NSW Gaming - Industry Outlook
Recently, we have observed a slight correctional phase following a buoyant period characterised by record high transaction volumes (predominantly during 2022 and the first quarter of 2023) and significant yield compression. Akin to the broader market (for specialised assets), we have already witnessed yield decompression on the back of numerous cash rate rises enforced by the RBA, hence transactions in the recent climate have demonstrated more prolonged lead times, underpinned by increasingly thorough DD investigations (from prospective purchasers) and an increase in available stock. Notwithstanding, throughout 2025 the Cash Rate has been cut three times to-date, in February, May and again in August 2025 (all by 0.25 BPS increments) – this has been widely received as the catalyst for the turning point in the rate cycle. Accordingly, over broadly the past 6 months, market sentiment has increased and transaction volumes are steadily rising.
From an operational standpoint, if rates continue to decline/stabilise, consumers disposable income will rise, contemporaneous with a resurgence in discretionary spending, all of which will culminate to support higher levels of patronage and trade throughout the industry.
The Whitebull HTL Pty Ltd, Area Hotel, The Griffith Hotel Pty Ltd v Independent Liquor & Gaming Authority Case (2023) has resulted in significant industry wide uncertainty in the trade of GMEs and flags potential for ILGA to impose discretionary power over venue liquor licences whilst assessing applications (which in turn could stipulate tighter gaming management conditions for various venues). Accordingly, GME transfer rates have decreased significantly (as has forfeiture, respectively), which we consider will persist until further clarity is provided by the government regarding NSW gaming reform. In the interim, demand for quality gaming hotels with a maxed threshold (30) could be further reinforced, whilst country hotel excise strategies and threshold increases for Band 2 and above venues (requiring a LIA) will likely deteriorate. GME values have recently stabilised.
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