In 1956, New South Wales became the first Australian state to legalise poker machines. It was common knowledge, though, that they had been operating for decades prior — in 1932 the state government held a royal commission into “fruit machines”. Since then, increasingly sophisticated gaming machines have spread out across the state, and across the country. According to Liquor and Gaming NSW, in the first half of 2022, $3.8 billion was lost on poker machines in that state alone — roughly $20 million a day.

With each approaching election, the issue of whether there will be meaningful reform of the sector rears its head, and this year is no different. Premier Dominic Perrottet has promised a reelected Coalition government would make poker machines in the state cashless by the end of 2028, while Labor’s policy is far less stringent, proposing a trial of cashless technology in 500 of the state’s nearly 90,000 machines.

ClubsNSW in particular has been a key player in this game. Since 2010, three Coalition governments have signed memorandums (MoU) of understanding with the peak body for the club’s industry, committing not to legislate in a way that significantly impacts gambling revenues — or, as the first MoU puts it, “to help secure the long-term financial viability of NSW clubs and allow them to strengthen their economic and social contribution to the state”. This makes Perrottet’s commitment a serious development.

Whatever ClubsNSW do this election will have to be done without the talents of former CEO Josh Landis, sacked in January for suggesting Perrottet’s drive for cashless gaming cards was being driven by his “Catholic gut”.

Here is a look at the history of the relationship between gaming interests and governments of both stripes, and why, until now, both sides of the aisle have backed away from anything that would displease them.

Donations

Associate Professor in the School of Public Health and Preventive Medicine at Monash University Charles Livingstone said the gaming industry made $7.5 billion from gambling losses last year.

“They have significant amounts of money that can buy access to politicians, as well as the talents of people who always win their political battles,” Livingstone told Crikey. “Over the years you will see small individually but collectively significant and very regular donations to various parties and significant politicians.”

A former political staffer interviewed by academics from the University of Newcastle described the gambling industry’s strategy as follows:

So what they’ll do is they’ll find guys who have a voice in caucus and they buy… we call it mouthpiece money… there’s two or three guys or women in caucus who will argue on behalf of the club (in regards to gambling policy), right. They’ll also then go and find the next up-and-coming heroes who might become the next premier; he might be a guy on the rise, and they’ll start giving him money too.

Both sides of politics in NSW take big money from gambling interests. According to Australian Electoral Commission donations data, from 1999 to 2021, the Labor, Liberal and National parties took more than $5 million in donations from gambling interests, primarily ClubsNSW, who accounted for more than $3.4 million. NSW Labor also received more than $100,000 from unions whose memberships work in the gambling industry.

Target the marginals, stir up the base

This week, departing NSW minister Victor Dominello described ClubsNSW as “the equivalent of the gun lobby in the United States”. He’s not just being melodramatic. In January 2012, ClubsNSW sent Landis and chief executive Anthony Ball to a two-week, $1500 course in Washington. There, speakers from the National Rifle Association explained how organisations can use large memberships to create “grassroots political campaigns” and hijack public meetings.

Any government wondering what it’s like to fall foul of the clubs need only look to the events of 2011 and 2012, when Clubs Australia (the national guise of ClubsNSW) rolled out their highly successful opposition to the gambling reforms independent MP Andrew Wilkie made a condition of support for the minority government lead by Julia Gillard.

The campaign, called “Won’t Work Will Hurt”, targeted marginal Labor electorates, mailing material to residents across 18 seats in New South Wales and everything Labor held in Queensland. This was followed by community rallies by groups across New South Wales. They bought large billboards in “high visibility areas” naming the local member and asking, “Why don’t you stand up for our community?” The clubs even produced drink coasters, and T-shirts for staff emblazoned with the question “Who voted to put me out of work?”

It worked. Piece by piece, Wilkie’s legislation — which called for a requirement for gamblers to make a pre-commitment on how much they’d be willing to lose and poker machines to be limited to $1 per button-push — was dismantled. That which survived was dutifully repealed by the Coalition when they came to power. All for just $3.5 million of the $40 million war chest the clubs and their backers had put aside.

When Dominello, at the time the minister with responsibility for gaming in NSW, tried to bring in similar reform around pre-commitment in 2020, “they basically said to me, in no uncertain terms, ‘We will do to you what we did to Julia Gillard’” he told the ABC. He said he was subject to “the most intense [lobbying] I’ve ever seen in 12 years as a minister”.

It wasn’t his first run-in with them, either. In 2019, industry objections meant a change as simple as renaming the NSW gambling education week from Responsible Gambling Awareness Week to Gambling Harm Awareness Week, a subtle shift in emphasis in line with other states, was overturned.

Revolving doors

There is a steady stream of staff who flow between the gaming sector and various parliaments. Retiring former minister David Elliott opposed pokies regulation at the Australian Hotels Association prior to his time in NSW Parliament, and he’s been tossing matches over his shoulder on the way out the door. It’s not just parliament — recently, Anne Fitzgerald, a former ClubsNSW executive manager, was appointed to the NSW government’s Trustees of the Responsible Gambling Fund board. Landis himself was once a Labor staffer.

Elsewhere, federal Liberal senator Nick Minchin and Labor’s Stephen Conroy joined Responsible Wagering Australia (RWA) — which represents bet365, Betfair, Entain, Sportsbet, Pointsbet and Unibet — after leaving Parliament. Special mention to Liberal Senator Richard Colbeck who punctuated his two stints in political office with a year as RWA chairman.

So where did it all begin?

After WWII, Sydney’s local RSL clubs would often be started by local communities as hubs for those amenities that were coming slowly or not at all from government. The mechanical slot machines were used to raise revenue, even before they were legalised. The clubs, set up as not-for-profits, used that gambling take to open (heavily subsidised) restaurants, as well as sports facilities, entertainment centres and, inevitably, more machines.

The money spent on poker machines rapidly exceeded what was spent on any other form of gambling, and clubs continued to build their assets, membership and facilities. Machine gaming in clubs was “legitimised and boosted by its legislated community role of providing benefits for members and the broader community”.

Via the NSW ClubGrants scheme, clubs are given a tax rebate if they give provide grants for “the provision of frontline services to their local communities”. In 2021, the ABC alleged ClubGrants were being used to pay for corporate sponsorships and “make mysterious payments to groups with lobbyist connections”.

2023: a referendum on pokies?

But is the gaming lobby losing its touch? Along with Perrottet’s proposed reforms, he is the first premier in more than a decade to forgo an MoU with ClubsNSW. With the election approaching, and Dominello breaking omerta to talk about the mechanisms of the gaming lobby, both The Sydney Morning Herald and news.com.au have put out several pieces about gambling harm in the state.

This article was first published on Crikey.