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Ka-ching! How the gambling lobby won the fight over pokie reforms Ka-ching! How the gambling lobby won the fight over pokie reforms
(35 minutes later)
The loosening of gambling regulations in New South Wales, announced during Responsible Gambling Awareness Week without an apparent trace of irony, tells the story of gambling regulation in Australia in the three years since Andrew Wilkie was rolled on poker machine reforms.   The loosening of gambling regulations in New South Wales, announced during Responsible Gambling Awareness Week without an apparent trace of irony, tells the story of gambling regulation in Australia in the three years since Andrew Wilkie was rolled on poker machine reforms.
Among other reforms, poker machine smart cards in NSW clubs and hotels can now be loaded with up to $5,000, an increase from $200. This is a great deal of money to lose by anyone’s measure. To get a sense of just how out-of-step this government decision is with the available evidence, it’s worthwhile returning to the Productivity Commission’s 2010 report, which recommended that the “cash input level” for poker machines be capped at just $20, a limit the commission believed would protect problem gamblers while having little adverse impact on recreational gamblers.  Among other reforms, poker machine smart cards in NSW clubs and hotels can now be loaded with up to $5,000, an increase from $200. This is a great deal of money to lose by anyone’s measure. To get a sense of just how out of step this government decision is with the available evidence, it’s worthwhile returning to the Productivity Commission’s 2010 report, which recommended that the “cash input level” for poker machines be capped at just $20, a limit the commission believed would protect problem gamblers while having little adverse impact on recreational gamblers.
Related: The fascinating maths and economics of slot machinesRelated: The fascinating maths and economics of slot machines
These slackened regulations are just the latest results of a series of cosy deals between gambling operators and state governments around Australia which are dealing effective poker machine regulation a death by a thousand cuts.  These slackened regulations are just the latest results of a series of cosy deals between gambling operators and state governments around Australia which are dealing effective poker machine regulation a death by a thousand cuts.
In NSW, successive state governments have signed memoranda of understanding with ClubsNSW prior to state elections, effectively pledging to enact a raft of gambling liberalisation measures and avoid any meaningful reform, in exchange for political support. While the political donations from the latest NSW election period have not yet been disclosed, in 2010 ClubsNSW rewarded the NSW Liberal party handsomely for their “understanding”, donating a total of $200,000 within two months of the agreement being signed. In NSW, successive state governments have signed memoranda of understanding with Clubs NSW prior to state elections, effectively pledging to enact a raft of gambling liberalisation measures and avoid any meaningful reform, in exchange for political support. While the political donations from the latest NSW election period have not yet been disclosed, in 2010 Clubs NSW rewarded the NSW Liberal party handsomely for their “understanding”, donating a total of $200,000 within two months of the agreement being signed.
In the Australian Capital Territory, where the ruling Labor party benefitted from a $2.5m donation from its network of affiliated clubs in 2013-14, the gambling and racing minister enabled pokies to accept $50 notes just three days before Christmas last year, a decision that was only reversed after a sustained campaign by the local press. Nevertheless, measures have been passed which will replace low denomination pokies with more dangerous, high-intensity machines and replace the fixed cap on machine numbers with one that will rise with population growth. Once again, these liberalisation measures are in line with a memorandum of understanding between the government and industry.   In the Australian Capital Territory, where the ruling Labor party benefitted from a $2.5m donation from its network of affiliated clubs in 2013-14, the gambling and racing minister enabled pokies to accept $50 notes just three days before Christmas last year, a decision that was only reversed after a sustained campaign by the local press. Nevertheless, measures have been passed which will replace low denomination pokies with more dangerous, high-intensity machines and replace the fixed cap on machine numbers with one that will rise with population growth. Once again, these liberalisation measures are in line with a memorandum of understanding between the government and industry.
In the Northern Territory, the most significant change to poker machine regulations in years – raising caps on the number of pokies per venue and lifting a moratorium on new venues – was announced by electronic press release at 5.47 pm on Friday 12 December 2014 during which the press was pre-occupied by a cabinet reshuffle.  In the Northern Territory, the most significant change to poker machine regulations in years – raising caps on the number of pokies per venue and lifting a moratorium on new venues – was announced by electronic press release at 5.47 pm on Friday 12 December 2014 during which the press was preoccupied by a cabinet reshuffle.
In Queensland,  a raft of poker machine liberalisation reforms were introduced last year under the banner of red tape reduction, measures that have been described as akin to the cutting of a safety belt for problem gamblers. In Queensland, a raft of poker machine liberalisation reforms were introduced last year under the banner of red tape reduction, measures that have been described as akin to the cutting of a safety belt for problem gamblers.
While regulations on pokies in clubs and hotels have been slackened with little fanfare, the new wave of casino development has been more spectacular. Four new casino licenses have been announced in the last two years, with the Tasmania government reportedly in talks to issue a third casino license in the small island state.While regulations on pokies in clubs and hotels have been slackened with little fanfare, the new wave of casino development has been more spectacular. Four new casino licenses have been announced in the last two years, with the Tasmania government reportedly in talks to issue a third casino license in the small island state.
The manner by which casino development proceeds is instructive. The new casino in Sydney is the result of a behind-closed-doors “unsolicited proposal” from Crown which required a new planning process to be devised to fast-track its approval. Crown was invited to design its own tax rate, a luxury apparently available only to those who employ a cadre of former politicians as lobbyists.  The manner by which casino development proceeds is instructive. The new casino in Sydney is the result of a behind-closed-doors “unsolicited proposal” from Crown which required a new planning process to be devised to fast-track its approval. Crown was invited to design its own tax rate, a luxury apparently available only to those who employ a cadre of former politicians as lobbyists.
The aversion to transparency at Crown Sydney extends beyond the approval process to its desired patrons. Crown describes the casino as targeting Chinese high-rollers, a customer base it claims will enable it to operate without poker machines. Yet the rivers of gold from Chinese VIPs in Macau have rapidly dried-up as the Chinese government cracks down on corruption. With anti-corruption measures causing a spectacular 42% drop in VIP gambling revenue in Macau over the last 12 months, it appears that many Chinese high-rollers are merely using casinos to launder the proceeds of crime or circumvent capital controls. It seems likely that in this newly scrupulous international environment Crown Sydney will struggle to meet its “tough” revenue goals without recourse to pokies. The aversion to transparency at Crown Sydney extends beyond the approval process to its desired patrons. Crown describes the casino as targeting Chinese high rollers, a customer base it claims will enable it to operate without poker machines. Yet the rivers of gold from Chinese VIPs in Macau have rapidly dried up as the Chinese government cracks down on corruption. With anti-corruption measures causing a spectacular 42% drop in VIP gambling revenue in Macau over the last 12 months, it appears that many Chinese high rollers are merely using casinos to launder the proceeds of crime or circumvent capital controls. It seems likely that in this newly scrupulous international environment Crown Sydney will struggle to meet its “tough” revenue goals without recourse to pokies.
Meanwhile in Victoria, Crown secured bipartisan support to lock-in the failure of regulations to protect the public from addictive-by-design poker machines. Crown Melbourne’s remarkable license extension included a clause which prevents future state governments from implementing public health reforms, such as reducing maximum bet size or banning smoking in high-roller lounge until 2050 without compensating Crown. This kind of compensation clause is the envy of the tobacco industry, which is currently seeking similar compensation through international trade negotiations. Meanwhile in Victoria, Crown secured bipartisan support to lock in the failure of regulations to protect the public from addictive-by-design poker machines. Crown Melbourne’s remarkable license extension included a clause which prevents future state governments from implementing public health reforms, such as reducing maximum bet size or banning smoking in high-roller lounge until 2050 without compensating Crown. This kind of compensation clause is the envy of the tobacco industry, which is currently seeking similar compensation through international trade negotiations.
In total, approximately $5bn to $9bn was lost in 2012-13 by those experiencing trouble controlling their gambling on poker machines alone. This astonishing transfer of resources from an exploited minority is facilitated by the extraordinary lobbying power of the gambling industry. While the gambling lobby remains unmatched by any organised and well-resourced advocacy body, prospects for gambling reforms in the public interest are likely to remain bleak. In total, approximately $5bn to $9bn was lost in 2012-13 by those experiencing trouble controlling their gambling on poker machines alone. This astonishing transfer of resources from an exploited minority is facilitated by the extraordinary lobbying power of the gambling industry.
While the gambling lobby remains unmatched by any organised and well-resourced advocacy body, prospects for gambling reforms in the public interest are likely to remain bleak.