The system that makes charities essential to a pub's poker machine profit

The Fairfield Hotel has committed to giving $2.6 million in donations to community organisations if its application to increase its poker machines from 23 to 30 is successful. Photo: Wolter Peeters
The Fairfield Hotel has committed to giving $2.6 million in donations to community organisations if its application to increase its poker machines from 23 to 30 is successful. Photo: Wolter Peeters

When publican Dan O'Hara wanted to increase the number of pokies at the Fairfield Hotel, he approached a local charity with an offer that many people may find surprising.

Mr O'Hara wanted to increase the venue's number of poker machines from 23 to 30.

To win approval from the regulator he needed to prove there would be a benefit to the local community.

To that end, Mr O'Hara offered local charity Community First Step, which provides programs and workshops to disadvantaged youth, $500,000 if his application was successful.

But the charity's former chief executive, Jason Cummings, declined the offer on the spot.

"There was an irony in the fact that he wanted to support our youth club whilst damaging the health of those kids' parents through actively promoting a reduction in household income through gambling," Mr Cummings said.

More than $8 billion - or about $40,000 per resident - was fed into poker machines during 2015/16 in Fairfield. Photo: Arsineh Houspian

More than $8 billion - or about $40,000 per resident - was fed into poker machines during 2015/16 in Fairfield. Photo: Arsineh Houspian

Mr O'Hara declined to speak directly with Fairfax Media. Through lawyers, he declined to respond to questions about the donation proposal to Community First Step.  

But other organisations approached by Mr O'Hara did not turn him down.

In total, Fairfield Hotel has promised $2.6 million in grants to community and public health organisations should its application, known as a Local Impact Assessment (LIA), be approved by the Independent Liquor and Gaming Authority.

It is understood to be one of largest donations to be offered by a pub or club as part of the application process.

White Ribbon Australia, a national anti-domestic violence advocacy body, was one of four organisations that agreed to receive a donation, and provided Mr O'Hara with written acceptance of his proposal.

Each organisation made clear in the letters that it was aware the donation was contingent upon the hotel's successful bid to increase its poker machines.

Mr O'Hara, whose pub sits in the one of the most poker-machine saturated areas in Australia, included these letters as supporting documentation for his application.

"We understand that the proposal to offer a monetary donation of $10,000 per year for five year is pending the successful application of Fairfield Hotel for an additional seven gaming machines," White Ribbon's chief executive Libby Davies wrote in the organisation's letter in February.

After being contacted for this article, however, White Ribbon said it would withdraw its support "effective immediately" and would not accept the $50,000.

"White Ribbon does not support the nature of this process required by the NSW Government and will not support this application, or any similar in the future," Ms Davies said in a statement to Fairfax Media.

Fairfield Hotel's application for the extra seven machines, which is still under assessment, offers an insight both into the vast sums of money to be made on poker machines in Sydney, and the vexed relationship poker machine venues have with their communities.

Fairfield is ranked by the ABS as Sydney's most disadvantaged area, and has been classified by the ILGA as having "a relatively high risk of gambling-related harm."

More than $8 billion - or about $40,000 per resident - was fed into poker machines during 2015/16 in Fairfield.

At the end of 2016, Fairfield Hotel was the seventh highest ranking hotel in NSW in terms of largest profits recorded per machine. According to its application, the hotel expects the seven new machines to generate an extra $927,000 in revenue each year. 

In line with the findings of a landmark report on gambling by the Productivity Commission, as much as 40 per cent of that money will come from problem gamblers.

Among the core requirements of the LIA process, pubs "must demonstrate that the proposed increase in the gaming machine threshold will have an overall positive impact on the local community".

Additionally, the LIA guidelines, prepared by Liquor and Gaming NSW, recommend that "a positive impact" may be demonstrated by "the funding of a project that will provide an important community facility or the funding of a community service".

The process is intended to extract a commensurate community benefit to offset the future harm caused by more poker machines. But critics such as Mr Cummings argue the system entrenched an unhealthy co-dependency between pokie-driven businesses and cash-strapped charities.

"Organisations who want more pokie machines are encouraged by the system to seek the support of community organisations," he said. "These community organisations find it hard to resist financial support even if the organisations providing it are actually causing the problems they are trying to solve."

In addition to White Ribbon, PCYC Fairfield-Cabramatta agreed to accept a $1 million donation, the  Assyrian Resource Centre agreed to accept more than $1.1 million in donations, and the publically-run Fairfield Hospital agreed to accept a $500,000 donation.

In a letter dated December 21, 2016, PCYC NSW chief executive Dominic Teakle confirmed Fairfield-Cabramatta PCYC "will accept the donation from the Fairfield Hotel as part of their legislative requirement to provide benefit to the community".

When contacted by Fairfax Media, Mr Teakle rejected any suggestion that the letter he wrote was supplied in exchange for the donation, and said that "PCYC does not support gambling".

Carmen Lazar, manager of the Assyrian Resource Centre, confirmed her organisation stood to receive $1 million to fund four full-time staff positions over five years, a one-off $100,000 donation, and the weekly use of the hotel's function room for five years, amounting to a $13,000 in-kind donation.

She told Fairfax Media the hotel's application was of "great interest to the Fairfield local government area" because "through this we will be able to assist a larger amount of refugees in gaining employment, language classes [and] access to support services".

Fairfield Hospital confirmed in its letter the $500,000 donation would be used for "much needed medical equipment in the children's ward".

Like Community First Step, Fairfield Council declined to support the hotel's application.

Mayor Frank Carbone told Fairfax Media that "council's policy does not support any additional poker machines for Fairfield LGA".

The council has also been a critical of the LIA process, which was subject to a government review earlier this year. 

In its submission to review, the council slammed the system as "complex, systematically biased in favour of the applicant, lacking in transparency with no requirement for independent expert analysis".

The peak body for councils, Local Government NSW, said in its submission that community organisations "usually write a letter of support for the application in return for the donation". 

"This process could be viewed as a pseudo payment for gaming machine approval, especially where the contribution is also a tax deduction for the applicant," it stated.

Fairfield Hotel maintains its proposal will deliver a positive outcome for Fairfield.

"Indeed, a weighing of the likely detriments and benefits strongly suggests that there will be a very substantial net community benefit from the grant of this application," the application said.

A spokesman for Liquor & Gaming NSW said the department was finalising the report from the review of the LIA scheme. The government will then consider the report and its recommendations.