The business model of clubs linked to pokies became something of a craze, as a correspondent from The Bulletin noted in 1965: even nine years after the legalisation of poker machines, the local market was ‘still booming’, with ‘new clubs, all after machines, being established at a quick rate’.8

  The clubs may have been popular, but their model came under intense criticism at the time – and now – for turning a blind eye to the damage extensive gambling did to the community. However, with memberships the size of large towns, clubs developed powerful political clout and were able to protect their interests. Some wondered whether legalising poker machines on such a large scale had unleashed a Frankenstein’s monster. Calls to ban the pokies reverberated through the 1950s and ’60s.

  How did clubs grow so big, so unaccountable and so powerful? The short answer is a gross failure of public policy. Governments simply didn’t contend with the addictive nature of poker machines. Instead, they saw a solution to the post-war need for a new form of mass entertainment.

  The decline of pubs

  The dramatic rise of clubs in New South Wales came on the back of public disgust over the conditions in pubs. These venerable institutions, built around local communities and often teeming with rowdiness, merriment, drinking and socialising, had entered a steady decline following World War I. The catalyst was the introduction of 6 pm closing in 1916. The earlier closing time represented a great victory for the powerful temperance movement, whose members had long railed against the evils of drink and the destructive role they believed pubs played in keeping working men away from their homes and families.

  But bringing forward closing time to 6 pm robbed the pubs of their community functions and transformed them into rough drinking dens. The infamous ‘six o’clock swill’, in which working men rushed to their local pub after work to guzzle down as much beer as they could between the end of work and closing time, became institutionalised. In the 1920s it was estimated that 90 per cent of alcohol drunk in hotels was consumed between 5 and 6 pm.9 Historian JM Freeland, in his study The Australian Pub, noted that with six o’clock closing, pubs became little more than ‘high pressure drinking houses’.10

  The unedifying spectacle of the six o’clock swill was graphically captured in Caddie, the autobiography of barmaid Catherine Edmonds, who worked in Sydney hotels during the Great Depression of the 1930s. Edmonds’ book was an instant bestseller. In it she narrated her extraordinary life of struggle before becoming a barmaid, but it was her stories of Australia’s ‘primitive’ drinking culture that shocked readers in England and Europe. She described drinkers who lined the bar like ‘beasts at a trough’, and who swore, brawled and spilled drink all over her; she bemoaned the unhygienic conditions; she lamented the women forced into being ‘back door drinkers’; and she excoriated the publicans, who were arrogant, rapacious and rude.11

  These uncivilised conditions persisted throughout the 1930s and ’40s. Most hotels were owned by one of the two major New South Wales breweries – Tooth & Co. and Tooheys – and they were only interested in maximising the profits gained from the frantic six o’clock swill rather than in improving the conditions of their premises.12

  After the end of World War II, the deplorable conditions of pubs became a political issue. In 1948, Sydney’s lord mayor, FC O’Dea, toured the city’s hotels and was shocked by the filthy conditions and the indifference of the owners to the health regulations. He found pub floors littered with paper, cigarette butts, broken glass and food.13 He promised a clean-up but none materialised. With the number of club licences fixed at 85, they didn’t pose much competition to the pubs, which continued to be ‘filling stations for the rapid consumption of beer’.14

  However, post-war pressures forced the government to act. Freed from wartime privations, the public clamoured for more entertainment. Governments had built vast new suburbs to house the post-war boom in population – suburbs that lacked amenities. Returned servicemen wanted places to fraternise. European migrants brought with them their culturally specific tastes in eating and drinking, and most were disgusted by Australia’s pub drinking customs. Expanding the number of clubs would meet the requirements of a new era.15

  And so, in 1954, the Labor government led by John Cahill liberalised laws around clubs. More licences were handed out and the number of club venues increased immediately. The clubs industry began lobbying for the legalisation of poker machines.16 Two years later, the Cahill government complied – and granted the clubs exclusive use of them.

  Introducing the bill, CA ‘Gus’ Kelly, the Minister for Cooperative Societies, justified the measure with the simple statement that Australians loved gambling.17 In reality, clubs were granted exclusive use of pokies because they needed a revenue stream beyond that provided by beer. In effect, the clubs had been given a licence to print money.18 Moreover, clubs were not required to pay corporate tax, and each club had discretion over what percentage of revenue would be awarded to players as winnings.

  As part of its reforms, the government proposed to tax the machines’ turnover. To sweeten the deal, it pledged to allocate the funds raised from the tax to hospitals. Amounts of between £500 000 and £1 million per year were expected to be raised.19 The concept of gambling was born.

  Taxing poker machines would prove a boon for governments for decades to come. As one gambling insider quipped in 2001, ‘Governments want an acceptable means to raise taxes without the public knowing.’20 But the measure undercut Australia’s progressive system of taxation. As the industry developed, taxing poker machines’ turnover became a substantial impost on those less well-off, effectively meaning they were helping pay for the essential services they required. Meanwhile, taxes paid predominantly by the rich – notably estate or death duties – were reduced, exacerbating the unfairness of the pokies tax.

  There’s no evidence that the Cahill government considered the potential for the clubs/pokies revolution to cause social damage. Cahill, before entering politics, was a rusted-on Labor man who had climbed out of the poverty of inner-city Redfern to become a railway fitter. He rationalised the change as providing a net social benefit: by installing poker machines in an expanded club industry, his government was providing social opportunities for ordinary working people – plush venues where families could relax in comfort – and raising government revenue.

  The lack of public support for poker machines during the 1950s can be gauged from the findings of a 1957 University of Sydney questionnaire that sampled 1000 people from the state electoral roll, asking what people thought of poker machines: 60 per cent of males and 70 per cent of females were either opposed or strongly opposed.21 It was an early indication that the spread of poker machines into the community never enjoyed strong support. By contrast, they have been imposed in areas where their addictive qualities were most likely to find a clientele.

  Charles Livingstone, one of Australia’s foremost researchers on gambling, grew up in the western suburbs of Sydney in the 1960s surrounded by the milieu of clubs and pokies. Clubs with pokies were everywhere, he says. If you were a working-class family and you wanted to go out, he recalls, ‘you wouldn’t go anywhere else other than a club for your meals. You’d go there, have a few drinks, have dinner and play the pokies. That’s how it went … The constant backdrop was the sound of the poker machines. There were banks of them everywhere.’22

  Public concern over pokies

  In scale and lavishness, the St George Leagues Club was the pinnacle of this new form of mass entertainment. Ordinary people in Sydney’s southern suburbs marvelled at its expanses of white marble. On weekends, as many as 4000 people availed themselves of the bars, the games rooms, the sauna and the dance floor. It quickly became one of Sydney’s top entertainment venues, hosting big Saturday-night stage shows. It was dubbed the Taj Mahal.23

  The St George Leagues Club may have been the most opulent of the 1960s clubs, but it wasn’t the largest by membership. That title belonged to the South Sydney Junior Leagues Club, 16 kilometres away. In the early 1960s it boasted 45 000 members – one of the largest such memberships anywhere in the world – who were treated to astonishing facilities: four squash courts, an indoor swimming pool, nine billiard tables, a dozen well-appointed lounges and a library, along with dining rooms and bistro bars. In 1963 the South Sydney Leagues Club had 111 poker machines, with another 15 on order. Praising this number, club president George Wintle said: ‘We’ll go on making more money. Why shouldn’t we?’24

  Part of the long-term problem of placing so many poker machines in leagues clubs was the way the sport of rugby league changed in New South Wales as a result. As one commentator noted, when the rugby league clubs embraced pokies, it allowed them ‘to whip out the cheque book when called on’, creating a culture of dependence on pokies revenue.25 In the famous words of a former South Sydney CEO, rugby league grew ‘fat, dumb and happy’ on pokies money. (We will return to this issue in Chapter 9.)

  Even before their legislation, sporadic concerns had been raised that poker machines caused serious individual and social harms: pokies were addictive, and working-class people were their main users. Although the concerns lacked the psychological insights of later decades, they raised clear and persistent warnings that were ignored by the Cahill government and subsequent governments in the state.

  One of the earliest red flags about the addictive nature of poker machines was raised in 1949 by a reporter for the tabloid Smith’s Weekly, who wrote that, to the uninitiated, the machine offered ‘a pleasant and inexpensive gamble for a few idle minutes with the chance of a profit’. But eventually ‘handle-jerking becomes a disease which sucks all in … It is a disease for which there is no antidote, no cure.’ But, as Smith’s Weekly acknowledged, businesses (that is, private clubs) had come to depend on the large profits generated by poker machines: ‘To supress them now would have severe economic repercussions, [and] cause large scale unemployment. No government would risk that.’26

  And pokies were wildly popular with club patrons; queuing to play was commonplace. As one newspaper reported in 1955, ‘some players won’t pull out until they have played away far more than they’ve planned’.27 A new and disturbing trend was being set.

  Within a year of legalisation, concern over the damaging social impacts of poker machines led to the formation of a broad coalition of groups calling on the government to ban their use. In 1957, for example, the Country Party member for the Legislative Assembly seat of Orange, Charles Cutler, called for a ban on poker machines. The reason, he explained, was the damage being wrought on ordinary families. These were ‘iniquitous machines’, Cutler said; many men took their weekly pay cheque and poured it into the machines; others embezzled their employers’ money to play, ending up on criminal charges. And there had been a marked increase in the volume of unpaid bills in the hands of country storekeepers since poker machine playing had been licensed.28

  Charles Livingstone recalls that schoolchildren in the 1960s would talk about ‘so and so being seen to play the machines too much, or someone’s Dad was seen putting $30 into a machine, which was a big chunk of a pay packet’. But there wasn’t much public discussion of the phenomenon of gambling addiction and the emerging social harm it was causing.

  Meanwhile, club profits were booming. And with the sheer size of their membership, they began, almost by stealth, to exert political influence. ‘Most New South Wales politicians,’ wrote Hugh Curnow in The Bulletin in 1964, ‘will not come out against the machines or risk making an election issue out of them.’29 At much the same time, The Canberra Times reported: ‘One state politician, who declined to be quoted, said that already there was a poker machine lobby operating.’30 Others agreed. Anti-pokies campaigner Reverend Alan Walker observed that the taxation receipts it received from poker machine money were silencing the New South Wales government.31

  By the early 1970s, the Registered Clubs Association of New South Wales was ‘flexing its muscles’ and threatened to intervene at election times should the interests of clubs be compromised.32 The association liked to boast about the empire it had created: ‘We’re twice as big as BHP,’ a spokesman declared in 1977.33

  Ban the pokies

  The speed and the scale of the spread of poker machines worried a broad coalition of opponents. The anti-pokies campaign was headed by Protestant churches, with the Methodists on the front line. But a key member of the coalition was the United Licensed Victualers Association (which later became the Hotels Association). It harboured a commercial drive to clip the wings of clubs. The New South Wales Retailers’ Association and a few of the big department stores also called for a ban on pokies. As a Retailers’ Association spokesperson explained to the press, there was a ‘close relationship between the huge profits running into poker machines and the millions being written off in bad debts by many business firms’.34 The New South Wales Housewives’ Association concurred. Its spokesperson said that many women were unable to pay household bills and were falling behind in their hire-purchase commitments.35

  The economic impact of clubs on local communities forced some club members to come out in opposition to pokies. From time to time during the 1960s, the anti-pokies campaign also received support from judges in city and rural courts, some local councils, country-based chambers of commerce, and provincial and city newspapers.36

  Strikingly, many poker machine players themselves wanted pokies to be banned. This was first documented in a survey conducted in 1964 by the sociology department at the University of New South Wales, which included a question on attitudes to poker machines. When the results were tabulated, researchers found that the highest majority in favour of banning poker machines was in occupation groups having the lowest income – mostly labouring or similar occupations. Speaking on the findings, Professor AA Congalton said that this group ‘are probably the ones who keep the poker machines going, yet they voted 65% among themselves that the machines should be banned’.37

  Despite this broad coalition of opposition, only a sprinkling of politicians joined the fray. The most prominent was ED Darby, the independent member for the state seat of Manly, who in 1963 twice failed to win support for his private member’s bill to ban poker machines.

  The objections raised by the anti-pokies alliance can’t be characterised simply as puritanical. They had legitimate concerns based on first-hand knowledge of the social and economic problems associated with such an addictive form of gambling. Both the Liberal and Labor parties, in batting away Darby’s bill, revealed their disinterest in peering into the dark side of the club industry. Together, they effectively formed an alliance with the clubs to protect the industry.

  By the mid to late 1960s in New South Wales, there was already a case for seriously examining the policy framework around poker machines. A ban, such as that in Victoria, was a possibility. But, given the spread of the machines through the New South Wales community, stricter regulation was probably more realistic: limiting the amount that could be put into the machines, the number of machines in each club, and/or the hours in which they could operate. This approach could have preceded a phase-out of machines.

  Instead, the pokies were essentially unregulated, and the clubs took full advantage of this policy vacuum. The lack of regulation was a prime example of how laissez-faire economics operated: with an emphasis on free markets and the freedom of individual consumers to pursue their own choices, on the assumption that they behaved rationally. Gambling in general, and poker machines in particular, demonstrate the fallibility of this model.

  Onwards and upwards

  With the state government behind them, clubs not only survived the attacks from the anti-pokies brigade, they thrived. Suburban and country working-class people flocked to the clubs. The affluent largely looked down on the clubs as ‘beer and poker machine palaces’, but their snobbery underestimated the far-reaching impact of the clubs.38

  By the late 1960s, this social revolution in leisure was in full swing. The Bulletin analysed the changes in 1969. Before 1954, the magazine explained, the term ‘club’ meant a handful of exclusive gentlemen’s clubs, but ‘[t]oday, in post-revolutionary NSW, it means over 1400 glittering People’s Palaces financed by 20 000 poker machines employing 16 000 staff members to provide 800 000 club members with everything from beer, ballet, and saunas to foreign wines, cruises and karate lessons’.39

  Post-war suburbia was offered an upbeat nightlife of cheap meals and alcohol and exciting recreational opportunities. In suburbs and country towns, clubs offered the main social opportunities for the local people. And the handful of gigantic clubs had become part of the international entertainment circuit.40 It was estimated that nearly 1000 entertainers were being maintained in more or less full-time employment by Sydney’s clubs alone.41

  And there were social benefits to be had from club life. Early studies indicated that they had moderated excessive drinking, because patrons knew they would be suspended for inebriation. And they acted as important centres for sociability, largely replacing the role played by churches. Unlike the pubs of the era, they encouraged convivial social interaction between the sexes. Lastly, early studies showed that clubs encouraged a broad range of participation in constructive leisure activities.42 In fact, GT Caldwell, who studied clubs in the 1970s as part of a PhD, went so far as to claim: ‘No other state in the world has leisure facilities so easily available to such a large proportion of the population.’43

  Returned Servicemen’s League (RSL) clubs became immersed in the pokies business model. The institution was formed in 1916 with a mission to offer troops who had volunteered to fight an opportunity to maintain the mateship forged during war. Members also wanted to commemorate fallen comrades and look after the sick and wounded. By 1946 the RSL had mushroomed into a huge organisation, reaching its peak with 377 000 members. Consequently, the organisation became an influential and at times controversial lobby group. Over time, the RSL’s embrace of poker machines prompted criticism that the organisation was more interested in making money than in offering services to its members.44