As seen in the April May 2021 Edition of Clubs Queensland's Club Insight magazine.
Clubs have become very good at ensuring their gaming rooms can remain operational with minimal disruption during renovation works. But there are times when a gaming licensee may need to close down its gaming room for a lengthy period of time, or permanently. There could be many reasons for this, including where the club is being demolished and rebuilt, where the club is being relocated, or where a club ceases to offer gaming.
We recently assisted a client that is closing its entire premises for two years whilst it is redeveloped, and one of the issues that came up was dealing with the accrued balance of the gaming jackpot.
To close a gaming room, the necessary applications need to be made to the OLGR for suspension of the liquor licence and gaming machine licence, storage of the gaming machines and approval for the alterations to the premises including the new gaming room. The Licensed Monitoring Operator (LMO) will then assist the de-commissioning and relocation of the gaming machines.
Jackpot monies represent contributions from gaming players to the jackpot pool and they need to be returned to customers as winnings. These monies are not the licensee's funds and as a result there are strict requirements regarding how they can be dealt with. Whilst a club may assume it could hold onto these monies during a major redevelopment – perhaps in a trust account or escrow arrangement – and then re-apply them to the jackpot once the club is ready to commence trade again, this is not actually permitted.
Once the jackpot system is de-commissioned, the LMO will need to calculate the exact amount of the accrued jackpot, and the gaming licensee is then responsible for dealing with these funds. The OLGR's preference is that the monies are contributed to another jackpot system in the premises, which is not an option for most clubs in these circumstances.
An alternative option is for the club to return the funds to its customers via gaming related promotional activities within the venue. OLGR approval is required for the proposed promotion and it must comply with the requirements for Category 4 Promotional Games (which do not normally require any approval).
Promotional games must have free entry and the winners are determined entirely or partly by chance. Players can be required to buy goods or services to receive their free entry as long as the goods and services are sold at their usual market value price. The licensee would need to provide the OLGR with details regarding how the promotion will be undertaken, the prizes available, how people can enter, how the draw is conducted and the timeframe for the promotion.
Otherwise, in exceptional circumstances, the OLGR may approve the jackpot funds being donated to charity. Failing any of the above options, the monies can be forfeited to the OLGR and paid into the consolidated funds.
The bottom line is that the preferred solution is for the monies to be returned to players and therefore, if you don't have another operating jackpot system, then a promotional activity should be conducted prior to ceasing trade. This may mean that the jackpot system needs to be de-commissioned prior to the premises ceasing trade, to calculate the exact amount to be distributed.
Licensed clubs are used to dealing with regulatory and compliance requirements as part of their operations, and ceasing to conduct gaming for a lengthy period or de-commissioning a jackpot system is no different. It is important for clubs to properly plan such major works, but the ability to run a promotion and give cash prizes to patrons may be an opportunity that some clubs can take advantage of as part of a major redevelopment or relocation.
If you have any questions on this topic, or any other issues relating to a temporary or permanent club closure, please do not hesitate to call me on 07 3224 0353.
Article written by Matthew Bradford (Partner).
"The content of this publication is for reference purposes only. It is current at the date of publication. This content does not constitute legal advice and should not be relied upon as such. Legal advice about your specific circumstances should always be obtained before taking any action based on this publication."