Policy making, social responsibility and the gambling industry

1
Policy making, social responsibility and the
gambling industry

• Professor Jan McMillen
• Director
• Australian Institute for Gambling Research
• University of Western Sydney

2
Background themes

• 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

3
Regulatory rationale

• 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

4
Factors that influence gambling policy

• 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

5
The Gambling Regulatory Cycle

• 1. Regulatory liberalisation

3. Community concern, industry pressure,
information can lead to regulatory reform
2. Proliferation of gambling impacts
6
What works lessons from Oz

• 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 doesnt
• Proliferation of gaming machines
• Wagering sportsbetting
• inferior regulatory standards, fragmented,
  inconsistent

7
Lessons from Australia (contd)

• 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

8
Crime prevention (contd)

• 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 OMalleys case
• the Star City case
• Self-regulation, commercial approach is deficient
• evidence of social costs/problems from PCs
  national inquiry, state research

9

• Problem gambling regulatory reforms
• 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

10
Internet gambling - regulatory issues

• 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

11
Developments in the UK

• 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

12
The way forward

• 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

13
Blueprint for gambling regulation

• 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