Pokies change means dollars for hotel owners

Pub and club owners in Victoria could see the value of their businesses increase in value significantly following a State Government decision to allow them to hold pokie licenses.

Victorian Premier John Brumby yesterday announced that from 2012 pub, club and hotel owners in Victoria will be able to bid directly to hold licenses to operate pokies in their venues.

The decision marks a dramatic departure from the current regime under which two companies, Tatts Group and Tabcorp, hold the licenses to operate all poker machines in Victoria outside of Crown Casino.

Despite not taking affect until 2012, the announcement of the change has added an immediate premium to the value of venues capable of operating pokies, according to Jane Glaisher, principal of hospitality business broking specialists G & T Brokers.

“Businesses will be worth more, no question,” Glaisher says. “A gaming licence is something that is unique and limited prices, so people will pay to have them.”

The change could also improve the value of the businesses that introduce pokies because there can be positive flow-on effects to food and drink purchasing, Glaisher says.

She predicts we could well see larger hotel operators start moving in to snap up venues in order to take advantage of the higher returns available.

“We could well see some of the bigger players come in but they will have to pay a premium. Pub owners will want to see that, and they won’t be able to come in at previous prices.”

But the change could well present some challenges for smaller venue operators who will have to manage paperwork and meet management obligations associated with holding a pokies licence.

“Financial reporting is often not strong in the hospitality industry, so it will put the onus on individual licensees to tighten up their internal controls to deal with licensing authorities,” Glaisher says.

At 10.30am AEST, Tabcorp shares were down 21% at $11.35 while Tatts was down 29% at $2.60, against a steady broader market.