6

No such thing as a free lunch

Nick Xenophon is also angry about the continued failure of state and federal governments to reform the regulation and practices of poker machines. But he isn’t baffled by this. To him, it makes much sense.

When I meet with him in October 2016, he is still serving as a senator in the federal parliament. His parliamentary office is messy. The table we’re sitting at is covered with folders, papers, and plastic water bottles. So, too, is the desk, behind which is a stack of cardboard boxes.

The state of the office seems to reflect Xenophon’s mind. It is going on 7.00pm, and he has just emerged from a marathon Senate session. He speaks rapidly, branching off into wild tangents and philosophical musings — all the while taking regular handfuls of what I initially thought were chocolate chips. ‘You tried these before? Raw cacao beans. They’re pretty amazing. They’re bitter. You alright with that?’ He pours a handful into my palm, then into his, and continues chatting without missing a breath. ‘They’re hard to find. I get them from a little store down in South Australia. Expensive, but it would be cheaper if more people bought it. God, they’re bitter. They’re good for you, though.’

I knew he was a character, but I wasn’t expecting this. I feel frantic just listening to him.

Xenophon has performed many public stunts and pranks in the two decades he has been involved in state and federal politics. He once led a mule through Adelaide’s Rundle Mall to show that he was as stubborn and hardworking as one; held a media conference at the giraffe enclosure of the Adelaide Zoo to demonstrate how far he was prepared to stick his neck out for the people of South Australia; and rode a toy car to the South Australian parliament to protest car perks for politicians.

But all jokes aside, Xenophon is a man deeply concerned by poker machines and the harm they inflict on Australian communities. In fact, the issue is what spurred him to enter politics: when he was first elected as an independent senator in South Australia in 1997, it was on a ‘No Pokies’ ticket. ‘On my tombstone will be the epitaph, “Here rests the “No Pokies” guy,” he tells me, laughing.

Xenophon says he was initially ‘ambivalent’ about poker machines when they were legalised en masse in Australia in the 1990s. He had seen them on a trip to Las Vegas years earlier and, while he thought them garish and boring, he concluded they were ultimately harmless. It did not take long for his ambivalence to be replaced with a feeling that a serious mistake had been made by the government. Working then at his own legal practice, he became exposed to the spike in problem gambling, with numerous clients detailing to him the trouble they or their relatives or friends were in as a result of poker machines. Now, years later, he describes poker machines as ‘an addiction trap disguised as entertainment’.

Xenophon claims that, behind closed doors, many of his colleagues in state and federal parliaments share similar views to him about poker machines, and agree that reform is needed. The reason they don’t air their private views publicly, or take any action, Xenophon says, is twofold.

First is the ‘desperate need’ of governments for gambling taxes. Collectively, between 2000 and 2014, state and territory governments pocketed over $45 billion from poker machine taxes. The exact figure varies across jurisdictions but, on average in 2016–17, poker machine taxes across the country accounted for an average 6 per cent of all state-raised revenue. This is a relatively small amount compared to other revenue streams, but the simple fact is that a drop in income from gambling taxes — which effective harm-minimisation measures would ultimately cause, as they would reduce overall gambling expenditure — would force cash-strapped governments to find extra funds elsewhere.

Second — and, Xenophon says, more importantly — is the ‘enormous power’ of the gambling lobby. In referring to the gambling lobby, Xenophon does not differentiate between clubs, hotels, and casinos. To him, they are ‘one amorphous, toxic blob which seems to permeate all facets of public life’.

He first became aware of the lobby’s power in his early days in South Australian politics. While serving in state parliament, he had a conversation with two senior members of the state’s Liberal Party and Labor Party (he refuses to name them). ‘They told me, “We hate poker machines, we think they’re damaging, but we’re not idiots. We won’t take poker machine money, but we know that if we started kicking up a fuss about poker machines and started supporting reform, then the poker machine lobby will eventually fund our opponent from the other side, or if they didn’t do that they could run a minor seats campaign very well and preference against us to wipe us out.” They weren’t prepared to take on the wrath and power of the industry.’

Xenophon has since discovered that the lobby’s power manifests itself in more insidious ways than simply instilling fear in politicians about taking it on. In his typical, colourful way of speaking, he says that some parliamentarians — both at a state and federal level — ‘have drunk from the lobby’s chalice of Kool-Aid’, and are now ‘active defenders’ of the industry.

According to Xenophon, poker machine reform is a ‘litmus test for good government’, and the continual failure of Australia’s political leaders to pursue it indicates their failure to fulfil the more fundamental duty of prioritising the public interest over corporate interests, and protecting citizens from harm. As he says, ‘If governments are willing to have families break up, people lose homes, people lose their life savings, and in some cases, people losing their lives because of gambling, then what else are they getting wrong?’

The power of the gambling lobby is derived from two main sources, says John Warhurst, an emeritus professor of political science at Australian National University and a renowned expert on lobbying in Australia.

The first is that two of its main arms — clubs and hotels — are strategically positioned in local communities. They are embedded in everyday Australian life, are highly respected, and have huge support bases that can be mobilised for a political fight. This is especially true of clubs that, according to Warhurst, have a very similar place in communities to one that another powerful institution once did. ‘Churches would see their members every Sunday,’ he tells me. ‘They had a pulpit from which they could talk to their members, so people were very wary about the role of churches in politics because they were so powerful. And there is something like a church about a club, in a way. You have a captive audience, and allegiances which might even cross party boundaries.’

The second source of the gambling industry’s power is more tangible and easy to identify. As Warhurst explains, ‘It strikes me that both the clubs and the hotels have a lot of money which they aren’t scared to splash around.’

Many others concur, including Michael Yabsley, the former New South Wales Liberal Party treasurer. In October 2016, he told The Sydney Morning Herald that, in a world where the biggest political donors are known as ‘outstanding citizens’, the hotels and clubs would be ‘rated as triple-A five-star outstanding citizens.’ He added, ‘If you want two case studies of playing the game, go no further.’

Recent analysis of Australian Electoral Commission disclosures by Dr Charles Livingstone of Monash University shows exactly how much both the clubs and hotels have splashed around over the years.

Between 2000 and 2015, ClubsNSW reported making political donations in excess of $2.6 million, all of which went to the state and federal branches of the Australian Labor Party and the Liberal and National parties. The Coalition parties were the biggest winners, receiving over 60 per cent of all the money donated. Hotels have been even more generous than the clubs. In the same period, the six branches of the AHA — the peak lobby group for the hotel sector — declared political donations to the state and federal branches of the Labor, Liberal, and National parties totalling $6 million.

The country’s major political parties have also benefited from the largesse of other major gambling players. Between 2008 and 2016, Crown Resorts, operator of the Melbourne and Perth casinos, donated over $1.1 million to Australia’s political parties. In the same period, Tabcorp Holdings donated over $1 million.

Warhurst laughs at the suggestion that this money is given simply out of goodwill or generosity. ‘These organisations don’t throw their money around for nothing,’ he says. ‘It’s about building a relationship — it gives them access to the political process. They want to know that they will be regarded in a good light and that they will get invitations to events. They want to get prior knowledge of policy developments and be consulted. And, ultimately, although there can be no guarantees, they will be extremely disappointed if they don’t get the outcome they want. They will do everything in their power to guarantee those outcomes.’

The former CEO of ClubsNSW, Mark Fitzgibbon, agrees. In 2009, he told The Australian newspaper that he had ‘no doubt’ ClubsNSW’s extensive donations helped to affect government policy in the lobby group’s favour. ‘I know it’s a cliché, but there’s no such thing as a free lunch,’ he said.

The continuous failure of state and territory governments across Australia to implement effective harm-minimisation measures is far from the only evidence that supports Warhurst’s and Fitzgibbon’s comments. In fact, a plethora of recent policies enacted in various jurisdictions are not only favourable to the gambling industry but have, in some cases, according to public-health experts, exacerbated gambling-related harm.

This is particularly true in New South Wales. Between September 2014 and December 2015, sixteen licensed pubs in Sydney’s CBD and Kings Cross — all of which operate poker machines — were given exemptions from the strict lockout laws that had been enacted a year earlier by the Liberal–National government. These laws prevented patrons from entering a premises after 1.30am and alcohol being served after 3.00am. The exempted venues were allowed to admit patrons after lockout so long as alcohol service also ceased at 1:30am — on the condition that ‘no entertainment is to be provided during the lockout period (other than gaming [poker machines] or background entertainment)’. In other words, people were allowed to enter after the lockout, but only to gamble.

Gambling venues in the state also benefit from lax smoking regulations. In August 2012, new laws were passed by the state’s parliament that banned smoking in all outdoor dining areas and at bus stops, train stations, and taxi ranks. This extension of the ban on indoor smoking that had been enacted years earlier, however, did not cover the ‘outdoor’ gambling sections at pubs and clubs. Anyone who has ever set foot in one of these sections will know they are really outdoor in name only; under existing laws, they are considered ‘outdoor’ if just 25 per cent of the total notional wall and ceiling area is not enclosed. Venues usually meet this criteria by simply having one large grated wall that lets in fresh air but barely any light.

The Star casino in Darling Harbour also enjoys certain exemptions from the state’s smoking laws. Gamblers in the casino’s high-roller rooms are legally allowed to smoke inside, despite the proven health risks that this poses to staff and other patrons.

Allowing people to smoke when they gamble benefits gambling operators in a very simple way: people gamble more when they’re able to smoke at the same time. A 2012 paper by KPMG, commissioned by ClubsNSW, reported that, ‘The introduction of a complete indoor smoking ban in NSW venues in July 2007 had a significant impact on gaming machine revenues. In total, EGM revenues declined by 10.6 per cent in the year subsequent to the ban.’ This reduction in spending is attributed to the fact that people may have a moment of clarity when they have a cigarette break, and may therefore decide to stop gambling. As a confidential paper from 2003 commissioned by Victorian gambling company Tattersalls noted: ‘Smoking is a powerful reinforcement for the trance-inducing rituals associated with gambling.’

The Star is also exempt from the violent-venues scheme introduced by the government in 2008. The scheme aims to make the public, for their own safety, aware of venues with high levels of assault, as well as to manage and reduce the number of violent incidents. The venue that topped the list in 2015 was the Plantation Hotel in Coffs Harbour, with 21 incidents of assault. Coming in as a close second was the Home Nightclub in Darling Harbour, with 19. According to the NSW Bureau of Crime Statistics and Research, however, there were 74 incidents of alcohol-related, non-domestic assault inside The Star between March 2014 and April 2015. The venue, however, didn’t garner a mention on the list.

Nor is The Star subject to the ‘Three Strikes’ disciplinary scheme. Under this scheme, if a licensee breaches its liquor licence on three occasions, it is subject to severe penalties, including licence suspensions and cancellations. In 2013–14, The Star casino faced disciplinary action for a total of 12 liquor-licence offences. Three of these were for ‘permitting intoxication’ — all strike-worthy offences.

On top of this, there’s the matter of Sydney’s soon-to-be opened second casino at Barangaroo, owned and operated by Crown. Without instituting a competitive tender process or making an independent evaluation, the state Liberal government granted Crown — which had recently hired Karl Bitar, who was once a senior figure in the NSW Labor right faction, as a lobbyist — the casino licence in November 2013. When the hotel-casino opens, it will be 275 metres high — over 100 metres taller than what was proposed in the initial masterplan. Gamblers in the high-roller rooms at the casino will also be allowed to smoke inside, and despite being located in between areas that are subject to the strict lockout laws in Sydney, the casino will be able to admit patrons at any time of the night.

Then there are the two Memorandums of Understanding (MOU) recently signed between ClubsNSW and the New South Wales Liberal–National Party. The Sydney Morning Herald’s state political editor, Sean Nicholls, described these as ‘two of the more extraordinary documents floating around New South Wales politics in the past seven years …’ Dr Charles Livingstone from Monash University says they are proof that the New South Wales Liberal–National Party is a ‘wholly-owned subsidiary’ of the club industry. John Warhurst has a similar view, saying that the MOUs demonstrate a concerning intimacy between the state government and club industry that is ‘corrupting of the political process’.

Chris Sidoti, the ex-chair of the NSW Independent Liquor and Gambling Authority, also echoes this sentiment. ‘I don’t know of any other industrial sector or any other sector of the community to have a formal, pre-electoral MOU with a political party about a public-policy issue, let alone a public-policy issue that is potentially as destructive as this,’ he tells me. He adds that there is one redeeming feature of the MOUs: they’re formal public documents. ‘There are lots of informal, completely opaque agreements between political parties and lobby groups which we never know anything of. At least this was above board and public, and known. So there’s that to be said for it.’

The first MOU, signed in October 2010, just prior to the state election the following year, which the Coalition won in a landslide, established ‘the club policy agenda for the NSW Liberals and Nationals in government’. The commitments made to the clubs — which were upheld by the Coalition when it came to power — included removing the requirement to forfeit poker machine entitlements on transfer between the premises of amalgamated clubs; maintaining existing conditions for maximum bets, reel speeds, cash insertion, and ATM placement and withdrawal limits; removing the cap on the number of electronic casino table games such as roulette and blackjack allowed to be operated by clubs; removing the ‘the ability of government to hold royal commission style investigations into clubs’; and ‘limiting increases in rents for clubs on Crown land.’ On top of all this, the MOU also reduced poker machines’ tax rates for clubs.

The second MOU, signed in 2014, committed the incumbent Liberal–National government to providing ‘transparency’ to and having a ‘shared responsibility’ with clubs when formulating gambling policy; increasing the cheque-issuing limit from $2,000 to $5,000; increasing the amount that could be stored on a smart card from $200 to $5,000; and retaining existing conditions for operating poker machines, with any proposed changes to be made ‘subject to a rigorous assessment including cost-benefit analysis and consultation’.

According to Dr Livingstone, these measures represent a ‘retro-aggressive step’ in gambling policy, and have only two beneficiaries: operators and governments. Raising the cheque-issuing limit to $5,000, he says, is a ‘a recipe to ensure that problem gamblers — and those in the moderate-risk category — simply pour their winnings back into the machine ASAP.’

Doug’s experience validates this point. Speaking to me about his two-day gambling binge that began at Maloney’s Hotel, where he won — and lost — several thousand dollars, he says, ‘If they gave all my winnings in a cheque, I wouldn’t have spent so much. The problem is when I have cash. That’s when I can’t control myself.’

Despite attracting much criticism, the government has vigorously defended the two MOUs. It said the raising of the cheque limit would reduce red tape by removing over 20,000 cheques from the system, and was counterbalanced by reducing the amount of cash that could be inserted into a poker machine at any one time from $10,000 to $7,500. A spokesman for Troy Grant, the Minister for Hospitality, Gaming and Racing, also told The Sydney Morning Herald that raising the amount of money that could be stored on smart cards would ‘ensure additional security for players as they will not be required to have to carry large sums of cash …’

In Queensland, policies benefiting the gambling industry have also recently been introduced. In 2013, the Liberal–National government overturned a longstanding ban on allowing $50 and $100 notes to be inserted into poker machines. A year later, the government enacted a suite of reforms that allowed clubs to operate up to 500 machines, instead of 280, across three or more venues, and enabled winnings of up to $5,000 to be paid out in cash on the spot. As in New South Wales, the government sold these reforms under the banner of ‘red-tape reduction’.

It’s a similar story in the Northern Territory. In December 2014, the Country Liberal government removed the territory-wide cap of 1,190 poker machines and announced an increase in the number of poker machines allowed in hotels from ten to twenty, and in clubs from forty-five to fifty-five. This came two years after the AHA donated $150,000 to the governing Country Liberal Party. Peter Styles, the territory’s gaming minister at the time, denied that this donation had influenced the government’s decision, saying the cap was lifted because the previous one imposed by Labor had been ‘arbitrary’ and hadn’t taken into account the ‘substantial increase in our population’. Public-health experts attacked the move, saying it would cause a rise in the number of gambling addicts in the community. Styles, however, rejected this. ‘The great majority of people use gaming machines responsibly, as other people in the community use whatever hobby they have responsibly,’ he said.

In Victoria, the Labor government announced a suite of gambling reforms in July 2017. While the number of poker machines in the state was frozen at just over 27,000, the next batch of licences to come into operation in 2022 would be issued for 20 years instead of the current ten-year agreement. The reforms also permitted clubs to double the number of poker machines they operated in their group from 420 to 840.

These changes came three years after a new licensing agreement was struck between Crown and the state government. The agreement extended Crown’s licence from 2033 to 2050, and reduced its tax obligations by removing the ‘super tax’ it paid previously on international and interstate VIP gaming. It also afforded Crown an extra 128 poker machine licences, 40 more tables on the casino floor, and 50 additional automated game terminals.

The new agreement benefited Crown in other significant ways, too. Unless Crown consents, taxes will not be increased and the licence will not be amended, and any regulatory actions adverse to Crown can trigger compensation.

In a company statement to the ASX when the deal was confirmed, Crown said the agreement ‘will improve the competitiveness of the Crown Melbourne integrated resort as a tourism destination compared to other integrated resorts in Australia and Asia’.

Even Tasmania, separated though it is from mainland Australia, is not separated from the political influence of the gambling industry. In fact, there, as historian James Boyce documented in Losing Streak: how Tasmania was gamed by the gambling industry, the industry’s influence on public policy is as long-lasting as it is strong.

One company holds the licence to every poker machine in Tasmania: the Federal Group. It is owned by the Sydney-based Farrell family, whose wealth is estimated at $463 million. Australian Electoral Commission returns show that, since 2002, the family has donated $152,625 to the Labor and Liberal parties. But because laws in Tasmania require that only political donations over $13,000 be disclosed, exactly how much the family has donated is not known for sure.

The history of Federal’s influence began in 1968 when, after extensive lobbying, secret negotiations with the government, and legislation that was rushed through the parliament without proper debate, it obtained the first casino licence in Australia for the Wrest Point Riviera Hotel in Hobart, which it had purchased over two decades earlier. At the time, the company and the government publicly promised that the casino would contain no poker machines. Twelve years after the casino opened in 1973, this promise was broken when legislation approving the operation of poker machines was passed with bipartisan support. Today, Wrest Point casino earns 87 per cent of its gambling revenue from poker machines.

Shortly before Wrest Point casino opened, the company also secured a licence for a second casino in Launceston. The granting of the licence to Federal was marred by bribery allegations against the deputy premier, Kevin Lyons, who was the power-holder in a Liberal minority government — allegations that Boyce provides extensive evidence to support.

In 1971, another company was selected by the government to operate a newly approved second casino in Launceston. If this came to fruition, Federal would have lost its monopoly on the state’s gambling market. Luckily for Federal, however, it didn’t, because in 1972 Lyons abruptly quit the Coalition and, in doing so, caused the state government to collapse. He had been planning this since at least a year earlier. Shortly before he quit, he received a ‘loan’ from Federal Hotels worth $10,500 in today’s terms. Despite having no demonstrated literary talent, he also received the equivalent of $250,000 as an advance for his memoirs — which were never completed — by British American Tobacco. Shortly after he quit, Lyons established a public relations company that was employed by Federal for a never-disclosed fee. ‘Given that Lyons had no experience in the field, there is no obvious reason why Federal Hotels should choose him to do its public relations work,’ Boyce writes.

Boyce documents many more examples over the years that highlight the influence of Federal Hotels on Tasmanian politics. One of the most notable is the 1993 decision to introduce poker machines into the state’s hotels and clubs.

The government’s preferred model was to allow a single operator to own the licences for every poker machine. This privilege would be regularly put out to tender to ensure market competition. Federal, fearing the financial ramifications that the introduction of poker machines into community venues would have on its casino operation, aggressively campaigned against the idea. Amid political deadlock, in early August 1993, Boyce writes, the government ‘suddenly capitulated’ to Federal, not by deciding against introducing poker machines into pubs and clubs, but by gifting the company the exclusive licence to operate every poker machine ‘ex gratia’. It was a lucrative deal worth approximately $30 million per year. Boyce says that the ‘only conceivable reason for the dramatic policy shift was to win over Federal Hotels’, adding that the company’s power was such that only with its support ‘would the legislation to allow poker machines in pubs and clubs pass through parliament’.

In 2002, the government gave another gift to Federal when it extended — without any public debate — the monopoly licence until 2023. Then, eight years later, after the 2010 state election, the minority Labor government moved to introduce $1 maximum bets on the state’s machines. Federal went on the attack, resulting in the parliament referring the issue to a committee. After two years, the committee came back with its recommendation: parliament should not introduce a $1 maximum bet. Both major parties supported the recommendation.

Boyce is unequivocal in his overall assessment of the situation in Tasmania. ‘Government policy on poker machines has reflected the inadequate management of conflict of interest and the reality of “regulatory capture”.’

But, as an infamous incident from several years ago demonstrates, the power of the gambling lobby isn’t just confined to state politics.

For only the second time in the country’s history, the 2010 federal election resulted in a hung parliament. With neither major party securing a majority, it was left to the six crossbenchers to determine whether Labor’s Julia Gillard or the Coalition’s Tony Abbott would become prime minister. One of these crossbenchers was Andrew Wilkie.

Wilkie, the member for the Tasmanian seat of Denison, had run on a platform of poker machine reform. He was seriously underprepared for the frenzy of negotiations that followed the election. ‘To put it into perspective, I’m standing for Denison — one of the safest seats in the country for Labor,’ he tells me in his parliamentary office. ‘No one gave me any chance of winning. I thought I had a small chance, but it was such a long shot that I didn’t think it really would happen. Then, pretty much the night of the election, I’m standing there, elected to parliament. I’ve got no party, no office, no staff — nothing. I’m told, “Get on a plane to Canberra and start negotiations.” I was very naïve, and probably didn’t know what to expect. I certainly learned a lot very, very quickly, and the clubs turned out to be a nasty piece of work.’

In his negotiations with Gillard and Abbott, Wilkie said he would give his vote to whoever would implement nationwide the Productivity Commission’s two main recommendations — $1 maximum bets and mandatory pre-commitment.

Gillard offered Wilkie a compromise: Labor would implement mandatory pre-commitment, but not $1 maximum bets. Wilkie ultimately — and now, to his regret — agreed to Gillard’s compromise. With his support, plus that of other crossbenchers, Labor formed a minority government. It rested on a single vote of support.

The gambling industry went on the offensive immediately. Costing only $3.5 million from a supposed war chest of $20 million, its anti-reform campaign was spearheaded by ClubsNSW, who, as the representative of community clubs, was by far the most presentable anti-reform group compared to its allies — allies that included the AHA and ex-director of Crown Resorts, James Packer. The campaign labelled mandatory pre-commitment ‘Un-Australian’ and said it constituted a ‘licence to punt’. It also claimed that mandatory pre-commitment ‘Won’t Work Will Hurt’ Australia’s clubs, because it would cost $5 billion to implement.

According to economist Richard Denniss in a paper for the Australia Institute that was commissioned by a cohort of pro-reform organisations, this figure was ‘clearly fanciful’ and bore ‘no relationship to the policy proposals currently being considered by the government’. Denniss pointed out that the industry’s claim was based on a report that claimed the potential cost of pre-commitment was in the range of $400 million to $5 billion. He said the $5 billion estimate would be the cost if every poker machine in Australia was to be replaced the next day — which, of course, wasn’t what was being proposed. The figure, he said, ignored the phase-in provision suggested by the parliamentary committee, the depreciation of old poker machines already on the market, the reduction in social harm and cost the reforms would result in, and the financial assistance that the government had agreed to give small clubs.

Denniss concluded, ‘Even if the gambling industry has done nothing to prepare for impending reforms and has continued to install machines that would be expensive to make compliant with the proposed regulations then, at worst, the cost of upgrading poker machines would be less than $350 million.’

As well as covering venues in campaign material and running television, newspaper, and radio advertisements, the industry spread its anti-reform message in craftier, subtler ways. During Channel Nine’s broadcast of the NRL semi-final between the Manly Sea Eagles and the Brisbane Broncos in September, veteran commentators Phil Gould and Ray Warren read out anti-reform announcements on air to the millions of sports fans around the country. Gould branded the poker machine laws a ‘rubbish policy’, while Warren said clubs ‘are under threat from the new, untested technology the federal government plans to introduce’. These statements — which were later confirmed to have been scripted and provided to the commentators by Channel Nine management — weren’t accompanied by any disclaimer, but they were accompanied by an on-screen prompt to the ‘Won’t Work Will Hurt’ campaign website.

But the real focus of the industry’s campaign was elsewhere. At its core it was a grassroots, marginal-seats campaign that specifically targeted crucial swing electorates in New South Wales and Queensland that Labor had narrowly won in the 2010 election — many of which were in rural and regional areas where people’s allegiances to their club are far stronger than their allegiance to any political party. In doing this, the industry hoped to frighten those vulnerable government MPs to urge Gillard to back out of her deal with Wilkie, or abstain — or even vote against — the reforms if legislation made it to the floor of parliament.

The targeted marginal seats were saturated with anti-reform campaign material. Over a million-and-a-half newsletters were mailed out to residents, urging them to contact their local MP and tell them to vote against the pre-commitment scheme. Huge billboards and banners were also erected outside clubs and hotels, featuring the name and face of the local MP and the question, ‘WHY DON’T YOU STAND UP FOR OUR COMMUNITY?’. Large rallies and community meetings were organised, and any Labor MP who accepted the invitation to attend and try to explain the reforms, or even to talk about problem gambling, quickly discovered that they had walked into an ambush. They were fronted by hundreds of angry club members, many of whom had been bussed in by the industry to bolster numbers, who held up placards, jeered and booed, and demanded explanations for why the Labor government was betraying clubs, local sporting teams, and local communities.

It was a cunning strategy that, as was later revealed, had been learned by the clubs at a $1,500-a-head course at the American University’s Public Affairs and Advocacy Institute in Washington, DC. One of the speakers at the course was a representative from the National Rifle Association, who outlined how to hijack the agenda of town hall meetings by packing the audience with supporters.

The federal opposition threw its full weight behind the industry’s anti-reform fight. Tony Abbott himself spoke at industry rallies organised by the clubs, promising to repeal the reforms if his party was elected at the next election. At times, it seemed as if he was speaking from a ClubsNSW script. He called mandatory pre-commitment a ‘tax’ that would ‘do a lot of damage to community clubs’, and said, ‘All of us want to do a better deal for the problem gambler, but it’s got to be a policy that works, not one that just hurts.’

The New South Wales government also supported the industry. ‘The NSW Coalition does not offer the rag-tag federal government carte blanche approval with an independent in Tasmania … without any consultation,’ George Souris, the New South Wales government spokesman for gaming, said. In a sign of the bipartisan support the industry enjoys, similar sentiments were expressed by the state Labor opposition, as well as by other governments in other states.

Donations to the federal and state branches of the Liberal–National Party by the clubs and hotels spiked in this period. In 2010–2011, ClubsNSW donated over $350,000, the New South Wales branch of the AHA donated over $600,000, and the Victorian branch of the AHA donated over $120,000. The following year, the federal office of the AHA made a $250,000 donation to the federal branch of the Liberal Party. ClubsNSW also donated $50,000 to Brian Loughane, the then Liberal Party federal director.

The industry’s marginal-seats strategy worked exactly as intended. Inside the Labor Party, a delegation of backbenchers threatened to cross the floor if the reforms made it to a vote. They aligned themselves with the industry, and insisted that Gillard either drop the deal with Wilkie or amend it and implement voluntary — not mandatory — pre-commitment.

Gillard was cornered. She knew that legislation to enact mandatory commitment would fail, namely because it would not be supported by those in her own party. But she also knew that if she reneged on her agreement with Wilkie, he would withdraw his vote of support for her minority government, causing it to collapse.

But in November 2011, Gillard won a lucky break when Harry Jenkins, a Labor MP, resigned as parliamentary speaker and was replaced by the Coalition’s Peter Slipper. This gave Labor the two-seat majority in parliament it needed to either renege on or amend the deal that Gillard had made with Wilkie.

That’s exactly what Gillard did, announcing in January 2012 that, while the other minor reform measures included in the initial deal with Wilkie, such as dynamic warnings on playing screens and a $250 withdrawal limit on ATMs inside venues would still happen, the nationwide rollout of mandatory pre-commitment was being abandoned. Instead, a 12-month trial of the scheme would be conducted in the ACT in February 2013.

Few in the public or in politics bought the Labor Party’s claim that it had scrapped the original deal because it did not have the support of key independents. As former federal independent MP, Rob Oakeshott, tells me, ‘The problem wasn’t on the vote of the crossbench — the problem was within the Labor Party’s own ranks, because there were people threatening to abstain. Mostly it was just about those people thinking about the implications for themselves, and they weren’t seeing any upsides for their future political careers if they did support such reforms. And that’s just a sad reality of politics.’

After this victory, the industry relaxed its anti-reform campaign, and instead turned its attention to promoting its apparent commitment to reducing gambling-related harm. In June 2012, ClubsAustralia — which is synonymous with ClubsNSW — launched a major media campaign called ‘Part of the Solution’ — designed, as explained on its website, to communicate ‘the active role that clubs play in reducing problem gambling in the community’. The campaign’s 36-page policy document claimed that ‘Australia is a global leader in gambling harm minimisation’ and that ‘the gaming industry is committed to a policy of minimising the harm associated with problem gambling in a manner that ensures a sustainable and vibrant gaming industry’.

The government’s watered-down reforms passed both houses of parliament in November 2012. But on the eve of the ACT trial beginning in February 2013, ACT clubs voted to postpone beginning the trial of mandatory pre-commitment until after the federal election that was scheduled for later in the year.

Just prior to the September election, the Coalition unveiled its official problem-gambling policy. It was near identical in substance, style, and tone to the industry’s. It said that Labor’s desire to introduce ‘licence to play’ poker machines through mandatory pre-commitment simply ‘won’t work’. It also promised to scrap the trial in the ACT, establish an industry advisory panel, take steps to implement voluntary pre-commitment, and improve existing counselling and support services. ‘Responsible gambling is all about people gambling within their means,’ the policy read.

ClubsAustralia emailed its members to say it was ‘encouraging to see that the Coalition sees a role for industry in policy development and continuing the work of helping problem gamblers’. The email also linked readers to the ClubsAustralia website, where the gambling policies of the two major parties were published. While Labor’s policy was merely outlined, the Coalition’s was explained at length in text and in a video by Kevin Andrews, the Coalition’s spokesman on poker machine policy as shadow minister for families, housing, and human services. In the video, Andrews was personally introduced by Anthony Ball, the CEO of ClubsNSW.

Also in August, ClubsNSW donated $20,000 to the Victorian-based Menzies 200 Club that was dedicated to supporting the re-election campaign of Andrews. But Andrews wasn’t the only individual MP to receive donations from the organisation at the time. So, too, did the Coalition’s Craig Laundy, Craig Kelly, and Bob Baldwin, who received $20,000, $6,500, and $4,000 respectively, as well as Labor’s Joel Fitzgibbon, Jason Clare, and Chris Bowen, who received $8,500, $9,250, and $3,700 respectively.

As predicted, the Coalition won the September election. In March the following year, it passed legislation repealing the trial of mandatory pre-commitment, as well as the daily limit on ATM withdrawals and the dynamic warning messages — with the support of Labor.

Three months later, ClubsNSW donated a further $10,000 to the Menzies 200 Club. A spokesman for the lobby group said that this and earlier money had been given for ‘no particular purpose’.

Oakeshott tells me that while he supported the initial reform package signed between Wilkie and Gillard, and would have voted for it had it reached the floor of parliament, he believed it was vulnerable to defeat from the outset: ‘I don’t think the original partners to the agreement had thought through the logical conclusions on the politics.’ According to him, the deal would have been stronger if two major flaws were fixed. The first and major one was that it did not bring the states to the table. There were no inter-governmental tax agreements dealing with the loss of state revenue from the reduction in gambling revenue. This, he says, would have initiated a discussion about why the machines exist at all, and would have provided ‘an opportunity to have a positive conversation about what other alternative revenue sources can be grown’. He says it would also have reduced the likelihood of the clubs owning the states throughout the debate.

The deal, according to Oakeshott, also should have considered forms of gambling other than just poker machines — especially online gambling. ‘Quite rightly, people were making the point that you can sit at home and you’re two clicks away from an illegal casino,’ he says. He believes this would have prevented the industry from being able to frame the debate as solely a government-led attack on community clubs and hotels.

It is, of course, impossible to know if Oakeshott is right — or, for that matter, if Gillard and the Labor Party would have even agreed to such measures. But one thing that is known for certain is that if the industry confronts a similar threat — either from a state or federal government — in the future, it will fight just as hard. ‘Fortunately, the memory of our previous campaign remains fresh in the minds of the major parties,’ Josh Landis, the executive director of ClubsNSW, wrote in the August 2016 edition of the group’s magazine, Club Life. ‘They know, if necessary, we will pull out the playbook from the mandatory pre-commitment campaign and call upon clubs to be active seat by seat in the lead up to the next election.’

Despite the inaction on poker machine reform, federal and state governments have taken strong action on online gambling — an ever-growing sector that poses a serious threat to those profiting from traditional forms of gambling. In 2014, the online gambling market was worth $2.1 billion in Australia and $35.1 billion globally.

In September 2015, the federal government ordered a review to be conducted into the impact of illegal offshore wagering. It accepted, in full or in principle, eighteen of the review’s nineteen recommendations. These included working with the states to establish a National Consumer Protection Framework that would ban companies from offering credit to customers; establishing a voluntary pre-commitment scheme and a national self-exclusion register for online wagering; enabling customers to access activity statements on demand and on a regular basis; and prohibiting links between online wagering companies and payday lenders. In April 2017, an intergovernmental meeting was held, with all ministers agreeing to these measures. They also agreed to jointly fund a $3 million national gambling-research program.

Another recommendation of the review was amending the Interactive Gambling Act 2001 to strengthen its enforcement and to increase clarity around the legality of online wagering services. The federal government acted swiftly, passing legislation in August 2017 that enacted a suite of reforms to reduce the harm caused by online gambling.

The federal government said these reforms were needed because of the significant risks that illegal online wagering posed to Australians, such as providing the opportunity to gamble anywhere, anytime, and the ability for operators to target vulnerable people with inducements to bet, and the lack of effective harm-minimisation measures for online gamblers. ‘Currently hundreds of illegal gambling services are easily accessible on the internet,’ the federal human services minister at the time, Alan Tudge, said in November 2016 when the new legislation was introduced into parliament, ‘and we know that people are more likely to get into trouble online — 2.7 per cent of interactive gamblers are problem gamblers compared to 0.9 per cent of all gamblers’.

None of the government’s reforms of online gambling have faced opposition from the poker machine industry. In fact, clubs have actually advocated for several years that action be taken on online gambling. In its submission to the 2014 New South Wales Legislative Inquiry into Gambling, ClubsNSW wrote that it ‘has concerns that the regulatory environment has not kept pace with the growth of the industry, and that the risks associated with online gambling are not being addressed effectively’. Despite its libertarian outlook on most other matters, the organisation argued that the ‘prohibition on online gambling can and should be enforced’.

No doubt, the online gambling sector warrants regulation to reduce the growing harm it causes to Australians. However, it’s worth wondering if governments across Australia would have shown such a willingness to crack down on online gambling if, say, the industry was vehemently opposed to these measures and had launched a marginal-seats campaign against them.

It is also worth wondering about the sincerity of government claims of being committed to protecting consumers and reducing gambling-related harm. If they were genuinely sincere, why would they not reform a form of gambling that has an addiction rate more than five times that of online gambling — a form of gambling that causes more harm to Australians than most other forms of gambling combined?

Even those within the gambling industry agree on the most reasonable answer to this question. As Anthony Ball of ClubsNSW boasted to Crikey in 2011: ‘I’m fortunate enough to be in an industry that probably is powerful.’