NSW Gambling Reforms: What Venues Need to Know and Budget For

The NSW Government has announced a major new package of gambling reforms covering facial recognition, exclusions, gaming technology, VIP programs and gaming machine entitlements.

Some changes are still years away and many of the implementation details are yet to come.

But there is enough information now for pubs and clubs to start considering what the reforms could mean operationally and financially.

Facial recognition is coming, but the cost is still unclear

From 2028, NSW plans to introduce a single statewide exclusion register covering hotels and clubs with gaming machines.

Venues will also be required to use facial recognition technology at gaming room entrances to help identify excluded patrons.

What hasn't yet been explained is what this will cost individual venues.

There could potentially be costs associated with hardware, installation, software, maintenance, privacy and data management, staff training and changes to venue procedures.

The final requirements and who will pay for each component are not yet clear. So it is too early to start putting numbers into a budget, but it is certainly an area operators should be watching.

The Government has committed $95.2 million over four years to the broader reform package, with part of that funding to come from increased licence fees for clubs and hotels with gaming machines. The size of those increases has not yet been announced.

Thinking about a new gaming VIP program? Take another look

The Government has also announced it will end VIP programs related to gaming.

The detail and commencement arrangements are still to come, so this should not be interpreted as an immediate ban on every venue membership or loyalty program.

But it does create an important question for venues currently developing or investing in a gaming-linked VIP program:

Does it make sense to spend heavily on something that may soon need to be changed or discontinued?

That investment could include software, integrations, member cards, marketing, rewards structures and staff training.

Until the Government defines exactly what will be captured by the new rules, venues considering a new gaming-related VIP offering should understand the direction of the reforms before committing significant money.

The technology behind gaming machines is changing too

The Government will also upgrade NSW's Centralised Monitoring System over the next two years.

A new two-way communication protocol known as QCOM3 will help modernise a gaming network that still includes significant legacy technology and create the infrastructure for future account-based play.

Why does that matter to an operator?

We don't yet know what upgrades may eventually be required at individual venue or machine level, or what they may cost.

That makes future technology and capital expenditure another area worth watching.

Account-based does not mean cashless only

This is an important distinction in the announcement.

The Government is building the infrastructure to support account-based play, but it has not announced mandatory cashless gaming.

The proposed infrastructure would allow venues to offer account-based play at their discretion while still allowing patrons to use cash if they prefer.

So while NSW gaming is moving towards more connected technology, this announcement does not mean every customer will soon need an account to play a gaming machine.

Gaming machine entitlements will continue to reduce

The Government will accelerate the reduction of Gaming Machine Entitlements across NSW.

When entitlements are traded, the forfeiture rate will increase from one in three to one in two. In simple terms, for every two entitlements traded, one will be permanently removed.

A new sinking cap will also progressively reduce the statewide cap, while some existing exemptions allowing entitlements to be transferred without forfeiture will be tightened.

For venues considering acquisitions, amalgamations, relocations or redevelopment, gaming entitlements may become an even more important part of the commercial due diligence.

The bigger message is about reliance on gaming revenue

Perhaps the most important business message in the announcement received less attention than facial recognition.

The NSW Government says it will work with pubs and clubs to reduce their reliance on gaming machine revenue, including supporting greater diversification into hospitality, events and live entertainment.

For venues with significant gaming income, that is worth thinking about now.

How much of the broader business depends on gaming revenue? Are food, beverage and entertainment operations genuinely profitable? And what happens to cash flow and future investment if the revenue mix changes?

Those are useful questions regardless of when the reforms commence.

What should venues do now?

There is no need to budget for costs that haven't been defined or implement requirements that don't yet exist.

But before committing significant money to a new gaming VIP program, technology project or other long-term gaming investment, the direction of these reforms should now form part of the decision.

New technology, higher licence fees, fewer gaming machine entitlements and a clear policy direction towards reducing reliance on gaming revenue could all affect venue planning over the next few years.

2028 may sound a long way away, but understanding the numbers probably shouldn't wait until then.