Merivale’s pokie empire expands to Rose Bay

Merivale chief Justin Hemmes opening Club Rose Bay with 101-year-old World War II veteran John Ryrie on Saturday. Credit: Instagram

Hemmes has been promoting his links with RSL members in the lead-up to the club’s re-launch. On December 20, 101-year-old World War II veteran John Ryrie cut the ribbon to open the club with the billionaire. Merivale has also retained a few nods to its RSL heritage in the fit-out, including on the front of the building.

“The price of Liberty is eternal vigilance,” the sign on the face of the club reads.

Beneath the sign, there are 36 pokie machines: more than double the previous number held by the struggling former RSL club, which was entitled to 16 but had only three machines in November, down from 30 in 2021.

One of Club Rose Bay’s first acts after it signed the 12-year contract with Hemmes’ was to apply for a further gaming machine increase of 20 machines. Two months later, the club lodged plans to make its car park a licensed area and to expand the gambling area on the ground floor.

A spokesman for the NSW Independent Liquor and Gaming Authority said the increase was approved after 20 machines were transferred from the Richmond Club in Richmond which were located in an area with a higher risk of gambling harm.

The authority also imposed a late-night gaming condition on the Club Rose Bay licence to cease operation of gaming machines by midnight.

Club Rose Bay reopened on Saturday. Credit: Sitthixay Ditthavong

“If the authority has gaming-related concerns with specific applications, the authority may impose conditions on a venue’s licence to mitigate those concerns – as occurred in the Rose Bay RSL decision – or refuse applications,” a spokesman said.

Internal documents also reveal Merivale has run poker games in its private members club and that it has taken a 20 per cent cut from every game played, which it described as “liquid profit”.

The poker table inside Merivale’s Level 6.

Nightly management reports known as “the John”, named after Hemmes’ father John, who began the Merivale empire with department stores in the 1960s, show staff being instructed to push customers onto the poker table at the private members’ club Level 6.

“Poker correlates to how much the house takes (set up fee). This is the 20% we collect for every poker game played,” the documents state. “This is liquid profit, so always push poker and make sure the croupier is doing the same!”

Merivale charged members between $5000 and $20,000 a year to become a member of the Level 6, where they could play poker surrounded by young female staff, some of whom allege they were exploited by the company. A Merivale spokeswoman denied the allegations and said the company took its obligations under the Sex Discrimination Act very seriously.

The members included older men in politics, consultancy and construction, as well as others who would go on to become some of Australia’s largest drug dealers and tax fraudsters.

Liquor and Gaming NSW regulations say it is illegal for a licensed venue to receive a cut of poker games or to charge players to participate in the game.

“For example, if a player is required to be a member of a poker club in order to play a private game at the venue, then the game would be unlawful,“ the regulations say. “If an operator or venue charged a rake or other fee at any point in the game, this would also be unlawful.”

Merivale said statements about its poker nights were false and “therefore your questions are irrelevant”.

NSW Police are liaising with Liquor and Gaming in relation to the Merivale poker nights.

Club Rose Bay’s pokie machine expansion comes as the NSW government continues to stall on plans to introduce cashless gambling into pubs and clubs, and as the NSW opposition is reviewing the signature policy of its former leader, Dominic Perrottet.

Opposition Leader Kellie Sloane last month told the ABC that the Coalition was reviewing its position on cashless gambling and that it was consulting with industry before clarifying after her comments were reported that there was “no retreat” from the policy.

Sloane, the MP for Vaucluse, did not respond to requests for comment about the increase in the number of pokies in her electorate or on her position on cashless gaming, which aims to reduce harm by setting limits for gamblers.

Cashless gambling is unpopular among the clients of Michael Photios, the Liberal powerbroker and lobbyist who retains significant influence over Liberal MPs and whose polling on former leader Mark Speakman precipitated Sloane’s ascent to the leadership.

Photios, a close friend of Hemmes, is Merivale’s principal lobbyist and hosted his Premier National Christmas Party in December at Merivale’s late-night CBD music venue, The Press.

Liberal powerbroker Michael Photios with former NSW minister Stuart Ayres. Credit: Tash Sorensen

The event had a lower-profile turnout than in previous years but it was attended by Liberal Party figures including George Brandis and Stuart Ayres. Photios’ clients also include the Australian Hotels Association and SportsBet.

The celebration came months after this masthead revealed allegations that Merivale underpaid staff, ignored sexual harassment and facilitated drug use while serving VIPs with criminal and political links. Merivale has denied the claims.

Industry figures, including lobby group ClubsNSW, have closely watched the deal between Merivale and Club Rose Bay.

Clubs are entitled to tax breaks in NSW because they are not-for-profit organisations, and commercial interests are not permitted to profit from their gaming machine revenue.

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Each pokie machine in a high-performing hotel earns an average net profit of $262,000 per year, according to data compiled by the Wesley Mission.

A ClubsNSW spokesman said that as the peak industry body for registered clubs, it was always concerned that not-for-profit clubs were run for the benefit of members and not private interests.

“We will continue to work with the government and regulators to ensure that any assets run by community clubs are retained for the use and benefit of their members,” he said.

Before voting to accept the Hemmes proposal, Club Rose Bay’s members voted to amend their bylaws to allow persons other than the club and its members to derive a profit from the club on the condition that it arose from “dealings reasonably carried out, or contracts reasonably made”.

Hemmes has also extended the club a $778,678 loan with market-rate interest, which will be forgiven at the end of 12 years if not repaid in full.

The agreement was a lifeline to Club Rose Bay after its members voted in January to accept the Hemmes proposal, rejecting an alternative offer by Coogee Diggers to amalgamate.

The Diggers club had offered a greater dividend to unsecured creditors than Hemmes and an upfront contribution of $1 million.

But its proposal was conditional on the lease being transferred into its name, and it did not have the backing of the landlord, the Rose Bay RSL sub-branch that supports veterans.

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Neither did it have the support of Club Rose Bay’s former directors, who would have permanently lost their positions when the club was dissolved into the operations of Coogee Diggers.

Club Rose Bay’s administrators advised members in November 2024 that the Hemmes proposal was the only one that could be implemented.

“It is our view that [the Coogee Diggers] proposal cannot be achieved at this time, given the lack of support from the landlord and the directors’ preferred proposal,” the administrators reported.

Coogee Diggers went on to execute an amalgamation with Paddo RSL, which some Paddington members have described as an asset grab. It requires the transfer of the title on Paddo RSL’s Oxford Street premises to Coogee Diggers.

Rose Bay RSL sub-branch president Charles Gallagher declined to comment on his preference for the Hemmes proposal.

Merivale’s initial $82,000 development application for Club Rose Bay was waved through by Woollahra Council in November. The cost of the rebuild, not including the expansive internal fit-out, has surged to $367,720.

“Club Rose Bay opened on the weekend, and as part of our follow-up, we will be reviewing compliance with DA conditions early in the new year,” a Woollahra Council spokesman said.

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