online casino Australia
GET AU$2000 FREE Only at JokaRoom Casino
Claim yours now!

Woolworths Shareholder Pushes for No Pokies

Share!Share on FacebookTweet about this on TwitterPin on PinterestShare on Google+

Woolworths is being asked to look at its business model. The longtime retailer isn’t under fire for its grocery items or household products, nor for its Everyday Rewards system or its plastic bag ban. It’s the pokies that are the problem.

According to Yahoo Finance, major Woolworths shareholder Perpetual Investments is putting pressure on the company to rid its stores of all gambling machines.

The push has since taken on a life of its own. Not only because of shareholder concerns but as a result of last year’s reporting on Woolworths misuse of the pokies. The list of complaints included details recorded of bettors’ activities and bribing high-value customers with free drinks to gamble more.

And all of it is beginning to affect Woolworths’ share price yet again.

Woolworths and Pokies

Many know them as Woolies, and with 995 total locations, it’s no wonder the company is a household name. Woolworths has been in business since 1924 and has grown consistently. The New South Wales-based company now employs more than 115,000 workers and claimed $56.7 billion in revenue in 2018.

The chain of grocery stores and home markets have one major competitor in Australia in Coles. Those two companies comprise about 80% of the nation’s industry.

The Woolworths Group parent company is the one with the strong ties to pokies. In fact, the company is the largest hotel and gaming pokies operator in Australia.

In 2005, Woolworths expanded into the hotel industry, partnering with the ALH Group to acquire properties. The ALH (Australian Leisure and Hospitality) Group, which is Australia’s largest pokies operator, incorporated pokies into the properties. Those machines subsequently ended up comprising a significant portion of overall revenue.

At this point, Woolworths owns 75% of the ALH Group, which operates more than 12,650 pokies throughout Australia. And those machines generate $1.2 billion in net revenue annually.

Controversy in 2018

A whistleblower blew the lid off of a situation at Woolworths in 2018. That then led to an investigation and much discussion about Woolworths’ relationship with the ALH Group, and the place of pokies in general.

The discovery was that Woolworths’ staff recorded punters and their habits and tried to induce them to play more. The venue also categorized customers, and ones deemed of “high value” were given specialised customer service. This included free drinks, to keep them gambling. The “customer service program” lasted approximately six months.

An extensive investigation led to staff fired and disciplined at 22 locations, including 20 hotels in Queensland, and pubs in NSW and South Australia. It also led to federal MP Andrew Wilkie calling for a revision of regulations that failed to catch and reprimand the company. Another demand was for the removal of all pokies from Woolworths supermarkets.

ALH Group did admit that “poor management” was at fault and that it was not in line with the company’s commitment to responsible gambling. The company vowed to review customer privacy rules and provide more staff training to ensure it didn’t happen again. 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.”

Renewed Concerns

The latest concerns came about when a New South Wales government report showed that gamblers lost approximately $6.8 million on pokies in 2018. National losses amounted to around $12 billion per year.

That led Perpetual Investments, one of the company’s most influential shareholders, to call for Woolworths to get rid of its gambling machines. And the requests have been fairly consistent of late, coming with a sentiment that the pokies are a threat to the entire brand and its reputation. They are also seen as incompatible with Woolworths’ expressed values. Perpetual Investments first raised the issue in 2016 but increased the intensity of the discussions in the past year.

Cairns told investors in the past that Woolworths had looked at various options for parting ways with the ALH Group, but it was complicated. Concerning the most recent revelation about Perpetual Investments, Cairns did not provide a specific comment except to say it would continue working to enhance responsible gambling practices at locations with pokies.

Meanwhile, Woolworths’ shares have dropped in the past week.

On May 23, stock prices hit as high as $34.06. But as the most recent story about the shareholders’ concerns made its rounds, prices fell fairly significantly. On May 28, they were sitting at $31.97,  but looking to dip further as the week continues.