The New Clubs & Gaming Laws: what you need to know

13 March 2018


Last week, NSW Racing Minister Paul Toole announced a raft of proposed changes to clubs and gaming legislation.  The bills are before Parliament waiting on further debate.  Below is a snapshot of the most important changes that will take effect if the bills are passed:

1. Is it harder to increase the gaming machine threshold? ILGA will now use smaller geographical spaces known as Statistical Areas Level 2 (SA2) rather than Local Government Areas for the LIA scheme.  You will not be able to increase the club’s gaming machine threshold if:

  • your club is located in the Fairfield LGA;
  • your club is located in a SA2 designated by ILGA as a restricted increase area; or
  • the total of the gaming machine thresholds in the LGA will be increased.

Liquor & Gaming’s fact sheet suggests that all Band 3 SA2s will be restricted increase areas – this is not specifically stated in the legislation but is something to look out for.

The new scheme has retrospective aspects in that it applies to threshold increase applications from 6 March, 2018 – the day the bill was introduced.

2. How does the gaming machine leasing scheme work?  Clubs with less than 30 entitlements can lease their machines to other clubs with ILGA’s approval.  It is proposed that clubs will sign up to a standard form contract, and that the lessee club will pay a levy to the Responsible Gambling Fund equal to 5% of all amounts it owes to the lessor club under the lease.

3. Is it easier to amalgamate?  Clubs still have to call for EOIs from other clubs within 50km.  However, the proposed new Regulation will expressly permit clubs to approach other clubs at any time about the possibility of amalgamating.  Some of the downsides are that clubs may now also have to give notice of each EOI and unsolicited “merger offer” received within the prior 12 months:

  • before every annual meeting; and
  • before it enters into any MOU.

These new requirements depart from well-established company law which provide that members do not need to be presented with information about all different proposals, but only information about the proposal recommended by the board to decide whether to approve it.

4. What counts towards the 10-amalgamation limit?  Under the proposed legislation, a club’s limit of 10 amalgamations won’t include a de-amalgamated club or premises which have since ceased to trade (even if those circumstances occurred before the new law is enacted).  This is a positive step and something which Thomson Geer recommended in our submissions to the NSW Government last year.

5. How will accountability be regulated?  Clubs will now be governed by the Registered Clubs Accountability Code.  A lot of the accountability provisions have been taken out of the Act and put into this code (with some changes) – e.g. disclosures by directors and employees; club management contracts etc.  Complaints under this Accountability Code will be referred to ClubsNSW if it relates to a club that is a ClubsNSW member.  Otherwise, it will be handled by Liquor & Gaming NSW.

6. Are secretaries and directors now personally liable?  A complaint can now also be brought against the secretary or directors (and not just the club) and lead to disciplinary action against them.  The new range of penalties against such persons are extensive: they include monetary penalties, removing them from office and banning them from ever being a secretary or director of a club.

We’ll be watching the parliamentary debate on the bills very closely – so watch this space!  There are some positive changes but also increased complexity around some of the statutory processes.  Lots of questions arise such as:

  • What kind of person qualifies to be an independent and qualified adviser who must review an employment contract with a top executive of a club?
  • What kind of notice of other amalgamation proposals must clubs give their members?
  • What natural justice process will apply to managers and directors accused of breaching the Accountability Code?
  • Who will be the winners and the losers from the new LIA scheme? How will this effect sale of gaming machine entitlements currently in process?

If you would like to know more about the proposed new legislation, please contact a member of our team who can help you with your questions.

For more information please contact:

Brett Boon | Partner | +61 2 8248 5832 |
Sherif Mouakkassa
 | Special Counsel | +61 2 8248 5837 | 
Phillip Wade | Special Counsel | +61 2 8248 5822 |
Vivienne Young | Senior Associate | +61 2 8248 5838 | 
Arj Puveendran | Senior Associate | +61 2 8248 3494 |