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Pokies spend falls

Spending on poker machines, or pokies as they are commonly known, has dropped by 7% since last year, thanks to a range of government initiatives.

According to data from the Victorian Commission for Gambling and Liquor Regulation, Victorians tipped $2.49 billion last financial year into pokies, a drop of $184 million on the previous year. Pokies spending is now at its lowest level since 2005/2006, but it still means gamblers are pouring $284,000 into pokies every hour.

Gaming Regulation Minister Edward O’Donohue’s spokesman, James Copsey, said “the Government would happily forgo revenue if it meant problem gambling had been eradicated”. He said the $150 million Victorian Responsible Gambling Foundation had helped tackle “the scourge of problem gambling”.

Problem gamblers account for around 40% of pokies spending according to the Productivity Commission. Despite the progress made in cutting spending, including a ban on ATMs in gaming venues since July last year, more restrictive policies could be on the way. These include $1 maximum bets, and $120 limits on losses each hour.

Retailers Woolworths Limited (ASX:WOW) and Wesfarmers (ASX:WES) owned Coles own and operate thousands of poker machines as part of their hotel operations. Woolworths by itself runs around 11,700 machines across Australia, more than six of the largest Las Vegas casinos combined. The company’s hotels and gaming venture ALE Property Group (ASX:LEP) owns and operates more than one-third of the poker machines in Victoria’s pubs.

Further restrictions on poker machine gambling could hit their bottom lines, with Woolworths estimated to earn more than $200 million a year from gaming – around the same as casino operator Echo Entertainment (ASX:EGP), which was originally part of Tabcorp Holdings (ASX:TAH).

Foolish takeaway

It seems Australia’s love affair with ‘playing the pokies’ is declining, but at a slow rate. That could accelerate as new restrictive policies are adapted to combat problem gambling. It’s good news for those gamblers that have a problem, but could be bad news for the poker machine barons.

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Motley Fool writer/analyst Mike King owns shares in ALE Property Group and Woolworths.

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