Monday, July 24, 2006

Gambling becomes a Victorian political issue

The pokies in Victoria have been a social disaster for low-income Victorians. Should pokie use be discouraged? The issue is whether the interests of the many 'responsible' gamblers should be sacrificed because an 'irresponsible' minority become compulsive players who destroy their own lives as well as the lives of their families. I think the damage of pokies outweighs the limited joys of their handles.

I rarely have much positive to say about the Greens as an Australian political force but on pokies they have driven a worthwhile agenda. In Victoria they propose cutting the 27,500 machines by 20,000 when gaming licences expire in 2012. I have previously urged the Victorian Liberals to imitate this policy and they now seem to have done so to some extent. Regrettably I doubt it is because Ted Baillieu has read my blog. But today Baillieu announced the Liberals would cut pokie numbers in Victoria by 5,000 thereby reducing the State Government's dependence on tax revenue from pokies to something below the $1 billion it currently gets. He will also spend much more addressing the problems faced by compulsive gamblers and make known statistics on the extent of compulsive gambling.

Watch for screams from the anti-social Tattersals and Tabcorp duopoly. Also watch for the dullard Labor Party response from their weak Gaming Minister John Pandazopoulos. The hope is that this will become a competition that ultimately reduces further the role of the mind-numbing and impoverishing pokie menace in Victoria.

11 comments:

Christine said...

That's a pretty big move isn't it? Basically amounts to turning down what 10 years ago would be politically fairly cheap money (unless people can actually substitute to a not very far away machine - that would be an interesting economics paper, btw, as long as the statistics are available).

patrick said...

Excellent; I hope it does become a bidding war.

The problem is though, where will the government get that money from? So far as I understand, much of Victoria's pokie revenue funds the hospital system. A billion is a lot of money, and Bracksie basically made the state more dependent on it, not less.

Crappy hospitals, or problem gamblers? I think they have a moral duty to give them up, but I wonder how the Victorian public will feel...

conrad said...

I agree with Patrick that it will be interesting to see how they intend to replace the lost revenue if they really do do that.

Damien Eldridge said...

Hi Harry,

This is a tricky issue. There can be little doubt that the pokies provide pleasure to some people and costs to others. There are probably many costs, but among the most severe are the devastating losses and hardship that may result for problem gamblers and their families.

This is not unlike alcohol. There are some people who enjoy its consumption. These people benefit from its availability. However, there also people who suffer devastating losses due to alcoholism because of its availability.

If we should ban pokies, should we also ban alcohol? Given that previous bans on alcohol have not been that successful (at least that is the impression I get from movies and the like), would a ban on pokies be successful? Is a black market on pokies easier to control than a black market for alcohol? Would people simply cross the border to NSW (I seem to recall reading about bus trips to Albury when pokies were previously banned (?) in Victoria)? Would they shift to other forms of gambling?

I guess if there were bus trips to Albury during a previous ban (?) in Victoria, then a ban on pokies may not tend to result in a problem with black market pokies, but who are the people that are detterred from gambling through a ban on pokies? are they problem gamblers or people who just like to gamble occassionally?

I don't know the answer to these questions.

Regards,

Damien.

hc said...

Damien, A fair part of pokie use is supply-driven and this seems concentrated among compulsive users. If its observed then it is used.

I think your comment defines a research agenda that the Productivity Commission have helped to initiate. What are the relative gains and losses? I think the losses are enormous and the gains not that deep.

My views on alcohol are here.

I am working on both issues so views might change.

Anonymous said...

Christine - There was a Victorian Government commissioned study in 2005 on the effect of reducing gaming machine numbers in certain regions of the state ... it found little evidence that the hotels and clubs that lost gaming machines suffered much of a reduction in gambling and no evidence that the gambling money had flowed out to nearby regions. Taken at face value this suggests that cutting the number of gaming machines across the whole state is unlikely to affect state revenues much, unless perhaps it reduces the number of venues.

http://www.justice.vic.gov.au/CA256902000FE154/Lookup/GRP_Reports_Files1/$file/Caps_Complete_forweb_05.pdf

observa said...

Removing machines in South Oz hasn't stopped revenue climbing. When you talk about removing machines which ones are you talking about? 5c, 10c, $1.00 machines? How many petrol bowsers would you have to remove to reduce petrol consumption? That's the sort of idiocy you're talking about here.

You know the quickest way to solve problem gambling? Increase the payouts. Simple isn't it?

hc said...

Observa, If demand is elastic (price-sensitive) then increasing payouts will boost use and boost revenue to the casinos.

I found anonymous's comments interesting. He said the evidence suggested cutting machines didn't make gamblers switch venues (that I understand - consistent with the supplier driven demand story) but that cutting machines at a location didn't reduce revenues at that location - this is harder to understand. Are machines then underutilised?

Or is it that compulsive gamblers with less elastic demands get there first and continue gambling?

observa said...

I should have explained better the bit about increasing the payouts. When you think about it, a 100% return of revenue in prize payouts, is a zero sum game for the punter, as it would be with buying lottery tickets under the same regime, with one important proviso. If the prize is statistically extremely uncommon and hence very large in comparison to the individual wager, then you may not live long enough to collect your statistical certainty. Therein lies the solution. Make pokie payouts small and frequent and almost 100% return of revenue and problem gamblers can play to their hearts content.

Of course there's a fly in the ointment there naturally for govts and venue owners. However you can see the spectrum of risk return the authorities have to play with here. This solution was easy to see with an acquaintance who had an old 5c one armed bandit in his shed. You could open it up and grab some 5c coins and play to your heart's content at no cost. You generally only played it once. There are much better Xboxes and Playstations around nowadays.

Christine said...

Thanks anonymous - I sort of suspected something like that (though there is definitely still the question of utilisation that Harry raises), but in getting rid of 5000/27500 machines, you'd surely be getting rid of a few locations? Distance to closest location should matter.

Although, my grandma almost certainly relocated from Brissie to the Gold Coast back in the day when Jupiters was the closest casino (the brilliantly located and named Treasury casino not having been open then). Before that she took bus trips to Tweed Heads, I think (I still remember these horrible ads "Don't you think you oughta/get some fun south of the border/Coolangatta-Tweed Heads Golf Club!" urgh). And Victoria's pretty small, after all.

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