Mandatory Pre-commitment On Poker Machines

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Pre-commitment and other harm minimisation and consumer protection measures have been implemented in relation to gaming machines in Australia, with mandatory opt-out pre-commitment having been considered and/or debated in various jurisdictions over a number of years. Arizona tribes aren’t required to release information on their slot machine percentage paybacks, however, according to the Arizona Department of Gaming, the terms of the compact require each tribes’ machines to return the following minimum and maximum paybacks: video poker and video blackjack - 83% to 100%, slot machines - 80% to 100%, keno. The owners, lessors as well as operators of vending machines who have the control over the receipts from the machine are required to obtain a sales tax license. A single license is required to run vending machines no matter how many they are and regardless of where in Colorado they are situated. Each vending machine should also have a decal.

At bars all over the Milwaukee area, patrons sit down, order a drink and take their chances at a video gambling machine.

In just about every bar, you can find one of these machines. And for every machine, there is at least one patron willing to dump in money for hours on end, despite labels proclaiming 'for entertainment use only.'

Many times, though, the label is as decorative as beer advertisements on the wall. The fact is a large percentage of bars offer payouts for gamblers, in direct violation of Wisconsin state statutes.

Under a 1999 agreement that reduced penalties for operating illegal machines, enforcement is now handled solely by the state Department of Revenue, which makes sure bar, restaurant and hotel owners are paying appropriate taxes on revenue generated by machines.

Before then-Gov. Tommy Thompson revised the state law, violators faced felony charges, fines of up to $10,000, loss of liquor license and prison time. The current state law allows bars to have up to five video poker machines and paying out winnings is a civil offense, carrying a $500 fine and no loss of license.

Bars with more than five machines, however, could face criminal charges, according to Department of Revenue Communications Officer Jessica Iverson.

Regulating the machines is big business for the DOR, which has brought in nearly $23 million in taxes since the law went into effect in 2003. Proceeds generated through video gaming machines are taxable income, and the gross receipts are subject to the state's sales tax.

To keep things in check, the department relies heavily on tax audits and also enlists the help of Alcohol and Tobacco Enforcement agents.

'Our ATF agents come across the illegal machines through the course of normal inspection as well as in the course of investigating other tobacco or alcohol law violations,' Iverson says. 'We also, of course, conduct tax audits of businesses. If auditors identify gambling operations during the course of those audits, they will enlist the help of ATF agents to enforce that part of the statute, as well.'

In addition to the tax implications, the Wisconsin statute 945.01 (c) makes it illegal to operate any machine that affords a player to win something of value determined by a game of chance.

The threat of audits, fines and licensing issues aside, bar owners are willing to make the illegal payments because the machines bring in a big chunk of money.

'People sit down when they're bored,' said one bar owner who spoke with OnMilwaukee.com under the condition of anonymity. 'They're more inclined to spend more time and buy more drinks when they're at the machines and have a chance to win some money.

'A lot of people, if there's nobody at the bar, will sit at a machine and make a couple bucks to pass the time.'

At this particular establishment, players receive a ticket when done that they can redeem at the bar for their winnings. The bar owner knows he's taking a chance, but there's big money to be made, especially important in the current economy.

'It's a little bit scary, yeah,' he said. 'But it's a risk you take.'

Earlier in the decade, the Tavern League supported a measure introduced by Rep. Terry Musser (R-River Falls) that would have legalized the machines, generating as much as $380 million in revenue. Other supporters of the bill wanted to prevent Wisconsin Native American tribes, legally operating casinos under a compact with the state, from having a monopoly on gaming.

Some states are reconsidering their stances on video gambling in an effort to patch up growing budget deficits.

In Pennsylvania, Gov. Ed Rendell proposed legalizing some forms of video gambling as a means to fund free college tuitions at the 28 campuses in his state. Officials there estimate that roughly 17,000 video poker machines are operating illegally. Those machines, if legalized, could generate as much as $550 million, according to Gov. Rendell's plan.

'This is not an expansion of gaming,' Pennsylvania Revenue Secretary Stephen Stelter told The Philadelphia Inquirer earlier this month. 'It is the recognition that video poker is already a thriving industry.'

Yes, it’s finally here. The Parliamentary Joint Select Committee on Gambling Reform this morning released their initial report covering “The design and implementation of a mandatory pre-commitment system for electronic gaming machines”. This is the committee that was set up following the ALP’s win at the last Federal election, and was chaired by Independent Andrew Wilkie.

It’s been a long time coming, which is hardly surprising. 119 individual submissions (including my own) and eight public hearings makes for a lot of material to work through! But it has finally been released, and as expected there is no reference to a “licence to punt”. Actually, that’s not quite true; Senator Xenophon does refer to it briefly in his additional comments at the end of the report, but only to highlight the lies being put about by ClubsAustralia as part of their abortive pro-pokies campaign.

The report is available on the Australian Parliament’s website, and I urge you to take a look for yourself. In the short term, I have plucked out what I feel are the key recommendations… and they are:

• Existing Australian poker machines should be classified as high-intensity poker machines.
• Mandatory pre-commitment for high-intensity poker machines should be rolled out in pubs, clubs and casinos across Australia by 2014.
• Low-intensity poker machines should be made available for operation by pubs, clubs and casinos.
• Low-intensity poker machines have the following restrictions: $1 maximum bet, $20 maximum load-up and $500 maximum win.
• Low-intensity poker machines will NOT require pre-commitment to play.
• Existing high-intensity poker machines can be reconfigured to become low-intensity poker machines.
• Small gambling venues (with 15 or fewer poker machines) will have until 2018 to implement mandatory pre-commitment.
• A transitional fund should be established to assist smaller venues with the cost of compliance with mandatory pre-commitment regulations.
• An independent national body should be established to oversee mandatory pre-commitment issues and regulations.
• State and territorial jurisdiction over the number and distribution of poker machines will remain in place.
• The preferred solution for enforcing mandatory pre-commitment is a smartcard solution with basic identity requirements.
• The pre-commitment smartcard should have a default betting limit, which can be changed by the gambler who owns the card.
• Betting limits can be increased once every fortnight.
• Betting limits can be decreased once every 24 hours.
• The pre-commitment smartcard should include the capacity for self-exclusion.
• Venues will have the choice of operating high-intensity poker machines, low-intensity poker machines or a combination of both.

So what do I think? In my opinion, these recommendations embody a true overhaul of the current poker machine gambling industry in this country. They address the current untenable situation not only by putting reasonable restrictions in place, and not only by empowering gamblers to make their own choices regarding how much they are prepared to gamble, but also by fundamentally altering the landscape with the introduction of low-intensity poker machines… commonplace around the world but previously unheard of in Australia.

These recommendations also recognise that there is a sprawling industry that relies on poker machines for their existence, being our casinos and many of our pubs and clubs. A two-tier poker machine system will allow these venues to provide machines for their patrons that don’t require a card to play, while still catering for those who wish to gamble larger amounts. In particular, the additional time allowed for smaller venues to comply, along with the establishment of a transitional fund to help with the costs of compliance, are proof that this reform process is not anti-clubs (an allegation made all too often in recent weeks) or anti-gambling in general.

Of course, these recommendations could have gone further; but I believe they have struck a real and viable balance between the needs of the public in general, problem gamblers in particular, and the industry.

Mandatory Pre-commitment On Poker Machines Jackpots

There is one point that has been conveniently ignored by all opponents to mandatory pre-commitment that I would like to make. These reforms are designed to minimise harm and empower gamblers with the tools to control their own gambling. However, by changing the poker machine “playing field” they will also have a tremendous impact on the development of problem gambling behaviours in years to come. These reforms are not just about making a difference to the gamblers of today; they will help prevent future generations of Australians from falling into the problem gambling trap.