Just off the freeway in a small suburb in Melbourne’s west is the Kealba Hotel. It looks like any other suburban sports pub: there’s a bistro and a beer garden, an indoor children’s playground, and huge TV screens showing live football matches and horse races.

And there are 86 poker machines. This pub in the middle of Brimbank, Victoria’s third most disadvantaged local government area, has had the dubious distinction, year after year, of being the venue in the state where people lose the most money on the pokies.

Last financial year, nearly $20.5m was lost in this building alone. That’s the equivalent of 391 yearly salaries at the median wage. And yet it’s a small number in the context of a very big, very expensive national problem.

Australia is addicted to gambling. About $25bn is lost to legal forms of gambling every year, according to recent estimates from the Australian Institute of Health and Welfare. Nearly half of this goes into poker machines.

The profits of pokies first and most obviously flow to the casinos, pubs and clubs that own licences to run them. When the chance of landing a jackpot on a poker machine is literally one in 35,640,000, the real jackpot is holding the licence to collect the losses.

But all aspects of Australian life are steeped in gambling money as it flows back and forth through the economy.

A substantial proportion of profits goes to the governments that allow poker machines to run. It flows to state and federal budgets through taxes, and also to political parties through donations.

Some is ploughed back into local communities, typically in the form of support for junior sport, which gives the clubs an effective argument against attempts to rein in their numbers. And many Australians invest in the gaming companies via their superannuation funds, including some marketed as “socially aware”, completing a circle that makes reducing harm from problem gambling such an intractable problem.

Most pokies losses come from the pockets of the poor

The worst losses happen in communities where people can least afford it.

In Victoria, where the data available is most robust, the largest amount of money is lost on pokies in Brimbank – $128m in the last financial year, despite pubs and clubs being closed for months due to Covid lockdowns. The previous financial year, it was more than $92m. In Greater Dandenong, the second-most disadvantaged local government area in Victoria, gamblers lost $102m in the last financial year.

expenditure per capita and seifa index

There were more than 29,000 poker machines in the state at the end of last year. The Victorian government collected more than $2.2bn in gambling taxes and expects to collect $2.4bn this financial year – $1.2bn of it from pokies.

In New South Wales, things are worse: the state has by far the highest concentration of pokies in the country, with 86,640 machines in its pubs and clubs.

And the most money is lost in western Sydney. More than $900m was lost in the local government areas of Fairfield and Canterbury-Bankstown on 8,578 machines in the last financial year . Fairfield is ranked as the city’s most disadvantaged area, with Canterbury-Bankstown not far behind.

The NSW government expects to rake in $3.26bn this financial year from gambling taxes.

One of the oft-repeated phrases by defenders of legal gambling is the benefit to the public from the taxes imposed on the industry. But as the data shows, this is money coming directly from the pockets of the people who have the least to lose, and who are losing it on machines that are designed to addict them.

“It’s impossible to describe how effective they are,” says Monash University associate professor Charles Livingstone, who has been researching pokies for more than two decades. “They are enormously efficient at getting people to keep putting money into them. It’s a highly addictive product that targets well-known psychological processes and stimulates the release of brain chemicals that make people feel good … and the clubs bank on it.”

Anti-pokies campaigners estimate at least 40% of losses from poker machines come from gamblers already at risk of or experiencing gambling harm, which can reach devastating levels.

There has been no shortage of attempts to curb the harm. A 2010 Productivity Commission report recommended a host of reforms, including $1 bet limits on poker machines and mandatory pre-commitment systems that would allow players to set a universal limit on their losses.

The Gillard government’s 2012 national gambling reform bill included pre-commitment systems, but stopped short of $1 bet limits. The pre-commitment systems were abandoned in the face of pressure from the clubs and hotel industry lobbyists, particularly Clubs NSW and the Australian Hotels Association, who threatened a marginal seat campaign against her minority government.

Where the pokies are

In 2015, the Coalition government under Tony Abbott announced a review into online gambling, led by the former NSW premier Barry O’Farrell. O’Farrell’s review made 19 recommendations, including that companies be required to regularly send itemised activity statements to online gamblers clearly showing how much money they had bet, won and lost, and to set up a national self-exclusion register. The government agreed in principle to all but one of the reforms, but no legislation was brought forward.

Since then, the market has exploded, with online gambling advertising at saturation level. While some restrictions still apply, particularly around broadcast advertisements, it’s impossible to escape the billboards, placards, decals and online advertising, let alone attend a sporting match without betting odds flashing from every screen pushing the gambling brands whose logos are emblazoned across players’ uniforms.

Punters play the poker machines in Tamworth, NSW.
Punters play poker machines in Tamworth, NSW. Photograph: Tracey Nearmy/AAP

But there are small signs change may be in the air.

The inquiry into casino operator Crown Resorts in Victoria last year found a string of licence breaches and conduct described by the commissioner as “variously illegal, dishonest, unethical and exploitative”, including towards the company’s treatment of people experiencing gambling harm. Similar findings have emerged in relation to Star, which has been found to be unsuitable to hold a casino licence in NSW and Queensland.

A report from the NSW Crime Commission, handed down last month, found that large sums of the proceeds of crime were being gambled in pokies.

Yet shadows of the clubs’ campaign against the Gillard government are looming as NSW Labor resists offering bipartisan support to the Liberal premier, Dominic Perrottet, as he edges towards industry reform.

All this has occurred as both parties seek to shore up their positions ahead of the NSW state election in March, making the question of what role pokies will play in that poll inescapable.

Since its election in May, the federal Labor government has begun rolling out the relatively small but significant reforms recommended by the O’Farrell review. In October, a Senate inquiry was established into online gambling and its impacts on those experiencing gambling harm. More than 50 submissions have been received so far. One writer, who has been diagnosed with severe gambling disorder, described the industry as “a playground of madness”.

Perhaps the most unexpected shift in the wind has come from Tasmania, where the gambling lobby’s influence has previously been most striking. In September the Liberal government announced that it would introduce a mandatory pre-commitment scheme. While experts say the design has holes, it’s nevertheless a step towards harm minimisation that seemed completely off the table just a year ago.

The recent inquiries “have lifted a rock”, Livingstone says. “And once you lift the rock and see what’s squirming around underneath it, you have to act.”

In Australia, Gambling Help Online is available on 1800 858 858 and through live chat. The National Debt Helpline is at 1800 007 007. The crisis support service Lifeline is 13 11 14.

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