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As gambling reform becomes a key battleground in the NSW election, it is clear how powerful the clubs lobby has become in a country with more poker machines than anywhere else in the world. By Mike Seccombe.

Perrottet, the pokies lobby and the Nazi uniform

NSW Premier Dominic Perrottet; a 40-year-old Caucasian man with short greying hair wearing clear-rimmed rectangular glasses. The image is a closeup of him looking extremely contrite with his lips pressed together.
During a press conference in Sydney on Thursday, January 12, NSW Premier Dominic Perrottet apologised for wearing a Nazi uniform at his 21st birthday party.
Credit: AAP Image / Dean Lewins

There are at least four questions about Dominic Perrottet’s Nazi costume, only one of which as yet has an answer. They are: Where is the photo? Does it even exist? If it does, is someone holding it back hoping to inflict more damage on the New South Wales premier by releasing it closer to the March 25 election? And why, almost 20 years after the 21st birthday party at which Perrottet wore the uniform, have we only recently heard about it?

We know about the uniform because he confessed at a press conference to wearing it and has since made a succession of grovelling apologies, particularly to Jewish groups, for the “terrible, terrible mistake” of his youth.

Although he said he did not know if any picture existed, he clearly was not prepared to bet against the rumours that there was one. So, after holding his guilty secret for all those years, prompted by the fear of exposure, he finally owned up.

But the other questions linger, along with another, bigger one: Whose interests are served by the rumours, the confession, the diminishment of the premier?

In most circumstances when a bucket is dropped on a prominent figure on one side of politics, it is dropped by the other side. But in more than a week since Perrottet’s self-outing, the informed speculation in political circles suggests it was not the case this time. Indeed, Labor has shown considerable restraint in the matter. Opposition Leader Chris Minns, after two days’ silence, said he thought Perrottet’s apology was sincere, adding “and I don’t think it will affect the election”.

The only prominent Labor figure to go in really hard on Perrottet was former NSW premier Bob Carr, who fired off a couple of tweets last Thursday, insisting that he only discussed it with Minns afterwards. “Verdict: he is now unelectable.”

The source of the Nazi uniform story is thought to be one of Perrottet’s own party or someone connected to the state’s powerful poker machine lobby, which has been angered by the premier’s plan to introduce mandatory cashless gaming cards in pubs and clubs. Or both.

The rumour mill has been fuelled by circumstantial evidence. It was one of Perrottet’s frontbench, David Elliott, who told him on Tuesday last week that “someone” was planning to use the alleged photo against him.

This is curious, for relations between the two are not good.

Elliott is leaving politics at the election, having lost a preselection battle involving Perrottet’s faction.

Only a matter of days before he spoke to the premier about the alleged picture, it was revealed he had been forced to exclude himself from cabinet discussions on gaming reform due to potential conflicts of interest.

Reportedly – and The Saturday Paper has not confirmed this, because he is now on compassionate leave following the death of his mother – Elliott believed Perrottet had told the media that Elliott’s son worked for the global poker machine manufacturer Aristocrat Leisure.

Only a couple of weeks before that, Elliott, a former deputy chief executive of the NSW branch of the Australian Hotels Association and a director of Castle Hill RSL Club, attacked Perrottet’s planned reforms, saying they risked “demonising one sort of gambling”.

He claimed that cashless gaming would cost jobs, would not help problem gamblers and would simply see people move to other forms of gambling.

So it seems passing strange that the outgoing minister, having been pointedly unhelpful to the premier’s bold, signature election policy, should helpfully phone to warn him.

Perrottet has said there was nothing threatening about the phone call, but the result was obviously very damaging in that it served to distract from the political debate about poker machine reform, in which the Labor opposition had to that point been struggling.

This week Labor released its own policy on pokies reform, widely viewed by gambling experts as inadequate in that it proposes only a limited trial of cashless gaming.

The issue is significant. NSW is the most pokie-addicted jurisdiction in the most pokie-addicted nation on Earth.

Australia has only about one-third of 1 per cent of the world’s population, yet it has 21 per cent of the world’s “high intensity” electronic gaming machines or EGMs. Of the roughly 200,000 EGMs in the country, some 86,000 are in NSW.    

“They are the main reason that Australia has the greatest gambling losses per head of any country – 40 per cent higher than the nation that comes second, Singapore,” says Tim Costello, spokesman for the Alliance for Gambling Reform, citing two studies by the federal Productivity Commission.

In most of the world, he says, EGMs are limited to casinos. “Here, they’re accessible on every second street corner.”

The machines suck phenomenal amounts of money out of the less than 20 per cent of people who play them – disproportionately from problem gamblers, who are in turn disproportionately young, male, less-educated, unemployed or on low incomes, lonely and troubled.

In the six months to May 1, 2022, registered clubs turned a profit of $2.217 billion from more than 64,000 pokies in NSW, according to Liquor & Gaming NSW. Pubs profited to the tune of $1.632 billion, from almost 22,500 machines.

And pubs and clubs paid a little over a billion dollars in taxes.

In NSW alone, EGM turnover in hotels and clubs was about $95 billion in 2020-21, much of it dirty money, according to a report from the state’s crime commission released last October.

“The lack of traceable data collected by EGMs means the exact scale of this criminal activity is impossible to determine,” said Crime Commissioner Michael Barnes, “but it is clear from our investigations it involves many billions of dollars every year.”

Barnes said poker machines offered criminals one of the last remaining safe havens where cash from criminal enterprises could be “cleaned”. The report called for the introduction of a mandatory cashless gaming card and enhanced data collection measures.

“These basic reforms will help exclude vast sums of dirty cash that are primarily the proceeds of drug dealing,” Barnes said. “I’m sure venues won’t argue they should keep receiving that.”

Of course, that is not what venues are arguing. They and their advocates instead claim that Perrottet’s promised reforms will cost jobs and impinge on personal freedom. They also seek to cast doubt on the other likely benefit of cashless gaming, which is that it will help address problem gambling.

Consider one of Elliott’s recent arguments. “We can’t say to Nanna, ‘You can’t put $20 into the pokie machine after bowls,’ ” he said, “because she’s just going to put that $20 on scratchies and lottery tickets in the newsagent on her way home.”

It is a dishonest argument in a couple of ways. First, the proposed reforms would not stop Nanna from having a modest flutter on the pokies. It would only ensure she did not use cash.

Second, his suggestion that stricter controls on pokies would simply lead people to other forms of gambling does not hold up.

It does not follow, says Professor Sally Gainsbury, an expert in gambling psychology and director of the gambling treatment and research clinic at the University of Sydney, “that if one form of gambling is restricted or changing one way, the customers will automatically swap to another”.

“We saw from the Covid-19 pandemic shutdown of gambling venues that when this particular form of gambling wasn’t available, there was not a huge migration,” she says. “So there weren’t more people buying scratchie tickets or lottery tickets online.”

Even if Nanna did buy lottery tickets instead of playing the pokies, that might not be such a bad thing. As various studies have shown – including one involving some 10,000 people, done for the NSW government in 2019 – pokies present a far higher risk of addiction that other forms of gambling.

“The riskiest form of gambling is playing EGMs, with EGM play associated with 3.6 times greater odds of being a moderate-risk or problem gambler,” the study found. “Buying lottery tickets or instant scratchies is associated with a lower risk of experiencing problem gambling.”

People gamble for different reasons, says Gainsbury. Some are attracted by “the risk or the thrill of something live-action, like race wagering, for example. But with pokies, a lot of the problems stem from another pathway, which is about emotional regulation and escapism.

“It’s so stimulating because of the lights and the sound, the rapid outcome, but there’s no cognitive involvement.

“And the continuous nature of play essentially means you sit there continually pressing buttons, but you don’t actually have to think or make decisions about anything really.

“For people who are experiencing anxiety or stress or worry or depression, this form of gambling is quite enticing, as it provides relief.”

It was under a NSW Labor government in 1956 that pokies were first introduced into clubs in Australia. Back then, says Tim Costello, the party saw them as a way of raising money and providing community recreation facilities in working-class areas that lacked them.

“And it became entrenched in the culture of Labor electorates, with donations of a local Labor politician and a couple of community groups. And ‘Look, we’re providing cheap parma and a cheap beer, maybe a flutter.’ ”

In the days of old manual machines – the so-called “one-armed bandits” – they did not do so much social damage, Costello says. Electronic machines, however, enabled people to lose much more money much more quickly. They turned what had been community-focused clubs into big businesses masquerading as non-profit organisations, heavily concentrated in poorer areas.

“Now all the directors of ClubsNSW are directors of clubs with 600-plus pokies,” Costello says. “They’re mini-casinos – not-for-profits paying their CEOs $1.5 million salaries. It’s shocking.”

Not surprisingly, as ever-increasing sums rolled into clubs, the pubs wanted a piece of the action.

In 1997 Bob Carr’s government gave it to them. The decision, he says, was uncontroversial at the time. “The opposition supported it. Indeed, the opposition has been advocating it through the shadow minister in advance of any movement from us.”

It seemed like a way to “even things up”, Carr tells The Saturday Paper.

“When you had poker machines able to fund licensed club facilities, hotels – which had been an important part of every country town, every hamlet, every suburb – went into serious decline.

“And the hotels had a case that they needed to re-equip, reinvest, upgrade their hospitality.

“The decision was made with the most monolithic policy consensus I can remember.”

This is not how the history is recorded by Costello and his co-author, Royce Millar, in their 2000 book Wanna Bet?, which details the donations and lobbying that went into pubs getting their way.

The book noted Carr was initially opposed to allowing more gaming machines when he became premier.

“Carr may have been the Premier but the hotel industry and the Labor Party had different ideas,” Costello and Millar wrote.

“The motion to allow pokies into pubs was passed in the Labor Caucus by just three votes. The Premier had lost.”

With that loss, the close relationship between Labor and the gambling industry became even closer.

Alex Greenwich, the independent member for Sydney, has long campaigned for gambling reform and says the book’s history is the right one. “Labor’s always been on board for gaming. So when Perrottet says that they are cleaning up the mess, that is an accurate statement.”

According to an analysis of electoral returns across all states and territories, conducted by the ABC last year, more than three-quarters of political donations from gambling interests, including unions whose members work for them, went to Labor.

Clubs alone donated more than $419,000 to NSW Labor and another $33,500 to country Labor. The Liberal and National parties were given $213,420.

If you want to understand why Labor has been soft on gaming reform, says Costello, start by considering the Randwick Labor Club, which operates 80 poker machines. Those machines generated $3.1 million in revenue last year, a portion of which was directed back to the Labor Party. The party has direct interests in a number of other, similar clubs across the country.

Labor’s reluctance to act on problem gambling is also driven in part by fear of the monster they have helped create, says Tasmanian independent federal MP Andrew Wilkie. “That’s because the clubs and the machines are concentrated in disadvantaged areas and often Labor seats, and these clubs have enough members just to swing the result.”

Wilkie speaks from lived experience. The 2010 federal election resulted in a hung parliament: Labor had 72 seats, as did the Coalition. Eventually Julia Gillard negotiated the support of four of the six crossbench members, including Wilkie, whose support was conditional on a number of policy measures including pokie reform.

“One of the most important parts of our agreement was that the government would roll out mandatory precommitment cards across the whole country. It was a bit like what’s being talked about now in NSW. It wasn’t cashless, but it was still a card that would allow the authorities to keep an eye on dirty money and money laundering. And it would have a precommitment function.”

But in 2012, Gillard managed to entice one Coalition member, Peter Slipper, to become speaker of the house, thus robbing the conservative parties of one vote, and making Wilkie’s support unnecessary. She abrogated their agreement on mandatory precommitment.

Like the other gambling reform proponents spoken to for this story, Wilkie is impressed by Perrottet’s apparent determination to legislate mandatory cashless pokie gaming before the election – even though the details, particularly spending limits, are not yet established.

He is unimpressed by Labor’s policy, announced this week. It includes a number of positive initiatives, including banning political donations from clubs that have pokies, the removal of external advertising from pubs and clubs, a reduction in the overall number of machines and the imposition of cash feed-in limits of $500 in new machines, down from $5000 currently.

But on the most important reform – mandatory cashless cards – Labor has committed only to a trial, with 500 machines.

“This is, after all, the No. 1, literally the first, recommendation of the New South Wales Crime Commission, as a result of its big investigation last year into money laundering,” says Wilkie.

“If Labor doesn’t change their policy, then I hope Labor doesn’t win.”

Alex Greenwich, likely a crucial vote in the parliament, is less virulent in his comments but equally critical of Minns for squibbing the most important element of reform.

“The big hole in Labor’s policy is obviously a limited trial of the cashless gaming card over a period of 12 months, with a so-called independent panel that involves people from the gaming industry in it,” he says.

Labor’s policy really does not address the issue of money laundering. Nor does it take in the evidence-based recommendations from the crime commission on how to deal with that.

“The casinos are all moving to cashless technology within the next two years. So unless we have a product in place for cashless gaming in NSW, we will just see the issues that have happened at Star move to clubs and pubs across New South Wales,” Greenwich says.

“If you’re in a bikie gang, you’re obviously not going to use the machine which only takes a card, you’re going to pick a venue that’s not participating in this trial. And you’re going to pick a machine that’s not participating in the trial.”

Of course, the resistance is not limited to Labor. The Nationals are yet to come on board with Perrottet’s plan, although pressure is mounting on them, including from the party’s elder statesman, former deputy prime minister John Anderson.

And then there’s David Elliott, still doing his best to blow up the whole idea and, in doing so, distracting from Labor’s inadequacies.

As one Labor operative observed this week: “We’re very lucky to have David.”

Dom Perrottet, not so much.

This article was first published in the print edition of The Saturday Paper on January 21, 2023 as "Perrottet, the pokies lobby and the Nazi uniform".

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