Gambling decisions so weak and so craven that your head will spin

After a few weeks off from writing my weekly note to subscribers, I’m back with an update on the pitiful status of gambling reform in NSW, and the events that have been playing out behind the scenes.

Just when you thought our state’s addiction to poker machines couldn’t get any worse, the NSW government has outdone itself with a series of decisions so weak and so craven that your head will spin.

NSW is home to half of all gaming machines operating in Australia.Credit: Jason South

The people making these decisions would very much prefer if you didn’t know anything about them. That’s because what they have been up to is nothing short of embarrassing.

I understand that some readers may be sick of me carping on about poker machine reform. But the issue is so serious, and getting such little attention elsewhere, that I feel compelled to keep you in the loop. And when the Herald spent much of 2022 and 2023 campaigning for change to the sector, we promised to stay on the case; our team is determined to deliver on that commitment.

So what has been going on? The short version is that money always wins. The longer version encompasses several developments.

The first involves a recent NSW auditor-general’s report that found our state is home to half of all gaming machines operating in Australia. As the Herald’s Harriet Alexander wrote recently, the number of machines has fallen by 13,758 since news laws in 2001, which equates to an average of 598 a year. “At this rate, it will take more than 55 years for NSW to reach parity with the national average for gaming machines per 1000 adults,” the report found.

Even more damning was the auditor-general’s finding that the government’s strategy for regulating our 87,749 machines “is not based on a clear understanding of current levels of gambling harm”, and that the government “does not set any targets for reducing harm associated with gaming machines”.

The report also ridiculed the so-called “responsible conduct of gambling” training that all staff who work in venues with poker machines must undertake. The scheme was savaged in a 2020 review as having little positive impact on harm prevention or reduction, and was rewritten in 2023. But in a sign of how the industry and government are way too close, the new training course materials were partly funded by the powerful lobby group ClubsNSW and Bankstown Sports Club – the venue with the largest number of pokies in the state. Cosy!

Unsurprisingly, the audit office found that the 2023 rewrite has been a massive fail: “The revised course content does not encourage venue staff to proactively address potentially harmful gambling behaviour,” it said.

A serious government would respond to this report in serious terms. But not the Minns Labor government. Instead, just days after the damning report was released, Gaming and Racing Minister David Harris launched a crackdown on the Independent Liquor and Gaming Authority, ordering the regulator not to prioritise harm minimisation above the “balanced development” of the industry.

Gaming and Racing Minister David Harris ordered the Independent Liquor and Gaming Authority not to prioritise harm minimisation above the “balanced development” of the industry.Credit: Kate Geraghty

Why did he do this? Good old-fashioned revenge, and a bit of media pressure. Days before his directive, ILGA chair Caroline Lamb was recorded telling an event that the gaming industry had “no social licence to rape and pillage the community”. It was hardly a controversial statement. But The Daily Telegraph got wind of her comments and was in a lather, so Harris felt the need to look and sound tough.

It’s not just pathetic stuff – it is decision-making that runs completely contrary to expert advice.

But that is just the first alarming development. The second arrived via recently released budget forecasts that show revenue from gambling will hit $2.6 billion this financial year and surge to more than $3 billion by 2028. That’s hardly the result you would see in a state that wants to reduce the amount of money being shovelled into the machines.

To misquote astronaut Jack Swigert: Houston, we have a problem. But mission control – aka the government – has no solution.

For a time, though, it was working on one. Buried in last year’s papers was the revelation that a few dozen casino-style clubs received nearly $500 million in gambling tax concessions. In total, NSW residents forewent $964 million in taxes in the 2023-24 financial year as a result of the gambling concession granted to clubs, and are expected to miss out on just over $1 billion this financial year.

Clubs do not pay any tax on annual gambling profits under $1 million, whereas hotels start paying tax when their profits hit $200,000. The maximum tax rate for clubs is 28.4 per cent on gambling profits over $20 million, while hotels pay 50 per cent on gambling profits over $5 million. In short, the mini casinos preying on the most vulnerable in Sydney’s suburbs are paying bugger all tax.

Treasurer Daniel Mookhey and senior Treasury officials resolved last year to do something about it. But as the Herald wrote in June, the government decided over recent months that while it liked the idea of clawing back some budget revenue, it did not want to open up a fight with the powerful clubs lobby. A very reliable contact told me that senior industry officials are cock-a-hoop about the backdown, telling anyone who will listen that their closed-door lobbying effort to kill tax reform has been a wild success. Meanwhile, the much-needed rollout of cashless gaming has all the momentum of a tortoise.

These are disturbing glimpses into how gambling and government works in NSW. The likelihood of serious reform from this cabal is about as strong as the odds of a broke and desperate gambling addict winning big on the pokies: zero.

Thanks for reading, and for your support. Have a great weekend.

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