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Socioeconomic dimensions of pokie machine losses

A recent Age article has highlighted the disproportionate financial losses incurred from pokie machine gambling in low income areas of Victoria, when compared to higher income areas. Using statistics from the Victorian regulator the Victorian Commission for Gambling and Liquor Regulation (VCGLR), Craig Butt compared net weekly expenditure per adult (ie player losses) on pokies across local government areas (LGAs), with the average weekly income of those LGAs based on census data provided to the Age.

In 2010–11 in Greater Dandenong, where average weekly income was reported to be $426, pokie losses were $1110 per adult. In wealthier Boroondara where average income was $836 per week average losses were $153 per adult. Furthermore, VCGLR figures show that the density of pokie machines in LGAs with lower average incomes was higher than for more wealthy areas. In Greater Dandenong there were 8.94 pokie machines per 1000 adults, while in Boroondara there were just 1.55.

While these figures are disturbing, looking in more detail at the VCGLR data on these LGAs paints a grimmer picture of the inequitable burden of pokie losses. Unemployment in Greater Dandenong was 8.2% in 2010–11, significantly higher than in Boroondara where it was 3.2%. Census data also reveals that less than half the adult population in Greater Dandenong had completed Year 12, while in Boroondara 76% had done so. In terms of social and economic disadvantage, Greater Dandenong is ranked as the lowest of all Victorian LGAs, while Boroondara is ranked the highest. In 2011–12, the VCGLR data shows the 15 pokies venues operating in Greater Dandenong generated some $117.5 million in player losses, up from $117.2 million in 2010–11. In comparison, player losses in Boroondara were $20.1 million in 2011–12, or nearly 6 times less.

The association of high player losses on pokies in lower socioeconomic areas has been noted elsewhere. This Victorian Auditor General's report in 2009, noted the differential in player losses between low and high income LGAs. It also found player losses on pokies, and pokie numbers, were higher in lower-income communities such as Greater Dandenong. A number of other studies (see examples from researchers at the University of New England and Victoria University) show disadvantaged areas generally experience higher poker machine losses relative to more advantaged areas.

Problem gambling prevalence studies, including from the Victorian Department of Justice, show that higher problem gambling rates are associated with higher spending on the pokies. The study found Greater Dandenong, which it classified as an area which spends high on pokies, had a higher rate of problem gamblers—0.8%—and moderate risk gamblers—2.4%—compared to Boroondara where the rates were respectively 0.0% and 1.2%.

Recent regulatory changes in Victoria have resulted in the cessation of the duopoly arrangements which saw Tattersalls and Tabcorp between them owning all gaming machine licenses in Victoria. Instead, local venue operators were able to purchase pokie machine licenses (valid for 10 years) following an auction process in May 2010. The auction generated some $980 million in government revenues for the 27,300 pokie entitlements on offer, according to the VCGR (predecessor of the VCGLR) annual report (p.5).

At around the same time, new caps were announced limiting the maximum number of pokies per adult in 20 regions and municipal areas. Greater Dandenong was issued with a cap of 9.48 pokie machines per 1000 adults according to the VCGR annual report (Appendix 20). If the population remains stable, this would allow an increase in the number of machines from the current level of 8.94 machines per 1000.

Local communities seeking to curb increases to pokie numbers in their area have already expressed concerns they face an increasingly uphill battle. One issue with the new arrangements is that the licenses that were auctioned have a duration of ten years. This could further limit the extent to which local communities with concerns can act to stem any expansion of pokies in their areas, particularly those communities like Greater Dandenong which have regional caps set higher than their current rate of machines.