SA-Best, led by high-profile former senator Nick Xenophon, has announced its gambling policy ahead of next month’s South Australian election. Xenophon has backed away from the “no pokies” policy that characterised his earlier approach to gambling reform. However, the evidence behind his party’s proposed suite of measures is reasonably strong.
What’s in the policy?
Key aspects of SA-Best’s proposal are:
a five-year plan to cut poker machines numbers in South Australia from 12,100 to 8,100;
- a reduction in maximum bets to A$1, from the current $5;
- a reduction in maximum prizes from $10,000 to $500;
- removing particularly addictive features such as “losses disguised as wins”;
- prohibition of political donations from gambling businesses; and
- the removal of EFTPOS facilities from gambling venues.
The policy would also empower the state’s Independent Gambling Authority to implement and evaluate these proposals.
The policy is targeted at commercial hotel operators; clubs, “community hotels” and the casino are exempt from the reduction provisions.
There are also proposals to cut trading hours from 18 to 16 per day, with the introduction of a seven-year pokie licence for venues, from January 1, 2019. Increased resources would go to counselling and support for those with gambling problems.
Notably absent from the policy is the introduction of a pre-commitmentsystem, which would enable pokie users to decide in advance how much they want to spend. Along with $1 maximum bets, this was a key recommendation of a Productivity Commission inquiry in 2010.
The policy has attracted the expected response from the gambling industry. The Australian Hotels Association argued the changes would “rip the guts” out of the gambling industry and attack the “26,000 jobs” it claims the industry directly creates.
Does evidence support SA Best’s policies?
We’ve known for some time that reducing maximum bets is likely to reduce the amount wagered by people experiencing severe gambling problems. This in turn reduces the harm they suffer.
Reducing maximum prizes reduces “volatility”, meaning pokies may have more consistent loss rates.
Reducing access to pokies is also an important intervention, since easy access is a key risk factor for developing a gambling problem. Reducing the number of machines, and the hours they are accessible, support this.
However, very substantial cuts in pokie numbers are needed to meaningfully reduce harm. A cut of the magnitude SA-Best proposes may not be sufficient to prevent those with serious gambling habits from readily accessing pokies. This is because pokies are rarely fully utilised at all times of the week.
Removing easy access to cash has also been identified as an important harm-reduction intervention. This had a positive initial effect in Victoria (especially among high-risk gamblers), when ATMs were removed from pokie venues in 2012.
The harms associated with gambling generally affect far more peoplethan just the gambler. The most recent study, from 2012 indicates that 0.6% of the SA adult population is classified as at high risk of gambling harm, 2.5% are classified as at moderate risk, and another 7.1% at low risk.
Based on census data, this equates to about 8,000 South Australians experiencing severe harm from gambling. Another 33,100 are experiencing significant harm, and about 94,000 are experiencing some harm.
However, each high-risk gambler affects six others; each moderate-risk gambler affects three others; and each low-risk gambler one other. So, the problems of each high-risk gambler affect another 47,660 South Australians. These are children, spouses, other relatives, friends, employers, the general community via the costs of crime, and so on.
Another 99,300 are affected by moderate-risk gambling, and another 94,000 by low-risk gambling. All up, this amounts to 241,000 people.
Of these, 190,000 are affected at high or significant levels. These harms include financial disaster and bankruptcy, divorce or separation, neglect of children, intimate partner violence and other violent crime, crimes against property, mental and physical ill-health, and in some cases, suicide.
Most gambling problems (around 75%) are related to pokies, and by far the greatest expenditure goes through them. Nothing has changed in this regard since the Productivity Commission identified this in 2010.
In this context, SA-Best’s policy has substantial justification.
Does it go far enough?
The South Australian Greens, like their counterparts in Tasmania and the Tasmanian Labor Party, want to get all pokies out of pubs and clubs. They argue gambling’s social and economic costs are far in excess of the benefits.
For Tasmania, the costs of gambling can be estimated at about $342 million per year. This is more than three times as much as the total tax take from all gambling in the state.
A similar calculation for South Australia suggests its overall costs of problem gambling are more than $1.6 billion per year. This is more than four times the total taxes from gambling the South Australian government derived in 2015-16 ($380.3 million).
With a cost-benefit ratio like that, some strong measures could well be called for. Xenophon says the proposals encapsulated in his party’s policy are the start. However, Tasmanian Labor has set the new benchmark for pokie regulation – removing them entirely from pubs and clubs.
It is remarkable that a party traditionally in lockstep with – and substantially supported by – the gambling industry has adopted such a position. Perhaps the harms have become too much to ignore?
How these policies might be implemented, amid the resistance they will face from a well-heeled and often-influential gambling industry, presents an intriguing prospect over coming months.
Sportingbet returns in Australia
The Stars Group’s recently acquired majority share in CrownBet appears to have set in train the return to Australia of the famous and respected Sportingbet brand.
Sportingbet was one of the country’s leading online sportsbooks before being shut down in 2013 following its acquisition by William Hill, however the name looks certain to be rejuvenated by CrownBet CEO Matthew Tripp, whose father Alan once owned the Sportingbet brand. Matthew Tripp subsequently launched the similarly named Sportsbet in 2005 before selling the company to Irish betting giant Paddy Power in 2011.
The Stars Group acquired a 62% stake in CrownBet Holdings in February, and increased its stake to 80% in April. It has also acquired William Hill Australia.
After completing the CrownBet acquisition, The Stars Group chief executive Rafi Ashkenazi said: “We are excited to enter the regulated Australian sportsbook market with CrownBet.
“CrownBet has become one of the fastest growing online sportsbooks in Australia through its strong management team, proprietary technology, mobile app, unique partnerships and market-leading loyalty programme.”
TopBetta to acquire DynamicOdds
TopBetta Holdings Ltd. (TBH), a betting company based in Australia, is going to buy DynamicOdds Pty. Ltd., data feed and bookmaker comparison website, also based in Australia, as part of its plans for global expansion.
TBH informed the Australian Securities Exchange on Thursday that it entered into “a binding, conditional heads of agreement” to acquire 100 percent shares of DynamicOdds and the associated licensing owned by C.D.K. Limited.
DynamicOdds offers an odds comparison, as well as a subscription service that allows users to place bets with bookmakers.
According to the agreement, TBH must issue to Dynamic IT Group Pty. Ltd. 10 million unquoted options on the bookmaker’s shares, pegged at AUD0.20 (US$0.15) per option within two years from the date of issue.
On completion, TBH must pay AUD1.5 million (US$1.13 million) to DynamicOdds shareholders in consideration for the acquisition of the platform’s shares and AUD1 million ($755,600.9) to C.D.K. for asset purchase.
TBH will also have to pay C.D.K another A$7.5 million ($5.67 million) or issue shares with the same value. Should the Australian-listed firm fail to discharge C.D.K. balance within 12 months of completion, TBH must transfer the DynamicOdds shares and the assets back to the latter’s shareholders.
CEO Todd Buckingham said the acquisition provides a huge opportunity to expand TopBetta‘s business into other verticals via partnerships with sporting and racing bodies globally, noting that the acquisition of DynamicOdds “is the perfect complementary business to continue with our company’s growth.”
DynamicOdds CEO David Begg said the acquisition would provide opportunities within racing and sports markets, not only in Australia but also in the UK and the United States.
“Since its inception, DynamicOdds has established itself as an integral part of the Australian wagering landscape at both retail and commercial levels,” Begg said in a statement.
TBH’s total revenue hit AUD6.9 million ($5.5 million) in the October to December 2017 period, a 401 per cent increase from AUD1.377 million ($1.1 million) in the same period a year earlier.
The Australian bookmaker attributed the revenue jump to the growth of Alderney-based subsidiary The Global Tote (Tote), and a positive quarterly period for its Australia-based retail platform.
New South Wales to adopt a 10 per cent tax regime on online gambling
The Australian state of New South Wales has decided to enforce a 10 per cent tax rate on gross gaming revenue (GGR) on online betting. This is somewhat more than the 8 per cent tax in Victoria. The government has faced the pressure of from local gambling group Tabcorp who lobbied for 15 per cent point-of-consumption tax on online betting – like the tax regime that was introduced in South Australia, Western Australia and Queensland. But the New South Wales government has withstood the pressure to introduce a more balanced tax regime of its own.
All the operators will get a tax-free threshold of A$1 million a year.
State Treasurer Dominic Perrottet revealed Tuesday that the tax will be formalised on all online sports bets within the state when the state budget is finalised next week, and will commence from January 1 next year. Observers say that the Treasurer will shortly announce that a substantial portion of the p.o.c. tax harvest is earmarked for the state racing, thoroughbreds, harness and greyhounds industry.
NSW hopes to raise about A$100 million from the tax. The government was lobbied on the tax proposal by online companies, who argue that the 15 per cent rate is based on the British p.o.c. tax model which does not take into account the fact that the betting operators in Australia already pay GST, payroll tax and product fees…and TAB has an exclusivity arrangement in relation to on-the-ground betting.
“The introduction of a point of consumption tax is an important step to ensure that we are levelling the playing field given the wagering tax paid by on-site (retail) operators,” Perrottet said in a statement.
“Following an extensive consultation period with stakeholders, this decision will resolve the disconnect between the jurisdiction where gambling activity occurs and where it is taxed. We also want to make sure that the racing industry is no worse off under these changes, which is why we have taken steps to ensure that they receive fair compensation and that existing parity arrangements are unchanged.”
“We think 10 percent strikes the right balance and that online corporate bookmakers should contribute their fair share,” Perrottet said. “However, a 15 per cent additional tax on top of GST and race field fees would be an excessive burden on players in the market. We will review our 10 percent rate in 18 months and also keep a close watch on how other states progress with their POCT.”
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