How to prevent gambling harm in Australia

Gambling is everywhere. And Australia’s lax approach to gambling regulation shows. We have the highest gambling losses in the world.

While the federal government is considering banning gambling advertising in the wake of the Murphy Inquiry, Grattan’s latest report makes the case for more regulation to minimise gambling harm in Australia.

In this special podcast, authors Kate Griffiths and Elizabeth Baldwin discuss their report, A better bet: How Australia should prevent gambling harm, with host Kat Clay.

Transcript

Kat Clay: We’ve heard a lot about gambling in the media recently, with the federal government considering banning gambling advertising in the wake of the Murphy Inquiry, and yet another casino operator in trouble.

Grattan recently released a new report on gambling called A Better Bet, How Australia Should Prevent Gambling Harm. I’m Kat Clay, Head of Digital Communications, and with me today on the podcast are two of the report’s authors, Kate Griffiths and Elizabeth Baldwin. Kate, gambling is in the spotlight right now, and there have been quite a few inquiries and Royal Commissions through the years.

Why did you and the team decide to tackle the issue and, and now?

Kate Griffiths: There have indeed been many, many investigations, including royal commissions and reviews of casinos in almost every state. And frankly, they paint a pretty grim picture of disregard for their communities and the rules under which their licenses are granted. So, we’ve certainly seen a lot of you know, outrageous findings, frankly.

And then last year, of course, there was the major inquiry into online gambling harm, the Murphy inquiry, which reached multi partisan consensus on all 31 recommendations. That’s quite a feat. And that included a total ban on gambling advertising. More than a year on from that report, Australians are still awaiting a response from the federal government and we’ve got plenty of good work already out there.

One of the things that Grattan wanted to do with this report that we really wanted to look at was to take this issue holistically nationally and bring all the evidence together. Try and identify what the most effective policies are in this space. And that’s the difference here, I suppose.

A lot of these reviews have been limited to a specific jurisdiction or just one type of gambling. And at Grattan, we have the luxury of setting our own scope. So, we wanted to take a broader look. Gambling is also a policy area we’ve been concerned about for a while, because we did a report back in 2018 on access and influence in Australian politics.

And one of the findings of that earlier work was how effective the gambling industry is in influencing Australian politics. It’s punching well above its weight. And that’s a cause for concern because it suggested to us that this could be an area where policy settings were not necessarily in the public interest.

Yeah, and you can find that report, Who’s in the Room, on our website, and we’ve actually put it on the gambling report page as well, so that if you’re interested in the gambling report, you can also read through that too. So, I want to dive into this new report, and one of your main findings is that Australia has the highest per capita losses in the world.

Kat Clay: Liz, why are Australians losing so much?

Elizabeth Baldwin: Australia is an international outlier when it comes to gambling. It’s our blind spot as a country. We lose about double what residents of the United States lose and three times our New Zealand counterparts. And together, that spending by Australians adds up to about 24 billion dollars. So, we’re losing a lot every year.

And there’s two forms of gambling that account for the lion’s share of those losses. And those are pokies and betting. And the reason that we’re so concerned about those two forms of gambling is because they’re everywhere in our communities. They’re addictive forms and they’re causing clear harm. As well as for losses, Australia stands out for the pervasiveness of gambling across our community.

We have more pokies outside of casinos than virtually any other country on earth. And that increases the risk of harm because it means that people are exposed to these pokies when they’re going about their day to day lives, going to the pub to have a beer with friends or, supermarket. In fact, we found that we have more pokies scattered across our suburbs and towns than we do ATMs, post boxes, or even public toilets.

And then on top of the pokies, we face a flood of advertising across TV and radio and online platforms that continually prompts us to bet. And with the rise of online betting, we can basically gamble anywhere, anytime. Now the problem with all of this pervasiveness is that pokies and betting are not like other consumer products.

They have this potential for addiction. And we took a look at some of the science behind that. And there’s a lot of literature showing that the unpredictable size and the pattern of gambling wins and losses activates the brain’s reward system, reinforcing this behaviour. And then you put on top of that, some of the design features of these products, like the bells and whistles, the audio-visual features that they have, and the high frequency gambling.

And it creates this real potential for addiction. And then what we found is that this potential is turning into serious harm for too many people. More exposure to these harmful gambling products leads to financial stress, like more credit card debt, leads to bankruptcy, mental health problems, relationship breakdown, and even suicide in some cases.

Kat Clay: Liz, I mean, one of the pushbacks to that argument is that it’s just problem gamblers. I mean, this is limited to a small amount of people you know, who, who probably need to get some help, but it’s just a small proportion. What does the evidence show here?

Elizabeth Baldwin: That’s one of the lines the industry has been running with for decades, but it doesn’t really match up with the evidence that we found. We found that there was around about 338, 000 people in 2022 who were experiencing acute gambling harm. They meet the criteria for problem gambling.

That’s not a small number in itself, but that’s not the end of the people who are harmed by gambling. We know that gambling problems can develop quickly without a lot of warning. So, the people who might be affected by gambling harm over their lifetime is bigger than the number of people who are experiencing harm at any one point in time.

And you don’t have to be a problem gambler to experience harm from gambling. A larger number of people report some problems with gambling, like feeling guilty about gambling or betting more than they can afford to lose.

We know that about 500, 000 people have asked their bank to put a block on gambling transactions on their account. So, the gambling harm is broader than problem gambling. And then, of course, it ripples through communities. Families and friends also experience significant stress. Around 700, 000 people live with someone who is suffering serious gambling harm.

And the broader community also bears costs around crime, health care, and job losses. So we know that this gambling harm is much broader than problem gambling, but this narrative persists because it’s convenient for the industry to blame a small number of kind of problem individuals when we know that in fact it’s the systems in which gambling is taking place that is actually responsible for the harm that’s occurring.

Kat Clay: One of the charts that’s in the report, really does starkly show that pokies are more prevalent in disadvantaged communities. Does this affect disadvantaged communities more?

Elizabeth Baldwin: Our research showed that pokies are more common in disadvantaged communities, so there’s a greater degree of exposure. A higher percentage of the pubs and clubs in poorer communities have pokies, so it’s just harder to escape. And unsurprisingly then, we also found that poorer communities have higher pokies losses than more advantaged communities.

So, that exposure is clearly turning into higher rates of losses. But then we also found that even within a community, it’s the people who are doing it toughest who are most affected. So lower income people who are living close to a venue with pokies experience worse harms than higher income people.

Kat Clay: So, it’s a problem that has a lot of different layers but can compound the disadvantage people are experiencing. Thanks, Liz. I want to talk about the solutions because you’ve outlined a really strong package of solutions in this report and I think it’s, it’s important to dig into them and they also tie into a lot of the discussions that are going on in the media in government right now. Kate, what do federal and state governments need to be doing to prevent gambling harm?

Kate Griffiths: The good news in our report is really that gambling harm is actually largely preventable if governments were to step up with better regulation. So, our recommendations focused on two main areas, the first being around reducing Australians’ kind of excessive exposure to gambling. And the biggest thing that governments could do in that space is to ban gambling advertising.

It’s the recommendation, the central recommendation of the Murphy Inquiry last year was to phase it out completely. And it really makes sense because gambling ads are just everywhere. They play a big role in normalizing gambling in our society, and that’s particularly a concern when it’s normalizing it for young people.

And for those people who are already experiencing gambling harm, it just makes it harder to escape it. This is a federal responsibility. So that’s one of the biggest things the federal government could be doing to reduce gambling harm.

Kat Clay: So, I mean, you’re advocating for a full ban on gambling advertising. Why not a partial ban?

Kate Griffiths: Yeah. So, I think with a partial ban, the hope would be that it’s better than nothing. But what we have seen in the past with partial restrictions, I suppose, on gambling advertising in the past was actually that gambling ads increased. So, the problem with a partial ban is that it obviously by definition leaves gaps and advertisers will capitalize on those gaps. Whether it’s effective in reducing gambling ads in total is still to be seen. But even if it does reduce gambling ads, it’s still leaving young people exposed. It’s still leaving people who are experiencing gambling harm exposed, and then they’re the people who are most vulnerable here.

Gambling ads really don’t offer much social benefit at all, and there is a high cost. This is a fairly easy one on the evidence. We should be banning them.

Kat Clay: And the other recommendations you’ve got are around loss limits on gambling. Could you take us through that recommendation?

Kate Griffiths: So, the other big thing that governments could be doing here, state and federal, is to make the most dangerous gambling products safer.

What we recommend is a pre commitment scheme with limits that would apply statewide for pokies and nationally for online gambling. And basically, gamblers would be choosing their limits in advance before they lose track of time, you know, before you start chasing losses, or you’ve had too much to drink.

The system is there to then enforce those limits. So, if you hit your limit, you can’t keep playing until the limit refreshes. And these systems tend to work best when there’s a regulated maximum limit loss. So, for example Tasmania is rolling out a scheme like this for pokies at the moment, and it’ll have maximum limits of 100 a day, 500 a month, and 5, 000 a year to prevent people’s losses getting out of hand effectively.

So we’ve been talking about that suite of reforms, these pre commitment schemes as a seatbelt for gambling, because what it should do is it should hardly be felt when everything is going smoothly and about 95 percent of regular pokies players and regular bettors would never hit those monthly limits anyway, but the system is there to prevent serious harm when something goes wrong.

And ultimately you know, no one should be losing their house or their life on the pokies.

Kat Clay: Absolutely. I couldn’t agree more with that, Kate. Why do you think that we don’t already have these kinds of consumer protections? You know, why have governments been slow to act in this area?

Kate Griffiths: there are probably two main factors at play here. The big one is that there are some very powerful vested interests who are against reform. And then there’s also the tax revenue from gambling, which is a relatively small, but still important source of revenue for most states and territories.

Gambling taxes are worth about 9 billion to states and territories, which is about 8 percent of their total tax take. So, it’s not insignificant. But it’s also not likely to be the primary reason why governments have been slow to act because governments also bear a lot of the social cost of gambling.

The bigger factor here is, is almost certainly the influence of vested interests. We’ve seen so many past attempts to strengthen consumer protections thwarted by the gambling industry and its allies. So, gambling reform is now considered very politically risky. The industry is very active in lobbying. It throws its weight around its money around and its power lies in its ability to influence elections, right?

So that’s through political donations, big advertising campaigns. Some targeted seat campaigns going out after like outspoken critics, for example. So, when pokies reforms are on the table, we see local clubs become kind of the sympathetic face of industry obstruction. And right now, even as the government is considering this potential ban on gambling advertising.

It’s Australia’s favourite sports and free to air TV channels who are leading the resistance. So, the industry is actually quite deliberately stoking community fears here to protect itself. But having said that, all of that still does not excuse weak regulation. Governments still have a responsibility to act in the public interest, even when it’s politically challenging.

Kat Clay: Yeah, I mean, that was one of the biggest questions I had coming into reading this report was, you know, oh, but don’t we rely on the taxes garnered from pokies and things like that. But you make the very strong point is that gambling harm also has a cost. And so, I think that’s something I really took away from this work.

I want to just myth bust a couple more of those kinds of things that we hear about. The report does have a whole chapter on how to counter industry scaremongering. So, let’s just chat about some of those arguments. I mean, Liz. The question has been asked I mean, will banning gambling advertising threaten the viability of sport or free to air TV?

Elizabeth Baldwin: There’s been a lot of big numbers and scary claims floating around about what would happen to TV companies and sporting codes if gambling ads were banned.

We do know that gambling companies spent 162 million dollars on TV ads in 2022, 23. So that sounds like a big number, but we think that if gambling ads were banned in the phased way that we suggest, and that the Murphy Inquiry suggested. Both of those industries would be able to adapt and would continue to thrive.

The reason is that other advertisers would come in and fill the slots that gambling companies are currently taking. The reason that we see that lucrative revenue from gambling companies is because those advertising spots are valuable. They’re an expensive product because they’re a valuable opportunity to market to engaged sports fans and TV viewers.

And if gambling ads were banned, those spots wouldn’t fade to black, they wouldn’t be given away for free. Other advertisers would take up those opportunities. Maybe those other companies wouldn’t be willing to pay quite as much, but as a rough back of the envelope calculation, even if they were only willing to pay 80 percent of what the gambling companies paid, the loss to TV companies would be less than 1 percent of their total advertising revenue.

So, we think they should be able to adapt to that.

Kat Clay: You know, an advertising slot in the AFL or NRL grand final is certainly prime time. So, I’m sure you wouldn’t have trouble finding advertisers for those slots. One of the things that really stood out to me is that we’ve actually seen a similar thing before with the tobacco advertising reform.

Can you tell me a little bit about what happened there when tobacco ads were banned on TV?

Elizabeth Baldwin: Yeah, it was a very similar thing, Kat. We saw all these wild claims from the tobacco industry and from media companies in the lead up to cigarette advertising being banned. It was banned on broadcast media in the 1970s. And we took a look at the data from the time, and there was no dip in radio or TV broadcasters’ revenues after that.

 And then when cigarette sponsorships of sport were banned in the 1990s, same thing. There was no dip in the total sponsorship revenue, and we saw plenty of cases of other sponsors taking over the prime opportunities. So, the Winfield Cup in the Rugby League became the Optus Cup, for example, and these codes adapted and continued to thrive.

Kat Clay: The other big concern is the viability of local pubs and clubs that rely on pokies revenue and what reducing that revenue might mean for local jobs. So, can clubs and the communities around them still thrive with less pokies revenue?

Elizabeth Baldwin: They sure can! We see lots of clubs across the country providing the social benefits of community clubs without the gambling revenue. And one of the clearest cases of that is Western Australia. There are no pokies allowed outside of the casino in Western Australia, but it has about as many clubs per person as New South Wales, which has the highest prevalence of pokies in the country.

And we see that Western Australians aren’t missing out on some of the other purported benefits of clubs, either like access to sports, sport coaches or volunteering or social connections. The other argument we see from the club’s lobby often is that tighter pokies restrictions would threaten jobs in their community.

We think this is pretty misleading too. If the gambling industry declined, that money is not lost from the economy. Consumers would spend it on other things, other, hospitality venues or other parts of the pub or club.

So, we think that hospitality workers in those industries will be able to adjust, particularly if we give them time through the natural lead times for implementing regulatory changes. Hospitality jobs are already pretty high turnover. Only about 30 percent of people who were working in a hospitality club in 2016 were still employed there five years later.

And a very few people are employed in gambling specific jobs, less than 5%. So, we think that because of all of those factors clubs, employees will have plenty of time and ability to take their skills elsewhere in the sector.

Kat Clay: So, Kate, do you think governments are up for the fight? Will we see them take on these vested interests?

Kate Griffiths: I hope so. it does feel like there’s a window for reform open right now. And that’s a kind of rare opportunity here to make real progress. What I would say, though, is that ultimately, like, the most effective way for governments to, to sort of take on the vested interests would be for them to take action together across all jurisdictions because that makes it harder for the industry to go after individual politicians or parties or governments as it has done in the past.

So, I hope our governments, federal and state, step up and work together on gambling reform.

Kat Clay: Thank you so much for your time today, Liz and Kate. This is an absolute cracker of a report, and if you’d like to read it, I’ll put a link in the show notes below. But also, please do find it on our website at grattan.edu.au. We are a not-for-profit organisation. And we are fiercely independent.

We rely on donations from people like you to keep our research like this going. So do go to our website and consider donating if you can. As always, please do take care and thanks so much for listening.