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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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Gambling on pokies is like tobacco – no amount of it is safe

The Conversation

Francis Markham, Australian National University; Bruce Doran, Australian National University, and Martin Young

Is occasional gambling safe? Our study found that gambling is like smoking: the more you gamble, the greater your risk of developing problems. There is no safe level of gambling, only risks that increase as you lose more money – even at relatively low levels of losses.

We examined large, nationally representative surveys in Australia, Canada, Finland and Norway, and found that no amount of gambling was safe.

In the graph below, we show the average relationship between money lost and problem gambling index scores in the four surveys. Gambling losses are shown on the x-axes, with problem gambling risk on the y-axes.

Crucially, there is no safe region on these curves where problems do not increase as you lose more money. This is different to alcohol, where moderate consumption may reduce your risk of mortality.

The relationships between gambling losses and problem gambling risk in four countries.
http://doi.org/10.1111/add.13178

We have known for some time that some forms of gambling are more risky than others. Therefore, we also examined the relationships between losses and risk for different gambling activities.

Electronic gaming machines – known as pokies in Australia, video lottery terminals in Canada and slot machines in the US – were the most strongly associated with problem gambling in every country in our study.

In Australia, there was also a clear relationship between money lost betting on races and problem gambling. Lotteries were also associated with problem gambling in Canada and Finland and sports betting was associated with problem gambling in Norway. There was no evidence of low-risk thresholds for any gambling activity.

Contradicting conventional wisdom

These findings are important because they contradict the conventional wisdom that there is a threshold below which gambling is safe. According to this view, gambling is much like alcohol, in that only after a particular consumption level has been reached does risk mount. It is only after heavy consumption (or losses) that problems supposedly occur.

As a case in point, the axiom that “safe levels of gambling participation are possible” is one of the six fundamental assumptions of the influential Reno Model, which describes itself as “a science-based framework for responsible gambling”.

This claim that safe levels of gambling are possible turns out to rest on two erroneous arguments. The first is an empirical case that supposedly documents low-risk thresholds for gambling.

The most prominent study of this kind found evidence for a “J-shaped” relationship between problem gambling risk and gambling expenditure. A J-shaped curve describes the situation where risk starts off very low and increases significantly only at higher levels of gambling losses (see panel A in the the graph below).

Unfortunately, this conclusion was based on an incorrectly scaled graph. In panel A, the range of money represented by each data point widens from $50 to $500, but the dots are still placed with equal distances apart. When the x-axis is correctly rescaled, a linear rather than J-shaped relationship emerges (see panel B).

The evidence base for ‘safe levels of gambling’ appears to rely on a flawed interpretation of data.
http://doi.org10.1111/j.1360-0443.2006.01392.x

The second argument sometimes made to support the idea of safe gambling is based on the anecdotal observation that some people do gamble large amounts without becoming problem gamblers. By extension, the argument goes, problem gamblers need to become like these responsible gamblers who can gamble without adverse impacts.

However, the existence of such individuals does not imply that gambling at that intensity is safe at the population level. For example, while some regular smokers may live to 100, this does not mean that smoking is safe or that we should promote “responsible smoking”. Such an argument fundamentally misunderstands the concept of risk.

What now?

Our findings have two important implications for regulation.

First, public information about gambling should not imply that moderate gambling is risk-free. Guidelines and other forms of public awareness campaigning should make it clear that, for poker machine gambling in particular, every increase in consumption increases the level of risk.

As a recent article in the Journal of the American Medical Association put it:

Traditional messaging oriented around “reduce, restrict, limit, ban” may make sense for determinants that have a linear relationship with health outcomes, as with tobacco and mortality.

Our research suggests that this kind of public health messaging should also apply to poker machine gambling.

The second implication relates to the “responsible gambling” model of regulation. This model rests on the notion that gambling in moderation is safe. In contrast, our research suggests that gambling at any level can be associated with harm. And the more money lost, the greater the risk of harm.

There is no threshold below which consumption does not increase the risk of harm. Harm-minimisation policies should seek to reduce the poker machine gambling of everyone, not just problem gamblers.

The ConversationFrancis Markham, PhD Candidate, The Fenner School of Environment and Society, Australian National University; Bruce Doran, Senior Lecturer (Geographic Information Systems), 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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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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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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The Gambler’s Fallacy

by Tim Harding

The nature of the fallacy

The Gambler’s Fallacy, also known as the Monte Carlo Fallacy or the Fallacy of the Maturity of Chances, is the mistaken belief that if something happens more frequently than normal during some period, then it will happen less frequently in the future (presumably as a means of balancing nature).  This belief is also sometimes referred to as the so-called ‘Law of Averages’.

Although appealing to the human mind, this belief is false.  The fallacy can arise in many practical situations although it is most strongly associated with gambling where such errors of reasoning are common amongst players, and even more common amongst ‘problem gamblers’ (see below).

The use of the term Monte Carlo Fallacy originates from the most notorious example of this phenomenon, which occurred in a Monte Carlo Casino in on August 18, 1913.[1]  On this occasion, black came up a record twenty-six times in succession on a roulette wheel.  There was a frenzied rush to bet on red, beginning about the time black had come up a phenomenal fifteen times.  In an application of the Gambler’s Fallacy, players doubled and tripled their stakes, the fallacy leading them to believe after black came up the twentieth time that there was not a chance in a million of another repeat.  In the end, the unusual run enriched the Casino by some millions of francs.[2]

800px-Roulette_wheel

The reality is that if the roulette wheel at the Casino was fair, then the probability of the ball landing on black was a little less than one-half on any given turn of the wheel.  Also, the colours that come up are statistically independent of one another, thus no matter how many times the ball has fallen on black, the probability is still the same at every turn of the wheel.  (Remember that neither a roulette wheel nor the ball has a memory).

Almost every so-called gambling ‘system’ is based on this fallacy, or a similar error of reasoning. Any gambler who thinks that he can record the results of a roulette wheel, or lotto numbers or a gaming machine, and use this information to predict future outcomes is probably committing some form of the gambler’s fallacy. An exception is counting the cards in successive deals from an unshuffled card deck. Many casinos now counteract card counting by reshuffling the cards before each deal. Part of the reason for the prevalence of this fallacy could be derived from this former system of card counting.

Problem gambling

Many psychologists treating problem gamblers have identified false perceptions and beliefs as major contributors to problem gambling.  Erroneous beliefs also lead to uninformed decision-making by a significant number of other players.[3]  A survey of gambling attitudes among 1017 Australian young people in 1998 found that such erroneous beliefs include:

  •  the chances of winning are significantly higher than they actually are;
  •  a player’s skill or adopting ‘the right system’ can influence the outcome of a game that is purely a game of chance;
  •  a player will eventually ‘strike it lucky’;
  •  a player is more likely to win with ‘lucky numbers’, by ‘thinking positively’ or by ‘concentrating hard enough’.[4]

According to the Productivity Commission Inquiry Report, one of the most widespread misconceptions is that gaming machine payouts are dependent upon previous outcomes from the same machine (as evidenced by the frequent ‘chasing of losses’).  To counter this common misconception, the Commission quotes the following facts about gaming machines:

  •  The payout tables on gaming machines indicate the winnings that are associated with certain combinations.  They do not tell the player the probability of the combination occurring.
  •  In most jurisdictions, operators must return at least 85 per cent of turnover to players as winnings. It will usually take hundreds of thousands of games for a machine to come close to this average ‘set’ return.
  •  Each game played on a machine is independent of results from past games —machines which have not paid out for some time have no higher chance of paying out now or in the near future (and vice versa).
  •  Actual outcomes on machines are extremely volatile, with player returns and the amount of time that it takes to lose a set amount of money varying between sessions.
  •  If a gambler ‘reinvests’ the winnings, he or she will eventually lose the lot.[5]

In this way, problem gambling is a severe manifestation of preference failure, with potentially dire consequences.  Harm to problem gamblers and their families can range from excessive time-wasting and financial losses, to loss of employment and family breakdown, to bankruptcy or criminal behaviour, clinical depression and even suicide.[6]

References:

[1] Lehrer, Jonah (2009).How We Decide. New York: Houghton Mifflin Harcourt. p.66.

[2] Darrell Huff & Irving Geis (1959) How to Take a Chance, pp. 28-29.

[3] Productivity Commission (1999) Australia’s Gambling Industries Report No. 10, AusInfo, Canberra, p.41.

[4] Moore, S.M. and Ohtsuka, K. (1999) ‘Beliefs About Control Over Gambling Among Young People, and Their Relation to Problem Gambling’. Psychology of Addictive Behaviors, December 1999, Volume 113, Number 4 APA Journals, Washington. D.C.

[5] Productivity Commission (1999) Australia’s Gambling Industries Report No. 10, AusInfo, Canberra, p.42.

[6] Tim Harding & Associates (2005)  Gambling Regulation Regulations 2005 – Regulatory Impact Statement. Department of Justice, Melbourne.

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