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Outline 2001 / 21: Poker machines: should the Victorian government do more to reduce gambling?
What they said ... 'The Government is a partner in poker machine banditry. They're addicted ... and there has been no indication that the Government is likely to change that dependence' Dr James Doughtery, Victoria University
'This Government is committed to gaming reform which encourages people to gamble responsibly and to address problem gambling' John Pandazopoulos, Victorian Gaming Minister
On September 3, 2001, the Victorian Government released figures indicating that Victorians had lost $2.36 billion in the 2000/2001 financial year on poker machines. A range of anti-gambling activists and the Opposition immediately condemned the Government for having failed to meet its pre-election promise to reduce the impact of poker machines. The Government countered that it had implemented most of the anti-gambling policies it had promoted before the election. The Government also stressed that the most recent rise in poker machine losses, though unacceptable, was a smaller increase than for the previous financial year. Critics have continued to complain that such defences are cosmetic in the face of the scope of the problem and have argued that the Government is compromised by the extent of its dependence on gaming taxes.
Background For many years in Victoria there had been a bipartisan agreement, involving both Government and Opposition, that poker machines were a destructive form of gaming that was difficult to control. The introduction of poker machines into Victorian occurred in 1992 under the Government of Labor premier Joan Kirner. It has been suggested that one of the attractions for the Kirner Government was the taxation revenue that poker machines would make available. (One third of poker machine losses go to the state government in tax.) When Jeff Kennett's Government took office in October 1992 he rejected calls for tighter gambling controls and presided over a government in whose revenue base taxation on gaming came to play an increasingly important part. By the time his Government was voted out of office two terms later, taxation revenue drawn from poker machines had come to represent one eighth, some 12 per cent, of the non-Commonwealth taxation revenue upon which the Kennett Government relied. The Bracks Labor Government came to office on a platform that included capping the number of poker machines in the state and redistributing poker machines so that they were no longer clustered in rural areas and low-income areas in metropolitan regions. The Bracks government has partially implemented this program and has taken a number of other measures, including a television advertising campaign on the consequences of problem gambling. However, the poker machine losses have continued to rise and the proportion of state government revenues gained from poker machine taxes has also continued to grow. Social commentators have repeatedly expressed concern about the social and economic impact of large and growing gambling losses. It is now estimated that approximately 43 cents in every dollar lost to poker machines is lost by a problem gambler, someone unable to control his or her gambling behaviour.
The full text of the most recent version of the 'Interactive Gaming (Player Protection) Act 1999', which gives the measures taken in Victoria, under law, to protect poker machine players, can be found at http://www.dms.dpc.vic.gov.au/l2d/I/ACT01661/1_0.html
In May 1999 The World Socialist Website published an article criticising Australian governments for their dependence on taxation from gambling. The article is titled, 'Gambling: a government bonanza in Australia.' It was written by Stephen Griffiths. The article can be found at http://www.wsws.org/articles/1999/may1999/gamb-m19.shtml
ABC Radio's current affairs program PM for July 19 1999 included a report on poker machine gambling in Australia. The report suggests the extent of poker machine gambling is directly related to the accessibility of the machines. It can be found at http://www.abc.net.au/pm/s37492.htm
The Age has drawn together several collections of articles dealing with gambling in Australia. This has been done as part of the newspaper's Issues series. The an index of the most recent collection of articles can be found at http://www.theage.com.au/issues/gambling/index.html These articles range from July 27, 2001 to October 10, 2000. An earlier collection of Age articles on the same issue can be found at http://www.theage.com.au/news/20000224/A35752-2000Feb23.html These articles are drawn from November 28, 2000, to January 29, 2000.
Arguments against the Victorian government doing more to reduce gambling 1. The Victorian government has fulfilled most of its anti-gambling election program The Bracks government has claimed that it has put in place most of the gaming control measures it promised during the last election. It has attempted to limit the access to poker machines available in country areas and economically disadvantaged metropolitan areas where poker machines have previously tended to be concentrated to exploit the desperation of the poor and the unemployed. The government has announced a reduction of 400 poker machines in problem areas over the next three years. An Age editorial of September 5, 2001, noted, 'Since the State Government introduced responsible gaming legislation in May 2000 applications for extra gaming machines have fallen by almost 70 per cent, while 24-hour gaming venues have been banned in country centres and have been reduced in the city. The legislation also included Crown Casino in its state-wide cap on poker machines.' In addition that government has trialled natural lighting in some poker machine venues and the installation of clocks. Further to this it has funded a series of television commercials intended to show problem gamblers the consequences of their behaviour.
2. The Victorian government's poker machine measures have had an effect The Victorian Government has stressed that although there was still an increase of nine per cent in Victorians' poker machine losses in the last financial year, this was a decrease in last year's increase of 11 per cent. The Victorian Gaming Minister, Mr John Pandazopoulos, has stated, 'The rate of growth has continued to trend down from its peak in 1999 of more than 17 per cent.'
3. The gaming companies have contracts that prevent the government reducing the number of poker machines The current Victorian Gaming Minister, Mr John Pandazopoulos, has claimed that the Government is unable to do what some of its critics demand and reduce the number of poker machines in Victoria by 50 per cent, from approximately 30,000 to 15,000. Mr Pandazopoulos has stated that the government is not in the business of tearing up contracts. Even some of the government's critics have acknowledged that a substantial reduction in the number of poker machines would require the government to compensate contract holders and that this would be extremely expensive. The government would not only have to forgo fifty percent of the taxation revenue currently coming from poker machines it would also have to payout the owners of the pokie machines for at least a portion of the projected returns on machines that were no longer in operation. 'There are some things that are achievable, there are some things that are not,' Mr Pandazopoulos said.
4. Poker machines offer Victorians a number of benefits Mr Bruce Ruxton, the Victorian president of the Returned Soldiers League (RSL) has urged the community to consider the benefits that poker machines bring. The RSL has about 72 gaming machine clubs, returning the RSL significant revenue. A proportion of this money is then fed back into services the clubs can offer patrons, such as cheap entertainment, subsidised meals and the supposed enjoyment that poker machines provided to people aged over 55, most of whom, Mr Ruxton claimed, gambled responsibly. Mr Ruxton has also claimed that the revenue from poker machines allows the RSL to employ additional staff and so boosts employment. One of two pensioner sisters, each in her seventies, claimed in a recent Age interview, 'This is a pleasant place to escape to. I can come here for a couple of hours, play the two-cent and one-cent machines and it doesn't usually cost me much at all.' Another invalid pensioner claimed, 'The drinks are cheap and I can get a nice lunch for just $6. The way I see it, the gamblers are subsidising my lifestyle.'
5. The Victorian government would have to reduce services if government revenue from gambling fell too far The Victorian premier, Mr Steve Bracks, has defended his government's reliance on gaming taxes, claiming that services would have to be cut without them. The premier also suggested that the state's budget might fall into deficit without the revenue derived from gaming taxes. The Victorian Gaming Minister, Mr John Pandazopoulos, has also defended the third share of poker machine revenue that the government claims in tax. He has stated that the money is better being spent by the government for community purposes such as hospitals and schools, rather than 'lining the pockets of gaming industry moguls'. Mr Pandazopoulos has stated, 'Poker machines are a legal product, like alcohol and tobacco, heavily taxed by the Federal Government.' The implication would appear to be that all governments tax popular and addictive behaviours and products as one means of raising the revenue needed to supply community services.
6. The Victorian government is investigating measures to further reduce the extent of poker machine gambling On September 6, 2000, the Victorian government launched nine major research projects through the State Government's Gambling Research Panel. The projects will investigate the social and economic costs of gambling, the causes of problem gambling and will investigate to minimise the harm caused by excessive gambling. The Government has argued that it will use the results of these studies to refine its gambling control policies.
Arguments in favour of the Victorian government doing more to reduce gambling 1. Victorians are losing a large and increasing amount of money at poker machines In the 2000/2001 financial year Victoria's gamblers lost more than $2.36 billion on poker machines. This is an increase of nine per cent or $195 million over the pervious financial year. It equates with a poker machine loss rate of $6.5 million a day or $75 a second.
2. Losses at poker machines are having damaging social consequences The largest losers at poker machines are problem gamblers who have little or no control over their gambling behaviour and lose large amounts of money that should be used to support themselves and their families. A problem gambler recently interviewed for The Age stated, 'I've tried to stop. I've told my family that I have. It's just that on payday, when I've got that money in my hand and it's like I just have to go. I wish they'd ban the things.' A productivity commission report has found that at least 42 per cent of poker-machine losses came from problem gamblers. This means that in the 2000/2001 financial year problem gamblers lost approximately $I billion. Critics of current government policies have condemned a gambling regime that exploits those who are addicted to poker machines. It has further been noted that poker machine losses are highest in poor areas where unemployment and other disadvantages make poker machines appear an attractive option for people seeking money. Thus, it is claimed, those with the least disposable income are suffering the greatest losses. Critics have noted with alarm the impact of such losses on families and individuals, claiming that poker machine losses are contributing to domestic violence, family breakdowns and a growing suicide rate.
3. Losses at poker machines are having damaging economic consequences It has been claimed that poker machines have had a negative effect on retail trade, especially in economically depressed regions where people have relatively little disposable income. It has been claimed that not only are business that rely on customers making discretionary or non-essential purchases suffering, it has been suggested that in some areas poker machine losses have significantly reduced the money which people would normally be spending on essentials. It has been claimed that poker machines, which have taken 15 billion dollars since their introduction in 1992, have had a depressing effect on the Victorian retail economy and have contributed to the failure of many small businesses. Critics of poker machines claim that the Victorian retail sector cannot afford to have $6 million dollars a day being fed into poker machines rather than being used to make retail purchases.
4. The current measures being used to reduce poker machine gambling have not worked It is claimed that the measures put in place by the Bracks government to reduce the impact of poker machines have not worked. Though the rate of increase of losses from poker machines in the last financial year is not as high as it was for the year before it is still running at an increase of nearly ten per cent. Critics have also noted that previous increases in poker machine losses have been fuelled by dramatic increases in the number of poker machines in operation. For the last financial year there has not been such a growth in the number of machines. The increase in losses has, therefore, come from more extended play per machine in operation. This would appear to suggest that the anti-gambling advertising campaigns the government has run have had little effect. It would also suggest that measures such as having natural light in some gaming venues and installing clocks have had no major effect. More people appear to have played each machine for longer.
5. There are many further measures that could be employed to reduce poker machine gambling The Government has been criticised for not having met all the election promises it made with regard to poker machines. It pledged to put regional caps on poker machines, especially in the Geelong, Ballarat and Bendigo areas. That is, there would be a fixed number of machines that would be able to operate in these regions and that number would not be able to be exceeded. The opposition gaming spokesperson, Mr Ted Baillieu, has claimed that this has not been done. The most extreme critics of the government's current policies argue that the number of poker machines in Victoria should be halved - from the current 30,000 to 15,000. Other proposals include cooling off periods (an automatic break in play at regular intervals); a limit to the amount an individual player could lose; the machines set a slower spin rate (Victorian machines run six times faster than those in Britain); machines set to accept only lower denominations (Victorian machines currently accept up to $100 notes; those in Britain will only take coins.) It has also been suggested that smoking be banned in poker machine venues as this would force smokers to leave their machines in order to have a cigarette.
6. The Victorian government is too financially dependent on taxation revenue from gambling In an editorial published on September 5, 2001, The Age noted, 'According to the most recent budget papers, the government will rely on gambling for 17.2 per cent of its own-source, non-Commonwealth revenue this financial year. More than 11 per cent of government taxes will come from poker machines.' Victoria has been compared unfavourably with other states in this regard. Gambling accounts for 10.2 per cent of non-Commonwealth revenue in New South Wales and only six per cent of non-Commonwealth revenue in Western Australia. Forward estimates suggest that Victoria's reliance on gambling revenues is likely to increase. Mr Mike Hill, the secretary of the Victorian Local Governance Association, has stated, 'in 2004-5, gambling taxes will make up 18.4 per cent of the Victorian government's revenue base, while in New South Wales gambling will provide just 10.6 per cent.' As one of its pre-election promises, the Bracks Government had pledged to reduce Victorian Government reliance on revenue from gambling taxes. The government is now being criticised for having failed to do so.
Further implications and author's comment Reducing problem gambling within the community and reducing government reliance on the taxes that come from poker machines will be no simple matter. It is apparent that the measures currently being employed by the government to lessen the impact of poker machines are having little impact - a reduction in growth from 11 per cent per annum to nine per cent per annum is hardly significant. Last year's losses of $2.36 billion is a sixth of the total $15 billion lost in the nine years since poker machines were introduced. Of particular concern is that the government literally cannot to be too successful in reducing the amount of money those in the community lose to poker machines. Poker machines have now become a major source of the taxation revenue needed to fund government supplied services. Taxation on poker machine losses will soon be supplying some 20 per cent of non-Commonwealth supplied taxation revenue in Victoria. It will be at least five years before the GST begins to impact significantly on the states' taxation base. The federal government has claimed that one of the principal reasons for introducing a GST was to guarantee the states a revenue stream. The Prime Minster, Mr John Howard, has regularly referred to the GST as a growth tax that will give ever-greater returns as the economy expands. If the federal government's optimistic predictions prove correct, the GST may ultimately make it possible for the Victorian government to reduce its reliance on gaming taxes. At the moment, however, it has been claimed that both the GST and the extent of poker machine losses have placed the retail sector, especially the small business sector, under significant pressure. It is difficult not to regret that the Kirner government allowed the introduction of poker machines into Victoria in 1992. It is equally regrettable that the number of these machines was allowed to grow so rapidly under the Kennett government and that the sorts of checks applied in Britain on the rate of play and the denominations that can be fed into the machines were not applied here. Governments have long had the habit of taxing socially undesirable but addictive behaviours, such as smoking and alcohol consumption. They have taken the moral high ground and argued that such taxes act as a disincentive for people to either smoke or drink to excess and put back into government coffers some of the money needed to treat the diseases suffered by those who smoke or drink too much. There has always been something a little hypocritical about such a posture. It is difficult to believe that governments actually want people to stop behaviours that net them significant taxation revenue at very little political cost. Taxes on cigarettes and alcohol are less unpopular than increased income taxes or general goods and services taxes. In the case of poker machines the government's divided position is even more apparent. Two successive Victorian governments are implicated in Victoria's poker machine dependence - the Kirner government that allowed them to be set up and the Kennett government that allowed them to flourish. Each did so because they wanted the taxation revenues that gaming generates. Neither government would be able to claim that the taxes placed on gaming are intended as a disincentive to gamblers. It would be very difficult to prove that you are discouraging something you have set up and promoted. The Bracks Government is less culpable. It neither introduced poker machines nor allowed them to extend their reach. It did, however, promise to reduce their scope. It has clearly not succeeded in doing so. Sadly, at least at the moment, it may not be able to afford to do so. The cost to problem gamblers and the community at large is enormous. We have struck a very bad bargain. There is, in deed, no such thing as a free lunch, either for those who eat at clubs were 'pokies' subsidise the meals or for governments funding services through gaming taxes. Both are dining out on business failures and the misery of problem gamblers and their families.
Sources The Age 4/9/01 page 1 news item by Richard Baker, '$2.3 billion lost on pokies last year' 5/9/01 page 7 news item by Richard Baker, 'Councils support call to slash pokies' 5/9/01 page 16 editorial, 'Gambling, taxes and the state' 6/9/01 page 6 news item by Richard Baker, 'Panel probes state gaming problems' 7/9/01 page 7 news item by Richard Baker, 'Gambling policies put to test' 8/9/01 page 14 analysis by Gary Tippet, 'Loss comes easy in pokieland' 8/9/01 page 14 news item by Richard Baker, 'Cash plan to wean states off pokies' 8/9/01 page 7 (News Extra section) comment by Charles Livingston, 'Steve is a gambling addict, just like Jeff' 12/9/01 page 13 comment by Tim Costello, 'A hypocritical addiction' 17/9/01 page 12 news item by Gabrielle Costa, 'Liberals hint at slowing pokies in gambling fight'
The Herald Sun 4/9/01 page 2 news item by Michael Warner, '$2.36b lost on poker machines' 5/9/01 page 1 news item by Fay Burstin and Michael Warner, 'Bad news, minister' 5/9/01 page 17 cartoon by Knight 5/9/01 page 18 editorial, 'A ridiculous pokie spin' 6/9/01 page 19 comment by Andrew Bolt, 'An insane lust' 8/9/01 page 8 news item by John Ferguson, 'Gaming attack on the cards' 10/9/01 page 12 news item by Neil Wilson, 'RSL backs more pokies' 10/9/01 page 18 comment by Matthew Pinkney, 'Pokies blame is on their heads'
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