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When it comes to election campaigns, is the gambling lobby all bark and no bite?

Francis Markham, Australian National University and Martin Young, Southern Cross University

The gambling lobby’s influence in overriding popular opinion and the public interest in Australia is well-known. But is its electoral power exaggerated? A look at this year’s ACT election suggests that perhaps the gambling industry is less influential than it appears to be.

Generating fear

One crucial weapon in Big Gambling’s lobbying arsenal is its threat to campaign against MPs at elections.

Former politicians describe the fear generated by threats of being targeted at elections: that the gambling industry will bring such financial resources to bear in an election campaign that proponents of gambling reform will be defeated at the ballot box.

The 2011 campaign against federal independent MP Andrew Wilkie’s poker-machine reform agenda provides evidence of this electoral fear. Aided and abetted by a conflicted media, the gambling lobby boasted of a A$40 million war-chest that would “eviscerate the government’s ranks of ministers and parliamentary secretaries at the next election if no compromise was reached” on Wilkie’s reforms.

A marginal seats campaign was promised, in which vulnerable government MPs would be targeted with vast electoral resources to blast those who did not acquiesce to Big Gambling’s wishes out of office.

History shows this campaign was successful in spooking the Gillard government. It reneged on its promised reforms well before the 2013 election. This gave the gambling industry an easy victory without an election being fought on the issue.

We don’t know if the gambling industry’s promised electoral strategy would have been successful because it has never been tested. Its great success has been in the fear it generates among politicians well before any election is called.

However, there are good reasons to think the industry’s popular support is lacking. For one, poker machines are wildly unpopular in the electorate. In 2014, 86% of ACT residents stated a belief that pokies do more harm than good, and a majority would like to see the number of machines reduced.

Similarly, a national study conducted during the gambling reform debate in 2011 found 74% in favour of mandatory pre-commitment.

What happened in the ACT?

With such little popular support for Big Gambling among voters, the wisdom of fighting an election campaign over pokies is questionable.

The 2016 ACT election finally put this question to the test. The issue was the Labor government’s decision to allow the Canberra Casino to purchase 200 pokie licenses from ACT clubs, allowing the machines in the casino for the first time.

Lobby group ClubsACT promised to campaign hard on the casino issue, arguing it was a threat to the clubs sector’s viability in Canberra. But ACT Labor did not back down prior to the election, and decided to face a concerted electoral campaign by the gambling industry.

ClubsACT, which is reliant on pokies for the majority of its income, launched a campaign against Labor and the Greens. It reportedly spent $185,000 funding the creation of a new political party, Canberra Community Voters (CCV), headed by lobbyist Richard Farmer. Most of this money was reportedly spent on TV advertising.

A ‘Your Canberra Clubs’ ad.

CCV’s signature issue was the future of clubs in the ACT. While it always seemed unlikely that it would gain seats in the Legislative Assembly, the political strategy appears to be one of diverting primary votes away from Labor and the Greens, and directing preferences to the Liberals.

A second front of attack was launched directly through the clubs themselves. During the months leading up to the election, banners and beer coasters appeared in Canberra’s community clubs bearing the slogan:

Imagine Canberra without community clubs.

And, on election day, text messages were sent to club members, imploring them to “save your community club” by voting Liberal.

A text message sent to a voter on the morning of the ACT election. Francis Markham

In all, ClubsACT reportedly spent $240,000 on its electoral efforts.

But this much-feared campaign amounted to very little. CCV received just 1,703 first-preference votes, or 0.7% of validly cast votes, at a cost of $109 per vote. Clubs in the ACT collectively have more employees than CCV received votes.

If the clubs’ claim of 200,000 members across the ACT is taken at face value, then less than 1% of members voted according to their wishes. Ultimately, the sitting Labor government was returned for a fifth term. The Liberals, the supposed beneficiary of the clubs’ campaign, received a swing against them of 2.2%.

While it is impossible to know exactly what role the gambling industry’s campaign played in this election, the clubs’ monopoly over pokies clearly wasn’t a decisive issue. Few voters were swayed to change their vote by the clubs’ arguments or CCV’s advertising blitz. In the final analysis, the clubs’ willingness to spend almost a quarter-of-a-million dollars on campaigning came to little.

This should embolden governments around Australia that have a mind to deal with the social fallout caused by poker machines. Poker machine reform remains very popular in Australia. What we now know is that the gambling industry’s much-vaunted electoral power is more bark than bite.

The ConversationFrancis Markham, PhD Candidate, The Fenner School of Environment and Society, Australian National University and Martin Young, Associate Professor, School of Business and Tourism, Southern Cross University

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

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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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Poker machines and the law: when is a win not a win?

The Conversation

Cristy Clark

If I took all of the money out of your wallet, you’d probably feel as though you’d lost something – wouldn’t you? Now imagine instead that I only took 80% of your money. Would you feel as though you had “won” the remaining 20%?

What if I tried to convince you that you had actually benefited from this transaction by playing happy music and letting off a few firecrackers?

This thought experiment might help you to get your head around a proposed legal action by law firm Maurice Blackburn that plans to use Australian consumer law to argue that poker machine operators are engaging in misleading and deceptive conduct to entice gamblers into using poker machines.

Misleading and deceptive conduct is prohibited by Section 18 of the Australian Consumer Law. The central test for this is whether the conduct is likely to mislead or deceive consumers having regard to all the circumstances. To apply this test, you need to identity both the “conduct” and the “relevant class of consumers”.

In this particular case, the class of consumers might be “gamblers”. Or, it might focus more specifically on “novice gamblers” or “problem gamblers”.

Maurice Blackburn seems to have identified a range of potential conduct that it would like to target in its action. One that particularly stands out is the technique known as “losses disguised as wins”. This is where a poker machine enables players to bet on more than one line and a minor win on one of these lines sets off a graphics and sound display that indicates a “win” when, in fact, the player has lost most of their money.

Applying the law to poker machines

The nice thing about consumer law is that it relies on fairly common-sense questions. So, the court would basically ask: if a poker machine displays a series of flashing symbols and music associated with winning and makes a chiming sound indicating that it is counting up winnings, would an ordinary and reasonable (novice) gambler be misled or deceived into thinking that they had won something despite having actually lost money?

Further inquiries or closer attention to detail that could enable a person to discover their error is not particularly relevant to this test. Also, the literal truth can be legally misleading, because the law recognises that humans do not behave rationally and tend to form an opinion in response to their overall impression of conduct.

In this case, for example, it might be argued that gamblers pay more attention to the flashing symbols and music than they do to their credit balance.

Previous cases give some idea of how the courts have applied this test. In ACCC v TPG Internet in 2013, the High Court found that TPG Internet had misled consumers by advertising “Unlimited ADSL2+ for $29.95 per month” when this price was available only to customers who bundled broadband with a home phone service.

The important detail was that TPG’s advertisements actually contained an explanation of this condition, but it was displayed less prominently than the advertised deal.

The High Court found that the attention given to advertising material by an ordinary and reasonable person may well be “perfunctory” and, therefore, many will only absorb the “general thrust”. The court also emphasised that it was enough if consumers were sufficiently misled to engage further with the company, even if they subsequently understood the true nature of the offer and chose not to purchase anything.

The TPG case was followed by the Federal Court in ACCC v Coles Supermarkets in 2014. In this case, the Australian Competition and Consumer Commission (ACCC) successfully alleged that Coles had misled consumers by advertising its reheated frozen par-baked bread with the words, “baked today, sold today” and “freshly baked”. This finding was made despite par-baked bread being able to be truthfully described as having been “baked”, and that Coles had detailed its par-baking method on its website.

Once again, the court emphasised the importance of considering both the context and the dominant message of the conduct.

Forming an argument

So, how could Maurice Blackburn possibly prove that gamblers might be misled by the “losses disguised as wins” technique?

It might draw on recent Canadian research which found that the flashing symbols and music that accompany “losses disguised as wins” trigger similar arousal levels in novice gamblers as real wins do – and that arousal is a key reinforcer in gambling behaviour.

In short, research seems to have demonstrated that novice gamblers do pay more attention to flashing symbols and music than they do to their credit balance. Perhaps unsurprisingly, these bright, loud messages appear to dominate.

The ConversationCristy Clark, Lecturer in Law

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

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15 things you should know about Australia’s love affair with pokies

The Conversation

Francis Markham, Australian National University and Martin Young

  • Poker machines were legalised in New South Wales in 1956; the ACT in 1976; Victoria and Queensland in 1991; South Australia in 1992; Tasmania in 1997; and the Northern Territory in 1998. They are banned in Western Australia, except in the casino.
  • There are 196,900 poker machines in Australia; 95,012 are in NSW, with a further 46,663 in Queensland and 28,860 in Victoria. In comparison, there are just 16,440 pokies in New Zealand and 97,161 in Canada.
  • Australia has the most poker machines per person of any country in the world (excluding gambling destinations dominated by the casino industry like Macau and Monaco), with one machine for every 114 people.
  • In 2013–14, Australians lost A$11 billion on poker machines in clubs and hotels. A further A$1.5 billion is estimated to have been lost on poker machines in casinos. That’s a total of around A$700 per adult per year.
  • Australians lose more on gambling than any other nation, mostly because of poker machines. In 2014, Australians lost more than US$1100 per capita, compared with less than US$600 in New Zealand and the US, and less than US$500 in Canada and Britain.
  • In 2013–14, state and territory governments raised A$3.2 billion in taxes on poker machines in clubs and hotels – that’s 5% of state-levied tax revenue.
  • Between 20% and 30% of Australian adults play poker machines at least once a year (except in Western Australia). The 4% who play weekly are conservatively estimated to lose an average of A$7000 to A$8000 per year.
  • It’s easy to lose A$1500 per hour playing poker machines at their maximum bet size and maximum speed. Because poker machine returns are unpredictable over the short term, gamblers playing in this way could lose a greater or lesser amount.

It’s easy to lose around $1500 an hour on poker machines.
AAP/Dan Peled

  • The average poker machine in clubs and hotels makes A$56,000 per year. Some machines are much more profitable, with pokies in several venues in Victoria making more than A$200,000 each.
  • Poker machines have minted a select few super rich, such as James Packer (net worth A$6,080 million), Len Ainsworth (net worth A$1,840 million), Bruce Mathieson (net worth A$1,160 million), Arthur Laundy (net worth A$310 million) and the Farrell family (net worth A$275 million).
  • Poker machines are concentrated in Australia’s poorest suburbs. In Western Sydney’s relatively impoverished Fairfield, each adult lost an average of A$2340 on the pokies in 2010-11; in wealthy Ku-ring-gai and Willoughby, poker machine losses were just A$270 per adult.
  • In 2010, the Productivity Commission estimated that there were around 115,000 “problem gamblers” in Australia, who account for 40% of losses on poker machines. People who live closer to poker machine venues are more likely to experience gambling problems.
  • Around 30% of people who play poker machines weekly are problem gamblers or are “at risk” of becoming problem gamblers. In WA, where poker machines are only allowed inside the casino, the rate of problem gambling is one-third of that in the rest of the country.
  • Aside from banning poker machines outside casinos, the most promising harm-minimisation measures include reducing maximum bet limits and requiring gamblers to set a limit before they begin playing (pre-commitment).
  • Poker machine reform is popular in Australia: 70% of people agree that gambling should be more tightly controlled and 74% agree that people should be limited to spending an amount they nominate before they start gambling.

This article is part of our special package on poker machines. See the other articles here:

Bright lights, big losses: how poker machines create addicts and rob them blind

How real are claims of poker machine community benefits?

The ConversationFrancis Markham, PhD Candidate, The Fenner School of Environment and Society, Australian National University and Martin Young, Associate Professor, Centre for Gambling Education and Research

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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