Tag Archives: Charles Livingstone

Coles wants $1 maximum bets for pokies – so why won’t the pokie-makers play ball?

The Conversation

Charles Livingstone, Monash University

Wesfarmers, operator of Coles and other retail brands, reportedly wants to pursue harm-prevention modifications to its poker machines. It has asked five pokie manufacturers, including Aristocrat Leisure, for help in trying out games with a maximum bet of A$1.

All have refused, apparently citing costs.

Like Woolworths, Coles – which operates the pokies through its hotels – is a major player in this space. It operates more than 3,000 machines in Queensland and South Australia. But, seemingly unlike Woolworths, Coles is concerned about these machines’ potential for harm.

A true money-spinner

Woolworths, through its subsidiary ALH Limited, operates more than 12,000 pokies across Australia. Net revenue from these is around $1.1 billion per year; the business is a 75:25 partnership with the Mathieson family’s businesses.

Coles’ revenue from its machines is much lower – around $185 million.

Pokies are great money-spinners for hotels, clubs and casinos in Australia, and increasingly internationally. But the technology behind them is not particularly novel. Contemporary pokies are quite straightforward computers, albeit housed in a novel case and with a customised display.

What makes them different is their software, which uses well-established psychological principles to make them “attractive” to punters.

But the features that make pokies “attractive” also make them addictive. The Productivity Commission has estimated that 42% of pokie revenue comes from people with a serious pokie addiction – and another 20% comes from those with a developing habit.

Manufacturers have acted in the past

Given pokies’ computerised basis, the manufacturers’ refusal to work with Coles is remarkable.

Like all companies in the business, Aristocrat Leisure prides itself on its innovative capacity. Through its then-European subsidiary Aristocrat Lotteries, Aristocrat developed and provided the Multix game terminal to Norsk Tipping, the Norwegian gambling operator, from 2008 onwards. Aristocrat sold the business in 2014.

The interesting aspect of the Multix terminal is that it was intended to provide a much safer and less harmful slot-machine-like product. These replaced the existing slots, which the Norwegian government nationalised and withdrew from operation in July 2007.

The machine provides a platform for multiple games, imposes a statutory limit on how much people can spend, and operates on an account-only basis. Users can track spending and reduce their daily limits if they want to be careful. Thus, it incorporates a host of consumer safety and harm minimisation/prevention measures.

Closer to home, the Victorian government introduced a reduced maximum bet limit and reduced load-up limits in 2009. Aristocrat, along with other manufacturers, had to find a solution for these new requirements. That wasn’t very difficult.

The game software required some alteration, and cabinet artwork had to be reconfigured in some cases. It cost somewhere in the tens of millions, but there were no publicly aired complaints and it was implemented smoothly. For a business that makes around $2.6 billion a year, that was small change.

The Tasmanian pokie industry has recently undergone a similar transformation, again without too much fuss.

Perhaps the reduction from $10 bets to $5 bets didn’t threaten the industry too much. And reducing the load-up limit from $9,949 to $1,000 in Victoria was a no-brainer.

Why won’t the manufacturers play ball?

There may be many reasons for the manufacturers’ refusal to agree to Coles’ request, but it is clear the vanguard for the Australian pokie industry lies in New South Wales – particularly with lobby group ClubsNSW. Club businesses operate 70% of NSW’s 95,000 pokies. These made their operators $5.8 billion in 2014-15, of which the clubs made around $4 billion.

Pokie games are upgraded regularly, and the machines themselves tend to be turned over every five years or so. Even putting aside maintenance and upgrades, selling around 20,000 machines every year to clubs and pubs in NSW would earn the manufacturers around $500 million. So, losing a share of that business would be something to avoid.

A successful trial of $1 bets could demonstrate that pokie harm could be reduced. If that occurred, the revenue model for NSW club businesses that rely heavily on pokie revenue would be rattled.

When the Productivity Commission recommended $1 maximum bets and pre-commitment as likely good responses to pokie addiction and harm, the gambling industry, led by ClubsNSW, railed against them as unproven and experimental.

That wasn’t true, even then, as the industry well knows – it funded the original research. But why not seize the opportunity to acquire some more useful evidence through a trial?

The harm pokies cause is widespread and tends to affect those already under significant stress. Moving to $1 bets is a good first step toward reducing this harm, and Coles acknowledges it can’t continue in this business unless it finds a way to reduce avoidable harm.

There are many other ways to limit harm, however, as the manufacturers know full well. They’ve been innovating to make their products as “attractive” as possible for the last 100 years or so.

If they wanted to, they could also lead the way in making machines safe, and fun. Perhaps the super profits might be wound back. The operators would be able to claim they really do care about their customers’ wellbeing.

Clearly, that’s a claim Coles is keen to make. The manufacturers? Maybe not so much.

The ConversationCharles Livingstone, Senior Lecturer, School of Public Health and Preventive Medicine, Monash University

This article was originally published on The Conversation. (Reblogged by permission). Read the original article.

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Advantage gambling, but corruption risk surely isn’t worth it for tennis

The Conversation

Charles Livingstone, Monash University

The tennis world has been rocked this week by allegations that a number of players appear to have fixed matches at the behest of gambling syndicates over nearly a decade.

Tennis authorities scoff at the suggestion that such practices are widespread or that they have ignored information provided to them. They also reject the notion that entering into sponsorship deals with bookmakers – such as William Hill, sponsor of the Australian Open – makes corruption more likely.

Rather, the argument goes, co-operation with the bookies facilitates access to gambling data.

The investigation that uncovered the match-fixing allegations utilised analysis of this data to identify the suspected players. In the absence of hard evidence such as surveillance material, bank records or telecommunications metadata, statistical analysis is the way to identify patterns of behaviour and identify likely cheats.

The bookies already do this. And if they are as public spirited as they claim, surely allowing access to data for purposes of scrutiny by sporting or regulatory authorities is a public duty? It doesn’t require a cosy sponsorship deal.

Drawing parallels

Unlike many businesses, wagering relies on the operations of unconnected entities to generate the markets that are its stock in trade. In this, it resembles the relentless “investment” in derivatives of the US housing market, which fuelled the global financial crisis.

In the end, the size of this market dwarfed the real activity it was focused on. When it collapsed, it brought that real world down with it. The danger for global sport is that the sports betting bubble will have the same effect.

Sports betting has enjoyed enormous growth in recent years. In Australia, its 16% annual growth has far outstripped other gambling modes.

The market in sports betting is also heavily driven by technology and relentless expansion into more sports. Anyone watching the Australian Open this year on Australian free-to-air TV will notice the proliferation of sports betting ads. So will spectators in the major arenas.

So, the current controversy over match-fixing has some ironic elements. World number two Andy Murray suggested there was a touch of hypocrisy about telling the players to have no connection with gambling interests (including accepting sponsorship from bookies) while blithely maintaining that gambling sponsorship generated no conflicts for the sport overall.

Gambling is big business; its money buys a lot of influence. One area where this plays out is the symbiotic relationship between governments and gambling businesses. The revenue governments derive from gambling makes them largely oblivious to the corrupting influence of gambling dollars on politics and policies.

Saving sport from itself

Sporting organisations are no different to political institutions. Gambling has spread its sponsorship wings and provided a new stream of revenue to popular sporting codes.

Beyond the codes themselves, broadcasters and other commercial media also find the stream of revenue from gambling ads lucrative. That in turn pumps up what they can offer for broadcast rights for popular leagues. And the cycle continues.

It’s hardly surprising that individual players – particularly those at the start of their careers who are often struggling to meet the costs of staying on the tour – would somehow fall victim to the temptations of all that money. Sadly, once corrupt gamblers or their agents have their hooks into you, they never let go.

And, in this debate, the factor that is usually forgotten is the cost to ordinary people. With rampant promotion of gambling on a seemingly never-ending exponential trajectory, more people are likely to gamble. Many will be young people who have never known sports free of the influence of gambling. And, it seems, they now view all sporting contests through the lens of the odds and the “value” available from different bookies.

For many of these people, gambling harms will ruin (or in too many cases end) their lives and greatly damage those of their family, friends and in some cases employers and others.

More broadly, the inestimable value of the untrammelled enjoyment of sport is lost. If you love a specific sport and see it degraded by scandal after scandal, some part of the enjoyment is gone forever. Tennis provides an excellent example of a sport of global significance being tainted by the commercial interests of a relatively small but increasingly lucrative and powerful business.

It is not feasible to clean up sport tournament by tournament, or country by country. An anti-corruption agency with the ability to look at these matters with an unjaundiced eye is probably necessary, and sooner rather than later.

It wouldn’t hurt to see the ever-closer associations between sports and gambling businesses wound back dramatically. Tobacco provided more than one-quarter of Australian sports sponsorship in the 1980s. At one point it sustained some sports’ financial viability. But when it ended, no sport went to the wall.

Gambling is a corrupter of institutions, as well as a dangerous product for many of those who consume it as intended. It must be seen as such. It needs to be properly and carefully regulated, and it needs to be treated with the considerable care that any dangerous product deserves.

If the price of clean sport and corruption-free political and social processes is a modest reduction in global gambling revenues or growth, I suspect most sports fans would be happy with the deal. Surely, right now, tennis lovers would be.

The ConversationCharles Livingstone, Senior Lecturer, School of Public Health and Preventive Medicine, Monash University

This article was originally published on The Conversation. (Reblogged by permission). Read the original article.
 

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Online gambling review should not ignore the problems in our own backyard

The Conversation

Charles Livingstone, Monash University

As those who watch sport will attest, online gambling is seemingly ubiquitous. Certainly advertising for it is.

In Australia, the regulation of gambling services is a matter for state governments. However, the federal government has responsibility for telecommunications, which includes the internet. So, there is some division of responsibility for online gambling. This has arguably left the area less well regulated than it might be.

This is one ostensible reason the federal government has announced a review of the online gambling industry.

Background

The current federal legislation is the Interactive Gambling Act. It allows Australian operators to offer online betting. It also seeks to prohibit the provision of casino-style gambling – roulette, slot machines – to Australian residents, but doesn’t prohibit Australians from using such services.

This means that Australian-registered services are not allowed to offer some gambling services, but are permitted to take online bets.

The most recent review of the act reported in 2012. It concluded that it would be useful to consider a trial of some online gambling – suggesting online poker, which is thought to be a less harmful form of gambling than slots or other casino-style gambling.

The review also recommended a host of harm-minimisation measures be introduced into the online gambling arena. These included a pre-commitment system, an effective self-exclusion system and much-improved practices among bookies. The review recommended that better enforcement of offshore providers be implemented, although effective regulation of extra-jurisdictional gambling providers is likely to be futile.

Nonetheless, the review suggested that banking institutions should be rewarded for blocking transactions between Australians and nominated unlawful gambling providers. This may have some effect, although mainstream banking institutions provide only some of the plethora of ways of moving money around the world.

A recent Financial Counselling Australia report highlighted a number of what can only be regarded as very dubious practices among prominent bookmakers operating under Australian regulation. These include extending unsolicited lines of credit, failure to pay winnings on request and repeated inducements to gamble.

These practices are not caught by current consumer protections under credit law or gambling regulation. Bookies also appear to regularly share data on their customers, which is likely to breach privacy legislation.

What this review will focus on

Media reports early this month – when Social Services Minister Scott Morrison confirmed that a review would be held – appeared to focus on a range of the issues highlighted by the 2013 review, including consumer protection.

However, the terms of reference headlined this new review as being into the:

Impact of Illegal Offshore Wagering.

In fairness, one of the terms of reference of the review is concerned with increasing consumer protection.

It will be a quick review. The final report must be with Morrison by late December. Submissions will be sought from industry and the public.

Those concerned with the growing harms of online gambling – and particularly sports betting – will be disappointed with the terms of this review. There are a number of pressing concerns that, from a consumer protection perspective, might have ranked higher in both the terms of reference and Morrison’s messaging.

Online bookies are competing for market share in Australia, where the operators now include global giants such as the British bookies Ladbrokes and William Hill. Their practices have attracted considerable criticism as the scramble for revenue escalates.

Troubling practices include the continuing provision of credit, the pushing of boundaries on such issues as the prohibition of online in-play betting, and blanket advertising of their wares – including to children during sporting events – and the aggressive branding of sporting teams with gambling providers.

What is Australia’s real gambling problem?

Sports betting in Australia is likely to generate revenue – that is, player losses – of around A$750 million in 2015-16. It is the fastest-growing gambling sector and is likely to produce a new wave of gambling problems among the young men to whom these products are marketed.

Although modest in comparison to poker machines – which generated around $11 billion in losses in 2014-15 – it needs to be effectively regulated if Australia is to avoid adding to the already significant burden of gambling harm. The good news is that preventing this harm is actually quite straightforward.

Unfortunately, substantial and powerful segments of the Australian body politic are now closely affected by the fortunes of the bookies. These include Packer interests via CrownBet, the AFL’s official wagering partner. State and territory treasuries are also abundantly interested in maintaining the flow of money.

It is worth asking if the offshore online gambling sector is Australia’s most pressing gambling problem. Undoubtedly, some Australians get into a lot of trouble gambling online. Most of them will fall prey to bookies already licensed in Australia and offering services lawfully. Some will end up in trouble because of offshore sites offering unobtainable services such as online slots or roulette.

Overall, the market going to such offshore providers is estimated at around $1 billion, although there is no way of verifying this under current circumstances.

But, at least 75% of those with a gambling problem have it because of poker machines in clubs or pubs. We see little concern from the government about this group.

And, even in the online gambling environment, there appears to be little concern about first cleaning up our own backyard. The 2013 review made some very sensible recommendations about harm minimisation, including restricting or prohibiting credit betting. This is clearly a source of considerable harm to many. And prohibiting credit betting is in fact current federal government policy.

The Financial Counselling Australia report provided ample evidence of the excesses of the Australian online gambling industry. A recent whistleblower article from within the industry confirmed these concerns. These need to be a major focus of any review of the Interactive Gambling Act and other relevant federal legislation, including the regulation of advertising and banking services.

But if the renewed urgency behind this review is to highlight the “dangers” of offshore online gambling providers, then the bookies will be arguing as hard as they can that the solution is to allow them to offer the same services from Australia. After all, the internet is notoriously difficult to regulate and service providers licensed in Australia would be expected to observe Australian regulation.

It is important to ensure gambling is properly regulated. But it is probably better to address the main game first, or at least simultaneously. That involves making sure that current providers are adhering to the best possible harm-minimisation practice.

The 2013 review set up a clear set of goals for that. We don’t need another review to know what needs to be done, or to do it.

The ConversationCharles Livingstone, Senior Lecturer, School of Public Health and Preventive Medicine, Monash University

This article was originally published on The Conversation. (Reblogged by permission). Read the original article.
 

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