Irresponsible gambling

The problem with irresponsible gamblers is the word “irresponsible” not the word “gambler”. The same is true with “irresponsible drinking” or “irresponsible drug-use” or any other irresponsible action. It is not the existence of gambling or alcohol or drugs that create irresponsible behaviour. And yet the nanny-state campaigners want to punish the product instead of addressing the underlying problem. With wowsers Nick Xenophon and Andrew Wilkie in parliament, and the government in trouble with the carbon tax, the pressure is growing for the government to “do something” about poker machines.

It’s easy to attack poker machines. I don’t like them. I enjoy playing texas hold’em poker for the judgement, excitement and social element… none of which I get from poker machines. But personal preference is besides the point. In a free society, people should be free to pursue their own hobbies and activities, and I shouldn’t force my preferences on others. People who use poker machines (like smokers and shooters) are the new whipping boys of politics. While “progressive” politicians love to wax lyrical about defending minorities, they only seem to defend fashionable minorities. And while trendy lefties will advertise the moral superiority of their tolerance, they only seem to tolerate groups which they actually like.

People who enjoy playing poker machines are seen as the “wrong sort of minority” and therefore they apparently deserve no tolerance.

Of course, intolerant bigots always find excuses for their intolerance. The excuse given to attack poker machines (and gambling more generally) is that some people have a gambling problem. That is certainly true. But then… some people have problems in general. The simple truth is that being irresponsible leads to irresponsible behaviour — which could include a gambling problem, drinking problem, drug problem, anger problem, or many other sorts of life-management problem. Irresponsible people will do stupid things, and get themselves into bad situations.

It is absurd to blame the product for the irresponsible behaviour of the user. This is especially true when the vast majority of people manage to live with the same product without developing a problem. Most drinkers do not run around at 3am starting fights with strangers, and most gamblers do not waste all of their income on poker machines.

Most people enjoy gambling — with over 80% of Australians gambling occasionally and 40% gambling regularly. Only about 1% of the adult population has a real gambling problem. While the gambling industry makes up 1.5% of GDP, employing over 100,000 people in over 7000 businesses… by far the biggest benefit is the enjoyment of consumers who don’t have a problem (79% of Australians). Simplistic reports sometimes talk of Australians “losing” $11 billion in gambling, but it makes no sense to talk of “losing”. We do not say that consumers “lose” $10 when they buy a movie ticket. Gambling is a service where people enjoy the activity, for a price. For gamblers without a problem, their spending on gambling represents a welfare gain.

For the 1% of problem gamblers, the thing to remember is that the underlying issue is a behaviour problem. Punishing the product, and in the process hurting 79% of innocent Australians (not to mention the business and employment costs) will do nothing to address the underlying issue.

This is not to say that there isn’t a problem. On the contrary, personal irresponsibility is a significant problem in Australia, and one that we need to take very seriously. But the first requirement is that we correctly identify the problem. By pretending that “irresponsible gambling” is a gambling problem, the government (and their nanny-statist backers) are not just hurting innocent gamblers, but they are failing to address the irresponsibility.

Once we recognise the real problem there are several approaches we can take. One approach is to try and identify the “irresponsible people” and then allow the government to control their decisions. This approach can be seen with the idea of quarantining welfare payments, to ensure that a basic minimum is spent on food, shelter and other basics. These restrictions should not apply to responsible people, such as those who don’t need hand-outs or bail-outs. This idea was considered in more detail in a short book called “Declaring Dependence, Declaring Independence” written by Peter Saunders, Eugene Dubossarsky, Stephen Samild and myself.

Another approach is to consider what leads people to become more or less responsible. This is where the big-government types suddenly lose their interest in the discussion. The truth is that responsibility and freedom are linked. You cannot have freedom without also taking responsibility for your choices… and you cannot learn responsibility without having the freedom to make choices (and live with the consequences). This is a truism understood by all good parents, and the same lessons are true at a national scale.

If we take away decision-making opportunities, we are taking away people’s ability to learn responsibility. If we shield people from the consequences of their decisions, then they do not learn to make better decisions. Incentives matter — so if we continue to tax good decisions and subsidise bad decisions, then we should not be surprised if we find that people make more bad decisions. There are lessons here for both the left and the right. Some on the left want freedom without responsibility, where the government protects people from their mistakes. But such an approach will inevitably lead to more mistakes, and then less freedom as the government has to continually “fix” irresponsible behaviour. Some on the right want responsibility without freedom, but responsibility comes from making individual choices, and so restricting freedom will inevitably lead to less responsible behaviour.

As the cliche goes — freedom and responsibility are two sides of the same coin.

At first, the idea of “taking responsibility” may seem harsh. The consequence is that some people will fall into poverty. But the alternative is worse. A responsible person who falls into poverty will be able to work their way out of poverty. An irresponsible person who escapes poverty with a hand-out will not be able to run forever from their own irresponsibility. They will be more likely to develop serious problems (whether alcohol, drugs, gambling or other) and they will continually need more hand-outs to deal with their bad life decisions, like a child who never fully develops. If it is cruel to let people suffer the consequences of their actions… it is much more cruel to prevent them developing a proper sense of responsibility.

Irresponsible gambling (like any irresponsible behaviour) is a problem, but the government would be wrong to jump straight to the populist solution of nanny-state regulation. We should not blame a product for a behavioural problem, and we should not punish the majority of innocent people for the mistakes of a few. If we really want to address the problem of irresponsible behaviour we need *less* of the nanny-welfare-state, replaced with more individual freedom and personal responsibility.

10 thoughts on “Irresponsible gambling

  1. Good article John.

    This kids, is why you should go to uni and study a good economics course. The analysis John has done here is good, basic, rigorous microeconomics.

  2. In Victoria, isn’t it 60% goes to the punter, 37% to the government, 3% goes to the house?

    Geee…. imagine if there were no tax on gambling…. it’d be 97% to the punter 3% to the house….

    But here’s another point. For a valid contract between valid parties, there must be a meeting of the minds. Someone who is a problem gambler, ie someone who gambles pathologically without consideration for his actions, cannot therefore enter into a valid contract with a gaming venue. Therefore he could sue the gaming venue for his money back if he can prove that he was not of sound mind when he gambled.

    Many ‘high rollers’ seek to do just that, but to my knowledge, the cases are always settled out of court. Could it be that casinos do not want any precedent on the books which makes them liable to the damages of problem gamblers?

    Now, the libertarian way is for each to take responsibility for their actions. I have no qualms with that, I support it fully. If someone is aware of what they are doing, and they lose money, then that’s fine. They understood the risks.They played voluntarily. Somebody who is a gambling addict is not playing voluntarily. Exploitation of people who are not of sound mind is not the libertarian way.

    Governments should do the following.
    1. Prohibit tax on gambling.
    2. Codify the principle that a gambler must be aware of what he is doing or the contract does not hold. This will mean that the industry will self regulate. Casinos will spend money to identify ‘problem gamblers’ and ensure that they do cost them money. It will be a natural cost of business to exclude pathological gamblers from participating. This will actually give small ‘clubs’ an edge over big casinos. Because they are small venues with a small group of regular clientèle, it will be easier for staff to keep tabs on the patrons than it would be for a casino like Crown Casino to keep tabs on the thousands of people passing through every day. Probably, laws like this would seriously f*** the casino when it comes to pokies… table games would do much better.

    Oh yeah, and with those laws in place, the gambling addict doesn’t need to know his rights. Private individuals, or perhaps even organisations, will eagerly seek out problem gamblers in order to represent them in court so to earn a fee to be taken from damages to be won from the gaming venue….

    No need for government interference here….

  3. Yes, the irresponsible gambler?

    What is gambling? My understanding outside of just poker machines is:
    Tattslotto, which can be addictive too. Horse racing, greyhounds, etc…

    But with an American friend, in the U.S., gambling would include even the local school raffle, the charity raffle…
    Hell when is the Government going to crack down on our government schools, private schools, even local charities, raising funds which encourage a form of problem gambling? Which parent and other good citizen can’t resist helping some worthy organization, even knowingly that they won’t even receive a return. Such irresponsibility in gambling?

    Yes Poker Machines should be banned, but only because the Government isn’t worth supporting. And let’s ban the TAB, Tattslotto, and Powerball to boot while we are it.
    But keep the charity and school raffles, (without any government cut).

  4. I was the only member of our schools P&C that voted against a resolution to oppose a new pub in the area. I was then asked to change my vote so we could have consensus. At least on this latter point I’m pleased to say that a number of the other parents stood up for my right to be different. The pub was to have a family restaurant a bar and a limited number of poker machines (and it still may). The entrepreneurs that want to open it fronted the P&C (to their credit) to answer questions and explain their intentions regarding management of noise, security etc. The biggest sticking point with other parents was the poker machines. They have demonic status it seems.

  5. Pubs don’t want kids anywhere near them. Where do live Terje? Your neighbours seem crazy. Remind me never to move there.

    If two up was legal many people would choose to play that instead of pokies. It’s more convivial. It’s also ridiculous that it is banned save for ANZAC Day.

  6. There’s an article on that new nanny-state called New York City. ‘The Australian’ mentions how Mayor Bloomberg and his staff are trying to regulate New-Yorkers into becoming healthy- and the New Yorkers are putting up with it! Shame, Shame, Shame!!!
    How soon before we follow them, I wonder?

  7. Hey Gary,

    You not going to believe this, but studying NYC, not only grew because of free trade, but with Tammary Hall, been one of the most Socialist / Nanny / Regulated Staes of all time (shame on you Karl Marx).

  8. Pubs don’t want kids anywhere near them.

    Crap. I know a pub with an entire jungle gym just for kids including a CCTV system so you can watch the kids whilst drinking. And whilst not technically a pub the North Ryde RSL has a huge poker machine section, a kids climbing gym, an arcade game section, a mini bowling alley and is a regular host of kids birthday parties. Lots of establishments with alcohol and gaming chase the family market. Obviously lot’s don’t but your generalisation is still wrong.

  9. Terrific article, especially this passage:

    “Some on the left want freedom without responsibility, where the government protects people from their mistakes. But such an approach will inevitably lead to more mistakes, and then less freedom as the government has to continually “fix” irresponsible behaviour. Some on the right want responsibility without freedom, but responsibility comes from making individual choices, and so restricting freedom will inevitably lead to less responsible behaviour.”

    This is an excellent way of articulating the idea that freedom promotes responsibility and the freedom to fail is just as important as the freedom to succeed.

  10. John,

    Fantastic article.

    I’m a blackjack player and also planning on doing my PhD on the subject of Queensland’s gambling laws, so the Political Economy of Gambling is obviously a subject that interests me.

    The amount of logical inconsistency in most popular gambling discourse is truly obscene. First, there’s always the unspoken moral premise of “gambling policy Must Stop Gambling because Gambling Is Evil.” This moral premise, however, is very inconsitently applied; on the first Tuesday in November gambling (in the form of betting on the Melbourne Cup) becomes a national duty and ceases to be a moral crime. You are completely correct that the problem is not gambling but rather irresponsibility; however most people subconsciously think that all gambling is intrinsically irresponsible (unless socially endorsed on the first Tuesday in November).

    There’s also a severe case of the Frozen Abstraction Fallacy (treating a subclass as if it were the wider class) involved; specifically how most people will moan and groan about “the pokies” whenever one suggests liberalizing gambling. Pokies are only ONE form of gambling and I fail to see why heart-wrenching Dickensian stories about the evils of The Pokies necessarily mean that Table Games should be treated the same way. But, unfortunately, rational discussion of gambling doesn’t exist in an environment where the only thing that matters is generating Moral Panic over “the pokies.”

    The state of popular discourse about gambling is truly hideous and your article is a good corrective.

Comments are closed.