CRV is a non-for-profit organisation that exists for the promotion and facilitation of country horse racing for its members and the wide community.

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1 26 February 2016 Gaming Machine Arrangements Review Office of Liquor, Gaming and Racing Department of Justice and Regulation PO Box Collins Street East MELBOURNE VIC Dear Sir/Madam, Gaming Machine Arrangements Review Country Racing Victoria (CRV) is pleased that the Victorian Government has taken a proactive step in releasing the consultation paper entitled Gaming Machine Arrangements Review (the Consultation Paper ). CRV is a non-for-profit organisation that exists for the promotion and facilitation of country horse racing for its members and the wide community. 67 country race clubs are represented by CRV. CRV is a part owner of two hotels with the Melbourne Racing Club (MRC). CRV is pleased to engage with the Victorian Government on the important review of the regulatory arrangements for gaming machines including the extension of entitlements post Venue operators need certainty regarding their businesses to allow appropriate strategic long term decision-making to ensure Victoria s hotels and club continue to evolve to meet consumer needs. 6 country clubs are directly involved in gaming and the profitability of each club and its ability to assist the delivery of local community programs is directly linked to its gaming proceeds. CRV contends that two or more clubs should be able to come together and purchase and manage that particular club or clubs without merging. It is our understanding that this is not possible in the current climate unless such clubs merge. Indeed CRV as a non member based organisation cannot purchase nor manage a club or clubs even with the country race clubs that we represent. We believe these two matters should be subject to consideration in the review. Please find attached CRV s submission in response to the Consultation Paper. We are more than happy to be involved in any further consultation process which the Government undertakes on this important issue.

2 MRC will be providing a submission on its gaming business which includes our two hotels and we endorse that submission. Yours sincerely, Scott Whiteman Chief Executive Officer

3 CRV Submission to the Consultation Paper Introduction CRV is the agent and representative of some 67 country race clubs across the State. CRV is also responsible for the marketing and promotion of horse racing in country Victoria. As a non-for-profit organisation all revenues derived from CRV s gaming interests are directed towards the promotion and facilitation of horse racing in country Victoria. CRV and its Clubs made a significant contribution to the Victorian economy through economic output direct and indirect job creation and permanency and by value adding. CRV takes its responsibilities as a non-for-profit status very seriously and supports Cystic Fibrosis and Down Syndrome and all country race clubs who in turn support a number of charities and causes. The thoroughbred racing industry in Victoria is a significant contributor to the Victorian economy. In 2013 a size and scope review of the Victorian thoroughbred industry prepared for Racing Victoria showed that 17,600 people were employed directly in racing in In addition, thoroughbred racing more than $1.5 billion in spending per annum, with nearly half of that expenditure occurring in regional Victoria. The Victorian racing industry continues to be under serious pressure to grow its revenue base to accommodate increasing costs and combat competition from other forms of gambling. In addition the racing industry s wagering revenue continues to shrink as its wagering partner Tabcorp loses market share to competitors. Revenue from gaming is a key component of race clubs and CRV s non racing revenue sources and all reserves generated from this activity are used to promote horse racing and local communities. CRV contends that two or more clubs should be able to come together and purchase and manage that particular club or clubs without merging. It is our understanding that this is not possible in the current climate unless such clubs merge. Indeed CRV as a non member based organisation cannot purchase nor manage a club or clubs even with the country race clubs that we represent. We believe these two matters should be subject to consideration in the review. CRV is more than happy to provide commentary on a number of aspects and sets out its views below on the following matters: Distribution of machines Destination venues Ownership restrictions Machine entitlements and payment terms Tax certainty

4 Review of tax rates Distribution of Machines As you would be aware Victoria has a cap of 30,000 gaming machines whereas NSW has a cap of 100,000 machines. Clearly this is an inequality especially given the growth in population and business in Victoria verse NSW. There is no doubt Victoria will continue to grow and surpass NSW in every way shape or form. We see growth in outer suburbs almost daily yet we cap gaming at 30,000 and seem reluctant to increase purely on negative publicity grounds. It is hoped that limits can be increased and that Government can give certainty by firstly declaring that there will be no decrease to clubs and hotels. Destination Venues The Government has a marvelous opportunity to substantially increase gaming at race club venues throughout the state without harming the community. Race club venues allow gambling and are destination venues where the customers must make a decision to visit. Country race clubs play an important role in the social fabric of their communities and increasing machine limits will ensure this role can increase but importantly ensure that the role does not decrease. Ownership Restrictions Whilst CRV is not a Club as such its individual country clubs are. We note that under current rules clubs are not allowed to own more than 420 machines each. We believe an increase in the 420 rule could be advantageous to our country clubs as the opportunity to work together and build a large club and assist the clubs various communities whilst driving better outcomes for racing to be a great opportunity. Machine Entitlements and Payment Terms Operators large and small need certainty and the review must address this issue. Taxes and levies need to be declared and increases not allowed otherwise operators can t determine what fair value can be appointment for an extension of the term.

5 We simply request certainty in this area and trust the review will dedicate the appropriate time to consider this matter fully. Tax Certainty Likewise the opportunity for various Governments to simply increase taxes whenever they need more funds has to stop! Why can t a moratorium or taxes and levies be introduced and declared for a defined time period? The 2012 tax increase on gaming machines hurt CRV and therefore all country clubs. Country clubs without gaming are financially supported by CRV. In 2012 CRV and the MRC purchased a large hotel after factoring in matters such as tax and levies. We urge the review to consider this matter closely. Review of Tax Rates CRV understands that Victorian tax rates are significantly more than NSW and also more than the third largest state Queensland. South Australia provided a tax moratorium for 10 years. Why can t Victoria if Victoria won t decrease tax rates on gaming? Finally it is CRV s view that the venue operator model has been successful. Individual ownership and operation has enabled our clubs to reinvest to assist local community projects and to help country horse racing in general. This model must be maintained.