Australia’s state elections challenge the mighty slot industry

By Byron Kaye and Praveen Menon

SYDNEY, March 23 (Reuters) – When David McMillan stole A$5,000 from his dying father’s small business last year, he knew it was time to kick a gambling habit that had eaten up his life since he started gambling. dumping his paychecks into slot machines at 17.

“It wasn’t an intentional thing, but before I knew it there was no money left,” said the 33-year-old air conditioning technician from Sydney, who gave control of his bank account to his sister.

“I will never go back there,” he added in an interview.

In what would be a world first in tackling problem gambling and money laundering, the ruling party in Australia’s most populous state and one of the world’s largest gambling hubs, New South Wales, wants to make slot machines cashless.

Ahead of the state election on Saturday, the conservative coalition has vowed to rein in the mighty pokie industry in a jurisdiction with nearly a tenth of the world’s million machines, second only to Las Vegas.

Per capita gambling losses in NSW are higher than anywhere else, meaning a move to mandatory cashless machines would be closely watched by gambling regulators around the world.

It’s the first time gambling has been a key issue in a state election, challenging an industry that provides more than 5% of state taxes and backs the welfare sector with A$100m ($67 million) per year in state-subsidized grants.

In a state where major political parties receive large donations from the gambling industry and players invest A$95 billion in poker machines each year, equivalent to one-seventh of its gross domestic product , Prime Minister Dominic Perrottet and his government broke ranks.

He said he can no longer watch his state “profiteering from the misery of others” and hopes the rest of the country will follow suit. It plans to force all slot machines to go cashless by 2028, allowing players to set loss limits in advance and making it harder for criminals to use the machines to launder money. ‘money.

“For generations to come, this will reduce family breakdowns due to problem gambling, it will prevent money laundering from happening in our state, and ultimately we will have a thriving industry,” Perrottet told reporters.

His plan has raised hopes among anti-gambling activists, who blame “pokies”, located at 2,300 locations across the state, of leaving hundreds of thousands of Australians financially ruined.

“This is the first time in our state’s history…that slot machine reform is actually an election issue,” said Stu Cameron, CEO of Wesley Mission, a charity that supports the homeless. shelter, drug addicts and others.

“We are the epicenter of slot machine addiction, not just in Australia, but around the world. The case for reform is there in the statistics, but more specifically in the stories of those lives that are harmed by slot machine addiction,” he said.

McMillan, the air conditioning repairman, said cashless machines alone could not stop problem gambling, but “I would favor any change that could help people”.

It is unclear whether the measures will pass after Saturday’s election, as the main opposition Labor Party is reluctant to back them.

Most polls suggest Labor will narrowly win, but political analysts say a hung parliament is possible, meaning Labor may have to negotiate with members of multiple ranks who support mandatory cashless machines.

BASE ADHESION

The promised restrictions could slash the profits of the country’s biggest pub owner and poker machine licensee, Endeavor Group Ltd. EDV.AX, which has some 12,000 machines, up to a fifth, analysts say. Endeavor declined to comment but said it wants to work constructively with regulators.

The plan is politically sensitive, not only because it implied tackling the gaming industry, but because hundreds of underfunded sports clubs and non-profits have survived on A$1 billion in state-backed industry grants since the 1990s.

A social welfare body that advised the grant scheme, the NSW Council of Social Services, stopped getting involved in 2021, citing governance issues.

Since then, a quarter of its 400 groups have received subsidies from gambling interests, Reuters analysis of publicly available documents showed, a sign of the industry’s grip on the ground.

“Clubs … use it as a very powerful public relations tool to tell the world, ‘we are fantastic corporate citizens, we give back to communities,'” said council CEO Joanna Quilty.

ClubsNSW said it would work with the new government on “evidence-based gaming reform measures”.

Activists say the cost of pokie damage outweighs the benefits of subsidies.

“Cashless gambling is a start, but I think pokies just need to go,” said Tim Gray, a 42-year-old tourist guide from Sydney, who took out high-interest instant loans to fund an addiction to the game of several decades before giving. four months ago.

“We have a chance to really push for change this time.”

($1 = 1.4950 Australian dollars)

Australia leads the world in gambling losseshttps://tmsnrt.rs/407sXwL

(Reporting by Byron Kaye and Praveen Menon, with additional reporting by Lewis Jackson; Editing by Sonali Paul)

((byron.kaye@thomsonreuters.com; +612 9171 7541; @byronkaye;))

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.