Billionaire hotelier Bruce Mathieson says public concerns about gambling were a key reason behind the decision by co-owner Woolworths to offload its controversial poker machine business.

Bruce Mathieson says Woolworths was concerned about reputational damage from its poker machines business. Credit:Photo: Arsineh Houspian

The retail giant has been dealing with a number of regulatory investigations across the country into its hotel chain and poker machine operations after a series of damaging revelations, including staff tracking gamblers without their permission and vulnerable customers being given free alcohol to entice them to keep betting.

Woolworths announced its plans on Wednesday to merge and sell its pubs and bottle shops as a new company, to be called Endeavour Group. However, it will maintain a minority stake of around 15 per cent in the new business.

Poker machine critics hailed the decision as a “globally significant” divestment, likening it to Rio Tinto’s decision to abandon coal. Woolworths owns 12,000 poker machines in 323 pubs and clubs across the country through its subsidiary, ALH, making it the third largest pokie operator in the country after Crown Casino and Star.