This time is different? The local costs of Cairns’ new casino

The proposed Aquis casino in Cairns is likely to be underwritten by the poker machine losses of local residents. AAP/Aquis Great Barrier Reef

The proposed Aquis casino resort in Cairns is edging ever closer to regulatory approval. The development is touted by proponents as a “man-made wonder of the world” and will cost billions to develop. The Queensland government is reportedly pushing for it in order to bring gamblers to Cairns in the hope that the dollars they leave behind will stimulate the region’s economy.

According to the proposal’s boosters, the casino is aimed squarely at the Chinese market. The developers claim that it will attract not only:

… the Chinese mass-market middle class, but also the big-spending, high-value, ever-expanding Chinese upper class.

Those with long memories or a familiarity with the history of casino development in Australia have heard this story before. From Hobart to Darwin, casinos have been justified with hopes of attracting lucrative international tourists and gamblers, particularly from Asia.

Yet such hopes have rarely been realised. Australian casinos sooner or later become dependent on the “local” pokies market – except for the barely profitable Canberra Casino, from which pokies have been banned.

Even Melbourne’s Crown Casino, often recognised as the benchmark for an Australian casino that successfully attracts international high-rollers, is highly dependent on poker-machine revenue. A careful reading of the Productivity Commission’s estimates and Crown’s annual reports shows that pokies are more important to Crown Melbourne’s bottom line than high-rollers. Profits from pokies amounted to an estimated A$376 million in 2008-09 compared to $330 million from high-rollers.

Outstripping both these categories is what Crown refers to as “local gaming”: $479 million in profit is taken from gamblers playing table games on the main gaming floor.

This time is different?

Yet with each new casino proposal, we are told that this time will be different. We went looking for evidence that the proposed Aquis casino in Cairns will attract the Asian high-rollers.

While Aquis has produced a 4000-page environmental and social impact statement, it has remained tight-lipped about what gambling facilities will actually be built. However, more details have been disclosed to the Australian Competition and Consumer Commission (ACCC). The ACCC notes that the casino will offer 1500 poker machines but only 750 gaming tables. This configuration of gambling products reveals an intention to target Cairns locals.

Chinese gamblers rarely play the pokies. The “market cultivation” efforts by operators in Macau to create demand for poker machines have thus far been a dismal failure. According to the latest figures, poker-machine gambling accounted for just 4% of gambling expenditure in Macau’s casinos.

Casino operators in Macau actually reduced the number of pokies they offer by over 20% between 2012 and 2014. The pokies in the Aquis casino will overwhelmingly be used by locals.

Putting an additional 1500 pokies in Cairns is likely to extract a staggering amount of economic resources out of the community, even when adjusting for pokie losses forgone at other pubs and clubs. Our modelling suggests that, on average, each adult resident in Cairns will spend an extra $240 per year on pokies, or, as a city, more than $56 million per year by 2021.

These do not represent the total estimated revenue generated by Aquis pokies, but the extra dollars that Cairns residents are likely to lose, in addition to the average $660 per year that they already spend on pokies in existing pubs and clubs.

More worrying still is the way these averages hide the unequal distribution of poker-machine losses in the community. According to our estimates, based on an analysis of surveys of gamblers in Queensland by the Productivity Commission, $22 million of the annual $56 million extra losses will come from just 950 problem gamblers. Around 3000 so-called “moderate risk” gamblers will lose a further $12 million per year.

In contrast, those who don’t report any harm from gambling will lose only $16 million. A further $8 million will be lost by those who report only one or two signs of gambling problems.

The Conversation/Authors

Pokies across the country disproportionately target the poorest people in Australia. Will this time be different? While we fervently hope that the Aquis casino will succeed in only taking money from international “recreational gamblers”, freely spending their hard-earned cash in Cairns to the benefit of the local community, we doubt this will be the case. Instead, the casino is likely to be underwritten by residents of the Cairns region.

Just 4000 people with some degree of gambling problems are likely to spend an extra $33.5 million each year on the 1500 proposed pokies at the Aquis casino. Questions must be asked as to whether the profits from the casino, going offshore to the Hong Kong-based developers, will be worth the inevitable local costs.