Australia: Regulator Seeks to Offload Oversight of Controversial Pokies Tax Scheme

Significant tensions are surfacing within the gambling regulatory framework of New South Wales. The Independent Liquor and Gaming Authority (ILGA) has announced its intention to relinquish administration of the ClubGRANTS scheme. Originally established in 1998, the program was designed to redirect a portion of gaming machine profits back into local communities. However, what was once framed as a philanthropic initiative has evolved into a bureaucratic burden and a point of intense political friction, pushing the regulator to its operational limits.

ILGA Chair Caroline Lamb has been vocal about the pressures facing her agency. Each year, the authority is tasked with processing over 500 applications within a timeframe of two weeks or less. This intense schedule effectively prevents the authority from conducting meaningful compliance monitoring. Consequently, Lamb has proposed that the State Revenue chief commissioner’s office should manage the program, characterizing it more as a tax rebate scheme than a regulatory function. It is a rare occurrence for a watchdog to voluntarily surrender authority, but the operational constraints appear insurmountable.

Numbers and facts

The scale of the financial figures involved is substantial. According to the 2025 contribution report, a total of $127 million in grants was awarded. A significant portion of this, specifically $53.3 million, was directed toward sports-related organizations. The core of the controversy lies in the tax structure: clubs with profits exceeding $1 million can access a tax rebate of up to 1.85% of their gaming machine profits, provided they allocate at least 0.75% of prescribed profits to community services.

Green MP Cate Faehrmann has been a fierce critic of this arrangement, utilizing the antipodean term "rort" to describe what she views as a fraudulent practice.

"ClubGRANTS is what the clubs rely upon to push back against any reform. The fact is they’re not generous, they’re a rort." - Cate Faehrmann, Green MP in New South Wales

Adding to the controversy is the recent data showing that New South Wales residents lost a record $2.38 billion on poker machines during the second quarter of 2026. While player losses reach historic highs, the gambling industry continues to benefit from tax incentives by distributing a small fraction of these proceeds.

Background

The fundamental issue with the ClubGRANTS model is the lack of stringent oversight. Clubs are permitted to direct funds toward upgrading their own facilities if they can argue a community benefit. There is currently no mandatory verification process to ensure that grant recipients deploy the money as intended. The Minns Labor government is also facing criticism for withholding a formal review of the scheme that was completed in January 2025. While the public waits for transparency, approximately 65,000 poker machines continue to operate in clubs across the state.

While the government has introduced legislation aimed at reducing the total number of poker machines from the current 87,000, critics argue the measures are insufficient. For instance, the forfeiture rate for trading gaming machine entitlements is set to increase from one in three to one in two. However, MPs like Faehrmann contend that these changes are merely "tinkering around the edges" and fail to address the underlying addiction of the state and clubs to gambling revenue.

Why it matters for German players

The situation in New South Wales contrasts sharply with the regulatory environment in Germany under the Interstate Treaty on Gambling 2021 (GlüStV 2021). While Australian clubs operate tens of thousands of machines with relatively loose social responsibility requirements, German players are protected by the GGL (Joint Gambling Authority of the States). For players in Germany, the LUGAS system ensures a cross-operator monthly deposit limit of 1,000 euros, a level of protection currently absent in the NSW market.

Furthermore, Germany enforces a maximum stake of 1 euro per spin on online slots to mitigate rapid financial loss. In New South Wales, the focus of regulation often seems to be on the redistribution of taxes after losses have occurred, rather than preventing the harm in the first place. German players can rely on the GGL whitelist to identify legal operators, ensuring that their funds are not being used in opaque grant schemes without strict oversight of player safety and addiction prevention.

What it means for GGL-licensed casinos

For operators holding a GGL license, the Australian controversy serves as a reminder of the value of a transparent and independent regulatory system. In Germany, operators fulfill their fiscal obligations without the ability to reclaim taxes through PR-driven community grants. This maintains a clear boundary between state oversight, taxation, and corporate social responsibility. German licensed casinos must demonstrate proactive harm minimization strategies rather than using charitable donations to bypass scrutiny. This framework fosters long-term market stability and consumer trust, avoiding the conflicts of interest currently plaguing the New South Wales gaming sector.