don’t vote for napthine’s $100 million “frequent gambler” scheme

Before you cast your vote in the 2014 Victorian state election, take a look at the $100 million bonus the Victorian state government is handing out to establish a “frequent gambler” pre-commitment program that has already failed internationally.

The Napthine government is poised to roll out poker machine “reforms” that have been proven not to work, linking them with loyalty schemes that massively increase spending and committing the roll-out to a company that’s actively suing it in the High Court.

Premier Denis Napthine with Gambling Minister Ed O'Donohue

Premier Denis Napthine with Gambling Minister Ed O’Donohue

Gambling is still an important issue in the lead-up to the 2014 Victorian state election. Voluntary pre-commitment is the centrepiece of the Napthine government’s gambling policy, and involves players using a pre-commitment card when playing poker machines. The card would allow them to impose limits on their gambling, such as setting time and spending limits, but only if they choose to do so.

Where this differs from mandatory pre-commitment (which the Gillard federal government promised but failed to implement in order to gain Andrew Wilkie’s support) is that it is optional. The Victorian scheme will require every poker machine to be able to accept a pre-commitment card, but gamblers will not need to use one to play. And if they do register and use a card, use of the harm minimisation measures is still optional.

Last year, the Victorian government selected Intralot as the preferred provider of voluntary pre-commitment. Intralot already runs Victoria’s poker machine monitoring system, which links all of the state’s gaming machines for revenue and taxation purposes; the government claims that this would enable them to use the same technology to provide both services, thereby cutting costs.

This is where it gets a little murky. In their submission to the government tendering for the scheme, Intralot talked up their close association with Canadian firm Techlink, which had rolled out a similar voluntary pre-commitment scheme (called My-Play) on gaming machines in Nova Scotia.

Their submission states:

As the appointed electronic gaming machine monitor in Victoria (outside the Melbourne Casino) and being in close cooperation with Techlink Entertainment, Canada, IGS has a unique perspective and view on the implementation of the Victorian Government’s proposal for voluntary electronic gaming machine pre-commitment (pre-commitment).

And:

The Monitor (Intralot) and Techlink combine a unique level of expertise internationally in wide area pre-commitment and are best positioned to offer extensive know-how in Victoria pre-commitment.

In answer to a question about how simple and easy the voluntary pre-commitment system will be, Intralot states:

The proposed features and processes are very much in line with the features and processes that have already been developed and deployed in Nova Scotia, Canada.

It’s clear that Intralot’s plans for Victoria will draw on their close relationship with Techlink. The problem is that Techlink’s My-Play system has already been scrapped, just a few years after it was rolled out.

The Nova Scotia government made the decision to get rid of My-Play in August this year, when it became clear that practically no one was using the harm minimisation measures, and that the rate of spending from high-risk and problem gamblers had reportedly increased. By September, it was gone.

That’s the system and expertise that Intralot and our state government are drawing on for their plans to roll out voluntary pre-commitment in Victoria: a failed system that’s been proven not to work.

It’s therefore not surprising that our gambling industry have also thrown their weight behind voluntary pre-commitment; Clubs Victoria approve and just yesterday at the National Association for Gambling Studies conference at the Gold Coast, ALH (the Woolworths poker machine division) reaffirmed their support for voluntary pre-commitment. They’re all backing it because it looks like they’re doing something, when they know it won’t work.

But it gets worse.

The Victorian government recently released the fee structure for how Intralot will be paid for running the voluntary pre-commitment scheme. They stand to make 74.5 cents per machine, per day. That may not sound like a lot, but when you consider that there are approximately 30,000 poker machines in Victoria (including Crown Casino) and that each one of them must BY LAW be connected to the system, that comes to over $8 million in fees each year.

Intralot’s contract with the government will run for 12 years, meaning they will collect over $100 million in fees over that period. Not a bad win. And of course, venues will pass the costs on to their customers.

But it gets worse.

Since 2008, Intralot has also been the Victorian provider for “scratchies” – gambling scratch tickets. Following years of losses, Intralot recently quit this business and are now suing the state government for $63 million for breach of contract and loss of revenue. With friends like these…

But it gets worse.

In passing legislation to cover Victoria’s voluntary pre-commitment scheme, the government made specific reference to loyalty schemes. We all know what loyalty schemes are; you get rewarded for spending money. Under the government’s plan, poker machine loyalty schemes must BY LAW use the same cards and technology as the new pre-commitment system. The plan is to use loyalty schemes to make pre-commitment more attractive.

That’s a massive problem. Loyalty schemes for poker machines have been universally slammed by gambling reform advocates for encouraging gambling. Linking loyalty schemes with pre-commitment, especially when it’s voluntary pre-commitment, seriously undermines any harm minimisation benefits that a voluntary scheme could provide.

Case in point: Tabcorp Gaming Solutions (TGS) run the very popular “Diamond Rewards” loyalty scheme. According to their latest investor presentation, growth in net gaming machine revenue in TGS venues was 16 times greater than that in non-TGS venues.

16 times greater. It’s no surprise that Steve Wooding left his role as General Manager of TGS in July 2013 to become the General Manager of Intralot Australia. He’s bringing that loyalty expertise with him.

But it gets worse.

Loyalty schemes such as Diamond Rewards already provide voluntary pre-commitment in Victoria. The optional ability to set time and spending limits is built in to schemes like this. Of course, no one uses them… but the point is that voluntary pre-commitment already exists in Victoria, and is doing nothing.

The difference is that under the Victorian government’s plan, loyalty schemes will no longer be allowed to offer pre-commitment. So their job gets simpler; they can get on with the business of getting gamblers to spend more, and leave the ineffective pre-commitment scheme to Intralot and the government.

But it gets worse.

There’s one more sting in this tale. Techlink, along with other companies involved in the roll-out of Nova Scotia’s My-Play system, are currently being sued by a Las Vegas firm alleging patent infringement. There is a very real chance that the technology Intralot is planning to roll out in Victoria, based on the Techlink model (and they say it is), will be illegal.

When there is so much wrong with a system such as this, there is no justification for proceeding. Whoever wins the election on the weekend MUST cancel the planned implementation of this voluntary pre-commitment system, and repeal all of the legislative changes that accompany it.

Far better to look, one last time, to Nova Scotia. They may have got rid of their voluntary pre-commitment system, but they’ve left in place a number of mandatory measures, including:

• Mandatory cash-out after 2.5 hours
• Maximum cash load-up limit of $60
• Maximum bet of $2.50 per spin

They’ve left these in place because they don’t require monitoring. They don’t need a company to oversee them or charge fees to use them.

And they work.

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