The approval is a major step forward for developers planning an $800,000 revamp of Rafferty's Tavern to turn it into a major family dining area and convention venue.

Now they await the final approval step of a planning permit decision by Warrnambool City Council expected late September.

Detailed reasons for the VCGR decision will not be released for another fortnight, but developer partner Peter Cook told The Standard yesterday the gaming licence had been approved on socio-economic grounds.

"We are very happy with the decision and now await the outcome of the council process," he said.

"Hopefully there will be a favourable vote which will allow us to undertake working drawings for the project.

"We are looking to start construction soon after Christmas.

"The new gaming entitlements regime starts on August 16 next year and our aim is to be completed and ready to go by then."

The council withdrew its preliminary opposition submission to the VCGR hearing after a community survey showed the majority of respondents supported the redevelopment or had no issue with it.

It showed people would rather have pokies in the revamp than not have it at all, but there has been criticism in how the survey was undertaken.

Detailed survey results have not yet been released to the public.

Mr Cook said a local architectural-drafting firm had been engaged and district sub-contractors would be involved in construction.

Cook Beaumont, which owns several hotels and entertainment venues around the state, paid $2.47m for its 19 gaming machine entitlements at open auction last year.

Meanwhile, the Flying Horse Bar and Brewery in east Warrnambool confirmed it too would apply for a VCGR licence for its eight gaming machine entitlements, changing earlier plans to sell them.

The family company has listed its 30 pokies entitlements for Moyne Shire for sale on the commission's website.