Since their introduction into pubs and clubs in 1994, poker machines have driven an exponential increase in gambling losses in SA, and with it enormous social and economic harm. Over $14.3 billion dollars has been lost while state government has collected $5.6 billion in tax revenue.
The Gambling Industry in SA and its large poker machine owners have disproportionate economic and political influence, with both Labor and Liberals seemingly falling over each other to keep them happy.
In their aggressive pursuit of profit they have unleashed an enormous amount of individual, family and community misery. In response governments have failed to provide responsible and effective regulation to protect the community.
SA-BEST is all about a clear pathway of real, practical reform to transition the SA government and hotels, from their poker machine dependence.
We want to see a substantial reduction in the number of poker machines as well as measures that greatly reduce to harm to the community, families and individuals.
The SA-BEST plan differs from what is being proposed in Tasmania, because of the nature and structure of poker machine licences in SA. SA-BEST's plan will maximise the reduction in poker machine harm, whilst minimising the transitional revenue, economic and employment impacts of these measures.
The issue of poker machine reform will be a priority issue for SA-BEST in the new parliament. In the event that we are fortunate to win the balance of power it will be a key issue in any negotiations about who will form next SA government.
The poker machine problem in a nutshell
SA has a proliferation of poker machines in hotels and clubs – approximately 12,100 machines in over 500 venues. It is well documented that accessibility to poker machines is a key factor in gambling harm.
Research by the Productivity Commission and two landmark research reports indicate that about 40 per cent of poker machine losses come from those people who experience severe gambling harm.
In its 2010 report the Productivity Commission noted that nationally there were between 80,000 and 160,000 people suffering severe problems from their gambling and between 230,000 – 350,000 Australians at real risk of a full-blown gambling addiction. That equates to almost one person per machine has a severe gambling problem and almost two other people (1.7) at risk of full blown gambling addiction Australia wide.
The Productivity Commission has found that for every ‘problem gambler’ there are an average of seven other people affected.
That’s a huge social impact.
Poker machine addiction drives up levels of crime, poverty, depression and other serious mental health problems. The majority of gambling related fraud was due to poker machines. Poker machine fraud generates crime amongst many otherwise non-offending citizens.
Whatever the government makes in poker machine revenue in the short term, it just isn’t worth it, especially in the long term.
And the economic impact can’t be understated. On average over the last 10 years some $731 million has been lost each year on poker machines in hotels and clubs in South Australia alone (2007/17); that’s money that’s diverted away – not just from the individuals who have lost their money and their families – but it also deprives retailers, supermarkets and other small businesses of valuable revenue.
A study by Adelaide University’s SA Centre for Economic Studies found that for every million dollars spent on poker machines, only three jobs were created, compared to more than double that for one million spent on retail and double again for jobs created in hospitality, cafes, fast food and restaurants.
For every $100 million not spent on poker machines but spent on retail goods there would be 300 to 350 additional jobs in retail and more than double this in hospitality, cafes, restaurants and other small business.
What needs to be done
A clear, two stage approach for reform to slash the level of harm, is required.
SA-BEST is proposing a practical approach to tackle the issue comprehensively:
- Poker machine licences to be converted to a seven-year licence, commencing 1st January 2019. This would deal with the argument that particularly smaller country hotels would have their loans at risk with any sudden change (although SA-BEST’s concerns, first and foremost, are for those who have been harmed by the machines). Converting machines to a seven-year licence would put the industry on notice not to invest beyond that time, with consideration of licence extensions beyond that seven-year period to be considered by the parliament by the end of 2022. (This would then become a key issue for the March 2022 election.)
- From 1st January 2019, the number of poker machines will be reduced on a gradual basis as follows:
- 10% per annum reduction in the number of machines in hotels in those venues with 10 or more machines, for a period of five years, until a 50% reduction is achieved. This 10% reduction per year will not apply to clubs, community hotels or the casino.
- A buyback scheme should apply, and include those over 140 venues with 10 or fewer machines, to encourage those venues to become poker machine free. In addition, any scheme should preference those smaller holders of machines in aggregate terms of up to 120 machines over multiple venues and to those who have entered the industry relatively recently (i.e. venues that haven’t made the huge super-profits of early entrants into the poker machine sector).
- Establishment of a jobs fund to support and help transition employees in the industry affected by these changes (including other changes to machine design being proposed). The emphasis will be on transition and support, and acknowledges the less money lost on poker machines, the more jobs will be created in other sectors.
- Making the machines much less harmful – for all machines in pubs and clubs - by implementing $1 maximum bets per spin and reducing the maximum jackpot to $500. This is broadly in keeping with the Productivity Commission’s key recommendations and, given that 90 per cent of recreational poker machine players don’t put in more than $1 per spin, will have a negligible impact on most players.
- A lower jackpot will also mean the machines are less addictive and significantly reduce hourly losses to closer to $120 per hour, compared to $1000 or more per hour that can be lost now.
- Making the machines ‘con-free’ by removing misleading and addictive features such as near miss and losses disguised as wins. Consumers must be protected from deceptive features and allowed to make fully informed choices with relevant information.
- Despite industry claims, implementing the $1 bets and lower jackpots and ‘con-free’ changes should be implemented as software changes within 12 months and in any event by 1st July 2019.
- Removing EFTPOS machines in poker machine rooms within six months. Easy access to cash is a key driver of increased harm.
- Reduce the maximum number of trading hours for gaming rooms from 18 to 16 with only one continuous break.
- Enhance the power of the Independent Gambling Authority to discipline venues (including the casino), that do the wrong thing by strengthening gambling codes of practice, and increased penalties for breaches.
- Provide additional funding of $3m per year for community education and gambling help services. Currently only about 10-15% of problem gamblers are seeking help – that is unacceptable and drastically needs to be increased in two years to at least 50%. This would also involve robust and independent monitoring of the levels of gambling addiction in SA as well as the impact of treatment programs in the state.
- Restrictions on gambling advertising – within 12 months all gambling advertising in SA should be required to comply to a stricter code of conduct, not be targeted towards children directly or indirectly and have a minimum of 30 per cent of the advertising space or time designated to a regulatory gambling warning, and details of where help can be obtained.
- The above reforms, particularly in relation to implementation of time limited licences, the reduction in licences, changes to machine features, buybacks, a compensation and transitional jobs support framework will need to be supervised by a better resourced Independent Gambling Authority, with the economic, social and research expertise to facilitate the implementation of the reforms.
- The Premier should make an annual report to parliament, incorporating research and advice from across government and independent experts, detailing the economic and social impact of poker machines, including the results of the progressive implementation of reforms.
- The social effects test in the Gaming Machines Act also needs to be strengthened to make it clearer that the community impacts of a poker machine licence must be considered.
- The proposed changes will lead to a reduction in machines in SA by approximately 4000 from 12,100 to 8100 over a five year period.
- The cost of these measures will need to be the subject of detailed modelling. It is expected these costs will be partly offset by the significant reduction in poker machine harm and the harm associated with it such as crime and the cost of incarceration. Most importantly, thousands of South Australians will have their lives markedly improved by these reforms or not get addicted. In addition, the diversion of spending to non-gambling activities will create more jobs, including payroll tax, greater economic activity and greater GST receipts. The IGA, assisted by independent research expertise, will be given the resources to properly model these effects and to determine the most effective transition options, particularly for those with smaller holdings of poker machines. These transition options will include appropriate measures to support employment, and if there is compelling evidence, compensation mechanisms for smaller poker machine operators.
- The measures outlined in this policy paper are designed as the first steps along a path leading to further progressive reductions in poker machines and the harm that they cause. Those further steps would be developed in the light of implementation experience and would be the subject of parliamentary and public debate prior to the next election in 2022.
Finally, in relation to poker machines, SA-BEST will champion a complete ban on all political donations from the gambling industry and its associated industries/entities.
The corrosive impact of the gambling lobby on the democratic politics of our state should not be underestimated. These measures will significantly decrease the harm caused by poker machines.
The Reverend Tim Costello over 15 years ago said, “with internet gambling you will soon be able to lose your home without ever leaving it”. Unfortunately. his prediction has in many ways come to fruition at increasingly alarming levels. Whilst online gambling is seen as primarily a federal government responsibility, there is still much our state government with real political will can, tackle with exponential increase in online gambling.
- SA-BEST will press for implementation of a sustained public health messaging campaign particularly targeting young people.
- The Authorised Betting Operations Act allows those online gambling companies who are generally licenced within the weaker regulatory environment in NT to operate in SA. The gambling codes of practice that apply to these operators must be strengthened to prohibit any forms of inducements and access to exotic bets (e.g. ball by ball betting). In addition, online betting operators must be required to provide patrons with mandatory pre-commitment options and the ability of those who want to stop gambling to be barred from all authorised online betting operators.
- With unauthorised, illegal offshore online gambling, the SA government should facilitate disrupting the access of such sites to SA consumers. The SA government must also work with federal authorities to take action with other jurisdictions to prosecute alleged illegal gambling operators to protect SA consumers from harm.