Chips

Ashes to Ashes – Pommie Reflections on the Great Australian Gambling Controversy

Can’t you hear, can’t you hear the thunder? You better run; you better take cover” 
from ‘Down Under’, Men at Work

Most sectors of the consumer economy have their bell-weather markets. For example, we in Britain have long looked to the USA in order to understand future trends in casual dining – or to Japan to seek insight into consumer technologies. In recent years, Australia has come to provide a similar reference point in terms of the regulation of gambling.Our partners in Commonwealth have assumed this distinction largely by dint of successive Government responses to mounting public health concerns in relation to gambling.

The nation has an impressive gambling industry, which last year generated gross revenues of AUS $23bn (similar to Great Britain’s £12bn with a population around one-third as large) and some spectacular business successes, such as Ainsworth, Aristocrat and Crown.

Success has come at a price. In the mid-1990s Australia’s problem gambling prevalence rate was disturbingly high by international standards – something that was largely blamed on the rapid expansion of slot machines (or ‘pokies’) in ‘ambient’ locations such as pubs and clubs. Since then, public and political concern has given rise to pioneering studies of gambling-related harm and the early adoption of harm minimization measures.

Since then, the rate of problem gambling has been shown to decline across successive surveys to a point where it is now comparable with the rate recorded in Great Britain. Yet the expansion of remote sports betting in recent years has reignited public health concerns.

This year, the national Government announced that in-play betting would be banned, reflecting concerns that the product lent itself to both sports corruption (spot-fixing) and problem gambling (repetitive betting with fast feedback). According to news reports, some operators have taken the view that the ban is a matter of choice rather than compliance.

The industry has (so far) escaped a national ban on advertising but the issue has not gone far away. This year, research from Deakin University suggested that children in Australia may be starting to view betting as a normal (possibly integral?) component of sports, raising concerns that the preponderance of advertising and sponsorships was storing up trouble for the future.

Veteran anti-gambling politicians Andrew Wilkie MP and Senator Nick Xenophon along with British-born Rebekah Sharkie have called on the national Government to ban day-time commercials for gambling. The Australian Green Party (a more powerful force in politics than its British counterpart) would go further and has adopted a policy to ban all gambling adverts, including shirt sponsorships and ‘cash for comment’ (effectively product placement within sports commentary).

Meanwhile, at a state level, Victoria has now published detailed plans to restrict static advertising (billboards etc). The new regulations will ban sports betting advertisements in areas commonly frequented by children (such as near schools), locations that are unavoidable in the public’s day-to-day activities (such as public transport) and in other sensitive sites. The regulations seem open to interpretation and may in time be pushed further.

The antipathy towards gambling advertising presents remote operators with a Prisoner’s Dilemma. At an industry level, common sense dictates that betting companies should tread carefully lest they stir up further public antagonism; but commercial imperatives appear to be pushing operators in the opposite direction as part of an advertising ‘arms race’. The outcry over Ladbrokes decision to take over the front page of the venerable Sydney Morning Herald earlier in the year encapsulates the competing pressures.

The relationship between sports and gambling has long been a thorny issue. The major gambling controversy of recent decades – the pokie – has a deeply entrenched relationship with sports; many Australian sports clubs are at least partly reliant on takings from slot machines. In a country that has grounded much of its cultural identity in its sporting success, the extension of the gambling link to shirt sponsorship is deeply troubling for many Australians. High profile marketing activity during the Olympics (which despite everything is still considered the acme of sporting purity) has done little to allay concerns.

Then there is the matter of sports integrity. This month, the Police launched a major new investigation into match-fixing in Australian Rugby League – with the media hinting at the involvement of the colourful (former owner of a brothel), Eddie Hayson.

While the pokie and sports betting controversies continue to rage, a major new totem for the gambling industry is set to rise above the Sydney skyline. James Packer’s new Crown resort casino in Bangaroo (Sydney Harbour) brings more than $1bn of new investment but critics allege that graft may have eased the legislative passage of the project. This is a familiar theme. Earlier this year, it was revealed that Kevin Andrews, the Government minister responsible for repealing anti-pokie legislation had accepted substantial political donations from gambling industry lobbyists – lending additional weight to the perception that gambling in Australia has become too big and too powerful.

Against this backdrop of gambling expansion, critics argue that it is the poorest in society that are being exploited – and in Australia, the poverty debate has a striking ethnic dimension. In one town with a large Aboriginal population, civic authorities have recently deployed a card-based benefits system that (at least in theory) prevents claimants from spending their welfare allowances on gambling and drink. It’s just one example of a more prohibitionist approach creeping in – but perhaps a warning sign for operators that the tide of public opinion is not with them.

A new study from the Australian National University indicates that ‘problem’ and ‘at risk’ gamblers generated 44% of gambling revenues in Canberra – and 63% of machine revenues.

Then there is the question of the relationship between gambling and crime. In a recent report, the forensic accounting firm Warfield & Associates calculated that Australians had stolen at least $100m between 2011 and 2016 in order to fund gambling. The report was based on court records in 265 convictions for theft and so may understate the true extent of the problem.

One of the most fascinating aspects of the Australian regulatory debate is just how closely it mirrors developments in Great Britain – long running concerns over the accessibility of slot machines and calls for stake reduction; a general distaste for advertising and the fear it may lead to normalization of gambling; concern over match-fixing; the perceived “fairness” of tax contributions from off-shore operators; gambling’s relationship with proceeds of crime; and allegations of the industry’s undue influence.

The response from a number of market participants is also uncannily familiar, perhaps characterized by an exaggerated sense that the industry is in a position to dictate terms.

Exposure to a number of different geographic markets is one of the more obvious methods of diversifying risk; but if the risks are similar in nature and the risk management strategies are similarly unsuccessful, risk is magnified rather than mitigated. Moreover, we have seen that gambling regulation can follow epidemiological patterns – in terms of both liberalization and repression. Provoking a government into action in one jurisdiction may have the consequence of prompting intervention in another – whether for good or ill.