Woolworths has announced it will be combining and offloading its drinks and gambling businesses.
The Australian supermarket announced this week that its Endeavour Drinks firm will be combined with its Australian Leisure & Hospitality Group under a new umbrella parent company called Endeavour Group Limited.
Australian Leisure & Hospitality Group currently owns around 12,000 casino machines at over 300 different pubs throughout the country, making it the largest poker business in Australia behind casino operators Crown Resorts Ltd and Star Entertainment Group Ltd.
The new company, which holds 1,500 BWS and Dan Murphy’s alcohol retail stores, will reportedly be sold off or put out for public offering with the separation planned to take place sometime in 2020.
Woolworths has made the decision just two weeks after New South Wales state’s gambling regulator launched an investigation into a complaint about two Woolworth’s-owned pubs that allegedly broke the law by giving away free alcohol. The move also comes after supermarket rival Coles gave up control of 3,000 casino machines and following mounting pressure from activists.
The supermarket chain believes the move will allow them to have a simplified business structure that focuses more on food and retail.
Brad Banducci, the Chief Executive at Woolworths, said in a statement that the demerger was not to distance itself from gambling but to simply both businesses due to fierce competition from internet-based retailers. He said: “It’s not about gaming, it’s about helping both businesses unlock their full potential.”
Tim Costello, a spokesman for the Alliance for Gambling Reform, said: “ALH has long been Australia’s biggest, most aggressive and more irresponsible pokies operator, pushing hard on loyalty schemes, offering up free liquor to gamblers and operating for the maximum amount of hours as the laws allow.”
He then suggested that Woolworths cutting ties with gambling machines was a “significant moment for the gambling divestment movement”.