red tape reduction will cost gamblers billions

As New South Wales joins Queensland on the “red tape reduction” bandwagon, it’s gamblers who will foot the bill.

Earlier this year, on July 1, the Queensland Coalition state government’s “red tape reduction” program came into effect. This included a number of measures affecting the poker machine industry in that state, such how many machines a single operator could run (which has gone up), how easy it is to transfer machines across regional boundaries (now much easier) and what size notes could be inserted into machines (formerly capped at $20, now $50 and $100 notes are acceptable).

Another measure implemented by the Newman government concerned paying out winnings. Previously, all jackpot winnings and any win over $1000 had to be paid out by cheque. This is a classic harm-minimisation measure, designed to prevent gamblers from getting their hands on huge sums of cash and pouring it straight back into the machines.

That limit has been raised to $5000. The supposed “red tape reduction” at play here is the reduced number of cheques that will be generated.

Fast forward three months. Last week, the NSW Coalition state government signed a new Memorandum of Understanding (MoU) with Clubs NSW. It had been four years since Barry O’Farrell had signed the last one (as opposition leader) and the clubs had a new list of demands they wanted taken care of.

In amongst the government’s commitments to work with Clubs NSW on getting them involved in childcare (a current hot topic) and allowing them to update their technology while preventing any real changes to regulations (because progress is good when it’s on their side), was another commitment that sounded very familiar.

The Baird government has just signed off on a commitment to increase the cheque issuing limit on poker machine winnings from $2000 to $5000. The reason cited was s substantial reduction in red tape.

This is good news for clubs (and pubs, if you’re in Queensland) but bad news for gamblers. Very bad news indeed.

As I said earlier, paying out large wins by cheque is a tried and tested harm minimisation technique. It’s long been recognised as a key element in preventing problematic gambling behaviour, and repeated studies and reports have confirmed this without question.

One of the classic traits of poker machine addiction is impulse control. Hand an addict a large sum of cash WHILE THEY’RE IN A VENUE and watch them throw it away. I’m talking from experience here; I won a $5000 jackpot back when I was an addict, before these limitations were introduced. I blew the lot without looking back.

But it also helps slow down the development of poor behaviours in gamblers who may not have a problem yet… but are on their way to having one. Whether you’re a gambling addict or not, a big win in a dark room resulting in piles of cash in your hands is a situation not many of us are equipped to deal with.

The research shows that large poker machine wins, when paid out in cash, get ploughed back into the machines. And that is why the industry in Queensland and NSW have lobbied their respective state governments for this change.

At the start of this year, NSW’s cheque limit of $2000 was the highest in the country, and Queensland’s cheque limit of $1000 was in line with the rest of the country. Now both states have (or are moving to) a cheque limit of $5000 and the consequences of this shift are dire.

Clubs NSW, with over 70,000 poker machines, says that this change will remove more than 250,000 cheques from the system. Queensland, which has over 40,000 machines but has moved from a lower cheque limit, would have a corresponding drop of around 150,000 cheques.

That’s 400,000 cheques. 400,000 wins that previously would have been paid by cheque, which will now be paid in cash and most likely lost. History and all of the available research bears this out.

And in dollar terms, that comes to somewhere between $650 million and $2 billion worth of winnings that will make their way back into the coffers of the clubs and pubs, and from there as taxes to the state governments in question.

It’s achingly clear yet again that dealing with problem gambling comes a distant second to raising revenue. And it’s equally clear that “red tape reduction” is just another way the state governments of Queensland and NSW have of telling their constituents that the gambling industry means more to them than their voters.

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4 Responses

  1. Peter says:

    For once Tom I actually agree with you, but the current cheque system is the wrong way around. Victoria HAD the correct system and changed it.
    You should be able to pay UP TO $1000 or $500 in cash, then anything over in a cheque. This would at least give the player some money to play on with but not all of it.
    With Victorias current system of paying $1000 OR MORE by cheque, I have seen where people win $5000 and play it down to under $1000 because they want cash.
    Isn’t that against RSG principles???
    If they were able to get $500 or $1000 in cash and the rest as a cheque, at least they would still have money to play with, but they won’t blow the lot.
    Agree???

  2. James says:

    I’m an addict and recently I won a 8K jackpot – the venue operator was keen to let me know I could have 2k in cash. Of course that was gone before I knew it. I was happy to have the 6k in my bank account anyway! Great point about being handed piles of cash in a dark room – reality is totally distorted in that atmosphere (the booze doesn’t help either)

  3. Anura says:

    Remember, reform is only ever carried out for the interests of businesses.

  4. Kate Sommerville says:

    Nice piece, Tom.

    Removing the existing constraints on pokie gambling will do nothing but increase harm from gambling. It is like removing speed limits on roads. Some would be able manage that but most will not. Our communities become considerably less safe yet Governments and the gambling industry would have us believe otherwise.

    It is immensely sad

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