It was opposed by the state’s two Greens MPs and independent Kristie Johnston.
The laws would give ownership of pokies to individual pubs and clubs, breaking the licence held by Federal Group, which runs the state’s two casinos, since 1973.
The tax rate on poker machines has been cut, but the Liberals say the new arrangement will leave Federal Group $25 million worse off per year.
Labor campaigned on banning pokies at their unsuccessful 2018 election tilt but the party has since dropped the policy.
The legislation seems likely to pass the 15-member Legislative Council which includes four Liberals, five Labor members and six independents.
Greens’ leader Cassy O’Connor, whose party wants to ban pokies from pubs and clubs, told ABC radio Labor had “utterly caved in” to the industry.
Premier Peter Gutwein told state parliament on Thursday the bill includes some of the strongest harm minimisation measures in the country.
Two weeks ago, the state government announced the Tasmanian Liquor and Gaming Commission would investigate the merits of implementing facial recognition technology to identify self-excluded problem gamblers.
The commission will also explore options for a smart card system where gamblers could put limits on their losses in advance.
“Importantly we’ve underpinned those pubs and clubs in regional areas and the jobs that they provide,” Mr Gutwein said.
Tasmania’s peak body for social services, TasCOSS, said those harm minimisation measures were band-aid solutions.
“We know that self-exclusion or voluntary measures, such as facial recognition technology and card-based play, have minimal impact compared to universal and mandatory measures such as a $1 bet limit, slower spin speeds and stopping losses-disguised-as-wins,” CEO Adrienne Picone said.
“Gambling harm is a public health issue because it impacts the health, finances, relationships and security of Tasmanians and their families.
“We call on the members of the upper house to respect the real interests of their communities and oppose this damaging legislation.”
It is estimated by Anglicare that people in Tasmania, which has a population of 541,000, lose $200 million per year on pokies.
If passed, the laws would begin on July 1, 2023.