Australia - pokie (slot) machines revenue slowly recovery..

Poker machine (slot machine) revenues are bouncing back as pub owners invest millions of dollars building outdoor areas to counter smoking bans.

CB Richard Ellis pubs director Joel Fisher said pub poker machine revenues in New South Wales (NSW) and Queensland were beginning to recover from total indoor smoking bans implemented in 2006 and 2007. Poker machine revenues, which slumped nationally from mid-2007, were now increasing, with pubs reporting gains of between 2 percent and 5 percent this calendar year, Mr Fisher said.

Mr Fisher: "A lot of pubs have built good outdoor smoking areas to cater for patrons who wish to smoke and play pokies. Different states had reported significant declines but in NSW and Queensland particularly, that really has turned the corner in the past few months."

A report by the federal government's Productivity Commission found that in the year to June the decline in poker machine spending across the nation had begun to ease, with some states showing a reversal.

In the year to June, both Queensland and Victoria recorded slight gains.

Last financial year in Victoria, $2.707 billion was pumped into poker machines, up a modest $12 million, while in Queensland pokies swallowed $1.861bn, up $3m. Mr Fisher said that although revenues had improved in many areas last financial year, the biggest improvements had been in the past six months.

The Crown Hotel in Sydney's Surry Hills recently spent $250,000 building an open smoking area inside the pub, where it has placed poker machines.

The pub's manager said the hotel was yet to see an increase in poker machine revenues following the renovations, but it had attracted a range of users.

He said some venues had seen dramatic rises in poker machine revenues, "while others are staying much the same. It depends on the demographic."

Mr Fisher said that under NSW smoking legalisation, pubs could build "outdoor" areas -- typically an area of the existing pub that had been sealed off and had open airflow -- where they could place poker machines.

In Queensland, the legislation specifically stated that patrons were not permitted to smoke while playing gaming machines, which meant many pubs had installed smoking areas next to gaming lounges.

Hotel groups such as the Australian Hotels Association lobbied heavily for the proliferation of poker machines in pubs, and numbers rocketed from the mid-1990s.

By 1999, after the Carr government approved pokies in pubs in NSW, Australia was home to 21 per cent of the world's gaming machines -- with just over half of them in NSW.

The values of pubs surged on the back of lucrative poker machine profits, and there was major consolidation in the sector.

Lobby groups subsequently campaigned strongly against the introduction of smoking bans, in a bid to protect those new poker machine revenue streams.

The approach of many pub and club operators has been criticised by social welfare and health advocates, who believe it is unethical for operators to exploit for financial gain a proven strong nexus between problem gambling and heavy smoking. According to the Productivity Commission's recently released draft report into gambling, almost half a million Australians are problem or "at risk" gamblers, and represent a quarter of all regular gamblers.

The money spent on poker machines now adds up to 65 per cent of all gambling revenues -- worth $11.8bn a year -- and 90 percent of that gambling takes place in pubs and clubs. The report said the number of poker machine gamblers had fallen slightly over the past two years, but those who continued to play the machines were spending more on them.

Reference: Outdoor smoke areas fire up pokie revenues, Anthony Klan, The Australian, 12/17/2009.