Woolworths, Australia's biggest owner of poker machines, has hit a multimillion-dollar jackpot thanks to a decision by the previous Victorian government to overhaul the way pokies are operated.
The supermarket giant looks to have booked a one-off earnings kick of between $10 million and $20 million after the monopoly once run by Tabcorp and Tatts was replaced by an owner-operator model.
The extra cash flooding Woolworths coffers makes it the single largest beneficiary of new gaming legislation, which came into force last August.
Woolworths said growth was driven by 32 hotel purchases as well as the overall benefit obtained through Victorian gaming regulatory changes. Photo: John Woudstra
Releasing its half-year profit results on Thursday, Woolworths revealed its hotels sales for the six months to December 31 had surged 19.3 per cent to $759 million but that pre-tax earnings had jumped 21.2 per cent to $140.8 million in 2013.
In a statement to the Australian Securities Exchange Woolworths said growth was driven by 32 hotel purchases as well as the overall benefit obtained through Victorian gaming regulatory changes.
Woolworths would not say how much of the $25 million in extra earnings came from regulatory changes. A 2012 stockbroker's report said Victoria's new regime would result in Woolworths generating an extra $72 million in annual earnings.
A consequence of the new government arrangements is that Tatts and Tabcorp were removed from the profit-sharing equation, with the spoils from each machine split between the state government and operators such as Woolworths.
Woolworths and other operators didn't have it all their own way. From July 1, 2012, ATMs were illegal in pokies venues.
''The removal of ATMs has had a negative effect, not only on gaming turnover, but also on bar and food revenue,'' Woolworths said. ''This impact was expected and we believe it will recover as customers adjust to the new regime.''
Woolworths, which last year sold just under $38 billion of food, groceries and liquor, is Australia's biggest operator of pokies through its ALH joint venture with the Mathieson family. As of late last year it had 11,584 machines, 5226 in Victoria. It removed 1000 machines to meet new restrictions.
Meanwhile, Woolworths chief Grant O'Brien defended supermarkets' hardball approach to suppliers over pricing.
The ACCC is investigating accusations of predatory and bullying behaviour by Woolworths and Coles when dealing with suppliers.