Aussie Gambling Reform Reveals Interesting Insights

In the lead-up to the election in NSW, gambling reform has become one of the key issues. It’s rather unsurprising though since gambling is big business there and per-capita spending is the highest of any country in the world. Those losses add up to a large share of the overall profit for the clubs and pubs, the government earns around $2 billion of dollars each year from their cut, and political parties themselves earn money directly from it. In NSW alone, user losses total roughly $7 billion per year.

Why is this relevant outside of Australia? The short answer is that nothing ever really happens in a true vacuum, especially in an increasingly interconnected world. The topics they’re debating are common to the industry as a whole and other governments are watching the results. And aside from the gambling mecca of Nevada, NSW has the most slot machines of any jurisdiction. So they’re dealing with some issues that most other jurisdictions haven’t even arrived at yet.

At the core of the gambling reform debate is the issue of problem gambling. We have written a fair amount on it already so we won’t get into too much detail here. One of the best ways by far to combat the harms of problem gambling is simply to raise the overall amount returned to bettors, and it is very telling that even the majority of problem gambling advocates aren’t pushing for this. This would reduce the amount of funding that is available to these kinds of groups so it creates a conflict of interest between these groups and the bettors that they claim to protect.

The groups have instead pushed for things like reducing the maximum bet size and slowing down the pace of games. One of the major problems with this is that bettors could simply spend more time on it, and now they have cost themselves even more time on top of the same amount of money they have lost. If they cut the bet size down too much then bettors may just go find even more risky ventures. Or a very likely scenario is that they switch to offshore options for faster games and/or higher bets and now the local business gets none of those losses and neither does the state.

More measures being taken are a switch to cashless machines and reducing the total number of machines by 2000. Placing artificial constraints on the number of machines seems rather ineffective and costly, especially when they plan to spend $384 million to compensate the operators. Perhaps the largest beneficiary in all of this gambling reform is the largest company producing and maintaining the machines, as their stock is up 20% since the announcement.

The switch to cashless machines is stated to be largely to combat money laundering, but this is quite a costly fix and it is still unclear if it will work well. Problem gambling advocates are praising the switch also, as it provides much more control over how and when bettors can use their money. It is a bit worrisome though as it is a loss of freedom and governments rarely relinquish control willingly, they most often seek to expand it further. It gives them a blueprint to apply it to other financial activities, anything that they can deem as too risky for the common folk. Not themselves of course, as those in power are great at creating exemptions for the elites.

One measure that isn’t spoken of much in the gambling reform debate is all of the additional data being collected on bettors. Politicians, journalists, and advocates are quick to reassure bettors that their data is secure and penalties are high for misuse. But we have already seen so many cases around the world that make us doubt that these claims can hold up as well as they promise. It is essentially creating major security risks for only a chance at possibly reducing money laundering.

It’s also interesting to note that the rival political party owns and operates a few of the clubs. Pushing gambling reforms seems like a surefire way to limit the amount of resources your opponents’ party brings in. It goes a step further even and seeks to ban political donations from the clubs and pubs. From this angle, the virtue signaling about problem gambling and stoking fears of money laundering are just fancy window dressing to get the public on the side of a political attack.

This is further compounded by all of the journalists and other media figures weighing in on issues they know and care little to nothing about. They try to paint operators as evil and greedy entities that prey upon defenseless people. They urge operators to just ‘make less money’ or even give up their property to the state entirely if they don’t agree, since journalists are oddly *very* enthusiastic about expanding government reach these days. But when it comes to media companies making massive amounts in advertising, from gambling companies even, these same figures almost always stay silent and take all the money that they can get and provide cover for their industry.

As mentioned in a recent post, the gambling industry really needs to manage their past image better and even embrace it to a certain extent. Otherwise they will always be at the mercy of politicians, their astroturf advocate groups, and their lapdog ‘journalists’. Just passing these increased costs onto bettors is a major source of harm, but almost nobody is willing to stand up and speak out on it. It’s quite telling that the offshore gray-area networks are among the most efficient and most receptive to the actual bettors. The rest of the industry needs to take notes and step up their game.

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