“The issue for us is we know that at least 40 per cent of the money that is lost on machines comes from people who are at risk or who have problems, and about 70 per cent of the people that we see have problems with pokie machines, not other forms of gambling.”
So said Problem Gambling Foundation chief executive Graeme Ramsey a couple of weeks ago when the Department of Internal Affairs released figures showing that Pokie machine expenditure in pubs and clubs dropped four per cent in the year to March. Licence holder numbers fell from 359 to 353, venue numbers dropped from 1403 to 1367 and the number of gaming machines from 18,001 to 17,542.
The community battle against pokies took out 439 pokies last year. Sky City just got 230 of those back – along with 52 more gaming tables, or 40 tables and 240 “Automated Table Game Player Stations”, various payment options that allow people to bet more money with greater anonymity and an unchallenged license extension to 2048. Auckland Council is currently consulting on the extension of the predominant “sinking lid” policy on pokie numbers to all parts of the city, with 99% of submissions said to favour the elimination or reduction of pokie machines in Auckland.
According to AUT’s Gambling and Addiction Research Centre, of 992 new Gambling Hotline gambler clients 811 were pokie victims and 57 casino table or card gamblers; leaving just 124 to all other gambling forms. 7 of these cited Lotteries Commission Products as their primary gambling mode.
There is no shortage of evidence linking pokies and gaming tables to serious gambling harm.
Goldman Sachs estimates the extra gambling opportunities promised under yesterday’s deal will generate an extra $42 million profit for Sky City a year – a 30% increase on last year’s $142 million. Considering the 2009 MED report which suggested the convention centre would operate on a break-even basis (actually a million a year profit according the report), Sky City’s owners are looking at a 10%+ return on the new investment (the capital costs of the convention centre are set at $402 million under the heads of agreement). My back of the envelope calculation says 2012 profits based on current market capitalization equal 5.4%. No wonder investors boosted the share price by 3.4% yesterday.
Now Sky City has made a deal with the Government to bank these extra profits for the next 35 years. Under the agreement any attempt by future governments to reduce gambling at Sky City will give rise to compensation.
This is looking like a one-way bet. For Sky city to lose on the deal (if losing means reducing the return on the land, bricks and mortar value of the new investment below the current rate of return on all investor funds) then I figure it would have to lose more than $20 million a year on the operation of the convention centre. Given that in 2009 MED estimated convention centre costs at about $16 million and revenue at about $17 million that seems pretty unlikely.
The government knows this deal will entrench casino-caused gambling harm and that every new pokie machine and gaming table will feed gambling addictions making life even harder for the multitude of people that problem gambling affects. It has crossed the line between casino regulator and casino operator. In fact it has gone one better, trashing the role of regulator altogether for the next 35 years and partnering with the casino on a project that not only promises a bigger profit from local punters but will siphon convention goers to the shiny new slot machines.
The Government has presented this Parliament with an ethics test. I hope it passes.