Gambling Regulation Act 2003; Gambling Regulation Act 2003. The Victorian Government acknowledges Aboriginal and Torres Strait Islander people as the Traditional. An Act to amend the Interactive Gambling Act 2001, and for other purposes Assented to 16 August 2017 The Parliament of Australia enacts: 1 Short title This Act is the Interactive Gambling Amendment Act 2017. Jarrod Wolfe, a strategic analyst in the Victorian regulators' compliance division, replied. And under Victorian law as far as he's concerned, loot boxes are a form of gambling.
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Latest news
Minister's Final Allocation
The fifth and final stage of the administrative allocation process is now completed with the Minister for Consumer Affairs, Gaming and Liquor Regulation (Minister) issuing each participating venue operator with a Final Allocation letter confirming the number of post-2022 gaming machine entitlements they have been allocated.
A high-level overview of the allocation process which focuses on Stage 5: Award is available for download
The completion of the allocation process is a significant milestone and is the culmination of a lot of hard work by the State and the industry. The Department would like to thank the participating venue operators and industry representatives for their efforts and cooperation during this process, which has enabled the successful allocation of the post-2022 gaming machine entitlements, providing club and hotel operators with long-term certainty.
If you have any further queries about the allocation process, contact the Gaming Machine Allocation Project by email olgr.gmap@justice.vic.gov.au (External link) or phone: (03) 8684 0329.
Reports of the Independent Review Panel
The Gambling and Lotteries Licence Independent Review Panel (the Panel) was formed in accordance with the Gambling Regulation Act 2003 (Vic) (the Act) to independently and publicly report on the gambling licensing processes under the Act as well as relevant regulatory reviews.
The key objective of the Panel is to oversee the integrity of the gambling licensing processes.
The Panel has produced the following reports on the gaming machines licensing process:
- a report on the gaming machines licensing process: regulatory review (tabled in Parliament on Tuesday 21 August 2018)
- a report on the gaming machine licensing process: allocation (tabled in Parliament on Tuesday 5 February 2019).
New allocation process Q&As
The questions and answers about the post-2022 gaming machine entitlement allocation process have been updated.
Allocation principles scenarios
We have prepared a number of scenarios that illustrate how the Minister may allocate when demand exceeds supply of available entitlements for proposed venues and existing venue top-ups.
Gaming machine entitlements information
Detail of the overarching allocation process, new entitlement payment arrangements and other relevant information is available by clicking on the headings below.
Minister's Declaration regarding ratio of club and hotel post-2022 gaming machine entitlements
The Minister for Consumer Affairs, Gaming and Liquor Regulation (Minister) has made a declaration that specifies the permissible percentages of post-16 August 2022 club gaming machine entitlements and hotel gaming machine entitlements (new entitlements), under section 3.4A.5AA(3) of the Gambling Regulation Act 2003.
The declaration was published in the Victoria Government Gazette (No. S 330) on 9 July 2018 and a copy is available on this website.
The declaration specifies that for new entitlements:
(i) 48.4911588484583% of those entitlements must be club gaming machine entitlements, and
(ii) 51.5088411515417% of those entitlements must be hotel gaming machine entitlements.
The Minister will allocate entitlements to eligible venue operators in accordance with the third set of Allocation Rules determined by the Minister under the Gambling Regulation Act 2003 and published in the Victorian Government Gazette (No. S450) on 20 December 2017.
The allocation will be based on the applications submitted by venue operators in response to the Minister's Offer to Apply, which allows each eligible venue operator to nominate the maximum number of entitlements they would be prepared to purchase.
The number of entitlements the Minister allocates a venue operator will be either:
- less than the maximum number of entitlements nominated by a venue operator (and in some cases, may be zero), OR
- equal to the maximum number of entitlements nominated by a venue operator.
Provisional allocation
The allocation starts with an unallocated pool of all available entitlements that gets progressively reduced as allocation goes through the priority stages detailed below.
First Stage
All incumbent venue operators are allocated up to the number of entitlements they held on 7 July 2017.
Second Stage (Clubs)
- New entrant clubs are allocated for proposed club venues up to a maximum of 420 entitlements for each new club
- Incumbent clubs are allocated for requested top-ups for existing venues up to 420 entitlements
- Incumbent clubs are allocated for any requested proposed venues up to 420 entitlements
- Clubs seeking more than 420 entitlements in total are allocated in this final step.
Third Stage (Hotels)
- New entrant hotels are allocated for proposed hotel venues
- Incumbent hotels are allocated for requested top-ups for existing venues
- Incumbent hotels are allocated for any requested proposed venues.
Allocation principles
The Minister will allocate entitlements in Stages 2 and 3 subject to entitlement availability and in accordance with the principles detailed below.
Proposed venues
Allocation with respect to proposed venues in the relevant stages above will be done as follows, subject to the availability of unallocated entitlements:
- (a) allocate all eligible venue operators their Nominated Numbers with respect to proposed venues
- (b) if (a) is not possible, allocate the minimum numbers in the nominated EOI ranges for relevant proposed venues (Minimum Number)
- (c) if any entitlements are left over after (b), allocate these equally
- (d) where (b) and/or (c) is not possible, allocate in a way that maximises the monetary value to the State.
The Minister will not allocate for a proposed venue unless she can allocate at least the applicable Minimum Number.
Approved venue top-ups
Allocation for approved venue top-ups in the relevant stages above will be done as follows, subject to the availability of unallocated entitlements:
- (a) allocate to all eligible venue operators up to their Nominated Numbers
- (b) if (a) is not possible, allocate the Minimum Additional Numbers specified in the applications
- (c) if any entitlements are left over after (b), allocate these equally
- (d) where (b) and/or (c) is not possible, allocate in a way that maximises the monetary value to the State.
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The Minister's discretion will apply where none of the above principles can be applied.
Market limitations
The allocation process will at all times be subject to the Act and instruments under the Act, including: Best in slot hexenmeister gebrechen.
- regional or municipal caps, and
- permissible percentages of club/hotel entitlements.
Allocation review
Venue operators will be notified of the outcomes of the provisional allocation and will have the opportunity to seek a review of the Minister's determination.
Allocation
Allocation will be completed upon execution by the venue operator of the Entitlement-Related Payment Agreement that will be provided with notification of the outcomes of provisional allocation (see Payment arrangements section below).
Every venue operator allocated new entitlements will be required to enter into an Entitlement-Related Payment Agreement that governs the payment terms and arrangements for allocated entitlements. Examples of the standard Entitlement-Related Agreements for clubs and hotels are available here
Payment terms
As per the Entitlement-Related Payment Agreement, if you are allocated new entitlements, these will be subject to the following payment terms:
- (a) As a first instalment, the venue operator must pay the deposit in accordance with the Deed Poll when submitting an application to purchase new entitlements:
- (i) Clubs – 2.5% of the entitlement price
- (ii) Hotels – 5% of the entitlement price.
- (b) The Venue Operator must then pay to the State the balance of the entitlement price as follows:
- (i) a second instalment on or before 28 February 2019 as follows:
- (A) Clubs – 2.5% of the entitlement price
- (B) Hotels – 5% of the entitlement price
- (ii) the balance of the price, either:
- (A) on or before 16 August 2022, or
- (B) in equal instalments on or before the last day of every third month over a 5 year period for Hotels and 7 year period for Clubs (deferred payments).
- (i) a second instalment on or before 28 February 2019 as follows:
Interest
The following interest will be incurred on deferred payments (calculated in accordance with the Entitlement-Related Payment Agreement):
- Clubs: rate equivalent to the 10-Year Commonwealth bond rate over the full repayment term
- Hotels:
- rate equivalent to the 10-Year Commonwealth bond coupon rate for the first 2 years of the term
- rate equivalent to the 10-Year Commonwealth bond coupon rate plus 2 per cent for the remainder of the term.
Penalty interest will be payable on late payments. If payments for entitlements are not made by dates specified in the Entitlement-Related Payment Agreement the relevant entitlement will be in default and forfeited to the State.
Hardship arrangements
If a venue operator experiences serious financial hardship, after allocation the venue operator may request a variation to their payment terms as specified in the Entitlement-Related Payment Agreement. Further details on applying for hardship consideration are available here.
The price for each new entitlement has been determined by the Minister in accordance with the second set of allocation rules published in the Victorian Government Gazette (No. S379) (Second Rules) on 9 November 2017
A summary of the pricing methodology is presented below.
Price for venue operators with operating entitlements
Venue operators will have the opportunity to acquire up to the number of entitlements they held on 7 July 2017.
The majority of entitlements held on 7 July 2017 are being used to operate gaming machines in an approved venue (‘operating entitlements'). A small number of entitlements are held but not being used by venue operators (‘non-operating entitlements').
For operating entitlements, the price varies for each venue and is to be calculated based on each venue's average gaming revenue per machine. The formula uses revenue for the years 2013-14 to 2016-17 divided by the average number of gaming machines operating at that venue in that financial year (calculated by adding the number of machines at the end of that year and at the end of the previous year, and dividing the sum by 2). Each year's revenue is given a weighting, with greater weight being given to the most recent revenue data. The weightings used are:
- 2013-14 – 10 per cent
- 2014-15 – 20 per cent
- 2015-16 – 30 per cent
- 2016-17 – 40 per cent.
The weighted average gaming revenue per machine for each venue is then multiplied by a State Multiplier of 46.3643988224133 per cent to arrive at the entitlement price for that venue (subject to the minimum price – see below).
This produces the following pricing formula:
P = ((A/N) x 10% + (B/N) x 20% + (C/N) x 30% + (D/N) x 40%) x M
Where:
P = price payable for a new gaming machine entitlement with respect to an approved venue
A = the Gaming Revenue at the approved venue for the financial year 2013-2014
B = the Gaming Revenue at the approved venue for the financial year 2014-2015
C = the Gaming Revenue at the approved venue for the financial year 2015-2016
D = the Gaming Revenue at the approved venue for the financial year 2016-2017
N = the number of gaming machines operating in the approved venue for the relevant financial year determined in accordance with the following formula:
N=(E+F)/2
Where:
E = the number of gaming machines operating in the approved venue as at 30 June in the relevant financial year
F = the number of gaming machines operating in the approved venue as at 30 June in the previous financial year
M= State Multiplier of 46.3643988224133%
Price for venue operators with non-operating entitlements
The majority of venue operators who hold non-operating entitlements also have operating entitlements for which an entitlement price is determined using the pricing formula above. Such non-operating entitlements are referred to as Unattached Entitlements under the Rules.
Where a venue operator who holds Unattached Entitlements operates only one venue, the price for the Unattached Entitlements is the same as the price paid for operating entitlements at that venue.
If a venue operator operates more than one venue, the price for the Unattached Entitlements is as follows:
- If there are one or more venues that have less than 105 attached entitlements (Reference Venue) operated by an operator in the geographic area that matches the geographic area condition of an Unattached Entitlement, the applicable price is equal to the highest entitlement price for the operator's Reference Venue in the same geographic area;
- If there are no Reference Venues operated by a venue operator in the geographic area that match the geographic area condition of an Unattached Entitlement, the applicable price will be equal to the highest entitlement price for a Reference Venue outside of the area.
Where a venue operator holds non-operating entitlements but does not operate a venue (referred to as a Non-operating Incumbent Venue Operator under the Rules), the entitlement price is calculated by reference to an approved venue that most closely matches the type (hotel or club) and the geographic area condition of the entitlements held by such an operator as wells as the number of entitlements held.
Price for proposed venues
Under the Expression of Interest (EOI) process, both new entrants and incumbent venue operators could express interest in purchasing new entitlements to operate in a proposed venue (venue that was not operational as at 7 July 2017).
The entities lodging an EOI had to nominate a range (of 20) of how many entitlements they wish to acquire and the location and type of venue (club or hotel) in which they plan to operate those entitlements.
The price for proposed venues is based on the entitlement price for an existing venue of similar size, type and location as the proposed venue.
There may be an adjustment to the price for new entitlements for proposed venues if the size, type and location of the venue where these entitlements are operated is significantly different to that nominated during the allocation process.
Minimum price
There will be a minimum price for all entitlements, regardless of the price determined by the pricing formula. The minimum price will be $5170 per entitlement for club entitlements and $32,714 per entitlement for hotel entitlements.
On 21 November 2017 the Minister for Consumer Affairs, Gaming and Liquor Regulation (Minister) determined Transfer Rules under the Gambling Regulation Act 2003, which were published on the same day in the Victorian Government Special Gazette No:S395. These Rules can be accessed here.
These Rules impose a prohibition on the transfer of new entitlements following the Minister's allocation and until six months prior to the commencement of the new entitlements on 16 August 2022. This prohibition is necessary to prevent speculative purchasing of new entitlements. The prohibition will be lifted six months prior to August 2022 to allow for a seamless transition from current to new entitlement regime where venue operators may need to buy/sell new entitlements due to a change in circumstances since the allocation. The prohibition does not apply to the transfer of new entitlements where the transfer occurs as part of a sale of a gaming venue.
The current tax arrangements will be amended to:
- introduce a new tax bracket for venue operators earning between $6667 and $12,500 per month in average per machine revenue
- increase the tax rate for the top (highest paying) bracket
- introduce a sliding scale for the club tax concession.
The tables below show the current and new tax brackets and rates, as well as the new sliding scale for the club tax concession.
Tax rate and threshold tables for clubs and hotels
| Monthly average per machine revenue ($) | Current: tax rate (%) | Monthly average per machine revenue ($) | From August 2022: tax rate (%) | Tax concession rate (%) |
| Less than 2666 | 0 | Less than 2666 | 0 | 8.33 |
| 2666 or more and less than 12,500 | 46.70 | 2666 or more and less than 6667 | 46.70 | 8.33 |
| 6667 or more and less than to 12,500 | 51.17 | 6.33 | ||
| 12,500 or more | 54.20 | 12,500 or more | 60.67 | 4.33 |
| Monthly average per machine revenue ($) | Current: tax rate (%) | Monthly average per machine revenue ($) | From August 2022: tax rate (%) |
| Less than 2666 | 8.33 | Less than 2666 | 8.33 |
| 2666 or more and less than 12,500 | 55.03 | 2666 or more and less than 6667 | 55.03 |
| 6667 or more and less than to 12,500 | 57.50 | ||
| 12,500 or more | 62.53 | 12,500 or more | 65.00 |
It is critical that each document returned to the Department or Minister in relation to the gaming machine allocation process is signed correctly, in order for the document to be effective and legally binding. We have prepared a guide to execution of relevant documents.
Announcements
11 August 2017 - A fairer pricing system for gaming machines in Victoria
The new gaming machine pricing system will increase taxes for pubs, clubs and hotels with high-earning gaming machines.
The increased revenue these changes provide will go directly into the state's Hospitals and Charities Fund, the Mental Health Fund, alcohol and drug treatment services and the Victorian Responsible Gambling Fund.
These arrangements will come into effect when the current gaming machine licences expire in August 2022 – providing pubs, clubs and hotels the certainty needed to plan for the future.
From August 2022, the price for gaming machine entitlements will be calculated using a formula based on a weighted average of a venue's gaming machine revenue over the past four financial years, with a minimum price applying to club and hotel entitlements.
The price paid by new entrants to the market will be calculated using the average gaming machine revenue at a venue of similar size, type and location.
Gambling Legislation Victoria 2019
The post-2022 tax structure will introduce a new tax bracket for venues earning on average between $6,667 and $12,500 per machine, per month. In addition, a higher tax rate will apply to the top bracket (>$12,500 per machine, per month on average). High performing clubs will see a reduction to their tax concession based on a sliding scale.
It follows the government's decision to freeze the total number of gaming machines in Victoria and the number of machines allowed in a single venue for the next 25 years.
Further harm minimisation measures relating to gaming machines will be announced in the coming months, following consultation with the community and industry earlier this year. The allocation of gaming machines entitlements is expected to start later this year and be complete by mid-2018.
Incumbent venue operators can access their detailed price information via the VCGLR Venue Operator Portal.
On 7 July 2017, the Minister for Consumer Affairs, Gaming and Liquor Regulation announced new gaming machine arrangements that will help limit gambling related harm and give certainty to pubs, clubs and hotels across Victoria.
7 July 2017 - announcement
Under the changes, the number of gaming machines in Victoria will remain capped at 27,372 and the maximum number of gaming machines in a single venue will be frozen at 105.
The reforms include:
- replacing the current 10 year term with a 20 year term, and requiring venue operators to make two sets of premium payments – the first in 2022 and the second in 2032
- giving venue operators the opportunity to acquire post-August 2022 entitlements up to the number of entitlements they held on 7 July 2017 through an administrative allocation process, rather than a competitive process
- increasing the maximum number of entitlements held by a club venue operator from 420 to 840
- adjusting the 50:50 rule to facilitate the allocation of unused club entitlements to the hotel sector
- determining premium payments for entitlements based on a venue's gaming revenue
- making changes to the current gaming machine taxation arrangements to make them more progressive.
These changes have been made as part of a review of the regulatory arrangements for gaming machines – enabling pubs, clubs and hotels to make decisions with certainty well before their current entitlements expire in 2022.
The allocation process is expected to be complete by the end of 2018.
New venue operators and existing venue operators wanting to acquire extra entitlements will have the opportunity to apply for entitlements not taken up during the initial offer.
Completed stages
The Minister for Consumer Affairs, Gaming and Liquor Regulation (Minister) has completed the provisional allocation of post-16 August 2022 gaming machine entitlements (new entitlements), and, on 27 July 2018, wrote to all venue operators who applied for the new entitlements notifying them of the provisional allocation outcomes.
A high-level overview of the allocation process which focuses on Stage 4: Allocation is available for download.
If you have any queries about the provisional allocation process, contact the Gaming Machine Allocation Project by email olgr.gmap@justice.vic.gov.au (External link) or phone: (03) 8684 0329.
On 21 December 2017 the Minister issued an offer to all eligible incumbent venue operators and new entrants (eligible entities) to apply for new entitlements that will allow them to operate gaming machines from 16 August 2022 to 15 August 2042 (Minister's Offer to Apply).
Eligible entities will receive the following documents as part of the Minster's Offer to apply:
- the Minister's Offer to Apply letter
- the Deed Poll that must be completed and signed by the appropriate authorised person and returned by 28 February 2018 with the deposit, and
- the Guide to the Offer to Apply for Entitlements, which outlines the information and requirements associated with the Offer to Apply, to assist eligible entities to respond to the Minister's Offer to Apply.
It is important to note that only eligible entities with a Venue Operator's Licence can respond to the Minister's Offer to Apply. This means that new entrants who received the Minister's Offer to Apply must ensure that they hold a valid Venue Operator's Licence prior to submitting an application for entitlements.
A venue operator can apply for the number of entitlements determined by the Minister, up to the maximum number of entitlements nominated by the venue operator in its Deed and must provide to the State a deposit for all the entitlements for which it has applied, as set out in the Deed.
To complete the Deed, venue operators must record the number of entitlements they wish to purchase (the 'Nominated Number') where indicated in Schedule 2 of the Deed. Venue operators must record their Nominated Number for each venue (and unattached or non-operating gaming machine entitlements, if applicable) that they wish to purchase New Entitlements for. The Deed must then be signed by duly authorised representatives.
The completed and executed Deed must be submitted, with the required deposit, by 5pm on28 February 2018.
Pre-offer process for post-August 2022 gaming machine entitlements for a new venue
The second stage of the administrative allocation process has commenced with the Minister for Consumer Affairs, Gaming and Liquor Regulation (Minister) issuing each eligible incumbent venue operator and each new entrant with a pre-offer letter detailing all the relevant pricing for new entitlements for that entity. A high-level overview of the allocation process which focuses on Stage 2: Pre-offer can be downloaded here
The price for each new entitlement has been determined by the Minister in accordance with the second set of allocation rules published in the Victorian Government Gazette (No. S379) (Second Rules) on 9 November 2017
Price review
All pre-offer letter recipients are encouraged to closely review the pricing in their letters. If you believe that the price is calculated in accordance with the Second Rules, you do not need to do anything.
If, however, you believe that the price has not been calculated correctly, you can request that the Minister reviews your price. To do that you need to submit a written statement setting out the reasons for disagreeing with the pre-offer price within 10business days of the pre-offer date by post or email to the addresses set out in the pre-offer letter.
The Minister will consider your submission and, within 10 business days of the receipt of your statement, will notify you of her decision (including a revised price where appropriate).
Next steps
The pre-offer price will form the basis of the Minister's formal offer in relation to new entitlements to eligible entities, anticipated to be issued in mid-December 2017.
You must read the letter and enclosures in full and form a view as to whether you agree or disagree with the Minister's determination(s).
If you agree with the Minister's determination(s), you do not need to do anything further.
If you disagree with the Minister's determination(s), you must deliver to the Minister a written statement which:
- states that your entity considers that the Minister's determination(s) are not a correct application of the Allocation and Transfer Rules, and
- clearly identifies the reasons for that claim.
A duly authorised officer of your entity must sign the written statement (a guide to document execution can be accessed here). The written statement must be returned within 10 business days of the pre-offer date to the Director, Gambling Licensing Program, to the Director, Gambling Licensing Program, at the following address:
By post:
Gambling Licensing Program
Office of Liquor, Gaming and Racing
Department of Justice and Regulation
Level 29
121 Exhibition Street
Melbourne VIC 3000
OR
By email:
Gambling Legislation Victoria Warren
If you do not return your written statement to the Minister by that date, in accordance with the Allocation and Transfer Rules, the Minister will not consider any other submissions from your entity in relation to the determination(s) set out in the pre-offer letter.
Disclaimer
In order to implement the new gaming machine arrangements, amendments to the Gambling Regulation Act 2003 are required (proposed amendments). The proposed amendments are set out in the Gambling Regulation Amendment (Gaming Machine Arrangements) Bill 2017, which can be accessed at legislation.vic.gov.au (External link)
As it cannot bind the Parliament of Victoria, the State of Victoria gives no warranty that the proposed amendments will be passed by the Parliament. The State will not be liable to you or any person in the event that the proposed amendments are not passed. Without limitation, the State will not be liable to compensate you or any other person for any costs, expenses or losses incurred or suffered by you or any other person in evaluating, acting upon or in submitting an expression of interest to purchase new entitlements.
If you have any queries about the expression of interest process, please contact the Gambling Licensing Program at olgr.gmap@justice.vic.gov.au (External link)(External link)
Expression of Interest process for gaming machine entitlements for a proposed new venue
On 5 October 2017, the first stage of the allocation process for post-August 2022 gaming machine entitlements (new entitlements) commenced.
The expression of interest process is open to new entrants and to incumbent venue operators seeking to purchase new entitlements for use in a venue that was not an approved venue on 7 July 2017 (new venue).
New entrants
If you did not hold gaming machine entitlements on 7 July 2017, and you want to acquire new entitlements to operate in a new venue on or after 16 August 2022, you are a new entrant.
In order to be eligible to participate in the latter stages of the allocation process, new entrants must lodge an expression of interest in accordance with the process set out below.
The Minister's discretion will apply where none of the above principles can be applied.
Market limitations
The allocation process will at all times be subject to the Act and instruments under the Act, including: Best in slot hexenmeister gebrechen.
- regional or municipal caps, and
- permissible percentages of club/hotel entitlements.
Allocation review
Venue operators will be notified of the outcomes of the provisional allocation and will have the opportunity to seek a review of the Minister's determination.
Allocation
Allocation will be completed upon execution by the venue operator of the Entitlement-Related Payment Agreement that will be provided with notification of the outcomes of provisional allocation (see Payment arrangements section below).
Every venue operator allocated new entitlements will be required to enter into an Entitlement-Related Payment Agreement that governs the payment terms and arrangements for allocated entitlements. Examples of the standard Entitlement-Related Agreements for clubs and hotels are available here
Payment terms
As per the Entitlement-Related Payment Agreement, if you are allocated new entitlements, these will be subject to the following payment terms:
- (a) As a first instalment, the venue operator must pay the deposit in accordance with the Deed Poll when submitting an application to purchase new entitlements:
- (i) Clubs – 2.5% of the entitlement price
- (ii) Hotels – 5% of the entitlement price.
- (b) The Venue Operator must then pay to the State the balance of the entitlement price as follows:
- (i) a second instalment on or before 28 February 2019 as follows:
- (A) Clubs – 2.5% of the entitlement price
- (B) Hotels – 5% of the entitlement price
- (ii) the balance of the price, either:
- (A) on or before 16 August 2022, or
- (B) in equal instalments on or before the last day of every third month over a 5 year period for Hotels and 7 year period for Clubs (deferred payments).
- (i) a second instalment on or before 28 February 2019 as follows:
Interest
The following interest will be incurred on deferred payments (calculated in accordance with the Entitlement-Related Payment Agreement):
- Clubs: rate equivalent to the 10-Year Commonwealth bond rate over the full repayment term
- Hotels:
- rate equivalent to the 10-Year Commonwealth bond coupon rate for the first 2 years of the term
- rate equivalent to the 10-Year Commonwealth bond coupon rate plus 2 per cent for the remainder of the term.
Penalty interest will be payable on late payments. If payments for entitlements are not made by dates specified in the Entitlement-Related Payment Agreement the relevant entitlement will be in default and forfeited to the State.
Hardship arrangements
If a venue operator experiences serious financial hardship, after allocation the venue operator may request a variation to their payment terms as specified in the Entitlement-Related Payment Agreement. Further details on applying for hardship consideration are available here.
The price for each new entitlement has been determined by the Minister in accordance with the second set of allocation rules published in the Victorian Government Gazette (No. S379) (Second Rules) on 9 November 2017
A summary of the pricing methodology is presented below.
Price for venue operators with operating entitlements
Venue operators will have the opportunity to acquire up to the number of entitlements they held on 7 July 2017.
The majority of entitlements held on 7 July 2017 are being used to operate gaming machines in an approved venue (‘operating entitlements'). A small number of entitlements are held but not being used by venue operators (‘non-operating entitlements').
For operating entitlements, the price varies for each venue and is to be calculated based on each venue's average gaming revenue per machine. The formula uses revenue for the years 2013-14 to 2016-17 divided by the average number of gaming machines operating at that venue in that financial year (calculated by adding the number of machines at the end of that year and at the end of the previous year, and dividing the sum by 2). Each year's revenue is given a weighting, with greater weight being given to the most recent revenue data. The weightings used are:
- 2013-14 – 10 per cent
- 2014-15 – 20 per cent
- 2015-16 – 30 per cent
- 2016-17 – 40 per cent.
The weighted average gaming revenue per machine for each venue is then multiplied by a State Multiplier of 46.3643988224133 per cent to arrive at the entitlement price for that venue (subject to the minimum price – see below).
This produces the following pricing formula:
P = ((A/N) x 10% + (B/N) x 20% + (C/N) x 30% + (D/N) x 40%) x M
Where:
P = price payable for a new gaming machine entitlement with respect to an approved venue
A = the Gaming Revenue at the approved venue for the financial year 2013-2014
B = the Gaming Revenue at the approved venue for the financial year 2014-2015
C = the Gaming Revenue at the approved venue for the financial year 2015-2016
D = the Gaming Revenue at the approved venue for the financial year 2016-2017
N = the number of gaming machines operating in the approved venue for the relevant financial year determined in accordance with the following formula:
N=(E+F)/2
Where:
E = the number of gaming machines operating in the approved venue as at 30 June in the relevant financial year
F = the number of gaming machines operating in the approved venue as at 30 June in the previous financial year
M= State Multiplier of 46.3643988224133%
Price for venue operators with non-operating entitlements
The majority of venue operators who hold non-operating entitlements also have operating entitlements for which an entitlement price is determined using the pricing formula above. Such non-operating entitlements are referred to as Unattached Entitlements under the Rules.
Where a venue operator who holds Unattached Entitlements operates only one venue, the price for the Unattached Entitlements is the same as the price paid for operating entitlements at that venue.
If a venue operator operates more than one venue, the price for the Unattached Entitlements is as follows:
- If there are one or more venues that have less than 105 attached entitlements (Reference Venue) operated by an operator in the geographic area that matches the geographic area condition of an Unattached Entitlement, the applicable price is equal to the highest entitlement price for the operator's Reference Venue in the same geographic area;
- If there are no Reference Venues operated by a venue operator in the geographic area that match the geographic area condition of an Unattached Entitlement, the applicable price will be equal to the highest entitlement price for a Reference Venue outside of the area.
Where a venue operator holds non-operating entitlements but does not operate a venue (referred to as a Non-operating Incumbent Venue Operator under the Rules), the entitlement price is calculated by reference to an approved venue that most closely matches the type (hotel or club) and the geographic area condition of the entitlements held by such an operator as wells as the number of entitlements held.
Price for proposed venues
Under the Expression of Interest (EOI) process, both new entrants and incumbent venue operators could express interest in purchasing new entitlements to operate in a proposed venue (venue that was not operational as at 7 July 2017).
The entities lodging an EOI had to nominate a range (of 20) of how many entitlements they wish to acquire and the location and type of venue (club or hotel) in which they plan to operate those entitlements.
The price for proposed venues is based on the entitlement price for an existing venue of similar size, type and location as the proposed venue.
There may be an adjustment to the price for new entitlements for proposed venues if the size, type and location of the venue where these entitlements are operated is significantly different to that nominated during the allocation process.
Minimum price
There will be a minimum price for all entitlements, regardless of the price determined by the pricing formula. The minimum price will be $5170 per entitlement for club entitlements and $32,714 per entitlement for hotel entitlements.
On 21 November 2017 the Minister for Consumer Affairs, Gaming and Liquor Regulation (Minister) determined Transfer Rules under the Gambling Regulation Act 2003, which were published on the same day in the Victorian Government Special Gazette No:S395. These Rules can be accessed here.
These Rules impose a prohibition on the transfer of new entitlements following the Minister's allocation and until six months prior to the commencement of the new entitlements on 16 August 2022. This prohibition is necessary to prevent speculative purchasing of new entitlements. The prohibition will be lifted six months prior to August 2022 to allow for a seamless transition from current to new entitlement regime where venue operators may need to buy/sell new entitlements due to a change in circumstances since the allocation. The prohibition does not apply to the transfer of new entitlements where the transfer occurs as part of a sale of a gaming venue.
The current tax arrangements will be amended to:
- introduce a new tax bracket for venue operators earning between $6667 and $12,500 per month in average per machine revenue
- increase the tax rate for the top (highest paying) bracket
- introduce a sliding scale for the club tax concession.
The tables below show the current and new tax brackets and rates, as well as the new sliding scale for the club tax concession.
Tax rate and threshold tables for clubs and hotels
| Monthly average per machine revenue ($) | Current: tax rate (%) | Monthly average per machine revenue ($) | From August 2022: tax rate (%) | Tax concession rate (%) |
| Less than 2666 | 0 | Less than 2666 | 0 | 8.33 |
| 2666 or more and less than 12,500 | 46.70 | 2666 or more and less than 6667 | 46.70 | 8.33 |
| 6667 or more and less than to 12,500 | 51.17 | 6.33 | ||
| 12,500 or more | 54.20 | 12,500 or more | 60.67 | 4.33 |
| Monthly average per machine revenue ($) | Current: tax rate (%) | Monthly average per machine revenue ($) | From August 2022: tax rate (%) |
| Less than 2666 | 8.33 | Less than 2666 | 8.33 |
| 2666 or more and less than 12,500 | 55.03 | 2666 or more and less than 6667 | 55.03 |
| 6667 or more and less than to 12,500 | 57.50 | ||
| 12,500 or more | 62.53 | 12,500 or more | 65.00 |
It is critical that each document returned to the Department or Minister in relation to the gaming machine allocation process is signed correctly, in order for the document to be effective and legally binding. We have prepared a guide to execution of relevant documents.
Announcements
11 August 2017 - A fairer pricing system for gaming machines in Victoria
The new gaming machine pricing system will increase taxes for pubs, clubs and hotels with high-earning gaming machines.
The increased revenue these changes provide will go directly into the state's Hospitals and Charities Fund, the Mental Health Fund, alcohol and drug treatment services and the Victorian Responsible Gambling Fund.
These arrangements will come into effect when the current gaming machine licences expire in August 2022 – providing pubs, clubs and hotels the certainty needed to plan for the future.
From August 2022, the price for gaming machine entitlements will be calculated using a formula based on a weighted average of a venue's gaming machine revenue over the past four financial years, with a minimum price applying to club and hotel entitlements.
The price paid by new entrants to the market will be calculated using the average gaming machine revenue at a venue of similar size, type and location.
Gambling Legislation Victoria 2019
The post-2022 tax structure will introduce a new tax bracket for venues earning on average between $6,667 and $12,500 per machine, per month. In addition, a higher tax rate will apply to the top bracket (>$12,500 per machine, per month on average). High performing clubs will see a reduction to their tax concession based on a sliding scale.
It follows the government's decision to freeze the total number of gaming machines in Victoria and the number of machines allowed in a single venue for the next 25 years.
Further harm minimisation measures relating to gaming machines will be announced in the coming months, following consultation with the community and industry earlier this year. The allocation of gaming machines entitlements is expected to start later this year and be complete by mid-2018.
Incumbent venue operators can access their detailed price information via the VCGLR Venue Operator Portal.
On 7 July 2017, the Minister for Consumer Affairs, Gaming and Liquor Regulation announced new gaming machine arrangements that will help limit gambling related harm and give certainty to pubs, clubs and hotels across Victoria.
7 July 2017 - announcement
Under the changes, the number of gaming machines in Victoria will remain capped at 27,372 and the maximum number of gaming machines in a single venue will be frozen at 105.
The reforms include:
- replacing the current 10 year term with a 20 year term, and requiring venue operators to make two sets of premium payments – the first in 2022 and the second in 2032
- giving venue operators the opportunity to acquire post-August 2022 entitlements up to the number of entitlements they held on 7 July 2017 through an administrative allocation process, rather than a competitive process
- increasing the maximum number of entitlements held by a club venue operator from 420 to 840
- adjusting the 50:50 rule to facilitate the allocation of unused club entitlements to the hotel sector
- determining premium payments for entitlements based on a venue's gaming revenue
- making changes to the current gaming machine taxation arrangements to make them more progressive.
These changes have been made as part of a review of the regulatory arrangements for gaming machines – enabling pubs, clubs and hotels to make decisions with certainty well before their current entitlements expire in 2022.
The allocation process is expected to be complete by the end of 2018.
New venue operators and existing venue operators wanting to acquire extra entitlements will have the opportunity to apply for entitlements not taken up during the initial offer.
Completed stages
The Minister for Consumer Affairs, Gaming and Liquor Regulation (Minister) has completed the provisional allocation of post-16 August 2022 gaming machine entitlements (new entitlements), and, on 27 July 2018, wrote to all venue operators who applied for the new entitlements notifying them of the provisional allocation outcomes.
A high-level overview of the allocation process which focuses on Stage 4: Allocation is available for download.
If you have any queries about the provisional allocation process, contact the Gaming Machine Allocation Project by email olgr.gmap@justice.vic.gov.au (External link) or phone: (03) 8684 0329.
On 21 December 2017 the Minister issued an offer to all eligible incumbent venue operators and new entrants (eligible entities) to apply for new entitlements that will allow them to operate gaming machines from 16 August 2022 to 15 August 2042 (Minister's Offer to Apply).
Eligible entities will receive the following documents as part of the Minster's Offer to apply:
- the Minister's Offer to Apply letter
- the Deed Poll that must be completed and signed by the appropriate authorised person and returned by 28 February 2018 with the deposit, and
- the Guide to the Offer to Apply for Entitlements, which outlines the information and requirements associated with the Offer to Apply, to assist eligible entities to respond to the Minister's Offer to Apply.
It is important to note that only eligible entities with a Venue Operator's Licence can respond to the Minister's Offer to Apply. This means that new entrants who received the Minister's Offer to Apply must ensure that they hold a valid Venue Operator's Licence prior to submitting an application for entitlements.
A venue operator can apply for the number of entitlements determined by the Minister, up to the maximum number of entitlements nominated by the venue operator in its Deed and must provide to the State a deposit for all the entitlements for which it has applied, as set out in the Deed.
To complete the Deed, venue operators must record the number of entitlements they wish to purchase (the 'Nominated Number') where indicated in Schedule 2 of the Deed. Venue operators must record their Nominated Number for each venue (and unattached or non-operating gaming machine entitlements, if applicable) that they wish to purchase New Entitlements for. The Deed must then be signed by duly authorised representatives.
The completed and executed Deed must be submitted, with the required deposit, by 5pm on28 February 2018.
Pre-offer process for post-August 2022 gaming machine entitlements for a new venue
The second stage of the administrative allocation process has commenced with the Minister for Consumer Affairs, Gaming and Liquor Regulation (Minister) issuing each eligible incumbent venue operator and each new entrant with a pre-offer letter detailing all the relevant pricing for new entitlements for that entity. A high-level overview of the allocation process which focuses on Stage 2: Pre-offer can be downloaded here
The price for each new entitlement has been determined by the Minister in accordance with the second set of allocation rules published in the Victorian Government Gazette (No. S379) (Second Rules) on 9 November 2017
Price review
All pre-offer letter recipients are encouraged to closely review the pricing in their letters. If you believe that the price is calculated in accordance with the Second Rules, you do not need to do anything.
If, however, you believe that the price has not been calculated correctly, you can request that the Minister reviews your price. To do that you need to submit a written statement setting out the reasons for disagreeing with the pre-offer price within 10business days of the pre-offer date by post or email to the addresses set out in the pre-offer letter.
The Minister will consider your submission and, within 10 business days of the receipt of your statement, will notify you of her decision (including a revised price where appropriate).
Next steps
The pre-offer price will form the basis of the Minister's formal offer in relation to new entitlements to eligible entities, anticipated to be issued in mid-December 2017.
You must read the letter and enclosures in full and form a view as to whether you agree or disagree with the Minister's determination(s).
If you agree with the Minister's determination(s), you do not need to do anything further.
If you disagree with the Minister's determination(s), you must deliver to the Minister a written statement which:
- states that your entity considers that the Minister's determination(s) are not a correct application of the Allocation and Transfer Rules, and
- clearly identifies the reasons for that claim.
A duly authorised officer of your entity must sign the written statement (a guide to document execution can be accessed here). The written statement must be returned within 10 business days of the pre-offer date to the Director, Gambling Licensing Program, to the Director, Gambling Licensing Program, at the following address:
By post:
Gambling Licensing Program
Office of Liquor, Gaming and Racing
Department of Justice and Regulation
Level 29
121 Exhibition Street
Melbourne VIC 3000
OR
By email:
Gambling Legislation Victoria Warren
If you do not return your written statement to the Minister by that date, in accordance with the Allocation and Transfer Rules, the Minister will not consider any other submissions from your entity in relation to the determination(s) set out in the pre-offer letter.
Disclaimer
In order to implement the new gaming machine arrangements, amendments to the Gambling Regulation Act 2003 are required (proposed amendments). The proposed amendments are set out in the Gambling Regulation Amendment (Gaming Machine Arrangements) Bill 2017, which can be accessed at legislation.vic.gov.au (External link)
As it cannot bind the Parliament of Victoria, the State of Victoria gives no warranty that the proposed amendments will be passed by the Parliament. The State will not be liable to you or any person in the event that the proposed amendments are not passed. Without limitation, the State will not be liable to compensate you or any other person for any costs, expenses or losses incurred or suffered by you or any other person in evaluating, acting upon or in submitting an expression of interest to purchase new entitlements.
If you have any queries about the expression of interest process, please contact the Gambling Licensing Program at olgr.gmap@justice.vic.gov.au (External link)(External link)
Expression of Interest process for gaming machine entitlements for a proposed new venue
On 5 October 2017, the first stage of the allocation process for post-August 2022 gaming machine entitlements (new entitlements) commenced.
The expression of interest process is open to new entrants and to incumbent venue operators seeking to purchase new entitlements for use in a venue that was not an approved venue on 7 July 2017 (new venue).
New entrants
If you did not hold gaming machine entitlements on 7 July 2017, and you want to acquire new entitlements to operate in a new venue on or after 16 August 2022, you are a new entrant.
In order to be eligible to participate in the latter stages of the allocation process, new entrants must lodge an expression of interest in accordance with the process set out below.
Incumbent venue operators
If you held attached or unattached entitlements on 7 July 2017, or acquired a gaming business with entitlements after 7 July 2017, you are an incumbent venue operator.
Incumbent venue operators wanting to acquire new entitlements to operate in a proposed new venue must lodge an expression of interest in accordance with the process set out below in relation to a proposed new venue only.
Incumbent venue operators are not required to lodge an expression of interest in relation to entitlements held on 7 July 2017. You will automatically be given the opportunity to acquire up to the number of entitlements you held on 7 July 2017 and do not have to lodge an expression of interest unless you are proposing to operate entitlements in a new venue on or after 16 August 2022.
New entitlement price
The price payable by you for a new entitlement for a proposed new venue will be based on the gaming machine revenue of a venue of similar size, type and location.
If, once you start operating gaming machines under new entitlements, the characteristics of your venue are significantly different to those indicated in your expression of interest form, the price of your new entitlements may be adjusted.
You will find useful tips on how to ascertain an indicative new entitlement price.
Allocation and transfer rules
The gaming machine entitlement allocation process is governed by gaming machine allocation and transfer rules (Rules) made by the Minister for Consumer Affairs, Gaming and Liquor Regulation (Minister) under sections 3.4A.3 and 3.4A.5(9) of the Gambling Regulation Act 2003. The Rules that govern the expression of interest process were published in the Victorian Government Gazette (No: G40/17) on 5 October 2017
You are encouraged to carefully review the Rules and the information on this website. You are also encouraged to familiarise yourself with the gaming machine caps and limits. This information can be found on the Victorian Commission for Gambling and Liquor Regulation website at vcglr.vic.gov.au (External link)
Expression of Interest process
Gambling Legislation Victoria Canada
To be eligible to acquire new entitlements for a proposed new venue you must download, complete and sign the expression of interest form
The form requires you to nominate how many new entitlements you wish to acquire (within an indicative range) and the location and type (club or hotel) of the venue in which you propose to operate those entitlements (your proposed new venue).
If you plan to operate more than one new venue you must submit a separate form for each venue.
You must submit the completed form by 3 November 2017 by posting the signed original to:
Gambling Licensing Program
Office of Liquor, Gaming and Racing
Department of Justice and Regulation
Level 29
121 Exhibition St
Melbourne 3000.
If your completed expression of interest form is not received by this date you may not be eligible to receive an offer from the Minister to acquire new entitlements for your proposed new venue.
Next steps
Following the receipt and assessment of your expression of interest form, the Minister will provide you with the price payable for new entitlements for your proposed new venue. You will have the opportunity to seek a review of this price if you believe it has been calculated incorrectly.
The Minister will then make a formal offer to purchase new entitlements to eligible venue operators and determine how many entitlements each eligible venue operator will be allocated.
Further information will be provided to you in due course to guide you through the next stages of the allocation process. It is intended that the allocation process will be completed by mid-2018.
Disclaimer
In order to implement the new gaming machine arrangements, amendments to the Gambling Regulation Act 2003 are required (proposed amendments). The proposed amendments are set out in the Gambling Regulation Amendment (Gaming Machine Arrangements) Bill 2017, which can be accessed at legislation.vic.gov.au (External link).
As it cannot bind the Parliament of Victoria, the State of Victoria gives no warranty that the proposed amendments will be passed by the Parliament. The State will not be liable to you or any person in the event that the proposed amendments are not passed. Without limitation, the State will not be liable to compensate you or any other person for any costs, expenses or losses incurred or suffered by you or any other person in evaluating, acting upon or in submitting an expression of interest to purchase new entitlements.
If you have any queries about the expression of interest process, please contact the Gambling Licensing Program at olgr.gmap@justice.vic.gov.au (External link).
The department and its associated agencies advise on gambling policy and regulate gambling licensing.
Agencies:
- commission research and provide education about gambling harm in Victoria
- provide support to people experiencing harm due to gambling.
Legislation and regulation
The gambling policy unit in the department's Office of Liquor and Gaming is the primary government point of reference for industry, community and government on gambling matters. The unit is responsible for the provision of strategic policy advice and support to the Minister for Consumer Affairs, Gaming and Liquor Regulation.
Licensing and compliance
The Victorian Commission for Gambling and Liquor Regulation (VCGLR) (External link) – an independent statutory authority – is responsible for regulating all forms of legalised gambling in Victoria. The commission's functions include informing and educating industry and the public about regulatory practices and requirements.
Education, research and preventing gambling harm
The Victorian Responsible Gambling Foundation (VRGF) (External link) is the statutory authority that addresses the challenge of gambling harm in the Victorian community.
The foundation works with partners and communities across Victoria to:
- inform people about the risks of gambling
- assist people affected by gambling harm
- provide support to people affected by someone else's gambling.
