Woolworths Faces Backlash For Pokies Operations
In May, Woolworths came under fire from some of its shareholders for unethical practices involving its pokies at some stores. Allegations of recording details of bettor activities and bribing high-value customers with free drinks to keep gambling put Woolworths under a bright spotlight.
Not even two months later, the company now faces more scrutiny as two of its New South Wales venues are under investigation by the NSW Independent Liquor and Gaming Authority.
Woolworths Investigations Ongoing
The reports continue to put Woolworths in front of a potential scandal and facing penalties.
The NSW Liquor and Gaming Authority officially filed a complaint, as revealed this month, regarding practices that took place in 2017 at the Westower Tavern in West Ballina and South Tweed Tavern on the northern coast. The Australian Leisure and Hospitality Group (ALH) operates both venues.
How does Woolworths play into it? The company has a 75% stake in ALH.
The two locations are under investigation for providing free alcohol to customers playing poker machines in order to coerce them into gambling longer.
As a result of the complaint and allegations, the investigation has been ongoing and consisted of inquiries at 50 venues. And the complaint is the first of its kind in New South Wales and in Australia as a whole. Deputy Secretary Paul Newson called the inquiry exhausting and comprehensive.
The venues could receive a fine of more than $100,000 if found guilty of supplying customers with free alcohol.
Tough Consequences
The ALH Group is facing tough consequences beyond the fine. The anger stirred by the allegations alone has brought much unwanted attention to the company, Woolworths, and the pokies industry.
NSW MP Justin Field expressed his anger: “These are not victimless crimes. Many people who suffer gambling addictions have serious impacts on themselves and their families. If that’s encouraged by venues, then that has really significant impacts on communities and those individuals.”
Field also added: “I hope the independent authority uses the powers it has including suspending or revoking these licences.”
The Alliance for Gambling Reform has been pushing for hard penalties for the Woolworths and the ALH Group. As spokesman Tim Costello noted:
“You shouldn’t be surprised when there’s so much easy money to be made from people who are addicted. … Australia has the greatest gambling losses of any country in the world…and Woolworths is right at the front of all of this.”
ALH Response
When asked to comment on the investigation and allegations, the ALH Group simply said via a spokesperson:
“An independent management review into ALH responsible gambling practices was conducted in 2018. As a result of the investigation, ALH took a number of steps to enhance its responsible gaming practices. As the matter is now before ILGA, we will be making no further comment at this stage.”
And Woolworths responded with an even shorter statement:
“What we’re focussed on with ALH is how to continue to enhance its responsible gaming practices and quality service at the hotels.”
Background Information
Woolworths has 995 locations in Australia, having been in business since 1924. The company is based in New South Wales and employs more than 115,000 workers. In 2018 alone, Woolworths collected $56.7 billion in revenue.
But it is the ALH Group, of which Woolworths owns 75%, that operates more than 12,650 pokies around the country that generate more than $1 billion in net revenue each year.
The allegations about pokies and unethical – some illegal – behaviours came from a whistleblower in 2018. Evidence came to the surface that Woolworths’ staff members at several locations recorded gamblers and their habits. They then deemed some of “high value” and proceeded to offer them more specialised customer service, including free drinks. That program lasted for about six months.
An internal investigation led to Woolworths firing and disciplining staff at 22 locations, including hotels in Queensland and pubs in New South Wales and South Australia. ALH Group admitted to poor management in some cases and vowed to review customer privacy rules and provide more comprehensive staff training.
Woolworths Chairman Gordon Cairns said at the time: “The practices outlined in the investigation, at a limited number of hotels, are at odds with the priorities and values of our customers and the communities where we operate.”
Primary Woolworths shareholder Perpetual Investments expressed anger and called for Woolworths to abandon all of its pokies. The investment firm subsequently said that the machines were a threat to the entire brand and its reputation. Pressure remains on Woolworths to reconsider their entire policies involving pokies.
