“Big Gambling”: The rise of the global industry-state gambling complex

Global commercial gambling has grown to be an industry of remarkable size and power. Over the past decade, global gambling losses have risen from approximately $250 billion USD in 2003 to $450 billion in 2013 (The Economist, 2014). No longer gambling is low-key and small-scale, the differentiated expression of local cultures (Binde, 2005). It is a global economic project, one central to the liberalisation of markets associated with the emergence of the international consumer society (Reith, 2013). We argue that that the emergence of “Big Gambling”, the industry-state gambling complex, is both exemplary and symptomatic of the concentration of capital and political power among an economic elite in the Western World since the 1980s. Rather than reflecting changing patterns in consumer demand, Big Gambling is driven by political processes and economic imperatives. It has inserted dangerous commodities en masse into vulnerable communities in ways that parallels the actions of both Big Alcohol and Big Tobacco, with similarly damaging consequences. To make this case, we outline of the growth and consequences of the gambling industry in Australia. We choose Australia as our case study, not only because it has formed the context for our own research efforts, but also because of its unprecedented rate and degree of gambling liberalisation, particularly through electronic gambling machines (EGMs), the Australian-variant of the slot machine.

Australia provides the example par excellence of Big Gambling ascendant. Electronic gambling machines (EGMs) have become ubiquitous in public hotels (pubs) and “not-for-profit” community clubs in every state and territory except for Western Australia, with a national ratio of 89 adults per EGM in 2011–12 (Office of Economic and Statistical Research, 2014). According to industry analysts, Australians lose more money gambling per person than any other nation, 23% more than the second-ranked Singapore and 60% more than the fifth-ranked United States (The Economist, 2014). In 2011–12, this amounted to over AUD20 billion lost on gambling nationally, a figure that excludes losses on overseas websites (Office of Economic and Statistical Research, 2014).

Gambling industries in Australia have not always been so profitable. In the 1970s, gambling opportunities were limited. The most popular form of gambling was betting on races and, except at the racetrack, bets could only be made with government-owned monopoly operators. Lotteries were similarly government-run in all states but one. Sports betting was illegal. EGMs were clunky, mechanical, single-line affairs. The machines accepted only smaller-denomination coins and were restricted to clubs in two jurisdictions. EGMs were even prohibited in the four small British-styled casinos, which themselves were located in remote tourist destinations, far from the great mass of the Australian population (Australian Institute for Gambling Research, 1999).

Over the last three decades, EGMs have proliferated in pubs, clubs and casinos across the country (excluding Western Australia) and EGM technology has advanced considerably. Australian company Aristocrat Leisure pioneered the development of linked jackpots and multiline games, a move that was only possible due to the transition from mechanical to electronic machines (Schüll, 2012). These machines encourage gamblers to stake higher amounts (Rockloff et al., 2014) and give the misleading impression of frequent wins and near-misses, encouraging gamblers to continue playing for longer periods (Dixon, Harrigan, Sandhu, Collins, & Fugelsang, 2010; Haw, 2009). Compared to their mechanical predecessors, EGMs are both more profitable for the gambling industry and more dangerous to gamblers. In addition, casinos have been legalised in every state and territory. Despite rhetoric about targeting “high-rollers”, Australian casinos continue to earn over 80% of their income from the non-VIP “grind” market (Productivity Commission, 2010). Indeed, casino development continues apace, with four new Vegas-styled casinos planned for NSW and Queensland in the coming years (Markham & Young, 2013). Lotteries have been privatised in every state and territory. Betting, once confined to the trackside and government-owned pari-mutuels, has been privatised and deregulated. Odds are available on more sports than ever before and “exotic” bets have transformed even the most banal moment in a sporting match into a money-making bonanza for corporate bookmakers. The legalisation of internet wagering has made gambling accessible 24 h a day, wherever a smartphone can be connected. And the final frontier of gambling liberalisation, online casino-style gambling, was recommended for staged liberalisation by an authoritative, government-commissioned review (Productivity Commission, 2010).

It is difficult to imagine this industry without rampant exploitation of the working classes. The distribution of EGM gambling expenditure and class are highly correlated. EGMs and the gambling losses are overwhelming located in poorer suburbs in Australia (Marshall & Baker, 2001a, 2001b, 2002; Rintoul, Livingstone, Mellor, & Jolley, 2012). Prevalence studies have confirmed this spatial correlation at the individual level: problem gambling – and thus gambling loss – is concentrated among the poor and poorly educated (e.g. Young et al., 2006).

The money lost on gambling by Australia’s working classes flows directly to state and territory treasuries and the gambling industry’s pockets. While around a quarter of gambling losses ends up in state coffers (Office of Economic and Statistical Research, 2014), the remaining $15 billion a year is appropriated by the “not-for-profit” clubs and private sector companies. Only a small fraction of club sector EGM profits, often justified on the basis of community benefit, are returned by clubs to the community. For example, in 2010–11, clubs in NSW, Victoria, Queensland and the ACT spent, respectively, 1.3%, 2.4%, 2.3% and 6.6% of EGM losses on community benefits (Livingstone, Kipsaina, & Rintoul, 2012). The remaining EGM profits are, according to data from Clubs Australia (2009), mostly spent subsidising “other” activities such as “donations, cash grants, abnormal and extraordinary and other expenses”. In Canberra, for example, gamblers lost over $16 million in 2012–13 playing the 271 EGMs at the Canberra Labor Group’s network of clubs (ACT Gambling and Racing Commission, 2013). Of these takings, $4.2 million were promptly transferred to the affiliated branch of the Australian Labor Party (ABC News, 2012).

Commercial gambling has also minted a new class of super-rich individuals, enriched not through the production of surplus value but through accumulation by dispossession (Harvey, 2003). Gambling moguls are over-represented among Australia’s wealthiest 0.01%. For example, Australia’s second-richest person, James Packer, has poured his considerable inheritance into casinos and profited massively. His majority-owned Crown Limited made a $490 million profit last (Crown Resorts, 2013), bringing his personal wealth to $7.7 billion (Heathcote, 2013b). Hotel owners have likewise shared the spoils, especially the corporate retailer Woolworths Limited and its joint-venture partners. Bruce Mathieson, partner with Woolworths in Australian Leisure and Hospitality Group, has amassed $1.2 billion, while Arthur Laundy, another Woolworths partner, owns pub assets worth $310 million. The Ferrell Family, owners of Australia’s first casino and beneficiaries of legislated monopoly ownership of all EGMs in the state of Tasmania, have reputedly accumulated assets worth $275 million. Other members of the capitalist elite to profit from gambling liberalisation include Cyril Maloney ($360 million, pubs), John Singleton ($355 million, also pubs), the Kafataris family ($110 million, online wagering) and Matthew Tripp ($115 million, online wagering) (Bennet, 2011; Heathcote, 2012, 2013a).

This level of class-based exploitation is only possible because the gambling super-rich are willing to use their money and influence to reinforce their class position. Political power is used to block reform. In the Australian context, for example, there was a concerted and ultimately successful effort to sabotage reforms that would have made EGMs less addictive, despite overwhelming popular opinion (Mond, Davidson, & McAllister, 2011; Panichi, 2013). Not coincidentally, a spate of political donations by the gambling lobby peaked at the same time, doubtless reminding politicians of the benefits of having Big Gambling on side (Safi, 2013).

Political power is also used proactively to further gambling liberalisation. Clubs in NSW recently leveraged their relationship with the state government to gain further tax concessions and the entitlement to offer new “electronic table games”. More outrageously, the so-called “unsolicited proposal” for a new Sydney casino by James Packer avoided a competitive tender process and designed its own tax rate (Hewson, 2012; Saulwick, 2013). This is after Packer’s late father, Kerry, lost a competitive tender process for the first Sydney casino in the 1990s, despite allegedly threatening a former NSW government with political death should the bid be unsuccessful (Barry, 2010).

Indeed, the growth of Big Gambling has only been possible with state collusion (Livingstone & Adams, 2011). It is no coincidence that gambling liberalisation occurred concurrently with the ascendance of the neoliberal economic project, with its emphasis on deregulation and free markets (Harvey, 2005). Since the 1980s, Australia has deregulated and largely deindustrialised its economy. As state and territory governments found themselves subject to shrinking taxation revenue, commercial gambling has paradoxically offered certainty and an independent source of income to cash-strapped jurisdictions reliant in large part on federal largess (Livingstone, 2001; Livingstone & Woolley, 2007; Young, 2010). As such, by 2008–09, gambling accounted for 10% of total own-state tax revenue (Productivity Commission, 2010, p. 2.11).

In terms of society, the state-sponsored gambling industry has resulted in the unabated economic exploitation of Australia’s most socioeconomically disadvantaged citizens (Doran & Young, 2010; Marshall & Baker, 2001a; Rintoul et al., 2012; Young, Doran, & Markham, 2013; Young, Lamb, & Doran, 2011). These changes have not occurred because liberated Australian consumers have chosen, and demanded, that 200,000 EGMs be installed across the country. It has been an exercise in class warfare from above, based on the calculated, industrial-scale exploitation of the working classes by a super-rich elite. It has not been brought about by the sudden rise of rational, sovereign consumers demand gambling opportunities, but by the imposition of mass-produced gambling onto often unwilling neighbourhoods. The so-called “liberalisation” of gambling has enabled the dramatic redistribution of resources, transferring, with industrial efficiency, billions of dollars from the pay packets of the working classes to the bank accounts of the richest 0.01%. Big Gambling uses its enormous political power to accelerate deregulation, expand its remit, and resist public health reforms.

The growth of “Big Gambling” and its class dynamics in Australia have been mirrored across the Western world. Extrapolating from the political economy of the Australia experience (Young, 2011), we argue that the class-project of gambling liberalisation and exploitation of the working glasses is increasingly global. In many countries beyond Australia, gambling opportunities are concentrated poorer suburbs (e.g. Robitaille & Herjean, 2008; Wardle, Keily, Astbury, & Reith, 2014; Wheeler, Rigby, & Huriwai, 2006). Big Gambling’s political influence is similarly global. Witness, for example, the so-called “Sheldon Primary” in which an American casino multi-billionaire and worlds 10th richest man offered his considerable financial backing to a political candidate who would protect his business interests (Confesore & Lipton, 2014). And the global reach of Big Gambling is expanding. Governments across the globe are feeling the pressure to support gambling liberalisation. In a study of 13 countries, Richard (2010) found that casino legalisation by national governments was associated with the pressure for economic growth. The Australian experience shows that this economic growth entails a direct appropriation of wealth by Big Gambling from those communities who can least afford it.

Bizarrely, the field of gambling studies appears almost oblivious to the astonishing transformation of gambling from a mostly private affair into a socially-damaging, economically-exploitative, multi-billion dollar global industry. The ad-hoc content area of gambling studies has focussed heavily on the psychological behaviour of individual gamblers, without meaningful analysis of the social and economic systems that produce industrial gambling (e.g. Blaszczynski & Nower, 2002; Raylu & Oei, 2002; Rogers, 1998). A prodigious, international research effort has been directed towards the measurement of pathological gambling prevalence and its social correlates. National problem gambling prevalence studies have been undertaken wherever commercial gambling has been liberalised, at last count over 25 countries on six continents (Shaffer, Hall, & Bilt, 1999; Storer, Abbott, & Stubbs, 2009; Volberg, 2004; Williams, Volberg, & Stevens, 2012). This research has focussed heavily on identifying, enumerating and profiling pathological gamblers. Indeed, in all these countries, problem gambling has emerged as the primary issue raised by gambling liberalisation. In this way, the pathological gambler, rather than the process of gambling liberalisation, has been constructed and mobilised as the object of policy and intervention (Collins, 2006; Livingstone & Woolley, 2007; Reith, 2007; Young, 2013a, 2013b). The stigmatised figure of the pathological gambler has arguably distracted the academic research community from the true social damage resulting from gambling liberalisation. The pressing problem for gambling studies is to understand the political economy of gambling and its societal consequences, an agenda beyond the routine psychological approaches that dominate the field (Young, 2013a, 2013b).

Declaration of interest

The authors declare no conflicts of interests. The authors alone are responsible for the content and writing of this article.