In a room at the back of the Wallan Hotel, a radio station pumping out Blondie’s ‘Atomic’ competes with a chorus of upbeat chirrups and bells, and the occasional clatter of coins. It’s a chilly weekday afternoon and a dozen or so men and women are hunched, statue still, over poker machines. No one speaks. A coffee machine is stationed just inside the door, an ATM just outside.

Renovated by the Melbourne accountant Jim Hogan, the Wallan, situated in Victoria’s Macedon Ranges, is a riot of jazzy carpets and faux stained glass. It has an airy, timber-beamed bistro, a shady courtyard, a children’s play area, a saloon bar, a sports bar and a TAB. Upstairs is a function room; a motel complex is being built at the rear.

Wallan is a small country town; so is Romsey, which lies 22 kilometres west, across rolling countryside and a patchwork of fields grazed by sheep and alpaca. Romsey’s one pub is also owned by Hogan, but it is very different from the one in Wallan. The restaurant serves standard Chinese fare rather than Tasmanian oysters and Wagyu-beef sausage. The saloon bar is uninviting, with its edgy atmosphere and gloomy decor.

Most notably, the 142-year-old Romsey Hotel has no pokies. Hogan, who acquired it in 2004, envisaged a major refurbishment; locals, backed by the shire council, rebelled against his plans for a gaming room. After a five-year legal battle, the town triumphed last November, setting a precedent that is being scrutinised by other shires in Victoria and further afield.

For anti-pokies campaigners, it was a landmark victory: a community had stood up to powerful gaming interests – and, by association, to a revenue-hungry state government – and won. But in Romsey the ramifications of the David-and-Goliath clash have been sour–sweet. Residents who were in favour of the machines, believing they would revitalise the local economy, complain that their views were ignored. As for the hotel, its $5 million refit has been ditched, it is now up for sale and, according to Hogan, it is being eyed by a petrol retailer. Briefly famous for having a pub with no pokies, Romsey is in danger of becoming the town with no pub.

Hogan’s name is emblazoned across the Wallan Hotel. His navy-blue Bentley is parked outside. The man himself – sandy-haired and wearing a dark suit and striped tie – insists he is not being vindictive. “It’s purely a business decision [to sell Romsey]. I’m not bitter.” He seems bitter, though. “Gambling is a legal activity and I think it’s just crazy that one particular town can be exempt. It’s like you’re drawing a barrier around some mythical place. It’s like Romsey is some kind of Brigadoon [a Scottish village sealed off from the outside world, depicted in a 1954 film of the same name], unsullied by the so-called bad things in society.”

Less than an hour’s drive from Melbourne and with a population of 4500, Romsey is dominated by young families drawn to cheaper housing, larger blocks and a relatively safe environment. Many locals are tradespeople, working in Melbourne’s northern suburbs or at the airport. You could almost blink and miss the town, which occupies a few blocks either side of the highway.

Drought, and mortgage stress, have taken a toll in Romsey, where a few dozen residents banded together to fight the pokies. As well as draining money from businesses, they warned, the machines posed a threat to struggling families. There were also fears that the character of the town would change. Julie John, a mother of six, says: “I like the fact Romsey doesn’t have a train station or a high school or a Woolworths. It’s a peaceful place, totally quiet at night. Even the chip shop closes by 8 pm.”

A plebiscite organised by Macedon Ranges Shire Council found 79% of residents were against Hogan’s plans. After the Victorian Civil and Administrative Tribunal (VCAT) ruled in his favour, the Supreme Court upheld the council’s appeal in 2008. In its groundbreaking judgement, the court emphasised the necessity of taking into account community views. At a second hearing, VCAT concluded that the negative social impact on Romsey would outweigh any economic benefits.

The case struck a chord nationally. Anne Phelan, star of Prisoner and Neighbours, lives in a converted church in Romsey and used to work behind the hotel bar between acting jobs; she toured a play around regional Western Australia earlier this year. “People would come up to me in these remote places and say, ‘Aren’t you from that town in Victoria that’s beaten the pokies?’”

Now other places are following suit. In Woodend, west of Romsey, bumper stickers proclaim: “Proud to be Pokie-Free”. In Jan Juc, a tranquil seaside hamlet near Torquay, the council is resisting a gaming application. At a conference in June, the mayor of Macedon Ranges, John Letchford, was courted by colleagues from New South Wales, Queensland and South Australia. Romsey, it seems, has spawned a grassroots movement that is trying, Canute-like, to halt the spread of pokie machines. “It has given a lot of hope to communities,” says Heinz Kreutz, president of the Victorian Local Governance Association.

In the town itself, though, resentment simmers. During the legal saga, some pokies opponents received abusive phone calls; others had rotten eggs or beer bottles smashed on their doorsteps. Drinkers jeered at Letchford from the hotel verandah after VCAT delivered its final ruling.

The outcome was a blow to Romsey’s sports clubs, which depend on Hogan for financial support. “We have cricket, football, netball, golf, bowls and tennis, and poker machines would have contributed to each and every one of them,” laments John Lynch, a former football club president, as he downs a white wine in the near-deserted hotel lounge.

To others, Hogan – who also has a pub in Bendigo and wants to open a casino there – is the villain for refusing to go ahead with the Romsey Hotel renovations. “Just because we don’t want pokies rammed down our throats,” remarks greengrocer Joe Schembri. As for the prospect of the pub closing, Lynch warns it would “devastate the town … I don’t know how Romsey would survive.”

Of his detractors, Hogan says: “It’s the classic nimby argument. They know their fellow citizens gamble, but they don’t want to see it in their town. It’s preposterous that 20 or 30 people can hold up a multimillion-dollar development. What about the rights of my patrons? They’ve been abrogated by a small minority of people who want to foist their morals on everyone else.”

According to the Productivity Commission, which in a recent report advocated tough restrictions on pokies, problem gamblers account for about 40% of spending on the machines. Since many end up broke or in jail, the industry is always on the lookout for new punters – “trawling around for communities like Romsey,” says Nick Xenophon, the independent senator. “But this case shows that communities, if they have a choice, don’t want poker machines.”

For the record, Wallan did not want them either. However, in that instance Hogan was able to prevail. Geoff Neill, a former Macedon Ranges councillor, says: “He probably thought he could come to Romsey and do the same thing here. Unfortunately for him, he hit the wrong town.”