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Dissenting report by the Chair and Senators Xenophon, Di Natale and Madigan
1.1
At the outset we wish to express our sincere gratitude and admiration
for the work performed by the Secretariat of the Joint Select Committee on
Gambling Reform since its inception. As has been made clear by the findings of
the committee in its five previous reports, problem gambling in Australia is an
issue that touches the lives of hundreds of thousands of people. The need for
meaningful and effective gambling reform is overwhelming. There has been a
perceptible change in the attitude of the Australian community towards
gambling, and in particular towards online sports betting in 2013 alone. We
believe there is a need for a permanent committee to be established to address
gambling reform in Australia and we are disappointed to see this committee
disbanded when there is still so much more work that needs to be done.
The Poker Machine Harm Reduction ($1 Bets and Other Measures) Bill 2012
Introduction
1.2
It is our view that the committee majority report is disappointingly
devoid of a discernible position on gaming machine reform. Given the quality of
evidence the committee received in support of the Poker Machine Harm Reduction
($1 Bets and Other Measures) Bill 2012 (the bill), as well as the large volume
of material the committee has considered for previous inquiries, we reject
outright the notion that the proposed legislation lacks sufficient evidentiary
basis. On the contrary, it is the government and Coalition committee members'
weak stance on poker machine reform that cannot stand up to rigorous analysis,
particularly when their professed commitment to harm reduction is taken into
account.
The damage done
1.3
More poker machine reform is desperately and urgently needed. Consider
the following statistics, provided by the Gambling Impact Society of New South
Wales:
- One in
six people who play the poker machines regularly have a serious addiction.
- Only
around 15 per cent of people who have a gambling problem seek help.
- Those
affected by problem gambling are six times more likely to be divorced than those
without gambling problems (Thomas, S, 2008).
- Children
with parents who are addicted to gambling are up to 10 times more likely to become
addicted themselves, than children with non-gambling parents (The Problem Gambling
Treatment and Research Centre, 2010).
- The NSW
Health Report of 2007 found that 10.4% of NSW residents had experienced a
problem with gambling in the family.
- Between
40 – 60% of gambling revenue is from those gambling problematically (Productivity
Report 2010)
- One in
five suicidal presentations are linked to problem gambling (a study by The
Alfred Hospital, Mental Health team research, Costello 2010).[1]
1.4
Gambling exists on a continuum—it is not always clear who will develop a
gambling problem and how many people an individual's behaviour will affect.
Those affected by the 'ripple effects' of gambling include family members,
friends, colleagues and workplaces and, as the committee explained in its first
report, their numbers are likely to be underreported.[2]
It is a mistake to ascribe all ill effects to what is accepted to be 'problem
gambling':
Problem gambling is generally (and probably erroneously)
regarded as being synonymous with the amount of harm occasioned by gambling.
However, it should be noted that although problem gambling prevalence rates
provide a metric (if instruments and survey methodologies are applied
consistently over time), prevalence surveys are unlikely to indicate the number
of people actually adversely affected by gambling nor are they capable of
assessing the actual impacts of the harm experienced by those affected.[3]
1.5
Highlighting the point above, the Municipal Association of Victoria
cited the Productivity Commission's conclusion that around 60 per cent of
people who report health problems arising from their gambling do not fit the
definition of 'problem gambler'.[4]
Furthermore:
It is well known that those gambling at problem or at-risk
levels are unlikely to publicly attribute any health, social or financial
difficulties they’re experiencing to their gambling activity. Accurately assessing
the social and economic costs of problem gambling in Victoria must then,
inevitably, be a difficult task. That said, the fact that it is known that so
much money is lost each year, predominantly in Victoria’s most disadvantaged
communities, and that gambling problems lead to a range of physical health,
mental health, social and economic harms, does, or should, raise important
public interest questions for all three levels of government.[5]
1.6
It is clear that counting the costs of gambling is a difficult task. It
is also clear that two Productivity Commission reports and numerous research
studies have indicated that poker machines represent the most addictive form of
gambling.[6]
Through its inquiries, the committee has catalogued the harm poker machine
addiction can and does cause individuals, families and society[7]—leaving
it up to individuals to carry this burden will not do. The proposed legislation
gives us an opportunity to put in place effective measures which will minimise
harm. This is not an opportunity to be missed.
The cost of inaction
1.7
The committee majority report states that the financial cost of
implementing the proposed legislation is significant and, by implication,
prohibitive. On reflection, what this position is actually saying is that the
financial cost to the gambling industry is deserving of greater consideration
than the cost of inaction to the community. This is an alarming position to
take for any incumbent or would-be government. For one, cost cannot simply be
measured in dollars and cents. However, even when it is, the financial cost our
society bears for inaction in this area over the years is far greater than the
one-off financial loss to the gambling industry.
1.8
Forgoing action because the gambling industry would have to pay in order
to reduce the harm caused by revenue-raising poker machines amounts to putting profit
and revenue-raising above people and communities. Those analysing criticism of
the proposed legislation would do well to remember that opposition to the bill
comes largely from those who stand the most to gain from the status quo: from
the gambling industry and from some state governments. As put by FamilyVoice
Australia:
It is time to consider whether the State governments –
charged with providing for the peace and good order of their State – are
failing in their duty to the extent that they have become dependent on revenue
from gambling and have consequently become reluctant to restrict access to
gambling in any substantial way.
The fundamental social question is whether the alleged
benefits of gaming machines –revenue for non-profit clubs and enjoyment for
"recreational" non-problem gamblers – are worth the social costs
associated with problem gambling.[8]
What are the costs?
1.9
Looking for a moment at the cost of implementation figures cited by
sections of the gambling industry, these figures are not only spurious but,
even if accepted at face value, pale in comparison to the social cost of
problem gambling.
The cost of implementation versus
the social cost of problem gambling
1.10
The Productivity Commission tells us that the social cost of problem
gambling is at least $4.7 billion per year.[9]
1.11
Gaming Technologies Australia (GTA), whose members supply all of
Australia's new poker machines, tells us that the cost of reconfiguring
Australia's poker machine inventory would exceed $2.5 billion.[10]
1.12
Even if accepted, this figure is far lower than the annual cost of
problem gambling incurred by society—it is a one-off cost of $2.5 billion, as
opposed to an annual cost of $4.7 billion. It is quite obvious which cost is
greater, even if compared in an absolute, purely financial sense. GTA's $2.5
billion cost of implementation figure, however, is not a figure that I accept.
1.13
As the committee heard, much depends on how costs are calculated, and
industry calculations of cost do not take into consideration the depreciation
of existing poker machines:
...[A] point I would make, particularly about the way that
these calculations are done, is that it is often along the line of saying the
average cost of modifying or replacing the machine is X dollars—it is roughly
$25,000, for example, for a completely new machine—and there is a range of much
lower costs for hardware and software changes. If you take the existing number
of gaming machines and multiply it by that composite measure, you get an
immediate cost. Many of the numbers you hear are of that kind, but that is
intrinsically a problematic measure because it ignores the fact that many
machines out there are not new machines. They are going to be replaced at some
time in the future. The correct measure of the cost would take into account
that very fact.
Perhaps to give an illustration, just imagine that a venue
has a machine which is in the last year of its life and that its replacement
ought to be $25,000. It is currently worth $2,000. If I bring forward the
investment of $25,000, the real cost is not $25,000—it is $2,000. Unless you
take account of that fact, you get grossly misleading indicators of the costs.
I cannot say which of those particular estimates you gave to me make which of
those errors, but it sounds like the higher ones do so.[11]
1.14
While industry will naturally be affected if machines are required to be
upgraded, I believe this is a necessary consequence if harm minimisation
measures of the kind proposed are to work.
The key measures
1.15
While the committee majority report cites submitter concerns regarding
the quantity of research available to support the key measures proposed by the
bill, it must be pointed out that a number of submitters—albeit not those
reliant on revenue from gaming machines—pointed to strong evidence which is
available.
$1 bet limits
1.16
It is incorrect to say that the evidence supporting a $1 cap on bets is
weak. The $1 figure is supported by the Productivity Commission in its 2010
inquiry and report on gambling in Australia. The Productivity Commission report
is not a haphazard document based on guesswork and scant research—it is a serious
piece of work produced by an impartial and highly professional agency. The fact
that its conclusions may not be to everyone's liking is not sufficient reason
to reject its findings.
Cash input limits
1.17
Cash input limits also received support among submitters. The Australian
Churches Gambling Taskforce pointed out:
The Productivity Commission noted a 2007 NSW gambling
prevalence study in which it was found people with gambling problems inserted
notes into machines at a significantly higher frequency compared to other gamblers
(84% of problem gamblers versus 54% of low risk gamblers who insert
often/always). People with gambling problems were more than eight times more
likely to insert $50 notes into machines compared with EGM gamblers overall
(41% to 5%). Moderate risk gamblers also displayed some of these expenditure
patterns, but to a lesser degree.[12]
1.18
In fact, submissions such as the one above supported stronger measures
than those proposed by the bill, but conceded that the legislation would be a
good start:
The Taskforce would strongly prefer the removal of note
acceptors altogether in those jurisdictions that currently allow for them, at
the very highest allowing for note acceptors that accept $5 notes. However, a
restriction on note acceptors on EGMs to $20 would be a small step forward in
those jurisdictions that currently allow for $50 notes to be inserted.[13]
1.19
We note that the cash input limit is also supported by the Productivity
Commission, which included a recommendation to that effect in its 2010 report.[14]
Other issues
Compatibility with measures already
underway
1.20
The committee majority is correct in saying that efforts towards the
implementation of other measures, such as pre-commitment technology, are
already underway. It is nonsensical, however, to imply that those measures are
somehow incompatible with the application of the provisions set out by the
bill. The point that the proposed measures and pre-commitment are entirely
compatible and could work side by side as harm minimisation measures was made
repeatedly over the course of this inquiry:
We do not regard mandatory precommitment and $1-bet limits to
be 'either/or' public policy options. Both are important budget-setting
approaches and part of a broader public health approach. If you like, mandatory
precommitment works on the demand side of the gambling industry while $1-bet
limits act on the supply side. Both are valid, important and useful ways of
playing spending limits.[15]
1.21
Furthermore, parallel implementation of pre-commitment technology and $1
bet limits is supported by the Productivity Commission.[16]
We believe this is a strong argument in favour of the legislation.
Effects on recreational versus
problem gamblers
1.22
Certain submitters raised the prospect of the bill's effects
inadvertently snaring recreational gamblers too, curbing their right to poker
machine playing as a form of harmless entertainment. The evidence to support
this assertion is scant.
1.23
When the above proposition was put to Dr Kevin Harrigan, an academic
with many years' research experience in the gambling field, he explained that
such an effect was unlikely:
What I will say based on observation but also some research,
including some research from Australia, is that a lot of people are not
wagering above $1 anyway, the casual gamblers. I observe all the time here in
my casinos in Ontario that people are waging amounts that are nothing close to
what the maximum wager on the machine is. They tend to play a nickel machine
and wager $1 or $2. So for these casual gamblers it is not going to have much
of an effect because that is what they wager anyway.[17]
1.24
Representatives of the Australian Churches Gambling Taskforce added:
A $1-bet limit will be proportionately focused on the
behaviour of people with gambling problems, and we highlight this as a really
important point. It will have minimal impact on the behaviour of recreational
gamblers. There is quite a bit [of] research, and our submission deals with
some of that, but I highlight research from Queensland that shows that, from
2006-07:
... only 12% of recreational gamblers bet at $1 or more a
button push, compared to 50% of problem gamblers.
So $1-bet limits are important public policy which we
strongly support.[18]
1.25
The Productivity Commission, too, told the committee that imposing $1
bet limits would achieve the outcomes intended by the bill insofar as harm
minimisation is concerned:
The effects of bet limits on player outcomes and on different
players are fairly straightforward. We looked at a range of evidence from a
range of surveys and other source of evidence, and problem gamblers have a much
higher tendency to play at high intensity and spend more than $1. It does not
mean that they all do, but they have a high probability of spending more than
recreational gamblers, which means the measure is relatively well targeted at
that group.[19]
1.26
While we accept that electronic gaming machines are intended primarily
for recreational purposes, the point should be and has been made that machine
design must be consistent with this intention. Given the intensity of play
provided for by Australian poker machines, we cannot agree that this is the
case.
Will problem gamblers move to other
forms of gambling?
1.27
The argument that introducing reforms to the operation of poker machines
could potentially just drive those with a gambling addiction to other forms of
gambling does not withstand scrutiny. As pointed out by the Gambling Impact
Society, 80 per cent of those with gambling problems are struggling with the
use of poker machines.'[20]
To assume that those people will all take up—and find equally addictive—other
forms of gambling if poker machines are better regulated is conjecture. It
completely disregards the fact that, among gambling products, poker machines
are unrivalled in the level of addiction and consequently harm that they cause.[21]
Will problem gamblers gamble for
longer periods?
1.28
We also note speculation, cited in the committee majority report,
concerning whether problem gamblers will simply spend longer periods gambling
if the intensity of play is curbed. Dr Ralph Lattimore, Assistant Commissioner
at the Productivity Commission, told the committee that this effect would be
limited, making two very valid points in the process:
There are two points to make in respect of that. First of
all, Professor Blaszczynski, in his work some time ago, examined that question
and did not find any significant increase in the playing time spent by problem
gamblers in response to his particular in venue experiment. The other point to
make is that, if the need is from the highest intensity machine—namely, a $10
bet limit machine—to a $1 bet limit machine, the required amount of extra time
for you to get to the same player losses would obviously be a tenfold increase
in time. That is a very appreciable increase in time which, for many practical
reasons, would not be achievable by many problem gamblers. It would also raise
the question of whether venues might have the greater opportunity to observe
the person playing for those hours and to apply venue intervention. That does
not mean to say that there is not any effect this way; it is likely that there
will be some substitution between time and a $1 bet limit if introduced.[22]
1.29
Finally, problem gamblers are not the only gamblers who would benefit
from reduced poker machine intensity. Gamblers as a group, the committee was
told, have inaccurate recall and exhibit cognitive misperceptions about poker
machines. This leads to greater expenditure than planned and can result in
considerable losses.[23]
Conclusion
1.30
It is disingenuous to say that the evidence to support this bill is
still somehow lacking. How many studies need to prove that poker machines are
harmful, and how many lives need to be destroyed before we accept that gaming
machines need to be better regulated? How much evidence is enough? This is
something the committee majority has not and will not explain.
1.31
This committee has done considerable work on problem gambling and is
very well aware of the capacity poker machines have to engender addictive
behaviour. We are firmly of the view that the time has come to act. This bill
would bring tangible results. The proposed reforms may not be pleasing to those
who profit from gambling addiction, but it is not their financial concerns that
should drive this committee or indeed policymakers.
Recommendation 1
1.32
We recommend that the Poker Machine Harm Reduction ($1 Bets and Other Measures)
Bill 2012 be passed.
Anti-Money Laundering Amendment (Gaming Machines Venues) Bill 2012
1.33
In October 2010 the Sydney Morning Herald reported that hundreds of
millions of dollars was being poured into poker machines in New South Wales
alone in order to convert illegally gained cash into funds that appear
legitimate. The article explained:
Industry sources estimate that nationally $2 billion a year
is laundered through hotel, club and casino poker machines and gambling
chips...This is a large slice of the $14 billion fed through the nation's poker
machines each year...The amount fed into machines by criminals far exceeds that
spent by problem gamblers with psychological addictions to playing pokies.[24]
1.34
The Anti-Money Laundering Amendment (Gaming Machines Venues) Bill 2012
seeks to 'restrict opportunities for money laundering through poker machines'
by requiring that payouts over $1,000 and the cashing of transferred cheques
are classified as 'threshold' transactions'.[25]
These transactions are then reportable to the Australian Transaction Reports
and Analysis Centre (AUSTRAC), allowing AUSTRAC to' monitor and record such
activity for the purposes of reducing money laundering and other prohibited
actions'.[26]
1.35
Despite evidence that money laundering through poker machines is a real
threat to the industry, Clubs Australia claims the current regulatory framework
provides sufficient safeguards against the practice based on the requirements
of the Anti-Money Laundering and Counterterrorism Financing Act 2006.[27]
Clubs Australia claims that a variety of obligations under the Anti-Money
Laundering and Counterterrorism Financing Act 2006, such as risk profiling
of gaming machines patrons and training for gaming employees are adequate at
preventing money laundering.[28]
1.36
These claims are in stark contrast to an example of suspected money
laundering reported in The Australian in 2012 involving the Westend
Market Hotel in Melbourne failing to act on suspicions of money laundering
through its poker machines by encouraging staff to turn a blind eye to one
family presenting winning tickets of up to $40,000 per week.[29]
In total, $632,396.67 in cheques was made out to this family.
1.37
This example demonstrates that it is clear the poker machine industry
cannot be relied upon to report suspicious activity voluntarily. Currently it
is too easy for cases of suspected money laundering to go unreported, allowing
this criminal enterprise to thrive.
1.38
We believe there is a demonstrable need for greater regulation of
payouts and transferred cheques at poker machine venues in order to stem the
tide of money laundering. The Anti-Money Laundering Amendment (Gaming Machines
Venues) Bill 2012 will go a long way to achieving this.
Recommendation 2
1.39
We recommend that the Anti-Money Laundering Amendment (Gaming Machines
Venues) Bill 2012 be passed.
Interactive Gambling Amendment (Virtual Credits) Bill 2013
1.40
The purpose of this bill is to ensure that gambling activities online
are appropriately captured by the definition of 'gambling service' in the Interactive
Gambling Act 2001. The current definition does not cover activities where
virtual items, which are purchased using real money, are then used for
gambling. In these cases, gamblers are essentially betting with real currency,
on games that are virtually identical to 'land-based' gambling activities but
have no way to cash out their winnings as the game is not considered to be a
'gambling service' under the Act.[30]
This is an unacceptable loophole which has allowed potentially millions of
dollars to be lost to online casino style websites and mobiles applications
("apps") such as DoubleDown Casino, Zynga Poker and Slotomania.
1.41
In its review of the Interactive Gambling Act, the Department of
Broadband, Communications and the Digital Economy summarised why many of these
websites and apps are cause for concern:
- The games look very much like many real casino games and some may
use a simulated rate of return that gives players an unrealistic impression of
rates of return for actual online casinos;
- There is an incentive to use virtual chips to unlock elements of
the game (eg. new levels, items) and the fastest way to do this is to purchase
additional chips with real money; and
-
If a player loses all their virtual chips, they are able to
purchase more chips to continue playing the game.[31]
1.42
The Australian Psychological Society in their submission affirmed the
need for virtual currency or 'tokens' to be recognised as possessing monetary
value:
...tokens have symbolic value, and demonstrate the widespread
use of alternative forms of currency, that function in similar ways to that of
cash currency. In this way, it is the symbolic value of the currency, together
with the rewards for which it can be exchanged, whether in cash, privileges or
other benefits, that has meaning, and not the actual unit currency. This
evidence warrants caution regarding the accessibility of online gaming
opportunities using virtual currencies, as these can simulate (and stimulate)
broader gambling activities and reinforce gambling behaviour. Amending the
Interactive Gambling Act 2001 to provide that virtual credits, coins, tokens
and objects that are purchased are recognised as items of value in relation to
a gambling service would appear entirely consistent with psychological research
that demonstrates, and has utilised in therapeutic settings, the operation of
token economies as systems of behaviour modification and reinforcement in which
the token indeed has real currency.[32]
1.43
The Department's cavalier attitude towards the definitional problems in
the IGA is in stark contrast to the evidence provided by the Australian
Psychological Society and is clearly identifiable through the department’s
statement in their submission:
...there are better ways of addressing this issue than changing
the definition of gambling in the IGA - this includes encouraging greater
vigilance by parents and by relevant social media platforms, etc being more
responsive to the findings of emerging research in this area.[33]
1.44
Placing the responsibility of limiting losses on parents' shoulders
alone is simply unacceptable. Time and time again we have heard how children
have been able to use their parent's credit cards and Pay-Pal accounts to make
online purchases without the parents' knowledge.
1.45
It is not surprising that representatives from the online gaming industry
have chosen to downplay the problems associated with virtual credits and
instead assert that the current regulations go far enough. The Australian
Interactive Media Industry Association Digital Policy Group told the committee:
Many other countries have assessed social gaming involving
virtual items to be safe, and not in need of additional regulation.[34]
1.46
This statement however does not take into account a ruling by the Dutch
Supreme Court in 2012 that it was possible for virtual items to be the subject
of a theft because they carry an intrinsic value due to the time and energy
invested in winning them.[35]
This ruling demonstrates how the perception of virtual items is evolving. It is
time Australian regulation caught up:
The current legislation is over a decade old. The past decade
has seen a burgeoning of more sophisticated ways to gamble, including access to
24 hour gambling through the internet, mobile phone technology and interactive
television platforms. With such rapid changes in technology, it is important
that legislation reflects these changes and takes into account how these sites
operate.[36]
1.47
It is inexcusable that the federal government to date has failed to
implement measures that would protect Australians, particularly Australian
children, from developing gambling addictions. While the websites and apps
targeted by this bill may describe themselves as "fun", the reality
of gambling addiction is anything but.
Recommendation 3
1.48
We recommend that the Interactive Gambling Amendment (Virtual Credits)
Bill 2013 be passed.
Mr Andrew Wilkie MP
Chair |
NICK
XENOPHON
Independent
Senator for South Australia |
|
|
Senator Di Natale
Australian Greens
Senator for Victoria |
Senator
John Madigan
Democratic
Labor Party
Senator
for Victoria |
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