Yesterday on Twitter Bernard Keane asked for an explanation of the ethical-philosophical basis for gambling regulation. This I won’t attempt, but I offer a defence of regulation based on what I think is practical reason.
Gambling is an ancient practice and for much of its history has been largely unregulated, and much gambling still continues with relatively minimal regulation – if you play bridge with your friends on Saturday night and money changes hands, no-one would suggest the state impose itself in that transaction. Indeed, many people engage in footy-tipping with cash prizes involved every week for half the year, and that is effectively unregulated.
The reality is that many gambling forms have little propensity for harm – playing cards with friends and footy tipping might lead to harm in some people but the proportion so affected is smaller than miniscule, according to all available data. Lotteries generate harm for a larger group, but again they are a miniscule proportion and the harm generated tends to be at the low end of the spectrum.
No-one to my knowledge wants to prohibit or further regulate those gambling forms for the simple reason that they are largely benign. In fact, Keynes argued that a national Lottery would be a great benefit for Britain, displacing gambling impulses into a more honest and sustainable direction. He was, I think, correct.
Some gambling forms however are exceptionally likely to generate harmful effects amongst those who indulge. The most exceptional, and the most ubiquitous in this country, are of course the pokies, which are responsible for about 85% of gambling problems in the 3% or so of the adult population affected. There are several issues with poker machines: firstly, in Australia, they’re ubiquitous.
Almost every pub and club in Australian jurisdictions, except for WA, has a collection of pokies. Secondly, they’re a continuous form of gambling. You can bet on a pokie every two seconds or so, thus maintaining a connection to the gambling experience (or, as the regulars call it, ‘the zone’) unavailable via any other gambling mode. Thirdly, Australian machines are very high impact. They can churn through $1,500 an hour, have maximum bet limits of up to $10 (in NSW) and can accept up to $10,000 in bank notes (also in NSW) in any one ‘load-up’.
The consequences of these three characteristics, combined with the fact that almost no-one understands how pokies work, is deadly to many people. From a behaviourist viewpoint, pokies are ‘learning consoles’, machines that combine principles of operant and classical conditioning to acculturate users to random but continuing rewards. Other theories, of course, abound. But regardless of the cause, pokies and the large networked system within which they operate are extremely effective at modifying what sociologists call the ‘agency’ of many people, affecting the basis on which they utilise their rational capacity.
In other words, they are designed to assist people to lose control and to spend as much time and money as possible using them. And at this they are extremely effective, having been developed over fifty years of R&D. Aristocrat, Australia’s largest pokie manufacturer, spends over $100 million per year on R&D. We can safely assume they’re not wasting that money.
The Productivity Commission, no set of bleeding hearts, recognised this and the thrust of their recent inquiry’s pokie-focused recommendations is to interrupt this system of harm creation. Not by banning pokies, but by proposing internal or external constraints on the harm creation aspects of pokies. The internal restraints include reducing the maximum bet per spin from $10 to $1, thus on average reducing the amount that can be lost from $1,500 to about $120 per hour.
They also suggested reducing the load-up from $10,000 to $20. These suggestions are based on the available evidence, which indicates that these measures would most likely be effective in reducing the harm done to problem gamblers, without recreational gamblers even noticing them.
The external constraint proposed by the PC is pre-commitment – a system whereby anyone playing a pokie would need an account set up on a server. This account would have limits of time and money established by the user, remote from the gambling room, thus allowing people to do what they can’t do at present – decide in advance, away from the attractions of the pokie room, how much time and money they want to spend.
The price of pokies, being based on random outcomes, is unknowable in advance. At least pre-commitment allows consumers in this area to have the same control over expenditure as consumers in any other area of consumption. It also allows people to track their expenditure, and generates data to assist in developing new ways of helping people who are in the thrall of a gambling problem. Given that all Australian pokies are already networked for data collection purposes, this is not as big a step as the clubs and hotels are making it out to be; it has already been done in other jurisdictions in Canada and Scandinavia, and it has already had demonstrated positive effects.
What the PC has proposed and what Wilkie wants implemented are practical responses to a demonstrated problem. Just like speed limits on powerful cars, it will provide a practical response to the problem of harm production arising from the development of a specific technology. That’s why it’s a good idea.
That would have to be close to the most disturbing thing I have ever heard.
Sorry, but as long as Crikey refuses to implement a preview function, I’m going to have no compunction about clogging up the comment stream.
Moderators, please feel free to make the obvious alterations.
Another point worth making, and I apologise if it has already been said on Bernard Keane’s original article, but the argument that the government reaps more in taxes on gambling ($5b) than the social cost, as estimated by the productivity commission (4.7b) doesn’t stand up either. It fails to take into account that a dollar spent at a café has at least double the employment multiplier effect that a dollar spent on the pokies does. State governments, being typically short-sighted and reactionary, can’t see that by giving up pokies revenue they will actually realise greater benefits as those dollars move into more active parts of the economy.
Poker machines are a moral, economic and social blight on our country, I wish we were well rid of them.
What about, “Pokies are addictive, causing people to behave irrationally, they are designed and constantly improved to be more so, and are just as destructive of time and money as any drug addiction”?
I suspect JaneShaw’s calculations aren’t as straightforward as might at first appear. Not everybody’s expenditures are equally productive (part of the point JS makes) but you need to factor in the rate of turnover, roughly the velocity of circulation and the expenditure by government ought also to be more productive than that of pokie addicts.
Still, I’m all in favour of federal law removing the incentive that, e.g. Victoria, succumbed to which was to decide to get a bit of the revenue that otherwise flowed only to NSW and Tasmania (as well, of course, as having had the Cain and Kirner governments run Victoria’s finances into the ground).
A question to the author, however: don’t you make a distinction between games of skill, like poker and bridge and they typical casino gaming opportunities (everything but poker or card-counting blackjack)? True you count some “gambling” as harmless but why should games of skill be regarded as gambling at all? Similar hormonal effects? [Any dispute that a game is to be classified as a game of skill if, over a typical period of play, the more skillful player will usually win?]