Losing streak: James Boyce’s new chapter on Tasmania’s gaming addiction

Acclaimed writer says the integrity of parliament is on the line in 2020
 March 22, 2020
Published:  March 22, 2020
Image: depositphotos

In May 2021 James Boyce won a Tasmanian Media Award for this article.

The last Tasmanian election was the first in Australian history in which a major party committed to withdraw poker machines from pubs and clubs. The Australian Labor Party’s (ALP) historic policy shift provided a vivid example of the vulnerability of the nation’s democratic process to a cashed-up vested interest. It is for good reason that the 2018 campaign has been called the “bought election”. The pokies industry bank-rolled a Liberal party committed to gifting them highly valuable new poker machine licences and ongoing tax concessions.

Since Tasmania is the only jurisdiction in the nation with no disclosure laws of its own, the limited information on donations comes from the Australian Electoral Commission (AEC). Disclosures to the AEC revealed that about 80 per cent of recorded corporate donations in 2017-18 to the Liberal party were from poker machine interests, with the Liberals total income four times that of the Labor Party.

These figures don’t include the overtly anti-Labor campaign funded directly by the pokies industry itself even though this was largely indistinguishable from party advertising. The support provided by the pokies industry to individual Liberal candidates is also not included in the AEC figure. A reasonable estimate is that the differential in spending done on behalf of the two major parties was about ten to one.

“I think this is absolutely outrageous ... it is absolutely scandalous.” Peter Gutwein

Given the influence of the pokies industry over the election outcome, it might be expected that Liberal party policy on this issue would have been widely discussed during the campaign. But despite the prominence given to Labor’s plan, the equally radical Liberal reform commitments went relatively unscrutinised. Few Tasmanians knew that the government abandoned the key principles it enunciated in 2016-17 in favour of a new policy set out by the industry itself a few months before the election was called.

So rapid and unscrutinised was the Liberal party reversal on poker machines that even the Tasmanian premier seems to have been unaware of what had occurred.

Labor’s “scandalous” pokies deal

Will Hodgman had long personal experience of the political power of the poker machine industry. He entered parliament in 2002 along with Peter Gutwein, a former Bridport hotelier, as part of a small group of Liberal MPs elected in a Labor landslide.

(click to enlarge)

In his memoir Confessions of a Ferret Salesman, the then opposition leader Bob Cheek chronicled a campaign that saw resources flowing to the Labor party from corporate donors that profited from a close relationship with the government, leaving an impoverished opposition fighting a doomed campaign from the margins. The two casinos owned by the Farrell family’s private company, the Federal Group, hosted a series of Labor fundraisers, policy launches and gatherings with industry organisations.

Within six months of their election victory, the government led by Jim Bacon and Paul Lennon secretly extended Federal Group’s monopoly poker machine contract, announcing it as a done deal in early 2003. Under a statutory deed attached to the 1993 Gaming Control Act, the Farrells owned every poker machine in the state. Because the contract was not due to expire until 2008, the secret extension ensured that public debate as the deadline approached was stymied.

As newly elected MPs, Hodgman and Gutwein seem to have been genuinely shocked at the clandestine process and poor financial outcome the state received. Not only did the government not conduct a tender, but it made no attempt to establish the market value of the most valuable public licence in the state.

Gutwein, always more forthright than his more mild-mannered southern colleague, expressed his opinion of the policy process in parliament on 29 May 2003:

“The circumstances that we find ourselves in at the moment… are just incredible… I am a new parliamentarian and I thought politics was about democracy. But it is not about democracy; it is about stealth, secrecy... about a government not wanting to be transparent or accountable… I think this is absolutely outrageous… I will be 58 years of age before we get an opportunity to make changes to this once this parliament signs off… there was no transparency. Nobody knew what was being negotiated at all… It was a deed signed in secret, sat on for 30 days, and then released to the Parliament of Tasmania as a done deal… I just think it is absolutely scandalous… It is scandalous!”

After Hodgman became opposition leader in 2006 he dared to raise the possibility that, given that Greg Farrell, Federal Group’s managing director, had not followed through on his promise to the Public Accounts Committee in 2003 that a 180-job development on the east coast would be completed should the pokies legislation pass parliament without amendment, the company’s contract with the state might have been breached.

By 2008, not only had the east coast development been repeatedly delayed – the contractual timeline having been extended with the Labor government’s support – but the delays had been accompanied by successive downgrades in size and employment forecasts. Federal Group has estimated that fewer than 40 full-time jobs would result.

The response to Hodgman’s polite questioning was ferocious. Full-page advertisements, in the form of a personal letter from Farrell attacking the Liberals, were taken out in the state’s three major papers. The company said the Liberals had behaved so irresponsibly it called into question their capacity to be considered capable of governing. The head of the Australian Hotels Association (AHA), Steve Old, said: “Just when people started to think Will had some leadership qualities he shoots himself in the foot and falls back into the shameless Liberal way of politics”.

Hodgman never again publicly criticised Federal Group. The Liberals did take a policy to support one dollar bet limits to the 2010 election and, with the Greens also supporting this change, had the numbers to have it passed in the hung parliament that followed. Instead, the policy was dropped after a drawn-out inquiry.

However, the Liberals did support a recommendation from the committee that on the expiry of the new pokies contract in 2018 it should go to open tender. Hodgman publicly expressed support for this principle until well into the last term of government.

Mona wedges Federal Group monopoly

It is possible Hodgman’s reservations about Federal Group arose from stories he must have heard from his family’s long connection with the Liberal party.

Federal Group's Wrest Point Casino. Image: Bob Burton

The first casino licence in Australia was handed to Federal Hotels in 1968 by a Labor party running out of support, finances and ideas after three decades in power. The reform-minded Liberals, who formed government in 1969, set out to end Federal Hotel’s casino monopoly by licensing a rival operator in Launceston, but lost their parliamentary majority after the sudden defection of the then deputy premier, Kevin Lyons, in 1972. An ALP whistle-blower, Hugh Dell, subsequently revealed Lyons had been offered inducements by various vested interests.

The Labor party made no secret that party coffers were also bolstered for the 1972 election campaign that saw the Liberals removed from power. The Launceston casino was stymied until Federal Hotels was in a position to build it itself in the mid-1980s through a joint partnership with Edmund Rouse, a Launceston businessman who would later be imprisoned for attempting to bribe an MP.

Hodgman’s personal concern did not immediately translate into policy action after he was elected in 2014. The opportunity for the premier to deliver reform was provided by the founder of the Museum of Old and New Art (MONA), David Walsh.

Walsh approached the government to discuss a licence for a new, pokies-free boutique casino at MONA aimed at high-rollers from overseas. Walsh was advised that the government was not willing to amend Federal Group’s exclusive gambling rights without their agreement and he needed to negotiate directly with Farrell.

The MONA boss offered Federal Group a number of financial and other concessions. Though it was not disputed that the boutique gambling venue would have no impact on Wrest Point’s business model, Farrell rejected them all. Federal Group advised the government it would not entertain a casino licence for MONA unless its own exclusive poker machine licence was extended.

The government then commenced negotiations with Federal Group. While it admitted negotiations were under way, no details or modelling were released, and there was no opportunity for consultation with or input from other parties.

On the evening of 14 September 2015, just days before the contract was reputedly to be signed, Walsh went public with his opposition to the deal. In a long blog post, he outlined his concerns and published  all his correspondence with Gutwein, then the treasurer, and Farrell.

The government responded by ending the negotiations and announcing they would take some time to consider their position. This provided the first opportunity for a genuine public debate in Tasmania about the poker machine contract without the essential matters having already been decided.

During the spring and summer of 2015-16, Federal Group threatened to end all new investment in Tasmania but, with tourism booming, it had become difficult for the company to explain why it needed to own every poker machine in Tasmania before it would invest. Concentrating on a long-heralded Port Arthur hotel project did not help the company’s PR pitch given this development had previously been presented as a benefit of the 2003 pokies contract. Walsh observed: “They’ve held it over to make a splash - a perfectly sensible strategy, but it’s also transparent.”

Walsh was buoyed by the support he received for his anti-pokies stance. The following month, in an interview on ABC TV’s 7.30, he said people had been telling him that “the pokies have been bringing down Tassie for too long... I got a pretty positive response when MONA opened for the first few months, but nothing like this and, I must say, I didn’t anticipate it”.

Gutwein backs tender for hotels pokies

On 22 February 2016, Gutwein announced he would soon be outlining the government’s “preferred position” on poker machine policy. On 17 March 2016, he did this through a ministerial statement to parliament that set out the broad principles that were to guide the reform process. While locking in Federal Group’s casino rights, he was clear that in regard to hotels pokies, “our policy position is that the right to operate machines post 2023 will be allocated and priced by a market-based mechanism, such as a tender”.

The treasurer acknowledged the process that led to the development of the current deed had caused concern in the community and cast a shadow over whether what had been agreed was appropriate. He said the government did not want a repeat of this outcome. “There needs to be a fully transparent public consultation process that enables interested Tasmanians… to have their say on the future structure of the gaming sector post 2023, with the government’s policy position as the starting point”.

A media release from Hodgman the same day further emphasised the transparency of the process: “Today, the government announced a new way forward for gaming in Tasmania, which makes a clean break with the secretive ways of the past”.

“We are determined ... to test the value through the market of this licence.” – Peter Gutwein

The position set out in the ministerial statement was then detailed in a policy position paper entitled Hodgman Liberal Government Post-2023 Gaming Structural Framework. This reiterated the right to operate the machines post-2023 would be allocated and priced by a market based mechanism, such as a tender.

The vehicle chosen to conduct the community consultation and decide on the final industry model was a joint select committee of parliament. In his evidence to the Committee into Future Gaming Markets on 22 March 2017, the premier again emphasised how central a market-based mechanism was to his government’s position:

“Most importantly, we believe the right to operate electronic gaming machines post-2023 should be determined, allocated and priced by testing the market… What we are proposing is a game changer in determining the future of electronic gaming machines operating in our state. For the first time we are proposing to put to the market – have the market test – the licence to operate electronic gaming machines in pubs and clubs in our state.”

Gutwein agreed, telling the committee: “It is complex and challenging, but from the government’s point of view we are determined that we want to test the value through the market of this licence”.

Committee member Robert Armstrong pointed out to the treasurer that both Treasury and the Gaming Commission believed in the advantages of a single-operator model. Gutwein replied that while he did not have a preferred model, but had a preferred outcome – a tender.

Tax cuts ahead

The novelty of a transparent process opened long simmering tensions within the pokies industry. Conflicting submissions were made to the parliamentary inquiry by the big hotel pokie chains, under the auspice of the Tasmanian Hospitality Association, and Federal Group. The former sought a greater share of the spoils through direct licencing of venues that would end Federal Group’s monopoly ownership. The latter supported the status quo. But by the middle of 2017, it was clear to everyone that the government’s emphasis on a market-based mechanism meant that if the single licence was to continue, it would go to tender, either costing Federal Group hundreds of millions of dollars or leading it to lose the licence altogether.

Finally freed from ministerial shackles, Treasury made it clear that its modelling confirmed  Federal Group was doing particularly well (“retains significant returns”) under the existing deal. The independent consultants advising the committee, Synergies Economic Consulting, also found Tasmanian taxpayers were getting a lower return from poker machines than jurisdictions on the mainland and this “could largely be addressed by the State retaining excess returns”.

Federal Hotels was the only stakeholder that denied it was receiving excessive profits – that, effectively, the company was being subsidised from the public purse. It became clear to all in the poker machine industry that if there was a chance the super profits enjoyed by Federal Group may be redistributed within the industry, rather than returned to the government, it

was time to present a united front.

On the last day of the parliamentary committee hearings, a new joint submission was made by the poker machine industry. This submission supported direct licensing of all existing venues without a tender, an increase in the state hotel poker machine tax rate from approximately 28 per cent to 39 per cent of losses and, crucially, a cut in the state tax rate on casino poker machines from 25 per cent to 10 per cent.

The justification given for the reduction in the casino poker machine tax rate was that the new proposed model would bring the rates paid by Wrest Point and the Country Club into line with  in other regional casinos, particularly those in Cairns and Townsville. On opting for direct licencing over a market-based process for pokies in pubs and clubs, the pokies industry argued it would avoid the need for a tender, which it said would be “very costly and generate considerable uncertainty and massive disruption for all stakeholders”.

Wrest Point Casino, March 2018 Tasmanian state election. Photo: Mark Horstman

The interstate tax comparison given in the submission was incorrect because It claimed all figures were GST inclusive, whereas the cited north Queensland casino tax rate was GST exclusive.The state tax rate applied in Cairns and Townsville - the only figure relevant to the Tasmanian policy debate is 20 per cent.

As a social economic and impact study into gambling in Tasmania documented in late 2018, the state’s casino tax rates were already low – the lowest in the country for table games, the lowest for Keno (once the different way of calculating the tax in the ACT was allowed for) and at the lower end for poker machines.

No argument was presented in the joint submission to make the case the poker machine industry in Tasmania competes with northern Australia given that poker machine players are largely local. There was no explanation why poker machines at Wrest Point and the Country Club should be taxed at a lower level than those in hotels, especially given those in casinos cost less to run than those in hotels due to economies of scale and regulatory exemptions.

The industry openly acknowledged the capital gain windfall that would flow to the existing venues through them not having to pay a market-based price for their new poker machine licences. It estimated the capital gain would be, on average, at least $1.5 million per venue.

Federal reels in policy for windfall profit

The committee had no time to consider this late submission, but the Tasmanian Liquor and Gaming Commission (TLGC) - the body with a statutory role to provide independent policy advice on gambling policy - offered an unusually frank response. It was concerned that the proposed model was not the result of a competitive market-based mechanism, “such as a tender”, as the Hodgman government’s framework had promised.

The commission observed that:

“A competitive mechanism would provide all potential operators (other than those already present) with the opportunity to enter a commercially profitable market (and the state to achieve a fair market price). More importantly, from the commission’s point of view, this would represent an opportunity to test the market for the introduction of best practice harm minimisation measures such as mandatory pre-commitment.”

In short, the commission believed that the industry proposal appeared to replace one form of monopoly with another – a direct licensing model for the venue operators that already had licences on 30 June 2023, without any competitive process to determine if that was the best deal for the state.

The letter went on to outline how difficult it was to get venues to comply with regulations.  Multiplying the number of licences would just make it worse. “The TLGC has a long record of dealing with compliance breaches in hotel venues and nothing in this model provides comfort that this would not continue and, in fact, increase,” it said.

The commission’s position was unchanged since their original submission, when they had described direct licensing as “highly problematic”. Its preferred model, should the government keep poker machines in the community, was a single licence issued through “a market tested, competitive process” that provides transparency for the community and returns the revenue to government – and the Tasmanian community – “that such an entitlement is worth”.

John Lawrence, a respected economist, also made a response to the industry submission. He noted that the extra $20 million flowing to the pubs would increase their value by about $150 million – in line with the industry estimate of at least $1.5million per venue. He said big venues would get most of this benefit. The top performing pokies pub in Glenorchy, the Federal Group’s Elwick Hotel, would receive a probable windfall of $4 million, while the much smaller Dover RSL Club would get a minimal increase.

He calculated that the Federal Group, which had used some of its super profits from its free pokies licence to buy 12 of the biggest pokie pubs, would receive an estimated 25 per cent of the state-wide capital gain. Other multi-venue owners, such as the ALH Group, Goodstone Group, Dixon Hospitality Group, Kalis Group and the Prescott & Hibberd Group, would get most of the rest.

Lawrence suggested that rather than using the windfall to invest in their venues as the industry had indicated it would, Federal Group was likely to sell up and cash in. With a free pokies licence, Federal’s pubs would be worth about $200 million. Without it, they would be valued at only $60 million. Lawrence said it gave “some idea of what the current battle … is really about”.

Libs 2018 unity ticket with pokies industry

The Liberal Party released their election policy in January 2018 after the ALP had committed to removing poker machines from pubs and clubs. 10 The Liberal’s policy was almost exactly the same as the industry joint submission: direct licensing of all existing venues; free long-term licences; no market pricing. Even the tax rate in hotels was virtually the same as that suggested by the poker machine industry submission.

Will Hodgman billboard at the Welcome Stranger Hotel, Hobart in the 2018 state election campaign. Image: Bob Burton

The Liberals not only abandoned supposedly non-negotiable core principles, but went against the explicit advice of Treasury and the TLGC in favour of adopting reforms proposed by the poker machine industry itself. The only plausible explanation is that the Liberal policy was directly copied from the industry plan. No other explanation as to how the radical reform proposal was arrived at has been offered.

The only market mechanism proposed by the Liberals in their election policy was a tender to run a monitoring network. But given this was reduced from 31 per cent to 2 per cent of losses, and the Federal Group had the infrastructure already in place, this was very unlikely to lead to a change in the status quo. Regardless, the revenue implications were insignificant.

Putting the monitoring network to tender did not honour the Liberals previous commitment to introduce a market-based system. The government had been explicit that the right to operate poker machines after 2023 would “be allocated and priced by a market-based mechanism, such as a tender”.

As in the pokies industry plan, a small annual licence fee was proposed but there is no suggestion that this returns a market price or was set by market modelling – the windfall capital gains outlined in the industry submission will still apply. Most of the financial benefits accruing from ending the monopoly under the Liberal policy will flow to a small number of multiple pokie hotel owners rather than the state.

The only substantial policy difference between the Liberal election policy and the industry proposal was the party did not commit to a tax rate for casino poker machines. However, the election policy affirmed that casino poker machine taxes would be benchmarked against “comparable casino operations interstate” to ensure returns were “competitive and fair for the community, players and the casino operator”.

This was another significant shift away from the Hodgman Liberal Government Post-2023 Gaming Structural Framework, which said casino taxes would be reviewed against the “broader Australian market”.

Given taxes were relatively low in Tasmania, this principle would have seen them increase. But the change to reviewing taxes against comparable casinos interstate presumably meant the regional casinos in North Queensland, which the Federal Group says most closely resemble the Tasmanian situation. In other words, instead of moving to increase casino pokie taxes under their original policy framework, the Liberal party election policy appeared a move to reduce them.

Much was made by the Liberal party during the election campaign of its policy to “cut” 150 poker machines. But all the cap achieved was to guarantee existing licence holders all their existing machines while protecting them from future competition, in the process adding value to their licences. It means the cap was not a social harm measure, but a further financial gift to venue owners. Given this, it is not surprising that it was supported by the pokies industry in their joint submission to the parliamentary inquiry.

Hodgman in the dark on pokies policy

It is often forgotten that the Tasmanian ALP election policy of confining poker machines to casinos would have provided considerable ongoing benefits to the Federal Group by ensuring it a continued monopoly.

To an extent unparalleled elsewhere in the nation, Federal Group has transformed Tasmanian casinos into large pokie barns in which table gaming is an insignificant sideline accounting for only about 5 percent of losses.

The two casinos historically account for between 40 and 50 per cent of total pokies turnover in Tasmania. Given their close proximity to most of the population, they could be expected to have picked up a substantial portion of any business lost to pubs. Although there would have been a large loss in the capital value of their hotels, the ALP policy would have provided a long-term secure profit stream.

If the Liberals had stuck with their support for an open tender for the poker machine licence, Federal Group would have been financially better off under the Labor Plan. The same would have applied if the Liberals had chosen any other market-based mechanism to recoup the full value of the excess profits currently accruing to Federal Group.

It is, therefore, highly unlikely Federal Group would have agreed to support ending its monopoly ownership of poker machines unless there had been an indication from the government that it would support further tax concessions for casinos.

What is not clear is that Hodgman was in on the deal.

At the January 2018 launch of the Liberal gambling policy, in front of the soon-to-be defunct Glenorchy RSL, Hodgman was still talking of the licences going to market. And in a lengthy interview with the Sydney Morning Herald, the premier appeared unfamiliar with the new Liberal policy only a fortnight before polling day.

On 22 February 2018, journalist Nick O’Malley reported in a story in the Herald’s sister newspaper, The Examiner, that when he asked Hodgman why he planned to give away such lucrative licences, the premier twice insisted that the government was putting the pokies out to tender and that a fair price would be achieved for Tasmanian taxpayers”’.

“We are for the first time opening for tender the future of gambling or gaming.” – Will Hodgman

Asked if it was true that, rather than being put out to tender, the rights to machines were being given to the pub and club owners, Hodgman said: “That is entirely untrue. We will make sure Tasmania gets the best possible deal. We are for the first time opening for tender the future of gambling or gaming”.

Asked how much the tender would raise, Mr Hodgman said “we would need to go through that process”.

O’Malley reported that a short time after the interview had concluded a staff member from the premier’s office rang to “clarify” the premier’s comments. He said the premier had not meant that the licences for the machines would be put to tender. Instead, he meant the network operations that controlled them would. However, as O’Malley observed, the network operation represented just 2 per cent of losses under the Liberal’s model. And they were not what was being discussed in the interview.

Hodgman’s ignorance of his party’s policy on the key battleground issue of the election was not given prominence in the pages of the newspaper that O’Malley sent his copy to, let alone other media outlets. Overstretched journalists in budget-deprived regional news rooms were being inundated with announcements from the over-resourced Liberal media team and understandably struggled to stay on top of policy detail. What was the “network”? What was a “market price” in this context? Unlike the seasoned investigative journalist from the most pokies-saturated city in the world, local editors seemed to have little idea.

Inflated job numbers

What to make of the premier’s ignorance? This was an issue that Hodgman had been personally involved in over many years. His commitment to ensuring a market price for the right to operate poker machines in Tasmania had been reiterated for a decade and repeatedly emphasised in 2016-17.

Hodgman appeared to understand the principle involved, but not his own party’s election policy. Had the premier been excluded from the process that formulated the policy that funded the campaign?

That the Liberal election policy was formulated in close partnership with Federal Group and THA was revealed not just by its content, but by the pitch used to sell it. The Liberals policy opened with the same line used by the industry’s pro-Liberal “Love Your Local” campaign developed by Font PR: that the gaming industry had estimated that about 5000 jobs were at risk if poker machines were removed from pubs and clubs. Gutwein repeated the claim during the campaign.

The employment data cited by the Liberals was radically different from the findings of the government-funded social and economic impact study delivered to the Treasurer weeks prior to their policy being released. The jobs claim was also investigated by the ABC/RMIT Fact Check unit and found to be “wrong”.

This was not surprising given that Font PR’s Becher Townshend revealed to the unit that the methodology relied on asking poker machine hotel owners – the people funding the campaign – for information on likely job impacts.

The 5000 figure included every employee at Federal Group and the large pubs, many of who would benefit from the withdrawal of poker machines. All jobs in the casinos were assumed to be “impacted” even though they would have a monopoly of poker machines in Tasmania under the ALP policy. Just how jobs at the $2000 a night Saffire resort or other high-end hotels such as Henry Jones and MACq 01, let alone Federal Group’s transport company, Cope Sensitive Transport, were to be negatively impacted by a policy on poker machines was not explained.

The politics of marketing the poker machine legislation will, more than ever, rely on Labor having been brought into line.

Townshend claimed that he resorted to the survey in the absence of other data. In fact, the Australian Bureau of Statistics publishes figures on this specific question. Furthermore, by legislation every three years Tasmania undertakes a social and impact study into gambling. A number of these studies have addressed employment. All had direct or indirect employment in the poker machine industry at a fraction of the figures heavily promoted in the campaign.

The Liberal party’s election policy did not just claim that around 5000 jobs would be “impacted”, it asserted these jobs were “at risk”. As Townshend made clear to the ABC’s fact check unit, even the gambling industry had not suggested that, but it was this claim that was repeated by the treasurer. It was noticeable that while the treasurer was quick to repeat the election policy’s spurious job claim, the premier did not, even when specifically asked. As with his refusal to repeat Gutwein’s claims about problem gambling data (which I documented in the opening pages of my 2017 book, Losing Streak), Hodgman opted to deflect questions on the subject.

Was this refusal to repeat the main marketing pitch of his party’s poker machine policy a final protest by a powerless premier? Was Hodgman’s subsequent post-election commitment to donation disclosure reform also a reaction to what had occurred?

What seems certain is that selling a tax concession to one of Australia’s richest families - at a time when the state’s health system is so chronically underfunded it nears breaking point, and homeless people are a common sight on the streets of Hobart - won’t be easy.

Hard sell ahead on pokies handouts

Now that he is premier, the fact that Gutwein was central to the deal with the pokies industry is likely to make selling new handouts to the Farrell family and large hotel owners even harder. The politics of marketing the poker machine legislation will, more than ever, rely on Labor having been brought into line.

Tasmanian Labor Leader, Bec White, conceding the 2018 election. Image: Bob Burton

After the 2018 election defeat, the Labor leader, Rebecca White, declared the party’s poker machine policy would not change. In early 2019, this position was comprehensively reversed, the architect of the original policy, former Treasury spokesman Scott Bacon, resigned from parliament and Paul Lennon, a former Labor premier turned lobbyist for Federal Group, now sits on the ALP’s policy review committee.

If the ALP and compliant upper house independents, such as Robert Armstrong, passed the legislation without scrutiny, the pokies deal could be rushed through both houses of parliament with manageable electoral damage for both major parties.

It is possible that the delay in presenting the legislation also reflects a difference of opinion between the government and Federal Group about how low taxes applied to casino gaming should be set, but it seems clear the rate on casino poker machines will be lower than those applying in pubs, and Keno taxes will also remain at the lower end of the national scale.

The government has also confirmed that, as its election policy indicated, new 20-year poker machine licences – nearly triple the seven-year period recommended by the gaming commission – will be handed out for free.

Much emphasis continues to focus on comparing predicted taxation returns with what would have occurred if the current arrangement had continued, even though this is a meaningless comparison because the current contract is coming to an end. All parties agree that no compensation is owned. The valid comparison is not between returns under the new contract and the old, but between returns in the proposed legislation and what would have been delivered by the previously promised tender or an alternative market-based mechanism.

Why is there so little hope that parliament will do its job to preserve the integrity of public finances and protect vulnerable Tasmanians? This is a difficult question to answer given the Liberals’ pokies plan is opposed not just by the majority of people, but by most MPs. A Mercury ReachTEL poll found that at the end of the industry’s mass advertising campaign in late February 2018 there was still majority support for Labor’s policy in every seat despite a big lead for the Liberal party overall.

White has repeatedly stated that she sought poker machine reform because of the overwhelming evidence about the harm they were causing. With a couple of influential exceptions, Labor members and candidates were united on this policy.

One of the strongest supporters of taking strong action on poker machines was ex-Labor, now independent, MP Madeleine Ogilvie, who expressed her support for change even before her former party had committed to it. There is nothing to suggest these MP’s opinions of the harm caused by poker machines has changed.

The fear induced by the experience of 2018 means that the only remaining hope for responsible policy reform now rests with the Tasmanian people.

Similarly, Hodgman’s long record of supporting the market pricing of pokie licences and reducing social harm through regulations such as lower bet limits has been shared by other Liberal MPs, including Michael Ferguson, Jacki Petrusma and Guy Barnett. Most members of parliament have heard too many stories of suffering from their constituents to not understand the serious harm caused by poker machines.

Given this, why is the poker machine industry likely to get its way? The answer seems simple: MPs from both major political parties are frightened of taking them on.

Tim Costello, arguably Australia’s leading anti-pokies campaigner, has pointed out that Australians struggle to understand why the US Congress refuses to implement sensible gun law reform despite overwhelming public support. The explanation is that they are scared of being targeted by the National Rifle Association (NRA).

The poker machine industry in Australia is a $12 billion enterprise with a business model that relies on public licences issues by state governments. As the campaign against the proposed Gillard-Wilkie reforms showed in 2011-12, the pokies lobby is as sophisticated, cashed up and influential as the NRA. Indeed, Clubs NSW, which has boasted of the support it provided to the Tasmanian poker machine industry campaign, received training in how to resist political reform from the US gun lobby.

The 2018 Tasmanian election provided the first real chance to roll back the pokies juggernaut which has destroyed thousands of lives, captured democracy and turned Australians into the biggest gamblers on earth. The poker machine industry across the nation was determined to show all politicians and major political parties the cost of seeking reform. The reason that the Liberals poker machine legislation is likely to pass the Tasmanian parliament this year is that local MPs have learnt their lesson.

The fear induced by the experience of 2018 means that the only remaining hope for responsible policy reform now rests with the Tasmanian people demanding that their MPs represent them rather than a vested interest. It needs to be made clear that the Liberals’ legislation is not the end-product of the relatively transparent policy process conducted in 2016-17, but a sordid deal negotiated in secret before the election was called.

Unless Gutwein can explain to Tasmanians why he rejected expert advice from Treasury and the TLGC, abandoned his rock-solid commitment to deliver a market price for the licences, set casino taxes lower than those applying in hotels and ignored the substantial harm minimisation reforms put forward by the TLGC, this bill should be rejected by the parliament.

The defeat of the government’s poker machine legislation would leave the status quo in place but, crucially, because that is now subject to a rolling-term clause, it could be ended at any time (with a five-year notice period) by the relevant minister simply writing to Federal Group. It would be far better to have an easily changed status quo that avoided the increased social harm the TLGC has advised would come from 100 new pokie licences than to lock in massive financial subsidies for the pokies industry and high levels of preventable suffering until 2043.

The TLGC is the body charged by parliament with providing independent policy advice on gambling matters. Its establishment and broad functions are a safeguard insisted on by the Legislative Council as a condition of allowing pokies into Tasmania in the first place. It is incumbent on MPs to take its advice seriously.

The TLGC gave its view on the industry reform proposal adopted by the Liberal government to the Joint Select Committee into Future Gaming Markets. It opposed direct licensing and extended licence terms, and advocated for a “market-tested, competitive process” that was transparent and returned “appropriate revenue” to the government, and through it, the Tasmanian community.

This was also broadly the advice of Treasury. Indeed, for three decades, every expert on gambling policy has emphasised that, if this small jurisdiction is to have poker machines, the best way to maximise the state’s financial return, ensure proper regulation and minimise social harm is by having one well-regulated licence that is put out to tender. If parliament defeats the Liberals’ pokies bill, there is no reason why this straightforward advice cannot still be implemented.

The legislation that Gutwein will bring to the Tasmanian parliament in the next few months is no longer only about poker machines. It concerns the integrity of the parliamentary system.

Demanding that our political representatives put the public good first is not just important to reducing social harm and balancing the budget. Reclaiming our democracy from vested corporate interests will be critical to responding effectively to all the complex social, economic, and environmental challenges of the twenty-first century.

The judges of the 2021 Tasmanian Media Awards wrote of this article: "Brilliant forensic investigation of the poker machine lobby in Tasmania and the compromised relationship of State Governments past and present with gambling interests. This is exactly the kind of journalism that Tasmania desperately needs, to break through the walls of secrecy that are the established methods of government here and force accountability and transparency of those who are supposed to be serving the public interest."

James Boyce James Boyce is a Tasmanian writer and historian. His books include Losing Streak: How Tasmania was Gamed by the Gambling Industry (Black Inc 2017) which was long-listed for the Walkley Book Award, short-listed for the Ashurst Business Literature Prize and won the People’s Choice Award in the Premier’s Literary Prizes.

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