Red Hot Pokies: The politics of gambling

“The last time I played a gaming machine I intend to play for one hour and spend no more than $50. I blew $500 in six hours that day, my entire weekly pay. It happened despite my knowing the odds of winning a large payout were minuscule and it happened despite my very best intentions and determination to stick to a spending limit that I could afford on that day” (Sue Pinkerton, Committee Hansard, 1 February 2011)

Gambling is a $19b industry in Australia. Policy reform focuses on the “pokies” of which there are 200,000 in Australia (half in NSW) and an estimated 600,000 people them at least once a week. Some 95,000 of these (almost one in six) are considered problem gamblers and they incur social costs of up to $4.7 billion a year. The 2010 Productivity Commission report into gambling noted the technology changes of recent years have made it easier to lose large amounts of money quickly on the pokies.

They recommended a six year program to impose an upper cash feeding limit into the pokies of $20 (currently up to $10,000) and lower the individual bet limit to $1 (currently $10). They also suggested longer shutdown hours, warning messages of likely losses, relocating ATMs and most controversially, mandatory pre-commitment (MPC). MPC requires lock-out when limits are reached, cooling-off periods for limit increases, safeguards to prevent gamblers from machine hopping and an effective self-exclusion function.

The Productivity Commission compares the notion of MPC to Ulysses binding himself to the mast of the ship to avoid the temptation of the call of the Sirens. Gambling has few market responses that enable individual pre-commitment to help people control their habit. Most gamblers rely on willpower but research has found continuous gambling leads to loss of control, particularly in an environment where alcohol is served. However the PC admitted the success of pre-commitment measures depended on their effectiveness, monetary and non-monetary cost (including erosions of autonomy) and addressing privacy concerns.

In 2011 the Senate produced its first report on a design and implementation of an MPC system for pokies. MPC would apply to big venues (>15 machines) and only to the high intensity machines capable of gobbling up thousands of dollars at a sitting. The slow $1 machines would be outside its purview. The MPC system would be introduced in 2014, require players to set a maximum loss in advance, lock out when that amount is reached, cool off before increasing a limit, have safeguards to prevent “machine hopping” and have an effective self-exclusion function.

While the report was well received by social groups, vested interests like Club Australia exploded in righteous indignation against “draconian reforms”. The powerful club industry, with 4,000 clubs and 10 million members, launched a multi-media scare campaign called “Won’t Work Will Hurt”. They said MPC meant every poker machine player must show identification and register to obtain a card before they could play. They said the Government had agreed to work with the industry prior to the election on pokie reforms, and supported the introduction of voluntary pre-commitment. They said it wouldn’t help problem gamblers who would obtain the card and set high or no limits. Recreational gamblers wouldn’t apply for the card and would stop playing causing revenue loss that would devastate the clubs and pubs. They also put the squeeze on 30 Labor MPs in marginal electorates where pokies are prevalent.

The Government might have weathered this campaign but lacked bipartisan support. The Coalition’s policy paper on gambling tries to have it both ways. The report says less than one per cent of the Australian population are problem gamblers,  around 220,000 people (the productivity commission says 115,000 are problem gamblers and another 280,000 are at “moderate risk”) while it notes 150,000 are employed in this “entertainment industry”. The Coalition also seeks to put a positive spin on the Productivity Commission report by saying problem rates are falling though the one problem percent account for 60 percent of all gambling in Australia.

The Tony Abbott gambling policy involves a discussion paper proposing voluntary pre-commitment scheme, improved counselling services for problem gamblers and better training for gaming venue staff. It was condemned by Independent MP Andrew Wilkie who said the paper “contained lies peddled by poker machine interests.” He said voluntary pre-commitment was a “nonsense” solution which would have no cashflow impact on clubs. He also hinted he might water down his agreement with the Gillard Government.

Wilkie’s agreement with Gillard gave Wilkie’s vote in parliament in return for $220 million for Royal Hobart Hospital and pokie reforms that included a full pre-commitment scheme by 2014, warning displays on machines and a $250 daily limit on pokie ATMs. A crucial date was 1 February 2012 by which the government had to advise Wilkie on the legal advice of getting the legislation through.

In the last act of parliament in December 20111, Gillard installed Liberal MP Peter Slipper as Speaker effectively giving her a two vote buffer in the knife-edge parliament. I said at the time I didn’t think she would renegotiate the Wilkie agreement because I thought Gillard would still require his vote on occasion. I was wrong. On Saturday, Gillard announced a winding back of the proposal. There would be a trial in Canberra and MPC technology would be introduced to every pokie. The Government claimed unconvincingly it was reneging on the deal because it would not get through parliament.

Wilkie responded saying he had withdrawn support from the government. Wilkie said he could no longer guarantee supply and confidence for the Government because Gillard couldn’t honour the pre-commitment promise by end 2014. “I regard the Prime Minister to be in breach of the written agreement she signed, leaving me no option but to honour my word and end my current relationship with her Government,” Wilkie said. “Our democracy is simply too precious to trash with broken promises and backroom compromises. So I will walk, take my chances and so be it.” Whether it means he will now vote for Abbott – whom he has little respect for – is another matter. It is not just Andrew Wilkie who will be taking his chances. Unlike Sue Pinkerton and her pokies addiction, all bets are off in Australia parliament in 2012.

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