“There are strong grounds for these concessions to be significantly reduced,though this would require phased implementation to facilitate adjustment by clubs.”

Ralph Lattimer,who led the research group for that inquiry,said the response to the commission’s findings was muted. The evidence that clubs were in a better position to support their local communities by making grants to sporting and other groups had never been clear,he said.

“They’re not really accountable to the community,” Lattimore said. “They don’t have parliamentary committees,they don’t have[Australian National Audit Office],they don’t have freedom of information,they don’t have as strong disclosure requirements or any of the customary accountability measures that government does.

Clubs were already exempt from commercial tax rates by virtue of being not-for-profit entities,which was “somewhat odd,given that clubs have so much revenue they’re opening new facilities that are quite commercial in their orientation,” he said.

“We saw very little rationale for the concessions in the clubs industry.”

A spokeswoman for ClubsNSW said clubs already paid $1.4 billion in state and federal taxes and provided $936 million worth of low- or no-cost community and sporting facilities across the state. More than 40 clubs now had a higher tax rate than the casinos,she said.

“Unlike other hospitality venues,clubs are owned by the community,with profits going back into the community,or into the upgrade of members’ facilities,rather than the pockets of shareholders or owners,” the spokeswoman said.

“It is also worth noting that of the 2713 for-profit companies in the Australian Taxation Office’s 2021-22 Tax Transparency Report,31 per cent did not pay any income tax.”

Acting NSW Treasurer Courtney Houssos did not directly comment on the gambling tax concession for registered clubs,but said the review of ClubGrants would help determine whether that scheme delivered value for money to the people of NSW.

Participation in the ClubGrants scheme is voluntary and entitles clubs to a rebate of up to 2.25 per cent on their gambling machine profits over $1 million if they devote a proportion of their profits to projects and services that improve the living standards of disadvantaged people,and community development or sporting activities.

More than $130 million in grants was distributed last year,for which clubs received a combined rebate of $84.5 million.

But it has been criticised for its lack of accountability and transparency. Thepublication of grant recipients for the first time this year showed that clubs were directing the largest donations back into their own operations and those of their subsidiaries,which is permitted under the scheme.

The government’sdiscussion paper on the scheme invites people to comment on the extent to which is has helped improve the lives of disadvantaged people and the appropriateness of the tax concession,among other considerations.

Monash University gambling researcher Charles Livingstone said it used to be the case that clubs provided a service to their communities that was not being provided by government,and the concession was then justified.

“It all changed in the 1990s with the introduction of electronic gaming machines and the whole industry went berserk,” Livingstone said.

“Essentially you’ve got a system where they all get the concession,they’re bagging the money,they’re making profits much higher than the pubs are making,and despite the fact that at the top end of town,calling them not-for-profit is a real stretch of the imagination.”

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