Taking a new approach to problem gambling
On 21 October 2009, the Productivity Commission released a draft report on its yearlong study which revealed that overall the gambling industry has brought questionable economic benefits to the nation.
According to the report, stronger harm minimisation measures are needed, mainly aimed at pokies, including lowering the intensity of play and the capacity for gamblers to set spending limits on themselves. Gamblers in Australia spend over $18 billion per year including a staggering $12 billion on poker machines.
The Commission estimates that problem gamblers account for around 15 per cent of regular gaming machine players, with a further 15 per cent facing moderate risks. The Productivity Commission also found problem gamblers’ share of total spending on pokies ranged around 40 per cent.
The key recommendations proposed by the Productivity Commission include:
• Reducing the amounts that people can lose (currently up to $1,200 per hour) to $120 per hour with much lower limits on how much cash be fed into machines at any one time.
• Shutdown periods for gaming rooms in hotels and clubs are too brief and occur at the wrong time. Hence, shutdown periods should be extended and commence earlier as seen in the Queensland approach.
• There should be a progressive move over the next six years to a universal pre-commitment system for gaming machines, using technologies that allow all consumers in all venues to set binding limits on their future play.
• By far, the most important proposal is the introduction of a smart card, issued to people who want to use poker machines or use casinos games, which sets a maximum amount they can spend in a day.
The system is already in use in Norway, where government-sanctioned smart cards are issued at gambling sites and have a cap of 60 Euros ($97) a day. Players can recycle their winnings, which gamblers like to do, but their credit for the day runs out once they reach the limit. But any smart card in Australia would have to have a higher limit because a $97 loss would barely cause a blink among many gamblers in Australia.
• Limiting access to cash in venues by relocating ATMs away from gaming floors and lower daily cash withdrawals limits on ATMs.
• Better warnings in venues (based on the Victorian model).
According to the draft report, the number of problem gamblers in Australia lie in a range between 125,000 to 290,000. Poker machines turn over approximately $4.6 billion per year in New South Wales. In 1999, the Productivity Commission delivered a report finding that 2.55 per cent of the adult population had a serious problem with gambling. This survey found that 0.8 per cent of the population are problem gamblers and about 1.6 per cent are at high risk of becoming problem gamblers. At any time around New South Wales, there are approximately 137,000 people are either problem gamblers or at high risk of becoming problem gamblers.
In its 1999 report, the Productivity Commission examined the costs and benefits qualitatively and quantitatively. At that time, the costs were large, somewhere between $1.8 billion and $5.6 billion. They arise from a multitude of problems: suicides, relationship breakdown, bankruptcy, lowered productivity and job loss, depression and anxiety, and crime (gambling is one of the most common single motivations for fraud).
In July 2003, a report for the Casino Community Benefit Fund (NSW Department of Gaming and Racing) found that there were over 71,000 problem gamblers in New South Wales. They lost on average over $27,000 each and created an additional community cost of $7,700 each or a staggering $576 million in the State. The top 25 gaming pubs received $150 million in revenue with all but two on Sydney’s west and southwest.
Gaming machines or pokies account for the biggest single slice of overall gaming expenditure in Australia (around 65 percent of the total). For instance, Bankstown District Sports Club earned $67 million last year. Mounties Club earned $66 million from poker machines. Hurstville RSL Club’s 95 per cent of its revenue came from poker machines. Wests Ashfield Leagues’ profits from poker machines represented 88 per cent of its revenue. Canterbury Leagues Club earned $80 million a year and Panthers in Penrith earned $93 million from gaming profits.
There is endemic poker machine gambling in southwest Sydney, with some families in Fairfield spending a staggering three-quarters of their disposable income each year on gambling. $1.5 billion is lost each year in Sydney’s west on gambling.
Suburbs with gambling addiction rated as the highest, such as Bankstown, Canterbury, Ashfield, Auburn, Fairfield, Marrickville, Burwood and Penrith, are the same neighbourhoods record numbers of homes were repossessed in 2007. These areas are some of the State’s richest hotels are located and collects approximately $200,000 per poker machine.
In March 2007 the NSW Government commissioned the Independent Pricing and Regulatory Tribunal (IPART) to undertake a major independent review of the club industry.
IPART in its report (June 2008) confirmed the significant contribution clubs make to the NSW economy and the need for continued Government support. IPART estimated that the value of clubs’ contribution to social infrastructure in NSW in 2007 was $811 million. IPART also confirmed the fact that most clubs are highly dependent on gaming machine revenue, and that most clubs would experience difficulty in diversifying their operations away from gaming machines.
In January 2009, new laws were implemented to strengthen gaming machine harm minimisation measures. Key amongst these is a new Local Impact Assessment (LIA) process for determining applications, from clubs and hotels, for more gaming machines. Under the LIA process, it will be very difficult for venues in local government areas with a high density of gaming machines, high gaming machine expenditure and a low socio-economic disadvantage, to obtain more gaming machines.
The Gaming Machines Amendment Bill, which passed in December 2008, will reduce the statewide gaming machine cap by 5,000 (from 104,000 to 99,000). The Act provides for the on-going reduction in the number of gaming machines in the State and it will be further reduced at least once every five years.
There is also the issue of online gaming as more and more Australians increasingly use overseas gambling websites with minimal consumer protection.
Given the strong public opinion and rising community concerns about gambling and its negative ramifications on the breakdown of families, a strategic approach is needed to solve this growing crisis. It is paramount that both Federal and State Governments adopt and implement the recommendations by the Productivity Commission.
The Productivity Commission is holding public hearings on its draft inquiry report in late November to December, with its final report issued to the Government by 26 February 2010.
References: Productivity Commission, Gambling Draft Report, Canberra, October 2009; Editorial, The Sydney Morning Herald, 22 October 2009.