Federal Group

Private company in Tasmania, Australia

Federal Group is a privately owned family company which operates tourism, hospitality, retail, and a national sensitive freight company but is primarily known for their casino and gaming assets in Tasmania which is described as "a licence to print money".[1] In the past the company has been known as both "Federal Hotels"[2] or "Federal Hotels and Resorts".[3]

The Federal Group is owned and operated by the Farrell family, consisting of Greg Farrell (managing director), John Farrell (director of business development), Julia Farrell (director of interior design), Deborah Lee (née Farrell; board member) and Jane Farrell (board member).[4]

## History[edit]

### Federal Coffee Palace[edit]

Federal is the oldest continually operating hotel group in Australia. Its origins can be traced to Melbourne in the 1880s.

In June 1885, a company named The Federal Coffee Palace Company Limited built an elegant temperance establishment (‘Coffee Palace’) to coincide with the 1888 Centennial Exhibition.[5] Seven stories high, it was the tallest building in Melbourne. It had 450 bedrooms and the largest dining room in Australia.[5]

During the Depression of the late 1880s and early 1890s, the Coffee Palace lost significant amounts of money. This prompted its directors to obtain a liquor licence in order to attract more profitable clientele.[5] The original coffee palace was renamed the Hotel Federal and it went on to become the cornerstone of what is now Federal Group.[5]

Over the next few decades Federal operated several hotels, including The Menzies, Savoy Plaza, The Windsor, Hotel Australia, Lennons Hotel in Brisbane and Hampton Court in Sydney.[5]

### Australia's first casino[edit]

In 1956, Federal bought its first Tasmanian business – the Wrest Point Riviera Hotel in Sandy Bay, Hobart.

During the late 1960s Federal initiated discussions with the Tasmanian Government about granting the Wrest Point Riviera Hotel Australia's first casino licence.[5] The casino was initially conceived to address the seasonal nature of Tasmania’s tourism industry, designed to be an attraction that would entice visitors to the state all year round.

In a referendum held on 14 December 1968, Tasmanian voters were asked the following question: “Are you in favour of the granting of a casino licence to Wrest Point Hotel conditional on the proposed development of that hotel?”. In spite of having a referendum planned, the Government managed to obtain sufficient votes on the floor of the parliament. They therefore decided to ignore the referendum, and hold the vote prior to the referendum, and the bill was passed as law. This process was also mired in allegations of corruption and bribery, especially with regards to Kevin Lyons, who held the balance of power.[6][7]

By a slim 6% majority, the establishment of a casino in Hobart was accepted and the Wrest Point Casino Licence and Development Act of 1968 was passed.[5]

On 10 February 1973 Australia’s first legal casino opened with great spectacle. The event featured the largest fireworks display ever seen in the country, and was televised through the Channel 7 network.[5] American entertainer Jerry Lewis was the main guest artist.

The initial response to the casino exceeded expectations. More than 2,000 people visited the casino on the first Sunday it opened. The hotel was booked out for the first 3 months.

However, the reality of the casino soon set in. While it was initially supposed to be an entertainment and convention centre with a small casino, the casino soon took over the building with many poker machines filling the complex.[8] The restrictions around the casino and the presence of poker machines in the community were gradually lifted, until they were widespread. The expected boon to tourism also disappeared as the vast majority of the significant losses at the machines were Tasmanian residents.[8]

### Second casino licence[edit]

In 1979, Federal Group secured a second casino licence in Northern Tasmania. The Country Club Casino and Resort was opened in 1982 and the adjacent Country Club villas were acquired by the company some years later.[5]

Architects modelled the style and interior design of Country Club on the stately homes of America’s south. Former Chairman Greg Farrell senior had always admired the simple lines of the US Embassy building in Canberra and believed that the Georgian style would work well in the rural landscape of Launceston.

The casino is now surrounded by suburbs and local neighbourhoods.

### Other gambling assets[edit]

With the monopoly over the poker machines in the state, and all the data of where the most profitable locations were. They then purchased a chain of bottle shops to attach to these locations.[9]

## Controversy[edit]

In a 2017, book entitled "Losing Streak",[10] the Tasmanian author James Boyce argues that the monopoly-licence granted to the Federal Hotels to operate poker machines in Tasmania has been at the expense of the best interests of the Tasmania public. The licence has meant that Federal Hotels have earned around $30 million for the past 30 years.[11]

A parliamentary enquiry called for a significant reduction of machines, and changing the deal with Federal Group.[12] It is estimated that clubs only take in 10-30% of all pokies losses, with the majority going to Federal Group, for which they pay a minimal amount to the government in taxes.[1]

### 2018 election and potential pokie ban[edit]

In August 2017, Federal Group agreed to give up their monopoly on the poker machines, if in return they would receive a reduction in their taxes (which are already the lowest gambling taxes in Australia).[13] The Liberal government also stated that they agree to the presence of the pokies but they will not necessarily grant those licences exclusively to Federal Group.[14]

In December 2017 the Labor Party opposition under its new leader, Rebecca White, announced that if elected they would phase out all poker machines from pubs and clubs by 2023.[15] The reasons cited were the health implications, and that Tasmanians could not afford to lose the more than $110 million it loses every year.[16]

In response Federal Group attacked the plan as dangerous and that it would lead to job losses, and said they would stop donating to the Labor Party.[17][18] The Liberal Party mostly fell in line with Federal Group, even using Federal Group's own promotional material to attack Labor.[19] Over half of the Liberal Party's declared donations, over $400,000, for the election were given to them by gambling interests.[1]

There has been wide spread support for the Labor policy. The Greens have been calling for the pokies ban for many years,[20] and the Jacquie Lambie Network also coming out in support.[21] Others in support include David Walsh, the owner of the MONA gallery, and major opponent of the pokies.[22] Public opinion also strongly supports either a reduction or phasing out of pokies.[23]

## Former interests[edit]

* Strahan Village
* Freycinet Lodge
* Cradle Mountain Hotel
* Gordon River Cruises
* West Coast Wilderness Railway

## Tourist accommodation[edit]

* Wrest Point Hotel Casino
* Country Club Casino
* The Henry Jones Art Hotel
* Saffire-Freycinet
* MACq01 Hotel (2017)

## See also[edit]

* 1968 Tasmanian casino referendum
* Kevin Lyons
* Rebecca White

## References[edit]

1. ^ a b c "Wager war on pokie reign". www.theaustralian.com.au. 2 December 2019. Retrieved 7 December 2019.
2. ^ Tasmania. Parliament. Standing Committee of Public Accounts (2003), Inquiry into the Federal Hotels agreement, The Committee], retrieved 20 October 2021
3. ^ Way, Nicholas (18 May 2006), "A sure bet.(Federal Hotels and Resorts)", Business Review Weekly, BRW Media, 28 (19): 98(3), ISSN 0727-758X
4. ^ "Farrell family fortune doubles", Australasian Business Intelligence, COMTEX News Network, Inc, 18 May 2005, ISSN 1320-6680
5. ^ a b c d e f g h i Sutton, Keith Blueprint for the Casino industry : Federal Hotels and Wrest Point Canberra: K. Sutton, c1992
6. ^ The politics of poker machines in Australia's poorest state, Australian Broadcasting Corporation, 15 September 2017, retrieved 18 January 2018
7. ^ Newman, Terry Referendums (p. 304) in Alexander, Alison The Companion to Tasmanian History 2005 ISBN 1-86295-223-X
8. ^ a b "Tasmania got gamed". The Monthly. 1 March 2017. Retrieved 18 January 2018.
9. ^ "Federal Group's 20 year haul". Tasmanian Times. Retrieved 18 January 2018.
10. ^ Boyce, J (2017), Losing streak: how Tasmania was gamed by the gambling industry, Redback, retrieved 20 October 2021
11. ^ Markham, Francis; Kinder, Barbara; Young, Martin (5 April 2017). "How Federal Hotels monopolised pokies in Tasmania". ABC News.
12. ^ "Gaming report urges reduction in pokies, reassessment of Federal Group deal". ABC News. 28 September 2017. Retrieved 18 January 2018.
13. ^ "Federal Group Offers To End Tasmania Slots Monopoly | GamblingCompliance". gamblingcompliance.com. Retrieved 18 January 2018.
14. ^ "Tasmanian Liberals commit to pokies but not Federal Group". Financial Review. 9 January 2018. Retrieved 18 January 2018.
15. ^ "Pokies out of Tasmanian pubs, clubs by 2023 under Labor promise". ABC News. 13 December 2017. Retrieved 18 January 2018.
16. ^ "Rebecca White defends claims that pokies ban is a health issue". www.tasmaniatalks.com.au. Retrieved 18 January 2018.
17. ^ "Federal Group to launch pro-pokies campaign at Country Club". The Advocate. 19 January 2018. Retrieved 18 January 2018.
18. ^ Maloney, Matt (15 December 2017). "Federal Group boss Greg Farrell speaks out on Labor's pokies plan". The Examiner. Retrieved 18 January 2018.
19. ^ "Labor's pokies plan 'threatens our way of life', Deputy Premier says". ABC News. 25 December 2017. Retrieved 18 January 2018.
20. ^ "Labor's poker face on gambling policy set to be tested". ABC News. 16 October 2017. Retrieved 18 January 2018.
21. ^ "Game on: Federal Group blasts Labor's 'attack on gaming', jobs". ABC News. 15 December 2017. Retrieved 18 January 2018.
22. ^ "Tasmanian Labor's gamble on pokie policy could win big, or break the bank". ABC News. 13 December 2017. Retrieved 18 January 2018.
23. ^ "Could Tasmania become the first state to ban pokies from pubs and clubs?". ABC News. 26 September 2017. Retrieved 18 January 2018.