Thus, with high levels of addiction, exploitative technology and an industry in denial, there was a compelling case for reform. But what was the best approach? The Gillard government had rejected the idea of $1 maximum bets, but curbing the allowable level of intensity of machines was clearly an area for action. Tim Costello argued that there was overwhelming public support for a reduction in the number of pokies and for banning 24-hour venues.14 He also suggested restricting operating hours and advertising, and making changes to ‘deceptive’ gaming machine tactics – specifically ‘losses disguised as wins’ with celebratory lights and music, and the illusion of ‘near misses’ in the way the symbols were presented on the screen. A ‘near miss’, he said, was a ‘complete nonsense’, but ‘it releases dopamine and is highly addictive and deceptive’. And the Productivity Commission highlighted the role advertising had been playing in the normalisation of gambling. In other words, a lot needed to be done.

  But MPC was the basis of Wilkie’s deal with Gillard. What did it offer as a solution to Big Gambling’s predatory business model? At the time, Norway was the only country in the world that had fully implemented MPC, meaning Australia’s adoption of the scheme was of international significance.

  Requiring players to set limits on their losses is assumed to drive rational and conscious decisions, rather than irrational choices when in the grip of addictive behaviour. Potentially, it would stop gamblers chasing their losses on Australia’s high-intensity machines. When a gambler’s preset limit was reached, they would be unable to continue playing. Importantly, the scheme had to be mandatory – a voluntary scheme would simply give problem gamblers an easy way to opt out.

  But the scheme did require a restructuring of the industry. Newer poker machines needed to be retrofitted with smart-card technology, while older machines had to be phased out. Under Wilkie’s deal, the industry would have until 2014 to implement the scheme. If it could be made to work, MPC had the potential to puncture the profits of gambling companies and shave off a slice of the revenue going to state governments – and, of course, to help addicts.

  But would MPC work? The gambling industry said it was a dud – gamblers would just set high limits for themselves, or take to other forms of gambling when their limit was reached. The clubs industry claimed that the Norwegian experience showed the scheme was bound to fail. After MPC was introduced in 2007, problem gambling had actually increased in the country. Industry voices claimed that Norwegian problem gamblers created multiple cards, often in the names of relatives, and shifted to online gambling when they were excluded from poker machines.15

  Yet the evidence to Wilkie’s committee presented a different story. When asked whether mandatory pre-commitment would have helped her, Julia Karpathakis said that if there had been another option, she would not have become an addict. Another witness, Gabriela Byrne, agreed:

  When you want to continue to gamble in the moment the urge is so strong that you would give anything to continue. If you stopped to do so and then you walked out and had time to cool off you realise that a measure like this is probably protecting you from losing a lot more. I think it is a worthwhile thing.

  Based on the evidence from a number of such witnesses, the committee concluded that ‘pre-commitment should be seen as a management tool for all gamblers. For those not at risk it is a management tool to make choices and support those choices. For those at risk or with a gambling problem it is a tool for change and learning new gambling behaviours.’16

  Canada had recently conducted a trial of MPC that showed a reduction in total expenditure by gamblers after its introduction.17 But the sharpest case for MPC came from the Productivity Commission’s 2010 report and the confronting figure it contained: ‘The significant social cost of problem gambling – estimated to be at least $4.7 billion a year – means that even policy measures with modest efficacy in reducing harm will often be worthwhile.’18

  Big Gambling on the up and up

  In agreeing to Wilkie’s deal, Prime Minister Gillard threatened the interests of an industry that had increasingly embedded itself into Australia’s economy and society. There were 11 casinos and some 200 000 poker machines spread across the country.19 The gambling industry employed 100 000 people in approximately 7000 businesses.20 The profits were enormous: Australians lost $11 billion on gambling activities, three times the amount of 15 years earlier.21 The gambling industry was becoming too big to fail – so long as governments ignored problem gambling. MPC threatened the head-in-the-sand approach taken by both industry and governments.

  At the time of the debate on MPC, the gambling industry in Australia was set to go to a new level, with new gambling opportunities opening up everywhere. Interactive television, mobile phones and the internet brought into play new forms of online gambling, especially sports betting, while also reviving older forms such as horse racing. Dubbed ‘convenience gambling’, the emerging technology represented a quantum leap in accessibility to gambling, meaning the industry could target new groups of people.22 (I’ll discuss these developments in detail in Chapter 9.) But in 2010 the online gambling industry was still relatively small, with sports betting accounting for approximately $350 million, compared to the $10 billion spent on poker machines.23

  Hard-sell gambling advertising ramped up after a 2008 High Court decision, Betfair Pty Limited v Western Australia. In 2007, the West Australian government had amended the state’s Betting Control Act 1954 to prevent interstate online betting operators from conducting business in the state. Big British gambling firm Betfair, which had established its operations in Tasmania in 2006, successfully challenged the amendments, arguing that the law imposed protectionist burdens on interstate trade and therefore contravened Section 92 of the Constitution.

  The effect of the High Court’s decision was immediate and far-reaching. It allowed bookmakers to offer bets and advertise anywhere in Australia.24 The gambling advertising tsunami began, leading to the eventual capture of Australian professional sport.

  All these developments – new technologies, online gambling, global corporate players, the takeover of sport and the avalanche of advertising – represented a perfect storm for Australian society. For gambling company executives it was a heady time. They were thrust into a barely regulated and rapidly expanding market. Neil Evans, head of public affairs at online betting company Luxbet, described the industry at the time as akin to the Wild West: ‘a bonanza of cash and overseas markets … hitching their wagons to the rising Australian star’.25 And state governments, along with the Commonwealth, were nowhere to be seen.

  Perhaps inevitably, disaster was just around the corner. Brash young Australian bookmaker Tom Waterhouse found a clever and ruthless way to extend the culture of gambling. The public was incensed.

  Reformer or political pragmatist?

  Was Gillard ever serious about implementing MPC, or did she agree the deal with Wilkie for the sake of power? The answer is elusive. Gillard was both a progressive and a pragmatist, depending on the issue and how she thought it suited her party’s position. In other words, she was a modern political leader.

  A lack of commitment to gambling reform was evident in Gillard’s predecessor as prime minister too. Kevin Rudd, in office between 2007 and 2010 (and again briefly in 2013), flipflopped over gambling. He appeared to be a champion for reform, expressing his dislike of poker machines and offering to sit down with Senator Xenophon to negotiate a deal, and he commissioned the 2010 Productivity Commission inquiry. But no government policy or legislation emerged.26 A later prime minister, the Liberals’ Malcolm Turnbull, in office between 2015 and 2018, would renege on a commitment to introduce a $1 bet limit. Before coming to office, he’d told Tim Costello that he supported the reform, as did his electorate. But, as Costello later lamented, ‘That was the old Malcolm.’27

  Gillard indicated that she understood and empathised with the victims of poker machines. In July 2012 she told the press how people in her local community in outer Melbourne had come into her electoral office asking for baby formula because their partners had lost all their money on the pokies. She knew of one family who had had to live in a driveway because they’d lost their home to gambling debts.28

  As a Labor prime minister, Gillard saw herself as a champion for the less well off, bemoaning ‘the divisions in our nation that result when some suburbs are ghettos of disadvantage’.29 She once described her approach to politics as involving ‘a real drive to make things better for people’.30 But despite a growing body of research, she showed no acknowledgement of the link between the two issues – how exorbitant losses on poker machines in disadvantaged suburbs worsened the ‘ghetto’ conditions of which she spoke with such conviction.

  However committed Gillard was at the sealing of the deal on MPC straight after the 2010 election, she quietly wound that commitment back over time. Gambling was easily compartmentalised as a state issue. The Labor Party had for decades been divided on the issue of poker machines. As we’ve seen, some Labor state premiers had rejected gambling as an economic model out of concern for the social damage it created, while others had wholeheartedly embraced it. So gambling policy was risky political territory for Gillard. Clubs, especially in western Sydney, represented an important constituency for Labor parliamentarians, and the right wing of the party ‘had long been in the pay of the pokies lobby’, as Stephen Mayne put it.31

  And Labor was directly tied to pokies money. The ACT Labor Club operated hundreds of poker machines, funnelling profits directly into the party’s investment arm, the 1973 Foundation. The party was, effectively, part of the clubs industry.32 The New South Wales branch had built up $45 million in assets in the Randwick Labor Club, a venue that had poker machines. The unions were also involved in the industry. The Construction, Forestry and Maritime Employees Union (CFMEU) owns a large pokies venue in the Canberra suburb of Dickson, called The Tradies.33

  More broadly, Labor has had a long connection with the gambling industry: let’s not forget it was a Labor government that set up the clubs industry in the mid-1950s, a Labor government that introduced Australia’s first legal casino in Tasmania, and a Labor government that paved the way for the proflieration of poker machines into hotels. In 2010, as Gillard was striking a deal with Wilkie, federal Labor had no policy to address the growing problems of the gambling industry.

  Nevertheless, Gillard possessed a range of leadership qualities that allowed her to tackle tough issues: an ability to master a brief, discipline, resilience and excellent people skills. The independents in the House of Representatives, including Tony Windsor, regarded her as a skilled negotiator. But her grip on power within her party was never secure, and suspicion and mistrust dogged her. She was constantly being forced to choose between her principles and power. According to Tim Costello, soon after Gillard announced the deal with Wilkie, representatives from the gambling industry ‘literally marched into her office and said “your prime ministership is over if you march on with this reform”’.34

  Already suffering public blowback after deposing Kevin Rudd as Labor leader and prime minister, Gillard now faced the challenging task of managing minority government. There was fierce opposition from the Murdoch press, radio ‘shock jocks’ and a relentlessly negative opposition leader, Tony Abbott – not to mention a bitter Kevin Rudd. Gillard is credited with having a tough but effective negotiating style with the independents, which was instrumental in delivering a substantial legislative agenda. But it was a roller-coaster term of office, raucous and often depicted as on the brink of falling apart. In sticking to the task, Gillard showed considerable fortitude.

  To its critics, the Gillard minority government was tainted from the outset. The government’s legitimacy was questioned after a key policy backflip early in the new term. During the election campaign, Gillard had promised that she would not introduce a carbon tax to address climate change. However, she reversed course, committing to the controversial measure in order to gain the support of the Greens and their leader, Bob Brown. The Liberal opposition characterised Gillard as untrustworthy, and the tag would haunt her prime ministership.

  Although some of Gillard’s policies seemed to cut against Labor values – jettisoning a controversial mining tax, reintroducing offshore processing of unauthorised migrants and cutting welfare payments to single mothers – she was progressive in other areas. In particular, she was a strong supporter of women’s rights, education and mental health supports.35 The creation of the National Disability Insurance Scheme by her government ranks as a great Labor reform. And her government introduced groundbreaking plain-packaging tobacco legislation that led the world as a measure to help reduce the harm from smoking.

  Respected economics commentator Ross Gittins wrote in late 2011 that Gillard was ‘hard to pigeon-hole’. He wasn’t sure whether she was a typical Labor leader, as many business critics believed, ‘or a pale imitation of a Liberal leader’. For Gittins, the key question was whether she stood up to powerful industries or kowtowed to them. He then compared the risks the government was taking in standing up to the tobacco and gambling industries. Both plain packaging for cigarettes and mandatory pre-commitment for pokies were world-leading reforms but there was an important political difference between the two: ‘[G]lobal tobacco has a fraction of the power the licensed clubs have in opposing compulsory pre-commitment for people using poker machines.’36

  Was Gillard prepared for a fight with the powerful gambling lobby? Wilkie feels she ‘didn’t have the heart for it’. As 2010 rolled into 2011, there’d been discussions with Jenny Macklin, the relevant minister, about how an MPC scheme would be implemented in what was an area of state government jurisdiction, but there was no evidence that the government was doing any hard work to make sure it happened.37

  The gambling industry’s fightback

  Within months of Wilkie’s deal over MPC, the gambling industry had publicly declared that it was on a war footing: its members were gearing up to defeat the proposed gambling legislation. In their corner was an assemblage of some of the most powerful organisations in the country. Aside from gambling companies and the clubs industry, the opposition to MPC included James Packer’s Crown Resorts; the Australian Hotels Association; the nation’s biggest professional football codes, the AFL and the NRL; Woolworths; Channel Nine; various state governments; ‘shock jock’ radio hosts; and the Coalition. Together, these groups raised some $40 million for the campaign. Some campaigned openly while others exercised their influence behind the scenes. The clubs industry would become the public face opposing MPC.38

  Anthony Ball, the CEO of both Clubs Australia and ClubsNSW, likened the looming fight to the mining industry’s campaign against the Minerals Resource Rent Tax, the Rudd government’s tax on the resources industry’s ‘super profits’. That campaign was so successful that some regard it as having precipitated the end of Rudd’s prime ministership.39 It showed that, with enough money committed, public policy could be shot down with a cleverly framed blitzkrieg advertising campaign that linked vested interests with the public interest.

  Ball was inspired to do the same over MPC, and his lines were well honed from the outset. ‘Everybody knows what the local club does,’ he argued, ‘there is one in every suburb and certainly in every electorate. I think they have genuine concerns about this licence to gamble … I think that the 10 million memberships around Australia will be worried about that.’40 In Ball’s framing of the issue, a ‘licence to gamble’ became one of the campaign’s most shrill slogans: ‘A licence to punt was unAustralian’. Linking MPC to the idea of freedom was a simple but clever construct. It diverted attention away from the clubs’ business model of exploiting problem gamblers through high-intensity machines and focusing on individual rights.

  There was no doubting the potential power of the clubs industry. Graeme Morris, a former adviser to John Howard and the gambling industry,41 publicly warned Gillard about the risks of taking on the industry. They could be a powerful opponent in marginal seats, he said, such that ‘Gillard could be blown out of the water on this one community issue if she is not careful’.42

  Former New South Wales Labor premier Morris Iemma agreed. The clubs industry could shift votes, he said, and their influence was especially felt by Labor politicians because clubs and Labor went hand in hand. This was ‘even more true of MPs with marginal seats in Western Sydney, the clubs’ metropolitan heartland’.

  Ball, calm and quietly spoken, no doubt felt emboldened by the thoughts of such esteemed political insiders. He quickly announced that clubs had appointed ten delegates to lobby Labor members in marginal seats, and he foreshadowed that an advertising campaign would commence in 2011.

  True to his word, in April 2011 Ball unveiled the first phase of the anti-MPC ad campaign. Well-connected advertising guru John Singleton was given the account. Newspaper, radio, billboard advertisements and newsletters blared out the narrative that the introduction of MPC would cause havoc: clubs would go broke; local sporting clubs would be denied the support they received from clubs; and problem gamblers would simply set high limits on their cards. The measure represented a ‘nanny state’ intervention on Australians’ basic freedoms. What’s more, it would cost the gambling industry $5 billion to comply with the technology requirements of the proposed ‘smart card’ system.

  Most of these claims were either misleading or outright propaganda. The claim of a $5 billion impost was repeated ad nauseum by an uncritical media but was dismissed as propaganda by think-tank The Australia Institute. It found that the compliance costs to the industry from the introduction of MPC would be between $171 million and $342 million.43 And the Productivity Commission had shown in 2010 that only 1.8 per cent of the clubs’ towering profits were distributed to local community organisations. But the government did little to correct the record, meaning the facts wouldn’t be broadly known.