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The Pokie Tax Won’t Work or It Will, You Can’t Have it Both Ways

There’s a fierce debate about how much poker machine reforms will hurt the clubs. There’s no doubt they’ll take a pummelling, but then we have to look at how serious we are about fixing the problem.

For those overseas, there’s a battle waging in Australia over reforms to restrict the use of poker machines (“pokies”, fruit machines, slot machines) to protect problem gamblers. A scheme to identify gamblers and limit the amount they are able to spend in a single session has been put forward by the government — it’s been referred to as a “mandatory pre-commitment” scheme. 

Last month, sports commentator Ray Warren called the measures “ridiculous” during the footy coverage, warning it would lead to job losses, and directed Channel Nine viewers to the “Won’t Work Will Hurt” website, which says “Gillard’s new laws will cost pubs and clubs billions of dollars and will force many out of business”. 

So which is it? The measures either “won’t work” or “will hurt” — they’re unlikely to do both. If they won’t work, then it’s a reported $3 billion wasted implementing the technology. (Spread across all clubs as an amortised capital expense with no subsequent loss of revenue, however, that figure seems unlikely to force any clubs to the wall.) 

If the measures “will hurt” that surely means they’re effective. And yes, if that’s the case it will have a significant impact on the clubs. But just how significant? 

A Productivity Commission inquiry last year estimated that 600,000 adults “play the pokies” each week. That’s just 3 percent of the adult population, yet gamblers spend $12 billion annually (2008-9), the vast majority of that in pubs and clubs. The Commission claims that one third of those regular visitors to the pokies are problem gamblers or face moderate risks, and they account for somewhere between 42 and 75 percent of all poker machine revenue. No wonder the clubs are scared witless. If problem gamblers stop spending it could halve their pokie revenue. 

If the measures “will hurt” that surely means they’re effective. And yes, if that’s the case it will have a significant impact on the clubs. But just how significant? 

A Productivity Commission inquiry last year estimated that 600,000 adults “play the pokies” each week. That’s just 3 percent of the adult population, yet gamblers spend $12 billion annually (2008-9), the vast majority of that in pubs and clubs. The Commission claims that one third of those regular visitors to the pokies are problem gamblers or face moderate risks, and they account for somewhere between 42 and 75 percent of all poker machine revenue. No wonder the clubs are scared witless. If problem gamblers stop spending it could halve their pokie revenue. 

The clubs argue that they have in recent years promoted responsible gambling, mainly through Help lines and extensive signage in gambling areas, but it doesn’t seem to have made much difference. Though pokie revenue has fallen a little in recent years (see graph), the ban on indoor smoking has probably been the biggest influence. 

The clubs also ask, what about all the community benefits these establishments are providing? Footy club owner and TV presenter Eddie McGuire said only last week that Aussie Rules and Rugby League teams get $60 million from Australian clubs and hotels. That’s nice, but just one club, the Rooty Hill RSL in Sydney’s West, pulls in $43.2 million annually from its 726 machines. 

So which is it? Won’t work or won’t hurt. I can’t think of a way to cut gambling addiction without reducing the amount addicts spend. That means a reality check for the clubs industry. 

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