1. Source of Data CDOL Benchmarking Service. Data based on clubs in CDOL database being 200 NSW clubs representing 31% of all poker machines in NSW
In December each year there is usually a rush of last minute legislation. This year was a massive dump down of new legislation/regulations affecting licensed venues that was either passed or announced.
These amendments impact venues that have liquor sales and those that have gaming machines.
There are many hundreds of pages of legislation and associated documentation.
Below is a very brief summary for your information. If you require any further information please contact CMP Lawler.
The Government passed the new Liquor Act on 7 December 2007 together with a number of other associated acts. This is effectively a complete re-write of the current Liquor Act and will affect all venues that sell liquor.
While the Act has been formally passed, the implementation of the legislation will take between 6 to 12 months as the Regulations have yet to be finalised.
What Are the Changes?
· The new Act will cover all venues that serve alcohol and will now include Clubs for the first time.
· The Registered Clubs Act will be retained and focus more “?on club management and governance issues”.
· The Act will result in liquor licensing being governed by a “?modern administrative liquor licensing process?”, this being:
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A new administrative authority (rather than the current legal model) will deal with liquor applications and disciplinary matters, called the Casino, Liquor and Gaming Control Authority (the Authority);
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Submissions can be made to the Authority by any person;
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There will be a minimum of three members that will make up the Authority, with a maximum appointment of five years;
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Appeals can be made to the Administrative Decisions Tribunal (ADT) – which is a merits review jurisdiction;
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The Director of Liquor and Gaming will continue to have some responsibilities including determining noise/disturbance complaints, and will be able to impose/vary conditions and declare lockouts/curfews; and
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Any appeal from the Directors decisions will be heard by the Authority not the ADT.
Community Impact Statements to replace Social Impact Assessments
· The SIA will be replaced by a Community Impact Statement (CIS)
The features of Community Impact Statements will be as follows:
· A CIS will gauge potential impacts of high impact licensed venues;
· A CIS will be required for:
· A CIS will be prepared before licensing applications are made and will summarize the results of consultation by applicants with local councils, police, health, Aboriginal representatives, community organizations and the public;
· the objective behind the CIS is to minimize time and cost;
· no fee will be payable for the CIS;
· stakeholders will have an opportunity to comment and applications will be advertised;
· health, police and crime data will be taken into account by the OLGR in forming an assessment;
· The Authority will only be able to approve a CIS where the overall social impact of the application will not be detrimental to the well-being of the local community (the exact same test for the current SIA).
Enhanced objects
· The new laws will focus on “?the social and cultural role played by responsible alcohol use.” – This could mean a more positive approach regarding the sale of alcohol.
· All normal responsibilities will remain on licensees.
Small bars and liquor sales in restaurants
· Bars where no gaming occurs and who do not sell take-away liquor will have a special type of license – this will cost $500 and a CIS will be required.
· Restaurants will be able to apply for authority not to serve food – there will be no application fee.
Our view is that such venues will only most likely work in unique areas, such as metropolitan Sydney and possibly Newcastle and Wollongong.
Other
· The public will remain able to make noise/disturbance complaints.
· There will be no change to trading hours for hotelier’s and liquor stores.
· Ease of restrictions on sale of alcohol at surf club functions.
What does this mean for Venues?
While hotels were regulated under the Liquor Act, now clubs will be regulated under the new Liquor Act. This will mean that clubs will need to familiarize themselves with their obligations for the service of alcohol, as will hotels.
There will be a new competitor for some venues in the form of “small bars”. Such venues may only work in unique areas, probably in the Sydney CBD and possibly in some areas in Newcastle and Wollongong. Even in these areas, as we all know, the hospitality industry is very competitive, and although these venues will not have gaming machines, their introduction to an area is likely to impact on the gaming trade of other venues in the area due to their competitive effect in the liquor area. These small bars have the potential to erode the gaming revenue of inner city venues.
Similar legislation in Victoria virtually doubled the number of liquor licenses in the state.
The CIS system should streamline the application process somewhat and this will hopefully mean that for the contentious matters that sometimes involved long drawn out court applications will now be a thing of the past. While the current SIA system allows a range of stakeholders an opportunity to comment on applications, the CIS provisions may result in increased input from stakeholders, such as local councils and community groups. At this early stage the impact of such objections on CIS’s is difficult to judge.
This received accent on 20 December 2007 and commenced on 21 December 2007.
As a result, requirements and rules in a number of key areas of club operation will commence:
Club amalgamations
Most of the requirements for club amalgamations have been transferred into the Regulation. The main changes are as follows:
- the number of clubs a 'parent' or 'principal' club is able to amalgamate with will be increased from 4 to 10;
- a club seeking to enter into an amalgamation must explore all avenues of amalgamation from other registered clubs located within a 50 kilometre radius through an Expression Of Interest (EOI);
- failing to find an amalgamation partner from clubs within that region, a club may seek amalgamation partners from outside the 50 km radius;
- The requirement for a deed of amalgamation is being removed, instead amalgamating clubs will need to enter into a Memorandum of Understanding (MUO) which will be made available to members of both clubs; and
- The definition of “major assets” of a club has been amended and updated.
Transitional arrangements have been made so that amalgamation applications that have been lodged with the Licensing Court of NSW but not granted before the commencement of the new club amalgamation requirements can be dealt with under the pre-existing requirements.
Guidelines have been developed, and will be made available by OLGR to assist clubs to adapt to the new process.
Disposal of club property
A new definition of core property has been introduced. The definition includes the defined premises of a club, and any facility provided for club members. Virtually all other club assets will be regarded as non-core property, and disposal of non-core property need not comply with section 41J, but is subject to disclosure requirements.
Clubs are still required to report to their members which property is being classed as core and non-core. Approval of members will be required should a club want to reclassify land as either core or non-core.
To allow for greater flexibility, the regulations provide for exceptions to the disposal requirements including where:
- property is leased or licensed for a period not exceeding 10 years;
- the property is being sold by private treaty, but only if previously failed to sell at public auction or open tender in compliance with section 41J(3);
- details of the terms and nature of the disposal are disclosed to club members, who approve of the disposal;
- a lease or license is granted for the purpose of providing goods and services exclusively to members and guests; and
- Property is being disposed of to a wholly owned subsidiary of the club.
In addition, the Director of Liquor and Gaming, on application by a club, can approve of the disposal of core property without compliance with section 41J (3).
Clarification on the transitional arrangements for property disposals is currently being addressed by the industry body.
Definition of top executive
The definition of top executive has been clarified so that it applies only to those club employees with clear managerial responsibilities. The new definition captures the secretary of the club, a person appointed under section 34A as the manager of any premises of the club, any other person paid more than $100,000 involved in the general administration, liquor or gaming operations of a club who is one of the five highest paid employees.
Financial and other reporting requirements
The reporting requirements for clubs have been transferred from the Act and consolidated into a single section of the Regulation (clause 47H). Registered clubs must prepare, and make available to members on a quarterly basis, profit and loss and trading accounts and a balance sheet. Clubs must also provide a copy of the financial statements to members that request it in writing.
An appropriate phase-in period for this requirement is likely to be implemented.
This replaces the requirement to lodge with the OLGR annual audited financial statements, as well as that to prepare and submit to the club board, and display to members, a statement of receipts and payments on a quarterly basis (Note: clubs must still comply with the Corporations Act in terms of annual report preparation, provision to members, lodgment etc.)
In addition, the requirement that section 41H information be sent to members is removed. This is the written report that must be sent to members annually containing information on required disclosures and returns, top executive remuneration above $100,000, overseas travel, employee loans and controlled contracts. Instead, the Regulation requires that a club make the information available to members and display a notice advising members how the information can be viewed.
Controlled contracts
Also, the requirement in section 40(O) of the Act for clubs to provide the Director of Liquor and Gaming with a copy of controlled contracts has been removed.
Pecuniary interests in companies
For the purposes of section 41(K) of the Act, a club director or top executive is considered to hold a pecuniary interest in a company if they have a shareholding of more than 5 per cent unless the company is involved in selling gaming machines or liquor to the club where any shareholding gives rise to a pecuniary interest.
Number of club members who must be full voting members
Clubs can reduce the number of club members who must be full voting members from a majority (i.e. 50% + 1 member) to no less than 25% of the total membership. To make the change a club must first have the agreement of club members and then notify the Director of Liquor and Gaming, and comply with any direction.
In addition, ClubsNSW continues discussions with the NSW Government on the final stage of regulation required by The Registered Clubs Amendment Act 2006. It is hoped that by mid 2008 regulation will be in place in the following areas:
Conduct of club elections (yet to commence)
Clubs with more than 10,000 members (approximately 175 registered clubs in New South Wales) will be required to have the election of the club's governing body conducted by a person or body approved by the Director of Liquor and Gaming. Clubs with 10,000 members or less have the option of using an external person/body to conduct their elections.
A process will be developed for the accreditation of election service providers that will be undertaken in consultation with the New South Wales Electoral Commission (NSWEC) and ClubsNSW.
In addition, an agreed set of procedures to assist clubs in carrying out elections will be developed by the NSW Office of Liquor Gaming and Racing, ClubsNSW and the State Electoral Office. Once finalised, these procedures will be included in the Registered Clubs Regulation.
Training of club directors (yet to commence)
A person will not be eligible to stand for election to a club's governing body unless they have acknowledged receipt of education and training material approved by the Director of Liquor and Gaming. The acknowledgement will be in the form of a written declaration, which will be kept by the club in a register for a period of at least three years. This package will also be developed in consultation with the NSWEC and ClubsNSW.
The Gaming Machine Review Report containing over 40 recommendations for amending the Gaming Machines Act (the Act) was tabled in Parliament on Friday, 7 December 2007. The government will prepare amendments to the Act in due course
Proposed Amendments (Yet to Commence)
The key recommendations related to clubs and which will form part of the next consultation phase include:
- Gaming machine venue caps to remain at 30 in the case of hotels and 450 in the case of clubs;
- The state wide poker machine cap is to be reduced from 104,000 to 99,000;
- Removal of “free” entitlements for new clubs and clubs with less than 10 machines. However there is a commitment to develop mechanisms to assist new and small clubs;
- The gaming machine trading forfeiture scheme amended to assist amalgamated clubs when transferring entitlements between related premises;
- Machines granted under the hardship provisions that applied at the time of the poker machine freeze are to be converted to normal poker machine entitlements;
- Significant amendments to the Social Impact Assessment (SIA) process. SIA’s will now be known as “Local Impact Assessments” (LIAs);
- Allowing gaming machine promotional material to be mailed directly to members on an “opt-in” basis;
- ATMs in clubs and hotels to continue, however cash withdrawal from credit accounts will be prohibited. That is cash can only be withdrawn using a debit card or savings account;
- Amendments to clarify and simplify the legislation governing venues in retail shopping centres;
- Multi-terminal gaming machines (MTGMs) to be capped at 15% of a clubs total number of poker machine entitlements. For clubs with a ratio in excess of 15% a consultation process to take place regarding treatment of the excess;
- Unclaimed tickets to be transferred into a Community Development Fund after 12 months and the right to claim on the club extinguished;
- Financing of gaming machines. The report supports a period of 5 years (currently 3 years) however this will be a responsibility of the new Casino, Liquor and Gaming Authority when operating;
- In consultation with stakeholders, addressing issues related to gaming machine visibility from outside of a venue.
Commencing immediately there will be:
- A temporary freeze on any new SIA’s seeking to increase a club or hotel SIA threshold. Any SIA’s submitted before the freeze will be processed as normal;
- A freeze on authorising MTGMs in those clubs that exceed the 15% ratio. Clubs below the 15% ratio will still be able to authorise MTGMs.
The Office of Liquor, Gaming and Racing will now consult with key stakeholders to take these recommendations forward by developing a package of reforms to be introduced into Parliament.
The full report can be accessed on the Office of Liquor, Gaming and Racing website (http://www.olgr.nsw.gov.au/pdfs/gaming_machine_act_review_report_061207[1].pdf).
Contact Us
For more information please contact any of our CMP Lawler team, in Sydney (02) 8346 6000, Newcastle (02) 4962 2688 or Brisbane (07) 3870 2101; or look at our website www.cmplawler.com.au.
