Policy making social responsibility and the gambling industry
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Policy making, social responsibility and the gambling industry Professor Jan McMillen Director Australian Institute for Gambling Research University of Western Sydney Background themes Canada & Australia: common principles

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Policy making, social responsibility and the gambling industry

Professor Jan McMillen


Australian Institute for Gambling Research

University of Western Sydney

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Background themes industry

  • Canada & Australia: common principles

    • Federal systems, state/provincial authority over gambling, varied approaches

    • Historical nexus between gambling legalisation & charitable/welfare funding

    • Strong emphasis on regulation, social issues

  • Differences

    • Australian gambling legalised since 19th century

    • Primarily government-run, prohibition on private ownership until 1970-80s

    • Privatisation, commercialisation introduced market imperatives, problem gambling (machines, casinos)

    • 2000-1 per capital loss $942, almost 4% HDI

    • 80-85% gamble regularly, 2.1% have problems

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Regulatory rationale industry

  • The traditional role of government to regulate

    • Commercial gambling as a privilege, not a right

    • Control over market entry, probity of operators

    • Crime prevention, consumer protection

  • To generate revenue

    • replacing illegal activities that incur policing costs

    • revenue for welfare, public infrastructure

    • increasing leisure and recreation facilities

    • job creation (= ‘illusory” – PC 1999)

  • To mediate social costs

    • perception that gambling is a questionable activity

    • problem gambling, social harm

  • Emerging challenges to national sovereignty

    • Global telecommunications technology as the catalyst for change

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Factors that influence gambling policy industry

  • The economic power of industry

    • Revenue imperative, ‘invisible’ form of taxation

    • Inter-regional rivalry

      • leakage of gambling expenditure

      • investment opportunities

    • Special treatment for some industries

    • Growth is supply driven (not consumer demand)

  • Policy learning

    • learning from other jurisdictions

    • from past policy failures

    • from research, community backlash

  • Relevant policy instruments, mechanisms

    • choice of policy options/design, convenient policy process

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The Gambling Regulatory Cycle industry

1. Regulatory liberalisation

3. Community concern, industry pressure, information can lead to regulatory reform

2. Proliferation of gambling

& impacts

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What works: lessons from Oz industry

  • Casinos:

    • Control over market entry, regional monopolies

    • Licensing & regulation of gaming staff

    • On-site 24 hr government inspectorate

    • Parallel surveillance systems, override on CCTV

    • Police squads, undercover, ban on criminals

    • Auditing of cash transactions

  • Gaming machines (clubs, hotels):

    • Venue licences, restricted to certain venue types

    • Licensing of key staff

    • Centralised monitoring systems, auditing

  • What doesn’t:

    • Proliferation of gaming machines

    • Wagering & sportsbetting:

      • inferior regulatory standards, fragmented, inconsistent

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Lessons from Australia (cont’d) industry

  • Crime prevention

    • Deterrence, detection, sanctions

    • Proactive policing at minimal public cost

      • Internal casino/venue crime

        • hidden ownership

        • theft, counterfeiting

        • cheating (card counting)

      • Community crime

        • Crime displacement

        • Problem gambling related crimes = inadequate data

      • Money laundering

        • Star City scandal, regulatory reforms

  • Prosecution, enforcement

    • Patrons, staff

      • Criminal prosecution, licence withdrawal automatic

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Crime prevention (cont’d) industry

  • Licence withdrawal rarely used against venues

    • but publication of breaches, sanctions

  • Problem gambling crimes

    • tendency of the courts is to impose jail sentence

    • problem gambling is accepted in rare cases as ‘mitigating circumstances’, leniency in sentencing

    • mandatory counselling not successful

  • Liability for problem gambling

    • Tendency has been to find individual liability eg

      • the Katoomba-Reynolds, Lane Cove cases

      • the O’Malley’s case

      • the Star City case

  • Self-regulation, commercial approach is deficient

    • evidence of social costs/problems from PC’s national inquiry, state research

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  • Problem gambling – regulatory reforms industry

    • Gaming machines = major source of problems

      • 10-14% of regular machine gamblers have problems

      • 2.1% gamblers generate 33% of total gambling revenue

      • NSW: 104,000 machines in clubs & hotels

        • 2.55% = highest national prevalence of problem gambling

      • Western Australia: no machines outside Perth casino

        • 0.70% = lowest national prevalence of problem gambling

    • Restrictions on consumer access

    • Away from shopping centres

    • ‘Cap’ number of machines (venue, region, state)

    • CIS requirements – demonstrate community benefit

    • Consumer information, signage, brochures

    • Controls over advertising and promotion

      • No external advertising, not to focus on ‘winning’, etc

    • Controlling the gaming environment

      • Lighting, ATMs, gaming not to dominate venue, multiple facilities

    • Controlling game features and design

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Internet gambling - regulatory issues industry

  • Legislative and regulatory inconsistencies between states/territories

    • inadequacies of regulation, loopholes

    • detection, control of illegal activities

  • Integrity of the games & consumer protection

    • who sets the standards? are they enforceable?

  • Social impacts (eg underage gambling, problem gambling)

  • Is prohibition a viable option?

    • Commonwealth response: prohibition of gaming, proliferation of wagering/sportsbetting

    • who will enforce a ban?

    • limitations of national sovereignty, state laws

  • Disputes with USA & other nations are likely over sportsbetting/wagering

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Developments in the UK industry

  • Principle of ‘non-stimulation’, restricted markets until 1990s

    • Privately owned National Lottery introduced commercial industry practices, uneven playing field

    • Internet bookmakers moved offshore to tax havens

  • Gaming Review 2001 (Budd Report)

    • proposes major liberalisation of gambling

      • introduction of gaming machines

    • in theory, growth is to be balanced by responsible gambling policies

    • Regulatory regimes not defined

    • Currently subject to industry lobbying

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The way forward industry

  • Avoid policy lag

    • policy learning - be proactive, not reactive

    • avoid trend to devolve initiative to industry

  • A coordinated policy using all regulatory resources

    • review of legislation, range of regulatory options

  • Needs a ‘whole of industry’ approach, consistency (not ad hoc, incrementalism)

  • Collaboration, policy input by community groups , local authorities

    • consultation re licensing criteria

    • more specific regulations, application of appropriate sanctions

    • clarify offences & liability

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Blueprint for gambling regulation industry

  • Separate structure of institutions involved

  • Allocation of roles and functions: who should do it? How should it be done?

    • policy development by parliament

    • control of all gambling by independent regulator

    • enforcement separate from policy & control

    • adjudication shared by control authority & courts

    • fund administration by independent trust, board

  • Defined,accountable processes for implementation and enforcement

  • Avoid conflicting principles & objectives

  • Open, consultative & informed processes

  • The guiding principle = the broader public interest