Retirement Income

Tue, 4 Jun, 2019Joanita Wibowo

Woolworths' pokies business under growing scrutiny

Woolworths' pokies business under growing scrutiny

Woolworths has found itself under growing pressure to back away from the controversial pokies industry, as a major shareholder warned that involvement in gambling may harm the supermarket giant’s reputation.

Woolworths owns a majority stake in Australia's largest slot machine operator ALH Group, which has more than 12,000 pokies machines across the country.

According to a Fairfax Media report, one of the grocery chain’s most influential shareholders, Perpetual Investments, has pushed the company to exit the pokies business.

The investment firm reportedly told the Woolworths’ board that their support for poker machines is incompatible with the supermarket’s family-friendly values and may threaten the brand’s standing within the community.

Woolworths owns a 75 per cent share in ALH and gained $259 million from the pubs and pokies company last year, which accounted for about 10 per cent of its pre-tax profit.

This is not the first challenge against Woolworths’ relationship with slot machines. Last year, it was revealed that staff at poker machine venues owned by Woolworths offered extra free drinks to “high-value” punters to boost profits, which goes against the company’s commitment to responsible gambling. In response to the report, staff at at least 22 venues were sacked and disciplined by ALH.

In a 2017 annual general meeting, Woolworths chairman Gordon Cairns rejected the idea that divesting would help relieve Australia’s gambling problem, as ALH only accounts for 6 per cent of Australia’s poker machines. “A much more constructive way to solve the problem is if we show industry leadership by maintaining the most responsible program,” he said.

Australia is the country with the most poker machines per person in the world, excluding gambling holiday destinations such as Macao and Monaco. In 2015, there was one slot machine for every 114 Australians. According to a 2017 study by the Australia Institute, Australia owns 18 per cent of the world’s poker machines.

“Australia’s large number of poker machines and our unusual decision to allow them in pubs and clubs make us a global anomaly,” said the report’s co-author Bill Browne.

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