Two angry mothers fronted up to let the board know of the financial misery that had been inflicted on their sons; one told the harrowing story of her son, who had twice attempted to take his own life. As journalist and shareholder activist Stephen Mayne observed of the meeting, the chairman, Neil Chatfield, along with other directors, expressed sympathy to the mothers but immediately afterwards flatly denied that the company’s products were built for addiction.66

  Hints at the manipulation being deployed occasionally slipped out from the industry. American casino management consultant Leslie Cummings referred to tactics of ‘gaming productivity’, a process of accelerating play, extending duration and increasing the total amount spent.67 Sophisticated sight, sound, ergonomics and cashless and tactile technologies are in continuous development to drive the gambling experience.68

  Aristocrat Leisure has been extremely clever in knowing what entices players to put lots of money into machines. The key to this, explains Charles Livingstone, is to maximise the flow of dopamine to the brain – this is the neurochemical that regulates our sense of pleasure and reward. Modern poker machines achieve this by stimulating a hit of dopamine every few seconds – by disguising losses as wins, and by highlighting near misses. Specific design features add to this effect, as Livingstone explains: ‘Different colour palettes appeal to different market segments. The game Dolphin Treasure is soft and blue, and thought to appeal to women. The Black Rhino game is darker, with red and purple highlights. It’s a game targeted at young, risk-taking men.’69

  All these characteristics have been designed to engineer a psychological state of continual reinforcement and immersion. Livingstone notes that ‘the effect can be overwhelming for pokie users. Rationality is left at the door.’ What Aristocrat cares about ‘is making machines that will maximise the amount of money people will spend on them’.

  The company is testing and tweaking new machines all the time, Livingstone says. And in Australia they have the world’s biggest pokies laboratory in which to do so: ‘They know what they’re doing. They put a new machine out into the field, and if it works, they keep enhancing the features. They’re trying to get people totally immersed in poker machines.’70

  The seductive triggers of poker machines were very familiar to problem gambler ‘Michelle’, who told the press in 2022 of her long and debilitating addiction to the devices. Since 1997, she had lost almost $300 000. ‘It’s an addiction,’ she said. ‘At one stage I became homeless due to gambling because I would spend all my rent money, all my food money, everything on pokies.’ She said the prevalence of gaming venues makes life difficult for her. ‘When I walk down the street and I see the lights and hear the sounds [of the gaming machines] it feels like they’re calling me, and I’m sure it does that for a lot of other people.’71

  It all smacks of deliberate manipulation of unsuspecting players.

  The pub pokies barons

  If Aristocrat Leisure could effectively insulate itself against the distress inflicted by poker machines, its hotel-owning clients were equally adept. The pub pokies barons were lured by one thing: the promise of enormous profits.

  In 2003, when Bill Waugh, who came from a family of hoteliers, wished to offload his New South Wales pub empire, it was said to be worth $1 billion – on the back of 25 pubs with 1000 poker machines.72 Arthur Laundy was another who built an empire. Said to be publicity shy, he was estimated to be making $26.5 million a year in the early 2000s from his portfolio from the list of top 200 hotels.73

  The wealth of New South Wales’ pub pokies barons was further enhanced in 2010, when the state Labor government led by Kristina Keneally slashed the gambling tax on poker machines. Some were set to have their tax bill cut on poker machine profits or even pay no tax at all, following an overhaul of gambling taxes in the state budget. The New South Wales president of the Australian Hotels Association, Scott Leach, celebrated the move in an email to members:

  The AHA NSW has successfully lobbied the NSW government to guarantee future gaming tax rates and deliver an immediate tax cut to 65 per cent of NSW hotels. This is a result of historic proportions for the industry following speculation last year the government was seriously considering increasing hotel tax rates.

  Help in brokering the deal was provided by John Whelan, a former chief of staff to the former minister for gaming and racing, Grant McBride, who, in a classic example of Big Gambling in action, went on to work for the AHA.74 Lobbying of this sort is not illegal.

  In Victoria, the pub pokies king was Bruce Mathieson. A former toolmaker and quintessential self-made man, he built an empire worth $360 million by 2004. Three decades earlier, he and his wife had dreamed of owning their own pub. They scrimped and saved and purchased their first pub in 1974. By the mid-1980s he was part of a syndicate that included Alan Bond and owned 260 hotels. The introduction of poker machines into Victorian pubs in 1992 saw the value of his business soar.75

  Forming the Endeavour Group, Mathieson’s wealth jumped to over $2 billion, earning him 39th place on the BRW Rich List. Reportedly not fond of the sobriquet ‘pokies king’, which was affixed to his name after he emerged as one of the big winners in Victoria’s poker machine explosion, he became a bête noire for the anti-gaming lobby.76

  Mathieson’s daughter Deborah and son-in-law Dave Tomsic emerged as pub pokies barons in their own right. By 2022 they owned 1200 machines in 25 venues across Melbourne. Defensive about the role poker machines played in the couple’s business model, Dave told the media in 2022 that the focus of gambling reform efforts should be on online gambling, which was ‘out of control’.77

  Tucked away among the pub pokies barons was the low-key Greg Farrell junior. By 2015 his monopoly on poker machines in Tasmania had delivered $463 million of wealth to his family, enough to place Greg at 29th on the BRW Rich List. The wealth was delivered on the back of the Federal Hotels group’s two casinos and high-end tourist accommodation, but also by the $100 million Tasmanians spent each year on poker machines.

  The Farrells enjoyed an opulent lifestyle in Sydney and in northern Tasmania, with high-end properties, a landed gentry lifestyle, fine art and thoroughbred horses. At the forefront of Greg Farrell’s corporate strategy – one needed to keep in place his monopoly licence for poker machines – was a focus on his family’s passionate commitment to Tasmania. The Farrells were driven, one admiring observer noted, to ‘develop the island state they love, to foster investment and employment’.78 The Farrells were generous donors to community groups and to both major political parties in the state, and few have been prepared to publicly criticise the company’s pokies operation. Under Tasmania’s weak electoral laws, corporations could keep relatively secret their donations to individual politicians. Not surprisingly, Farrell was treated like a business guru. He was placed on numerous peak bodies advising governments.

  A rare family photograph of the Farrells in a newspaper captured an unmistakable air of self-satisfied opulence. But life was miserable for many of the low-income patrons at the Federal Hotels group’s pokies pubs. The company and the lessees of its poker machines were accused of targeting poorer suburbs to build its business.

  Pubs with pokies are often allowed to stay open until 4 am, when even the lounge and bars of hotels are closed. Kristie Johnston, an independent member of the Tasmanian parliament, visited the Elwick Hotel at 2 am one morning to see for herself who was playing the machines at that hour. ‘There were a dozen or so people totally transfixed by the machines,’ she said. ‘That’s not recreation: no one plays pokies at that hour of the morning unless they are addicted.’79 In fact, the long opening hours are a deliberate ploy by corporate hotel owners to exploit problem gamblers. Gambling researchers know that, after midnight, the risks of problem gambling increase.80

  Smaller players in the pub pokies market typically owned between ten and 12 hotels, but these portfolios could still generate $20 million or more in profits each year.81

  But scandal was never far away for pub owners with pokies.

  Corporate sleaze

  In September 2015 controversy erupted from an unexpected quarter. It was revealed that Woolworths was offering rewards programs to entice people to spend more money at the poker machines in its hotel portfolio. The public was shocked to read that Woolies had become a large owner of pokies through a 75 per cent ownership of the Australian Leisure and Hospitality Group (ALH). After all, Woolworths had spent decades crafting a wholesome and healthy image: its logo was a fresh green apple, it promoted a family-friendly environment and it spruiked corporate ethics on its website. Suddenly it had been exposed as being linked to the ruthless exploitation of its customers through its 12 000 poker machines.

  As if hiding a guilty secret, Woolies had tried to distance itself from its investment in pokies. Nowhere in its most recent glossy annual report, full of photos of smiling families, was there any mention of the words ‘poker machine’.

  The scandal centred around ALH offering a ‘kids eat free’ promotion, along with rewards cards for frequent gambling. Critics railed that this was the opposite of family-friendly. The rewards card was labelled as an ‘addiction card’ by the South Australian senator and gambling reform advocate Nick Xenophon.82

  But there was more pain for Woolies to come. Louise Milligan, an investigative reporter for the ABC’s 7.30, found that poker machines in some Woolies-owned pubs were located next to children’s playgrounds: only a glass wall separated children from the flashing lights of poker machines in action. Anti-pokies campaigner Paul Bendat was outraged at Woolies’ lack of ethics, declaring that the company was engaged in ‘an immersive experience for young children that normalised gambling’ because ‘there’s nothing more powerful than seeing your parents gamble’.83

  Why had such a seemingly wholesome company as Woolworths moved into the poker machine business, risking the very reputational damage it was now suffering? The answer, of course, was profit, and its accompanying dictates of shareholder value and executive salaries. And it wasn’t just Woolworths hopping in on the pokies action. Much of corporate Australia did as well, funding poker machines through investments. Corporate heads were like hungry seagulls fighting over a leftover sandwich, so desperate were they to get a slice of the profits pokies generated.

  In the era of financial deregulation, involvement in the gambling industry made perfect sense to corporate players, just as natural as investments in climate-altering oil and gas mega-projects or obesity-inducing sugary drinks or fast foods. Modern corporations are adept at creating mass markets, especially around entertainment products. They are equally focused on deploying new technologies to enhance entertainment products. Corporations regularly overlook risk in the search for profit; in fact, bolstering shareholder value and justifying ever-escalating executive remuneration packages remain the focus of many corporations. Modern corporate heads talk of ‘corporate social responsibility’ but often don’t walk the walk. And, of course, corporations thrive in a deregulated market, where they can get on with the task of commercialising almost anything, reaping extraordinary profits in the process.84 Pokies were legal, they said, so what’s the problem? Go all out!

  Expenditure on pokies was soaring like a jet engine on full throttle. In the decade between 1993 and 2003, gamblers lost a staggering $70 billion playing pokies, up from $19 billion the previous decade.85 For Woolworths, poker machines were just another opportunity for profit. How the company came to rationalise its involvement in the sullied business of pokies offers a straightforward but illuminating example of contemporary corporate culture.

  It’s important to understand Woolworths’ turf war with Coles. Coles started buying up bottle shops in Queensland as part of its move into the liquor business. As it happened, in order to own a bottle shop in Queensland, a proprietor must first own a pub – and this confers the added advantage that they can open a liquor barn on the same site. So Coles ended up with 87 hotels with 3000 poker machines, which delivered a handy revenue stream. It had effectively thrown down the challenge to its competitor.

  In 2000, Woolworths’ then CEO, Roger Corbett, met Bruce Mathieson at the ritzy Sydney Olympic Hotel, where they hatched a plan to develop a joint venture into the liquor business. Ultimately, the two teamed up to buy the ALH Group.86 Mathieson was said to be a natural partner for Woolworths, bringing his no-frills business approach and belief in providing a ‘service-oriented value proposition for customers’.87

  Described as mild-mannered but straight-talking, Corbett had spent his career climbing the ranks of the retail industry before taking the helm at Woolies between 1999 and 2006. In the process he became one of the most powerful business directors in the country, joining a slew of top boards, among them that of the Reserve Bank.

  Impressive as these achievements were, Corbett’s private life was driven by his strong Christian faith – the contradiction, of course, being that Christian leaders had long been at the forefront of the campaign against gambling, with particularly fierce opposition to poker machines because of their impact on those less well off.

  In 2020 Corbett gave an interview to the Christian podcast The Inspiration Project, where he laid bare his deep faith: ‘My parents were people of faith and I made a commitment to the Lord Jesus Christ very early in my life, kneeling with my father beside the bed in his room … That was the starting point of my walk with Jesus.’

  The parallel quality that Corbett spoke of in the interview was his strong sense of empathy with ordinary people – the sort of people he employed at Woolies, who hadn’t enjoyed the opportunities he had. ‘I always felt great empathy with the people in the stores [in] what were really, in many cases, tough, sometimes boring jobs … and most of those people have done those jobs all their lives.’88

  How Corbett reconciled his Christian faith and empathy for his workers with the impact of poker machines on the very same people is not clear. As Nick Xenophon said of Woolworths: ‘There are people who can’t afford to buy food and groceries at a Woolworths grocery because they’ve lost their money on a Woolworths-owned poker machine.’89

  During his time at Woolworths, Corbett made the company the undisputed leader of the supermarket industry in Australia, but he did so, in part, on the back of the company becoming the third-largest owner of poker machines in the country, behind only Crown and Star. Woolies quietly promoted its joint venture with Mathieson as a scheme to generate greater revenue growth.90 In fact, when asked in 2005 if gaming and liquor were now core businesses for the company, Corbett replied: ‘It is now a significant and long-term profit generator for this company and I might say cash flow generator.’91 And he was right: the profits from pokies were estimated to generate $1.5 billion a year for Woolies/ALH.92

  Corbett was accused in the press of having a tone-deaf attitude towards pokies.93 On several occasions, he was asked how his devout Anglican ideals squared against the pokies business. Corbett’s response was to defend the status quo. ‘The law of the land,’ he said, ‘allows poker machines and we are absolutely committed to being the best operators of poker machines in Australia.’ Business is business, he seemed to be saying. And he appeared to have little understanding of problem gamblers, commenting: ‘Like drinking, and eating too much food, people can make a choice.’94

  After Corbett departed Woolworths in 2006, he went on to become chair of ALH. Woolworths’ continued involvement in the pokies business attracted increasing political and investor pressure. The company’s reputation was sullied during this time, when it no longer met the criteria for ethical investment funds due to its extensive liquor and gambling involvements.95

  At much the same time, Coles started to take a different turn with its pokies assets. In 2007 Coles was bought by Wesfarmers and inherited its swag of poker machines. However, its CEO, Richard Goyder, hated pokies. But could he do anything about the company’s involvement?

  Gaming the punters

  Much of corporate Australia was out of touch with the reputational risk posed by poker machines. Companies investing in the sector overlooked that pokies were addictive and heavily concentrated in lower socioeconomic areas. And this was more so for Woolies/ALH, which was aggressive in looking to grow the pokies arm of the business. On one occasion, when a local government in Melbourne’s northern suburbs voted to ban pokies, it took them to the Supreme Court to get the decision overturned.96

  As the profits kept rolling in, scandals revealed the rapaciousness of the corporate-owned poker machine industry. In early 2018, Andrew Wilkie, an independent Tasmanian member of the federal parliament, rose in the House of Representatives and dropped a political bombshell: ALH had been involved in spying on poker machine players across its 400 hotel venues to compile a secret database of their personal information to assist staff in encouraging increased gambling.

  Some of the directives to staff were simply damning. One document, called the ‘Gaming Daily Briefing Sheet’, read:

  We have a massive weekly target to beat … We need to be out on the floor really pushing drinks. It’s tax time so people will have more money to spend. Hand out drinks cards, be out there as much as possible. Do whatever you have to do to keep people in the room!

  Other leaked briefings disclosed by Wilkie were similarly exploitative: ‘Started slow, picked up after nine, coffees, drink shouts and toasties trying to keep them [gamblers] in,’ one read. A staff meeting discussed how best to fleece a newly bereaved woman of her inheritance.97

  The Woolworths board suddenly found themselves in the middle of a ‘PR catastrophe’, as journalist Nick O’Malley commented in The Sydney Morning Herald. ‘Having spent millions telling Australians they are the Fresh Food People, a cavalcade of angry and disheartened pub staff are coming forward to blow the whistle on the ugly practices they are instructed to use to keep pokies players glued to their machines,’ he reported.98