Is democratic gambling reform possible?

Jan McMillen, Auckland University of Technology

Peter J. Adams, Gambling, Freedom and Democrac, London & New York, Routledge, 2008 (226 pp). ISBN 13 9-78041595-762-5 (hard cover) RRP $171.00.

Australians have had the government-sanctioned ‘freedom to gamble’ in a variety of forms since European settlement, in contrast to moralistic and restrictive regimes in Britain and the United States (McMillen, O’Hara, Woolley 1999). A large majority of Australians gamble, with ‘pokies’ (electronic gaming machines [EGMs]), casino games and racing most popular. Australians reportedly have the highest level of per capita expenditure (loss) on legal gambling in the world (over $1,122.73 per adult in 2005–06). In 2005–06 total expenditure exceeded $17.5 billion (Office of Economic and Statistical Research 2008).

Gambling is an entrenched feature of Australia’s popular culture; it also is a thriving and profitable industry which makes significant contributions to state government revenues. Until the 1980s most forms of legalised gambling in Australia were government-run for the explicit purpose of raising funds for welfare programs (for example, lotteries) or to control illegal gambling (for example, TABs). Tattersall’s privately-owned lottery was the exception. In marked contrast to earlier preference for public ownership, however, since the 1980s all forms of Australian gambling have been progressively privatised and now operate as commercial organisations. Further, only Western Australia’s Lotterywest has continues to directly fund community programs; lottery taxes in other states go to consolidated revenue.

Although Australian community attitudes are generally supportive of legalised gambling, permissive attitudes co-exist with concerns about public morality and social welfare in debates over gambling policy. Public legitimacy and confidence in state authority is essential for an effective gambling regime. Democratic governments have a primary duty to ensure that legalised gambling operates for public benefit and to protect communities from gambling-related harm. Governments also have a responsibility to respond to public concerns and to foster public scrutiny of the factors that influence their decisions. If the community has reason to doubt the capacity of government to regulate in the public interest, or to question the integrity of policy-makers, government and industry run the risk of public protest and a legitimation crisis.

Social costs and the potential for democratic reform

In the last decade, the legitimacy of gambling regulation has been challenged in four major gambling nations. A congruence of factors—including increased affluence, commercialisation of the gambling industry modelled on US corporations, and revenue pressures on governments during the lingering global recession of the 1980s—had resulted in rapid expansion of commercial gambling in the 1980s and 1990s (particularly casinos and EGMs), while simultaneously producing increased problem gambling and creating new social welfare problems (McMillen 1996). New technological forms of gambling such as internet and interactive betting had emerged as major areas of potential growth, facilitating cross-border gambling.

Gambling is an entrenched feature of Australia’s popular culture.

In Australia, mounting evidence of social problems from EGM gambling in particular had eroded public confidence in governments and the industry, mobilising a vocal public backlash. As state governments continued to delay protective action, a sustained media campaign and organised community protests provoked the federal government to commission a national inquiry into Australia’s gambling industries (Productivity Commission 1999). Similarly, community concerns about commercial gambling in the United States, the United Kingdom and New Zealand also prompted national reviews of gaming policy that have resulted in regulatory reforms (Markland 2002; McMillen 2002; Miers 2004).

The inquiries identified common policy failures in all four countries. They found lack of a clearly defined and consistent rationale for government policies, which were driven mainly by fiscal problems, revenue dependency, and pressure from industry groups. There had been limited community consultation in policy processes. The inquiries also identified close relationships between rapid industry growth and the social costs experienced by individuals and communities. Mutual co-operation between the commercial gambling industry and governments to expand the market, and their shared emphasis on economic priorities (profits, gambling revenue), had resulted in adverse social impacts, especially problem gambling. Social inequalities and uneven regional development were associated with regressive tax impacts. On the other hand, the inquiries found little evidence of economic benefits, such as employment growth and increased tourism, to the community as a whole.

Peter Adams takes up these issues in his book, Gambling, Freedom and Democracy. As he states at the outset, however, ‘this is no ordinary book about gambling’. With few concessions to objectivity, Adams acknowledges in the preface that he is motivated by ‘strong emotions’ arising from his ‘first hand exposures’ to policy processes in New Zealand over an extended period. Based on his experience as both academic and public advocate, he makes a strong and sometimes passionate argument that the very nature of ‘high level’ commercialised gambling presents a threat to social systems and the foundations of democracy.

Adams equates the rapid expansion of commercial gambling to other extractive industries that involve ‘exploitation of primary resources’. In his view, EGMs ‘have done for gambling what the chainsaw did for forestry’ (p. 6) in that large-scale commercialisation has the potential to undermine both the economy and society. He also argues that contemporary gambling also threatens political systems in three ways: through government-industry alliances to promote gambling despite public opposition; through the collective global influence of the gambling industry; and by engaging ‘more and more people in a web of benefits and privileges that … progressively compromises their ability to openly question the way gambling is being provided’ (pp. 16–17).

Peter Adam’s argument that these core features of commercial gambling can subtly erode democratic processes and thus degrade the political system is the central theme of his book and his main contribution to debates about contemporary gambling. He argues that commercial gambling has compromised four key elements of democracy—‘awareness, transparency, independence, and responsibility’ (p. 149). He raises important questions that often are overlooked in gambling research: notably, relationships between three ‘communities of interest’ (governments, industry, and local interests such as the media) and their effects on political processes and outcomes. Adams argues that these ‘main players [are] more interested in how to achieve increased revenue while minimizing potential political opposition’ (p. x). For example, he claims the threatened collapse of a New Zealand advocacy group in 2002 was the consequence of pressure from this ‘alliance’.

Evidence of social problems from gambling eroded public confidence.

Adams is pessimistic about the capacity of independent research or community groups to counteract the power of industry. By the time commercial gambling is well established ‘public health advocates have little chance of introducing significant changes’ (p. 11). Governments become complicit in a ‘normalisation’ process (pp. 25–41) associated with ‘subtle degradation’ of democratic participation (pp. 16–17).

Many Australian researchers, policy advisers and welfare providers will identify with the ethical risks, ‘moral jeopardy’, role conflicts and funding dependency described by Adams, and share his frustration at the power of the gambling industry to block, manipulate or dilute policy reform. They will also relate to Adams’ argument that commercial gambling has become so pervasive and central to community life that it has changed Australian society in subtle but powerful ways. EGM revenues have financed extensive club and hotel refurbishment with new facilities that attract patrons from other businesses and activities. ‘Community benefit’ payments to local organisations, sports groups and counselling services also bind them to the gambling operators while other groups struggle to survive. His typology of the ‘helping professionals’ and ways they can be marginalised from democratic processes is particularly revealing (pp. 125–145).

Government agencies and their staff also risk compromising ‘their duty to protect the integrity of government systems and protect the interests of the public’ (p. 41). To provide government agencies with a basis for future action, Adams offers constructive guidelines to encourage independence and ethical conduct (pp. 147–165). However, although he refers to ‘the emergent global networks of the gambling industry’ (p. 16), he neglects the difficulties governments confront in regulating internet and cross-border gambling (McMillen 2000).

Recent reforms and trends in Australia

Many of Adams arguments are powerful. However, he does not seem to be well-informed about the overall situation in Australia, especially the diversity and scope of reform since the 1999 Productivity Commission inquiry. Regrettably, his analysis has relied on a few Australian sources which support his negative view of events over the past decade. A more balanced and well-researched examination of policy reforms and outcomes would tell a more complex story.

Evidence from Australia and New Zealand suggests there are reasons to be cautiously optimistic about gambling reform. Many (but not all) of the issues raised in Adams’ book have been addressed to some extent in recent policies. The 2001 New Zealand Gaming Review and the Productivity Commission inquiry are testimony that such inquiries can be an effective and democratic channel for community concerns and a counterbalance to industry influence. The aftermath of those inquiries also demonstrates the potential capacity for governments and political processes to reinstate the public interest as a policy priority. Drawing mainly on my own research experience, I have summarised some recent trends to illustrate this point.

The Productivity Commission inquiry was an important watershed in the political history of Australian gambling, precipitating a wave of policy reform. The Commission’s research highlighted the contradictory tendencies associated with rapid industry growth and commercialisation, and the social costs experienced by individuals and the community. Significantly, as well as government and industry representatives, the Commission consulted widely with community groups and counselling agencies. Their evidence had a significant bearing on the inquiry’s outcome.

There are reasons to be cautiously optimistic about gambling reform.

The Commission found that many claimed benefits of industry growth were ‘illusory’ and offset by social costs. EGMs were identified as the major source of social problems. Governments and industry were caught off guard by the inquiry’s findings, but could not ignore them. It was clear that a more restricted and regulated industry was required to achieve the social and integrity objectives of gambling policy.

Subsequent policy reforms have put greater emphasis on evidence-based analysis. Governments have commissioned strategic research into problem gambling and socio-economic impacts to facilitate and inform policy development. Academic interest in gambling research also has increased. As Adams notes, there are real hazards in research partnerships with government or the gambling industry; the risks of ‘capture’ and loss of credibility are acute. Yet collaborative research need not be inevitably tainted or compromised, as he implies. Collaborative partnerships with (rather than for) government and industry are essential for effective and informed policy development. If we are to better understand Australian gambling and its impacts co-operative efforts by government, industry, researchers and community groups are essential (McMillen 2005). With necessary safeguards (for example, public accountability and independent peer review), such partnerships can have important benefits for all groups involved and for the community as a whole.

Adams also argues that gambling research has shifted from ‘high inconvenience to low inconvenience topics’ less critical of government and industry (p. 119). However, although research programs since 1999 have had shortcomings, several commissioned studies have ‘inconvenienced’ governments and informed major policy reforms that contradict industry interests (McMillen, Murphy & Marshall 2004a; McMillen & Pitt 2005; McMillen & Doran 2006; Livingstone & Woolley 2007).

For example, contrasting with Peter Adam’s view of problem gambling as an individual addiction or mental health pathology, all Australian jurisdictions have now accepted a national definition conceived more broadly in terms of ‘adverse consequences’ experienced by ‘at risk’ gamblers, families and vulnerable communities (Neal et al. 2005). In effect, problem gambling is seen as a complex public health issue requiring a multifaceted, epidemiological approach involving fundamental changes to policy and industry practices, as captured in Figure 1 (McMillen 2007).

Figure 1
Epidemiological framework for problem gambling

Source: Productivity Commission 1999, p. 6.23.

Redefining the problem has meant reconsidering policy solutions. Australian governments have accepted harm minimisation and ‘responsible gambling’ as central policy principles, as Adams recommends, and introduced a range of harm minimisation strategies (Council of Australian Governments 2008). Significantly, while gamblers are held to be responsible for their own actions, the onus is on government and industry to minimise the potential harm and create a safe gambling environment. As a result, responsible gambling policies have been extended beyond consumer protection measures to include detailed regulation of industry operations, venue features and location, etcetera.

For example, codes of practice have been implemented to govern industry practices; limitations have been placed on 24-hour gaming in pubs and clubs; all states and territories except Western Australia have placed restrictions on advertising related to EGMs; gambling related inducements are banned in New South Wales, the Northern Territory and South Australia; there are compulsory bans on smoking in gaming areas in all states and territories; ATMs are not permitted in gaming areas and daily limits have been placed on ATM withdrawals in many states. Victoria will remove ATMs from gambling venues in 2010 and mandate changes to all EGMs that enable gamblers to preset their betting limits.

Not all gambling providers have been willing to embrace reform.

In response to evidence suggesting an association between problem gambling and the numbers of gaming machines in a community, several states (Queensland, New South Wales, the Northern Territory) also have introduced measures to regulate the numbers and location of EGMs, including regulated caps on gaming machine numbers and impact assessments for venues seeking new or additional machines. The Victorian Government has developed a regional caps policy to protect areas of socio-economic vulnerability; and the SA Government legislated for a staged reduction in the number of gaming machines operating in that state.

In the main, action by governments or direct regulatory intervention was required before all operators accepted that changes to past practices were necessary. Some gambling providers, such as lotteries, have been more willing to embrace harm minimisation strategies but others have resisted reform. Industry representatives often articulate the rhetoric of responsible gambling while simultaneously seeking to achieve regulations conducive to profitable markets. Others continue to demand ‘scientific’ evidence to support policy change, or they distort research evidence to play down any adverse findings.

Governments and industry also are being held accountable for decisions about gambling as never before. One important change in some states has been the establishment of ongoing mechanisms for consultation between community groups, governments and industry. This trend towards more consultative policy processes has enlisted non-state actors in gambling governance. In Queensland, for instance, a comprehensive harm minimisation program was developed by a collaborative ‘partnership’ between industry, government and the community (Office of Liquor and Gaming n.d). This strategy, which is supported by legislation and includes an industry code of practice, is designed to give community groups a permanent mechanism for active input to policy development and research, as well as to achieve a high level of industry commitment and compliance. Similarly, the Victorian Government has enlisted community groups and local councils in the reform process, responding to and harnessing their interests to advance policy objectives (Office of Racing and Gaming 2006; McMillen & Wright 2008). Adams is sceptical of such initiatives (pp. 120–123), a stance that would deny community groups a formalised and sustained opportunity to influence gambling policy. He makes a salient point, however, about unequal power relationships and the capacity for government and industry to marginalise dissent and co-opt community representatives into a process that is directed primarily by their interests. In that regard, Adams provides useful self-assessment guidelines for community agencies to reduce the risk of ‘moral jeopardy’ (pp. 176–180).

Another recent achievement in the process of Australian gambling reform has been progress towards a co-ordinated national approach to research and policy change. Some analysts, including myself, have long argued for national co-ordination of Australian gambling regulation to remedy inconsistencies and policy failures, and to establish uniform standards of consumer protection for all Australians, regardless of where they live. A number of interstate Working Parties have been established to share information on issues such as responsible gambling. Importantly, this process of ‘policy learning’ has been achieved by increased consultation between states and territories, with limited involvement by the federal government.

Potential co-operation between the federal and state levels of government after 1999 suffered a serious setback when the federal government legislated unilaterally in 2001 to restrict development of internet gambling services licenced by the states (McMillen 2003). In 1999 the Australian internet gambling industry was a global leader. Race betting, lottery sales, casino games, and sports betting were all provided by licenced internet providers. Although the Productivity Commission had grave concerns about the potential for problem gambling and underage gambling, it rejected prohibition as an impractical solution. The Commission recommended ‘managed liberalisation within a nationally agreed framework’ (Productivity Commission 1999, p. 18.57). State and territory regulators began to work together to develop an agreed policy to regulate the industry, including a range of harm minimisation measures. However, in December 2000 the Commonwealth intervened, imposing a legislated moratorium on new internet gambling licences while it investigated the policy options, including the possibility of prohibition. After a Senate inquiry and lengthy and heated debate, the Interactive Gambling Act 2001 was passed by the Commonwealth Parliament, effectively banning Australian providers of internet casino-style gambling (McMillen 2003). However, the Act does not apply to internet gambling services for races, sports and lotteries, which have continued to proliferate.

The deep political tensions between levels of government that emerged over that issue were exacerbated by persistent Commonwealth attacks on state gambling policies. Efforts to achieve uniform national regulation of ATMs also faltered when the Commonwealth refused to use its powers over financial institutions to assist the states.

Gambling accessibility and problem gambling prevalence vary from state to state.

Consequently, the establishment of Gambling Research Australia (GRA) in 2004 and its research program was recognition by both levels of government that a more consistent approach to gambling policy was required. In contrast to state-based research programs, GRA involves collaboration between the Commonwealth and all states and territories to commission national research to inform policy development (see, for example, McDonnell Phillips Pty Ltd 2005).

Current issues and cautions

Typical of federal systems of government, however, policy environments continue to vary from state to state. To some extent Australia has been an experimental laboratory for policy reform. For example, harm minimisation strategies have not been applied evenly across all jurisdictions (Council of Australian Governments 2008). The share of taxation revenue derived from gambling also varies considerably by jurisdiction, due to widely different tax rates and variation in the availability and popularity of gambling products, as well as the relative strength and diversity of the overall state economies, as Table 1 shows. In New South Wales, for example, gambling taxes comprise 32 per cent of the national total and are directly linked to higher EGM numbers and expenditure in that state. Even so, EGM tax rates in New South Wales are lower than elsewhere (for example, South Australia, Queensland and Victoria), the result of determined opposition by the club sector (McMillen & Wright 2008).

Table 1
Gambling Taxes as Share of Total State Tax Revenues, estimates 2007–08
State/Territory Gambling Tax
Revenues* $m
Total Tax
Revenues $m
Gambling as % of
Total Tax Revenuesª
NSW 1,609 17,562 9.16
VIC 1,530 11,589 13.20
QLD 868 9,272 9.36
SA 405 3,243 12.49
WA 145 5,527 2.62
TAS 89 752 11.84
ACT 51 924 5.52
NT 68 439 15.49

Source: Percentages are based on estimates in NSW Budget Paper No. 2,
Victorian Budget Paper No. 4, Queensland Budget Paper No. 2, South Australian
Budget Paper No. 3, West Australian Budget Paper No. 3, Tasmanian Budget Paper
No. 1, ACT Budget Paper No. 3, Northern Territory Budget Paper No. 2, 2006–07.
*Tax includes licence fees and charges.

Gambling accessibility and problem gambling prevalence also vary from state to state, as Table 2 shows. At the level of local communities, evidence suggests that gambling behaviour, policy impacts, community harm and wellbeing vary from one locality to another. For example, while convenient access to gambling is known to influence participation, direct links between venue location and problem gambling are less certain. Available evidence suggests that although some patrons gamble at venues close to home (Marshall & Baker 2002; McMillen et al. 2004b), many people travel long distances to gamble. Venues in central locations (at transport hubs where many people work, shop and seek entertainment) attract patrons from wide areas (Marshall et al. 2004; McMillen & Doran 2006). Recent research suggests that policies based on simple measures such as reducing machine numbers are not likely to reduce gambling-related harm in vulnerable communities (McMillen & Doran 2006; Delfabbro 2008).

Table 2
Availability of casino and machine gaming, per capita expenditure,
prevalence of gambling problems and harm: by Australian states and territories
Casinos No. EGMs
in casinos*
No. EGMs in
clubs & hotels
per adult $
SOGS 5+ %
High risk***
NSW 1 1,500 98,808 1,336.22 2.55 1.96 0.80 1.60
VIC 1 2,500 27,124 1,133.88 2.14 2.05 0.97 0.91
NT 2 714 985 1,918.38** 1.89 1.24 0.64 n/a
QLD 4 3,473 39,484 1,003.64 1.88 1.79 0.83
WA 1 1,318 0 520.73 0.70 1.50 n/a n/a
SA 1 850 14,062 922.37 a 1.44 1.20 0.40
TAS 2 1,158 2,289 814.45** 0.44 0.12 n/a n/a
ACT 1 0 5,144 998.18 2.06 1.32 n/a n/a
Australia 13 11,513 187,896 1,097.47 2.07 1.80 n/a n/a

Source: Australian Gaming Council 2007; Productivity Commission 1999;
Queensland Government Treasury 2008.
SOGS = South Oaks Gambling Screen
HARM = A self assessed indicator of significant adverse impacts on the life of the gambler.
CPIG = Canadian Problem Gambling Index
* Note that racing, sports betting, lotteries, keno, football pools, interactive
gambling and charitable gambling are also available in all jurisdictions.
** NT expenditure figures are inflated by expenditure by overseas
internet gamblers; Tasmanian figures are incomplete.
*** The CPGI was adopted as the national prevalence screen in 2004; however only Queensland
has used the CPGI in two surveys (2001 and 2003–04). Prevalence findings may not be
directly comparable due to different methodologies, survey years, the wide variety of
types and availability of gambling, different policy contexts, etcetera.

Yet there have been identifiable changes in Australian gambling behaviour since 1999, although it is not known if this is a direct result of policy reform. Per capita spending on Australian gambling has flattened; and gambling expenditure as a proportion of household discretionary income has declined from 3.16 per cent in 1999–2000 to 2.93 per cent in 2005–06. Overall growth in gambling tax revenues has slowed, and real tax revenue from gambling has declined in several jurisdictions (Banks 2007; Office of Statistical Research 2007; Australian Gaming Council 2008).

Despite extensive policy change, it is not clear if reforms have effectively addressed the problems identified in the national inquiry. Research tends to be state-based and inconsistent, preventing comparative analysis. Independent evaluation of programs has begun in only a few states (for example, Queensland, Victoria, South Australia and the Australian Capital Territory) where it is too soon to reach any firm conclusions (Thomas, Jackson & Thomasen. 2002; Breen, Buultjens & Hing 2005; McMillen & Pitt 2005; McMillen & Doran 2006; Martin & Moskos 2007; Delfabbro 2008). Lack of reliable baseline data and the reluctance of industry to co-operate with research also are major obstacles to understanding policy effects (McMillen, Marshall & Murphy 2004a; Livingstone & Woolley 2008). Consequently there is little evidence to indicate whether responsible gambling policies have achieved their main objectives (reduction in problem gambling and community harm), or which harm minimisation strategies are effective in reducing gambling problems and which are not.

While a small number of state governments (such as Queensland, South Australia and Victoria) have been proactively monitoring policy impacts, other governments (such as New South Wales and the Northern Territory) have ‘muddled through’ with ad hoc, incremental responses to problems as they arise. Such reactive crisis management rarely grapples with the fundamental source of problems and exposes decisions to interest group pressure and conflict. Policy decisions in those circumstances tend to be politicised compromises, rather than substantive reforms guided by clearly articulated principles and rationales.

Australians continue to be concerned about the effects of commercial gambling.

These were important questions for the Productivity Commission’s 1999 inquiry. Despite the achievements of the past few years, there is plenty of evidence that Australians continue to be concerned about the effects of commercial gambling (McMillen et al. 2004b; McMillen, Murphy & Marshall 2004a). Most recently, there have been protests about online betting agencies offering ‘free bets’ to induce gamblers (Christiansen 2009) and political donations by the club industry (‘Simplest solution is to scrap poker machines’ 2009). Australians also have objected to sports sponsorship and advertising during televised cricket matches by betting operators such as Betfair (Peter FitzSimons 2009; ‘Outcry over Betfair cricket ads’ 2008).

Periodic reviews by the Chair of the Productivity Commission have called for more interventionist regulation over industry practices and EGMs (Banks 2002, 2007). Researchers also continue to identify unacceptable levels of problem gambling, policy deficiencies and flaws (McMillen, Murphy & Marshall 2004a; McMillen & Pitt 2005; Livingstone & Woolley 2008). Furthermore, existing restrictions and standards are not always enforced (Independent Pricing and Regulatory Tribunal 1998, 2004).

Election of the Rudd national government in November 2007 has again placed gambling policy on the national political agenda. In contrast to the federal government’s unilateral intervention a decade earlier, under the banner of ‘new federalism’ the Council of Australian Governments has established a second inquiry by the Productivity Commission (PC) to examine the current situation; the Commission’s report is due in November 2009 (Productivity Commission 2008). Moreover, changes to the composition of the Senate in July 2008 have shifted the balance of power to minority parties and independents advocating gambling reform, further ensuring that the momentum for reform is maintained (Senate Committee on Community Affairs 2008). In combination, these factors provide an unprecedented opportunity for nationally consistent and democratic gambling reform.

Undoubtedly, some governments with fiscal problems and entrenched links to industry groups will be more resistant to change than progressive states. The current economic crisis is impacting on the revenues and responsibilities of all Australian governments and thus will have a bearing on the way they respond to the current PC inquiry. State and territory governments also will be wary of federal intervention, especially after their experience with the 2001 internet gambling legislation.

Industry groups, on the other hand, appear better prepared and more strategic than in 1999, and so are likely to argue their case more strongly and coherently than before. Operators such as Tattersall’s and Tabcorp have expanded their businesses since 1999 and now operate a variety of gambling forms in several states (Tabcorp, for example, operates EGMs, casinos and betting agencies). And federated bodies have been formed to represent industry interests at a national level (including ClubsAustralia, the Australian Hotels Association and the Australian Gaming Council).

Community groups are still fragmented and lack equivalent resources, but their collective submissions can be equally important if they maintain an essential distinction between mere opinion and evidence-based advocacy. The challenge is to draw on objective evidence to develop and propose practical intervention strategies that are likely to be effective and have a realistic chance of being implemented. As occurred with the 1999 PC inquiry, public participation and debate, supported by good information—the core elements of democratic policy-making—could drive governments and industry further than they might otherwise be inclined to go.


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Jan McMillen is Adjunct Professor at the Auckland University of Technology. Her research interests include the analysis of gambling impacts, policy and regulation. She has held professorial appointments at the Australian Institute for Gambling Research (University of Western Sydney) and Centre of Gambling Research (Australian National University). She also has been a regulator appointed to two independent Gaming Commissions (19902003).