Despite regulatory fig leaves, live and online gambling is growing exponentially. And there’s no will to change it. By Mike Seccombe.

Betting against political resolve on gambling

Eighteen months ago the Australian public, and football fans in particular, won a heroic victory of people power. Perhaps you remember it.

We rose up against that smarmy face of sports betting, Tom Waterhouse. We told the gambling industry, the TV networks and politicians in no uncertain terms that we were mad as hell about being exposed – and more importantly having our children exposed – to the product he was overselling.

We were sick of Toothy Tom sloganising about knowing “what punters want”, when what punters really wanted was not to see his smug mug spruiking the odds and chatting with the commentary teams.  

But while the anger started with Tom, it didn’t end there. It quickly became apparent he was but the irritating personification of a broader public distaste for the industry. So alarmed did the sports betting companies become that Waterhouse was cruelling it for them all, they nobbled young Tom and agreed to new restrictions on the way their products could be promoted on free-to-air TV.

It was a glorious win for the good guys, right? Wrong.

The backlash against Tom Waterhouse did absolutely nothing to halt the growth in televised gambling ads. The gambling industry, the networks and the government conspired to make a few superficial changes and waited for the fuss to die down.

The statistics tell the real story.

In 2010, according to the advertising monitoring firm Ebiquity, sports betting outfits spent $12 million on TV ads. By 2012, the ad spend had grown more than threefold, to $41 million.

In 2013, the year of the Waterhouse controversy, it was $47.5 million. And in just the first eight months of 2014 it was already close to $40 million. Assuming it continues at the same rate, the total spend by sports betting companies will be almost $60 million this year, five times what it was just four years ago.

Now where’s the outrage? Has it simply evaporated, or has it transmuted into something else, something duller and more cynical?

For if there is one area of government policy that might serve to encourage the public belief that our democracy is not working for the people, and that it makes little difference which of the major parties they vote for, it is gambling regulation. And we know from the polls and political scientists that those negative sentiments have grown along with the sports betting advertising over the past few years.

Even the staunchest advocates of better regulation become weary.

On Tuesday this week, I rang one of them, Tasmanian independent MP Andrew Wilkie, to ask what was happening on the gambling front.

“Peter Slipper’s up for sentencing,” said the anti-pokie campaigner. “He might go to jail.”

It was not a non sequitur, but a reference to the cynicism of the political system. He joined the following dots. Had he not demanded various reforms to mitigate problem gambling on poker machines as a condition of his support of the minority Gillard government, the gambling lobby would not have mounted a huge scare campaign directed at Labor marginal seats.

Had Gillard not as a result abrogated her deal with Wilkie, he would not have withdrawn his support, and the government would not have had to offer Slippery Pete the speakership to shore up its numbers.

Had Slipper not abandoned the Libs to take up the role, they would not have been interested in exposing the way he rorted his travel expenses.

“Ultimately, Julia Gillard’s decision to renege on the deal with me could put Peter Slipper in jail,” said Wilkie.

We now know that Slipper is not going to jail. The day after Wilkie spoke, the former speaker was ordered, as punishment for defrauding the Commonwealth, to perform 300 hours of community service and to repay $954.

It was a trifle. The real costs were to Slipper’s reputation and mental health, not to mention the estimated $3 million of taxpayers’ money spent pursuing him. And the cost to public perceptions about whose interests our major political parties really champion.

Through the drawnout process of negotiating a plan for poker-machine reform, public opinion was strongly on the side of parliament’s minor players – Wilkie, the Greens and South Australian independent senator Nick Xenophon. 

“At least half a dozen credible polls showed a strong majority for reform,” said Wilkie.

And it wasn’t only public opinion that backed them: so did empirical evidence that the measures proposed would limit problem gambling.

But the big money did not. The pubs and clubs who relied on poker-machine revenues mounted their $20 million “marketing campaign”. Millions more was given in direct political donations. Between August and December 2010 alone, they gave $1.3 million to the major parties, overwhelmingly to the Liberals.

And so the Gillard government watered down the reforms, and then lost power to a Liberal opposition flush with poker-machine money. 

“The big news in this parliament has been not just that Abbott overturned the modest poker-machine reforms that did get enacted in the last parliament, but that they did it with the support of Labor in the senate,” says Wilkie. “The Labor Party weren’t even prepared to defend the reforms they had made.”

The retreat continues. Just this week, as part of its push to repeal red tape, the Abbott government moved to “streamline” the operation of the Australian Communications and Media Authority, amending the acts covering broadcasting and online gambling to give ACMA a “broad discretion” on whether or not to investigate complaints.

Thus it could choose to ignore issues considered trivial or that “might inappropriately divert the ACMA’s resources and the resources of broadcasters”.

Nick Xenophon opposed this, telling the senate: “It seems to me that it is such a broad discretion that ACMA – perhaps through resource constraints, perhaps for any other reasons or other priorities – can ignore matters that are clearly in the public interest.”

His concerns were ignored; the opposition voted with the government.

More outrageous things are happening elsewhere. As The Saturday Paper reported last week, the Victorian Coalition government recently announced an agreement with Melbourne’s Crown Casino to extend its existing gaming licence to 2050, provide for an additional 40 gaming tables and 128 poker machines, and remove the existing “super tax” on international and interstate VIP players. Most remarkably, the deal would compensate Crown for any future measures the government might take that would affect its profitability.

Again, Liberal government and Labor opposition were as one in endorsing the deal. 

Tim Costello, chairman of the Australian Churches Gambling Taskforce, was appalled by the agreement but not entirely surprised, given the track record of government in bowing to the wishes of the gambling industry in general, and James Packer and Crown in particular.

“He has an extraordinary ability to get whatever he wants,” says Costello.

“I mean, in New South Wales we have ICAC looking at $10,000 donations in paper bags from property developers, and here is Packer, who gave $580,000 to the Libs federally – so it’s legal – while doing one of the biggest casino developments anywhere, at Barangaroo.  And the NSW authorities … carried out the fastest processing of a licence ever.”

To be technically accurate, it was not Packer who gave the $580,000, the largest single donation to the Libs in 2012. It was his mother. But the alacrity with which both major parties jump to the Packers’ will remains, as Costello says, “just amazing”.

Also amazing are the size, complexity and rate of evolution of the gambling industry.

A few facts. Gambling in all its forms is a $20 billion-a-year industry in Australia. Of that, according to the most recent figures from the Queensland government treasury, about half is lost to the pokies in pubs and clubs. Another 20-odd per cent goes on casino gaming, 14 per cent on racing, 11 per cent on lotteries, pools and keno and about 1.9 per cent on sports betting.

The Productivity Commission estimated in 2010 that 80,000 to 160,000 Australian adults were severe problem gamblers. A further 230,000 to 350,000 were at moderate risk of developing a problem. Most of those, about 80 per cent, relate to pokies. Problem gamblers account for as much as 40 per cent of all money lost on pokies.

But things are changing, says Dr Sally Gainsbury, at the Centre for Gambling Education and Research at Southern Cross University, who was one of the authors of a major report on interactive gambling, released in March.

“Overall gambling participation has decreased… from 82 per cent to 64 per cent between 1999 and 2010,” she says.

“That’s pretty steep. Casino and race betting have stayed pretty much the same. The big drop is gaming machines. It was around 40 per cent of the population in 1999, and is down to about 20 per cent in 2011. Yet overall expenditure has stayed pretty stable.”

While fewer people are playing the pokies, though, the number engaging in sports betting is zooming, albeit from a low base.

“We found the rate of sports betting had more than doubled from 6 per cent to about 13 per cent,” says Gainsbury.

“We’ve seen several operators enter the field: Paddy Power, William Hill, Ladbrokes, Bet365. All foreign-owned companies. All opened up shop independently, or partnered or bought out companies in Australia, and are all spending huge advertising dollars to capture this growing audience.”

And while the pokie players are still by far the largest group reporting problem gambling, Gainsbury says, the data shows a steady increase in reporting from the areas of internet and sports-related gambling.

“It hasn’t been a massive spike, but about half the people gambling online only started in 2009 or later, so it might well be something that is developing.”

Certainly, the signs are there. The report found interactive gamblers spent more, lost more and “had higher rates of psychological distress than non-interactive gamblers”. It recommended broadening measures to combat problem gambling to “especially target males, younger interactive gamblers and non-English speakers”.

If government has not yet identified the growing risk of problem online gambling, the banks have. Just last month National Australia Bank became the last of the majors to increase the rate charged on credit cards when used for betting, from the so-called purchase rate, to the rate for cash advances.  

The Topsy-like growth of online gambling was further evidenced just this week in a report from Roy Morgan Research, which found that the number of people betting online had quadrupled in the past decade. Internet betting is now almost four times greater than betting through a TAB agency. In fact, it’s almost equal to the combined number betting via TAB agencies, TAB outlets in clubs and pubs, telephone accounts, on-course totes, on-course bookmakers, and telephone bookmakers.

“It’s not necessarily evidence of massive growth in wagering or gambling,” says Mary Collier, of the Australian Wagering Council. “It’s more a platform shift.”

But there is another factor to consider. Online gambling has opened up a whole new world of gambling opportunity. As Roy Morgan’s interactive gambling report noted, current Australian law prohibits operators from offering interactive services to Australian residents, with the exception of wagering and lotteries.

“The act is considered to be largely ineffective, with around 60 per cent of the total value of interactive gambling in Australia, estimated at $AU1.6 billion in 2010, spent on prohibited overseas-based services,” it said.

Collier cites research estimating some 2500 blackmarket operators in Asia, offering services that are illegal here.

The Wagering Council now wants the law changed so domestic companies can offer so-called “in-play” bets, which are placed during a sporting event rather than before it begins, and have shifting odds. Currently, gamblers can only avail themselves of in-play betting through offshore sites, or through walk-in or phone-based Australian sites. 

We shall see if the political parties grant the Australian online gambling companies their wish. For what it’s worth as an indicator, last month Packer’s Crown acquired 100 per cent of Betfair.

This article was first published in the print edition of The Saturday Paper on Sep 27, 2014 as "Betting against political resolve".

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Mike Seccombe is The Saturday Paper’s national correspondent.