Thursday, April 10, 2008

Tabcorp- Tattersall monopoly over pokies smashed in Victoria

In a rare, worthwhile decision the Brumby Government in Victoria have got rid of the Tattersall's/Tabcorp poker machine monopoly in Victoria. In 4 years all of Victoria's 27,500 pokies (outside of Crown Casino) will cease being under the control of these duopolists. Individual clubs and pubs will be able to bid for up to 115 machines each.

Mr Brumby said the move will help reduce problem gambling - I don't see how. It will mean that more of the rents from the machines go into the public purse - this is a good thing - but I cannot see how that will reduce problem gambling. To the extent that lower gambling prices are driven by increased competition more gambling will be encouraged. But I guess the government can invest more in restoring the lives of families ruined by gambling.

The decision to get tough with these anti-social corporate nasties is a surprising one since past premier Bracks was a total wimp in taking on the anti-social pro-gambling lobby. This was hardly suprising given the number of ex Labor Party pollies and party hacks working for the gaming industry in Victoria.

I'll update with further information as it comes to hand. I am mainly interested in the terms of the new pokie contracts. Will it be possible to phase these socially destructive bandits out of the community entirely? I understand the new licences will be for 10 rather than 20 years and while Tabcorp/Tattersalls can bid for pokies their share cannot exceed 35% of the market. Tattersals has said it will try to buy up gaming venues which might undermine Brumby's plan.

Update: Brumby has said that he will not compensate Tattersalls and TabCorp for the $600 each claimsa they are owed given that their licenses have not been renewed. the firms claim this is an ambit claim by the Premier and that they will sue if necessary. The shares of nboth companies have been suspended on the sharemarket.


Anonymous said...

Removing the duopoly can be seen as setting the stage for a substantial change in responsible gambling policy. This is mainly so by using monitoring data (currently undertaken by the duopolists) to drive a responsible gambling regime, rather than for profit maximisation. The monitoring data is a massive mine of information which can be used to construct responsible gambling initiatives. While it was being undertaken by parties receiving profits from gambling, you will be suprised to hear it was not used very much or very effectively for responsible gambling outcomes.

The key to reduced problem gambling will be through combining the removal of the duopoly with the introduction of smart technology and pre-commitment, something the Government has already announced (without much detail as yet). As I understand it, it will be compulsory for EGM players to use an individual identifier by 2012 (probably a USB stick with thumbprint technology). Players will then have access to a number of responsible gambling tools including pre-commitment, in which they set limits to their gambling expenditures (daily, weekly, monthly) before they get in front of a machine.

Even as a voluntary measure, the evidence from Canada suggests it will be effective in reducing harms, especially as a preventative measure. That is, gamblers with severe problems will avoid using it, but those 'at risk' or who have fallen out of a problem will be more receptive to setting limits.

There is very little detail to the policy at this stage, but this is very important news.


Anonymous said...

I assume some government stooge put in the last remark - total nonsense. The new proprietors will have no more interest in curbing gambling than anyone else (the administration included). All of them make money off of it and none of them care one iota about anything other than profit. It's a simple piece of political chicanery, with undoubtedly some back room corruption thrown in to boot. Guess Tab and Tatt came up short in their payments...

Anonymous said...

The new pokie owners might be compelled by the government to put in anti-problem gambling measures.

An apparent problem for the government is that the more this happens, the less prospective owners will be willing to bid for the licenses, since problem gamblers are such a large part of the business.

But by cutting out Tabcorp and Tattersalls, the government has taken a huge slab of profits and divided them between itself and the new owners. Even if the industry shrinks because problem gamblers are effectively stopped from gambling (a big if, admittedly) there will still be heaps of profit to be shared between the pokie venues and the government.

It's win-win for the government and the pokie venues.

It's lose for Tabcorp (share price down 20% today) and even more lose for the less diversified Tattersalls (share price down 27%).

But when your business model depends on having a government licence that can be taken away from you, these things can happen.

Anonymous said...

I'm hardly a government stooge, nor did I suggest the 'new proprietors' will be more interested in curbing problem gambling. Removing Tatts and TABcorp from the equation removes an important barrier to more effective policy. The key will be whether a pre-commitment mechanism is introduced, and how. It was never going to happen under the duopoly.