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Australian Debates on Gambling raise Questions Internationally

Submitted by on 09 Mar 2012 – 12:40

Professor Linda HancockBy Professor Linda Hancock, Personal Chair, School of Humanities and Social Sciences, Deakin University, Australia

Australia has had what we call ‘poker machines’ (slots, VLTs or electronic gaming machines) since the 1950s ( low key fruit machines in New South Wales clubs). Problems escalated in the 1990s with the roll out of high-tech electronic ‘virtual reel’ gaming machines into 13 new casinos and in 5,700 suburban clubs and hotels (in all states except Western Australia which has only the casino).

There are now over 200,000 gaming machines in Australia and gambling revenue (player losses) across all forms of gambling comes to over A$19 billion. This is 40 percent more than the amount spent on retail alcohol sales and signals the fact that Australian adults on average lost $1,300 gambling in 2010. Casinos account for about 18 percent of revenue (over A$5 billion) and suburban gaming machines, 75percent of revenue (about A$12 billion).

Gambling is essentially a supply-driven industry, reliant on government approval for liberalisation into new modalities and expansion of existing forms into new communities, demographics and venues. The gambling industry has invested in research on product profit maximisation, advertising, product promotions and a campaign to normalise gambling culturally. The industry is focused on growing profits into new markets such as hand held mobile devices, internet and in-game sports betting, whilst expanding platforms.

Gaming machines are globalised products driven by a burgeoning transnational gambling industry, with continuous platforms of gambling such as automated roulette, electronic table games and gaming machines successful in realising high revenue and capable of enticing players to lose control, chase losses and spend more than they intended.

Ironically, liberalisation has typically been accompanied by governments pledging they will regulate gambling to guarantee probity, anti-fraud, crime control, ‘responsible gambling’ and the protection of minors and vulnerable groups.

Expansion has been fuelled by insistence that regulation is superior to illegal forms proliferating under prohibition. Government reliance on gambling taxes for mainstream budget items has resulted in governments themselves becoming addicted to the tax revenue (over A$5 billion per year in Australia) and becoming co-producers with the industry of gambling and the harms that come with it.

What lies at the heart of debates is the downside of gambling: the impact of problem gambling on individuals, families and communities (bankruptcy, crime, marriage breakdown, depression and suicide); the diversion of money flows out of local community economies and questions raised about the ‘light touch’ regulation by governments becoming increasingly addicted to the taxes raised from gambling. In Australia, gambling taxes represent 10 percent on average of state-own revenues.

Why is Australia relevant to gambling regulation deliberations elsewhere?

Australia’s federal structure has meant that States/Territories regulate and license gambling and the national federal government has had more limited jurisdiction over advertising (via Broadcasting laws) and internet gambling (with the Interactive Gambling Act 2001 resulting in bans on internet casino and gaming machine gambling). Importantly, a 2006 High Court judgement on the industrial relations issue of Work Choices confirmed that the Commonwealth could use its Corporations powers to over-ride the States.

Australia has now had two major national inquiries into gambling conducted by the highly respected independent Productivity Commission (PC) in 1999 and 2010. In the decade between these reports, the lack of State/Territory action on curbing the now well-documented harms from gambling and gaming machines in particular, has galvanised pressure for the national government to intervene in gambling policy and regulation.  (Gamblers can lose over A$1200 per hour on ordinary gaming machines in clubs and hotels and excessive amounts on casino machines exempt from regulations on spin rate and note acceptors.) With an estimated 115,000 ‘problem gamblers’ in Australia, and an additional 280,000 at ‘moderate risk’ each year, gambling is a substantial cost for the Australian community.

The lack of States commissioning independent research and the lack of protection of vulnerable groups have triggered a national political debate, which has put gambling firmly on the national public policy agenda.

Following the Productivity Commission report, a multi party Select Parliamentary Committee set up to inquire into gambling, recommended that gaming machines be pulled back ($1 per button press to a maximum of $120 per hour) and that States adopt a national program of mandatory pre-commitment (whereby patrons set limits on how much they are willing to lose whilst gambling).

At the national level, gambling has become a political football. In 2010, the Gillard Labor Government was only able to form government with the agreement of independents. MP Andrew Wilke insisted on a written agreement with the PM to implement mandatory pre-commitment. Wilke subsequently agreed to an amendment from the Greens (with balance of power in the Senate) to put in place the $1 bet/$120 per hour consumer protection measure.

The Industry galvanised into action with a A$40 million war chest to oppose proposed national reforms. Spearheading this national campaign, NSW clubs with large venues of up to 750 gaming machines (bigger than casinos in many other jurisdictions), are closely linked to Labor’s political machinery.

Meanwhile in late 2011, Labor shored up its majority by returning the Labor speaker to the back benches and depleting Opposition numbers with the appointment of a new Speaker. In January 2012, no longer needing Wilke, PM Gillard reneged on the Wilke agreement.

Aside from the national outcry about trust in government, at the heart of national debates are concerns about ‘light touch’ government regulation of the industry; the impact of continued expansion of gambling; its impact on Australian culture; the harms it causes to individuals, families and communities (each problem gambler affects on average seven other people) and the need for a national approach to product safety and consumer protection. With research showing that problem gambling contributes 40+ percent of gambling revenue, a national public health consumer protection campaign is focused on more effective regulation and harm reduction. Having really made it onto the national policy agenda, international attention will continue to focus on what comes out of the political battle on gambling in Australia.

Prof. Linda Hancock has a Personal Chair in Public Policy at Deakin University and is the author of Regulatory Failure: The Case of Crown Casino, Australian Scholarly Press, Melbourne.