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Sky City a rigged bet

By   /  May 14, 2013  /  11 Comments

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There is no shortage of evidence linking pokies and gaming tables to serious gambling harm.

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264453_10151375819186372_546954153_n“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.

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11 Comments

  1. Richard Christie says:

    You never notice that you’re living in poverty if you are always going to become a millionaire next Wednesday.

  2. […] Laila Harre posted on the Daily Blog today, providing clear statistical evidence of the damage that will result from SkyCity’s the increase in pokies and gambling tables.  She quotes evidence that shows pokies are the most damaging form of gambling addiction, followed by casino table and card gambling.  Harre applies this evidence to the Sky City deal, which will entrench the gambling harm for 35 years: […]

  3. […] There is no shortage of evidence linking pokies and gaming tables to serious gambling harm.” Read More […]

  4. Ovicula says:

    The only people I’ve ever known who gamble at Sky City are crims laundering their money, or meeting others to arrange deals. This may be a reflection of the people I know, but it’s also far from the glossy high stakes mover and shaker image that Sky City and the government promote.
    I don’t believe we need another convention centre, but even if we do, it doesn’t need to be tied to gambling and prostitution. Key is trying to remake Aotearoa in the image of pre-Castro Cuba – a haven for dirty money from all around the world.

  5. James Ritchie says:

    Very good article Laila. Increase problem gambling and reduce labour costs seems to be the economic policy prescription for NZ

  6. Capo Key saunters into Cabinet, craddling his favourite gold-plated Browning sub-machine-gun (a thank you gift for “services rendered” from Lehmann Bros), and with a smirk that is well-known to us all, announces,

    “Boys! Have a go a deal for youse! Skycity? It’s in our pockets!”

    *cue theme tune for “The Untouchables”*

  7. KelT says:

    It would be a fair arguement if the Problem Gambling Foundation stats were correct. 40% of the money from gamblers… nope…. that was a survey from New South Wales, not Australia. Those stats were widely discredited because of flawed methodology and biased agenda’s, but the PGF use them and no journo has bothered to check it. 70% of their clients have an issue with pokies. Hmmmm… maybe PGF … but the PGF only provide services to 46% of problem gamblers…. there are other, more honest and informed problem gambling treatment providers deal with significantly less. Go check the Min of Health presntation stats for problem Gambling treatment, its a lot less and still dropping
    Problem Gambling Foundation are also a victim of Gambling Harm. They are so intent on maintaining their funding and the little corporate empire they have built, they will say and do anything to get funding and the media laps it all up and thinks the PGF are experts in their feild. Lets start interviewing the experts and stop stroking the ego’s of wanna-be’s.
    Don’t get me wrong….Yes we have problem Gamblers. Yes it is an issue. But the truth about the numbers would be a good place to start. I’m sick of these organisations manipulting statistics to push their own barrow. Or am i just being too idealistic?

    And as far as Skycity are concerned….. the pokies were a smoke screen… they wanted the tables… to target Asian businessmen…they want to grow their international business from 3% to over 15% which is the amount their Aussie counterparts get. Thats why the Government relaxed visas for asian businessmen… its why the NZ Gambling commission gave Sky City permission to open up foreign bank accounts recently and also gave them permsiion to build multiple small private table gaming rooms in Auckland. The pokies will make no difference and gambling harm for new Zealanders will not increase. Pity the poor asian high rollers though

    • Cathy says:

      KELT,

      I see you have changed your story – what happened to your claim the 40% of revenue from problem* gamblers was based on data from NSW which you allege the Australian Productivity Commission used to come up with said figure? It was pointed out the other day this was incorrect as the Productivity Commission report was a national inquiry and the 40% figure was reached by assessing national data. That you are now omitting the reference to the Production Commission and making out it was just some discredited NSW survey makes your claim even more misleading. It was also pointed out who was being discredited in all of this – and that was the industry. Gary Banks, the Chairman of the Productivity Commission at the time of the gambling inquiry said “Perhaps the most egregious example has been Clubs Australia’s selective use of data from surveys with different methodologies to falsely claim that the prevalence of problem gambling had been greatly reduced.” (‘Evidence and social Policy: the case of gambling’ by Gary Banks).

      The Problem Gambling Foundation uses the 40% figure in its rightful context as expressed in the Australian Productivity Commission report.

      * I think you accidentally omitted ‘problem’ in your first sentence.

      Seems to me that overall they see a lot of people who have issues with pokies, see http://www.health.govt.nz/our-work/mental-health-and-addictions/problem-gambling/service-user-data/intervention-client-data#ppgm

      Also mentioned before, since pokies have for years produced a reliable stream of revenue for the industry they also act as an insurance against failure of other ventures. So they may want to entice ‘high rolling Asian gamblers’ (who you referred to before as ‘fair game’) to play at these tables. This may have some ‘success’ but I am sure Sky City rest easy knowing they have all those pokies as backup.

      Doubts are being raised here in Australia as to whether James Packer’s potential new casino project in Sydney will survive without pokies as he is reportedly relying heavily on ‘Asian gamblers’ to support his venture.

  8. Robert M says:

    It might be an oversimplification, but in all the twilight activities- pleasure and leisure for some and pain and loss for others– there is a clear divide the rich, well off and good bodies on both the selling and buying side enjoy and the poor, stupid and degraded suffer. This is true of racing, gambling, stripping, prostitution, drinking and clubbing, possibly even various types of drugs. In many nations even Casino’s have become the centre of massively entertaining and exciting clubs, restauraunts and bars, etc- places like Vegas, Dubai, Australia. The gambling thing has evolved far from the caricture of Hunter S Thompson.
    However with casino’s in NZ the underside and low grade proverty is more apparent- because NZ is not a rich country, it only appears part of the developed world because of massive redistribution and viciously egalitarian culture unable to accept pleasure, excess or too much obvious poverty.
    Things that are true and on balance desirable in the rest of the world are often not her, because as some say the water goes down the plughole in the opposite direction here.
    Having said that casino’s can and do offer useful services to the general public 24 hours a day. They are a place you can rest, get cleaned up, do your banking,have a coffee, a meal and a drink, if your remotely rational and have a clue.

  9. […]  Like the gel-slicked grandson who gets power of attorney and lives rent-free in granny’s house while selling off all her antiques as she languishes in hospital, John Key and his mates don’t neeeeed to keep selling my stuff. It’s just that they want very many dollars for, like, casinos. […]

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