What’s the deal?

For many years now the Essendon Football Club has owned and operated 190 poker machines across two venues; the Melton Country Club and the Windy Hill Venue. Since 2010 over $150 million has been lost on poker machines by people at those two venues.

While all 10 Victorian based AFL clubs have at some time operated poker machines, only Essendon, Carlton, Richmond and St Kilda continue to do so. The pokies based revenue model of football clubs has become harder to justify in light of the damaging social effects that addiction to poker machines bring.

Why NoPE needs to keep Essendon Accountable

Knowing it’s a bit on the nose, the Essendon Football Club doesn’t like to talk too much about its Pokies operations. This makes it difficult to know Essendon’s long-term plans for their pokies operations. Attempts to engage with the club to gain an understanding have gone unanswered.

To fill this information void NoPE has looked at the few media statements that Essendon has made in recent years on this issue and have found the following:

In 2018, the Club made some statements suggesting that it was working to exit the poker industry.  On 9 July 2018, The Age reported

In March, Essendon announced a deal with RMIT University, with Campbell saying at the time it was such partnerships that would help his club wean off pokie revenue. The Bombers have also purchased an eSports team in another push to grow revenue from an alternate source. 

On 11 December 2018, The Age reported

Last month, Essendon CEO Xavier Campbell told The Age: “We have spoken to this publicly on a number of occasions – we endeavour to become less reliant on gaming as a revenue stream and we have invested heavily in building our strategy and investment divisions to work toward exploring opportunities in this space.

Unfortunately, this position seemed to change a few days later when The Age reported that

Essendon remain committed to pursuing gaming revenues in the short and medium term, but have identified several alternative revenue streams which will eventually allow the club to reduce its reliance on gaming, when financially viable.

The club’s pokies strategy was also addressed by club president Lindsay Tanner at the Bombers’ AGM on Monday.

Tanner reminded onlookers that Essendon were a football club with financial imperatives, rather than the government of Victoria tasked with administering gambling regulations, acknowledging “significant divided community opinion” on the matter.

The president noted a number of board discussions about the club’s pokies holdings, saying “it would be financially irresponsible to simply fold our cards and say, ‘OK that’s it, whatever the cost, we’re just walking out’.”

This position has been reiterated since, with then President Paul Brasher stating at the 2021 AGM in response to questions on the topic:

“We run the machines in a way that is at the absolute peak of the requirements of responsible gambling legislation. Were we to divest the gaming machines, they wouldn’t just disappear. They’d be sold to somebody else and they certainly wouldn’t be running them with greater probity than we do, and conceivably it could be less, so I think that’s worth keeping in mind. The second thing is that it is a relevant part of our operations, I’ve said that already, and we’ll continue to regard it as being something that we’ll operate responsibly.”

While we don’t have a transcript of current President David Barham’s Q&A session at the 2022 AGM, his response did not suggest any change in the club’s position.

Since then, as far as we can tell, the Club has avoided making public statements about its long-term position regarding its poker licence investment.  Based on these comments from the club it looks as though they have quietly committed to holding their poker licences for the long term and are trying to keep this position quiet to avoid negative press.

If Essendon FC wants to remain committed to its Poker Industry investment, then NoPE wants to make sure that they are at least held accountable for this decision.

On 3 May 2023, NoPE wrote to Essendon FC and said:

As supporters of Essendon, our desire is to work positively with the club towards the divestment of its Poker Licences.

However, in order for this to be possible, Essendon needs to be prepared to engage on this issue. One of the reasons why it was necessary to incorporate NoPE was because many of our supporters had already written to Essendon expressing their opposition to the club owning Poker Licences, and the Club has not replied to any of these letters or emails. This failure of Essendon to engage with its members has provided the impetus for joining together to create NoPE.

NoPE now requests that Essendon enters into dialogue with us. We also request a meeting with club officials to hear our concerns and to discuss the options for achieving this outcome, and confirmation that this letter has been brought to the Board’s attention.

As at 22 May 2023, the Club had not replied to our letter.  

NoPE calls on the Club to come clean about what its long term intentions are for its poker machine investments.

Why ditch pokies

Poker machines can have a disastrous effect on people’s lives. They are designed in such a way that increases the chances of addiction. That addiction doesn’t just affect the person in front of the machine, research suggests that a gambling addiction will affect up to six other people, often including spouses and children, leading to relationship and family breakdowns. Other studies have found a link between higher crime rates in areas that have higher pokies loses.

To put it simply, we do not believe that the Essendon Football Club should be contributing to the social destruction that comes with poker machines. And it certainly should not be a central pillar of the business model.

But they’re legal…

A common argument we hear is that poker machines are legal so why shouldn’t Essendon profit from them? Our belief is that pokies ownership is instead a moral, or ethical, question. With the wealth of evidence available about the destructive impacts of poker machine addiction, profiting off them fails the moral test. It all comes down to wanting Essendon to be a great club both on and off the field and the belief that profiting off poker machines is incompatible with that.

The purpose of NoPE is not to ban all poker machines, rather we believe in gambling reform. This is why we are also advocating for the state government to offer licence buybacks, to decrease the density of poker machines in communities and provide a pathway for venues that wish to get out of the business.

Why shouldn’t Essendon profit from pokies just because some people get addicted?

Poker machines are designed to be addictive. Through lights, sounds, and symbols modern poker machines manipulate the brain into delivering a dopamine hit to the user, even on spins that deliver a loss. People who experience gambling harm from poker machines do so as a result of the predatory nature of the machines, not through any character flaw of their own.

Essendon give profits back to the community, this won’t happen if they sell them to a private company…

While private owners of pokies venues normally operate under a venue licence, R.S.Ls, sporting, and social clubs such as Essendon operate their poker machines under a club licence. Club licencees are entitled to a lower tax rate than venue licencees if at least 8.33% of the money lost on poker machines in their venue is reported in community benefit statements as being put back into the community. These benefits are vastly overstated. We have analysed the community benefit statements for the Melton Country Club and Windy Hill Venue, going back to the 2010 financial year, to understand how the community benefits from Essendon’s poker machine ownership.

Across the two venues combined between FY2010-22 the amounts reported on the community benefit statements were equal to 29.19% of the total amount of money lost on the venues’ poker machines. Of that amount the vast majority was spent on what we’ve called In Venue benefits – Things like venue operating costs (such as employee wages, cleaning, gas and electricity bills) or other benefits that were only available to customers of the venues, such as discounted meals and pay TV broadcasts. These are all things that are available from other venues, regardless of ownership, so the community benefit would not be lost if Essendon gave up ownership.

Benefit LocationDetail (Simplified)Total as Percentage of EFC Venue Gambling Losses FY2010-22
In VenueVenue Operating Costs17.15%
In VenueDiscounted Meals3.60%
In VenuePay Tv (Fox Footy & Sky Racing)0.72%
In VenueCapital Expenditure (Venue)0.55%
In VenueEntertainment0.54%
In VenueFree or Discounted Room Hire0.39%
In VenueConsolidated Discounted Food, Pay TV, Room Hire & Entertainment (No breakdown provided)0.16%
In VenueAudit Fees0.05%
In VenueTotal In Venue Benefit23.15%
Out of VenueMaintenance of Sporting Grounds2.05%
Out of VenueDonations, Gifts and Sponsorship (Sport & Recreation – Non EFC)1.89%
Out of VenueDonations, Gifts and Sponsorship (Philanthropic or Benevoloent)1.58%
Out of VenueDonations, Gifts and Sponsorship (Youth)0.26%
Out of VenueDonations, Gifts and Sponsorship (Veterans Services)0.16%
Out of VenueDonations, Gifts and Sponsorship (Educational Programs)0.07%
Out of VenueDonations, Gifts and Sponsorship (Gambling, Drug or Alcohol Addiction Support Services)0.02%
Out of VenueDonations, Gifts and Sponsorship (Aged)0.01%
Out of VenueTotal Out of Venue Benefit6.04%

Only 6.04% of money lost by gamblers at the venues went back to the community outside of the venues. Of that amount, over a third went towards the maintenance of sporting grounds – with detailed statements indicating these amounts went mostly to a combination of the bowls club and oval at Windy Hill and the ovals at Essendon’s Tullamarine training base. While all of Essendon’s claimed community benefits are allowed under the community benefit statement scheme, and we are not suggesting otherwise, it does illustrate the flawed nature of the community benefits scheme and supports the argument that any community benefit provided by Essendon owning the venues is vastly overstated.

Breakdown of reported Community Benefits at Essendon’s two venues from FY2010-2022

But how will Essendon replace the revenue?

Footy clubs need money to run, we’re not oblivious to that. According to Essendon’s 2022 Annual Report the club turned a profit of $3.37million from the operations of its venues. The club made an overall operating profit of $1.48million, leaving a shortfall of $1.89million to break even if you remove the venue profits. This money obviously needs to be replaced in a sustainable manner.

As attitudes towards poker machines continue to change, there are increasing calls for stronger regulation and restrictions to be put on venues. In terms of making a profitable exit, it makes sense to leave the industry before further restrictions are put in place.

We have confidence that the board is equipped with the right financial and business experience to make a successful transition away from poker machine income. North Melbourne, Collingwood, Western Bulldogs, Geelong, Melbourne and Hawthorn have all successfully done it.

It’s time for Essendon to do the same.