Australia gambling operations work a bit differently than in other countries. One key difference is that operators are required to donate a portion of total revenue to help the local community. In the past, charitable donations by lotteries have gone to fund the various hospitals in Queensland along with the Sydney Opera House.
However, according to some recent reports, it appears that some operators in Victoria are not being as charitable as they are claiming. Clubs are supposed to donate a minimum of 8.33% to causes, but research is showing that charitable contributions of only 1.5% are reaching their intended targets.
Clubs Claim a 32.5 Percent Benefit But Only Donated 1.5%
According to reports, a study was conducted by the Victorian Responsible Gambling Foundation that looked at financial records over a three year period. They studied how much money was actually reaching the community through charitable donations from gambling clubs.
Under state law, clubs must spend a minimum of 8.33% of live pokie losses on charitable programs for the community. The VRGF looked at records from July 2012 through June 2015 for their study. During that time, Victorian gambling clubs earned $2.6 billion in revenue. They also claimed $853 million as benefits paid out to the community.
On paper, this sounds amazing, but a deeper look by the group shows some startling numbers. Out of that $853 million, $602.5 million went to operating costs. An additional $88.4 million went to members’ sports facilities. Ultimately, the report shows that only $38.7 million went to “charitable-philanthropic donations.” That’s just 1.5 percent of the total.
Money that actually reaches the community goes towards funding programs such as youth sports.
Clubs Claim Tax Break Despite Low Donations
One benefit that gambling clubs get from donating the required percentage is a tax break. That tax break is 8.33% annually. This break is given based on how much that the clubs claim for charitable donations, rather than the amount actually sent to the community.
As such, gambling clubs are claiming their 8.33% tax break, which is only $217.4 million. That’s over six times the amount actually given to the communities.
Before you ask, clubs are indeed allowed to claim operating expenses for the charitable initiative as part of their donation. That loophole is one reason why they can claim a big donation while only sending a small amount to the community.
Victoria Not the Only Country Short-Changing Communities
There appears to be additional support for these claims. According to the Australian Government Productivity Commission, other states are also seeing small donations to charitable causes. For example, in NSW, a total of 2.1% of pokie revenue was donated to the community in 2015.
In 2012, Queensland only donated $36.5 million, or just 1.9%. The data for these areas was less readily available, so we are unclear as to whether donations picked up in subsequent years. However, it appears that many gambling operators are taking full advantage of the loopholes in the law to maximize benefits.
Gambling Clubs Should Work to Improve Charitable Donations
It is a bit surprising that gambling clubs would donate such a small percentage to the communities. Considering the backlash they are sure to receive from groups like the VRGF, it would seem that they would work to keep those donations closer to the 8.33% threshold.
The amount of money being spent on administrative costs is the biggest red flag in this report. It is a common theme we see from charitable companies all over the world. They end up spending a ton of money on administrative costs and paying their employees, and the actual donations are nowhere near what they should be.
While gambling companies are not charitable organizations, they should hold themselves to a higher standard. They should also make records available to the public so we can see the causes they support. If anything, it is positive PR that gambling companies need.
Regardless, gambling companies need to explore ways to increase their donations while reducing costs. Otherwise, they will continue getting scathing reports like this one for the foreseeable future.