and any disciplinary history of current and previous licensee(s). 
  • Gaming intensity and problem gambling prevalence data in the local area compared to the state average. 

Clubs must also demonstrate that they have effective responsible gambling/harm minimisation measures in place to prevent gambling harm.

The GME Trading Market

Based on Liquor & Gaming NSW data, the average trading price for entitlements from April 2002 to the 2023 calendar year for each club trading market are: 

• Metro to Metro - $29,554.38
• Metro to Regional - $22,837.12
• Regional to Regional - $24,992.24
• Regional to Metro - $23,503.74
• Total Club Average - $25,491.47.

There is anecdotal evidence that recent brokered trades in the club market could be valued between $45,000 and $60,000 per block of three depending on the LIA band, SA2 and location.

The market price for GMEs can fluctuate depending on the amount of GMEs available for trading and the number of clubs able to obtain additional GMEs. 

If your club has any gaming queries or questions regarding anything discussed in this article, please contact ClubASSIST on 1300 730 001 and request to speak with Amy Broomfield.