The election promise NSW Labor doesn’t want to talk about

Michael Foggo surveyed the gambling experts who assembled at the NSW government’s Martin Place offices for their inaugural meeting with a bravado that only a man who had reached the summit of the public service could muster.

Ranging from gambling prohibitionists to those whose livelihoods depended on poker machine profits, the experts had been selected to advise a trial of cashless gaming that was a key election commitment by the new Premier Chris Minns.

Foggo, tasked with chairing the panel, could see it would be impossible to please them all.

So he began by drawing their attention to the term of reference that stated it was up to his three-person executive committee to make the final recommendations.

Experienced bureaucrat Michael Foggo was tasked with chairing the panel.Credit: AAP

“Now, I would like that to be a consensus view,” he said. “But what will happen is we will all set out our views, and if we can’t reach consensus on an area, we [the executive committee] will make recommendations.”

It was the high watermark of goodwill. They closed the doors behind them.

Eighteen months after that initial meeting, far from a consensus, the chasm of opinions on cashless gaming is as wide as ever, and the government is sitting on a writhing problem.

The central recommendation of the executive committee for mandatory cashless gambling in pubs and clubs motivated the powerful NSW Australian Hospitality Association to step out of the shadows for the first time in more than a decade. Describing the research that underpinned the recommendation as “embarrassing and not credible”, the lobby group is showing every sign that it will pull down the house before acceding to any such measure. ClubsNSW has issued dire warnings of mass job losses and venue closures.

There are an estimated 87,000 suburban poker machines in NSW.Credit: Getty Images/iStockphoto

Meanwhile, a call by the Greens for documents related to the panel’s work has resulted in fewer than 11 per cent of the available papers being released, fuelling suspicions that the government intends to protect certain interests.

Gaming Minister David Harris will say only that the government intends to respond “in due course”.

The concept of a trial was Minns’s answer to his predecessor Dominic Perrottet’s crazy-brave pledge to make cashless gambling mandatory, a policy prompted by the NSW Crime Commission’s finding that billions of dollars in dirty money was being ploughed through the state’s 87,000 suburban poker machines, but equally aimed at reducing gambling harm in the community.

Perrottet’s policy was lauded by harm minimisation advocates but deeply unpopular in the hospitality industry, which did not want to lose the market segment that prefers to gamble in cash. It was not a battle Minns wanted to fight, and for 18 blissful months, the trial removed it from the political agenda.

Now he faces a decision that has cost other leaders their careers.

But in August 2023, when the doors closed behind the gambling reform panel, good faith was in high supply. The industry was broadly supportive of cashless gambling in principle, so long as punters still had the option to gamble with hard currency. People aged between 18 and 24, who are leading the charge towards a cashless economy, represent the biggest demographic of poker machine players. A cashless option makes business sense.

The panel had been asked to consider what infrastructure would be required, the impact on industry, the impact on money laundering and gambling harm and what other options might be pursued.

Nick McGhie, a former gambler who sat on the panel to give the perspective of a person with experience of gambling harm, was pleasantly surprised by the accord among panel members.

“One of my reservations about being involved was that personally it’s very emotionally taxing, but what I saw was a real respect and genuine commitment to understand the issue and come up with a pragmatic solution,” McGhie said.

“It didn’t get nasty. It was all very amicable and respectful.”

But it was quickly apparent that the trial would not be capable of measuring the impact of cashless gambling on gambling harm unless it was compulsory, or the target market would simply choose not to become involved.

This had been observed in Victoria, which since 2015 has offered players the option of a digital payment scheme that requires them to commit in advance to how much they wish to spend. A four-year evaluation of YourPlay found gamblers who took part found it beneficial, but participation rates were extremely low. The cards were used in fewer than 1 per cent of gambling sessions.

The panel considered and quickly discarded the idea of mandating carded play in a particular geographic area. Gamblers could simply take their business elsewhere, potentially prompting venues to seek compensation. It was also difficult to encourage gamblers to take part without offering incentives, which was legally problematic.

Conducting a cost analysis proved equally fraught. “What are we hoping to do here?” an industry representative of the panel ventured in one of the early sessions. “We can’t identify what the costs are until we know what the system will be.”

That objective was put aside as well. The executive committee resolved instead to focus on the feasibility and acceptance of the technology while gaining insights into what infrastructure would be needed and what costs might be incurred.

Not that the panel was short of work. As the new government worked its head around the gambling landscape, it continued to outsource its curliest problems to the panel. The scope of the panel was widened to consider late-night trading, facial recognition and self-exclusion, while the trial became merely an element of its work.

After the panel’s fourth meeting, NSW AHA chief executive John Whelan fired off a terse email to the team. Foggo had sought the panel’s feedback on several gambling reform measures including gaming machine trading hours and reducing the cash input limit. Whelan thought the focus should be on using facial recognition to exclude people with gambling problems. He did not agree either of these measures should be considered at all.

Liquor and Gaming was already looking at trading hours, he said. And it was his understanding that the cash input limit would be reduced only on new machines. “The advice we have been given is that retrofitting existing machines will be extremely expensive,” he said. “This should not be a priority, particularly when the Crime Commission found there was no evidence of widespread money laundering in pubs and clubs.”

In fact, the Crime Commission found there was little evidence that criminals were using poker machines to clean their money but plenty of evidence that they were feeding the machines with dirty cash. However, financial crime was only cursorily considered by the panel and not at all by the social research group running the trial.

Though the advisers remained courteous to one another, there was an uneasiness in all quarters that the panel was moving in the wrong direction. The very premise of its work was in contention.

It was not as simple as industry versus harm minimisation advocates. Whelan’s attempts to steer the panel away from consideration of cash input limits and towards facial recognition exposed nuances between the positions of hotels and clubs. The NSW AHA has long advocated facial recognition as an alternative to cashless gambling because the latter would require patrons to provide identity documents, and pubs do not want to lose the segment of their market that wants to gamble anonymously. Pokie players gamble far more intensively in pubs than they do in clubs.

Club patrons already have to show identification papers to sign in to venues, and clubs do not believe they have a significant problem with money laundering. They are more concerned about losing non-tech savvy customers and are opposed to facial recognition technology on privacy and cybersecurity grounds.

However, by mid-2024, a new problem was emerging. The mail from 3Arc, the social research company running the cashless gambling trial, was that recruitment was alarmingly slow. The government had made much of the fact that many more venues had signed on than had been participated. But pokie players hated it.

“People were saying, ‘There’s no way I’m giving my driver’s licence, there’s no way I’m putting that app on my phone, there’s no way I will do that, this is a conspiracy by the government’,” said one panel member who was not authorised to speak publicly. “They were worried about Big Brother; they were worried about privacy. The concern was very strongly held and genuine.”

In July 2024, the researchers emailed the panel the results of an interview they had held with Dooleys Catholic Club.

“Venue stated only 2 true sign-ups (others were industry related) and of the 2, 1 dropped out as their online bank account was blocked after signing up, felt it was too technical and initially set their limit too low,” the researcher reported. “The venue noted initially sign-ups were taking 30–40 mins, but it is now closer to 10-15 mins as venue staff are more familiar with the process.”

It was also difficult to promote the trial. NSW Liquor and Gaming NSW, which was cracking down on gambling inducements and in the midst of a prosecution against an online bookmaker, took a conservative approach to the marketing material. One early poster design that included the wording “Why am I being invited?” was deemed an advertisement because it alluded to an invitation. Another that asked, “How would my participation be beneficial?” was kiboshed because it suggested there were benefits to gambling.

3Arc switched tack and sought approval from the panel to interview patrons who were not involved in the trial to probe the barriers to signing up. But it soon faced another setback when Aristocrat, which was among several gambling machine manufacturers trialling their cashless technology, pulled out of the trial, which meant all the venues using their product also had to withdraw – nearly half of the original 27 venues.

By the end of the trial, just 14 genuine participants were actively using the technology across all venues.

Then it was up to the executive panel to deliver its report to the government. Panel members were given two weeks to give their own feedback on the recommendations before the report was sent off. When they saw what the executive panel had recommended – that the NSW government implement a mandatory digital gambling system by 2028 – they erupted.

What evidence did the committee have to make such a recommendation, industry members asked, when mandatory cashless gambling had not been trialled, and the trial that did take place was based on the experience of just 14 participants?

Foggo reasoned that the low participation rate partially justified the technology being mandated. “Patrons are reluctant to engage with this technology when it is not mandated,” his report found. “Furthermore ... there is little commercial incentive for venues and providers to adopt account-based gaming without it being eventually mandated.”

The panel’s recommendations drew on 218 additional papers and reports, including previous trials of cashless technology and the NSW Crime Commission’s 2022 report into money laundering that came to the same conclusion.

Whelan wrote a scorching response on behalf of the AHA. “The research findings of the cashless gaming trial are embarrassing and not credible,” he submitted. The executive had not considered the infrastructure required or the impact on industry before making its recommendations. The trial of cashless gambling relied on interviews with just two patrons.

The secretariat sought to redact the panel members’ submissions. The panel members insisted they be made public and escalated the dispute to the department. When the government released the report on December 3, the panel members’ feedback was included in full.

It was a striking change in strategy for the NSW AHA, which allowed ClubsNSW to take the public lead in opposing Perrottet’s gambling policies leading up to the election, and reminiscent of the public campaign it led against Julia Gillard’s attempts to introduce a similar technology in 2010.

It now lies in the government’s lap. Gaming Minister David Harris declined to speculate on when the government might be in a position to respond to the report.

“The 30 recommendations contained in the 530-page road map … flag significant complexities, and it is important the NSW government takes its time to work through them,” his spokesman said. “The government will respond in due course.”

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