Economist Dr Andrew Russell explores the concept of egalitarianism as it relates to Australia’s gambling sector, arguing that the current form of regulation does not sit well with the traditional Australian ethos of equality for all.
Egalitarianism is a treasured value in Australian culture; it is regularly appealed to by all parties across Australian politics, regularly cited by Australian thought leaders and regularly dramatized in Australian literature. The conflict between this strongly held cultural ethos and the implicit assumptions underpinning Australian casino gambling regulation could not be more stark.
Whilst Australian egalitarianism tends to manifest differently across the political spectrum – the center-right embraces a classically liberal understanding of equality whereas the center-left embraces a more social-democratic understanding of the concept – Australians across that spectrum all agree that there needs to be a baseline minimum level of opportunity and potential social mobility (a principle summarized by the phrase “a fair go”), and that real world social outcomes don’t reflect a pure meritocracy. Socioeconomic class, as well as luck, are both seen as significant factors in explaining different life outcomes (indeed, this belief in the role of luck may also explain why Australians are enthusiastic gamblers). Consequently, Australians have a level of skepticism towards the idea that social elites are necessarily smarter, more talented or harder working than the everyday person.
Such skepticism is clearly not shared by the social elites who, directly or indirectly, serve as the architects of Australian gambling regulation. Australian culture embraces gambling – sports betting in general (in particular the Melbourne Cup) and games of Two-Up on ANZAC Day – as part of its popular culture. Yet the gambling policy choices made by Australia’s elites amount to a loud rejection of the practice.
Let us take casino regulation as a case study. Australian casino regulation is typically described as being based on the “New Jersey Model” (i.e. large-scale casino hotel developments are mandated), but unlike Atlantic City, which permits market entry to any entrant capable of meeting regulatory requirements, Australian casinos have geographic monopolies over mass market table games (Crown Sydney is VIP-only) and, in the case of Crown Perth, slot machines as well. There is no economic justification for this market structure – the monopoly exists specifically to cultivate monopoly profits which not only serve the government’s desire for revenue but also make luxurious, spectacular integrated resorts commercially viable. These resorts are consciously intended to be destinations capable of winning the patronage of out-of-jurisdiction gamblers, in particular lucrative international VIPs (for whom competition is intense). In other words, low-rolling locals are deliberately forced to endure above-market prices to cross-subsidize the experience of wealthy travelers. This alone is a slap in the face to Australian egalitarianism.
Defendants of the Australian model will likely claim it provides consumer protection. Apart from the fact that, since gambling harm is a function of gambling losses, artificially high prices exacerbate gambling harm, claims that this model provides consumer protection inevitably rest on a belief that local gamblers, who are generally less wealthy, are more prone to gambling harm. To be entirely fair, less wealthy people by definition are more likely to get into financial trouble due to gambling, but we can all tell the basic underlying logic at play here: the assumption being made is that poor people are too stupid to practice responsible gambling (or overly susceptible to manipulative tricks perpetrated by a predatory industry), ergo their “betters” must protect them from themselves. This assumption is deeply patronizing and inegalitarian, and conflicts with Australians’ skepticism towards the idea that wealthier people are necessarily of higher intellect or moral character.
One could, not unfairly, describe the Australian model of casino regulation as the closest thing Australian politicians could have to “foreigner-only” casinos (akin to South Korea) or charging entry fees to locals (as Singapore does). Such policies make it very clear to locals, particularly those without substantial wealth, that the casinos aren’t “for them,” but given how Asian political culture is more accepting of societal stratification, it isn’t a surprise that Australian politicians had to conceal the elitism (and camouflage the opportunism) that drives their own policy decisions. So, Australia does let locals into the casinos … but no longer (at least in New South Wales or Queensland) lets them into VIP rooms even if they bring a substantial cash buy-in (day passes into VIP rooms for “locals” used to be available with a big cash buy-in but today are either unavailable or less available that than previously).It does allow locals to earn their way into the VIP rooms through membership status, which means they actually have to gamble substantially more to attain entry. This change clearly has no rational relationship to money laundering by foreign VIPs inside said rooms, but that shouldn’t surprise anyone.
Australian egalitarianism is often championed as embodying something kinder and more humane than the social norms of the United States (which the Australian left commonly depicts as a socially-Darwinian bloodbath), yet the gambling culture of the United States is much more egalitarian than that of Australia. Part of this is due to the fact that American gambling culture began on the frontier, where the rule of law was weak, and thus the industry’s roots were intertwined with scoundrels, scofflaws and low-rollers. Pioneers of American casino gambling, such as Bill Harrah, specialized in catering to smaller bettors, and for most of its existence the Las Vegas Strip was a solidly mass market destination (which only began to “gentrify” in the post-Mirage era). The concept of a “locals casino” – the precise kind of thing that Australian gambling policy tries to divert casinos away from being (at least where such a goal undermines government revenue maximization) – is very much an American invention. There is a great egalitarianism in such an institution – the democratization of a form of entertainment previously reserved for the wealthy, and treating people equally irrespective of where they come from.
Of course, telling Australians that the Americans do equality (in some ways) better than Australians do is a hard sell. This fits the interests of Australian state governments just perfectly. A competitive casino industry wouldn’t be making monopoly profits that can be gouged for tax revenue, and without such profits the industry wouldn’t be able to build destination resorts capable of importing additional taxpayers. But one has to lament Australia’s egalitarianism-blind-spot when it comes to treating local, low-rolling gamblers as intellectually and/or ethically impaired tax cattle.
