A loophole in Australia’s state and territory gambling legislation is being exploited by the poker machine industry, and our governments are turning a blind eye.

Entitlements

The loophole concerns gaming machine entitlements. Around Australia, venues (clubs or hotels) that want to operate electronic gaming machines (EGMs) need to purchase entitlements from their local regulator. It is illegal for a venue to run more EGMs than it owns entitlements for.

Every state and territory in Australia (barring Western Australia, where pokies are illegal) follows this principle. Victoria was the last state to adopt the “gaming machine entitlement” system, which came into effect in August 2012.

The principle is simple: one gaming machine entitlement = one EGM. That’s where the loophole comes in. Gaming machine entitlements apply only to physical EGMs, the hardware that makes up gaming machines. They don’t apply to the software that operates on those machines, even though it’s the software that gamblers interact with.

Every EGM in Australia is essentially hardware (the machine) running software (the game). And while all games (such as “Queen Of The Nile” or “Indian Dreaming”, for example) must be approved by state regulators, there is no regulation covering how many games can be loaded into a gaming machine.

Multi-game systems

In the past five years, all of the major gaming machine companies (Aristocrat, Konami, IGT, Aruze, Ainsworth, Bally and ShuffleMaster) have invested in the development of “multi-game” systems. They’ve grouped together collections of new, old and high-performing games, often in a varying number of denominations. They’ve called them catchy names such as Player’s Choice (Aristocrat), Multi Win Ultimate Choice (Ainsworth) and Multistar (IGT). They’ve sought and obtained approval for these collections from the state and territory gambling regulators. And they’ve sold them to our clubs and hotels, installing them in EGMs around the country.

“Multi-game” systems allow venues to double or even triple the number of gambling games they offer, even though the number of physical machines stays the same. With anywhere from three to eight separate gambling games in each “multi-game” system, they make a mockery of the existing caps on EGMs, which currently restrict the total number of poker machines in Australia to a fraction under 200,000.

If a club with 100 EGMs converted just a quarter of them to “multi-game” systems, that club would effectively be offering up to 275 games for gamblers to play. The only limitation would be the number of games bundled into each machine.

Consequences

The potential consequences of this development are dire.

The most obvious impact is the ability of venues to significantly increase the number of gambling games they can offer, even if the number of physical EGMs remains the same. By increasing the number and variety of games available, they encourage greater participation and spending by gamblers. This is a simple matter of human psychology: greater choice leads to greater participation.

It’s also a clear attempt to circumvent EGM restrictions that have been in place in all parts of Australia for years. Caps on EGM numbers were imposed in an effort to minimise the harm they could cause in the community; now venues have the ability to offer many more gambling games to the public without breaching their local cap. It’s another way the industry, venues and manufacturers alike, bend the rules without actually breaking them.

This is not about “bums on seats”. I’m not suggesting that venues can are offering more machines, or that more people can gamble simultaneously. The reality is that practically no gaming venue in Australia ever operates at capacity; there are always free machines. What “multi-game” systems do is allow venues to offer a far greater variety of gambling games than their entitlements specify.

But the most troublesome consequence has to do with the development of problem gambling behaviours. There’s a concept called “break in play”, which means taking some time away from gambling and then being able to decide whether or not to continue. The industry has spent considerable time and effort eliminating breaks in play; anything that takes a gambler away from a machine is to be discouraged. This approach has seen coins replaced by notes, cash replaced by ticket systems, and in the case of NSW, outdoor gaming rooms where gamblers can smoke while they play.

With the introduction of “multi-game” systems, gamblers will no longer need to leave their seat to change games. They can move from one game to another, from a one-cent machine to a two-cent machine to a 50-cent machine, over and over again, without a “break in play”; without ever stopping their gambling. This will only serve to encourage dangerous gambling behaviours, and that is not acceptable.

Where to from here?

By any measure, this is a situation that needs to be addressed. It is yet another case of the gambling industry introducing innovations with little or no regard for the welfare of gamblers; there is no record of any of the major poker machine manufacturers assessing their “multi-game” systems for increased incidence of harm.

Our governments and regulators need to formally address this issue and clarify the legislation surrounding gaming machine entitlements. Technology has moved beyond the scope of the original laws and regulations; they need to be updated to address the current gambling landscape.

I believe one entitlement should equal one game, not one machine. The industry disagrees. Our governments need to make it clear what the situation is, one way or the other.

Until that happens, it cannot be assumed that operating multiple games under a single gaming machine entitlement is legal. Our governments and regulators need to direct every club and hotel gaming venue in their jurisdictions to stop offering “multi-game” systems until the laws are clarified.

I will be contacting every state and territory gaming minister and every gambling regulator to pursue this matter. I will post updates as they come to hand.