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Original article: https://theconversation.com/pokies-line-the-coffers-of-governments-and-venues-but-there-are-ways-to-tame-this-gambling-gorilla-252038
Recently, much public attention has been given to the way online wagering and its incessant promotion has infiltrated sport and our TV screens.
Despite a 2023 parliamentary inquiry that recommended new restrictions on online (especially sport) gambling advertising, the federal government neglected to implement any of the 31 recommendations.
Read more:
Will the government’s online gambling advertising legislation ever eventuate? Don’t bet on it
This seems to have resulted from a furious and well resourced campaign by gambling’s ecosystem: wagering companies, broadcasters, sporting leagues, and others who currently drink from the fountain of gambling revenue.
Naturally, this issue garnered a great deal of attention, as it should.
But there’s another even bigger gambling gorilla that has steadily rebuilt its profits post-pandemic. You’ll probably find some at a hotel or social club near you.
This is, of course, pokies: Australia’s version of slot machines.
Australia’s major source of gambling problems
Australians lost A$15.8 billion on pokies in 2022–23, over half of that ($8.1 billion) in New South Wales. That’s an increase of 7.6% from 2018–19 (before pandemic restrictions closed many venues or restricted operations).
Wagering (sports and race betting) losses grew a hefty 45% over the same period, to around $8.4 billion. Even so, it remains way behind the pokies as Australia’s biggest source of gambling losses and problems.
Casino losses dropped by 35.5%. Casinos are also poke venues, but also offer other forms of gambling. Pokies in casinos are counted as “casino” gambling in national gambling statistics, while pokies in clubs and pubs continue to be counted separately.
A recent study found pokies responsible for between 52% and 57% of gambling problems in Australia. Wagering was estimated at 20%.
Recent growth may have altered these a little but pokies are still responsible for half of Australia’s gambling losses.
The gambling industry is fond of pointing out only a modest proportion of the population have serious gambling problems. That’s true, according to most prevalence studies.
But what also has to be remembered is, most people never use pokies. In 2024, the latest population study for NSW found only 14.3% of adults used pokies at all.
But around 18.5% of pokie users are either high or moderate risk gamblers: 35% of gamblers who use pokies at least once a month are classified as either high or moderate risk gamblers.
And in 2010 the Productivity Commission estimated 41% of the money lost on pokies came from the most seriously addicted, with another 20% coming from those with more moderate issues. Overall, well over half of the losses.
It’s little wonder pokie operators resist reforms.
Why are pokies so profitable?
The first and obvious answer to this is that there are a lot of them: they are widely accessible across Australia (apart from Western Australia, where they’re only in a single casino).
NSW alone has about 87,500. Queensland has about half that number, and Victoria about 26,000.
All of these are located in pubs or clubs, and in NSW they collect (on average) $93,000 per machine per year.
Second, they’re overwhelmingly concentrated in areas where people are doing it tough. Stress and strain are common where there are pokies.
Some people start to use them thinking they might alleviate financial woes. They don’t, of course. But they do provide an escape from the vicissitudes of daily life.
Once sampled, that can become addictive.
People who use pokies a lot call this escape from reality “the zone” – once you’re there, nothing matters, except staying there.
The zone is also known as “immersion”, or “loss of executive control”: people using pokies find it very difficult, if not impossible, to stop. Once the money’s gone, reality crashes in.
Pokies are also extremely addictive. Along with online casino games (which includes virtual pokies or slot machines), they are generally regarded as the most addictive and harmful gambling products.
They have a host of features engineered into them, including “losses disguised as wins”, “near misses” and many others.
They are engineered with 10 million or more possible outcomes and it is not possible for anyone to predict what outcome will come next.
Crucially, the house always wins. In a machine where the “return to player ratio” is set at 87% (a common, completely lawful setting), the machine would retain 13% of all wagers.
Unfortunately, few pokie users understand these characteristics.
Can’t we rein in the pokies?
So why do politicians resist reform?
One reason for this is the pokie revenue that flows into government coffers.
In 2022–23, state governments received a total of more than $9 billion in gambling taxes – 7.8% of all state tax revenue. Of this, $5.3 billion came from pokies. NSW alone got $2.23 billion from pokies, Victoria $1.3 billion, and Queensland $1.1 billion.
The venues, of course, receive a great deal more. One of the consequences of all that money flowing into the coffers of pubs and clubs is political access and influence.
We can, however, tame the pokies if we want to.
Various solutions are available, including pre-commitment, generally believed to be the most likely candidate.
This involves pokie users being required to set a limit prior to using the machines, which is now common in many countries in Europe, and has been proposed (but delayed or scuttled) in Australia for Tasmania, Victoria, and New South Wales.
More broadly however, this has been strongly resisted by the gambling ecosystem, including parties such as ClubsNSW and the Tasmanian Hospitality Association. Their influence appears profound.
Change is needed, urgently
Australia’s reputation as the world’s biggest gambling losers is unenviable: we lose $32 billion on gambling products every year.
Clearly, prohibition of gambling ads, and the termination of sports sponsorships that tie football, cricket and other major sports to gambling is needed urgently.
But if we really want to reduce gambling problems and their extraordinary catalogue of harm, reining in the pokies is a must.
That may take some serious effort.
Charles Livingstone has received funding from the Victorian Responsible Gambling Foundation, the (former) Victorian Gambling Research Panel, and the South Australian Independent Gambling Authority (the funds for which were derived from hypothecation of gambling tax revenue to research purposes), from the Australian and New Zealand School of Government and the Foundation for Alcohol Research and Education, and from non-government organisations for research into multiple aspects of poker machine gambling, including regulatory reform, existing harm minimisation practices, and technical characteristics of gambling forms. He has received travel and co-operation grants from the Alberta Problem Gambling Research Institute, the Finnish Institute for Public Health, the Finnish Alcohol Research Foundation, the Ontario Problem Gambling Research Committee, the Turkish Red Crescent Society, and the Problem Gambling Foundation of New Zealand. He was a Chief Investigator on an Australian Research Council funded project researching mechanisms of influence on government by the tobacco, alcohol and gambling industries. He has undertaken consultancy research for local governments and non-government organisations in Australia and the UK seeking to restrict or reduce the concentration of poker machines and gambling impacts, and was a member of the Australian government’s Ministerial Expert Advisory Group on Gambling in 2010-11. He is a member of the Lancet Public Health Commission into gambling, and of the World Health Organisation expert group on gambling and gambling harm. He made a submission to and appeared before the HoR Standing Committee on Social Policy and Legal Affairs inquiry into online gambling and its impacts on those experiencing gambling harm.
