The number of players declined from 4.6 in 2011 down to 4.4 in 2012, while the number of gaming machines remained steady: around 200,000 are found in Australia. These days, Australia has the 7th highest total number of poker machines of any country in the world. The countries with more gaming machines are Japan (pachinko), the United States, Italy, the United Kingdom, Spain, and Germany.
Poker machines account for a huge part of the revenue stream for gambling interests in Australia. Of all the gambling profits made by gambling interests in Australia, over 60% comes from pokies revenue. These gaming machines use video displays to project games with five reels, in most cases.
Decades ago, the games in casinos were mechanical, but now all land-based and online pokies are electronic. These use a random number generator to produce results. While this might seem like an academic fact, the electronic nature of the machines has increased the potential size of jackpots over the past three decades by several magnitudes of scale. In turn, the bigger payouts has increased the popularity of poker machines to the Australian gaming public.
Unlike many other nations worldwide, the government does not tax player winnings. Instead, the governments collect taxes on the revenues of the casinos, pubs, and clubs which offer gambling. In recent years, the states of Australia collected about $3 billion per year on revenues from pokies (though they collected more in 2011 than 2012). This accounts for roughly 2/3rds of the taxes collected, out of a total of about $4.6 billion.
Most of the gambling machines in Australia are found in one of three states: New South Wales, Victoria, and Queensland. We’ll focus mainly on these three states, since they comprise about 7/8ths of the poker machine economy in the country.
New South Wales houses about half of the gaming machines in Australia, if one counts the Australian Capital Territory. The number any given year is around 97,000, though this amount rises and falls periodically. The games are found not only in the usual locations, but also in RSL clubs throughout the state.
Victoria has about 25% of the population of Australia, but only 15% of the gaming machines (about 29,000). A recent decline happened after the Victorian government ended the 20-year duopoly by Tabcorp and Tattersall’s. These companies were allotted 13,000 machines apiece, which were placed in the bigger venues where they could make the most money. Many of the small pubs and clubs which would have machines in NSW or Queensland don’t have them in Victoria.
In Victoria, the payout percentage for pokies must be 87% or higher. This includes payouts at the Crown Casino in Melbourne. In 2007, new laws were instituted which banned the use of $100 bills for gambling. Also, the autoplay feature was banned in gaming machines in the state of Victoria. The only exception to this ban is the Crown Casino, where players with a VIP loyalty card can place $100 bets. These same players can use the autoplay feature, too. Those wondering why autoplay would be a focus of the law must understand this option allows players to set the game to run without a manual clicking of the button, so losses can run high quickly.
Queensland houses just over 45,000 of the gaming machines in Australia. The state government of Queensland instituted a law where requires a specific minimum house edge. In casinos, the lowest house edge on poker machines is 90%. In pubs and clubs, the lowest possible house edge is 85%.
Western Australia has long had the most restrictive gaming policies in the country. Besides the Burswood Casino, now known as the Crown Perth, no gaming machines are allowed in the state. The Crown Perth currently has 1,500 coin-operated gambling machines, with games like video poker, keno, dice, and dominoes.
At the moment, reel slots with pull-down levers are not allowed in Western Australia. According to a 2012 proposal by Crown Limited, the Crown Perth will expand its gambling facilities to include 2,500 gaming machines in all.
Tasmanian casinos and gaming venues collect about $215 million per year in revenues from pokies. The numbers are declining slightly since the all-time high of $220 in 2009. Tasmania’s government granted a monopoly on gaming machines to Federal Hotels, which has placed some 3,680 machines in all.
The SA government recently passed a law which would limit bets per spin to $5, down from the previous $10 limit. Another new law calls for a pre-commitment system, which would allow gamblers to set a limit to their gambling losses before they started playing. The new law also creates a major venue (60 machines max) and a minor venue (20 machines max). The distinction between these venues includes the ability to use ATM machine and player incentive clubs. The new law might lead to a consolidation of poker machines in the bigger establishments. Their maximum limit of machines goes from 40 to 60, while many of the smaller places may be able to sell their licenses to the big clubs.
In the Northern Territory, player losses on poker machines is reaching nearly $200 million per year. This means the 1200+ gambling establishments are likely to collect about $140 million in pokies revenue each year, with the government collecting about $60 million. While this is small change compared to several other state governments, some in the territory view these numbers as a disturbing trend. The number of machines has jumped by a factor of 5 in the past 10 years, which means the profits have increased by a similar amount.
Australians are thought to spend over $1.1 billion per year on the online betting. That number continues to rise from one year to the next, up from $928 million in 2010. That figure includes sports betting, table games, and poker sites. Like in other parts of the industry, over half of the total revenues come from online pokies.