NSW ClubGrants scheme oversight questioned amid concerns over poker machine harm
The NSW government's ClubGrants scheme, which allows clubs to receive tax discounts for donating to community organisations, has been marred by controversy over clubs awarding grants to their own groups and facilities. The Independent Liquor and Gaming Authority has expressed concerns over the scheme and wanted to offload oversight to another agency.
Every year, clubs around the state operating poker machines throw parties where they present money to community groups and charities. Giant novelty cheques are handed to people who smile for the cameras. But rarely is it mentioned that the money comes from the type of gambling the NSW government considers to be most harmful; poker machines.
The clubs operating 65,000 poker machines in NSW are given tax discounts under the ClubGrants scheme, if they donate a fraction of the $5 billion in annual profits to community organisations. The NSW government considers poker machines to be the most harmful form of gambling.
But the scheme has proven controversial, dogged by reports that clubs have been awarding grants to their own groups, facilities and projects. Now, documents reveal the Independent Liquor and Gaming Authority (ILGA) believed there were "constraints and issues" with the ClubGrants scheme, and that it wanted to offload oversight to another agency.
The bundle of documents were obtained by Greens MP Cate Faehrmann, who used a parliamentary process known as a Standing Order 52 to compel the NSW government to release them.
'Constraints and issues'
Ms Faehrmann used a Standing Order 52 to compel the NSW government to release the documents. The ILGA wanted to relinquish oversight of the ClubGrants scheme due to compliance concerns, according to its submission to a recent review. It cited the yearly "burden" of having to conduct preliminary checks on applications submitted by more than 500 clubs, within a period of two weeks or less.
Chairperson Caroline Lamb said the workload "practically limits the authority's ability to most effectively monitor the compliance with the Scheme". "The Chief Commissioner [of State Revenue] is best placed to administer a tax rebate program," she said.
The independent watchdog is not the only body concerned about the ClubGrants scheme. It agreed with the "constraints and issues" raised in a discussion paper by the regulator, Liquor and Gaming NSW. One of them is that clubs and community groups do not need to verify how the grant money is spent. Another is that clubs can ignore recommendations by local committees to award a particular type of grant to "any organisation or program".
Most of the grants awarded by clubs went to sporting groups, according to the ClubGrants 2025 contribution report. Of the $127 million awarded that year, $53.3 million went to sporting programs and facilities. This is more than the combined grants for health, disability inclusion, education and early learning, domestic violence, mental health, veterans, emergency services and homelessness.
Industry lobby group response
The industry lobby group, Clubs NSW, championed the scheme in its submission to the recent ClubGrants review, claiming "more than $1.5 billion of funding has been allocated to support community initiatives" since it was formed in 1998. "ClubsNSW commissioned an external analysis of the ClubGrants Scheme which found that the scheme generates $137 million in economic benefit to the community each year," it said in the submission. "Given the significant social and economic advantages, ClubGrants remains an efficient application of a tax rebate, for which the NSW public receives outsized benefits."
ILGA's role and concerns
The ILGA was asked if it still held concerns about the ClubGrants scheme. A spokesperson said its role was to support clubs as they were the "stewards of the scheme's integrity". It said the guidelines ensured "there is accountability for expenditure of the tax revenue foregone".
Government response and review
The NSW government ordered the first formal review of the ClubGrants scheme in more than 10 years, after coming into office in 2023. It received a final report in January 2025, but it has not released it or shared its findings despite repeated requests.
The office of the NSW Minister for Gaming, David Harris, said the findings were still being considered. "We have … updated the guidelines to clarify funding for statewide services and ensure tax obligations are understood," a spokesperson said.
Ms Faehrmann said the ClubGrants scheme allowed clubs to pay less tax while buying community goodwill, despite the harm caused by poker machines. "The changes to the guidelines are just tinkering around the edges. I can't even see the difference, frankly, when I've compared the two," she said. "ClubGrants is what the clubs rely upon to push back against any reform. The fact is they're not generous, they're a rort."
Impact on non-profits
Some non-profits have been left in limbo as they wait for the state government to release the review's final report before deciding if they should participate in the ClubGrants scheme. An example is Odyssey House in Sydney's south-west, which operates one of the largest alcohol and drug rehabilitation services in the state.
Among the documents is an email from Odyssey House's chief executive to the office of the minister for gaming. "For many years we participated in the ClubGrants scheme," chief executive Carmel Tebbut said in the email on November 7, 2025. "The Board took a decision last year to pause our participation in the scheme due to both governance concerns and potential conflict of interest, given we support people with addiction issues." Ms Tebbut, the state's former deputy premier, had asked for an update on when the review would be released. "The Board agreed they would reconsider the matter when the Governments (sic) review of the ClubGrants scheme is finalised," she said.