Bookmakers warn of “tough times ahead” as regulators crack down on Australian gambling

Australia has the world’s largest gambling spend per head. The Melbourne Cup celebrations cause bookies to warn that party could soon be over as political pressure mounts.

Australia hosted its 157th Melbourne Cup on Tuesday, and parties following the prestigious race event stretched into the early hours – particularly from those of the Emerald Isle. Irish runner Rekindling galloped past the post and claimed the victory, with the nation claiming the top three finishers.

One lucky punter scooping AU$1 million ($767,000 USD) in a TAB promotion and another pulling $151,255 ($115,000USD) from a $50 trifecta wager.

But while punters and the race industry celebrate long into the night, bookmakers have warned that the party could be over for the nation’s betting industry.

Gambling faces a significant backlash from lobbyists and politicians, who are concerned that having the world’s largest gambling spend is also creating the world’s largest gambling problem.

Huge gaming market sparks fears over player safety

Australia has a relatively small population and a well-established betting scene, but it is not as lucrative a market for operators as Las Vegas, Macau or Singapore. However, the AU$23 billion (US$17 billion) market sees the highest spend per person per year, with the average annual loss hitting US$990 in 2016.

A Household, Income and Labour Dynamics survey in August revealed that there are 200,000 problem gamblers in Australia, while figures from the Australian Gambling Statistics Bureau show a spend of $1,241.86 per adult per year.

This is a sharp 7.7% increase on figures from 2014-15, suggesting that gambling spend is rising fast.

While increased spend is usually good for business, bookmakers and casino operators face a backlash from anti-gambling lobbyists who feel there is too little regulation in the gaming industry. To appease campaigners and lessen the general public’s fears, politicians and regulators are trying to crack down on the gambling industry with new taxes and laws.

Bookmakers warn of hard times ahead

The two key measures introduced to curb problem gambling rates are changes to advertising rules and a new point of consumption tax, applied to net wagering revenues and gambling losses at a rate of 15% in South Australia this summer, with other states set to follow.

Bookmakers have warned that the tax could severely reduce profits and could even make operating within the nation an impossibility in the future.

The Financial Times reports that foreign operators William Hill, Bet365 and Ladbrokes have posted losses since they entered the Australian market, while native operator Sportsbet says a nationwide roll-out of the consumption tax could cost the company half of its pre-tax profits.

“There are tough times ahead… This is an earthquake – a seismic event for the industry,” warned Sportsbet CEO Cormac Barry.

Barry’s comments come as another major change takes effect. Advertising laws in Canberra will be changed to prohibit sports bet advertising on television during matches, and before 8.30pm.

Rules may also be introduced which prohibit the promotion of free bets, deposit bonuses and other rewards for players who sign up.

If the laws have an impact, they could be rolled out nationwide – which would severely limit the reach of gambling advertisers and cut them off from their key audience: sports fans.

Calls for pokie reform go unheard

While anti-gambling campaigners will be pleased that advertising laws are changing to limit vulnerable people’s exposure to them, the changes don’t go far enough for some.

Critics say that the biggest danger to players is not the sports bet industry, but the poker machines which are found in clubs and casinos all over the country.

Similar to the UK’s recent ruling on fixed odds betting terminal stakes, campaigners want maximum pokie stakes reduced to AU$1 per person.

The recent Household, Income and Labour Dynamics in Australia survey found that spend is significantly higher on poker and pokie machines than on sports or race betting – as is the average loss. If Australia wants to make an impact on its problem gambling rates without harming its valuable betting industry, it might need to address the national love of pokies before targeting sports bets.