Coalition ‘Problem Gambling’ Policy: Putting the Fox in Charge of the Henhouse?

The Coalition policy (on gambling) is highly risk averse. It poses no threat to the gambling industry and proposes no effective reforms says Dr.Charles Livingstone a Senior Lecturer at Monash University in this is article first published in The Conversation. 

The Coalition has released its policy “to help problem gamblers” under that very title. If the betting markets are any guide, the Coalition is poised to win government on September 7, so the likelihood is that this will be Australian government policy for some time to come. What does it promise?

Specifics of the Coalition policy

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The Coalition policy is focused on providing services to people who have developed a gambling problem. It argues for more and better counselling and other treatment services, and more effective self-exclusion programs. It asserts that the best way to deliver these services is by establishing an industry council comprised of representatives of clubs and other gambling venues.

The policy attacks the Julia Gillard-Andrew Wilkie precommitment proposals as a “licence to play”, echoing the line adopted by the clubs during their anti-reform campaign.

It does support a venue-based voluntary pre-commitment system. This would require a different card or account for every venue where poker machines are used. The Gillard-Wilkie proposal takes a jurisdiction-wide approach, where one card would fit all. Available research on voluntary systems suggests they are extremely unlikely to be utilised, however.

Further, the Coalition policy proposes no liberalisation of the online gambling environment. In doing so it attacks the Labor government’s rather modest proposal to allow online poker (with protections in place). The clubs also the liberalisation of online gambling – unless they get the licence to operate it.

The Coalition policy echoes current government policy on sports betting advertising. If the industry doesn’t effectively self-regulate to stop live odds during games, the government will step in.

A sub-heading in the policy makes a reference to “better research” but no mention of this appears in the text.

Harm minimisation and the policy’s limitations

Harm minimisation is the idea that systematic reform can reduce harm, or perhaps stop problems developing in the first place. This is at the forefront of contemporary practice in dealing with dangerous products, especially those associated with addiction.

This concept is not mentioned. Neither are the concepts of consumer safety or consumer protection, the proposition that dangerous products should be modified to reduce harm. Both of these ideas are central to the thinking behind the Productivity Commission’s 2009 approach to reducing the costs of gambling, and improving the benefits.

So, the Coalition’s policy is treatment focused, excludes potential online competitors and makes no funding commitment. It would be driven and delivered by the industry. This is itself at odds with the principle that those benefitting directly from a dangerous product have a rather obvious vested interest in making sure nothing disrupts their bottom line.

It alludes to the “small but important percentage” of gamblers who get into trouble, positioning the issues associated with gambling problems at the level of the individual – something the industry strongly supports.

It is largely at odds with the recommendations of the Productivity Commission’s report on the gambling industry, but at the same time as it criticises the current government for being too focused on the commission’s poker machine recommendations. Of course, the commission focused on poker machines itself, since they account for more than 75% of Australia’s gambling problems.

Where did the policy come from?

The Coalition’s policy is unsurprising, coming from the party of individual responsibility. But it does represent a huge win for the gambling lobby, particularly Clubs Australia, which has opposed any effective harm minimisation measures (such as reduced maximum bets, effective pre-commitment systems or reductions in machine numbers).

It also guarantees the gambling lobby an exclusive place at the table. Little wonder they greeted the Liberal policy with unabashed enthusiasm. They might well have written it themselves.

Given this, the context in which this policy came into being needs scrutiny as well.

Gambling is worth A$20 billion a year. More than $10 billion of it is via poker machines in clubs and hotels sprinkled throughout Australia’s suburbs. This is particularly so in NSW, where local venues make about $5 billion annually from their poker machines. The Productivity Commission has conducted two major inquiries into gambling’s effects. We know very well what needs to be done to alleviate the significant harm associated with gambling.

But operators of gambling venues stand to lose a great deal if effective reforms are enacted. The Productivity Commission estimated that 40% of poker machine revenue comes from problem gamblers, for example. The industry’s interest in policy is thus profound. This interest was well on display over the last couple of years, as Clubs Australia rolled out a well orchestrated and strongly resourced campaign against the Wilkie-initiated reforms of the Gillard government.

Clubs Australia’s involvement

The Clubs Australia campaign centred on spooking already nervous backbenchers, and has been well documented. A measure of its effectiveness was that it certainly contributed to the Gillard government’s decision to recruit Peter Slipper as Speaker of the House of Representatives. Even a casual observer of Australian politics might have pointed out that such a move was unlikely to end well.

For the clubs, however, this was a major watershed. Their power was now on display in federal politics as well as at the state level. In NSW, for example, the then-O’Farrell opposition entered into an agreement with NSW clubs on gambling policy in 2010, in advance of O’Farrell’s electoral rout of the ALP in 2011.

This agreement promised tax breaks for bigger clubs (those making more than $1 million per year from poker machine gambling) and opposed the Gillard government’s precommitment proposals. Further, it promised to work with the clubs to improve counselling services, introduce voluntary (not mandatory) precommitment, and continue current settings for poker machines – such as the $10 maximum bet, the $10,000 load up, the easy availability of ATMs, and so on.

It also promised to allow clubs to operate multi-terminal gambling machines (MTGMs, which allow bets up to $100 and are effectively automated casino table games), and to oppose a second casino.

With the exception of the second casino, these provisions appear to have been honoured. So, the clubs (and their bedfellows in the hotel industry, including Australia’s largest operator of poker machine venues, Woolworths) have developed a pretty good relationship with the Coalition parties. From the Coalition’s perspective, the agreement cemented a relationship that had become possible by the divorce from Labor that the Wilkie proposals initiated. Driving a solid wedge into that relationship would have been well worth the deal.

For their part, the clubs and pubs took this relationship seriously, as the pattern of their political donations over recent years reveals. These donations spiked between September and December 2010 when $1.3 million was donated, most of it to the LNP. This was the timeframe within which the federal government was considering its options for poker machine reform.

The Coalition policy is highly risk averse. It poses no threat to the gambling industry, proposes no effective reforms, and posits the problem as one of a few disordered individuals. It also insures against the gambling industry making up with the ALP any time soon, thus denying them a traditional fellow traveller in important parts of working class Australia.

All in all, a perfect outcome for an industry with a lot to lose.

About the author: Dr.Charles Livingstone is a Senior Lecturer, Global Health and Society at Monash University and was a member of the Ministerial Advisory Group on Gambling in 2010-11. This group canvassed a range of research policy issues relevant to this article and reported to ALP Government Ministers Macklin and Shorten. Dr Livingstone's remuneration for participation in this group was paid to his employer (Monash University). The gambling industry was also represented on this group.