Gambling

Dear Dan,

It has come to my attention, even out here in the Australian bush, that certain of your politicians are considering state-sanctioned gambling as a preferred alternative to direct taxation. I would like to relate our history and experience with this practice, and to offer a few well-chosen and considered words of advice.

In short:
DON'T DO IT!!
DON'T ALLOW IT!!
FIGHT IT ALL THE WAY!!

I've seen politicians get sucked into this one. The result is bad: it's a one-way street and a steep slope down. Once you do anything, you can't reverse it; and it's all too easy to take another step, and another ....

We have a fair history of gambling: it's been observed that Australians will bet on two flies on a wall, if nothing else is available. Horse-racing, harness-racing, greyhound racing, on-course bookmakers, and "automatic totalisators" (you and DrK would call them pari-mutuel) are very much a part of our culture.

The state I live in (New South Wales) has had state-run lotteries for many decades (hey, that's how we paid for the Sydney Opera House). In fact, that was the start of the greasy slope. The raffles, chocolate wheels, and bingo nights that local charities ran, grew up. "Yes, gambling is bad, but we need money for a special purpose (hospitals, Opera House, etc.) and this way we get it without putting up taxes - some people are going to gamble anyway, this way it goes to a worthy purpose, anyone who doesn't like it doesn't have to take part, and if you still want to give money - hey there are charities you can give to directly - who could object?"

Alcohol is also a big part of Australian culture: our first hospital was financed by taxes on rum imports. We've always had licenced hotels ("public houses" or pubs) where you can get a drink or two - dozen. A system of registered local clubs grew up in parallel to this - golf, lawn bowls, returned servicemen, Catholic, workingmen's, etc. - places where people would, or could, get together with others of like interests, and spend a few hours. Of course, alcohol was going to be consumed, so they got special licenses; but they had to return any profits into the local community. However, they were still doing it tough, so - purely coincidentally, during a time when the premier of New South Wales was corrupt, taking regular payoffs from illegal gambling and other interests, the clubs were allowed to install "poker machines" (slot machines) (licence fees to the government; purchase price to the manufacturers, who might have had an interest in ensuring that the government let the local clubs find this added means of ensuring financial viability). This introduced real, but limited, problems for people who might have been inclined to become problem gamblers. Limited, because the clubs were local, they were returning the money to the local community, and they did (generally) have the interests of their members at heart. If the committees of management didn't do the right thing, they might not have been re-elected.

Well: I mentioned racing, and I mentioned illegal gambling. Apart from a small number of illegal casinos, there was an enormous illegal off-course bookmaking industry. When the government changed, the new one decided that they were never going to control off-course bookmakers by laws alone - too much money to buy off police piecemeal if not politicians wholemeal.

Did someone say "Much money"? The government promptly went into competition with the off-course bookmakers. They set up a state-wide (and this is a BIG state) totalisator (pari-mutuel), with Totalisator Agency Board (TAB) outlets in every community of any size. At the same time, they massively increased the penalties for illegal bookmaking. Thirty years ago, as far as computers and communication networks went, this was exciting stuff - you needed guaranteed up-times, bandwidth and response times as everyone tried to get on just before "they jumped", far in excess of what banks required. And it HAD to work - if it lost credibility, then the punters would just go back to their friendly local bookmaker nursing a small beer at the corner of the bar.

OK, we're well on track now. The government's dependent on gambling money; directly involved in going out and getting it; and would rather get more of it than have to justify introducing new taxes, or increasing old ones.

A neighbouring state had been doing something slightly different - a weekly Lotto competion instead of a lottery - guess the first six numbers to be drawn out of a barrel, and throw in a couple of "supplementary" numbers for lesser divisions of prizes. The United Kingdom's football pools wanted in, so the government licensed them for a substantial fee; then introduced their own Lotto, then rang a few changes: now we have a different Lotto variant drawn every week night. Entries in these and the lotteries are sold by every local newsagency (an agent for the newspapers - often called a "paper shop") - a hybrid newstand and stationer.

The government wanted more immediate access to more punters, so they introduced ClubTAB and PubTAB agencies, discarding their previous policy of keeping off-course punting separated from alcohol. Also, in addition to their poker machines, the registered clubs got a variant of bingo or Keno connected statewide via computer networks, tickets sold continually, draws every couple of minutes.

The government also realised that some people wanted more immediate results than the lotteries or even Lotto gave them; and that giving them this would let them lose their money - I'll rephrase that - let them gamble again - more quickly. Thus, the government introduced "instant lotteries" or "scratch lotteries"; where the tickets were pre-printed, and the paying (or not) combinations were covered with a tamper-proof rubberised coating which was then overprinted for further security. Scratching this coating off revealed whether or not you had won - if so, minor prizes could be collected immediately, and claims lodged for major ones.

Our government next in their wisdom considered the rest of the world, and the other states of Australia, and saw that many of them were introducing casinos; and lo, they were profitable; and the government pondered on this (about two seconds worth) and said: "Let us also embark on this enterprise. But behold: though many casinos are profitable, some are not. Let us find some patsy to carry out this work, rather than undertaking it ourselves; and we shall charge them fees such that we cannot lose." And so it was decreed, and so it was done.

And the licensed clubs objected, saying "We are dependent on poker machine revenue, and the casino will have thousands of poker machines (true), and it is unfair competition". So the government said "Allright, we'll let you have more poker machines (with an additional fee for each machine, of course, as well as our slice of the action on the nett, and a guaranteed percentage return to the player to keep the suckers - sorry, strike that last phrase)". And the hotels objected, saying "Hey, hold on - this is unfair competition. We've stood still for it while these were just little local clubs, with a membership of two hundred; or maybe fifty thousand. Now you're giving them a way of making additional money, and they've got to either return the money to the community or invest it in better facilities for their customers, and they're competing with we businessmen for those customers, and we can't afford to provide better facilities for our customers, and you'll put us out of business". So the government said "Allright, we'll allow hotels to have poker machines as well, but only a strictly limited number each, with a fee for each machine, of course, as well as our slice of the action on the nett, and a guaranteed percentage return to the player to keep the suckers - sorry, strike that last phrase".

Well, this went on for a while. The hotels of course increased in value many times, because it was now possible for the hotel licencees to transfer money from the pockets of the patrons to their own coffers without having to provide goods in return; and without the patrons falling down while they still had money in their pockets. It then apparently became desirable to increase the limit on the number of poker machines per hotel, and allow hotels to purchase even more permits from the government - some at a very high fixed price, and then perhaps some more from a pool for which they had to bid even more extortionate amounts. There is still a limit on how many poker machines are permitted per hotel, and one can't yet trade poker machine permits. However, one can buy several hotels; and allocate the total machines in the group to different hotels according to where one can rip the most money off the customers. Also, hotel licenses have been drastically revalued, as have official attitudes to transferring them - it is now economical and possible for city interests to buy a hotel in a small country town (one which has been the social heart of the town for more than a century), close it down, and transfer the licence to the city where there are many more people with much more money in their pockets.

Somewhere during this process, the design of poker machines changed. They were once machines where you had to put a coin in a slot, then pull a handle. Minor prizes dropped coins into a tray. Major prizes either dropped LOTS of coins into the tray; or had to be collected by a time-consuming process of claiming from staff or officials, signing receipts, and resetting machines. Poker machines then advanced to accumulating credits: if you had credits in the machine, you didn't have to do the physical work of putting in coins. In the ever-vigilant search for ways to make life easier for patrons, the handle was replaced with push-buttons: this also made it possible for people to further speed-up their gambling, by betting on several different ways for paying combinations to line up in the windows of the machines (top row, bottom row, diagonally, .... ). This was initially constrained by an arbitrary and illogical limit of no more than one dollar per machine play, and no more than twenty cents per combination: however, reason and logic must have revealed flaws in this arrangement, because it is now possible to bet on up to almost twenty different combinations at once, and up to a dollar per combination on some machines. That can make a fair-sized hole in a hundred dollars quite quickly: part of greater efficiency and the effort to relieve the labour previously incurred by the poker machine patron.

A good deal of thought has also gone into the design of the minimal repetitive movements involved in the action of gambling; the repetitive visual displays and sounds; the visual and auditory rewards delivered when one "wins"; and the small but critical challenge and response involved in dealing with a win, and which obviates boredom. Of course, poker machines have been re-engineered to accept notes as well as coins now; and networked so that a central cashier can "ring up" a credit of, say, a hundred or five hundred dollars if you pass across the cash or ring it up an an EFTPOS machine. Poker machines have also been engineered to accept credit and debit cards directly: for some reason the government as yet has not seen the wisdom of allowing this obvious increase in efficiency, but the industry is ready when they do.

One of my sons was night manager at one of these hotels for a time; admittedly one of the top ten in the state for poker machine turnover; and on average he'd make up for banking each morning more cash than most of us get (after tax) in a year. The licensee of that hotel must then have been making a clear profit (excluding payments on any loans) of over ten million dollars a year- more now. He would have paid about two and a half million dollars for the hotel; and have been expecting to make about fifteen percent return on investment per year, before the introduction of poker machines.

It is probably purely coincidental, but a significant part of this particular process was overseen by a government minister who in private life just happened to own the licenses of about half a dozen major city hotels.

ANYWAY - New South Wales surprisingly now has a major "problem gambler" problem. Gambling can't be the problem: that's a source of income, and apparently essential by now; so it MUST be the gamblers. Apparently innoculation doesn't work too well in this case. If the opportunity to gamble is there, and it is arranged to be tempting to gamble (which for some reason it generally is), then problem gamblers will be tempted to gamble; and they will gamble. The combination of easy gambling and EFTPOS is critical: many wages disappear the night after they have made their way into the bank account.

Over eighty percent of Australians gamble in some form each year. I've got no quarrel with that - I'm certainly one of them. Almost two percent have a "critical gambling problem" - i.e. their lives are out of control ALL the time. Effectively everyone in our state now has either been directly affected by (e.g. self, spouse, child, parent), or knows someone who has been affected by, problem gambling. I have seen (but can't now verify - perhaps newspaper reports) estimates ranging as high as one person in five having had a gambling problem, and one in ten being a problem gambler. Those figures feel about right to me, and obviously if they are then the recovery rate isn't everything we might wish. Even if that is just a reflection of the groups I associate with and my liking for an occasional beer or six, still a substantial part of Australian society is seriously affected by gambling problems.

There are many smart-alec comments: "Lotto is a tax on those who can't do arithmetic", "Think of it as evolution in action ®", and so forth. They're all true. They don't help.

Anyone can have a problem gambling - for a while. It IS an addictive form of behaviour, with the biggest reward being the most insidious one possible - in our imaginations, our hopes and our dreams. Some people can think things through, and take control of their behaviour: maybe still gamble if that's their decision, but in control. Problem gamblers are likely to be from the lower end of the IQ scale, and can't get control of their habit: at worst they can't even be sufficiently introspective to consider a decision, let alone make it or keep to it. They can dream about a large prize, but they can't envisage saving a large amount over a long period of time. Even hotel staff who are certainly in a position to observe the odds and the results can become problem gamblers: the entire process is deliberately designed to be extremely insidious and addictive.

In my humble and unbiased opinion, people who deliberately live off the money from problem gamblers are the lowest form of life on this earth. They could walk under a snake without bending their knees or removing their hat. They could walk under a snail and not get slimier. They are deliberately victimising those who can't help themselves: not only the gamblers, but also their families and dependents.

If any group of people, knowing that there are places in the world which have experience with institutionalised gambling, implements or extends such a system without or despite investigation, then they are deliberately choosing to live their lives by stealing pennies from blind men's cups and beggar's bowls. Maybe a LOT of pennies, and maybe the beggars can't realise they're being stolen from; but the fact remains: it is immoral theft.

The fact is that state-sponsored or institutionalised gambling is a moral sin. Knowing what it will do, no person with consideration for others or for their own sense of self-worth, whether from religious convictions or purely personal moral ones, could support or allow it.

To do so, you'd also have to be STUPID yourself. No man is an island - at least these days. You create problem gamblers, and you'll create gambling problems. There will be social ills which will affect you, and which will be addressed, and it's going to be your tax dollars that do it. Not the tax dollars from gambling - in the nature of things, you won't get as many as you need that way - someone's taking a profit out of it, it's an inefficient system, and the difference will have to be made up from other taxes. The problems are that the damage and its cause may not be obviously connected; and also that there's a lag in the system. The chickens don't come home to roost immediately; and the abused, starved and homeless children may not start costing you really big dollars for a decade or more, until the effects of their behaviour have to be made good in other ways, while you have to house them in prison.

I personally don't want anyone to have gambling problems. I don't want people to suffer through it: I don't want them to have to endure the feeling of hopelessness and worthlessness that accompanies these problems. I don't want their families to suffer; I don't want their friends and the people to whom they owe money to suffer; and I definitely don't want to have to support them and their families, or to be mugged by their children in my old age.

Of course, there are other things to consider. Gambling has made Australia - a country with a small population - into a world leader, or near the top, in some areas. We are a world leader in, and major exporter of, gambling technology: on-course and off-course totalisators, and poker machines. We have also leapt forward in our suicide rate: second only to Japan worldwide.

Suicide is not something we can prove is the direct result of gambling in all cases, so that can perhaps, if one needs to indulge in wishful thinking, be disregarded. The lag between cause and the other effects is a problem, given the notorious attention span of the politician - just as far as the next election. The fact is, many of them don't care about the effect of what they do if it's not in their current term; and a lot of the rest of them don't think about it, even if they would care if they did think - a dubious proposition on several counts. Many of them don't even permit themselves to think: they always follow the party line, and no more is to be said. I'm not saying all politicians are stupid and immoral, or stupid or immoral - many of them are there to serve the public, and some of those we should just be grateful they don't charge stud fees. Even with the best will in the world, the nature of their situation is going to force short-term views onto them; perhaps deny them the time to do any long-term thinking; and when all is said and done, any answer that leaves them around to continue representing their constituents may seem like the best available choice, compared to letting the reprehensible opposition get in. That isn't always the case: sometimes a decision that may involve self-sacrifice is morally necessary.

If you can't depend on your elected representatives to voluntarily turn down a way of getting money that doesn't involve direct taxes, and which may not seem to have major problems for ten years or more; and if you don't want to have to live with your conscience and those major problems for the rest of your life; then you'd better get out there and ensure that you and every other moral person you can gather together tell your representatives how you feel, and why, and what situation they'll be in after the next election if they don't act accordingly starting now.