Poker Machine Reform.

Policy-on-the-Run Clinic

An occasional column to assist the APS develop policies to tackle wicked problems while on the run

Poker Machine Reform.

This is an excellent topic for On-the-run, as most APS officers will be unable to locate the section of the Constitution that says that poker machine policy is the responsibility of the Commonwealth, or may have been confused as to their involvement given that State Governments are the ones who actually license these wicked problematic machines. So having been caught on the hop, they can now solve the problem on the run.

But first some history: 2012 marks the bicentenary of the “Luddite” uprisings in the English midlands when the working population physically attacked the wicked machines that were causing their misfortune and the sudden decline in their living standards. Families were becoming impoverished and destitute as the cotton and wool mills adopted revolutionary technology that offering ten-fold (or more) increases in productivity. It was simply unfortunate timing that concurrently English trade in finished cloth (that for 50 odd years had been enriching the country) now suddenly declined (or unravelled) as a result of the war with France under Napoleon, and the great boost to productivity could not translate into great increases in exports, and continued employment in the cloth-making industries. Maintenance of jobs in one sector of the economy was under risk, and England came close to social, not industrial, revolution.

So the first solution to our current concerns could be to mount raids on premises that house poker machines, hold the managers hostage while the machines are systematically smashed (if that’s not an oxymoron) and then retreat in an orderly manner much as the Luddites did 200 years ago. But as we now know, it was not a successful strategy then and poor Ned Ludd has been consigned to history, pretty much like English manufacturing itself.

So let’s work more on the source of the current concerns. Of itself, there is nothing morally or socially wrong with a number of private citizens forming a group (let’s call it a club) within which the means is provided for the members to tax themselves (let’s call it a throughput tax) and distribute the gains as they see fit. If the members realise that in fact most of the tax is being collected from just a few of their members, and this was seen as some form of moral quandary (exploiting one’s friends for one’s own benefit might cover that), then they could simply ask these offenders to their morality to leave the club.

But we live in a democracy in the 21st century, so people have rights. Those excluded individuals could reasonably claim they are being victimised and discriminated against and the Government should protect their ability to ruin themselves. After all, one of the key functions of a modern state is to ensure stupidity, weakness or self harm not be a barrier to security in life. Individuals now have expectations to be protected from the predations of themselves as well as others.

And here is the problem – governments are now involved. The State governments know a good thing, and so they decided to add their own throughput tax on the throughput tax the clubs levy on their members, and in so doing made gambling on poker machines a right. And, don’t be surprised, the problem now concerning our society is construed in terms of rights, individual freedoms, and how the state can legitimately and best curtail those rights and freedoms in those cases where there is manifest harm to the individual and family. This should not be a problem, as in many cases the law does exactly that – it curtails actions that are a threat to the person or others in society. The difficulty lies with the possible turning-off of the flow of funds into State government coffers, and the threat to the employment base in recreation industries (shades of 1812).

Mandatory pre-commitment is seen as the solution. This involves an individual having to decide how much of their earnings and wealth they are willing to give the State Government and fellow club members (or casino licensees) before they hand it over. A better case of voluntary taxation could not be found! Clearly, to its supporters, this solution of having someone deciding up front by how much they will impoverish themself and enrich others removes any moral obligation not to allow that in the first place. And as it is also seen as a satisfactory solution by the State Government and club members (or casino licensees) it clearly has little prospect of reducing the flow of funds so derived.

But we do not have mandatory pre commitment at the race courses of the country, or in the lottery offices in the suburbs. Is this because it’s impossible to wreak havoc on wellbeing in these places, or is it because poker machines have something special about them? Of course they do, and they are wonderful at extracting money by their carefully calculated payout rate, size of payouts and the interval between “wins”. They are a trap, and that’s why they cause problems to individuals, and outrage to others. Just like the machines of early 1800’s in Britain, they are better at their job of enriching their owners.

Well if the machines are “better” than the alternatives, and smashing them is unlikely to succeed, how about changing the operations of the machines so they have a less detrimental impact on individuals – that at least might square with some moral compass of our time in more than a tokenistic way. Just like the resolution of all disputes around implementing technological improvements, from 1800s onwards, it comes down to determining a fair sharing of the benefits. At present, pokies take 13% of players’ investment which, from the players’ side, looks a tad unfair. But if pokies paid back closer to 100%, there would be little possible social impact to those addicted to their playing - it would simply be too time consuming to lose great slabs of money if the machine nearly always gave it back to you. This approach would maintain the employment base in clubs, but would not provide a cross subsidy to other activities in the club (or the State) in which the addicted pokie player would have little time to participate in in any case. Those who enjoyed the other facilities or benefits of the club (or State) would have to pay the full going price – shock horror! And in arguing that not letting players take home nearly all that they arrived with puts those proponents of clearly exploitative behaviour on the back foot. So over the next 12 years, in 1% increments, let us require States and clubs to stop subsidising their preferred indulgences with funds from those who cannot forgo the pokies. Let us adjust our sharing of benefits and woes in a more sophisticated manner than was evident in 1812 England.

Bill Burmester
Professorial Fellow
ANZSOG Institute for Governance
University of Canberra