Pearls and Irritations

Gary van Duinen took his own life after a thirteen-hour binge on the pokies two months ago. His body was found by a walking trail near Narrabeen lagoon. The tragic death of the 45-year old husband and father has cranked up the spotlight once again on Australia’s predatory poker machine industry and the shameful connivance of governments, pubs and clubs in sharing the billions in loot.

When Gary went missing, his mother Joy Van Duinen headed down to the Dee Why RSL Club to find him but by then it was too late. His wife Sonia too had earlier pleaded with the Club to stop Gary gambling. It was no use. He had torn up hundreds of thousands of dollars in that gaming room, as staff kept him playing for hours with food and free drinks.

Gary was responsible for a bit of the $43 million in revenue reaped by Dee Why RSL from poker machines last year. This is big business run by small businessmen. It is mostly 70-year-old men on the board of directors. All men, no women, like most of the other clubs. Australians are the biggest gamblers in the world, NSW is the biggest gambling state and Dee Why RSL on Sydney’s Northern Beaches, with its 492 machines, ranks number ten in the state.

Joy Van Duinen has not let the life of her son pass in vain. Despite her grief, she has talked with the press. She is agitating for reform, and calls for reform are mounting. The problem is immense profit. These clubs are now so big – and the states so addicted to the gambling revenues they spit out – that the pokies lobby has both major political parties where it wants them, doing little but tinkering around the edges to lend the impression of reform.

Profits from pokies have gathered at such a pace that the clubs have expanded into property development, aged care, retirement villages and childcare. Dee Why, for its part, is embracing this “cradle-to-grave” strategy. It has retirement village assets, a childcare centre, a bowling alley, a service station. And it is building on. A proposal is with Council may ironically see it plonk more senior living units on top of its vast gaming room.

The RSL lobby projects an image of “community”. Our analysis of the club’s financial statements however demonstrates that “community” runs a poor second to pokie profits.

One measure says it all: how much money the club makes from pokies versus how much it plugs back into the community per member. Taking last year’s average membership, Dee Why RSL took an average of $911 per member on the pokies and gave back just $41 per member to the community. It took 22 times more than it gave.

This is no aberration. The year before, the club took 25 times more than it gave. Amid the rhetoric of community, you will struggle to even to find the words “poker machines” in its public materials. Yet the pokies dwarf all other forms of income.

Of last year’s $67 million in revenue, pokies accounted for $43 million; some eight times the bar receipts.

This from the club’s “Our Vision” statement:

“From our foundation to our future, we are bound by one core value. Respect.
“We respect our members. We respect our community. We respect each other. And every night we pay our respects to the fallen.
“Now as the sun sets on our founding generation, a new age is about to dawn for the Dee Why RSL.”

Frankly, the fallen, those who served this country in war would probably be horrified their memories were being evoked by what are essentially casinos. This “new age” is the age of mega-profits from gambling addicts, whence spring the majority of club income.

Yet you won’t easily find any mention of these words “poker machines” unless you proceed to the fine print in the one single annual report which is posted on the Dee Why RSL’s website. Even then, you will have to trawl through 14 pages of marketing waffle – and some 30 mentions of the word “community” before you get to the words “poker machines” buried in the thick of the Profit & Loss statement on page 15.

Dee Why is by no means alone. Just one beach south, a five minute drive away, sprawling across the southern headland of Curl Curl beach is the new “Taj Mahal” of the Northern Beaches, the Harbord Diggers, with its childcare, its retirement village, its cafes, restaurants, swimming pool and, of course, gaming rooms.

This resplendent monument to greed is built on the losses of gamblers from Sydney’s outer Western Suburbs. People from Bonnyrigg and Cabramatta, people with their poker machine addictions and their quiet tales of misery, have financed this multi-million-dollar foray, again by the old white men on the board of the Mt Pritchard & District Community Club, trading as Mounties.

There is that word “Community” again. But what community? With its 599 pokie licences and $104 million in pokie revenue (out of total income of $125 million), the Mounties have taken over the old Harbord Diggers.

That is a story for another day. Analysis of the financial reports of the Dee Why RSL shows, since 2005, management and executive pay has doubled and poker machine revenue has almost doubled, while other sources of income have risen slowly. KMP (key management personnel) have enjoyed an increase of salaries from $1 million to $2.3 million. The number of members has grown from 25,000 to 49,000.

Moving to profits before labour and overheads, poker machines went from $25 million to $43 million but profit from beverage sales actually fell from $1.8 million to $1.5 million. Profits from catering meanwhile rose only from $2.7 million to $3.6 million. This suggests that food and drink are something of a “loss leader” for the club, enticements designed to keep the clientele entrenched, night and day, in front of flashing screens.

We could not explore these issues further as the club’s president, Graeme Liddell and its chief executive Grant Easterby were not available to be interviewed. A communications executive invited questions by email but then refused to respond to them.

Here they are:

The areas I wish to cover with your CEO:

1. I’ve looked at a few of the past annual reports and was wondering why Directors’ Reports are not included in the filings. Pages are missing – first 10 or so in the ASIC filings …

2. How many KMP?

3. Info around deferred management fees. In 2017 accounts they are mentioned in the tax note but not in the P&L. What are they? I assume around $6m but there is no breakdown. And do they reflect the resident loans for the RVs?

4. How much cash goes through the poker machines to get to $45m revenue?  

5. There is a big bump in machine revenues in 2015-16 – 10pc higher – with no increase in licences. How did this occur? Membership did not grow but sales were up from $38m to $42.5m. Wondering if there was a change in marketing or management or the machines themselves.

6. Also wanted to chat with (CEO) Grant Easterby about the social welfare narrative, the measures put in place since the recent tragedy and responsible gaming v profits. The profits are enormous and have grown impressively in gaming while food and beverage etc is subdued.

7. Does the Club provide transport for Retirement Village residents to the Club and back?

8. How does Dee Why differ from other clubs? I’m interested in the financial and social sides.

Given the technical nature of the subject matter it would be great if Grant could spare some time for an interview. Happy to chat with the CFO as well if that suits.

It is worth noting that, besides being a journalist, this reporter is a native of the Northern Beaches, part of the “Community” and a recent member of Dee Why RSL. This is a company limited by guarantee, which means it does not have shareholders, just a management which has inherited valuable legacy assets, the legacy of the generations before them, before the pokies.

In ten years from 2006 to 2016 net assets rose from $43 million to $114 million. Dee Why RSL is, at last balance date, sitting on a cash pile of $50 million, up from $29 million in the prior year. It is fair to ask, where will this all end? How much do these clubs suck out of the community, how many personal tragedies do communities have to bear, before governments act?

This article was published by Michael West on the 13th of August 2018. 

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