Area Banding for Gaming Machine Threshold Increase Applications

On 21 October 2019, Liquor & Gaming NSW announced that there had been a reclassification of the banding of local statistical areas (LSA) for the purposes of the Gaming Machines Act 2001 (Act).  The significance of an LSA banding for a pub of club seeking to increase its gaming machine holdings, is that the LSA banding determines whether an application to increase the venue’s gaming machine threshold will be relatively straight forward, or diabolically complex and expensive.  Properly understanding LSA banding is therefore important.

Previously, the Act dealt with the classification of local government areas in NSW, as being either a Band 1, Band 2 or Band 3 local government area.  However, all that changed under the Gaming Machines Amendment (Leasing and Assessment) Act 2018, which commenced in April 2018.  Now the Act deals with LSAs and bands them in the same way.

An LSA is a geographic area determined by the Australian Bureau of Statistics (ABS).  The whole of Australia has been mapped into census collection areas, the smallest of which is the Statistical Area 2 (SA2).  Each SA2 is given a specific name.  For example, the Sydney CBD and immediate surrounds, this area is called the SA2 area of “Sydney – Haymarket – The Rocks”.

SA2 areas are not fixed.  From time to time they are changed by the ABS, following the release of latest census data.  The current ABS mapping data was released in May 2019.  Prior to that, there were releases in 2016 and before that, in 2011.

The key point for those venues with long-term development projects, is that they may commence a project on the understanding/expectation that they are in a certain SA2 area and then come to realise part way through their projects, that their SA2 area has changed.  Possibly it might be an entirely new SA2 area, as recent experience has shown.

Changes to SA2 areas can be more than simply a boundary adjustment.  As recently experienced for a client, its SA2 area was abolished by the ABS in 2016 and an entirely new SA2 area was published by the ABS.  Not only did the client’s SA2 area become much smaller, it also took on a completely different name.

The significance of such a profound change to the SA2 area, was that it had the effect that the SA2 banding classification published by Liquor & Gaming in November 2017, was technically void.  This was because the SA2 area ceased to exist in 2016.  Despite this, Liquor & Gaming published the banding classification, based upon the SA2 area determined by the ABS in 2011.  The short point being that a SA2 area cannot be banded for the purposes of the Act, if it in fact previously ceased to exist.

On the latest published list of SA2 banded areas, it can be seen that quite a number of SA2 areas had changes made to their geographic boundaries.  Whether or not all those changed SA2 areas were simply no more than a boundary adjustment is difficult to say.  Previously Liquor & Gaming had not published a list of these SA2 area bands, instead it maintained a “Find your LIA Band” mapping tool on its website and applicants had to rely on that mapping tool.  At the time of writing this article, the website mentions that the LIA Band mapping tool is “under construction”.  Instead a link is provided to the ABS website.

For those venues contemplating a commercial transaction, such as purchasing gaming machine entitlements, usually at a considerable cost, they ought to take care while undertaking their pre-purchase due diligence.  Certainly, it would be very unwise to rely upon information previously found by the “Find you LIA Band” mapping tool and assume that everything remains the same.  For those developers with long term projects, the risk is that their venue or development site, may be moved to a different SA2 banding classification or into an entirely new SA2 area.

The latest SA2 banding list also shows that a number of SA2 areas have moved to a higher risk band.  As an example, venues in the SA2 area of “Armidale Region – North”, have now moved to a Level 2 banding classification, whereas previously they were Level 1.  The significance of that change is any application to increase the gaming machine threshold for venues in that area, now requires a local impact assessment to be provided and in turn, that local impact assessment must be approved by the Independent Liquor & Gaming Authority.  Previously (being a Level 1 band), those venues could apply for up to 20 additional gaming machines every 12 months, without the requirement for a local impact assessment to be approved.  The approval of a local impact assessment is difficult to achieve and now quite expensive.

Liquor & Gaming has published a guideline for determining the quantum of the required “community benefit”, for the local impact assessment to be approved.  Now that quantum may run into several million dollars, depending upon the venue, its location and how many extra gaming machines are being sought.

Avoiding the requirement for a local impact assessment is therefore important.  The Act provides certain pathways to achieve this and those pathways rely upon SA2 classifications.

Bruce Bulford

31 October 2019