NSW Gambling Authority Sought to Shed Oversight of ClubGrants Pokies Tax Scheme

The independent authority overseeing a New South Wales gambling-linked tax concession wanted another government body to take over the job, internal documents reveal, after identifying problems with the way the ClubGrants system is administered.

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The concerns go beyond bureaucratic workload. They touch on how hundreds of clubs distribute money under a scheme that reduces their poker-machine tax obligations when funds are directed toward community organisations and programs.

Documents obtained through the NSW Parliament show the Independent Liquor and Gaming Authority, or ILGA, sought to relinquish its oversight role after identifying compliance difficulties with ClubGrants.

The revelation arrives while the NSW government is still considering the findings of the first formal review of ClubGrants in more than a decade. That review was completed in January 2025, but its final report has yet to be publicly released.

Hundreds of Clubs, a Two-Week Window

Part of ILGA’s problem was practical.

More than 500 clubs submit applications that require preliminary checks each year, yet the authority can have two weeks or less to complete that work. ILGA told the review that those demands restricted its ability to effectively monitor compliance with the scheme.

The authority proposed shifting administration of the tax rebate program to the Chief Commissioner of State Revenue. It also shared concerns identified by Liquor and Gaming NSW about weaknesses in the existing system.

Among them is a basic accountability issue: clubs and community organisations are not required to verify how grant money is ultimately spent.

Local committees can recommend where certain grants should go, but clubs are also able to disregard those recommendations and direct funding elsewhere within the rules of the program.

$127 Million Distributed in 2025

ClubGrants links community funding to the state’s substantial poker-machine industry.

NSW clubs operate about 65,000 poker machines and receive tax concessions when they allocate part of their earnings to eligible community purposes. In 2025, clubs distributed $127 million through the program.

Sport received the largest portion.

Some $53.3 million went toward sporting programs and facilities — more than the combined amount directed to health, disability inclusion, education and early learning, domestic violence, mental health, veterans, emergency services and homelessness.

That distribution is particularly significant because the funding mechanism is tied directly to poker-machine revenue, a form of gambling the NSW government identifies as especially harmful.

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ClubsNSW Defends the Scheme

The industry sees ClubGrants differently.

In its submission to the government review, ClubsNSW defended the program’s community contribution and reported that more than $1.5 billion had been allocated to community initiatives since the scheme began in 1998.

The organisation also cited commissioned economic analysis estimating that ClubGrants generates $137 million in community economic benefits each year. ClubsNSW did not respond to ABC questions about the latest allegations surrounding the scheme.

ILGA’s current public position also places considerable responsibility on participating clubs themselves. In response to questions from the ABC, the authority described clubs as responsible for maintaining the integrity of the program and pointed to guidelines intended to provide accountability for tax revenue forgone through the scheme.

Government Review Has Remained Unreleased Since 2025

The NSW government commissioned its review after taking office in 2023.

The final report landed with the government in January 2025. More than a year and a half later, it remains unpublished despite repeated requests for its release.

The office of NSW Gaming Minister David Harris said the findings were still being considered. The government has made changes to ClubGrants guidelines in the meantime, including measures intended to clarify funding for statewide services and clubs’ tax obligations.

Greens MP Cate Faehrmann obtained the documents exposing ILGA’s concerns through a parliamentary Standing Order 52 process. She has argued that the changes made so far do not address the deeper problems she sees in ClubGrants and has criticised the use of tax concessions linked to poker-machine profits to fund community initiatives.

Some Charities Are Waiting for Answers

The delay is having consequences beyond government and the club industry.

Odyssey House, a major alcohol and drug rehabilitation provider in Sydney’s south-west, previously participated in ClubGrants but paused its involvement because of governance concerns and a potential conflict arising from its work with people experiencing addiction.

Documents show its chief executive, Carmel Tebbut, contacted the gaming minister’s office in November 2025 seeking information about the review. The organisation’s board intended to reconsider its involvement once the government’s review was finalised. Odyssey House declined to comment further to the ABC.

That leaves an unusual situation around a program distributing more than $100 million a year.

The independent authority responsible for oversight had sought to hand that responsibility elsewhere, the regulator had identified structural problems, and the government possesses a completed review examining the system.

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What that review concluded has still not been made public.

Source: abc.net.au