Annual Report

Annual Report

2010–2011

Victorian Commission for Gambling Regulation

Office Level 5 35 Spring Street Melbourne Victoria 3000 Postal Address PO Box 1988 Melbourne Victoria 3001 Website: www.vcgr.vic.gov.au Office Hours 9.00 am to 5.00 pm Monday to Friday Switchboard Telephone: 61 3 9651 3333 Facsimile: 61 3 9651 3777

E-mail contact address: [email protected] Complaints hotline: 61 3 9651 3737

Inspectors at Melbourne Casino Southbank:

Chairman’s Letter

15 September 2011

Minister for Gaming Parliament House Spring Street

MELBOURNE VIC 3002

Dear Minister

I am pleased to present the Annual Report of the Victorian Commission for Gambling Regulation for 2010–2011. This Annual Report is prepared in accordance with the provisions of the Financial Management Act 1994, the

Gambling Regulation Act 2003 and the Casino Control Act 1991 and covers the period between 1 July 2010 and

30 June 2011.

Yours sincerely

BRUCE THOMPSON Chairman

Contents

Chairman’s Letter to Minister 1

Chairman’s Report 5

Highlights in 2010–2011 7

Output Performance 10

Part 1 – The Victorian Commission for Gambling Regulation

11

Overview 12

Objectives 13

Functions 14

Commission Members 16

Organisational Structure 17

Organisational Chart as at 30 June 2011 18

Corporate Governance 20

Part 2 – Report of Operations 2010–2011 by Intended Outcomes

21 1 Gambling Activities:

The conduct of gambling properly protects players and other stakeholders 22 2 Gambling Participants:

Gambling is conducted honestly, is free from criminal influence and commercial

licensees deliver on their obligations 31 3 Gambling Benefits:

The Victorian community receives the benefits arising from gambling 42 4 Gambling Harm Minimisation:

The harm caused by problem gambling is minimised 47 5 VCGR Resources:

VCGR fulfils its Government and legislative responsibilities and achieves its

service delivery objectives by innovative, effective and efficient use of resources 52

Summary of Financial Results 62

Part 3 – Financial Statements 2010–2011

67

Part 4 – Appendices

107

1A Principal Legislation Administered by the Minister for Gaming 109 1B Commencement Dates of Legislation 110

1C Subordinate Legislation 111

2 Ministerial Direction 112

3 Ministerial Determinations – Community Benefit Statements 115 4 Victorian Commission for Gambling Regulation Rules 117 5 Commission Decisions on Applications for New Premises and Venue Operator

Licence Amendments 120

6 Commission Meetings, Inquiries and Hearings 2010–2011 122 7 Gaming Machine Entitlements as at 30 June 2011 124

8 Gaming Venues as at 30 June 2011 130

9 Registered Bookmakers as at 30 June 2011 143 10 Bingo Centres and Commercial Raffle Organisers as at 30 June 2011 147

11 Licensing Activities 148

12 Number of Active Licences at 30 June 2010 and 30 June 2011 150 13 Roll of Manufacturers, Suppliers and Testers as at 30 June 2011 151 14 Responsible Gaming Training Course Providers as at 30 June 2011 152 15 Community Benefit Statements – Summary of the Total Claims Made by

Club Gaming Venues 154

16 Gambling Player Loss and Taxes and Levies Paid 2010–2011 155 17 Distribution of Taxes from Gambling 157 18 Player Loss from Gaming Machines – Statistical Data Fact Sheet 159 19 Distribution of Player Loss from Gaming Machines 160

20 Regional Caps 161

21 Municipal Limits 164

22 Representation on Working Parties 166 23 Commission Whistleblower Procedures 167 24 Staff Profile by Position 2010–2011 177 25 Other Information Available on Request 178

Disclosure Index 179

Chairman’s Report

Over the past several years, by all accounts, the Commission has done a very commendable job in achieving those high level objectives prescribed by the legislation. The Commission has operated in a relatively stable environment and has built up a vast reservoir of capability, knowledge and expertise as it undertakes its regulatory role.

‘Stable’ environments, however, don’t last forever and the Commission’s flexibility and adaptability will be seriously tested over the next twelve months as we embark on a very significant structural and environmental change process. Taken individually, each of these changes is significant. But taken collectively they represent an event of potentially seismic proportions.

Let’s look at each of these in turn.

From a gaming machine standpoint, the industry is in the midst of the transition from the Tattersall’s and Tabcorp duopoly. The auction has been held and gaming machine entitlements purchased. Clubs and pubs in Victoria paid out a total of $980 million for 27,300 entitlements. The market is now more open and competitive and the economics of the industry have already changed dramatically.

Clubs and pubs that had sound auction strategies in place and are well organised to take on the challenges of the new environment should fare particularly well. The Commission is mindful of the potential regulatory risks associated with the shift in industry balance, but our regulatory role has not changed and we will insist that the high standards of probity and performance against statutory requirements continue to be maintained.

A second major change in our industry structure is, as outlined last year, the merger of the Gambling and Liquor regulatory functions into one body, the Victorian Commission for Gambling and Liquor Regulation, the ‘VCGLR’. The legislation required to give effect to this change is being prepared and is expected to be in force in the new year. I have been involved in a number of mergers and acquisitions and, in fact, one significant ‘demerger’, and I know that at an individual level such events can be stressful. Quite naturally, the individual employee will always ask ‘What does this mean for me?’. During periods of uncertainty this is natural and expected. Successful mergers are usually characterised by strong leadership, which includes well thought out and well communicated strategies, and a demonstrated understanding of key issues at both the individual and stakeholder level.

This change, in my view, will open up a vast array of opportunities for people at all levels and provide an

extraordinary base for organisational reinvention. There is no doubt in my mind that as a result, together we can become a modern, ‘best in class’ regulator.

A third, but in my view less significant change, is the move of both organisations to a new building in Richmond. Whilst less significant this is symbolic and it does in a way represent a fresh start. Such symbolism, if captured correctly, can be powerful.

As I pointed out in my Chairman’s report last year, and I believe,

it is worth reiterating, the fundamental role of the Commission is

very clearly defined by law. In a very broad sense our regulatory

responsibilities focus on keeping the industry free of any criminal

influence and exploitation and fostering responsible gambling in

order to minimise harm.

Chairman’s Report

continued

Over the last few months the Commission has been working with the Department of Justice to recruit a new CEO to replace Peter Cohen. This person will become CEO of the newly formed VCGLR entity and clearly, therefore, will be critical in creating the new outstanding performance culture. The former CEO, Peter Cohen, left the organisation after fourteen years of service, the last eight as Executive Commissioner. We thank him for his considerable contribution over the journey.

I also thank my fellow Commissioners, Judith King, Gail Owen OAM and Ches Baragwanath AO, for their invaluable counsel and contribution over the year, and the Commission staff in fulfilling their respective roles so very capably over the course of the year.

As a result of these efforts the public can be confident that the industry operates fairly and that the outcomes contemplated by the legislation are achieved.

Bruce Thompson Chairman

Highlights in 2010–2011

Fair Gambling

• supporting an effective system of gambling regulation and implementation of

Government policy by:

– introducing processes to reduce the regulatory burden of gambling regulation by

implementing on-line application services utilising smart forms; and

– enhancing the efficiency of the employee licence application process with the

introduction of new technology to allow licence applicants to have finger and palm

prints recorded electronically;

• promoting player confidence in the integrity of gambling products by:

– providing a range of gambling product approval programs including product rules,

systems and equipment; and

– approving trade promotion lotteries;

• minimising the risk and impact of gambling regulatory breaches by:

– monitoring the casino and supervising lottery draws;

– conducting compliance audits and investigations of licensed gambling venues and

minor gaming, lotteries and race track activities;

– investigating gaming venue and casino patron complaints;

– publishing on the VCGR website updated regulatory information to assist industry

participants to comply with licensing requirements;

– being a party in Court proceedings to determine the legality of the use of computer

terminals in Victoria known as ‘Betbox’, currently being appealed by Sportsbet Pty Ltd.

Crime Free Gambling Industry

• enhancing confidence that gambling industry participants are suitable by:

– conducting probity and financial checks for licences and approvals for gaming machine

manufacturers, suppliers and testers; casino suppliers; venue operators; bingo centre

operators; commercial raffle organisers; casino special employees; gaming industry

employees; and registration of bookmakers and their key employees;

– monitoring licence and registration holders for any changes in structure, addition

of associates or issues of a probity, commercial or financial nature that may have an

adverse impact on suitability;

• supporting a high standard of probity within the gambling industry by taking disciplinary

action against the casino operator on three occasions, venue operators and licensed

industry employees;

• monitoring the fulfilment of obligations to the State by commercial participants in the

gambling industry.

Gambling Benefits

• facilitating community benefit arising from the new gambling industry structure

post-2012 by establishing the Gaming Machine Entitlements Register of the 27,300 gaming

machine entitlements allocated to venue operators in August 2010 and the associated

transfer market website;

• ensuring that only bona fide community and charitable organisations benefit from

minor gaming by conducting renewal reviews of community and charitable organisation

declarations;

• ensuring that gambling returns are properly distributed by:

– monitoring all gambling products to ensure players receive their appropriate

entitlements and verifying, collecting and transferring all gambling taxes;

– monitoring and reviewing Community Benefit Statements submitted by club venue

operators; and

– monitoring and reviewing returns submitted by organisations conducting bingo and

large raffles.

Gambling Harm Minimisation

• supporting the gambling industry in the responsible delivery of its products by:

– assisting industry to implement Responsible Gambling Codes of Conduct (‘Codes’)

and Self-Exclusion Programs (‘SEPs’) including consulting with stakeholders,

conducting venue educational visits, operating a responsible gambling telephone

hotline and auditing the effectiveness and operation of Codes and SEPs;

– implementing a formal responsible gambling compliance audit program at gaming

venues, bingo centres, TAB wagering outlets, Club Keno, bookmakers and the

Melbourne Casino;

– participating in Responsible Gambling Awareness Week 2011 and providing speakers

for information sessions throughout Victoria and responsible gambling information

and educational material;

– providing expert and technical advice with respect to the establishment of the

Government’s pre-commitment scheme for gaming machines;

• minimising potential harm from gambling to communities and individuals by:

– conducting public inquiries, including from applications lodged in the previous year,

to assess the net socio-economic impact on the local community of applications for

approval of new premises as suitable for gaming and for additional gaming machines at

approved gaming venues; and

– monitoring municipal limits and regional caps for gaming machines to ensure that

maximum permissible numbers are not exceeded.

VCGR targets formed part of the Gaming and Racing Management and Regulation output in 2010–2011.

The following table outlines the major output deliverables for which the VCGR is responsible. The table shows actual performance against targets as specified in State Budget Paper No.3 for 2010–2011.

Output measured below involves the monitoring and regulation of gambling in Victoria.

Performance Measures Annual Year End

Target Actual Quantity (number)

Regulatory Services including Licensing and Compliance Activities 30,000 28,304 Quality (%)

Accuracy of Regulatory Compliance Activities 100 100

Timeliness (%)

Regulatory Compliance and Licensing Activities progressed within set timeframes 85 89

Commentary on 2010–2011 results

Quantity

Performance was lower than the target by 5.7 per cent due to decreased demand for some licensing services.

Quality

Performance was on target.

Timeliness

Performance was higher than the target by 5.8 per cent due to process enhancements.

Output Performance

Part 1

Victorian Commission for

Gambling Regulation

Overview

History

The Victorian Commission for Gambling Regulation (‘VCGR’) came into operation on 1 July 2004 following the proclamation of the Gambling Regulation Act 2003. As at 30 June 2011, the responsible Minister was the Minister for Gaming, the Honourable Michael O’Brien MP. Principal legislation administered by the Minister for Gaming is listed at Appendix 1A of this report.

The VCGR assumed responsibility for the regulation of gambling from the Victorian Casino and Gaming Authority, the Director of Gaming and Betting and the Director of Casino Surveillance. These statutory entities ceased to exist as at 30 June 2004. As at 30 June 2011, the VCGR is comprised of the

Commissioners indicated at page 16 of this report.

Purpose

The VCGR seeks to provide a fair, responsible and crime free gambling industry which optimises the benefits for all Victorians. To achieve this outcome, the VCGR strives to be at the forefront of effective regulation of the gambling industry, guided by its legislated objectives and functions as set out at sections 10.1.3 and 10.1.4 of the Gambling Regulation Act 2003.

These objectives and functions are set out in detail at pages 13 to 15 of the report.

The regulation of gambling by the VCGR is consistent with the Government’s key principles that underpin its approach to promoting a responsible, sustainable and transparent gambling industry.

Objectives

The objectives of the VCGR are as stated in section 10.1.3 of the

Gambling Regulation Act 2003, namely –

• to ensure that gaming on gaming machines is conducted honestly;

• to ensure that the management of gaming machines and gaming equipment is free

from criminal influence and exploitation;

• to ensure that other forms of gambling permitted under this or any other Act are

conducted honestly and that their management is free from criminal influence and

exploitation;

• to foster the development of sport by promoting equitable and fair information

and revenue sharing between sports betting providers and sports controlling

bodies and to foster the integrity of betting on sports betting events;

• to act as a source of advice to the Minister for Gaming on gambling issues and

ensure that the Government’s policy on gambling is implemented;

• to foster responsible gambling in order to minimise harm caused by problem

gambling and accommodate those who gamble without harming themselves or

others; and

Functions

The functions of the VCGR are as conferred on it by or under the gambling legislation

or any other Act and include –

• regulating the operation and use of gaming machines in the casino and approved

gaming venues;

• monitoring compliance with provisions of the Act relating to ownership of gaming

machine entitlements and operation of the monitoring licence;

• regulating the activities of key operatives in the gaming machine industry, including

those who manufacture, supply, repair or own, or provide venues for and operate,

gaming machines;

• ensuring that the conduct of gaming at approved gaming venues and the casino is

supervised;

• detecting offences committed in, or in relation to, approved gaming venues and the

casino;

• receiving and investigating complaints from gaming patrons concerning the conduct

of gaming in approved gaming venues and the casino;

• regulating the activities of key operatives in the wagering, Club Keno, interactive

gaming, community and charitable gaming, bingo, onboard gaming and public

lottery industries and other functions relating to sports betting;

• registering and regulating bookmakers and bookmakers’ key employees;

• ensuring that Responsible Gambling Codes of Conduct and self-exclusion programs

are, and remain, of a satisfactory standard and are compliant with Ministerial

directions;

• ensuring that all taxes, charges and levies are paid;

• advising the Minister for Gaming on community concerns about the economic and

social impact of gambling on the well-being of the community;

• advising the Minister for Gaming concerning policy in relation to the supervision

and inspection of casinos, and reporting on the casino operator’s suitability and

licence;

• informing itself in the manner it sees fit of current and emerging issues and

practices in Victoria and elsewhere with respect to gambling, including responsible

gambling, probity, game security and integrity, sports betting and facility

development;

• informing and educating the public as to the regulatory practices and

requirements of the VCGR; and

• carrying out all investigations and inquiries that it considers necessary to enable

the Secretary to report to the Minister and the Minister to properly consider

registrations of interest in, and applications for, the Keno, Wagering and Betting

and Monitoring Licences and reporting to the Secretary on the results of those

investigations.

Commission Members

Commissioners

Mr Bruce Thompson, Chairman Ms Judith King, Deputy Chair Ms Gail Owen OAM, Commissioner Mr Ches Baragwanath AO, Commissioner

Mr Max Priestley, Acting Executive Commissioner and Acting CEO (from 26 December 2010)

Sessional Commissioners

His Honour Gordon Lewis AM, Deputy Chair Mr Ken Loughnan AO, Sessional Commissioner Ms Suzanne Jones, Sessional Commissioner

Note:

Commissioners

The membership of the Commission expanded from four to five at the commencement of the year with the appointment of Mr Ches Baragwanath AO, effective from 1 July 2010.

The Chairman, Deputy Chair and Commissioners Baragwanath and Owen are part-time appointees.

The Executive Commissioner and CEO, Mr Peter Cohen, resigned with effect from 25 December 2010 and Mr Max Priestley was appointed as Acting Executive Commissioner and Acting CEO from 26 December 2010.

During the year under review there were no sessional commissioners appointed in support of the activities of the VCGR.

Sessional Commissioners

The Commissioners appointed on a part-time basis to perform the VCGR functions in relation to the licence-awarding phase of the Gambling Licences Review being conducted by the Department of Justice are:

• His Honour Gordon Lewis AM, Deputy Chair and Commissioner; • Mr Ken Loughnan AO, Sessional Commissioner; and

• Ms Suzanne Jones, Sessional Commissioner.

These Commissioners are currently appointed until 31 August 2011 and do not have a role in any day-to-day matters, which continue to be the responsibility of the other Commissioners.

Mr Warren Hodgson, Deputy Chair, and Ms Andrea Hassett, Sessional Commissioner, the persons appointed until 30 July 2010 to perform the function of auctioneer at the gaming machine entitlements auction conducted in May 2010, did not hold any meetings in the reporting period, nor did they have a role in any day-to-day matters of the Commission.

Organisational Structure

Management

Mr Max Priestley, Acting Executive Commissioner and Acting Chief Executive Officer

Mr Max Priestley is the Acting Executive Commissioner of the VCGR. The Executive Commissioner is appointed by the Governor in Council and has specific statutory duties under gambling legislation. As the Acting Executive Commissioner, Max is also the Acting Chief Executive Officer and leads the management team comprised of Directors and a Deputy Director.

Ms Lynne Bertolini, Director Gambling Licences Project

As Director of the Gambling Licences Project, Lynne has responsibility for investigations and inquiries, and for supporting Commissioners appointed to perform the functions of the VCGR in relation to the licence-awarding phase of the Gambling Licences Review being conducted by the Department of Justice. Lynne is also responsible for post-2012 transition planning and the provision of relevant advice and policy development to ensure the VCGR effectively implements all new roles and responsibilities arising from the post-2012 arrangements.

Ms Meredith Brown, Director Corporate Services

As Director of the Corporate Services Branch, Meredith has responsibility for providing strategic and operational advice and delivering business-specific support services including corporate governance, planning and risk management, budget and financial management, human resources and office management. Meredith also has responsibility for control, development, and maintenance of the VCGR information technology infrastructure, database and applications. The Branch facilitates and assists the VCGR in meeting its legislative responsibilities and service delivery objectives.

Ms Sylvia Grobtuch, Director Legal and Legislation

As Director of the Legal and Legislation Branch, Sylvia has responsibility for advising on how the regulation of gambling in the State should be carried out so that it is consistent with the requirements of gambling legislation. The Branch also advises on VCGR contractual obligations under commercial agreements to which it is a party and provides counsel assisting functions at hearings (public and private) and prosecutes criminal matters in the Magistrates’ Court.

Mr Laurie Bailey, Acting Director Compliance and Investigation

As Acting Director of the Compliance and Investigation Branch, Laurie has responsibility for investigations, as well as enforcement of, and compliance with, gambling legislation. Laurie also has responsibility for Inspectors who monitor the operation of the Casino, 24 hours per day, seven days a week. The role also involves the provision of stakeholder and community education.

Mr Phillip Shelton, Director Gambling Operations and Audit

As Director of the Gambling Operations and Audit Branch, Phillip has responsibility for advising whether the conduct of gambling, and the associated computer gambling systems and related operational procedures for the casino, electronic gaming machines, wagering, interactive gambling, Club Keno, approved betting competitions, lotteries and bingo, is consistent with enabling legislation and is delivered responsibly.

Mr Steve Thurston, Deputy Director Licensing Operations and Policy

As Deputy Director of the Licensing Operations and Policy Branch, Steve has responsibility for the licensing, registration and ongoing monitoring of participants in the gambling industry. This includes initial checks and ongoing suitability monitoring and disciplinary action for commercial participants in the casino and gaming industry, individuals employed in those industries, bookmakers and their key employees, trade promotion lotteries, and community and charitable gaming participants and activities.

Organisational Chart

as at 30 June 2011

Mr Bruce Thompson, Chairman Ms Judith King, Deputy Chair

Ms Gail Owen OAM, Commissioner

Mr Ches Baragwanath AO, Commissioner

Secretary

Department of Justice

Ms Penny Armytage

Executive Director

Gaming and Racing

Mr Ross Kennedy

Deputy Director

Licensing Operations

and Policy

Mr Steve Thurston

• Corporate and

individual gaming

licences and

approvals

• Trade promotion,

raffle, bingo and

lucky envelope

permits

• approved industry

participants and

permit activities

monitoring

• stakeholder and

community education

Director

Gambling Operations

and Audit

Mr Phillip Shelton

• Gambling Product

approvals and monitoring

• Operational, Revenue and

Systems Audits

• Premises Approvals

Gaming Machine area

modifications

• Social and Economic

Impact Assessments

• Responsible Gaming

Training Courses

• Technical Compliance

• Lottery Supervision

Acting Director

Compliance and

Investigation

Mr Laurie Bailey

• Investigation and

Prosecution

• Casino Regulation

• Venue Audit

• Stakeholder

and community

education

Minister

The Hon Michael O’Brien MP

Minister for Gaming

Office of the Executive Commissioner

Ms Tracey Forrester, Manager

Commissioners

Mr Bruce Thompson, Chairman

Ms Judith King, Deputy Chair

Ms Gail Owen OAM, Commissioner

Mr Ches Baragwanath AO, Commissioner

Mr Max Priestley, Acting Executive Commissioner

and Acting Chief Executive Officer

Director

Corporate Services

Ms Meredith Brown

• Corporate

Governance,

Planning and Risk

Management

• Human Resources

• Finance

• Office Management

• Information

Technology

• Information

Management

Director

Legal and

Legislation

Ms Sylvia Grobtuch

• Legal Advice

• Legislation

• Freedom of

Information

• Privacy

• Commission

Hearings

• Casino Commercial

Arrangements

Director

Gambling Licences

Project

Ms Lynne Bertolini

• Post-2012

gambling licences

• Post-2012

Transition Planning

and Policy

Other Commissioners

His Honour Gordon Lewis AM,

Deputy Chair

Mr Ken Loughnan AO,

Sessional Commissioner

Ms Suzanne Jones,

Sessional Commissioner

Victorian Commission for Gambling Regulation

Corporate Governance

Audit Committee Membership and Role

The Audit Committee is comprised of Mr David Boymal AM, Chairman, Ms Judith King, Deputy Chair of the VCGR, and Mr David Beatty.

The Audit Committee undertakes the oversight of:

• financial performance and the financial reporting process, including the annual financial statements;

• the scope of work, performance and independence of internal and external audit;

• the operation and implementation of the risk management framework;

• matters of accountability and internal control affecting the operations of the VCGR;

• the effectiveness of management information systems and other systems of internal control;

• the acceptability of, and correct accounting treatment for and disclosure of, significant transactions which are not part of the normal course of VCGR business and sign-off of accounting policies; and

• the VCGR process for monitoring compliance with laws and regulations and its own Code of Conduct and Code of Financial Practice.

During 2010–2011 the Audit Committee met formally on four occasions. Attendance details are contained in Appendix 6 of this report.

Annual Report

The VCGR Annual Report for 2009–2010 was tabled in the Parliament by the due date.

Part 2

Report of Operations 2010–2011

by Intended Outcomes

Intended Outcome 1

Goal 1.1:

The system of gambling regulation is effective

and implements the Government’s policy

Gambling Regulation

Legislation

Information relevant to legislation and changes during the year is contained in Appendix 1A and Appendix 1B of this report. The following legislative provisions came into operation during the year:

Gambling Regulation Amendment (Licensing) Act 2010

(56/2010)

The Gambling Regulation Amendment (Licensing) Act 2010 was assented to on 14 September 2010.

The main purpose of this Act is:

• to amend the Gambling Regulation Act 2003, and the

Gambling Regulation Further Amendment Act 2009 to make

further provisions in relation to regulatory arrangements for – – gaming machine entitlements and the monitoring,

wagering and betting and keno licences; and – the regulation of associates of gambling industry

participants;

• to amend the Casino Control Act 1991 to make further provision in relation to disciplinary action against the casino operator for offences involving minors; and

• to amend the Confiscation Act 1997 to remove a redundant reference to minor gaming permits.

Justice Legislation Further Amendment Act 2010 (64/2010)

The Justice Legislation Further Amendment Act 2010 was assented to on 28 September 2010.

As it relates to the Gambling Regulation Act 2003, the main purpose of this Act was to amend the Gambling Regulation Act 2003 and the Gambling Regulation Further Amendment Act 2009 to make further provisions in relation to:

• the regulatory arrangements for monitoring and linked jackpots; and

• the payment of taxes in respect of wagering.

Subordinate Legislation

Information relevant to subordinate legislation is contained in Appendix 1C of this report.

The following subordinate legislation came into operation this year:

Gambling Regulation (Pre-commitment) Interim Regulations 2010 (SR 129/2010)

These Regulations came into operation on 1 December 2010. The Regulations prescribe, for the purposes of section 3.4.31A of the Gambling Regulation Act 2003, the gaming machines that are required to have a pre-commitment mechanism on and after 1 December 2010, the pre-commitment mechanism that is to apply to those gaming machines, and other matters in relation to pre-commitment.

Gambling Activities

The conduct of gambling properly protects players and

other stakeholders

Gambling Regulation (Premium Customer) Regulations 2011 (SR 3/2011)

These Regulations came into operation on 2 February 2011. The Regulations prescribe the monetary amounts for the purposes of identifying premium totalisator wagering customers and the wagering tax payable in respect of the relevant

commissions deducted from the money invested by those customers.

Appeals Relating to Commission Decisions

During 2010–2011 the Victorian Civil and Administrative Tribunal (‘VCAT’) affirmed two Commission decisions, Bright Newbay Pty Ltd v Bayside City Council in relation to the New Bay Hotel and Drayton Manor Pty Ltd v Greater Bendigo City Council in relation to the Foundry Hotel. Both matters related to approval of premises for gaming and they came before the Tribunal for merits review.

Application has been made for review of one further Commission decision involving Club Italia-Sporting Club Inc which is to come before the Tribunal in November 2011.

In April 2011, following an appeal hearing, VCAT decided to set aside the Commission’s decision concerning an application by George Adams Pty Ltd for approval of premises at Laurimar Hotel, in the City of Whittlesea, with 40 gaming machines and refuse the application. George Adams Pty Ltd subsequently made application to the Supreme Court for leave to appeal the Tribunal’s decision. The leave application, which was listed for hearing on 17 June 2011, was refused on 30 June 2011.

Gambling Policy and Legislation Advice

The formulation of Government policy in relation to gambling regulation in Victoria is the responsibility of the Office of Gaming and Racing within the Department of Justice portfolio. The VCGR is responsible for the implementation and ongoing monitoring of industry compliance with the Government’s policy directives. The objectives of the VCGR under the Gambling Regulation

Act 2003 require, amongst other things, that the VCGR act as a

source of advice to the Minister for Gaming on gambling issues. The VCGR has amassed a wide range of statistical data in respect of authorised gambling activities conducted in Victoria. This information provides a valuable resource for the State Government when considering policy initiatives in relation to gambling. During 2010–2011, the VCGR responded to a number of requests for advice and statistical data from the Minister and his office, the Department of Justice and the Office of Gaming and Racing.

Reduced Regulatory Burden

Art Union, Raffles and Trade Promotion Lottery Working Party

The VCGR participates in the Art Union, Raffles and Trade Promotion Lottery Working Party, which was established by the Australasian Casino and Gaming Regulators’ CEOs in 2007. The Working Party’s mission is to review regulatory issues arising from art unions, raffles and trade promotion lotteries conducted nationally or across multiple jurisdictions. Primary objectives of the group include achieving harmonisation in regulatory requirements between the States and Territories and identifying and addressing contemporary regulatory concerns.

In late 2008, Victoria assumed the role of the Chair of the Working Party, which has participating representatives from each Australian State and Territory except Tasmania (which, along with New Zealand, is an observer, monitoring minutes and other outcomes).

During the year under review the Working Party met once, in February 2011, with representatives sharing information about arrangements for activities within their jurisdictions. The Working Party has continued to identify similarities and differences between jurisdictions and enhanced knowledge and cooperation between regulatory agencies.

A number of priority projects are being progressed by the Working Party, including the development of a national on-line application form and national guidelines for trade promotion lotteries.

Further information regarding VCGR representation on national working parties is contained in Appendix 22 of this report.

On-line Lodgement of Trade Promotion Lottery Permit Applications

Since November 2009, businesses have been able to apply for a trade promotion lottery permit and pay the associated fee on-line. This option is designed to simplify the process of submitting permit applications and is particularly useful for the significant number of businesses that regularly conduct trade promotion lotteries within Victoria.

As of 30 June 2011, 244 businesses have registered to use the VCGR on-line permit application facility. Together, these organisations have submitted 1,390 on-line applications. Approximately 47 per cent of all trade promotion lottery permit applications received by the VCGR in 2010–2011 were lodged via the on-line facility.

Roll-out of ‘smart forms’

Gaming industry employee licence application forms became available as on-line smart forms in December 2009, as an alternative to filling out a paper application form.

Since that time, a further 10 VCGR application forms have been made available as smart forms. The remaining application forms will progressively be made available on-line in 2011–2012.

Intended Outcome 1

continued

The smart forms technology enables information, errors or inconsistencies to be highlighted and requests amendments before the application form can be printed prior to signing and lodgement. The introduction of smart forms has helped to reduce the number of incomplete application forms submitted to the VCGR, in turn reducing delays in processing.

Streamlined Regulation

Introduction of Electronic finger and palm printing

In 2010 new technology was introduced allowing licence applicants to have finger and palm prints recorded electronically. Taking prints in this manner is more efficient, ensures a more accurate result, and is faster and less intrusive than the ink method.

Additional provider of personal credit reports

Many VCGR applicants are required to lodge a personal credit report with their application form. It was determined in January 2011 that the VCGR would accept such reports from an additional provider on the basis that this provider was able to issue an equivalent report. Accordingly, VCGR licence applicants are now able to choose a service provider who best meets their personal requirements.

Commercial Agreements

The Casino Agreement and Casino Licence can be viewed on the VCGR website at www.vcgr.vic.gov.au.

Goal 1.2:

Players have confidence in the integrity of

gambling products

Product Approvals and Monitoring

Equipment

Approvals were granted for:

• 12 types of electronic gaming machines and 181 gaming machine games for the Tabcorp, Tatts and Crown gaming networks;

• 172 changes and modifications to existing electronic gaming machine types, games and systems in the Tabcorp, Tatts and Crown gaming networks;

• 89 modifications to the Tabcorp Wagering, Trackside and Sportsbet systems; and

• 26 modifications to Tatts lottery products and systems including the Internet lottery system.

There were no applications received for Club Keno and Intralot.

National Standard for Electronic Gaming Machines

and the Commission’s Standards

The Gambling Regulation Act 2003 gives the VCGR the discretion to take into consideration whether a gaming machine type or game complies with any Commission standards in force. This legislation also empowers the VCGR, with the approval of the Minister for Gaming, to make and amend the Commission’s standards for gaming machine types and games.

The Australian/New Zealand National Standard for Gaming Machines Version 10 has been developed together with the Victorian Appendix Version 10 and became effective as Version 10 of the Commission’s standards from 27 September 2009. The National Standard has been developed by the National Standard Working Party consisting of participants from gaming regulators in Australia and New Zealand and in consultation with gaming manufacturers and gaming operators. The purpose of the National Standard is to create a common standard for gaming machines throughout Australia and New Zealand. Victoria continues to participate actively in the development of the National Standard.

In addition to various technical requirements that have been developed to ensure that gaming machine types and games are secure, auditable and fair to players, the Victorian Appendix includes a chapter on responsible gambling requirements that are a pre-requisite for the approval of any gaming machine type or game.

Installation of Gambling Equipment and Ongoing

Compliance

Inspectors undertook gaming industry professional development to keep abreast of technical changes in the industry. Four hundred and thirty-nine technical compliance inspections were undertaken throughout the year to ensure gaming equipment was operating in the manner in which it was approved to function.

Commission’s Rules

Under the provisions of section 3.5.23 of the Gambling

Regulation Act 2003, the VCGR may make rules for, or with

respect to, gaming machines in gaming venues and at the Casino. These rules are known as the Commission’s Rules, with separate rules applying to gaming venues and the Casino. There were no changes to the Commission’s Rules during the year.

The Commission’s Rules in their current form are at Appendix 4 of this report.

Rules Considered by the Commission

Lottery Rules

The VCGR received two submissions from Tattersall’s Sweeps Pty Ltd pertaining to Lottery Rules. The approved changes consolidated previously separate Rules for various lottery products into one document and provided for the introduction of a new lottery operating system. These changes also introduced an additional prize division for Tattslotto, bringing the total prize divisions to six.

Two submissions were received from Intralot Australia Pty Ltd for Rules for Lucky 3, involving a reference to a limit on ticket sales already approved by the VCGR as part of the game specifications.

Club Keno Rules

There were no submissions for amendments to the rules relating to Club Keno.

Betting Rules (Pari-mutuel)

There were two submissions for amendments to the Rules relating to Betting Transactions in Victoria (Pari-mutuel betting) involving the inclusion of net pool guarantees for Trifecta, First 4, Quaddie and Big6 and the introduction of FootyTAB Quad and Quarter Quad options.

Betting Rules (Fixed Odds)

There was one submission for amendment to the Rules Relating to Betting Transactions in Victoria (Fixed-Odds) involving the inclusion of the Greyhound Box and Driver Challenge bet types.

Rules for Casino games

Under section 60 of the Casino Control Act 1991, the VCGR approved 45 amendments to the rules of the games that may be played in the Casino.

Significant amendments include the introduction of continuous spins for Big Wheel, Sic Bo, Roulette and dummy coups for Baccarat. Additionally, substantive changes were made to include generic tournament terms and conditions to allow the operator to conduct minor tournaments without seeking further approval and thus reducing the regulatory burden.

Bingo Rules

On 9 November 2010 the Commission made amendments to the Rules for Bingo. The amendments introduce new types of bingo and allow for more versions of the game to be played to provide bingo centre operators and community and charitable organisations with greater flexibility.

In March 2010, the Commission approved amendments to the Rules for Bingo. These amendments provided for the provision of paperless/electronic tickets, allowing numbers to be called by electronic means, the removal of the requirement to call back winning numbers, and permitting additional versions of Bingo to be played. The Commission conducted a review of the Rules for Bingo and found that:

• there had been no adverse reactions or misunderstanding among staff or players to the new Rules;

• the amendments had positively affected patronage;

• the introduction of paperless/electronic tickets was seen as a way to attract new players to the game and ensure Bingo was successful in the future, and

• the new rules provide for greater choice and flexibility for clubs in conducting Bingo.

Possession of Gaming Machines

The VCGR issued 50 authorisations under sections 3.2.2 and 3.5.1 of the Gambling Regulation Act 2003 to permit possession of electronic gaming machines or restricted components. The authorisations included inoperative electronic gaming machines on cruise ships whilst in port in Victorian waters and electronic gaming machines in the possession of accredited testing facilities, held in bulk storage facilities by collectors of antique gaming machines, and used for research into problem gambling and display at gaming industry trade exhibitions.

Intended Outcome 1

continued

General Approvals for the Sale or Disposal of Gaming

Equipment/Gaming Machines

Pursuant to the Gambling Regulation Act 2003 and the Casino

Control Act 1991, the VCGR has issued general approvals to

Tabcorp, Tatts and Crown for the sale or disposal of gaming equipment including electronic gaming machines.

The general approvals were updated during the year and now allow the gaming operators to sell gaming machines to a person issued with an authority under the applicable legislation where the gaming machine is for use outside Victoria.

In 2010–2011 a total of 1,668 electronic gaming machines were disposed of or sold.

Sports Betting Approvals

Sports Controlling Bodies and New Betting Events

Provisions within the Gambling Regulation Act 2003 allow for the VCGR to approve sports controlling bodies and approved betting events either at fixed odds or pari-mutuel.

These provisions have been designed to strengthen public confidence in the integrity of sporting events and the betting that takes place on those events. In addition, the legislation enables sporting bodies to receive their fair share of revenue from the betting that takes place on their sport.

During 2010–2011 the VCGR approved the following fixed odds betting events:

• Professional Darts; • UK General Elections; and • Professional Snooker.

Review of Sports Controlling Bodies’ Integrity

Procedures

Section 4.5.15 of the Gambling Regulation Act 2003 empowers the Commission to approve an organisation as a sports controlling body and section 4.5.17 enables the Commission to vary or revoke the approval for any reasonable cause.

The Commission continued to monitor sports betting and contacted all approved sports controlling bodies to remind them of their responsibilities for maintaining integrity in their respective sports.

Trade Promotion Lotteries

Trade Promotion Lottery Permits

A number of significant legislative changes were introduced during the 2009–2010 year that impacted upon the conduct of trade promotion lotteries and other gambling-related promotional activities. These legislative changes have required a regulatory response by the VCGR in the year under review.

The legislative changes included prohibitions on:

• gaming operators conducting trade promotion lotteries in relation to their gaming business, and

• trade promotion lotteries, with entry preconditions, requiring entrants to participate in gaming machine play or agree to receive advertising for gaming machines.

Additionally, an advertisement for a trade promotion lottery must include a statement of gaming machine play restrictions in circumstances where the lottery is conducted by a venue operator or casino operator and an entry expense is incurred to enter the promotion.

On 17 August 2010, the VCGR issued a new Direction for the display of gaming machine play restrictions in an advertisement for a trade promotion lottery, which specifies how relevant licensees should meet their new obligations in relation to trade promotion advertising.

To assist licensees in complying with the Direction, the VCGR issued the Direction to venue operators and the casino operator, and published ‘Frequently Asked Questions’ on the VCGR website.

Goal 1.3:

The risk and impact of gambling regulatory

breaches is minimised

Premises Approval and Monitoring

Modification of Gaming Machine Areas

Under section 3.3.16 of the Gambling Regulation Act 2003 the VCGR approved 128 modifications to the gaming machine area in gaming venues during 2010–2011.

Casino Layout

Thirty-eight applications were approved by the VCGR under section 59 of the Casino Control Act 1991 for re-configuration of gaming tables and electronic gaming machines at the Casino.

Specified Areas

Casino

Restrictions on large denomination note acceptors, autoplay facilities, spin rates, the payment of winnings by cash and bet limits apply to all electronic gaming machines located in the Casino.

The restrictions do not apply to a game played on a gaming machine located in an area specified by notice of the VCGR published in the Government Gazette if the casino operator complies with certain responsible gambling provisions specified in the notice. The total number of gaming machines available to a casino operator complying with responsible gambling provisions specified in such a notice is 1,000.

As a notice of this type has been issued in relation to specified areas within the Casino, the VCGR monitored operations at the Casino to ensure that, at all times, the maximum number of gaming machines in operation remained within the permitted limit.

A further requirement for the removal of the $10 bet limit restriction in a specified area of the Casino is that the gaming machines can only be played by means of a card, Personal Identification Number (‘PIN’) or similar technology that requires the player to nominate limits on time and net loss before play can commence.

During 2010–2011 the VCGR approved four submissions for changes to the specified area at the Casino.

Gaming venues

Similar specified area provisions applied in gaming venues. However these provisions were repealed by the Gambling

Regulation Amendment (Licensing) Act 2009 with effect from

1 January 2010.

Casino Boundary

During 2010–2011, Crown applied four times to redefine the boundary of the Casino gaming area pursuant to section 17 of the Casino Control Act 1991.

On 3 August 2010, the Commission approved a redefinition of the Casino boundary for the purpose of upgrading premium player facilities. The redefinition involved modifying the Teak Room Casino boundary to reflect architectural changes: adding a new gaming salon on Level 29; closing the premium gaming salons on Level 36; and introducing a new purpose-built premium gaming facility on Level 39. The net effect of the changes was an increase to the Casino boundary of approximately 990 square metres.

On 26 October 2010, the Commission approved a redefinition of the Casino boundary as a result of the Mahogany Room expansion project, and the 2009 Casino Licence amendment to increase the number of gaming and poker tables from 350 to 500 (400 gaming tables and 100 poker tables). The redefinition included modifying the Mahogany Room Casino boundary to reflect architectural changes, adding a new gaming area on Level Three of the Casino, relocating the entry point to the Sports Casino, extending the main floor Casino boundary to include the Riverside Café and two former retail tenancies and reconfiguring the eastern entry point to the Casino. The requested changes increased the Casino boundary area by approximately 1,034 square metres.

On 22 February 2011, the Commission approved a temporary redefinition of the Casino boundary on Level 29 of the Crown Towers Hotel. Crown closed the Silks restaurant temporarily as a result of the Mahogany Room refurbishment project and relocated it to the lounge and dining area on Level 29. The temporary redefinition removed an area of approximately 79 square metres from within the Casino boundary which enabled the restaurant to operate in a smoke-free zone. This temporary redefinition lapsed on 1 June 2011.

On 19 April 2011, the Commission approved a redefinition of the Casino boundary for the purpose of changing the structural architecture of the Food Court entry area to the Casino. The redefinition involved installing new escalators to the first floor and a lift to replace the existing first floor escalators. Also, the patron control zone in the Las Vegas Room was revised to extend the Casino boundary. The net effect of the redefinition resulted in an increase to the Casino boundary area of approximately 57 square metres.

Each application from Crown complied with all statutory requirements, including payment of the fee prescribed by the Casino Control (Boundary Redefinition Fee) Regulations 2005. The areas approved were within the location for which the Casino Licence was granted, that is, the ‘Casino Site’, as defined in the Casino Control Act 1991.

Intended Outcome 1

continued

Venue Audits

Compliance Inspections and Operational Reviews

Compliance inspections and operational reviews include unannounced surveillance, formal inspections and financial audits of gaming venues, racetracks, bingo centres and other minor gaming activities.

They are performed to assess whether the activities being conducted comply with the requirements of the relevant legislation, regulations, directions and Commission Rules. Auditing and verification of player return and financial data occurred for each electronic gaming machine and gaming venue connected to the gaming operator’s on-line real-time monitoring and control system.

The type and number of compliance inspections and audits conducted in 2010–2011 are shown in the following table.

Activity Number

Gaming venue inspections 1,685 Gaming venue financial audits 77 Gaming venue responsible gambling codes of

conduct audits 433

Gaming venue self-exclusion program audits 429

Bingo inspections 135

Bingo Centre – responsible gambling code of

conduct audits 14

Bookmakers – responsible gambling code of

conduct audits 20

Intralot lottery outlet audits 189 Intralot lottery outlets – responsible gambling

code of conduct audits 143 Tatts lottery outlet audits 210 Tatts lottery outlets – responsible gambling

code of conduct audits 158 Lucky envelope outlet inspections 739 Racetrack inspections 89 Raffle draw inspections 80 Trade promotion lottery draw inspections 104

Total 4,505

Patron Complaints

Patron complaints at gaming venues

Fifty-eight patron complaints were received and investigated in respect of the conduct of gaming and Club Keno at gaming venues. These complaints included allegations of machine malfunctions, misleading pay tables, varying returns to players, breaches of Responsible Gambling Codes of Conduct and Self-Exclusion Programs, barring of players, syndicate play, unlicensed staff and minors in gaming areas.

Following investigation of those complaints, several breaches of legislation, regulations, directions or Commission Rules were detected. Nineteen complaints remained under investigation as at 30 June 2011.

Patron complaints at the Casino

Patrons lodged 47 complaints relating to the conduct of gaming in the Casino. Investigations by Inspectors found that, in respect of 43 complaints, gaming was conducted in accordance with the rules and procedures of the game as approved by the VCGR. Two complaints were resolved in favour of the patron and two further complaints are under investigation as at 30 June 2011.

Casino Supervision

Casino Surveillance

Inspectors maintained a 24 hour per day, seven days per week monitoring presence at the Casino. In 2010–2011 the Casino at all times operated within the limits applying for the maximum number of gaming tables and electronic gaming machines permitted. The casino operator has 81 different types of table games, including variations, approved for play and 812 different games approved for play on electronic gaming machines.

Internal Control Manual

Twenty-six submissions from Crown to amend the Crown Internal Control Manual and Internal Control Statements and Standard Operating Procedures were approved by the VCGR under section 121 of the Casino Control Act 1991. These submissions included further proposals to convert sections of the Internal Control Manual to the new Internal Control Statement and Standard Operating Procedures format as part of the ongoing Crown project to streamline the Internal Control Manual, as well as to strengthen integrity and reflect changed operational practices.

Lotteries Supervision

Section 5.2.6 of the Gambling Regulation Act 2003 requires that a public lottery must not be determined by draw unless a person nominated by the VCGR supervises the draw.

Government Supervisors nominated by the VCGR supervised all lottery draws as follows:

Draw Type Number of Draws Supervised

Lucky Keno 70 365

Lucky Lines 365

Lucky Bingo Star 52

Lucky 3 365

Lucky 5 Red or Black 365

Super 66 52

Tattslotto 52

Oz Lotto 52

Powerball 53

Monday/Wednesday Lotto *730

* Draws not conducted in Victoria but supervised by persons nominated by the VCGR

Education

Improved Provision of Licensing and Registration

Information

Better guidance for licence applicants

The VCGR updated information available to licence applicants in application forms and frequently asked questions (‘FAQs’) published on the VCGR website, in addition to responding to enquiries from individual applicants.

New FAQs were published on advertising requirements and restrictions for trade promotion lotteries and customer loyalty schemes. Existing FAQs reviewed and updated included those relating to bookmakers, bookmakers’ key employees, employee licensing and venue operators.

The VCGR responded to numerous licensing and other gaming-related queries received in the form of e-mail, phone calls and general correspondence. Topics included poker, Community Benefit Statements, interactive gaming, footy tipping and general licensing enquiries.

Update of the guide for nominees of venue operators

The booklet Being the Nominee of a Venue Operator: What

you need to know was developed to assist nominees in

understanding their legal obligations regarding the operations of a gaming venue. This booklet was updated in January 2011 to reflect legislative changes and other related information. A copy of the updated guide is available on the VCGR website.

Update of Bingo Booklet

The Bingo Booklet was developed to assist community and charitable organisations and their nominees to understand their legal obligations with regard to the running of bingo sessions. This Booklet was updated in January 2011 to reflect legislative changes and other related information to nominees with respect to the conduct of bingo. A copy of the updated Booklet is published on the VCGR website.

Illegal Gambling

Betbox Internet Betting Terminal

Under the provisions of the Gambling Regulation Act 2003, VCGR inspectors seized wagering terminals known as the ‘Betbox’, which were installed in the North Suburban Club in Moonee Ponds and the Eureka Stockade Hotel in Ballarat. Betbox terminals are owned by Sportsbet Pty Ltd (‘Sportsbet’), an entity licensed in the Northern Territory to provide

bookmaking services. These terminals, which only allow access to the Sportsbet website, enable patrons who have an account with Sportsbet to place bets on racing and sporting events. It is the view of the VCGR that these terminals allowed unauthorised betting to take place.

Sportsbet and Eureka Hotel Holdings Pty Ltd subsequently filed an application in the Federal Court against the VCGR and the State of Victoria seeking orders to the effect that sections 2.5.2 and 2.6.1 of the Gambling Regulation Act 2003 are invalid to the extent that they would apply to the installation and use of the ‘Betbox’ in Victoria by Sportsbet and the Eureka Stockade Hotel. Also sought are a declaration that the seizure was unlawful and an order that the machines be returned. On 3 March 2011 Tabcorp Holdings Limited was added as the third respondent in this matter.

The application was heard in the week commencing 11 April 2011 and, as at 30 June 2011, the decision was reserved.

VenueNet Kiosk

In August 2009 an alleged betting kiosk was seized by gaming inspectors from the Rising Sun Hotel, South Melbourne, pursuant to a court-issued warrant. The VCGR alleged that the kiosk allowed patrons with accounts to place bets on racing and sports events offered by Sportsbet, a bookmaker licensed in the Northern Territory.

In June 2010 the VCGR laid a number of charges under the

Gambling Regulation Act 2003 against VenueNet Pty Ltd, the

owner of the kiosk, and Rising Sun Hotel South Melbourne Pty Ltd in relation to this kiosk.

VenueNet is charged with possessing an unauthorised instrument of betting at the hotel on 16 June and 31 July 2010. It is also charged with helping the Rising Sun Hotel run a betting house with an unauthorized kiosk on these dates. Further charges cover allegations of helping the hotel commit an offence on these dates by allowing unlawful betting.

Rising Sun Hotel South Melbourne Pty Ltd, the operator of the Rising Sun Hotel, faces charges of allowing betting on an unauthorised kiosk on 16 June and 31 July 2010 and possessing the kiosk on those dates.

The matters were set down for hearing at the Melbourne Magistrates’ Court commencing 6 December 2010. However these proceedings have been adjourned pending determination of the Federal Court proceedings initiated by Sportsbet Pty Ltd and Eureka Hotel Holdings Pty Ltd who are seeking orders that the sections of the Gambling Regulation Act 2003 under which VenueNet and the Rising Sun Hotel have been charged are invalid to the extent that they would apply to the installation and use in Victoria of these computer terminals.

Publishing of Race Fields and Unauthorised

Betting

To ensure compliance with the relevant legislation, the VCGR continues to work with Racing Victoria Limited, Harness Racing Victoria and Greyhound Racing Victoria to maintain current information about who is authorised to conduct betting and publish race fields.

Intended Outcome 1

continued

Intended Outcome 2

Goal 2.1:

Commercial participants and their employees

are suitable gambling industry participants

Commercial Licensing

Shareholder Monitoring

Crown Melbourne Limited

Approval from the VCGR is necessary for any person to be entitled to more than five per cent of the total number of shares on issue in Crown Melbourne Limited.

During 2010–2011 there was no change in shareholding in Crown Melbourne Limited requiring VCGR approval.

Tabcorp Holdings Limited

Under section 4.3.20 of the Gambling Regulation Act 2003, a person has a prohibited shareholding interest in Tabcorp Holdings Limited if that person is entitled to voting shares of more than 10 per cent of the total on issue. If a prohibited shareholding is detected, the Minister for Gaming may require that person to dispose of the relevant number of shares.

No person held a prohibited shareholding during the reporting period.

Tatts Group Limited

Under section 3.4.37C of the Gambling Regulation Act 2003, a person has a prohibited shareholding interest in Tatts Group Limited if that person is entitled to voting shares of more than 10 per cent of the total on issue. If a prohibited shareholding is detected, the Minister for Gaming may require that person to dispose of the relevant number of shares.

No person held a prohibited shareholding during the reporting period.

Change to applicable legislation

It should be noted that, in relation to the ongoing shareholder monitoring of Tabcorp Holdings Limited and Tatts Group Limited, sections 4.3.20 and 3.4.37C of the Gambling

Regulation Act 2003 were removed by the Gambling Regulation Amendment (Licensing) Act 2010 with effect from

1 December 2010.

For the purposes of the ongoing shareholder monitoring of Tabcorp Holdings Limited and Tatts Group Limited, the consolidated provisions for the investigation and regulation of associates, provided for in Part 4A of Chapter 10 of the

Gambling Regulation Act 2003, also apply to these licensees.

Gambling Participants

Gambling is conducted honestly, is free from criminal influence

and commercial licensees deliver on their obligations