The nation’s largest poker machine operator, Australian Leisure and Hospitality Group (ALH), could be fined up to $1.35 million after the Victorian Gambling and Casino Control Commission (VGCCC) issued 62 charges against the company for allegedly failing to install mandatory pre-commitment technology.

Owned by liquor and hospitality giant Endeavour Group (ASX: EDV), ALH is alleged to have operated 220 gaming machines for up to 5 weeks without YourPlay enabled, which is a card-based tool that allows players to set limits on the money and time they spend using gaming machines.

While the YourPlay functionality is optional for players, venues in Victoria must have it installed and available on all gaming machines in operation.

Following an anonymous tip-off in December 2021, VGCCC inspectors immediately visited multiple venues in the Victorian suburbs of Hallam, Sandringham, Narre Warren, Mulgrave, Laverton and Cheltenham to verify the breaches.

ALH turned off all 220 non-compliant machines across 62 of its 77 venues. 

“We have decided to prosecute ALH as the alleged breaches constituted serious and significant non-compliance across 80 per cent of all ALH’s Victorian venues,” said VGCCC CEO Annette Kimmitt said.

“Anyone who holds a gambling licence in Victoria is on notice that they must, at a minimum, comply with their legal obligations to protect patrons from gambling harm. Having YourPlay installed and available on electronic gaming machines is a mandatory requirement to support safer gambling.”

In July 2019, Woolworths (ASX: WOW) announced its intention to combine its drinks and hospitality businesses, Endeavour Drinks and ALH into a single entity now known as Endeavour Group. 

The move created one of Australia’s largest integrated drinks and hospitality companies, with sales of approximately $10 billion and EBITDA of $1 billion at the time of the merger. Two years later, Endeavour Group would demerge from the supermarket giant and list on the ASX.

Today, the entity operates more than 300 bistros, 900-plus bars and over 2,400 accommodation rooms.

Five months ago, Bruce Lawrence Mathieson – who is a 15.1 per cent shareholder - resigned as a non-executive of the board. He was replaced by Bruce Mathieson Jr., who is the former CEO of ALH Group - a joint venture between Woolworths and the Bruce Mathieson Group.

As at 29 July 2022, Woolworths holds a 14.6 per cent stake in Endeavour Group, which has 12,539 Electronic Gaming Machines (EGMs) in 300 hotels across Australia.

In an announcement to the ASX this morning, Endeavour Group CEO Steve Donohue confirmed the company conducted a review of the installation process across its fleet of 4,690 machines.

“The investigation concluded this was an isolated but regrettable case of process and communication failure in our internal supply chain. The Board was immediately made aware of the VGCCC investigation by management and has been regularly updated on the investigation and VGCCC process,” Donohue said.

“We are acutely aware of the seriousness of this matter and we are committed to doing all we can to ensure it does not happen again. At Endeavour we hold ourselves to the highest standard of responsibility, we regret that this has occurred and we will continue to work with the VGCCC.

“As soon as the matter was raised we deactivated the machines, and proceeded to address the concerns before re-testing the functionality. We can confirm YourPlay is active on all Victorian machines that we operate, with ALH also offering Voluntary Pre-Commitment at all venues on the mainland, as part of our national standard.”

The news comes almost two weeks after the VGCCC fined Crown Melbourne $120 million for breaching its Responsible Service of Gambling obligations. The casino operator was found to consistently fail to prevent gambling harm, allowing customers to gamble for long periods without a break, and in some instances for more than 24 hours.

It was also determined that Crown Melbourne failed to comply with a statutory direction by the regulator to take all reasonable steps to prevent patrons from using plastic picks and other devices to simulate ‘automatic play’ when gambling on certain gaming machines.