Institute for Social Change News

As the debate over poker machines heats up ahead of the 2018 Tasmanian election, it is timely to look back on a paper from 2013, which highlights just how difficult it is to achieve meaningful gambling reform.

Five Political Realities of Gaming Regulation by Institute for the Study of Social Change director Professor Richard Eccleston and Felicity Gray was published by the Journal of the National Association for Gambling Studies (Australia), Vol. 25, No. 1 in May 2013.

Institute for the Study of Social Change director Professor Richard Eccleston

Abstract

Gaming regulation is a major point of contention in Australian politics. This paper analyses five key aspects of the gambling policy process in Australia. We explore the rationale that underpins plans to regulate gambling; the impact of cultural norms in promoting and implementing policy; the impact of power and interests in shaping policy; and the importance of an evidence-based approach with a focus on design and implementation. We argue that a deeper understanding of these broad influences provides a foundation for better outcomes for those negatively impacted by gambling.

Keywords: Gambling, Australian politics, gaming regulation.

Introduction

Gambling policy is a fiercely contested and emotive area of politics, and can be regarded as a microcosm of many of the challenges and dilemmas facing contemporary government. As former Productivity Commission Chairman Garry Banks (2011) argued in a recent speech in relation to gambling, ‘It is hard to think of another area of social policy where this combination of obstacles to good public policy is so marked’. These obstacles include, but are not limited to:

•  What is the legitimate role and scope of Government intervention and what form should it take?

•  How are policy ‘problems’ in the gambling arena defined and what evidence should be brought to bear in developing and promoting solutions?

•  To what extent do financial imperatives and economic interests shape the policy arena? •  How can we be certain that policy interventions achieve their desired effects?

•  To what extent do jurisdictional constraints and technological factors undermine the effectiveness of gaming regulation?

Through application of these ‘big’ political science questions to an analysis of the gaming debate in Australia, we can draw insights into the ideas, interests, and institutions that define not only what is desirable, but also what is possible in terms of gaming regulation. Indeed, history demonstrates that a pragmatic and incremental approach to policy reform is the best approach for achieving reform in contested policy arenas, because, if nothing else, ‘politics is the art of the possible’ (Bismarck, 1867).

What is the rationale for gaming regulation?

Like other British settler societies, Australia has a deeply entrenched liberal political culture (Dickerson et al, 2010). A central tenet of this philosophy is that individual liberties – be they economic or social – should be both protected and celebrated. It is argued that society will prosper if individuals are allowed to pursue their own interests and reap the rewards of their own endeavours. In its classic form, Adam Smith’s ‘night watchman state’ is designed to provide security, law, and order which are considered the legal foundations for a market economy (Smith, 1776/2011).

However, even among classic liberal scholars, this commitment to promoting economic and social freedom is limited by what has come to be known as the ‘harm principle’. As John Stuart Mill argued in On Liberty (1859), ‘The only freedom which deserves the name is that of pursuing our own good, in our own way, so long as we do not attempt to deprive others of theirs, or impede their efforts to obtain it.’ In practical terms, harm can be regarded as limiting another’s freedom or utility without their consent. Moreover, according to Mill and others, governments need to be particularly attentive in terms of protecting the young, marginalised, poorly educated, and ill from exploitation. These longstanding and overarching arguments inform most contemporary policy debates concerning social regulation, from car safety to tobacco control, to illicit drugs and everything in between.

In terms of gambling policy, it is incumbent on researchers, industry, and government to assess where gambling fits onto this spectrum and based on this assessment, make judgements about the extent to which it needs to be regulated. First, it is important to acknowledge that the majority of Australians view betting in some form as a legitimate form of entertainment (Productivity Commission, 2010), often requiring the punter to be informed and rational. For example, in an influential study by the Australian-born and now Stanford-based political scientist, Simon Jackman, it was argued that betting markets were more accurate at predicting election outcomes than large opinion polls (Jackman, 2005). He concluded that punters are informed and strategic. ABC’s Media Watch also examined this topic in relation to the use of betting odds by journalists. Program host Jonathan Holmes noted the prolific use of odds in stories as diverse as the Oscars, Grammy nominees, the election of a new Pope, and particularly in relation to the upcoming Federal election. Although Holmes (2013) noted that ‘academic studies have shown that the collective assessment of hundreds or thousands of punters has often proved a more accurate predictor than opinion polls’, he criticised their use in journalism so soon after the Federal election announcement, given that the opening odds reflect the best guess of a single expert.

However, there is a good deal of evidence that a significant minority – perhaps 80,000 to 160,000 Australians – can be classified as ‘problem gamblers’ who face adverse health, emotional, and financial impacts as a result of gambling activities (Productivity Commission, 2010). Moreover, these impacts almost certainly have negative consequences for the problem gambler’s family, community, and broader society. Such negative externalities clearly constitute a form of harm which classic liberals would argue warrants state intervention. In the words of the Australian Psychological Society (2012): 20 Eccleston & Gray While self-responsibility is important, an individual’s capacity to exercise informed choice in relation to EGMs (Electronic Gaming Machines) can become severely impaired due to the essential design features of the product. The APS (Australian Psychological Society) therefore considers a consumer protection response essential for addressing gambling harm.

Thus, it is clear in the case of gambling that some form of gaming regulation is justified as a response to this potential for harm. Therefore, the resultant question is the scope and nature of the intervention. Unfortunately, the establishment of rational frameworks for assessing the costs and benefits of gaming regulation is fraught with complexity for a number of reasons.

The impact of cultural norms

First, politics and policy are not rational, and as such, there can be no objective test as to what constitutes good public policy. It is important to recognise that policy has a deep cultural bias, in that deeply held belief systems influence both political legitimacy and the interpretation of rival claims. Often the key to successfully promoting a particular position is to ‘frame’ the policy in terms of deeply held cultural norms (Colebatch, 1999).

In the case of gaming, Australians have a long tradition of betting on everything and anything: flies crawling up a wall, two-up, and of course, horse racing. In Tasmania, the celebration of gaming has literally become an art form with professional gambler David Walsh’s gaming earnings financing the development of MONA (the Museum of Old and New Art), the state’s most de rigueur attraction. The fact that Walsh and his ‘business partners’ made their millions from gambling sends an unfortunate message to the broader community about the opportunity for success through gambling.

Accordingly, the dominant discourse within Australia is that gambling is a normal and appropriate form of entertainment and consumption. For those who would advocate tighter regulation of gambling, the twofold challenge involves: (1) Providing evidence of harm, and (2) Challenging deeply held norms concerning the legitimacy of gambling. From a policy perspective, there are strong parallels between alcohol and gaming regulation. However, the debate on alcohol regulation is decades ahead in relation to framing the policy issue in terms of its public health consequences and all of its attendant implications. One observation which gives cause for some optimism in regard to potential for success of gambling regulation is that, while gambling continues to be popular, its prevalence is not as high as for excessive alcohol consumption and especially among the educated middle class who define public opinion and limit the scope of possible government intervention.

The impact of power and interests

Another enduring theme in political science and critical policy analysis that can be applied to gambling regulation is the enduring and inevitable influence of power and interests. Despite optimism in the 1950’s and 1960’s regarding the potential to design a rational system for translating Five Political Realities of Gaming Regulation 21 community preferences into evidence-based policy programs, the majority of subsequent research has been devoted to understanding why practice deviates from this ideal type.

One prominent strand in this literature has drawn on critical sociology to improve our understanding of the nature of political power, how it is mobilised, and with what effect (Lukes, 1974/2005). Political power is a contested concept, with multiple possible definitions. One obvious dimension relates to the capacity of actors to engage in lobbying and campaigning. Subtler, yet equally important, is the ability of certain actors to control the political agenda by exerting structural power through financial dependence, expertise, or insider status. As such, the power of a particular industry sector can be enhanced through factors such as industry concentration and extent; geographical concentration of employment; specific revenue dependencies; the extent of sub-national regulation and historical depth of business-state regulatory relationships; links to the party system, and politicisation of the policy arena.

Those who advocate more rigorous gambling regulation often seek to focus on these structural and institutional elements of power held by the gaming industry. Proposed policies often seek to create a less concentrated industry, a government with less dependence on gaming taxation,2 or a greater Commonwealth role in regulation, on the basis that State governments are more vulnerable to lobbying from powerful interests. Despite this preoccupation with structural forces, perhaps the most significant barrier to gaming reform is a lack of transparency and the risk that the issue decline in prominence on the overt political agenda. Theoretically, this argument has been refined by American political scientist Pepper Culpepper in his recent book ‘Quiet Politics and Business Power’ (2011). Beyond his wonderful name, Culpepper highlights the serious point that industry power is much greater when an issue remains off the mainstream political agenda, and there is no countervailing voice from the electorate or public interest groups. To what extent this process is evident in relation to public debates concerning gambling remains unclear, especially given the considerable publicity given to industry protests against plans for the introduction of a national mandatory pre-commitment scheme on gaming machines. It appears that advocates of more rigorous gambling regulation must ensure that gambling reforms remain on the political agenda, while attempting to counter the inevitable industry campaign designed to preserve the status quo.

Member for Denison, Anti-Pokies MP Andrew Wilkie

Given this context, the Australian gambling debate is likely to be a long one. In order to sustain and promote this debate, political entrepreneurs are needed at the interface of the policy and political worlds. Independents like Nick Xenophon and Andrew Wilkie, along with the Australian Greens, have made significant contributions. The debate has also been spurred by increasingly active advocacy groups, particularly from those with a broader social welfare focus like Anglicare and Relationships Australia, as well as coalitions like the Australian Churches Gambling Taskforce. This is also evident in the recent intervention from the former NSW Auditor General Tony Harris in relation to the need to tender for the additional casino licences in Sydney when Echo’s monopoly expires in 2019. Not only did Harris’s intervention force the NSW government to justify its position in relation to granting gaming licences, it also highlighted the need to increase the scrutiny of the 2 State tax dependence on gambling revenue comprised between 4-13% of all state tax revenue. The total revenue raised from gambling by states was $5 billion in 2008–09 (10 per cent of all state tax revenue). Victoria has the highest tax dependence on gambling (13 per cent) and Western Australia has the lowest, 4 per cent. This does not include extra GST generated through these activities (Productivity Commission, 2010). 22 Eccleston & Gray close relationships that exist between the gambling industry and State governments in Australia, in order to promote competition between operators.

The importance of evidence

Once an issue is on the political agenda and there is a broad policy objective, it is then possible to develop regulations to reduce ‘problem gambling’. Such regulations will, however, only be effective if there is a good body of credible and independent evidence that can be used to design, implement, and evaluate such policies. In contested policy arenas – and gambling regulation clearly falls into this category – constant vigilance should be employed in terms of ‘sham regulations’ and/or symbolic policy responses. Policies of this nature are devised so that governments are seen to be doing something, irrespective of whether they actually achieve or address the policies goals. For example, recent research highlights the limits of self-help and other voluntary approaches to treating problem gambling (Guideline for Screening, Assessment, and Treatment of in Problem Gambling, 2011), suggesting that government and industry alike need to promote more rigorous and effective methods. While there will always be points of contention and dispute, two decades of research (two Productivity Commission reports and numerous government and parliamentary inquiries) has resulted in sufficient baseline data on which to base possible regulation in Australia. The adoption of the Canadian Problem Gambling Index (CPGI) in Australia (despite some flaws) is a solid foundation. However, as the Productivity Commission (2010) has noted, there is a need to systematically gather CPGI data in order to accurately measure the prevalence of problem gambling and determine whether interventions have been effective. Although considerable research has been conducted by states and other research agencies, it often appears to be fragmented with States having a tendency to ‘do their own thing’.

There is also uncertainty about the interventions that are most effective in reducing the prevalence of problem gambling. This question is at the forefront of the contemporary debate concerning EGM policy in Australia, where there are competing claims concerning the relative merits of mandatory pre-commitment, bet limits, and prohibition of high intensity EGMs. It is beyond the scope of this brief paper to assess the merits of these various policy interventions, but it is important to note that we do have the time to trial MPC in a thorough and independent evaluation. This evaluation also needs to consider the cost associated with implementing the new technology; all public policy should be subjected to a rough cost-benefit analysis. On this front, the Canberra Clubs’ decision to postpone their MPC trial until after the 2013 federal election is disappointing, given that a Coalition win in September will likely mean the abandonment of the trial entirely (Martin, 2013).

Although there is good deal of important psychological research on the causes of problem gambling and how to address them, I suspect that such behaviour is a complex combination of neurological, social, and economic factors which cannot easily be tested by positivist/scientific methods. What might be required is an alternative approach that is more sociological, or even anthropological. What I have in mind here are the increasingly influential ‘place-based methods’, which seeks to gain insights into individual gamblers’ understanding of their own situation and behaviours (Macintyre, Maciver, & Sooman, 1993). Its basis is in ethnography, observation, and the use of ‘lay knowledge’. To date, the place-based methods approach has delivered some notably counter-intuitive results in other areas of health promotion. This research agenda would focus on the lived experience of problem gamblers and would aim to devise a broad understanding Five Political Realities of Gaming Regulation 23 of social, economic, and environmental factors which contribute to their behaviours. Such a research agenda would further elucidate the complex causes of problem gambling.

Policy design and implementation

Unfortunately, our political process is such that we spend too much time focusing on who is governing and the decisions they make, and not enough time on how they govern, and with what effect. A greater emphasis should be placed on implementation. We might agree that problem gambling must be addressed; we might also understand its causes and how it should be tackled. However, all the best political intentions in the world (not to mention millions of dollars) will not address policy problems without a clear focus on implementation. Implementation should be front and centre of policy design. We need to focus on solutions for which we have the expertise, capacity, and resources to implement.

The ‘big picture’ is that both State and Federal governments face an increasingly complex array of implementation challenges that will limit the effectiveness of policy interventions. This is particularly the case in terms of the very real jurisdictional limits that exist in terms of government intervention. One reason for these challenges is Australia’s Federal system, combined with the fact that gaming regulation and licensing has been a state responsibility. What we are seeing and are likely to see more frequently if the experience in other policy areas is a guide is the Commonwealth using its coercive powers to drive national reforms.

A second and perhaps less obvious implementation challenge concerns the increasingly transnational nature of gambling and the regulatory challenges associated with on-line gaming. From our experience in other regulatory areas such as international taxation (Eccleston, 2012), there is a real risk that well-intentioned harm minimisation strategies could lead to increased demand for on-line gaming. Although this outcome is not inevitable, harm minimisation strategies need to be monitored very carefully. Despite the possible threat from on-line gaming, we can take some comfort from the fact that both the Australian gaming industry and advocates of enhanced gambling regulation have a common interest in terms of minimising access to offshore and on-line gaming. Such a campaign might involve monitoring, education, exploring possible technological barriers, among other soft measures. Hopefully it will not involve the need for diplomacy.

Conclusion

In Australia, our capacity to establish effective policy responses to gambling are constrained by the diminishing reform capacity of the Australian political system, and the often timid approach of the major political parties. Clearly the need to address ‘problem gambling’ has gained traction over the last two decades, initially from public health and welfare experts, and more recently being highlighted on the overt political agenda. Unfortunately, these developments have not resulted in tangible regulatory outcomes or assistance for those suffering as a result of problem gambling.

Politics is a chaotic contest between ideas, values, and interests; mediated by institutions and the political actors of the day. This contest is particularly witnessed in the policy arena, where gambling policy is frequently debated. As a result of these characteristics, policy change will be slow and incremental because few politicians are bold enough to propose and implement effective reforms. One potential strategy for reform is to focus on regulatory issues where there is 24 Eccleston & Gray some consensus between advocates and the industry; governments are inevitably more willing to act if there is broad coalition for reform. One area discussed in this paper where such a consensus may exist is in relation to the development of strategies to limit the impact of offshore on-line gaming on the Australian community. In the absence of effective political leadership, it is up to researchers, advocates, and industry to work collaboratively to identify other common ground areas that can drive policy change.

References

Australian Psychological Society Public Interest Team. (2012). Gambling-related harm: A Position Statement prepared for the Australian Psychological Society. Available at http://www.psychology.org.au/Assets/ Files/APS-Gambling-Related-Harm-Position-Statement.pdf.

Banks, G. (2011). Presentation to South Australian Centre for Economic Studies, Corporate Seminar, Adelaide, 30 March 2011.

Bismarck, remark, 11 August 1867.

Colebatch, H. (1999). Policy. Birkshire: McGraw Hill.

Culpepper, P. (2011). Quiet Politics and Business Power: Corporate Control in Europe and Japan., Cambridge: Cambridge University Press.

Dickerson, M., Flanagan, T., & O’Neill, B. (2010). An Introduction to Government and Politics: A Conceptual Approach (8th Ed.), Ontario: Nelson Education.

Eccleston, R. (2012). The Dynamics of Global Economic Governance: The Financial Crisis, The OECD and the Politics of International Tax Regulation. Cheltenham: Edward Elgar.

Holmes, J. (2013) Media Watch, Australian Broadcasting Corporation, 25 February 2013. Available at http:// www.abc.net.au/mediawatch/transcripts/s3698012.htm.

Jackman, S. (2005). Pooling the Polls Over an Election Campaign. Australian Journal of Political Science, 40, 499-517.

Lukes, S. (2005). Power: A Radical View. London: Palgrave Macmillan (first published 1974).

Macintyre, S., Maciver, S., & Sooman, A. (1993). Area, class and health: should we be focusing on places or people? Journal of Social Policy, 22, 213-34.

Martin, L. (2013) ‘Pokies ACT precommitment trial sunk’, Sydney Morning Herald, 21 February 2013. Available at http://news.smh.com.au/breaking-news-national/pokies-act-precommitment-trial-sunk20130221-2eu9t.html.

Mill, J. S. (1869). On Liberty. London: Longman, Roberts & Green. (first published 1859). Productivity Commission (2010). Gambling, Report no. 50, Canberra. Available at http://www.pc.gov.au/ projects/inquiry/gambling-2009/report (2010).

Smith, A. (2011). Wealth of Nations. Raleigh: Hayes Barton Press. (first published 1776).