Pokies punters and taxpayers both lose when govts and industry get too cosy

Taxpayers were shortchanged $3billion in Victoria’s ill-fated auction of licences last year. AAP

GAMBLING IN AUSTRALIA – How do pokies cause harm? People addicted to the pokies lose one hell of a lot of money.

Because they lose one hell of a lot of money they do not eat well, get into debt, lose their homes, suffer psychological trauma and do desperate things like commit crimes and suicide.

Last year the Productivity Commission said that problem gamblers lost 40% of total pokies losses around the country. Add those at risk of becoming problem gamblers, and the figure rises to 60%.

It’s just a harmless bit of fluttering fun if you listen to the poker-machine industry (the gambling corporates, clubs and pubs). It’s all a bit of entertainment.

Yet it is hard to think of other forms of ordinary street-level entertainment in which you can lose $1200 to $1500 an hour. That is standard for Australia’s high-intensity pokies.

If you spent eight hours of harmlessly entertaining fluttering, you could easily blow $10,000. Now that would be serious fun.

People do lose big money. People with gambling problems lose $5-7 billion plus a year, according to the Productivity Commission.

Their families, friends, employers and the community all suffer. It’s not really that much fun at all. In fact it’s deadly – and not in the indigenous sense of the word.

Sorry, that’s wrong. Worse, it’s un-Australian. Of course, the poker-machine industry is having a hairy-arsed, fun-filled, whale of a time.

Its state government partners are, too. Between them they pocket the $12 billion lost per year, including the $5-7 billion of harm-causing losses by problems gamblers and those at risk.

Let’s not mince words. The poker-machine industry and state governments profit from that harm.

There was a time when Victoria’s minister for pokies, Michael O’Brien, would come along to conferences on gambling harm. He would sit and listen earnestly. He would criticise former ministers for pokies for not doing enough for problem gamblers.

His less squeamish colleagues would be on the phone to gambling researchers (including this one) hoping for tid-bits of pokies muck to rake.

Now, of course, shoulder to shoulder with their State mates around the country they are trying to stop the Wilkie mandatory pre-commitment scheme. It’s untested. It won’t work. It will hit the pokies industry, particularly pubs and clubs.

Michael O’Brien chips in that Victoria’s voluntary scheme and other problem-gambling measures are the best in the country. What’s more, they won’t materially affect the pubs and clubs.

Sorry? Run that by me again, as they say. You can do something about the $5 billion-plus harm-causing losses by problem gamblers without reducing industry revenues and pokies taxes? Magic puddings all round!

Of course, the ritual incantations by state governments against the Wilkie plan are fatuous nonsense, and they know it.

If they weren’t so cheek by jowl with the pokies industry they might instead be campaigning for tax redistribution from the Commonwealth to compensate for the hit to their budgets. Instead, they say, they will peddle their wretchedly bad argumentation all the way to the High Court.

Meanwhile, Victoria’s Auditor-General tabled a report in Victorian Parliament yesterday slamming last year’s auction of poker-machine licences. Most of these licences were snaffled by gambling’s big end of town.

The Bruce Mathieson’s ALH Group joint venture with Woolworths picked up one-third, ironically in an auction purported to increase competition after the Tabcorp-Tattersall’s duopoly expires next year.

The upshot was that the licences for each of Victoria’s 27,000 machines, which generate about $2.7 billion revenue per year, sold for an average of $37,000.

That is, the average revenue generated by each machine – about $100,000 per annum – could cover its licence price in about four months and 13 days.

In the words of the Auditor General: “The revenue obtained from the sale of the entitlements was around $3 billion less than the assessed fair market value of these assets [about $4.1 billion].

"As a result of this very significant difference, the allocation largely failed to meet its intended financial outcome of capturing a greater share of the industry’s supernormal profits … Large venue operators, rather than the community, are the beneficiaries of this windfall gain …

"The industry paid $980 million for the right to operate EGMs over a ten-year period. This is equivalent to around a third of the total revenue generated by EGMs in a single year, and a quarter of the estimated fair market values of the entitlements. We valued the EGM entitlements in the range of $3.7 billion to $4.5 billion, with a mid-point of $4.1 billion.”

That just about says it all, except for one thing. Juxtapose the phrase ‘supernormal profits’ with the down-to-earth, back-slapping clubbiness of the industry’s TV and other ads.

What did Matthew’s gospel say? “Beware of false prophets, who come to you in sheep’s clothing, but inwardly are ravening wolves.”

This is part five of The Conversation’s Gambling in Australia series. Read part one: Gambling in Australian culture: more than just a day at the races; part two: Promotion of gambling short-changes Australian sport … and its fans; part three: Get rich or die trying: when gambling becomes a problem; and part four: Want to win at gambling? Use your head.

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