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Chapter 8
Catering for recreational and low level players
8.1
Chapter three provided an overview of high and low intensity EGMs. The
settings of a high intensity machine which allow substantial cash load up, high
bet limits, fast games and big jackpots result in a high level of volatility
and the likelihood of big losses. Mandatory pre-commitment will help protect
gamblers playing these high intensity machines.
8.2
While no EGM is without danger, low intensity machines on the other hand
could be configured to reliably limit player losses. This would provide a lower
risk gambling environment which is closer to a recreational activity. Occasional
and low level players would notice no difference to their playing experience
because the game parameters would be the same as what they normally play and
the machines would be outside the mandatory pre-commitment system. The
committee is drawn towards providing a greater role for low intensity machines,
configured to limit losses, to provide venues and players with a greater level
of choice. This is further detailed below. However, first the option of a
temporary low-value pre-commitment card which was suggested as an alternative
to low intensity machines, will be discussed.
The option of a temporary
pre-commitment card[1]
8.3
The option of a temporary, low-value card for occasional players for
those who may play EGMs only once or twice a year was raised.[2]
Mr Alan Moss, Independent Gambling Authority, SA, supported such an option for
occasional players:
There will be other people who perhaps play only occasionally
who might choose to get a card or who might choose, on the particular day they
go, to get a temporary card for that day.[3]
8.4
Associate Professor Paul Delfabbro noted that one-off low-value cards
are already available in NSW:
So around the world there are those ticket-in type cards that
you can buy—New South Wales has them—where you can just buy a $5 card, use it
once and that is it, where you make no undertaking to play more regularly to
get bonus loyalty points from playing EGMs.[4]
8.5
The Productivity Commission also indicated its support for a temporary
low-value card, seeing it as an attractive option for recreational players but
not for regular gamblers:
...it is in fact designed not to allow regular heavy-use
gamblers to be able to use lots and lots of these sorts of little cards. It is
specifically for that group of recreational gamblers who have a low-level
spend. Those that have a more regular spend which is of a higher nature—those
who are all high-risk and problem gamblers—do not spend $20 at a time but much
more than that and they would end up in the precommitment system. It is
designed for that to happen.[5]
Committee view
8.6
The committee notes that the Productivity Commission also saw low
intensity machines as a credible alternative to a temporary low-value card.[6]
Given the evidence describing the addictive features of EGMs in chapter three
and the following arguments emphasising the need to make changes to machine
design, the committee is attracted to low intensity machines over a low-value
card. This is described further below.
The need for structural change
8.7
In addition to supporting mandatory pre-commitment, a number of
witnesses raised the issue of introducing complementary machine design changes.
Dr Jamie Doughney for example saw the need for a two-pronged approach, which
involves providing consumers with the power to make more rational and
considered decisions, which includes measures such as pre-commitment. This
approach would also involve changing the structure of the machines to make them
less dangerous, including reducing the speed of play or lowering maximum bets.[7]
8.8
Professor Malcolm Battersby also spoke about changing the design
elements such as spin rates and recommended that along with pre-commitment,
more should be done by governments in this area.[8]
As well as supporting the introduction of mandatory pre-commitment Dr Charles
Livingstone also spoke about the need to address machine design to reduce the
amount of expenditure that is possible for players to lose:
It is important to distinguish between, on the one hand,
problem gambling and, on the other hand, the harm created by problem gambling.
A problem gambler who cannot spend a lot of money may still have a problem in
the sense that they are preoccupied with gambling, but if they cannot actually
spend vast sums of money on high-impact machines—or, at any rate, their rate of
expenditure is substantially reduced or slowed—the amount of harm done by that
person’s problem is reduced. We would argue that both sides of that equation
need to be addressed if you are to have a solution that is as complete as
possible. But that does not mean that just because we can only address some
part of the problem we should not do that, because precommitment is undoubtedly
going to have many benefits for many affected individuals and prevent people
from developing gambling problems.[9]
8.9
Dr Charles Livingstone and Dr Richard Woolley summarised their shared
view that the 'ideal model would combine compulsory, universal, effective
precommitment with structural change of machines. So that is a seatbelts and
airbags model'[10]
to provide the maximum level of protection to all consumers. Dr Woolley described
pre-commitment as being the most direct way of eliminating the stream of income
from problem gamblers from the market. However, he emphasised that this should
be implemented along with changes to the design of EGMs which would slow the
rate at which players lose money. He added that this is connected to
sustainability of the industry, citing the common view expressed by many in the
industry that they do not wish to receive a single dollar from problem
gamblers.[11]
8.10
Dr Jamie Doughney argued that supplying potentially harmful products,
EGMs, should not be an unfettered right; EGMs should be made as safe as
possible:
All of this points to the fact that we have before us a
harmful product and an addictive product for many of the people who use it
regularly. Again, that means that we should look at the responsibility
question, as we do with other harmful products, not only through the user’s
perspective but also through the perspective of the supplier. The
responsibility question that we should ask—which I set out on page 5 of the
submission that I presented to you—is: we must ask whether the supplier should
have an unfettered right knowingly to supply the dangerous or harmful product
and in consequence share in the full responsibility for the harms that result.
We do this with many products that serve a useful purpose in our society—a
useful purpose that however is constrained, restricted and made safe, or at
least as safe as we can possibly make it, by the way we regulate the supply of
those products. Gambling is in that category and therefore, because of the
unconscionable burden, the duty to protect those who are problematic gamblers
overrides any other question, for example, about facility, revenue of venues
and so forth.[12]
8.11
The Victorian Interchurch Gambling Taskforce suggested making some EGMs
available that operate in 'safe' mode[13]
which may or may not be pre-commitment enabled. If not pre-commitment enabled,
then these machines could only be operated in the 'safe' mode.[14]
8.12
In their 2010 report into gambling the Productivity Commission explored
the concept of an 'airbag' EGM as an alternative strategy to minimise the losses
from EGM play. The type of machine the Commission envisaged had a range of harm
limiting features including increasing the 'return to player' to 100 per cent
and limiting the volatility of the machines. In their model, these
'progressive' features of the machine would be activated by the insertion of a
player loyalty card.[15]
In evidence to the committee, the Productivity Commission also noted that low
risk machines could be an alternative to the low-value card they envisaged for
occasional players.[16]
Low intensity machines
8.13
Submissions argued that low intensity EGMs that are specially configured[17]
be considered as part of an overall strategy to reduce harm. Dr Charles
Livingstone and Dr Richard Woolley suggested these low intensity EGMs be
considered, particularly for smaller venues:
It is possible that EGMs could be configured to allow for
both low and high intensity modes of operation, depending on whether the user
utilised a pre-commitment system or not. However, it would be feasible to
permit small venues to operate only low impact EGMs and thus escape the
necessity of pre-commitment.[18]
8.14
The advantages of low intensity machines with modified parameters which
significantly reduce losses were listed:
Such a game would conform to its average returns more closely
than highly volatile games currently deployed throughout local clubs and pubs
in Australia. At present, it is readily possible to lose $400 over the course
of around 20 minutes poker machine use in all relevant Australian
jurisdictions. Low‐risk
games, however, would require a user to devote an average of 7 hours to such a
level of loss. Clearly, such a system would impose a much reduced burden of
harm on users who wish to make use of poker machines...[19]
8.15
Dr Livingstone and Dr Woolley suggested that a low intensity machine
with appropriate intensity limiting parameters could operate outside the
mandatory pre-commitment system as:
It is very unlikely (based on research undertaken on modified
poker machines in 2001, commissioned by the poker machine industry) that
recreational or ‘entertainment’ pokie gamblers would notice much difference
about the machines – except that they would provide them with a more regular
experience of entertainment in a greatly risk‐minimised
environment.[20]
8.16
The Productivity Commission also agreed that low intensity machines were
an alternative to the low-value card they had envisaged for occasional players:
The alternative of that is they have access to a low-level
intensity machine. There are a bank of machines which play at a different rate
and they are controlled so that the amount of expenditure is quite low. Most
recreational gamblers may not enter the precommitment system.[21]
8.17
The committee heard that it should be possible to run EGMs which offer
both high intensity (with mandatory pre-commitment) and low intensity modes of
operation as EGM stock is replaced.[22]
Dr Livingstone and Dr Woolley also suggested that eventually all EGMs should
offer pre-commitment capability, even low intensity, to provide players maximum
control over their gambling.[23]
Lower maximum bets
8.18
The committee heard evidence that lowering the maximum bet on EGMs could
reduce harms. The Productivity Commission argued that current bet limits are
set too high to constrain the spending of problem gamblers.[24]
8.19
Currently, how much can be bet on each game and how fast the EGM can be
played varies across jurisdictions. In some jurisdictions games can be played
as fast as the button on the EGM can be pushed.[25]
With maximum bet limits currently set at between $5 and $10 per game this means
hourly losses can be excessive. The average loss on a machine which allows a
game to be played every three seconds with a maximum bet per game of $10 is
around $1,200 per hour. In comparison, the average loss on a similar machine
with a maximum bet of $1 per game is around $120 per hour.[26]
8.20
The Productivity Commission argued there was a strong prima facie
case for lowering the maximum bet limit. This limit should be low enough to
constrain the spending of problem gamblers but not so low as to affect the
enjoyment of recreational gamblers.[27]
As EGMs are marketed as recreational devices, it argues, the cost of playing
them should reflect this.[28]
This would also bring them into line with the UK and New Zealand where maximum
bet limits have been reduced. Most categories of machines in the UK now have a
maximum stake of £1,
whilst in NZ it is $2.50.[29]
8.21
Dr Charles Livingstone and Dr Kevin Harrigan provided the committee with
modelling on lower bet limits which confirmed that harms were reduced the lower
the bet limit was set.[30]
8.22
The Productivity Commission pointed to a study by Professor Alex
Blaszczynski[31]
as further evidence that lower bet limits would reduce harms to problem
gamblers. The study found that problem gamblers were more likely to place bets
in excess of $1. The study looked at the effectiveness of various machine
modifications[32]
and found that of those proposed:
...reducing the maximum bet size would produce the intended
benefits with no evidence of unintended negative consequences.[33]
8.23
The findings from this study confirm analysis from the Productivity
Commission that few recreational gamblers stake more than $1 per game. In fact
88 percent of recreational gamblers stake less than this amount, but
at-risk and problem gamblers are more likely to stake over $1.[34]
8.24
The Commission concluded that a bet limit set around $1 would strongly
target problem gamblers[35]
while recreational gamblers would not notice the lower bet limit as they
'typically bet at low levels anyway'.[36]
Consequently, the Commission recommended that all new machines be capable of
being played with a maximum bet limit of $1 per button push, with this feature
being activated on all EGMs in 2016.[37]
8.25
Witnesses with whom the committee spoke also supported a $1 bet limit.
Associate Professor Linda Hancock drew the committee's attention to the
Productivity Commission's recommendation of the $1 bet limit, and argued:
Precommitment needs to acknowledge that you are not going to
be able to really help the people who are at moderate risk or at grave risk or
in the zone. So what you need to then consider, in my view, are the products
themselves and the environments that they are in. That then brings in the $1
per button press.[38]
8.26
Professor Alex Blaszczynski also agreed:
Reducing the maximum bet would have an impact on some problem
gamblers. The question is how large an impact it would be.[39]
8.27
Dr John Falzon, St Vincent de Paul Society, concurred:
...there are strong grounds to lower the betting limit to
around $1 per button push instead of the current $5 to $10...[40]
8.28
In her evidence to the committee, Ms Margie Law, Anglicare Tasmania, saw
the $1 bet limit as being part of a larger strategy involving pre-commitment:
...doing harm minimisation measures that improve lighting or
put a clock in the room are still very important but they are not likely to
reduce the amount of time or money a person with a gambling problem would spend;
whereas, $1 bet limit and precommitment are much more likely to reduce the
amount of money spent.[41]
Other parameter settings
8.29
Dr Jamie Doughney emphasised the need to address a number of parameter
settings:
The other thing we can do is give people better control on
the demand side, not only through increased knowledge but through increased
capacity to make rational and informed decisions: bet limits, load-up limits,
speed of machines or maximum bets. All of those sorts of things operate on the
supply side, and they constrain both what the industry can supply and the
product that can be accessed by the gambler.[42]
8.30
The committee heard that reducing jackpot amounts and maximum load-ups[43]
along with bet limits would also reduce volatility and harms. Dr Livingstone
described high jackpots as one of the most dangerous characteristic of the
machines.[44]
He and Dr Richard Woolley agreed that a reduced maximum jackpot prize of $500
would reduce the volatility of the game:
...reducing the maximum prize to about $500 would reduce the
inherent volatility of the game maths of the game, which means that the average
rate of return to players would be much more likely to be achieved over the
short term.[45]
8.31
Further modelling by Dr Charles Livingstone and Dr Kevin Harrigan shows
that with a maximum bet of $0.90, and a maximum prize of $500, the average loss
per hour was around $92. They concluded that these parameters:
...appear very likely to reduce the harm associated with poker
machine use, via significant reduction of costs of use.[46]
8.32
Adding that:
The public benefits of adopting a low-risk high-risk pre-commitment
system would therefore be considerable.[47]
8.33
Restricting the maximum load up, or cash input, was also identified by
the Productivity Commission as being part of an effective harm minimisation
package.[48]
It recommended that cash input be limited to $20, with no further cash allowed
to be inserted until credit on the machine falls below $20.[49]
Committee view
8.34
The committee agrees that as part of the approach to reduce the harms
from problem gambling, it is necessary to address those design features of EGMs
which have created a dangerous product offering a high risk gambling
experience. High intensity machines with the possibility of large, but
infrequent wins have taken the gambling experience far away from the low risk
recreational activity it used to be. Mandatory pre-commitment for all those
playing high intensity machines will provide greater protection and control for
those who choose to play them. While recognising that no EGM is entirely safe,
the committee also believes that increasing the availability of low intensity
machines, either on their own or in combination with high intensity machines
with mandatory pre-commitment, would provide greater choice for those players
seeking a lower risk, more recreational activity. It would also provide greater
choice for venues and this is further discussed in chapter nine. The committee
recognises that with the introduction of this type of machine it would be prudent
to monitor the effects on gambler behaviour, losses and for any unintended
consequences such as gamblers playing for longer periods.
8.35
The committee notes the advice of the Productivity Commission and other
experts around the appropriate parameter settings for low intensity machines. For
example, the recent modelling by Dr Charles Livingstone and Dr Kevin Harrigan
that supports the findings of the Productivity Commission that a lower maximum
bet limit would result in average hourly losses being reduced.[50]
The committee is satisfied that reducing the bet limit will reduce harms to
problem gamblers, but will not adversely affect the enjoyment of recreational
gamblers, who typically play with lower bet amounts. The committee agrees with
expert advice that a bet limit of $1 per game on low intensity machines would
appropriately target problem gamblers without diminishing the enjoyment of low
level, recreational gamblers.
8.36
In addition to the parameter settings noted by experts and the
Productivity Commission above, the committee believes there are other variable
parameter settings such as RTP (Return to Player) percentage that will need to
be addressed in order to ensure an average hourly loss for players.
Recommendation 36
8.37
The committee recommends that low intensity machines, configured to
reliably limit player losses to an average loss of around $120 per hour, do not
need to be part of the mandatory pre-commitment system. Specifically the
committee recommends these machines feature a $1 maximum bet limit, a $500
maximum prize and a $20 maximum load up. The use of these machines should be
monitored by the national regulatory authority to identify any unintended
consequences and the extent to which they contribute to reducing problem gambling
prevalence rates.
Recommendation 37
8.38
The committee recommends that the timeline to introduce low intensity
machines with the parameters specified in the recommendation above is
consistent with the timeline to implement mandatory pre-commitment.
8.39
While the committee expects to see that all new machines coming onto the
Australian market would be equipped for mandatory pre-commitment, it is not a
requirement for low intensity machines. In addition, the committee will monitor
the effects of the reforms proposed in this report.
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