The licensed clubs in the ACT are alarmed about the prospect of poker machines being allowed in the Canberra Casino. The casino is the only on in Australia not to have them, but that is not a conclusive argument. Each place has its own characteristics which must be considered.
The central difficulty for the clubs is that a large part of their income is derived from poker machines; they have become almost dependent upon them. In effect they have become dependent upon a statutory monopoly. It is a dangerous base for any economic activity because it is be can be taken away. It is beyond the control of the business. Other businesses are in the same situation _ taxis, for example, and to a lesser extent the suburban service station in Canberra which got a monopolies through planning laws.
Very few monopolies are in the public interest; they usually inhibit competition, increase costs and deliver poorer service to customers. That might sound ridiculous in the case of licensed clubs in the ACT which are notorious for delivering good food and entertainment at cheap prices with fairly modest subscriptions. But that is only part of the picture. The great hidden cost is the amount of money many club patrons put through the pokies, without which the rest would not be possible, at least not at that price. The totality of club users are paying higher prices than stated for food, drink and entertainment, but some individuals are paying more, others less. Government figures show players of poker machines at clubs send $22.5 million in taxes to the ACT Government a year. About $50 million stays with the clubs.
In total about $700 million a year goes through the pokies in the ACT _ about $2000 a head, though a large amount of that is quickly recycled money. About $100 million goes from players to government, clubs and upkeep of the machines, about $330 per head per year.
The Government imposes fairly strict licensing arrangements and rules about pay-outs and security.
On any account it is a very large and highly regulated activity that financially underpins a lot of club life in the ACT. The clubs employ about 2000 staff, pay about $2.5 million in non-pokies taxes to the ACT, give about $3 million a year to sport and charity and have about $35 million in capital works running. It is a substantial beneficial contribution to the ACT. Whether it outweighs the social is a matter of conjecture. It may be that poker machines are little more than a harmless but sophisticated raffle system for club subscriptions whereby some mugs pay more than others.
The question is whether allowing poker machines into the casino and/or pubs will undermine the good side of the club industry by channelling a slice of the finite poker-machine cake away from local clubs into profits for the non-locally owned casino.
The clubs fears about the casino were unfounded in the past. When it was first debated they predicted a large fall in revenue. But after the casino opened the clubs revenue went up. Because the casino is at only one venue, the clubs _ spread throughout town _ have a geographic advantage. They also have a membership loyalty advantage. The casino, on the other hand, is facing new competition from Sydney. Poker machines will help.
That said, the casino’s poker machines should be introduced gradually. As with the unwinding of any monopoly regulation, a quick unwinding can result in unfairness to those who expectations have been built on the status quo. The same argument applies to pubs, but as the geographic argument does not apply to pubs, there is a good case for making any deregulation very slow indeed.