01_QHA_July_Online

LEGAL MATTERS with Curt Schatz
OPERATING AUTHORITIES: A BALANCING ACT
After more than 40 years advising the hospitality
industry, the topic of electronic gaming machine (EGM)
operating authorities, how many exist, how tightly
they are held, and whether we have enough, has
remained hot in discussions with publicans. And, with
the increase in investment and new entrants to the
industry in the last 12 months, I thought it relevant to
revisit this topic and also provide some 101 information
for new entrants.
EGM OPERATING AUTHORITIES, EXPLAINED
The maximum number of EGMs allowed under a
Gaming Machine Licence (Licence) depends on
the type of venue being operated. For a hotel, the
maximum number of EGMs allowed is 45. However,
there is a key distinction between how many EGMs
your venue is licensed for and how many EGM can
operate from your venue. This is because under
Queensland legislation, a cap is placed on the number
of EGMs that can be operated within licensed venues.
Each EGM requires what is known as an “operating
authority” – which is essentially a right to operate that
specific EGM at your venue that can only be obtained
by participating in an authorised sale conducted by the
Public Trustee of Queensland (discussed in more detail
below).
So, while your hotel may be licensed for 45 EGMs,
you may not have obtained the corresponding number
of operating authorities, which can be a frustrating
situation for Hoteliers. This contributes to the complex
‘balancing act’ of EGM supply and demand.
As at May 2021, the total number of approved
operating authorities for hotels in Queensland is
19,500. 1 This is in contrast to the 18,843 operating
authorities available in 2003, despite Queensland’s
population having increased by ~31% since that time.
To ensure that all the operating authorities are not
located in one dense geographical area, those 19,500
operating authorities are further divided into three
different geographical areas, or “authority regions”,
– South-East Region, Coastal Region and Western
Region. The operating authorities allocated to each
region must remain in their authority region.
TABLE 1
Tender Date South-East Avg Price Coastal Avg Price Western Avg Price
22 November 2006 $283,293 $164,929 $74,996
14 November 2012 $67,152 $56,548 $34,412
24 March 2021 $197,937 $122,250 $17,061 (15 July 2020)
Table 1 demonstrates how the average price of operating authorities has fluctuated over years
The number of operating authorities available within the tender pool will ultimately be determined by the amount that are either
surrendered by licensees or cancelled by the Office of Liquor and Gaming Regulation.
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TABLE 2
Tender Date South-East OAO Coastal OAO Western OAO
22 November 2006 120 53 13
14 November 2012 234 58 13
24 March 2021 12 10 0
Table 2 shows how the operating authorities offered (‘OAO) have fluctuated within the respective tenders used above.