Thursday, 30 June 2011

The Real Problem with the Entitlement Auction

The Victorian Auditor General issued a report this week about the incompetence of the process of legislating and then implementing the pokie entitlement auction that likely cost the State of Victoria hundreds of million of dollars. I agree that incompetence in legislating and implementing could have been factors. I agree with Prof Livingstone comments that the auction was an opportunity missed to truly address the issue of harm minimisation. I blame the Greens for caving in when they held the balance of power.

Click here to read some literal hand wringing in today's The Age.

The true core problem in not getting more $$$ is that Victoria has an effective monopoly with Woolies / Mathieson joint venture. No one could realistically bid against them so probably no one did. Firstly, Woolworths would always have more money. Secondly, because of the takeover of the Fosters and Taverners pubs with Woolworths $$$$ there was no pub real estate left.

And it is the metro pub pokies where the significant deficiencies between earnings and the cost of the entitlements occurred.
Here's an article I initiated when the matter was being debated.

I emailed and called Michael O'Brien's and Greg Barber's office. They both ignored my advocacy. That advocacy was to lower the maximum percentage owned, at the very least, by reference to clubs managed. With 20/20 hindsight, what I was suggesting was not radical enough but it would have helped a little to promote competition.

Here's a copy of the media release I sent out in March 2009.

Let's cut to 2011 and see if mistakes are not being made again. They are.

Minister O'Brien seems equally intent as he was in March 2009 in ignoring not just moderate advocacy on pokie reform but also the deficiencies in enforcing even existing legislation as to harmful machines, responsible codes and encouraging children to gamble.

Pre-commitment on high loss pokies can be implemented from a central control if Victoria adopts the QCOM system now operating in Queensland, Tasmania and the Northern Territory. New Zealand is QCOM compliant. Here's what the Productivity Commission found at page 10.38:

"In discussion with regulators, experts and the gaming machine industry, the Commission understands that some existing central monitoring systems — such as the Qcom system in Tasmania, Northern Territory and Queensland — could be used to provide ‘full’ pre-commitment across nearly all community venues and machines.21 The Victorian Government has announced a monitoring system that would have a similar functionality as part of its legislated intention to implement pre-commitment."

If this extract is correct then consumers will be protected by quickly indicating what they are prepared to spend for their pokie entertainment and be bound by whatever limit they set. And it can all happen rather quickly and inexpensively.

But Minster O'Brien is resisting even this considered advice.

In addition to the matters raised in the notice to the Victorian gambling commission and Minister O'Brien, Victorians can add the Lucky Envelope pokies nastiness. No matter what the technicalities say, these are low loss pokies are parading as something somehow OK and they're not.

Paraphrasing the Minister from his brazen statements on Four Corners, where was the "holistic" evidence based approach before these low loss pokies were allowed to spread? And are they low loss at all?

The burden is on the Minister to prove that these new style of pokies have spread on the basis of considered research. My guess is that there isn't any. My guess is that this is yet another instance of this Minister's terrifying contempt for the interests of affected Victorians.

Wednesday, 29 June 2011

Peter Cohen Post VCGR

Peter Cohen is the former Executive Commissioner and Chief Executive Officer of the Victorian Commission for Gambling Regulation. He was responsible for all aspects of gambling regulation in Victoria, including Crown Casino, 27,500 poker machines in over 500 venues, two public lottery operators, bookmakers, the TAB, Keno and charitable gaming. With all this knowledge, Mr Cohen is now working for The Agenda Group; a firm that combines "the political, corporate and media expertise of senior consultants in Melbourne, Sydney and Canberra, we exhaust all possibilities to deliver for our clients". Amongst their claimed accomplishments are:
Tactical media and government relations campaign to overturn sections of the Federal Government’s health professionals accreditation scheme

Regulatory transformation of an international gaming organisation
I would call this a lobby group.

Here's the release from the Victorian Gambling Commission upon Mr Cohen's retirement.The business of The Agenda Group is not what would have first come to mind although it is private enterprise.

There is a lot of confidential information that came across Mr Cohen's desk in his capacity as chief executive officer. He likely had access to information as to how much was being lost at what venues and on what forms of gambling. That includes KENO and Club KENO. It makes Mr Cohen's promotional statement about the attractive nature of the new KENO license all the more extraordinary:
"The new keno licence which has just been issued and which will take effect from April 2012 overcomes some of these limitations. Firstly, the network of available outlets has been expanded to about 3,000 as it will be allowed in a broader range of premises licensed to serve liquor – with or without poker machines – as well as wagering outlets. Also, any tension that might exist because of the joint venture will cease with keno being licensed to a single entity, Tabcorp. And as Tabcorp already operates keno successfully in the states of New South Wales and Queensland, it has both a business model which is successful and a system approved which can be expanded into Victoria."
This same position was provided to the International Association of Gaming Advisors. One wonders why Mr Cohen is spruicking an investment in Tabcorp.

Mr Cohen also knew what was in the secret management agreements that practically control so many pokie venues. The VCGR, when Mr Cohen, was in charge was reported to be investigating the goings on at the Richmond Tavern (licensed to a basketball club that had ceased to ay basketball years earlier) when pokies were withdrawn from this venue yet the same North Melbourne Giants basketball club (whose address is the same as the giant Woolworths / Mathieson joint venture) apparently applied for 30 pokie entitlements.

I am not aware of any investigation report even though the "ripping out" happened over a year ago. While not critical of anything relating to the Richmond Tavern, the Victorian Auditor General's report into was critical of many other things surrounding the auction of pokie entitlements.

Annexed to the Auditor General's report is a letter from the present VCGR Chairman explaining inconsistencies in some of its information recorded for venue operators.

Monday, 27 June 2011

Media Watch Exposes Uncritical Reporting

The uncritical reporting of the pokie clubs' advocacy has reached an unacceptable level. The poor journalism includes Four Corners.

Click here to read the transcript of Media Watch.

Media Watch uncovers the poor reporting of the clubs' speculative claim of a 40% decline in pokie losses should the Federal Parliament enact the Productivity Commission's consumer protection measures.

ClubsNSW have failed the goal of sustaining the pokie clubs by promoting frightening information that incorrectly generates concern amongst clubs and the public about reduction of pokie revenue as a result of the Productivity Commission's consumer reforms.

Peter Newell and Jeremy Bath were nationally exposed. This reduces the effectiveness of anything they now might say on behalf of clubs. Mr Newell should now be urged to drop the false claim of a compulsory "license to punt" when gambling on low loss machines will require no registration, no card and no setting of limits. Otherwise, there will be further exposure, embarrassment and decline in public acceptance of anything clubs have to say.

Friday, 24 June 2011

The Minister and the VCGR on notice

On Monday, 19 June I sent notice to the Chairman of the VCGR, Bruce Thompson, a notice requesting remedial action. An identical letter was sent to the Minister, Michael O'Brien. My co-signatories were Nick Xenophon and Tim Cosello. A similiar letter, relating to matters in South Australia was sent by Nick Xenophon to the relevant parties in that state. Reproduced below is a copy of that letter. Click on the images to read them.I will post any response once received.

Click here to read the coverage in The Age.
Click here to read the coverage in the Adelaide Advertiser.

Friday, 17 June 2011

And Now The ABC Has Fallen

After years of fair coverage, the ABC has now fallen to the pokie clubs strategy to stop pokie reform. It is the very strategy that Yes Minister parodied yet the next Four Corners has been completely duped by it. Here's the hilarious Yes Minister parody extract from the Productivity Commission's report. Click on the image to have a read and a laugh.
What is not funny is how this strategy has become the reality of the battle to implement pokie reform.

The promotion for Four Corners lacks any mention of the cornerstone of the reforms. Pre-commitment was never proposed to be "mandatory" for all. The truth is that gamblers will be able to lose up to $150 per hour gambling on pokies that require no pre-commitment, no card, no license to punt. At a maximum bet of $1, this will account for 80% of existing gamblers without them having to change their gambling habits. This modest consumer protection measure asks only gamblers whose choice it is to gamble on the dangerous high intensity machines to choose how much they are prepared to lose.

Here's how Four Corners pro-pokies bias shows through:
  • The reforms are described as "radical",
  • The core question posed is "it was good politics - but was it good policy?"
  • Wilkie "cut a deal"
  • The lead advocate for the clubs statement is broadcast that "it was a deal done behind closed doors" - the truth is that the agreement has always been a matter of public record. Want a copy? Email me at and I'll send you one.
  • The reporter states "And the punters are in a spin"
  • A gambler's statement is broadcast "people have got to register at how much they are going to play. They won't play at all". This is wrong and promotes the ClubsNSW spin without question.
It would be irresponsible of the ABC to broadcast this ignorance unless it is followed by a broadcast of the fact that the reform does not require most gamblers to either register or set any limits on their gambling.

One wonders how many times this inaccurate and biased promo will be broadcast before Monday night. It should be withdrawn and re-edited.

Click here to read the Four Corners promo page.

There appears to be more bad and biased reporting on the way...
  • The story is called "Wilkie's Gamble".
  • There is a false statement " "Labor promised to introduce smart card technology that would force gamblers to decide in advance how much they would spend when they played poker machines." The actual promise allowed for gamblers to gamble on safe machines without any card, any registration, any setting of limits.
  • The reporter's question is set "why did he choose pre-commitment technology that had never been properly tested?". The fact is that the technology has been tested. It has been in use in Australia and overseas for years.
And, in addition to stop talking about 'mandatory' when the proposal has never been mandatory, let's get something semantically straight.... pokie gambling is not play. It's not sport. It's not kicking or throwing a ball. It's not something that children do in a playground. Pokie gambling is gambling. People who gamble on pokies are gamblers.

By using the word "play" instead of gambling; the ABC has been duped by the Yes Minister strategy.

I have already written to Four Corners in an effort to have the full facts disclosed. I urge you to do the same. Click here to send a comment.

Thursday, 16 June 2011

Garbage In Garbage Out

On the surface, the reporting from the Tweed Head Daily News seems straightforward. However, quick examination of the claims being made uncover uncritical journalism that blissfully publishes the garbage advocacy of the giant pokie industry propaganda machine. The worry is that uncritical reporting dangerously transforms this advocacy into some kind of truth. Here's a reproduction of the article.Click here to read the article online.

No one wants people to lose their jobs and 882 jobs is a lot. I would want whatever causes that to not happen. Ms Masters relies upon a KPMG report to substantiate the headline. However, the story is in immediate trouble as Ms Masters fails to disclose that the KPMG report was initiated and paid for by the pokie clubs. Ms Masters fails to disclose that KPMG is a corporate partner of the giant pokie lobby ClubsNSW. Click here to see the special web page set aside for KPMG on the ClubsNSW web site.

Review of Volume 1 of the Productivity Commission's report shows doubt being expressed about findings submitted by KPMG.

But this is window dressing. The substantial step is to examine the basis of the KPMG finding. And it is lacking in substance. It is based upon an assumption of loss of revenue. The only evidence cited in support of that speculative assumption is a trial in Quebec. No detail can be found on the specifics of that trial so one must examine what does happen in Quebec and see if it has a parallel in NSW.

Turning to the reality of Quebec, click here to read the web page of Loto Quebec, the operator of all Quebec pokies (called "VLTs"). The reality is that in Quebec, gamblers set time limits, losses are limited to $60 per session, the required return to player is significantly higher than any Australian jurisdiction, and bets can be no higher than $2.50. That bet limit is 50% less than Australia's strictest requirement. Who knows what it was before?

There are 12,000 VLTs in the Province of Quebec, a population of 7,970,672. There are 97,065 pokies in NSW, a population of 7,134,421.

The reality of the Quebec consumer protection measures on pokie gambling bear little relationship to the claims being made for NSW.

Then there is Ms Masters uncritical acceptance of the claim that it will cost Far North Coast clubs $73 million to implement the reform. No basis for this claim is made. Looking again upon the reality of "nearly there" systems in place for years in Queensland, this claim is false. The reality is that there is NO CAPITAL COST and the periodical cost for "nearly there" systems is as low as $1.50 per day per machine.

The revenue drop is equally speculative. Again no facts are cited.

Finally, the statement that the "proposed technology, put forward by the federal government in return for the support of Tasmanian independent MP Andrew Wilkie" is critically untrue.
  1. The modest consumer protection reforms were the recommendation of the Productivity Commission. Not Mr Wilkie. Not the federal government. They were made after 11 years of study commissioned by both Liberal and Labor governments and full consultation with the pokie club industry.
  2. Jenny Macklin, the responsible federal minister, identified implementation of the Productivity Commission's recommendation on pre-commitment as a "first priority" on 23 June 2010. This is months before Mr Wilkie even ran for election.
Garbage In. Garbage Out. While it is always open for a paper to editorialise, articles presented as news do have some responsibility to accuracy.

Tuesday, 7 June 2011

The MiHi Tragedy Continues

In June 2009, I blogged about the tragic incident of a child being left in a vehicle at the Coles associated MiHi Tavern near Ipswich in Queensland. Readers may recall my recounting my meeting with Coles' senior executives and my please for them to take similar steps to those in place in Victoria. Some very commendable steps were taken (that I applauded publicly - for what that is worth) but not enough. It has all happened again. At the same pokie pub.

Click here to read the story.

By email dated 15 December 2008, I asked Coles to erect these signs:

Instead they erected these signs:

Click on this photo (supplied by Coles) to see an expanded version.

Click here to read my 25 June 2009 blog.

On 18 September 2009, I wrote to Coles and indicated my concerns about the signs they chose to erect:
"With regard to the child warning signs, I believe that the KidsSafe signs will be more effective than the design in the pictures. There is no question that the message in the signs you forwarded is correct and that their design compliments the 'look' of the Mihi Tavern. The suggested signs are aesthetically pleasing. The problem is that the message needs to be forcibly noticed to be truly effective. This KidsSafe design was mentioned in your 6 point plan. I believe that the KidsSafe design used by all Victorian pokie pubs remains the best option. It may well be that this is a less expensive option than custom designed signs. There is also matter of how many signs will be erected and where they will be located."
Regretfully, I may have been right. Another infant has been left in a car at the MiHi while her parent gambled inside. What will it take for Coles to correct it's practices?

I have written again to Coles suggesting that these signs are ineffective, that their car park monitoring be increased and that the public address system be used hourly at all their venues to warn against leaving children in vehicles.

But Coles' practices remain a model to emulate compared to my experiences of the giant NSW pokie clubs. While I may have missed them, no car park of any NSW pokie club or pub had any warning signs whatsoever. Given the harmful nature of pokie gambling and the vast car parks of these pokie clubs, this is a disaster waiting to happen.