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Betting on the future of Australia’s gambling addiction

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My first bet was with an illegal SP (Starting Price) bookmaker behind the Junction Hotel in Melbourne’s northern suburbs. It was in the late 1950s. My father cleared me with the look-out ‘cocky’ and I mingled with the blokes milling around the penciller.

Most of the pubs in the district had SP bookies. Many of them were Catholics. The cards, the dice and the racecourse were part of Irish cultural baggage. Just as well, for the enterprise of Catholic parishes and schools was funded in no small part by gambling. A ‘silver circle’, the spinning wheel and raffles at fetes, and sportsmen’s nights with diverse gaming tables were standard features of parish life through much of the 20th century. Neither clergy nor laity publicly pondered the morality of this form of fund-raising. Strict Protestants viewed all forms of gambling as a vice; we called them ‘wowsers’.

The SP bookies and their patrons in the 1950s lived in the same locality. The only technology involved was a radio to hear the races and the starting prices. The punters knew that a bit of chicanery around the tracks forever tilted the odds but they backed their smarts and an occasional allegedly insider ‘tip’ anyhow. Doubtless some punters’ losses caused problems for themselves and their families. It was blokey recreation, easily over-romanticised, but limited in time and scope, moderated by communal norms and of minimal social harm.

For governments and racing clubs, the problem with gambling was financial, not moral. They could not derive revenue from unregulated SP betting. The solution was to rationalise gambling by appropriating off-course betting exclusively for Totalisator Agency Board (TAB) shops.  

So, around the mid-20th century began a progressive corporatisation and technological transformation of gambling in Australia. Enabled by the information technology revolution and driven by multi-national, mass-marketing bookmaking corporations, off-course punting has burgeoned into legalised, unlimited on-line wagering on any sport or activity with chance outcomes, anytime and anywhere in the world.

New South Wales led the other States in introducing mechanical ‘non-sport’ gambling in the 1950s. Popular resistance to so-called ‘poker machines’ in pubs, clubs and later-approved casinos, was eventually overcome in other States, except Western Australia. Straitened State budgets, promises of effective regulation and undertakings that portion of the government take would be directed to community good causes cleared the way.

 

"The Economist reported in 2014 that Australia leads the world in gambling expenditure per capita." 

 

 

Now Australian States have mature gambling industries with on-line sports betting, accessible electronic gaming machines (EGMs) in pubs, clubs and casinos, lotteries et al. The Economist reported in 2014 that Australia leads the world in gambling expenditure per capita.

The enchanting prospect of every individual’s total freedom to gamble has been delivered. Except, as the early 20th century German sociologist Max Weber foreshadowed, modernity’s rational, bureaucratic, technology-driven progressions tend to lead society into what Weber termed an ‘iron cage’ from which it is difficult to escape. Industrial scale gambling has constructed such a cage with socially malign ‘problem gambling’ and criminal activity on one hand and government dependence on its economic product on the other.

The frustration expressed by Ray Finkelstein QC in framing his key recommendation in the Royal Commission into the Casino Operation and Licence (October 2021) well illustrates the ‘cage’ effect. Having decided that Crown Melbourne’s conduct made it ‘inevitable’ that it be found unsuitable to hold the casino licence, he had to weigh ‘two almost irreconcilable positions’. On one hand, maintaining the integrity of the licensing system required cancellation of the Crown licence: on the other, there was the risk that the cancellation would cause considerable harm to the Victorian economy and innocent third parties.

There is a similar, irreconcilable gap at the philosophic level, also noted by Finkelstein. The libertarian proposition that a responsible adult’s right to gamble should be unfettered is irreconcilable with advocacy of interventions to minimize risk of harm to the gambler and affected others. There can only be a political resolution to that conflict. It hangs on the calculus of benefit versus harm.

 

"The Productivity Commission’s 2010 report estimated the social cost of problem gambling nationally at between $4.7 and $8.4 billion a year." 

 

The economic and recreational benefits from gambling are significant. The Productivity Commission reported (2010) that State and territory governments derive 11 per cent of their taxation revenue from legalised gambling. In 2020, EGM venues in Victoria employed 15,000 people. Gambling contributed $2 billion to State revenue, the fifth highest source. The gambling industry is important to tourism and to downstream suppliers. It is a major source of recreation and enjoyment. A Victorian Responsible Gaming Foundation study (VRGF, November 2017) estimated that, of the state’s whole adult population, 70 per cent gambled in some form.

The debate around costs of gambling in all states focuses on problem gamblers, particularly the users of EGMs, and the ripple effects of their losses. In 2018, Victorians lost $2.7 billion on EGMs, seven times as much as on sports gambling.

The Productivity Commission’s 2010 report estimated the social cost of problem gambling nationally at between $4.7 and $8.4 billion a year. For the gambler, the estimate took account of financial loss plus a range of mental, physical and health problems. For the ‘affected others’, it assessed financial problems, housing stress, family violence, relationship breakdown and maltreatment of children.

The 2017 VRGF study referred to, using 2014-15 data, assessed 122,077 people (2.8 per cent of the Victorian population) as moderate-risk gamblers affecting 368,000 others and 35,415 problem gamblers (0.8 per cent of the population) affecting 212,500 others. Using cost elements similar to those used by the Productivity Commission, this VRGF study estimated total costs generated by gamblers in these two categories as over $1.9 billion (moderate) and over $2.35 billion (problem).  

At the collective level, the gaming industry is an efficient mechanism for regressive wealth transfer. The local government area (l.g.a.) Brimbank in Melbourne’s west, ranked third among Victorian local government areas for socio-economic disadvantage, was top for poker machine expenditure in financial year 2018-19 with an average spend of $617 per adult through its 953 machines in 15 venues. State coffers and private gambling facility owners do well out of Brimbank, not so well in out east in Booroondara. That prosperous l.g.a. was 38th for pokies expenditure putting $95 per adult through 162 machines in just 4 venues.

The Productivity Commission’s 2010 estimate was that gamblers in the ‘moderate-risk’ and ‘problem’ categories accounted for 60 per cent of EGM losses. Small wonder that there is gambling industry resistance to and government temporizing in implementing strong policies to mitigate personal and social damage.

 

"The Australian Gaming Council is up-front on its website about the iron law of gambling: you cannot win no matter how long you play."

 

Gambling is now a core national industry providing significant employment, profit for private providers and revenue for governments. All good but, as with every form of industry, there are ‘externalities’. In the case of the gambling industry, it is the personal and social costs of ‘problem’ or ‘addicted’ gamblers that must be taken into account.

The Productivity Commission (2010) recommended a public health model approach to addressing problem gambling. Researchers and advocates of reform generally adopt this framework. (See, for example, Identifying effective policy interventions to prevent gambling-related harm.) The model seeks to re-frame the problem as one of product safety and supplier responsibility.

The key harm minimisation measures proposed include reduced accessibility to EGMs in the community, mandatory personal player cards with associated pre-commitment on expenditure and time on EGMs in a venue, and constantly displayed product-disclosure such as ‘pop-up’ messages on machines reminding players of the real odds of each bet.

The industry body, the Australian Gaming Council is up-front on its website about the iron law of gambling: you cannot win no matter how long you play. Critics want this ‘static’ message made ‘dynamic’, constantly on players’ screens, while they are in the risk zone.

Forms of ‘pre-commitment’ have been introduced in some jurisdictions. They have been ‘partial’ rather than mandatory on players, allowing them to over-ride their earlier commitments when the amount or time came. The Productivity Commission likened this to giving ‘Ulysses a knife to cut his bonds when the Sirens call.’ 

With so many powerful, vested interests involved, the path out of the cage through effective harm-minimsation policies will be, as Max Weber said of politics, ‘a slow boring through hard boards.’ Maybe the revelations and recommendations of the Bergin (NSW) and Finkelstein (Victoria) commissions of inquiry have given reform lobbyists and legislators a power drill. In NSW, for example, the responsible Minister has already proposed legislation to introduce mandatory cashless gaming cards with time and spending limit features.

Meanwhile, those of us who missed a win in last year’s worthy Eureka Street raffle are sure to back up in 2022. Tenete traditiones, as my Catholic secondary school’s motto exhorted.

 

 

Frank Hurley is a former Pro Vice-Chancellor (Academic) at Ballarat (now Federation) University.

Main image: A mature woman, sitting in front of a slot machine, is gambling in a casino. (Instants/Getty Images)

Topic tags: Frank Hurley, Gambling, Casino, Addiction, Australia Gaming Council

 

 

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Existing comments

In days gone by a requirement for any form of gambling to be considered "legal" was that there was some element of skill on behalf of the punter. Almost insulting to the intelligence is that this included the dubious attributes of when to purchase the lottery ticket, placing the x's in the right boxes or just being skilful enough to hand over the bet and not lose the ticket. The employ of actual skill is of course denied to punters by gambling operators; if you're observed clever enough to count cards or work out the pokies algorithms the casino will oblige your safe conduct from their premises; banned, quick-smart. Unfortunately, many punters believe they possess the mysterious skill; a mix of dopamine, adrenaline, pride or desire to get even keeps them playing; statistics and stupidity determines the outcome. I believe that any amount tendered for gambling needs to be registered for the purposes of accounting both laundering and wastage; problem gamblers can withdraw and (perhaps) bet the family assets and there's little opportunity to determine if the cash was actually lost (wasted) or if it was simply transferred to another person or account. It's difficult to prove wastage in the Fed Circuit court but just maybe pursuing accountability by deeming gambled funds wastage might change punters' attitudes.


ray | 24 February 2022  

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