Showing posts with label gambling. Show all posts
Showing posts with label gambling. Show all posts

Wednesday, August 11, 2021

Casino operator Crown plays an old business trick: using workers as human shields

Casino operator Crown Resorts must be desperate or think we’re dumb.

Last week, before the royal commission into its right to hold a casino licence in Victoria, Crown resorted to one of the oldest, most discredited, tricks in the book. It used its workers as shields.

“More than 20,000 people work across Crown’s resorts. Over 11,600 of those work in Melbourne. The vast majority of them were of course not complicit in the misconduct,” its lawyer Michael Borsky told the commission.

Revoking Crown’s licence would sentence Crown’s employees to “enormous disruption and possibly financial hardship” at a time when many were already “living through great uncertainty and hardship”.

And not only Crown’s employees. Among Crown’s shareholders were “tens of thousands of small shareholders and, indeed, superannuation funds”.

Removing Crown’s licence would not only endanger Crown’s workers, it would have “a significant impact on the Victorian tourism industry”.

Crown provided 10% of Melbourne’s hotel rooms. Before COVID-19 hit, it contributed A$1.2 billion per year to Victoria’s economy.

It’s a logically flawed defence of the kind I first heard from Alan Bond’s Bond Corporation in the late 1980s, several years before he was imprisoned for fraud.

Trying to fend off an attempt to have his breweries placed in receivership, the company said Bond had 20,000 employees. They might not “have a job to go to on Tuesday”.

The logical flaw was the suggestion that if Bond didn’t own the breweries, the breweries wouldn’t exist.

The beers made by those breweries — Tooheys, Swan and XXXX — are still being made today.

Similarly, if Crown loses its casino licence, its 10% of Melbourne hotel rooms will still be there, most likely run by someone else. Its casino (or one like it) will also still be there, also run by someone else.

Clive Palmer tried it as well

The use of this flawed argument reached its peak early last decade during the battle over Labor’s proposed resource super profits tax.

Despite its name, the tax was designed as a profit-sharing arrangement. The government would be on the hook for 40% of the cost of each project and would take 40% of the profit.

If a project was profitable for a mining company, then 60% of the project would also be profitable, meaning the tax ought to make no difference to its willingness to invest.


Read more: Mineral wealth, Clive Palmer, and the corruption of Australian politics


Yet mining magnates such as Clive Palmer and Andrew Forrest threatened to abandon Australia and take their money elsewhere, to Africa or to China.

Their threats were no more a threat to Australian mining than Alan Bond’s was to Australian brewing.

If Forrest and Palmer had walked away (or even BHP and Rio Tinto, which talked along similar lines), someone else would have walked in.

The arrangement might not be to their liking, but it would be to the liking of someone else prepared to take the profit in their place.

Crown, as Royal Commissioner Ray Finkelstein pointed out on August 3, is profitable. Its casino operation is very profitable: “maybe on the decline a little bit, but very profitable”.

“The way industry works is somebody will always step in, so I don’t treat 12,000 employees [as] at risk. ” Finkelstein said.

“They might change their employer, but they are not at risk of losing their jobs.

Nor were suppliers or tourists at risk.

"When we have a profitable operating business, there will be an operator there out in the world, a suitable one.”

A line that used to work — on television

That Crown thought it could spin this line might have something to do with the experience of its largest shareholder, from whom Crown is now distancing itself.

James Packer used to own Channel Nine (as in an earlier era did Alan Bond).

For most of its life, Australia’s television owners have played chicken with the bodies meant to be policing them — the Australian Broadcasting Tribunal and then the Australian Communications and Media Authority.

Each body was given enormous power: the power to suspend or cancel a licence, but with a catch. It lacked lesser powers.


Read more: The TV networks holding back the future


If it suspended or cancelled an operator’s licence, the station would go off the air (at least for a while). The authority would be deluged with complaints.

Packer, Bond and the other owners could use their viewers as human shields.

Time after time (11 times in five years) the authority found Nine had breached the industry code of practice. Time after time it failed to invoke the ultimate sanction.

In a 2005 report for the authority, Professor Ian Ramsay said this meant that in effect it had “less enforcement powers” than other authorities.

Crown’s workers don’t place it beyond the law

Blessedly, in 2006 (as Packer was selling out of Nine) the government acted on Ramsay’s report. The authority can now issue fines and seek enforceable undertakings, without fear of blow-back.

For Finkelstein to accept that if Crown’s licence was revoked its workers or the tourist industry would suffer would be to accept that, like the television industry was for many decades, Crown is beyond the practical reach of the law.

He is giving every indication he thinks no such thing.The Conversation

Peter Martin, Visiting Fellow, Crawford School of Public Policy, Australian National University

This article is republished from The Conversation under a Creative Commons license. Read the original article.

Read more >>

Tuesday, October 28, 2014

Crowned. Neither Napthine nor Andrews wants to govern

Daniel Andrews and Denis Napthine are competing for glory without power. Neither really wants to govern.

Napthine signed away his right to make laws that tackled gambling and smoking in an extraordinary deal waved through Parliament days before the election campaign. The law not only restricts the actions of the Napthine government should it get back, but the actions of every future Victorian government for the next 36 years.

Should a future government decide to impose a $1 betting limit on poker machines (as recommended by the Productivity Commission); should it decide to enforce the use of precommitment technology on poker machines; or should it require automatic teller machines to be further away from poker machines, it'll be up for a $200 million payment to Crown. The size of the penalty will climb with inflation. By the time the provision expires in 2050 the penalty will be $480 million.

In the (entirely likely) event that community attitudes to smoking harden in the decades ahead, the government will be unable to remove the exemption permitting smoking inside Crown's VIP rooms no matter how necessary it thinks it is. The legislation says the only way through would be to pay Crown millions for "loss and damage", the exact amount to be determined by a panel of "experts" appointed from independent, internationally recognised chartered accounting firms or investment banks.

It's a right not normally available to firms hurt by government decisions. The government was able to ban smoking inside pubs and restaurants without compensating those firms for "loss and damage". It was able to ban drink driving without compensating alcohol retailers, it was able to ban ATMs within 50 metres of poker machines without compensating either the owners of the machines or the banks. Governments are normally allowed to govern. If most of us suffer "loss and damage" when they put up taxes or hurt our businesses we just have to bear it, or vote them out at the next election...

The restrictions on what future Victorian governments can do are set down in excruciating detail in schedule 11 of the legislation. The only exceptions apply in cases where all of Australia's state and territory governments act together, a get-out clause that further underlines the impotence of the Victorian government we are about to elect.

In return for binding future governments this one gets an upfront payment of $250 million. (The government is spinning it as a payment of $910 million, but it's nothing like that much.  It gets the first $250 million immediately. It gets another cheque for $250 million in July 2033, but assuming a discount rate of 4 per cent, that is only worth a payment which is worth $115 million in today's terms. It also gets plus the right to contingent payments if Crown's gambling revenue exceeds certain targets.)

Put starkly Crown gets the right to impose fines of $200 million per government any time a new government comes in and changes the law to Crown's disadvantage, for the next 36 years.  in return for the government gets an immediate payment of $250 million plus a few lesser payments later.

It's an extraordinary deal for Crown. In addition to "regulatory certainty" denied other businesses it gets an extension of its licence from 2033 to 2050, the right to install another 40 gaming tables, the right to buy another 128 poker machines and the right to continue using the site for the peppercorn rent of $1 per year.

And Labor under Andrews? It voted for it. Andrews was silent during the debate. His treasury spokesman Tim Pallas spoke of the importance of "certainty" for Crown, apparently forgetting its status as a specialist in gambling. Crown employs 8800 people.

Aware that he was voting for a "regulatory time bomb" he said Victoria's hotels and clubs would demand similar assurances in the future. He failed to acknowledge that all sorts of Victorian businesses will demand similar assurances and that Victoria has set a precedent for businesses in other states to demand those assurances similar deals.

The Commonwealth government refuses to allow its hands to be tied. Told that its plain packaging legislation would infringe on the rights of Philip Morris under the terms of an obscure Australia Hong Kong investment treaty it took on Philip Morris in an international arbitration tribunal.

Where it can, it refuses to include so-called investor-state dispute settlement procedures in international agreements.

Overseas they are used to winding back the ability of sovereign governments to legislate in ways that hurt pharmaceutical companies, pesticide manufacturers and mining companies.

Labor rejected them outright. John Howard's government was the only one in the world to successfully resist having them  in its free trade agreement with the United States. This The Abbott government assesses them on a case-by-case basis, including them in its agreement with them with Korea but excluding them from its agreement with Japan.  

Over the weekend ministers from 12 pacific nations have been meeting in Sydney to thrash out the details of the proposed Trans-Pacific Partnership. The US is holding out for investor-state dispute settlement clauses. If the other 11 succumb and sign up Australia's biggest investors and customers will be granted the right to sue our governments in international tribunals for attempting to do what they are elected to do.

Perhaps unwittingly, Napthine (and Andrews) have made it clear that they really don't mind. Elections matter because we are able to elect decision makers to take decisions on our behalf. If we can't, there's no point.

In The Age and Sydney Morning Herald
Read more >>

Tuesday, September 27, 2011

Jenny Macklin is the Labor spokesman on poker machine reform

Here's Stephen Mayne in Crikey:


"Jenny Macklin, the federal minister responsible for implementing the pokies deal with Andrew Wilkie, is complaining that the industry is refusing to offer up any venues that will trial a mandatory pre-commitment system with $1 maximum bets.

Jenny, ask your own party in Canberra. The Canberra Labor Club operates about 500 machines in the ACT and it represents the single largest investment asset owned directly by an ALP branch.

Labor’s role as the only major political party in the world that fundraises through operating gambling venues is just one of many conflicts of interest which dominate the pokies reform debate.
"


Jenny, if you need background, there's some below:


Related Posts

. Our nation's capital is also the nation's poker machine capital

. Labor - whose party is it?

. Ban large political donations. Starting here, starting now.

. The city the poker machines ate.


Read more >>

Tuesday, May 17, 2011

ASIC is strange and threatening. Ask Centrebet

ASIC has regained its sense of humour. Fourteen months after threatening directors of the betting agency Centrebet with fines and potential prison terms if they continued to offer bets on Reserve Bank interest rate hikes, it has quietly relented.

The bookmaker is offering $1.20 per successful $1.00 bet on “no change” at the Bank’s June board meeting, and $3.25 for a successful bet on a rate hike.

The standoff between ASIC and the bookmaker has seen its competitors continue to ply their trade on the first Tuesday of every month, with only Centrebet apparently prevented by a range of sanctions including “court orders shutting down your business”.

The difficulties began for the Alice Springs based bookmaker early last year when it announced plans to expand its range of its products to betting on the level of the ASX 200.

ASIC executive Jonathan Coultas wrote to Centrebet’s directors on March 26 saying "it has come to the attention of the Australian Securities and Investments Commission that you may be carrying on a financial services business without holding a financial services licence."

"In particular we believe the financial bets you offer over the ASX 200 share index and RBA interest rate changes may be 'derivatives', as defined in the Corporations Act."

The penalties for trading in derivatives without a licence included up to two years in prison.

“ASIC can take you to court and seek orders that stop you carrying on a financial services business without a licence,” the letter continued. That is, ASIC can seek court orders shutting down your business.”

So threatening was the letter... (it demanded a reply by April 9) that Centrebet abandoned its market on Reserve Bank rate moves and put on ice its plans for a market on the ASX-200.

Throughout all of this time competitors such as sportsbet.com.au continued to offer odds on Reserve Bank board decisions without attracting ASIC’s attention.

Even after the Herald alerted ASIC to Sportsbet’s widely publicised market, sending it as copy of a Sportsbet press release and asking it whether it intended to act against it as had Centrebet, ASIC it took no action.

The royal wedding and the Queen’s hat brought about the thaw.

Centrebet’s Neil Evans approached ASIC in the leadup to the wedding seeking formal approval to offer a market on the colour of the hat.

He found ASIC surprisingly accommodating and pressed his luck by asking about the Bank.

“They said yes,” he told the Herald. “After all this time they didn’t mind.”

Mr Evans says he does not have the approval in writing, but he was told very clearly he could safely trade in Reserve Bank rate moves.

“But not in ASX indexes. They won’t approve that. It was our move on the ASX they after all along,” he said.

ASIC itself wouldn’t comment last night, taking questions about its assurance to Centrebet on notice. (it demanded a reply by April 9) that Centrebet abandoned its market on Reserve Bank rate moves and put on ice its plans for a market on the ASX-200.

Throughout all of this time competitors such as sportsbet.com.au continued to offer odds on Reserve Bank board decisions without attracting ASIC’s attention.

Even after the Herald alerted ASIC to Sportsbet’s widely publicised market, sending it as copy of a Sportsbet press release and asking it whether it intended to act against it as had Centrebet, ASIC it took no action.

The royal wedding and the Queen’s hat brought about the thaw.

Centrebet’s Neil Evans approached ASIC in the leadup to the wedding seeking formal approval to offer a market on the colour of the hat.

He found ASIC surprisingly accommodating and pressed his luck by asking about the Bank.

“They said yes,” he told the Herald. “After all this time they didn’t mind.”

Mr Evans says he does not have the approval in writing, but he was told very clearly he could safely trade in Reserve Bank rate moves.

“But not in ASX indexes. They won’t approve that. It was our move on the ASX they after all along,” he said.

ASIC itself wouldn’t comment last night, taking questions about its assurance to Centrebet on notice.

Published in today's SMH and Age


Asic to Centrebet


Related Posts

. You wouldn't bet on it - if ASIC gets its way

. No betting. The RBA loses its fun

. A punt is a punt, except when ASIC says its a "derivative"


Read more >>

Tuesday, April 27, 2010

You wouldn't bet on it - if ASIC gets its way

The Reserve Bank will next meet to vote on interest rates a week from today, but don't expect to be able to bet on the outcome.

For only the second time in two years Centrebet won't accept your money.

The last time it believed the result was a foregone conclusion. This time ASIC has stopped it.

The Securities and Investments Commission has written to the Alice Springs based bookmaker warning that bets on interest rate changes may be "derivatives" as defined in section 761D Corporations Act.

That section defines a derivative as an arrangement in which the value of a consideration is derived from the value of something "of any nature whatsoever," including an interest rate or exchange rate.

On the face of it the section would outlaw all manner of bets including the recent high profile wager between economics professor Steve Keen and financial markets economist Rory Robertson on the value of house prices which saw the loser walk from Canberra to Kosciusko...

The letter from ASIC senior manager Jonathan Coultas to Centrebet says offering a derivative without a financial services licence "is an offence punishable by a fine not exceeding $22,000 or imprisonment for 2 years or both".

It threatens the bookmaker with "court orders shutting down your business".

"Totally shattered and a little bit confused," said Centrebet public relations manager Neil Evans when asked how he felt. "We have spent hundred of hours doing this for two years with not a word said."

Centrebet's market was hardly low profile. It has been reported on eight times in this newspaper and the odds it offers have been used as a guide to the weight of public opinion about what the Reserve Bank board will do.

Less-well known has been the market operated by Centrebet's competitor Sportsbet.com.au.

It is continuing to take bets on Tuesday's Reserve Bank board despite knowing of ASIC's threat.

Two of its bets it has taken on - each on no change in rates - are for $10,000 each.

"We have received nothing from ASIC in terms of whether we can or can't bet on that market. We will keep taking money until they tell us to stop," said spokesman Haydn Lane. "Apart from sports events and elections it is our most popular markets."

Asked why he thought ASIC had targeted Centrebet and not his organisation Mr Lane said it could be because in March "Centrebet started betting on the ASX 200, I think that sort of kicked them into action a bit with them, but we've certainly heard nothing".

Centrebet also suspects ASIC was provoked by its action last month in opening a market on the stock exchange share price index. "This other market seems to have been caught up in it. We've stopped in May but a rival bookie is going ahead."

Asked to explain why it had targeted one bookmaker but not the other an ASIC spokesman was unable to comment on operational matters. However he confirmed that ASIC had written to Centrebet.

Melbourne Law School professor Ian Ramsay said the ASIC letter had effectively shut down the Centrebet market on Reserve Bank decisions. It would not be worth the bookmaker's while to fulfill the requirements needed to get a financial services license.

For now Sportsbet.com.au is offering $1.20 for each $1 successfully bet on no change next Tuesday, and $3 for each $1 bet on a rate hike.

Mr Lane said he is hoping he doesn't have to stop mid-stream and give back the money.

Published in today's SMH and Age


Asic to Centrebet


AFR Editorial, April 17:

ASIC's nanny gambling curbs just don't rate

It's become commonplace in the wake of the global financial crisis to refer to the financial system as a giant casino. And in a sense that's true. But the critical issue is not that large amounts of money are wagered on predictions of future events, but that those making the bets may be unaware of the proper odds, or that the races are fixed. Or indeed that they are wagering at all.

Post-crisis focus should be on the integrity of financial markets, malfeasance by agents, structural imperfections and appropriate regulation and supervision.
The scrutiny should not be on the betting per se.

For better or worse, any financial reward carries a risk, and attempting to price that risk is the business of financial markets. It's an odds play.

Now we hear the Australian Securities and Investments Commission has told betting agency Centrebet to stop offering odds and taking bets on share price indices and the Reserve Bank's monthly interest rate changes.

ASIC claimed that the "financial bets" offered over the ASX 200 share index and RBA interest rate changes may be "derivatives" as defined in the Corporations Act, and that these services may amount to a financial services business, requiring a financial services licence.

Centrebet has suspended offering odds on both markets and has written to ASIC saying it would like to continue its interest rate betting service. It's also stated that its operating licence from the Northern Territory government allows it to bet on interest rates and stockmarket indices.

Curiously, Sportsbet.com.au, which is also licensed in the NT, and also offers interest rate betting, has not received any attention from ASIC. So why the heavying of Centrebet? The online lucky shop has been offering odds on Reserve Bank rate rises since August 2008, without any comment from ASIC. But in March this year it started offering odds on the monthly finish of the ASX 200 share price index, in effect setting up in competition to the ASX. Centrebet stated at the time that it also planned to extend its financial betting to the oil price, and individual stocks as well, although those latter plans are apparently now on hold.

Centrebet is trying to expand its market beyond the traditional gambler to appeal to white collar financial types. And it was succeeding. It received 200 bets on the monthly close of the S&P/ASX200. Now ASIC may well be right; Centrebet's activities with respect to the share price index may technically contravene the law as written. The interest rate betting is more uncertain.

But really, is this something to which a very stretched, crucial agency should be devoting time and resources? Is the spirit of the law intended to stop such bets? Why has it acted now, instead of August 2008, and why has Centrebet been singled out?

Does ASIC really think the integrity of financial markets is being compromised because maybe some investment bank's forex desk or options traders are laying off the RBA rate rise risk by flipping screens and hedging with Centrebet?

For the punter, the monthly RBA board meeting and the daily sharemarket are probably two of the cleanest markets you could hope for. If those markets are fixed, then ASIC would really have some worries.

So, too, if punters were pulling their money from their superannuation and wagering it on Centrebet's ASX200 with a side bet on Martin Place in Race 5 at Randwick.

But there is no evidence of this happening. Those making such a bet can be perfectly sure what they are betting on, the odds being offered, and the counterparty they are dealing with.

Gambling, love it or hate it, is part of the Australian culture. Punters know they are making a bet when they go to a bookmaker. This is not a market we need to be nannied in. Centrebet should be free to resume taking bets on interest rate changes and ASIC should concentrate on bigger issues than a Darwin bookmaker straying into turf that the Australian Securities Exchange regards as its monopoly.




Related Posts

. No betting. The RBA loses its fun

. A punt is a punt, except when ASIC says its a "derivative"

. Somewhere, someone is very certain about how the Reserve Bank is going to move


Read more >>

Thursday, April 08, 2010

A punt is a punt, except when ASIC says its a "derivative". ASIC shuts down RBA betting

Oh my. They may be wrong in law, but who's going to fight them

Punters think of them as bets, but to ASIC they are apparently "derivatives".

The Securities and Investments Commission has threatened the Northern Territory based bookmaker Centrebet with a court order "shutting down your business" if it continues to run take bets on the outcome of monthly Reserve Bank board meetings without a financial services licence.

Centrebet has taken nearly $1 million in bets on the outcome of Reserve Bank board meetings in the past two years without complaint from ASIC. The markets have received wide publicity and have been listed on its website along with markets on elections and sporting events.

Yet in a letter to Centrebet dated March 26 ASIC's senior manager, market participants and stockbrokers Jonathan Coultas says "it has come to the attention of ASIC that you may be carrying on a financial services business without holding a financial services licence"...

"In particular we believe the financial bets you offer over the ASX 200 share index and RBA interest rate changes may be 'derivates', as defined in the Corporations Act," the letter continues.

"Carrying on a financial services business without an Australian financial services licence is an offence punishable by a fine not exceeding $22,000 or imprisonment for 2 years or both".

"ASIC may also decide to take other actions in relation to your conduct. For example... ASIC can seek court orders shutting down your business."

Centrebet public relations manager Neil Evans described himself as "totally shattered, and a little bit confused".

"We founded interest rate betting in this country in 2008, and not a word was said."

"Our operating licence from the Northern Territory government allows us to bet on financial markets."

ASIC confirmed that it had sent that letter but would not answer questions about why it had done so now rather than earlier in the life of the widely publicised market.

The answer might lie in Centrebet's action in March in establishing a betting market on the ASX 200 shareprice index which had the effect of competing with products offered by the ASX itself.

There are few precedents to guide either ASIC or Centrebet should the matter go to court.

ASIC has given the agency until Friday to respond.

In the meantime Mr Evans said Centrebet will not take bets on either Reserve Bank decisions or the share price index. In the language used by ASIC, it will not sell derivatives.

Published in today's SMH and Age

Asic to Centrebet


Related Posts

. When is punting on the economy "utterly irresponsible"?

. Now you can bet on a higher unemployment rate

. Who'd take on Centrebet?

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Tuesday, June 02, 2009

One piece of good news every few days

Today it's Queensland abolishing fuel subsidies.

A few days back it was the ACT Labor party offloading its poker machines and the clubs that house them.

I'm especially happy about that one.
Read more >>

Tuesday, October 07, 2008

Unbackable: Today's rate cut

Both Sportsbook and Centrebet have stopped taking bets. When they were, there was no possible combination of bets which would have allowed you to make money by merely predicting that rates will be cut.

A cut of 0.50 percentage points was by far the favourite, the first time since rates have been cut by that much since 2001.

The banks are likely to pass on only half of it.

The Reserve Bank's decision will be announced here at 2.30pm Australian Eastern Daylight time. (2.00pm in SA, 1.00pm in the NT, 1.30pm in Qld, and 11.30am in WA)
Read more >>

Saturday, April 19, 2008

Saturday Forum: Our nation's capital is also the nation's poker machine capital

Welcome to Canberra, delegates.

We in the Australian Capital Territory have long prided ourselves on our support of progressive causes.

The only state of territory to vote for a republic at the referendum (and overwhelmingly so), more than 60 per cent of us regularly vote Labor after preferences are distributed.

We introduced Australia’s first Human Rights Act, we were the first to recognise same-sex unions (until the Commonwealth overruled us) and our Chief Minister Jon Stanhope is only one to have stood up to the former Prime Minister John Howard over his Anti-Terrorism Bill.

Our households are keen on green power, recycled water and banning plastic bags.

But suddenly, on the issues that matter to the new Prime Minister, we are getting left behind.

The new wave of causes being pushed by Kevin Rudd seem less than attractive to the man who is by now Australia’s longest-serving state or territory leader...

Jon Stanhope is vocal in his support of the ACT’s poker machine operators.

He has told our Legislative Assembly that when most people play the poker machines “there is no harm done to anyone”. “Imagine Canberra without our clubs,” he has said.

He won’t cut the number of machines and he won’t ban automatic tellers from the venues that house them.

Kevin Rudd wants to do both. He is having success with other states.

Queensland’s Premier this week cut the cap on poker machines and stopped them operating before 10.00am. Victoria said it would remove ATMs from pokies venues in 2012 when it ends the billion-dollar pokies duopoly enjoyed by Tattersall’s and Tabcorp.

But our leader offered nothing.

And he hasn’t been to the forefront on electoral reform.

Kevin Rudd has proposed capping the size of political donations. The NSW Premier Morris Iemma this week said he wanted to ban them altogether.

The ACT was in the uncomfortable position of being upstaged by NSW – the state whose electoral sleaze was laid bare on Four Corners this week in a program entitled “Dirty Sexy Money”.

In the ACT the money to run the local Labor Party’s election campaigns comes predominantly from the operators of poker machines. In no other state is the ruling party so funded.

Tim Costello, who will be chairing a forum that will discuss gambling at this weekend’s 2020 Summit says our Chief Minister is “brought to you by the gaming industry, he's an extension of the gaming industry”.

The latest Electoral Commission returns show why.

According to their figures, in the last financial year $238,552 of the ACT Labor Party’s $587,123 of income came from just one donor – the Canberra Labor Club, a money-making machine that operates more than 400 poker machines at its venues in Civic, Belconnen, Charnwood and Weston Creek.

The Canberra Labor Club is the seventh-biggest political donor in the entire nation, and by far the biggest in the ACT.

The Electoral CommissionA says the ACT ALP’s next biggest donor is the Woden Tradesmen's Club, which happens also to be an operator of poker machines.

ClubsACT says there is nothing surprising about these donations to the ALP. Its President David Lalor wrote in The Canberra Times last year that the Labor Club was “set up to support the ALP”, just as the Hellenic Club supports the Greek community, the Ainslie Football Club supports the AFL, and the Vikings Group the rugby union.

But the electoral commission records suggest that the Canberra Labor Club hasn’t supported the ALP by fund raising in the traditional sense. Neither in the last financial year when the threshold for reporting donations to organisations such as the Labor Club was $10,300 nor in the previous two years when the threshold was $1,500 did it report receiving any donations to advance the Labor cause.

Instead it has operated as a business, operating poker machines.

The purveyors of businesses such as the Canberra Labor Club are treated more gently here than they are anywhere else in Australia.

This graph, sourced from the industry-funded Australasian Gaming Council tells the story. The ACT has more poker machines per head than does any other state in the nation, even the supposed poker machine capital of NSW.

At 20.7 machines per 1,000 adults, we have more than NSW at 19.5 and almost half as much again as does Australia as a whole at 13.

On average each ACT resident pumps $746 into the machines each year, the second-highest spending rate in the nation, behind NSW.

And yet oddly, the ACT has taxed the purveyors of poker machines much less than has the typical Australian state.

Taxation figures released this week show that the ACT Treasury made $31 million from gambling machine tax last financial year – around $90 per resident.

But Australia-wide the total was $140 per resident. In NSW it was $160 per resident.

Our government has been prepared to both tolerate more poker machines per head than any other state and to raise much less revenue from them (although it did announce a tax increase in its last budget).

And it has been also extraordinarily protective of the special position of clubs such as the Canberra Labor Club when it comes to deciding where the poker machines should be housed.

Every other state of territory has allowed poker machines in its casino. Not the ACT.

Every other state or territory that does allow poker machines in clubs, also allows a fair few in its hotels. Not the ACT.

Whereas in Victoria the poker machines are evenly split between the clubs and hotels, and in NSW the clubs have three times as many as do the hotels, in the ACT the clubs have 5,000 poker machines to the hotels 100-odd, according to the Gaming Council.

The ACT Labor Party - predominantly funded by the purveyors of poker machines - allows more of them to operate more than would be allowed anywhere else, taxes them more lightly, and appears to protect the operators from competition.

The Chief Minister maintains that for most of us of us his support for poker machines is harmless. He has told The Canberra Times that he sees them as “an outlet” and has asked: “Who am I to deny people their pleasure?”

There is much that is good about the clubs that operate poker machines. They keep ACT residents from going across the border to Queanbeyan to play the pokies as used to happen before the pokes were allowed in almost 30 years ago.

Around 500,000 of us are members of the clubs, although many of us have joined for the food rather than pokies and would probably be happier if their spinning wheels fell silent.

The ACT’s clubs are required to spend 7 per cent of their poker machine revenue on sporting and other community activities, even if they are required to pay less tax than they would have to elsewhere.

And we should be able to cope with a high concentration of machines better than the residents of other states. We earn more.

For that reason the amount we spent on pokies is low as a proportion of income compared to other states, although it is creeping up.

No more of our gamblers are “problem gamblers” than is typical in the rest of Australia, according to the Productivity Commission.

But nevertheless, perhaps because of our high incomes, we’ve proven ourselves to be particularly bad at handling the money we gamble with.

The Gaming Council says the ACT has the highest gambling and speculation related bankruptcy rate in the country.

While our population is a mere 1.6 per cent of Australia’s total, we account for 4.8 per cent of Australia’s gambling-related business bankruptcies and 5.8 per cent of gambling related personal bankruptcies.

Our government could act to reduce this toll, as Kevin Rudd wants. It could eliminate the use of $10 and $5 notes in the machines and limit them to coins. It could ban ATMs, which in many Act clubs are sited just metres away from the machines.

It could wind back the number of licences, and push up the tax rate to the Australian standard.

Refusing to accept political donations from the gambling industry might be a big ask, given that it provides half the ACT Labor Party’s income, but outlawing political donations of any kind, as NSW says it wants to, might not be.

An end to political donations (or at least a limit on their size – perhaps to $2,000 per donor) would ensure that the Labor Party’s local business-funded opponents were never able to outspend it, and should be electorally popular.

Jon Stanhope hasn’t left it too late to show leadership on both issues, but the doors are closing.

In seven weeks time South Australia’s extraordinarily popular “No Pokies” politician Nick Xenophon will join the Senate. He will be keen to forge alliances to wind back the pokies industry nationwide. The Prime Minister has already indicated that he is on side, and the 2006 WorkChoices High Court case established that the Commonwealth had the power to override the states when it comes to regulating corporations.

Should there be any lingering doubt about the Commonwealth’s power in this area, it could start by imposing tougher controls on poker machines in the ACT, where it has undisputed ultimate authority.

The ACT Chief Minister could avert this possibility by showing that he is as serious about winding back the influence of poker machines as are the Premiers of Queensland and Victoria.

And in the ACT’s May Budget he could push the tax take from poker machines up to the Australian standard.

Without action, the ACT and the ACT Labor Party are at risk of being punished financially.

With less tax taken from poker machines than the Australian standard, the ACT is setting itself up for less compensation than other states when the Commonwealth or the Commonwealth and the states in combination take action.

And with more than $200,000 of the ACT Labor Party’s funds sourced from one donor in the poker machine industry it is setting itself up for a collapse in revenue should donations be limited.

It is a good time to wean both the ACT and ACT Labor off their poker machine addictions.


Related Posts

Labor - whose party is it?

Ban large political donations. Starting here, starting now.

The city the poker machines ate.


Read more >>

Wednesday, October 10, 2007

The pokie purveyors respond

David Lalor, president of ClubsACT writes in todays Canberra Times:

Recent articles in The Canberra Times report that clubs have been asked to ''dump pokies'' by Lifeline and a leading representative of the Catholic Church. Yet Lifeline has indicated to us that they did no such thing and in a subsequent radio interview the Catholic clergyman put a very different slant on matters than was attributed to him.

Most recently economics editor Peter Martin has posed some questions to the Chief Minister ''suspecting'' that the claimed lack of action on harm minimisation and reducing poker machines is related to funding the ALP receives from the Labor Club...

I can only shake my head in disbelief when I read comments claiming the ACT Government has taken no action to reduce problem gambling because of its relationship with the Labor Club. They ignore the Stanhope Government's decision, in the face of enormous pressure, to refuse privateers into gaming in the ACT, thus keeping them out of taverns, hotels and the casino. Governments in most other jurisdictions have been unable to resist this pressure the consequence being an ''explosion'' in gaming activity, taxation receipts and individual wealth.

One only needs to look at gaming revenue growth during the past decade in NSW to see that clubs have a more moderating influence and do not push gaming to the extent of the privateers.

There might be more machines per head in the ACT, but the per capita spend is less than NSW. Based on recent information, including machines in casinos our spend is probably less than Victoria, Northern Territory, Queensland and South Australia where gaming is now firmly in the grip of privateers. Also gaming machines are not on every street corner or in your face they are in licensed clubs, where in many cases they have been for almost 30 years.

This controlled access, together with a range of harm minimisation measures introduced by the ACT Government (machine cap, trading hours, responsible service of gaming and alcohol, mandatory Gambling Code of Practice, and a new Gaming Machine Act 2004) puts paid to any claim that the Government is shirking its responsibilities. We have had two increases in gaming taxes 8 per cent in 2003/04 and 17 per cent from July 2007 so much for the lack of action on this front! Clubs are required by law to spend 7 per cent of gaming revenue on community contributions, but most clubs spend much more the highest in Australia.

Clubs do not take the privilege of providing gaming services for granted and in return they expect to be able to offer a legitimate and legalised form of entertainment to the community. Many Australians like to play poker machines and 99 per cent of these do so with total care and responsibility. For a small number of people gambling can be a serious problem that is why clubs accept the need for greater regulatory accountability and transparency.

We have worked closely with ACT Governments and Lifeline Canberra to bring about even more responsible gambling practices and to deliver a gaming environment that is the envy of other states. This has been at some cost gaming revenue in 2006/07 was the lowest for five years, and it could be even lower in 2007/08.

Much of the recent comment has been opinion and exaggeration presented as fact. It is misleading for those so called ''gambling experts'' to quote from an eight-year-old Productivity Commission report, especially as more recent studies show substantially different findings.

Unfortunately this media focus creates an erroneous view of the work of not-for-profit clubs.With 33 club groups operating from 56 venues around Canberra, employing 2000 people and a membership base of 500,000, it is an indisputable fact that clubs play a significant role in the Canberra community be it in sport, recreation, entertainment and community support.

Since the late 1970s ACT clubs have applied the proceeds of gaming to the social good and to the provision of community and sporting infrastructure, much of which would not otherwise exist.

In 2005/06 clubs contributed $12.5million to a large number of recipients $4.5million more than required by law bringing the total contribution to $112million since 1997/98.

But these significant headline numbers understate the contribution that individual clubs make. Charities, schools, aged care, art and craft groups, regional and ethnic community services groups would not be funded if it was not for a club or the Government would have to find the funds to make up any shortfall.

Finally the call to prohibit the Labor Club from contributing to the ALP is perplexing. Clubs are established for common purposes sport, cultural, ethnic, professional and returned services interests and a constitution governs what the clubs have been set up to do. For example the Hellenic Club supports the Greek community, the Ainslie Football Club the AFL, the Vikings Group the rugby union and the Tuggeranong community, and The Canberra Southern Cross Club a range of affiliated groups. And the list goes on.

For its part the Labor Club was set up to support the ALP. There is no member outcry that funds are ''donated'' to the ALP. This is a legitimate and transparent contribution.

It is unreasonable for those (abolitionists) speaking on behalf of the minority who have a problem with gambling to paint a picture which suggests that clubs have lost their community focus.

I am sure the vast majority of Canberrans who belong to one or more of our clubs would beg to differ and agree that Jon Stanhope has nothing to explain.

David Lalor is president of ClubsACT.
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Tuesday, October 09, 2007

Tuesday Column: Ban large political donations. Starting here, starting now.

After I wrote last week that ACT housed more poker machines per person than any other state in Australia I got an anonymous semi-serious email suggesting we needed more. “They should be in shopping centres, in railway stations, tram and bus stops, in government offices, public buildings and banks,” my correspondent wrote.

”I see tax taken on poker machines as tax I don't have to pay. This is a good thing, and I see no reason to stop it.”

Except that the ACT for some reason takes comparatively little tax from poker machines – less than the Australian standard. ACT citizens get the worst of both worlds: the misery associated with the highest concentration of poker machines in the country (we have more gambling-related bankruptcies per head than anywhere else) without Australian-standard tax revenue.

The whole thing makes no sense unless you are a cynic who thinks that the ACT Labor Party is reluctant to really move against poker machines or properly tax them because it knows it is bankrolled by the clubs that house them...

It certainly is bankrolled by one of those clubs. The Canberra Labor Club hosts more than 400 poker machines at its venues in Civic, Belconnen, Charnwood and Weston Creek. Its donations to the ACT Labor Party - reported on the Electoral Commission’s website - dwarf those of every other contributor.

It’s an uncomfortable thought – that a government generally well regarded in the ACT is unable to govern properly on this one issue because it knows that if it did its parliamentarians might lose the money they need to get reelected.

The anti-pokies campaigner Tim Costello says our Chief Minister is “brought to you by the gaming industry, he's an extension of the gaming industry” – a claim that can hardly make us or Jon Stanhope feel proud.

Stanhope has hit back by alleging that the Liberals are in "bad odour" themselves because they are funded by real estate agents and developers.

He is correct about where the ACT Liberal Party gets its money from. Its donors include the Village Building Company, LEDA Holdings, Consolidated Builders, Madison Constructions, the Hindmarsh Group and the Amalgamated Property Group as well as property financiers including Westpac and the National Australia Bank. It has also been supported by British American Tobacco.

So why not break the cycle?

What I am proposing is an Australian first where the ACT would be proud to show the rest of Australia the way.

Unencumbered by an upper house or an by Opposition with any moral authority on campaign funding, the Stanhope government is in an excellent position to push it through.

All political donations larger than a certain amount – say, $2,000 – would be banned.

In immediate financial terms the change would hurt the Labor Party the most. At the moment it gets a bigger haul of donations than the Liberal Party, largely because of the pokies-tainted funding from the Labor Club.

But in the long run Labor might be the biggest beneficiary.

As happens already, it and the other parties in the Assembly would continue to receive funding from the Electoral Commission based on their vote in the last election. The formula could even be made more generous. It would be a small price to pay for an improved democracy.

Minor parties and independents not yet in the Assembly would find it harder than at present to compete, but that’s unlikely to worry the ALP.

And the Liberal Party, at present under-funded compared to Labor, would be prevented from ever whipping up mass business support and outspending it.

With Canberra essentially a Labor-leaning town, and with upsets less likely, the ACT Labor Party would have bought itself long-term electoral dominance.

ACT elections would be duller - there would be fewer ads. But turning down the heat at election time is unlikely to hurt the dominant party. It might even lead to better campaigns.

It would certainly lead to a Labor government, or a Liberal government when elected, that was free to act in the best interests of the electors without the suspicion that it was also repaying financial favours.

Trade unions would be freed from the need to contribute the ALP. They could use the money for the benefit of their members. Any members that wanted to donate to the Party would be free to do so individually, up to a limit of $2,000.

Developers including Village, Hindmarsh and LEDA might no longer feel the need to engage in the bizarre practice of donating to both the ACT Liberals and the ACT Labor Party using a logic that I am not keen to explore further.

I can imagine objections to the idea. One would be that any organisation that wants to make a big donation to one of the parties could still do so by breaking it up into $2,000 blocks and donating each in a different name. In reality I don’t think that is likely, and organisations such as the Canberra Labor Club which donates hundreds of thousands of dollars would find it all but impossible.

Also many donations already fit within the $2,000 cap. Many more would not have to be reduced by much in order to fit.

It would be impossible, and not desirable, to outlaw political donations altogether. They are part of politics. The High Court has found that Australians have the right to donate as part of the exercise of free speech. It has held that a government can limit, but not abolish that right.

Another objection would be that some candidates are rich enough to spend their own money, or keen enough to mortgage their houses to fund their campaigns and will get an unfair financial advantage. I call this the “Ross Perot” objection, named after the American billionaire who poured millions of his own dollars into a bid to become US President in 1992 - easily outspending competitors including Bill Clinton who faced donation limits.

But if candidates are prepared to spend their own money getting elected I don’t really see an opportunity for corruption of the political process. That happens when they are spending donated money and owe favours.

Would the idea appeal to our Chief Minister? I think it might. Being factionally unaligned he owes nothing to mandarins who run either the Labor Club or the Tradesman’s Club. He probably has no particular love for poker machines.

If it became law, Jon Stanhope would doubtless continue to allow poker machines to operate, but he would become free to pass laws that wound back their numbers and restricted their operation in a way it is currently believed he cannot.

And he would put the ACT on the map. We would strengthen Australia’s democracy by example, and we would probably reward him for it.

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Wednesday, October 03, 2007

Tuesday Column: The city the poker machines ate

There’s something very odd about poker machines in the ACT.

And I don’t just mean the Chief Minister’s absurd-sounding statement that they are okay because some people enjoy using them. He told this paper last month that he saw them as “an outlet” and asked: “Who am I to deny people their pleasure?"

Part of what’s odd about poker machines in the ACT is the sheer number of them.

There are 5,200 poker machines within the ACT’s borders. That’s right – 5,200, which according to the Australian Gaming Council is more per person than any other state or territory.

The ACT is better served with gaming machines than is Australia’s supposed poker machine Mecca, NSW...

A few weeks back the ABC’s Four Corners broadcast some harrowing stories of the lives wrecked and lives ended by poker machines in NSW.

One woman was living on the rent from a half-a-million dollar house she owned. As her habit took hold she sold it and used all of the proceeds to feed the machines.

A Woolworths’ pay clerk stole $2.6 million to keep feeding them. Her club knew she was pushing in an obscene amount of money but never tried to stop her. She was jailed for seven years and her husband committed suicide.

In the wake of the program Labor’s leader Kevin Rudd said that he hated poker machines. Tim Costello, the head of World Vision Australia said he wanted the numbers cut, the machines slowed and automatic teller machines removed from the clubs and hotels that house them. His brother, the Treasurer Peter Costello applauded the owners of the South Sydney Leagues Club Russell Crowe and Peter Holmes a Court for announcing their plan to remove all of the club’s 160 poker machines.

Four Corners only ventured into the ACT in order to interview an ANU academic. But I suspect that if it had lingered it could have made an equally shocking program about what is happening here.

At the Canberra Tradesmen's Union Club in Dickson the ATM is placed just metres away from the machines. The Gaming Council says the ACT has the highest proportion of gambling-related bankruptcies in the country. While our population is a mere 1.6 per cent of Australia’s total, we account for 4.8 per cent of Australia’s gambling-related business bankruptcies and 5.8 per cent of gambling related personal bankruptcies.

Disturbingly, the Council says gambling-related bankruptcies are climbing in the ACT while they are falling in Victoria, Tasmania, Western Australia and the Northern Territory.

Our special status in hosting the highest number of poker machines per head in the country probably makes us special internationally. Australia is said to have the highest concentration in the world. Tim Costello says that when he recently outlined Australia’s poker machine saturation to the British House of Lords its members were so staggered they thought they had misheard him.

The ACT might just be the world’s poker machine capital.

(As it happens we are not a world leader when it comes to the amount poured into the machines per head of population. NSW beats us there, using its machines more intensively. Even if our bankruptcy statistics suggest we do so less wisely.)

So why won’t the Chief Minister cut the number of machines, remove ATMs from the venues that house them (not just from the rooms) and slow them down?

You would imagine that it’s because our Budget is dependent on poker machines. That’s Tim Costello’s guess. He says Australia’s states and territories rake in more than $4 billion a year in poker machine taxes.

But the thing that’s really odd about the ACT and poker machines is that, notwithstanding the number we have and the amount of money they rake in, in the ACT government gets little of it.

Each year the industry-funded Australian Gaming Council produces a comprehensive database on gambling spending and taxation. Its latest figures, for 2004-05, show that the ACT’s per capita tax take from poker machines is not the highest or second-highest in Australia as would be expected, but the fourth-highest - behind NSW, Victoria, Queensland and South Australia. Only Tasmania, the Northern Territory and Western Australia rake in less tax per person from poker machines than does the ACT - and Western Australia doesn’t have poker machines outside its casino.

The figures aren’t a fluke. The Grants Commission has been reporting for years that the ACT collects less gambling tax than would be expected.

The actual tax rates are hard to compare. NSW bases its rates on “annual revenue”; Victoria on “player loss”; Queensland on the “monthly metered win” and the ACT on “gross monthly gaming machine revenue”.

But the result is that we take in less than each of those states per person, and a good deal less per dollar gambled.

The Chief Minister is completely correct when he says that the ACT’s Budget is not dependent on poker machine revenue. $31 million out of $3 billion would be noticed, but its loss would hardly be fatal.

Which raises two intriguing questions. Why won’t the Stanhope government increase its taxation of poker machines to the Australian standard (it could run more busses and keep open more schools) and why is the Chief Minister so insistent that he won’t legislate to cut the number of poker machines to something less than our current Australian record high (after all, he isn’t dependent on them).

I don’t know the answers, but I have a suspicion. The Canberra Labor Club runs more than 400 poker machines at its venues in Civic, Belconnen, Charnwood and Weston Creek. The Tradesmen’s Club (owned by the Construction Forestry Mining and Energy Union) runs many more.

The Canberra Labor Club stands out as being an enormous donor to the ACT ALP. Its contributions, reported each year to the Australian Electoral Commission, dwarf those of every other donor. Lesser donors include the Tradesmen’s Club and the Canberra Southern Cross Club.

The Electoral Commission figures suggest that without the hundreds of thousands of dollars donated to it by the Canberra Labor Club, much of which would come from its 400+ poker machines, the ACT ALP would be in financial trouble.

I’m hoping this isn’t why the Chief Minister is reluctant to seriously restrict the operation of poker machines in the ACT. (He has limited the machines to taking $20 notes but he hasn’t stopped them taking notes; he has taken the ATMs out of the gaming rooms but not of the venues).

I am hoping there’s another reason. I would like him to explain what it is.

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