The latest piece of depressing stupidity I wish to discuss is a new proposal to make Cairns a “gambling hub” of Queensland by moving every single poker machine in Queensland to Cairns. For more, see here.
Of course, the State’s four main casinos will be exempt.
And naturally, the drive behind this new proposal is the old mainstay of moral panic.
Aidan McLindon is the man behind this push; a former LNP member with a grudge against pokies, McLindon is arguing for a “Vegas style” pokies hub. The purpose: to reduce gambling.
“To reduce gambling” is, unfortunately, the axiom at the base of all mainstream political discourse that deals with gambling policy. Under this attitude, gambling is itself an evil and the goal of gambling policy should be to reduce the amount of gambling that takes place.
But I’ll get back to that in a second. Lets look at the problems with this proposal, from a strictly economic perspective.
First; this proposal strengthens the monopoly enjoyed by Tabcorp and endorsed by the state government. Competition for pokies is abolished; the only places legally allowed to offer pokies under this proposal would be Cairns, Jupiters Townsville, Jupiters Gold Coast, and the Treasury casino. Thus, if it is not Cairns, it is Tabcorp (and of course, Tabcorp runs The Reef casino in Cairns).
This means that the house edges on pokies will go up. Tabcorp have a monopoly on table games as well and the house edges for Australian blackjack are shockingly high. Slot machine house edges are usually very high even in places with competition (i.e. Las Vegas); Australian slots are even worse and they will be made worse still without any competition.
Who will suffer the most from this? The “little guy” that these laws set out to protect. High Rollers typically play low-house-edge games like Blackjack and Baccarat. They can afford to go to Macau or Las Vegas and gamble at casinos there (all of which have lower house edges than Australian casinos!). It is the proverbial “battler” that suffers the hike in pokies house edges.
In other words, the costs of this policy will be imposed precisely on those that the policy aims to protect.
However, this is totally acceptable to someone that aims to reduce gambling. To this attitude, a bad gamble will put gamblers off, and/or suck their money away more quickly (thus getting them away from the pokies in less time). They probably see a huge loss in a casino as some sort of moral lesson, a deserved punishment for sin. To draw an analogy, this attitude would argue against Harm Reduction approaches when dealing with drug policy, because the possibility of a fatal overdose is a deterrent for drug use.
Of course, McLindon may not understand how his proposal will hurt the “little guy” the most. This means he doesn’t understand economics and thus shouldn’t be in Parliament.
Economically speaking, this approach may also have one further effect; enrich the State Government (and Tabcorp). Although it is reasonable to speculate that there will be an overall drop in amount of money gambled, Tabcorp are still likely to hike pokie house edges owing to their monopoly (thus increasing the overall share of money won). This isn’t certain, but it is clear that the possibility exists for the government to make more money from this. As for Tabcorp, their benefit is certain; they get even more monopoly priveliges.
McLindon claims his policy is “Vegas-style,” but Vegas offers table games as well (and usually with much better rules than Australia). It is good table games that attract big bettors and high rollers, international tourists with money to spend. McLindon claims his proposal will be good for Cairns tourism, but turning the place into a huge slot parlor simply is not effective. If you want people to buy plane tickets to go somewhere to gamble, then you should offer them a good gamble!
But, as is obvious, McLindon doesn’t care about gamblers. According to his worldview, any gambler is a degenerate that is pouring children’s cereal money into the pokies.
Looking at the facts, Queensland is bankrupt. The state government needs more money. A possible solution would be to legalize and tax gambling in the two largest tourist markets in the State; the Gold Coast and Cairns. In order to ensure both political feasability and actual competition, lets limit things to five casinos per market and have one casino per owner (i.e. Tabcorp gets one, Crown Limited gets one, etc.). This would provide jobs, ensure competition and at least have some level of political feasibility (Yes, like everyone here I would prefer a more laissez-faire approach, but that has no hope of even being considered). It also has the advantage of actually not infringing on individual rights (unlike Captain Bligh’s latest “swearing fines” laws, which violate free speech (and yes, free speech doesn’t protect yelling out “fire” in a crowded theatre, but it does protect usages of the word “fuck” from being legally penalized (in and of themselves))).
This solution has proven itself effective several times. Multiple US states, for instance Pennsylvania, have legalized gambling. Empirically there is no question that legalized gambling is a good way to raise tax revenue; this is one of the primary justifications for the current situation of state-sanctioned monopoly casinos. Demonopolization of gambling will increase the amount of revenue raised.
But, unfortunately, even this modest and moderate proposal for a demonopolized gambling industry faces a significant hurdle; the belief that gambling discourse must be based around stopping gambling. Not around minimizing the potential negative externalities associated with it, but stopping it from occurring. Anyone that dares propose a solution that makes good gambling more accessible is automatically accused of wanting to pour children’s cereal money into the pokies.
The differences between various forms of gambling are dealt with in a very inconsistent fashion. Horse racing is seen as “okay” (and indeed, on the first Tuesday in November, it is considered a national tradition), pokies as “a scourge (that funds our government)” and table games as “utter evil.”
Table games actually offer some of the best chances for the player. This is conveniently ignored by the debate. Regardless, table games offer…
1) a social environment
2) a job per table (i.e. a dealer)
3) low house edges relative to slots
These three factors alone should make table games more politically appealling than pokies.
But no. Sanity and rationality simply do not exist in the debate. What exists is a deontological demand “to stop gambling.” All other approaches are seen as an attempt to pour the children’s cereal money into the pokies.
A sensible economic analysis of proposals shows that McLindon’s suggestion is pure idiocy. It punishes the people he claims to be protecting, it fails at turning Cairns into a destination for gambling, and it doesn’t fix the underlying problem with Australian gambling; the state-priveliged monopoly system. Of course, McLindon’s grasp of basic economics is probably worse than his grasp of basic accounting (for one, he hasn’t exactly published accounts explaining how he spent his $30 000 electoral allowance).
And of course, the primary issue (from a classical liberal perspective) about gambling policy simply doesn’t get mentioned. This issue is “why should my individual right to engage in consensual gambling be curtailed, just because some idiots pour their kiddies cereal money into the slot machines?”