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Policy making, social responsibility and the gambling industry Professor Jan McMillen Director Australian Institute for Gambling Research University of Western Sydney Background themes Canada & Australia: common principles
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Policy making, social responsibility and the gambling industry Professor Jan McMillen Director Australian Institute for Gambling Research University of Western Sydney
Background themes • Canada & Australia: common principles • Federal systems, state/provincial authority over gambling, varied approaches • Historical nexus between gambling legalisation & charitable/welfare funding • Strong emphasis on regulation, social issues • Differences • Australian gambling legalised since 19th century • Primarily government-run, prohibition on private ownership until 1970-80s • Privatisation, commercialisation introduced market imperatives, problem gambling (machines, casinos) • 2000-1 per capital loss $942, almost 4% HDI • 80-85% gamble regularly, 2.1% have problems
Regulatory rationale • The traditional role of government to regulate • Commercial gambling as a privilege, not a right • Control over market entry, probity of operators • Crime prevention, consumer protection • To generate revenue • replacing illegal activities that incur policing costs • revenue for welfare, public infrastructure • increasing leisure and recreation facilities • job creation (= ‘illusory” – PC 1999) • To mediate social costs • perception that gambling is a questionable activity • problem gambling, social harm • Emerging challenges to national sovereignty • Global telecommunications technology as the catalyst for change
Factors that influence gambling policy • The economic power of industry • Revenue imperative, ‘invisible’ form of taxation • Inter-regional rivalry • leakage of gambling expenditure • investment opportunities • Special treatment for some industries • Growth is supply driven (not consumer demand) • Policy learning • learning from other jurisdictions • from past policy failures • from research, community backlash • Relevant policy instruments, mechanisms • choice of policy options/design, convenient policy process
The Gambling Regulatory Cycle 1. Regulatory liberalisation 3. Community concern, industry pressure, information can lead to regulatory reform 2. Proliferation of gambling & impacts
What works: lessons from Oz • Casinos: • Control over market entry, regional monopolies • Licensing & regulation of gaming staff • On-site 24 hr government inspectorate • Parallel surveillance systems, override on CCTV • Police squads, undercover, ban on criminals • Auditing of cash transactions • Gaming machines (clubs, hotels): • Venue licences, restricted to certain venue types • Licensing of key staff • Centralised monitoring systems, auditing • What doesn’t: • Proliferation of gaming machines • Wagering & sportsbetting: • inferior regulatory standards, fragmented, inconsistent
Lessons from Australia (cont’d) • Crime prevention • Deterrence, detection, sanctions • Proactive policing at minimal public cost • Internal casino/venue crime • hidden ownership • theft, counterfeiting • cheating (card counting) • Community crime • Crime displacement • Problem gambling related crimes = inadequate data • Money laundering • Star City scandal, regulatory reforms • Prosecution, enforcement • Patrons, staff • Criminal prosecution, licence withdrawal automatic
Crime prevention (cont’d) • Licence withdrawal rarely used against venues • but publication of breaches, sanctions • Problem gambling crimes • tendency of the courts is to impose jail sentence • problem gambling is accepted in rare cases as ‘mitigating circumstances’, leniency in sentencing • mandatory counselling not successful • Liability for problem gambling • Tendency has been to find individual liability eg • the Katoomba-Reynolds, Lane Cove cases • the O’Malley’s case • the Star City case • Self-regulation, commercial approach is deficient • evidence of social costs/problems from PC’s national inquiry, state research
Problem gambling – regulatory reforms • Gaming machines = major source of problems • 10-14% of regular machine gamblers have problems • 2.1% gamblers generate 33% of total gambling revenue • NSW: 104,000 machines in clubs & hotels • 2.55% = highest national prevalence of problem gambling • Western Australia: no machines outside Perth casino • 0.70% = lowest national prevalence of problem gambling • Restrictions on consumer access • Away from shopping centres • ‘Cap’ number of machines (venue, region, state) • CIS requirements – demonstrate community benefit • Consumer information, signage, brochures • Controls over advertising and promotion • No external advertising, not to focus on ‘winning’, etc • Controlling the gaming environment • Lighting, ATMs, gaming not to dominate venue, multiple facilities • Controlling game features and design
Internet gambling - regulatory issues • Legislative and regulatory inconsistencies between states/territories • inadequacies of regulation, loopholes • detection, control of illegal activities • Integrity of the games & consumer protection • who sets the standards? are they enforceable? • Social impacts (eg underage gambling, problem gambling) • Is prohibition a viable option? • Commonwealth response: prohibition of gaming, proliferation of wagering/sportsbetting • who will enforce a ban? • limitations of national sovereignty, state laws • Disputes with USA & other nations are likely over sportsbetting/wagering
Developments in the UK • Principle of ‘non-stimulation’, restricted markets until 1990s • Privately owned National Lottery introduced commercial industry practices, uneven playing field • Internet bookmakers moved offshore to tax havens • Gaming Review 2001 (Budd Report) • proposes major liberalisation of gambling • introduction of gaming machines • in theory, growth is to be balanced by responsible gambling policies • Regulatory regimes not defined • Currently subject to industry lobbying
The way forward • Avoid policy lag • policy learning - be proactive, not reactive • avoid trend to devolve initiative to industry • A coordinated policy using all regulatory resources • review of legislation, range of regulatory options • Needs a ‘whole of industry’ approach, consistency (not ad hoc, incrementalism) • Collaboration, policy input by community groups , local authorities • consultation re licensing criteria • more specific regulations, application of appropriate sanctions • clarify offences & liability
Blueprint for gambling regulation • Separate structure of institutions involved • Allocation of roles and functions: who should do it? How should it be done? • policy development by parliament • control of all gambling by independent regulator • enforcement separate from policy & control • adjudication shared by control authority & courts • fund administration by independent trust, board • Defined,accountable processes for implementation and enforcement • Avoid conflicting principles & objectives • Open, consultative & informed processes • The guiding principle = the broader public interest