The mini casinos making a cash bonanza under ‘hardship’ exemptions

Three of the 10 most profitable clubs in NSW by gaming revenue are operating with extended trading hours after gaining a “hardship exemption” to the mandatory shutdown period for poker machines.

The six-hour shutdown period is designed to enforce a break in play from 4am to 10am when research has shown that gambling harm is most likely to occur.

But a review of gaming machine shutdown hours found that 673 clubs and pubs – or 20 per cent of all venues with poker machines – have been granted an exemption, including 34 on hardship grounds, though many are pulling in tens of millions of dollars in revenue.

The findings, quietly published earlier this year, were highlighted at budget estimates on Tuesday as the NSW government comes under increasing pressure to respond to the recommendations made by the Independent Panel on Gambling Reform in December.

NSW residents lost $2.3 billion on poker machines in the second quarter of 2025, an increase of 8.7 per cent when compared to the same period last year, government data released on Friday shows.

The Independent Panel on Gaming Reform recommended the removal of exemptions to the shutdown period and a transition to “account-based” gaming with pre-determined loss limits and know-your-customer checks.

But NSW Gaming Minister, David Harris, likened the consequences of a radical shake-up in the gambling industry to the collapse of the taxi industry after deregulation.

“This will impact economically, financially, on communities right across the state,” Harris said in response to a question about the government’s inaction.

“Do you want us to rush out with a back-of-the-envelope strategy? You did that with taxi licences, and you sent people broke overnight.”

Venues can gain exemptions to the 6-hour shutdown if they operate in an area frequented by tourists or other hospitality venues with extended hours, if they had a consistent history of early opening before the legislation was introduced in 1997 or if they met financial hardship criteria when they applied for the exemption.

However, there was no time limit on the exemption and no requirement for it to be reviewed. The review found that many venues may not continue to meet the criteria.

It also found that the exemption for venues surrounded by other late-night openers had created a “mutually reinforcing cycle”, where more venues were prompted to ask for the variation because their local competition had done one.

This was evident from maps of venues that had been granted the exemption, most of which were not in tourist or entertainment precincts, the review found.

“Indeed the top areas for this variation outside the Sydney LGA are Canterbury-Bankstown, Blacktown, Fairfield and Cumberland, which coincides with the areas with the greatest number of gaming machines and the greatest gaming machine profits.”

One venue operating under a hardship exemption was the second most profitable club in NSW by gaming revenue.

The venues were not named, but the second most profitable club by gaming revenue at the relevant time was Bankstown Sports Club, which boasted in its latest annual report that its “remarkable” trading results had enabled it to launch an Italian bistro and an Asian restaurant, upgrade its golf course, renovate its foyer and lounge and install new EV charging stations in the car park.

It declined to comment.

Liberal MLC Scott Farlow queried at estimates why a club with the second-highest profits would have a hardship variation.

Hospitality and Racing deputy secretary Tarek Barakat: “That’s a fair question. That was part of the purpose of the review... I don’t think [the exemptions] have been looked at since they were first initiated in the late 90s and early 2000s.”

The Independent Liquor and Gaming Authority has committed to review existing licences after an Auditor-General’s report found that many venues were operating gaming machines under conditions that “may not be consistent with contemporary approaches to harm minimisation”.

The Auditor-General recommended in June that ILGA periodically review the licence conditions of venues in the highest risk locations, commencing no later than 2026, and amend them where necessary.

ILGA said in a statement that it would assess existing licences on a case-by-case basis, and aimed to begin the work within the recommended timeframe.

“In accordance with the Auditor-General’s recommendations, ILGA will prioritise consideration of existing licences where conditions have not been reviewed for some time,” the statement said.

“Beyond that, the nature and scale of the recommended review is at an early stage of development and has yet to be determined.”

A NSW Greens analysis of annual reports found 25 of the 30 most profitable clubs had variations to the standard opening hours.

It also showed the extent to which those clubs relied on poker machines, with Campsie RSL, Fairfield RSL and Cabra-Vale Diggers Club drawing more than 90 per cent of their revenue from gaming.

Greens MP Cate Faehrmann said switching off poker machines for six hours every day was one of the simplest measures the government could take to reduce gambling harm.

“No club is going to go broke by shutting down their pokies between the hours of 4am and 10am,” she said.

The vast majority of turnover among venues that have shutdown exemptions is generated during standard operating hours from 10am to 4am.

“The government is giving every indication they actually don’t intend to do anything that will reduce clubs’ profits from the pokies.”

Faehrmann asked Harris at estimates this week why the department was taking so long to act on the exemptions when the review was completed last August. It was not published until January.

“When can we expect any indication from your Government about what it’s going to do?” she said. “It’s just review, review, review, review, ‘complex’, ‘complex’ and no action.“

Harris replied: “It’s not just review. It’s develop.”

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