Sat, May 4, 2:30am by Kevin Pitstock
Dr. Charles Livingstone of Monash University recently suggested gaming tax reform as a method of solving the problem gambling crisis. He states that the way gambling is taxed at the moment encourages online casinos to take advantage of those with gambling addiction. By reforming the tax system, gaming websites will modify their policies.
The doctor pointed to Victoria and New South Wales from a recent study. These two states received a respective 61% and 64% from taxes on poker machines. Since Australian gambling taxes are based on the amount lost and not the amount won at casinos, the numbers are a good indication of the percentage of money which is lost on the gaming machines.
He claims that of the $10 billion revenues casinos made by casinos on the pokies, about 40% comes from problem gamblers and another 20% from “at risk” players. This led the doctor to recommend similar reforms to those proposed by the Productivity Commission.
The Productivity Commission suggested two major gambling reforms. The first is the introduction of mandatory pre-commitment system at websites, which this blog reported on earlier. This pre-commitment system requires a gambler to set a deposit limit on their own account, so that gambler decides the max limit of expenditure before competitive spirit and their own addictive tendencies cause them to spend more than they should. This reform has widespread appeal with the Australian public.
The second reform is more fundamental. The max wager on the pokies would be set at $1 per spin. According to the Commission, this would reduce loss rates per hour to $120–still a sizable amount for most players. The total reduction would cut the loss rate by 90%, down from the $1,200 per hour experienced by gamblers who averaged $10 bets on every spin.
Industry experts dispute whether this is a reasonable or practical bet limit. One study conducted ten years ago shows a loss of revenue in the 39% range. Dr Livingstone points out that 82% of gamblers bet no more than $1 per spin on the pokies. Problem players make up a significant percentage of the remaining 18%, so the new system would be well-designed to target gambling addicts.
The doctor predicts such a method would reduce government revenues on gambling by as much as 20%. This leads him to believe treasuries would be against new laws with the $1 limit. His conclusion is that effective change is likely to hurt the government budget, but this is what’s needed to reduce addictive gambling or “harm minimization” in a meaningful way.
Livingstone cites the end of the 20-year duopoly as a chance to make real changes which might avert the big losses in revenues, by producing a direct relationship between governments and vendors without the duopoly in between. With one less organization taking a cut of the revenues, enough cash should exist to make both sides happy and profitable, while still pushing through true reform like that suggested by the doctor. Yet attempts at a public auction to replace the old method proved a disaster in Victoria. The issue of whether a better system can be implemented is still uncertain.
Dr Charles Livingstone is a Senior Lecturer in the School of Public Health and Preventive Medicine, Monash University. The doctor also teaches honors courses for the Bachelor of Health Science program. Besides concerning himself with physical health, the doctor has conducted gambling studies. The conclusion he drew from these studies is that electronic gaming machines are the crux of the problem. Dr Livingstone now advocates policies which target the ECM’s at land-based and online casinos.
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