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Letter from the Antipodes: Gambling Regulatory Reform?

Submitted by on 22 Nov 2010 – 11:56

By Associate Professor Linda Hancock, Deakin University, Australia

The Productivity Commission in Australia released its “Gambling: Final Report” in late July 2010. It has been a decade since the internationally renowned 1999 report, which established that poker machines cause avoidable harms and problem gamblers contribute about 42.3 percent of every dollar lost on poker machines. What is striking is that despite the subsequent ‘harm minimisation’ and ‘responsible gambling’ commitments from state and territory governments over the last decade, gambling losses have continued to mount and are now in excess of Aus $19 billion per year.

Top of the recommendations of the 2010 Productivity Commission report are reforms to slow down and reduce the intensity of gaming machines to $1 per button press and a maximum bet of $120 an hour – the equivalent of 69.43 pounds. Disappointing from a consumer protection point of view is the Productivity Commission’s back-down on a proposal for a a ‘statutory cause of action’ for ‘gamblers to seek remedy against venues that behave egregiously’; its recommendation for a ‘staged liberalisation’ of on-line gaming, commencing with online poker games (already rejected by government in line with the Interactive Gambling Act 2001); its recommendation to exempt online gambling providers from bans on credit cards; and its focus on ‘cost-benefit trade-offs’ – where the real costs are under-estimated due to the difficulties of quantifying the costs of impacts such as depression, suicide, marital breakdown and loss of trust caused by gambling-related deception.

The reform agenda in Australia is driven by robust evidence that gambling products and venue environments need to be re-regulated at a national level; a point taken up by anti poker machine senator Nick Xenophon and independents brokering national action on gambling in the hung parliament.

A new report, entitled “Risky Business Risky Business: Why the Commonwealth Needs to Take Over Gambling Regulation”, proposes a revenue-neutral reform agenda for the federal government that incorporates as crucial elements funding from a new national lottery and a 2 percent ‘super-profits tax’ on gambling revenues to fund incentives for state governments to downscale their dependence on regressive gambling taxes (via the Grants Commission payments to the states). The Productivity Commission recognises that properly regulated lotteries are the least harmful form of gambling.

We know a lot more about gambling than 10 years ago. In Australia, there is national data on density of machines and per capita expenditure for each local government area and there is now a body of research establishing the costs in terms of community impact of gambling on crime, bankruptcy, depression, suicide, loss of savings and family separation and divorce.

In the UK, the gambling industry has brokered annual payments for gambling research and treatment in lieu of a levy and there is no national data base on the number of machines and on how much is spent per gambler or per machine in each Local Authority – to inform advocacy on regulation. Minister Sutliffe asked the Gambling Commission to inquire into whether British gambling machines are as harmful as those in Australia, New Zealand and Canada. Experts say these are globalised products, and British gaming machines may be calibrated a bit lower but in they are functionally equivalent to those in Australia and, potentially, as harmful.

British gaming machines are permitted as of right with certain licences: 4 for pubs and 8 for bingo licensees. FOBTs in betting shops with automated casino games like roulette are seen as a problem; especially in some low income areas where betting shops have proliferated over recent years – like Hackney in London with 68 betting shops (272 machines) in a concentrated area.

Charities are critical of the lack of gambling impact research, the impotence of local authorities to act, the concessions granted by government to the gambling industry, and the lack of preventative action at the local level.

In the UK, the 2005 Gambling Act gave local authorities licensing duties but removed their capacity to object on the grounds of saturation. The gambling Act has great potential for venue-based player protections from codes of practice that are yet to be effectively formulated. The UK lacks a national data base on the number and losses from machines in its complicated gaming machine licensing regime.

The industry claims it is heavily regulated and is calling for further deregulation.

This is consistent with policy drivers at the international (OECD), transnational, EU and national UK policy levels. Within the EU, the global free trade movement has sought to influence Member States’ regulatory reform policies with a focus on ‘better regulation’ principles and tools emphasising the reduction of administrative burdens on industry.

Regulators and administrators play a pivotal role in determining the fine detail and tools of regulation. Regulation is the outcome of complex negotiation between interested parties. It may be that the Hampton Review principles of Proportionality, Accountability, Consistency, Transparency, Targeting may not adequately account for the public interest.

As is now recognised in Australia, gambling stands alongside other potentially ‘dangerous consumptions’ or social harms industries– tobacco, alcohol, obesity, which demand particular protective/public interest regulation.

In many respects, the devil is in the detail.