Supermarket giant Coles has divested from poker machines in a move gambling reform advocates say places more pressure on Woolworths to follow suit.
In a statement to the ASX on Tuesday, Coles said it had inked a $200m deal that will see the company give up control of 87 hotels through Queensland. The Spirits Hotels business runs about 3,000 poker machines.
Coles’ previous owner, Wesfarmers, had indicated it intended to move out of the gaming business but the process had been complicated by Queensland’s novel liquor licensing laws, which require bottle shop owners to also own a pub or hotel.
Under a joint venture, Spirits Hotels will be placed in the hands of private equity firm KKR’s Australian Venue Co (AVC). Coles will continue to manage and reap revenue from 243 Liquorland, First Choice and Vintage Cellars stores throughout Queensland.
“Coles have done the right thing selling out to a KKR-controlled business called the Australian Venue Company which I hope will continue the Coles advocacy for the introduction of $1 maximum bets,” said Tim Costello, a spokesman for the Alliance for Gambling Reform.
“With Coles having successfully divested, the onus is now on Woolworths, Australia’s biggest and most ruthless pokies operator, to remove itself from the 12,000-plus pokies operated by Bruce Mathieson in the ALH joint venture, which is 75% owned by Woolworths.”
Both supermarket giants have faced pressure from reform advocates and some shareholders to divest amid regular negative coverage about the machines.
Woolworths Group is the majority owner of the Australian Leisure & Hospitality, which owns 12,000 poker machines across 330 pubs throughout Australia. That makes it the largest pokies business in Australia.
Last year Woolworths reaped $1.6bn in sales from its hotels and gaming business while Coles reportedly earned about $185m a year from its machines.
In February, gaming regulators announced they would investigate allegations ALH staff broke laws by giving poker machine players free drinks.
The Coles chief executive, Steven Cain, said AVC planed to grow the hotel portfolio, which would allow the supermarket giant to expand its bottle shop business.
“The agreement with AVC will enable each party to bring relevant expertise to the joint venture,” Cain said.
“AVC is a highly experienced and responsible operator of quality hospitality venues with their current portfolio of more than 60 hotels.”
