A survey of clubs, hotels, taverns and bars conducted by the ABS in respect of 2000-01 provides some indication of the relative economic performance of venues with gambling facilities versus those without gambling facilities. Table 3.2 shows the average employment and total income per premises for clubs, hotels, taverns and bars in South Australia, Victoria, Western Australia and Australia. For the sake of brevity, “hotels” in the remainder of this section is used to refer to hotels, taverns and bars as a whole.83
Venues with gambling facilities have significantly higher employment and total income compared to those without gambling facilities. South Australian clubs and hotels with gambling facilities had an average of 22 employees per premises while those without gambling facilities had 5 employees on average. Total income per premises was also significantly higher for South Australian venues with gambling facilities ($2.2 million cf. $0.3 million). This also likely reflects that differences in employment levels and income existed prior to the introduction of EGMs. For instance, in inner-eastern suburbs of Adelaide most older hotels are small with only a few large venues, often where new additions have been added to the existing hotel. In contrast, in the northern suburbs (by design) there are fewer hotels but they are much larger (e.g., in Salisbury and Elizabeth). Many of the larger venues were most easily able to accommodate 40 machines without the need for major renovations and/or additions.
Venues with gambling facilities also had higher average employment and income relative to those without gambling facilities in Victoria and Western Australia. However, the difference was relatively lower for Western Australia where the only real differentiation between hotels in terms of recreation, is whether they host TAB facilities or they do not. Hotels in Western Australia with gambling facilities (i.e., TAB facilities, kiosk) had an average of about 5 more employees compared to those without gambling facilities. In comparison, South Australia venues with gambling facilities had about 13 employees more on average, while Victorian venues with gambling facilities had 30 more employees on average. The smaller difference for Western Australia reflects that gambling opportunities are much more limited in that State with gaming machines not permitted in hotels and clubs.
Table 3.2
Average Employment and Total Income Per Premises: Clubs, Hotels Taverns and Bars Selected States and Australia, 2000-01
South
Australia Victoria Australia Australia Western Employment per premises at end June (No.)
Hotels, Taverns and Bars
With gambling facilities 22.4 42.7 19.8a 21.3
Without gambling facilities 9.0 12.3 14.5 11.8
All 20.3 24.2 16.1 18.2
Clubs
With gambling facilities 16.0 27.4 na 29.2
Without gambling facilities 3.1 4.8 na 4.6
All 6.3 16.4 4.0 20.8
Clubs, Hotels, Taverns and Bars
With gambling facilities 21.5 36.8 na 24.4
Without gambling facilities 4.8 10.2 na 8.9
All 15.5 21.7 10.9 19.2
Total income per premises ($m)
Hotels, Taverns and Bars
With gambling facilities 2.4 3.6 2.4a 2.5
Without gambling facilities 0.6 0.8 1.2 0.9
All 2.1 1.9 1.6 1.9
Clubs
With gambling facilities 0.8 1.7 na 2.9
Without gambling facilities 0.1 0.3 na 0.2
All 0.3 1.0 0.2 2.0
Clubs, Hotels, Taverns and Bars
With gambling facilities 2.2 2.8 na 2.6
Without gambling facilities 0.3 0.7 na 0.6
All 1.5 1.6 1.0 2.0
Note: a This estimate should be interpreted with caution as it has a high relative standard error. In Western Australia gambling
facilities refers to TAB full service or kiosk facilities. Source: ABS, Clubs, Pubs, Taverns and Bars, 2000-01 (Cat. No. 8687.0).
Higher employment and income for venues with gambling facilities suggests that gambling has had a positive impact on economic activity at these venues. However, in terms of the net economic impact, it is likely that venues with gambling facilities have drawn activity away from venues without gambling facilities.
Table 3.3 shows how average employment on a ‘per business’ basis has changed between 1994-95 – i.e., the first full year gaming machines operated in SA – and 2000-01.84 It should be noted that some changes between the two years could be partly explained by differences in coverage between the two surveys. Nevertheless, the data should give a reasonable picture of general trends within the industry and relative differences between industry sub-sectors and States.
Average employment for all hotels, taverns and bars in South Australia rose from 19 persons per business in 1994-95 to 23 persons per business in 2000-01. Average employment for all clubs also rose, from 6.5 to 8.1 persons per organisation.
84 Data in this section are presented on a ‘per business’ basis in the case of hotels, taverns and bars, and ‘per organisation’ basis in
Table 3.3
Average Employment (at 30th June) for Hotels, Taverns, Bars and Clubsa
South Australia Victoria Western Australia Australia 1994-95 2000-01 1994-95 2000-01 1994-95 2000-01 1994-95 2000-01 Hotels, Taverns and Bars
With Gambling Facilities 26.6 25.2 31.3 53.2 24.6 24.3 20.9 25.8 Without Gambling Facilities 9.7 9.5 10.8 12.9 14.5 15.4 11.4 12.5
Total 19.2 22.6 15.6 27.0 16.7 17.8 16.5 21.0
Clubs
With Gambling Facilities 11.5 16.9 23.2 28.3 np np 24.8 30.8 Without Gambling Facilities 5.5 4.4 9.5 5.0 8.6 np 8.2 5.1
Total 6.5 8.1 14.0 17.1 8.6 4.4 19.0 22.3
Clubs, Hotels, Taverns and Bars
With Gambling Facilities 24.3 24.0 28.3 42.5 24.6 np 22.8 28.0 Without Gambling Facilities 7.5 6.1 10.4 10.7 12.1 np 10.3 9.5
Total 14.5 18.0 15.1 23.6 13.8 11.9 17.6 21.6
Note: a Average refers to per “business” in relation to hotels, taverns and bars, and per “organisation” in relation to clubs.
Source: ABS, Clubs, Pubs, Taverns and Bars, Australia. Calculations by the researchers.
Interestingly, the rise in average employment for all hotels, taverns, and bars came about despite a fall in average employment for these venues with gambling facilities (from 27 to 25 persons) and those without gambling facilities (from 9.7 to 9.5 persons). The rise in average employment for all venues is explained by an increase in the proportion of venues with gambling facilities (which have higher employment on average), rather than venues with existing gambling facilities taking on more employees (although firms that did establish gambling facilities, usually gaming machines, did subsequently experience strong employment growth). The proportion of hotels with gambling facilities increased from 56 per cent in 1994-95 to 83 per cent in 2000-01.
Unlike South Australia, average employment for Victorian hotels with gambling facilities did rise significantly between 1994-95 and 2000-01 (from 31 to 53 employees per venue). This outcome appears to be explained by differences in the structure of the industry between the two States. A higher limit on the number of gaming machines allowed in clubs and hotels (105 machines compared to 40 in South Australia) would enable venues in Victoria to grow to a larger aggregate size, in part by allowing venues to support other activities or services that may not be sustainable with a smaller number of gaming machines. A duopoly arrangement combined with the ability to move gaming machines between venues would also tend to ensure that machines are placed in venues or regions that offer greater growth potential. The result of these differences is that gaming machines tend to be more concentrated in Victoria, with relatively fewer hotels in the State having gambling facilities compared to hotels in South Australia (35 per cent cf. 83 per cent in 2000-01). The greater competition between venues combined with the lower maximum number of machines allowed in venues would tend to limit the growth of individual venues in South Australia.
Average employment for South Australian clubs with gambling facilities did rise between 1994-95 and 2000-01, from an average of about 12 employees to 17 employees. This reflects that clubs started from a lower base in terms of aggregate size relative to hotels, meaning they had further scope to grow. Clubs with gambling facilities had an average of almost 12 employees per organisation at 30 June 1995 compared to an average of 27 employees per ‘business’ for hotels with gambling facilities.
A rise in average employment for all clubs between 1994-95 and 2000-01 (from 6.5 to 8.1 persons per organisation) may be interpreted as being inconsistent with the finding in the previous section that employment in clubs (hospitality) has fallen during the period in which EGMs have operated. However, the latest data considered here are for 2000-01, whereas the fall in actual employment observed in the previous section largely took place after 2000-01, meaning the differences could simply reflect that different time periods have been considered in relation to the two data analyses.
Table 3.4 shows how total income per business has changed between 1994-95 and 2000-01. Average total income per business for all clubs, hotels, taverns and bars in South Australia rose from $1.1 million in 1994-95 to $1.7 million in 2000-01. The rise was driven by an increase in average revenue for venues with gambling facilities (from $2.0 million to $2.4 million), and an increase in the proportion of venues with gambling facilities (from 42 per cent to 67 per cent), which have higher average total revenue compared to those venues
without gambling facilities ($2.4 million cf. $0.3 million in 2000-01).
Average total income for hotels with gambling facilities rose more strongly than for those
without gambling facilities between 1994-95 and 2000-01 ($0.4 million cf. $0.2 million).
Average total income also rose more strongly for clubs with gambling facilities than those
without such facilities. The rise in total income for venues that acquired gambling facilities
between 1994-95 and 2000-01 would of course be more substantial. These outcomes indicate that gambling facilities, and in particular gaming machines, tend to provide a significant boost to the financial performance of venues that acquire them. However, such an experience may not be universal. For instance, venues that acquire a small number of gaming machines may not see a significant improvement in their financial performance because they have a small clientele; a limited choice of machines encourages gamblers to visit larger venues instead; and a small number of machines does not provide sufficient cash flow to expand other facilities at the venue to attract potential customers.
Table 3.4
Average Total Income for Hotels, Taverns, Bars and Clubsa
South Australia Victoria Western Australia Australia 1994-95 2000-01 1994-95 2000-01 1994-95 2000-01 1994-95 2000-01 Hotels, Taverns and Bars
With Gambling Facilities 2.3 2.7 2.5 4.4 2.5 2.9 2.0 3.0 Without Gambling Facilities 0.5 0.7 0.8 0.9 1.2 1.3 0.8 1.0
Total 1.5 2.4 1.2 2.1 1.5 1.7 1.5 2.3
Clubs
With Gambling Facilities 0.7 0.9 1.3 1.7 np np 2.0 3.1 Without Gambling Facilities 0.2 0.2 0.4 0.3 0.4 np 0.4 0.3
Total 0.3 0.4 0.7 1.0 0.4 0.3 1.4 2.2
Clubs, Hotels, Taverns and Bars
With Gambling Facilities 2.0 2.4 2.0 3.3 2.5 np 2.0 3.0 Without Gambling Facilities 0.4 0.3 0.7 0.7 0.9 np 0.7 0.7
Total 1.1 1.7 1.0 1.7 1.1 1.1 1.5 2.2
Note: a Average refers to per “business” in relation to hotels, taverns and bars, and per “organisation” in relation to clubs.