June 2019


The lie of ‘responsible gambling’

By James Boyce
Image of poker machines

Photograph by Max D’Orsogna

Australia’s world-beating gambling addiction and the deception hiding it

Australians are the biggest gamblers on earth, losing more than $24 billion a year. According to The Economist, gambling losses of $1068 per adult in 2017 were 40 per cent higher than in the next highest country, Singapore, more than twice as high as in the United States, about three times the level in the United Kingdom, more than four times that in Germany and France and 30 times as large as those in Ireland.

One explanation for Australia’s world-record gambling spend is cultural preference. From Birdsville to the trenches, a love of the punt has supposedly been central to national identity.

The other explanation for why Australians became the world’s biggest gamblers during the 1990s was that the expansion of gambling was a deliberate government policy choice.

Australia was not a highly ranked gambling nation in the 1970s. There was betting at race tracks, at government-­owned TABs and on lotteries. Sports betting was illegal and although there were poker machines in clubs in New South Wales and the Australian Capital Territory, these were unsophisticated contraptions that could only be played with small coins. Even the first casinos in regional centres were pokies-free.

During the 1980s and early 1990s, state governments became cash-strapped because of the abolition of various taxes (including death and gift duties), and burgeoning demands on health, education and community services. With the exception of resource-rich Western Australia (where pokies are confined to the casino), governments turned to poker machines to help resolve the revenue shortfall. Pokies were introduced into pubs and clubs not in response to public pressure but in spite of it. In Victoria, Tasmania and South Australia the policy change was opposed by a majority of the population. Their governments pressed on regardless.

The newly licensed machines were not the “one-armed bandits” featured in NSW clubs since the 1950s. In one of the most life-destroying design innovations in Australian history, local gambling company Aristocrat Leisure’s cross-disciplinary team of researchers, whose expertise included neuroscience and behavioural psychology, developed electronic machines with features devised to keep people playing longer and faster. Stimulating the release of the neurotransmitter dopamine, in a manner that brain imaging has shown is similar to what occurs with cocaine use, proved to be central to the inherently addictive nature of a product that Aristocrat founder, Len Ainsworth, memorably described as a “mouse trap”. The name given to the invention was “electronic gaming machines”, or EGMs, thus rebranding high-intensity poker machine gambling as a “game”.

The proliferation of poker machines that subsequently occurred in Australia was unique in the world. By the turn of the century, there were about 200,000 pokies across the nation – about 18 per cent of all the machines on earth. Even more remarkably, as an Australia Institute report found in 2017, a country with just 0.3 per cent of the world’s population had 76 per cent of the world’s poker machines outside of gambling-only venues.

Today, the rapid growth of sports betting has led to gambling losses of more than a billion dollars a year. Annual pokies losses are around $12 billion, and account for half the total losses across the nation. In NSW and Victoria each poker machine gambler loses an average of about $3500 a year in pubs and clubs alone – nearly three times the average $1245 spent annually on electricity and gas, the repercussions of which dominate political debate.

Why did the evidence of social harm that led governments overseas to limit electronic gaming machine proliferation not lead to similar action in Australia?

There are three answers to this.

The first and best known relates to state governments’ continued reliance on pokies tax revenue. However, the fact that most jurisdictions have let super-­profits remain with licence holders rather than returning them to the public purse suggests that the importance of this factor is exaggerated. Only around one quarter of pokie losses nationwide are returned to state governments despite this being a low-cost and largely self-­service industry. It is not clear if this revenue covers the extra costs caused by the increased demand on health, community and justice services associated with gambling harm.

A more important factor in sustaining the status quo has been the political power of the gambling industry. Poker machine licence holders have almost no commercial risk – the only serious threat to their profitable business model is policy reform. This reality has ensured that the industry has become an active participant in our democratic process. Recent elections in Victoria (where a special levy was collected from pokies licence holders to raise funds to combat the anti-gambling Greens), South Australia (where the target was anti-gambling politician Nick Xenophon and his new state party) and Tasmania (where gambling-industry donations ensured that the Liberals out-spent a reform-minded Labor by more than four to one) revealed what influence pokies money can buy. MPs across the country understand that taking on the industry means massive donations will flow to their opponent. Any federal government tempted to intervene was warned off by the ferocious PR campaign against the modest reforms negotiated in 2010 between independent MP Andrew Wilkie and then prime minister Julia Gillard (which didn’t end until Labor voted with the new Abbott government to extinguish its own already watered-down policy achievements).

The gambling industry makes no secret of the importance it places on influencing politics. ClubsNSW executive manager of public affairs Josh Landis wrote in the organisation’s 2017 annual report that “If clubs must campaign, we must go hard and we must win” because “the anti-gambling lobby remains active”. For Landis, the “right to operate and participate in gaming is a privilege which must constantly be defended” through “regular advocacy with politicians, the media and public servants”. Achieving “regulatory stability” (in other words, preventing reform) is “at the core of what the Public Affairs Team at ClubsNSW is employed to manage”. Landis honed his considerable lobbying skills through training in Washington partly delivered by the National Rifle Association (NRA).

The third reason for the dominance of the poker-machine industry is the acceptance of the industry-engineered ideology known as “responsible gambling”. According to this contention, only a tiny proportion of people have problems with excessive gambling while the overwhelming majority of Australians gamble for recreational purposes only. There is no need to limit ordinary people’s access to pleasure, because the small group of irresponsible gamblers can be supported to change their problematic behaviour through specialised counselling services.

The legitimacy of the “responsible gambling” framework rests on state government–commissioned research known as “problem-gambling prevalence studies”. More than 40 of these expensive and well-publicised studies have been conducted since the early 1990s. Because they claim to provide the empirical proof that almost all Australians gamble without causing harm, they underpin the poker machine industry’s purported social licence.

When public debate erupts, this data is the industry’s propaganda weapon of choice. As Anthony Ball, executive director of Clubs Australia and executive officer of ClubsNSW, proclaimed in 2009 when stricter regulations seemed likely, while governments “have a duty to help the 1% of Australians that gamble irresponsibly, it can’t be at the expense of the 99% of adults who gamble within their means and as a form of entertainment”. In recent elections, the full suite of poker machine industry partners, from premiers to pub owners, have used the supposedly tiny number of “problem gamblers” as their principal point of attack on those seeking change.

So how are these prevalence studies conducted?

A university and/or private consulting firm is commissioned to conduct a study, usually by a government department or statutory body, in which thousands of randomly selected people are asked a series of questions over the phone about their gambling behaviour. If a person answers sufficiently positively to a sufficient number of questions, he or she is deemed to be a “problem gambler”. The number of problem gamblers is then presented as a percentage of the whole population, which becomes the headline problem-gambling rate – invariably less than 1 per cent of the population.

The Productivity Commission documented the limitations of these studies when it investigated Australia’s gambling industries in 1999 and 2010. Some of the issues are embarrassingly obvious.

It is hardly surprising that people with a gambling problem are unlikely to be able or willing to acknowledge their difficulties to an anonymous person over the phone. If a problem gambler answers the questions at all, they are likely to minimise the harm their behaviour is causing to themselves and others. Indeed, facing the full truth of their problem is, as any counsellor can explain, the single most important step to overcoming that problem. Market researchers Nielsen had sufficient integrity to acknowledge in its 2007 NSW prevalence study that “it is likely that someone with a severe gambling problem will not be inclined to participate in a self-report survey. Similarly, the target population may have been reticent to disclose personal, sensitive and confidential information.”

To be certain of this commonsense observation, the Productivity Commission conducted surveys of problem gamblers attending counselling. Only 29 per cent said they would have answered a survey honestly before they reached out for help and some 24 per cent said they would have refused to answer the survey at all.

This dimension of human behaviour is also starkly revealed by Australian Bureau of Statistics’ Household Expenditure Survey data. In 2003–04, poker machine losses self-reported by Victorians for the survey amounted to $63.6 million. According to official figures, published by state and territory governments in the annual “Australian Gambling Statistics” report, the actual pokies losses in Victoria that year were $2.3 billion.

Given this methodological limitation, it is not surprising that buried deep within the datasets of the prevalence studies is the admission of how few individual problem gamblers are identified by the many thousands of phone calls that are made. When Tasmanian treasurer Peter Gutwein used a prevalence study to boast of a 25 per cent fall in problem gambling in the state between 2014 and 2017, he did so on the basis that the number of self-identifying problem gamblers had gone down by five people. While no statistically valid conclusions could be drawn from this change – a point made by the study’s authors – for a politician hell-bent on defending the status quo the headline-­grabbing percentage was gold.

An even more basic limitation of prevalence studies is the way they define “problem gambler”. In everyday language, a problem gambler is someone who has a problem with gambling. But in the research commissioned by state and territory governments, the term is reserved for extreme pathology – for people whose lives have been so destroyed by gambling that they are highly unlikely to be found through random population surveys. To provide a reliable measure of this dire condition one would need to visit jails (research by the University of South Australia found that problem gambling was the second-biggest single cause after illicit drugs for prisoner crime in Victoria), mental health centres (31 per cent of problem gamblers experience depression as a result of their gambling), homelessness services (a 2017 study estimated that about 3350 people in Victoria alone were made homeless by gambling problems), GP clinics (an Australian Medical Association study reported that one in 50 people attended a medical practice specifically because of problems with gambling), employment centres (a high proportion of problem gamblers lose their jobs) and, sadly, morgues (68 Victorian suicides in just four years were linked by the coroner to problems with poker machines).

In prevalence studies, problem gamblers are also not the only people with a problem. The other major category, the “at risk” group of gamblers, does not refer to people who are at risk of developing a gambling problem. They are in fact people who are already experiencing problems with their gambling but who don’t score high enough to be considered “problem gamblers”. They are “at risk” in the sense that their existing suffering could yet become worse.

A majority of people experiencing harm from their gambling don’t qualify for either category. In 2016, a study undertaken by a team of 12 researchers for the Victorian Responsible Gambling Foundation found that while there were more than 1300 Victorians whose lives were “barely worth living” because of gambling, most harm was associated with people not deemed to be problem gamblers according to prevalence study measures. The aggregate of gambling harm across the community was found to be similar to that associated with major depressive orders and alcohol dependency.Only one conclusion could follow such a finding: a “radical rethink of our approach to gambling policy” was required.

In response to the limitations of defining problem gambling in such a confusing and restrictive way, the Productivity Commission developed an index to measure the prevalence of harm. Other independent researchers have more recently done the same. Why have these methodologies not been widely adopted? The likely reason is that because most poker machine players register somewhere on these indices, they undermine the “responsible gambling” rhetoric on which the defence of the industry relies.

The systemic misleading of the Australian community is tolerated because it serves the interests of the clients who fund the research. As gambling research scholars Francis Markham (Australian National University) and Martin Young (Southern Cross University) recently concluded, problem-gambling prevalence studies function effectively as a “device for the political legitimation of the gambling industries and the governments that support them”.

The political potency of narrowly defining problem gambling has been confirmed in two of the most recent studies undertaken in Australia. In 2016 the ANU Centre for Gambling Research, recognising that everyone scoring on the questionnaire was experiencing some level of harm, concluded that in the ACT, “non-problem gamblers accounted for 36.9% of all money lost on EGMs. In contrast, 63.1% of money lost came from people with at least some problem-gambling symptoms.”

By contrast, in January 2018, only two months before the Tasmanian election in which Labor’s commitment to withdraw poker machines from pubs and clubs dominated the campaign, a prevalence study undertaken by a consortium led by ACIL Allen (a private firm that has conducted numerous consultancies for the gambling industry, including for the company that owns every poker machine in Tasmania) was released. It reported a 0.6 per cent problem-gambling prevalence rate and avoided explaining the real meaning of the much larger “at risk” group. A long-term decline in the number of players was highlighted, as was a considerably smaller decline in losses. But the obvious conclusion to be drawn from this data – that losses per player had increased over time – was not mentioned. Nor was the fact that player numbers had stabilised since the last study because increasing take-up among young people had compensated for the declining number of older players.

 In contrast to normal academic practice, no researchers from ACIL Allen’s partner universities (which included the Social Research Centre, a business purchased by the ANU as a commercial concern in 2014) put their names to the report. Queries about the presentation of its findings were directed to the client – the Tasmanian Treasury.

Why have some universities been prepared to compromise their independence in this way? Under the higher education funding reforms contemporaneous with gambling liberalisation, commercial consultancies and partnerships with industry were not just encouraged, they became a necessity for many of the growing number of academics without secure employment. Prevalence studies have proved to be easy and profitable pickings, boosting research output and resources in a highly competitive and restricted fiscal environment.

The policy implications of selling out academic integrity can be grave. Had the Social Research Centre followed the Centre for Gambling Research’s lead in highlighting the high proportion of losses that come from people with problem-gambling symptoms, rather than emphasising the deceptively low percentage of those considered problem gamblers, the public debate during Tasmania’s election campaign might have gone differently. The ANU’s imprimatur on both studies lent them credence. The one conducted in the ACT by independent academics helped the cause for reform. That undertaken in Tasmania hindered it.

Problems with gambling research don’t end with methodology and terminology.

That the headline problem-gambling figure continues to be presented as a percentage of the whole population is, as the Productivity Commission politely put it, “highly misleading”. Among regular poker machine players, the commission stated, the problem-gambling prevalence rate is not 1 per cent, but 15 per cent. When the “at risk” group is included, it is double that. Such people comprise the core business of the poker machine industry.

The gambling industry is well aware of its dependence on problem gamblers because of the data it collects through player “reward programs”. One unusually discursive TabCorp executive admitted in a witness statement to the Productivity Commission that 80 per cent of losses on poker machines are borne by 20 per cent of players. She knew this because of internal data from the marketing schemes that provide rewards proportionate to player losses. This data could be made available to independent researchers while protecting individual privacy. The only feasible explanation for such information being kept secret, and for governments not requiring it to be disclosed as part of licence conditions, is that it contradicts the myth that problem gamblers provide only a small portion of industry profits.

General population surveys of gambling prevalence also obscure the fact that most losses are suffered by disadvantaged people, for whom even comparatively small losses can have devastating consequences. Given how little discretionary income is available for people on benefits and in low-wage employment, losing even $100 a week to gambling has a direct and devastating impact on tenancies, electricity connections, food purchases, school costs and so on. The 600,000 Australians who play the pokies at least once a week lose on average about 50 per cent more than that.

Gambling industry apologists pretend that prevalence studies are scientific. But as Elena Svetieva and Michael Walker, from the School of Psychology at the University of Sydney, have shown, questions asked in surveys have been “largely borrowed from instruments … developed in a US clinical context and for the express purpose of identifying pathological gambling”. What might be a valid tool for a counsellor in a confidential conversation with a client seeking help has much less value in random population studies. Moreover, with the tool most commonly used – the Canadian Problem Gambling Index (CPGI) – there are no questions about impact on relationships, work or quality of life generally. There is a question about health but nothing specific about depression or mental health, housing impacts, contact with the law or other personal problems.

It has also never been explained why, when the CPGI was progressively adopted around Australia from around 2000, it was often modified. Its Canadian developers have stated that the changes meant many Australian studies may “significantly underestimate the true prevalence percent of problem gambling”. Regarding the CPGI’s application in Australia, the Productivity Commission’s 2010 report records its originator, Harold Wynne, remarking: “I am often dismayed that researchers disregard the CPGI scoring protocol.”

The many limitations of prevalence studies mean that “they are likely to underestimate the true level of the problem massively”, Victoria University’s Dr James Doughney wrote in the Journal of Business Systems, Governance and Ethics. The former chair of the Productivity Commission, Gary Banks, travelled the nation making exactly this point. But whenever gambling becomes a matter of public concern, the headline problem-gambling statistic is rolled out without caveat or care. Hence, why do the people of NSW, the most pokies-heavy jurisdiction in the planet, not have to worry about gambling harm? Because, according to the responsible state minister, Paul Toole, the last prevalence study “found only 0.8% of the population to be problem gamblers, a rate that has been steady for many years and is comparable with other states”.

The Productivity Commission stated in 2010 that when played regularly, EGMs do not “satisfy the criterion of a ‘safe’ product”. Academics Francis Markham, Martin Young and Bruce Doran concluded in The Conversation in 2015 that harm minimisation needs to be focused on reducing “the poker machine gambling of everyone”. The sustained call has been for effective regulation that dramatically lowers gambling expenditure.

The contrast between the policy approaches taken to tobacco and poker machines by Australian governments is stark. It is now well understood that research projects undertaken in collaboration with the tobacco industry distracted attention from the fact that the only way to reduce harm was to reduce consumption. Peripheral questions were studied in detail, doubt was sown where there was none and superficial changes were made to products that only made them seem safer. A responsible public health policy focused on restricting the advertising, availability and attractiveness of the product was eventually adopted, but it came only after the long partnership between tobacco companies and research bodies was ended. An associate professor of public health at Deakin University, Samantha Thomas, argues that gambling is the “new tobacco” and that the same principles that guarantee the independence of tobacco research must be extended to gambling.

The peak body for gambling research in Australia is the National Association for Gambling Studies. It is almost solely sponsored by the gambling industry. The industry’s grip over the governance of NAGS has been further consolidated after recent committee elections. Its new president, Rowan Cameron, only recently resigned from ClubsNSW, and past and present employees of Tabcorp and its subsidiary Tatts Group provide further industry representation on the board. The vice-president, Mara Lovrin, has reflected that “listening” to industry helps her “work efficiently for her clients”. Further, having everyone “at the table” enables “rich conversations about the gambling environment”.

The annual NAGS conference is touted as “the preeminent event” to “learn about the latest research on gambling disorder and new responsible gaming strategies”. It also provides ample opportunities for those in gambling research to meet industry representatives at cocktail parties, dinners and award ceremonies. An associate professor in the School of Public Health at Monash University, Charles Livingstone, has observed that it is at gatherings like this that the industry identifies amenable research partners, maintains contact with existing ones and identifies looming threats. “Anyone speaking out against the status quo risks reputational damage which may render them ‘unfundable’,” he says.

The previous secretary of NAGS, Dr Marisa Paterson, director of the ANU Centre for Gambling Research, argues that “the peak body promoting gambling studies in Australia should be leading the way in promoting accountability, transparency and independence”, which requires “a board independent of the (real or perceived) vested interests of the gambling industry”.

The current secretary and former president of NAGS is Professor Alex Blaszczynski, the director of the Gambling Treatment and Research Clinic at the University of Sydney. Despite there being no mention of the level of financial support from the gambling industry on the clinic’s website, ClubsNSW is more forthcoming. In its 2017 annual report, in the context of explaining its strategic response to anti-gambling advocates, ClubsNSW takes the credit for generating “sensible gaming research”, noting that “this year ClubsNSW extended its gambling research partnership with the University of Sydney and Professor Blaszczynski for another three years, taking our investment to $2.5 million”.

Blaszczynski acknowledges receiving funding from ClubsNSW and other gambling interests across the world, but points out that safeguards are in place to ensure that industry funders have no involvement in the research itself, and refers to analysis he helped conduct showing that industry funding does not influence research findings (in contrast to researchers who Blaszczynski says have an “unacknowledged bias” associated with their “ideological or moral concerns about gambling”).

However, the main concern with industry funding is whether it influences the questions being asked. A major four-year study by the University of London, conducted with European Union funding, found that industry-­supported research “enabled certain ways of thinking about gambling to flourish and suppresses alternatives … money flows towards conservative or ‘safe’ ideas, while serious questions may be left un-answered, or even unformulated”.

While the gambling industry emphasises the importance of collaboration in relation to the work of regulators, academics and support services, it doesn’t hesitate to exclude such partners from its own peak bodies, such as the Australasian Gaming Council and the Gaming Technologies Association. Moreover, attendance at industry-run conferences is controlled through prohibitive registration fees, which are waived for invited special guests. Delegates at the Gaming, Racing and Wagering Australia conference in August will learn about “responsible gambling” along with “diversification strategies and innovative marketing ideas”including how to “attract new and younger customers”. One of the “gaming industry leaders” headlined in the conference program is Sally Gainsbury, deputy director of the University of Sydney’s Gambling Treatment and Research Clinic.

On February 20, 2019, Daniel Hanna, senior executive of Federal Group, the family company that owns every poker machine in Tasmania, presented a keynote address at the industry’s $3500-a-head Gaming Innovation Conference. His address was titled “Here for the Long Haul – Lessons from 45 Years of Experience as a Casino and Gaming Operator in Tasmania”. Hanna also participated in a panel with Alex Blaszczynski and Scott May, director of legal services at the Victorian Commission for Gambling and Liquor Regulation.

What could the co-panellists have learnt from the Federal Group’s experience? Did Hanna analyse what effect the company’s multimillion-dollar pro-Liberal advertising campaign had during the Tasmanian election? Did he recount the company’s five decades of experience in preserving exclusive gambling licences through the patronage of MPs and political parties, and the targeting of any MP or political party who dared step out of line? No doubt delegates would have been interested to learn how Hanna’s employer, the Farrell family, accumulated personal wealth of more than $2 billion (a sum that exceeds the total Tasmanian health budget) largely from pokies profits in Australia’s smallest and poorest state.

World Vision Australia’s chief advocate and anti-­gambling campaigner Tim Costello points out that decades of donations and ferocious PR campaigns mean that MPs from both major parties are as beholden to and frightened of the poker machine industry as American politicians are of the NRA.

There are growing signs, however, that Australians are as exasperated with the power of the gambling industry as the American people are of the gun lobby: witness the outrage at the use of the Sydney Opera House sails for gambling advertising, the popular revolts against pokies by AFL and RSL club members, and the polls showing most Tasmanians still want pokies-free pubs. Nevertheless, ClubsNSW states in its annual report that “we do not see regulatory trouble on the horizon for clubs at State or Federal level”.

Gambling reform was not an issue in the 2019 federal election and is unlikely to be on the agenda of either major party in any state or territory in the foreseeable future. Even sympathetic MPs are not doing the will of the people on gambling reform because they perceive the industry will target them if they promote change. Public policy reform has become captured by a well-resourced and highly organised vested interest.

The first step in changing the political reality must be to end the funding of research by the gambling industry, and for full accountability, transparency and clarity to be established in the methodology, language and presentation of all research, including prevalence studies. Samantha Thomas (Deakin University), Charles Livingstone (Monash University) and other public health experts have reiterated the urgency of establishing a Commonwealth-­funded national research body, as recommended by the Productivity Commission. To measure and reduce harm, a clear strategy to reduce Australia’s extraordinary gambling losses must replace the industry-driven “responsible gambling” agenda. It is time to stop blaming the victims for what is in fact a policy-driven catastrophe.

In April of this year, Singapore took effective action to reduce gambling losses through dramatically increasing the entry fees to casinos. Their government is worried about growing levels of harm associated with having the second highest level of gambling losses in the world. Even in the Brexit-fractured UK parliament, MPs from across the political spectrum have joined together to take effective action to reduce the growth in gambling losses that has seen their nation reach number nine in global ratings.

Meanwhile, decision-makers in Australia, unconcerned about this country’s gold-medal losses, do nothing as the gambling industry causes untold and preventable harm to millions of our most disadvantaged citizens, their families and communities. For their sake, and the good of our democracy, it is time for the political power of the industry to be confronted head-on, and for Australia’s 30-year experiment in radical gambling liberalisation to be brought to an end.

James Boyce

James Boyce is a Hobart-based writer and historian. His latest book is Imperial Mud: The Fight for the Fens.

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