Posts Tagged ‘poker machines’

It is sad to see that governments in some states and territories are making it easy for people with gambling addictions to blow their money.  The gambling industry was opposed to the reforms of the previous Gillard government, and now that the LNP are in charge, those reforms are all but gone or being ignored as problem gamblers are once again encouraged to spend their money on poker machines and the TAB in venues, pubs and clubs.  The power of the gambling industry is making this possible, where they have made large donations to governments at state and federal levels to win government support, where in return the government takes no action on recommended reforms and guidelines to help problem gamblers and people with gambling addictions as the increase in gambling revenue equates to an increase in their tax revenue.  This article poses the pertinent question; if Australians spend more per head on gambling than any other country, why are governments encouraging further growth of a harmful industry?  And the simple answer is that governments are themselves addicted and reliant on the tax generated from the gambling industry, to the point where the cost of reforms and restrictions to help problem gamblers outweighs their need to generate revenue from this insidious source.

Gambling pays off … for Australian governments

By Mike Steketee

http://www.abc.net.au/news/2015-07-17/steketee-gambling-pays-off-for-australian-governments/6625170

State and territory governments increasingly rely on gambling tax for revenue, which helps explain why Australia is currently going backwards on the issue despite clear evidence of a public health threat, writes Mike Steketee.

Two weeks ago, the Baird Government in NSW introduced changes to make life easier for serious poker machine players. That is part of a trend, with governments in Canberra, Queensland and the Northern Territory going down the same path. After its comprehensive demolition of the Gillard government’s reforms to tackle problem gambling, the gambling industry has pressed home its advantage by extracting further concessions to increase its profits, guarantee its further expansion, and increase the misery of the estimated 115,000 mainly low-income Australians with a serious gambling addiction – one mostly caused by the pokies. However, there are signs of pushback.

The Alliance for Gambling Reform has been formed to co-ordinate the activities of church and community groups who speak for the 70 per cent of Australians who said in 2011 that gambling should be more tightly controlled. Separately, Neil Lawrence, the ad man who created the Kevin 07 campaign, has left a significant legacy after his sudden death this week in the Maldives: a powerful documentary, scheduled to be shown on the ABC, revealing how pokies are specifically engineered to encourage addiction. In the meantime, as a result of the most recent changes, gamblers in NSW clubs can now store $5,000 in an account or a smart card – a 25-fold increase from the previous standard limit of $200. As well, they can receive up to $5,000 of their winnings in cash, whereas previously amounts over $2,000 had to be paid by cheque or electronic funds transfer.

Monash University’s Charles Livingstone, an authority on gambling issues, says it is hard to fathom why a player would want $5,000 so readily at hand unless they had a very serious issue with poker machine gambling. He describes the other measure – raising the threshold for cheques or EFT to $5,000 – as “a recipe to ensure that problem gamblers … simply pour their winnings back into the machine ASAP”. But wait, that’s not all. In what the government argues is a counter-balance, there is a reduction from $10,000 to $7,500 in the maximum amount pokie players can insert and store in machines and an increase from three to six months in the minimum period problem gamblers can ban themselves from venues. If that looks like tokenism, that is because it is. Livingstone told me that the reduction from $10,000 to $7,500 is meaningless: This is supposed to be a harmless entertainment. Why on earth would you need to put $7,500 in a poker machine in a club or pub if it were genuinely merely harmless fun?

The only impact of this is to make money laundering slightly more difficult, but only slightly. He describes self-exclusion as a useful strategy for a small number of people, but says it is far more honoured in the breach than in the observance. The changes stem from a pre-election commitment by the NSW Liberals and Nationals to secure the support of Clubs NSW, the most powerful part of the lobby that mounted an expensive campaign to torpedo the Gillard government’s plans for gambling reform. The measures are spelled out in a memorandum of understanding that also includes a promise to “retain existing gaming machine operating conditions”, with any proposals for change requiring “rigorous assessment” and consultation. In other words, don’t dare lift a finger without telling us or we’ll hit you with another campaign. Needless to say, the public were not party to this agreement. There are some common themes in the backsliding by governments.

In Queensland, the Newman government also changed the rules to allow winnings of up to $5,000 to be paid in cash. Previously, jackpots could only be paid out by cheque and the cheque could not be cashed at the gambling venue for at least 24 hours – tougher rules than those that used to apply in NSW. Like the Baird Government, the Newman government justified this and a raft of other changes in the name of reducing red tape. Livingstone and his Monash University colleague Louise Francis had a different explanation in a report last year commissioned by the Anglican Church: This is clearly in the interests of EGM [electronic gaming machine or poker machine] venue operators and against the interests of people experiencing issues with gambling… In our opinion, this is a wholly detrimental measure that cannot be justified on ‘red tape reduction’ principles. Instead it appears intended to increase the likelihood that EGM users, especially problem gamblers who win substantial amounts, will, in all likelihood, lose those funds at the same venue.

The Queensland changes also increase the number of poker machines allowed under a club licence from 280 to 500, with a maximum of 300 at one venue. Livingstone and Francis said the likely effect would be to increase the average size of venues with poker machines and that it was well established that larger establishments generated more revenue per machine. “There is significant potential for exacerbating gambling related harm in vulnerable communities as a result of increasing allowable machine numbers in venues,” they said.

Last December, the Northern Territory Government announced an increase in the number of poker machines allowed in hotels from 10 to 20 and in clubs from 45 to 55. What of the $150,000 donation by the Australian Hotels Association to the governing Country Liberal Party before the last election? We have the word of Gaming Minister Peter Styles that it did not influence the Government’s decision. These measures are on top of the Abbott Government’s repeal last year, with Labor’s support, of the few measures that survived the onslaught from the clubs on the Gillard government.

They included limits on withdrawals from ATMs, the installation of so-called pre-commitment technology on replacement poker machines so as to allow players to nominate beforehand the maximum amount they were prepared to lose, and a trial of a mandatory pre-commitment scheme. Together, these decisions represent a big step in the wrong direction at a time when studies by the Productivity Commission and others have confronted us with the reality of problem gambling – bankruptcies, family break-ups, crime and suicide. Addiction to gambling is as much a public health issue as smoking or drug addiction. What governments have done is akin to re-introducing smoking in restaurants and bars.

Total gambling expenditure per head in Australia grew after inflation from $577 in 1986-87 to $1,179 in 2011-12. That meant total gambling losses of $20.5 billion in 2011-12, 84 per cent of it on gaming, with the rest on racing and sports betting. Considering Australians spend more per head on gambling than any other country, why are governments encouraging further growth of a harmful industry? Because government policy on gambling is compromised on multiple fronts. State and territory governments increasingly have relied on it for revenue, with their takings almost doubling after inflation to $5.5 billion in the 25 years to 2011-12.

With the growth of the industry has come the increase in the power of the clubs and hotel lobbies, and that power has included making political donations. In the Northern Territory, the Australian Hotels Association gave the same amount – $150,000 – to the Labor Party before the last election as to the Country Liberal Party. The last time there were meaningful measures to control gambling was in Victoria more than five years ago. They included a $5 maximum bet – a change Livingstone says was introduced without industry opposition. He adds that a $1 maximum would reduce the harmful effects of gambling, given that 80 per cent of problem gambling stems from poker machines. Among the politicians, only independents like Nick Xenophon and Andrew Wilkie are prepared these days to stand up to the gambling lobby.

Wilkie put a bill for $1 bets, among other measures, before Parliament last November but the Abbott Government refused to allow it to come up for debate. Xenophon plans to introduce into the spring session of Parliament a bill to apply restrictions to online gambling. This is emerging as a threat, even while the much larger one from poker machines remains to be tackled.

The Champ Bros see sports betting as one of the more likely ways of making a profit through gambling, as you can minimise your risk and maximise your chances of winning money over time through discipline, research and understanding the odds structures of the book makers, and most importantly, avoiding the ‘sucker bet’ (and the NRL on a Monday night).

Sports betting has its own pitfalls with the odds offered by the bookies being less than the true odds for the event, where a $1 bet on a head to head match between two evenly matched sides only returns $1.87 for either side to win (TAB) or $1.92 (Sportsbet), obviously less than $2 it should be in a perfect world.

This view of ours is the result of years of dabbling in other forms of gambling and betting and learning how the other types of gambling and games out there function.  The following is a brief analysis of what the punter is up against when playing the pokies or gambling in the casino, and why gambling and especially poker machines can easily lead to gambling addiction.

It must be noted here that gambling addiction is very real and that no punter at any level or in any form of gambling is immune from it.  Our approach is that gambling is supposed to be fun and a challenge, where we know what we’re up against and we are trying to find the edge that gives us an advantage over the book makers.  As mentioned before, we are low ball punters who are very disciplined in not deviating from our strategies or in how much we bet, which adds to the challenge and makes turning a consistent profit all the more rewarding.

Poker Machines

How Victorian Poker Machines Work

Poker machines (pokies) are a popular form of gambling, but make no mistake, pokies are designed to earn revenue for the venue operators and not for you. This is known as the ‘House Edge’.

Each machine has an inbuilt computer program that randomly generates 1000s of possible outcomes every second.  When you press the button:

1.    The machine will randomly pick one result from the many thousands of possibilities in a millisecond.
2.    The next second it will generate thousands more.
3.    It does this continuously, every second all day and night, without thinking or remembering.

The machine accepts any credits bet. If the machine determines a win, credits are paid.  If not, the machine continues to generate outcomes until the button is pressed again, each press completely unrelated to the last.

Bonus Features

Game bonus features are designed to give you the feeling that you are getting something for nothing or a second chance to win. However, everything that happens on a poker machine, including ‘game features’ and ‘free spins’ are included in the calculations made by the poker machine manufacturer. So even when it appears that you’re getting free spins, the fact is, you have already paid for them with the losses you’ve had already on the machine.

Surely some money must return to the players?

The ‘return to player’ setting is the average amount won by players as a share of the total amount bet. By law, Victorian poker machine venues and the casino must return at least 87 percent of the total amount that is bet each year to players.

It takes millions of games for a machine to reach its ‘return to player’ setting and it’s important to note that there is no legal requirement for any individual poker machine to return the expected rate (87%) in any given period of play.

In Victoria this is a minimum of 87 per cent. This doesn’t mean that every time you play you will get 87 per cent of your money back. It means that if you could play enough spins to cover every possible combination on a machine (about 80 million) then you could expect to get 87 per cent of your money back. This also means the operator can count on 13 per cent of your money. For this reason the operator doesn’t ‘cheat’ and the machines aren’t ‘rigged’, they simply have a built in advantage for the operator—there are many more losing combinations than winning ones.

Why are poker machines so addictive?

While there is little research actually taking place in Australia about this problem, there is some research from the USA about their slot machine epidemic and the role of dopamine in the brain, and I also have my own theories related to operant conditioning.

Dopamine

When dopamine is released in the brain, it can give a feeling of pleasure or satisfaction. E.g. Food and sex release dopamine.  These feelings of pleasure and satisfaction become desired, and to satisfy that desire a person will repeat the behaviours that release dopamine. Several studies have been conducted which targeted neural response to rewards. The results were unanimous in the fact that when someone performed an action over and over again, and was given a reward randomly, dopamine levels rose. If the reward was given consistently, i.e. every fourth time the action was performed, the dopamine levels remained constant. Finally, if no reward was given, the dopamine levels dropped. This also explains why eating new foods or eating food when travelling overseas is usually more pleasurable, and why having spontaneous sex is more exciting; the ‘freshness’ of the experience acts as an unexpected reward, releasing more dopamine into your brain.

These same random rewards can be seen in gambling and especially with poker machine payouts. Because the outcome is based on chance, a player does not know prior if he or she will win. Therefore, if the person wins (a random reward), dopamine levels increase.  From this it has been concluded by some that only people whose dopamine levels are naturally low become addicted to gambling.  When pokies players are on a losing streak though, their dopamine levels would drop (no reward being given) and this leads to them feeling miserable when they have lost their money.  Their solution? To play the pokies again trying to get the win (the unexpected reward) that will once again increase their dopamine levels.  This chasing of the pleasure and satisfaction dervied from dopamine is a losing battle though, as the brain won’t release as much dopamine when the action is repeated without something new happening, and the expectation of the reward also suppresses the release of dopamine.

This is a similar cycle that leads to cocaine addiction, as cocaine chemically inhibits the recycling of dopamine in the brain, causing a flooding of dopamine and intense pleasure in the user for about 30 minutes.  Tolerance soon builds though as dopamine is also released when something pleasurable and unexpected occurs.  Routine limits the release of dopamine, and as the cocaine user gets an expectation of the pleasure, the pleasure won’t be as intense as less dopamine is released with the similar action.

Interestingly, medications which boost dopamine can cause compulsive gambling. Parkinson’s disease results from a severe dopamine shortage caused by the death of dopamine-producing cells in mid-brain structures that are involved in bodily movement. Some Parkinson’s disease patients who received drug therapy to increase their dopamine levels developed gambling problems.  Soon after the drug therapy ceased, their gambling addiction also ended.

One patient, a 52-year-old who had only occasionally gambled before taking the Parkinson’s medication, became a compulsive player, losing $100,000 in casinos. A month after discontinuing the drug, his gambling stopped and his wife said she had her “old husband back.” Another patient who developed a compulsion to play poker machines said he saw a report on the strange side-effect of the medication on the Internet and had a “eureka!” moment. His desire to gamble vanished three days after he stopped taking the drug.

Operant Conditioning

I believe another factor at play when people become addicted to poker machines is a form of operant conditioning.

Operant conditioning is a type of learning that occurs through rewards and punishments for behaviour, where an association is made between behaviour and a consequence for that behaviour.

For example, a rat can be trained to push a button and get food as a reward, reinforcing the behaviour of pushing the button.  This is a Positive Reinforcement.

Now a rat in a cage will also learn very quickly that if the same portion of food is dispensed (say from a tube) each time the button is pushed, it can come back any time and push the button and the same amount of food will arrive.  In the meantime, the rat will sleep or go about its business without any stress worrying about its next meal.

An Intermittent Reinforcement is when the reward is given at random intervals, and/or the reward is a random amount.  It has been found that a participant is more likely to act when they only sometimes get what they wanted.  So when an action’s reward is unknown and not guaranteed, there is a greater response (no doubt related to the release of dopamine).

So if the rat in the cage pushes the button and starts getting random amounts of food at random intervals (not every time the button is pushed), it is going to be in a more agitated state as its next meal is not guaranteed.  The result?  The rat will keep pushing the button and waiting at the end of the tube for the food to arrive, as it no longer knows when it is coming or how much food there will be.  Does this action remind you of anything?  Why don’t they just get up and walk away…

If you push the rat one insidious step further and gave it a diminishing amount of food over time, say only 87% of what was delivered in the previous hour, what do you think would happen?

The rat would sit at the end of the tube and keep pushing the button until it starved to death.  And this is also the unfortunate fate of the poker machine player.

The poker machines pay out a random amount of money at random intervals, and this Intermittent Reinforcement of an action quickly leads to addiction.  And when you include the factor that poker machines only return 87% of what is invested over time, every addicted player will eventually go broke, starving to death while sitting at the machine and pushing the button.

Why do the people who are less well off tend to gamble the most?

I can’t answer this question definitively as it is a highly complex issue, but I can share a hypothetical scenario I used to present to my students when I was teaching at Swinburne University.  It was a simple proposal and it was always raised after the gambling lecture in the subject Popular Culture, when the students would inevitably want to discuss this very issue.

My proposition was that they could gamble their final grade on the flip of a coin.  They win and they get a high distinction, they lose and they get a fail.

After their initial shock and unsure laughter and then my promise that it was just a hypothetical and wouldn’t impact on their actual mark, there would always be at least one student in the class willing to risk a fail for the chance to win a high distinction.

The student would choose heads or tails and I would get another volunteer to flip the coin so there was no bias, and we would look at the result.  A win would often result in a fist pump and cheers, while a loss would be followed by a shrug of the shoulders and a, “I was going to be lucky to pass anyway” style comment.

The brighter students in the class would get my point straight away; that the ones most likely to gamble in this scenario were in fact the ones who had the least to lose.  It would be very unlikely that someone who is already heading for a distinction would risk that grade for a fail, undoing all their hard work and study on the flip of a coin.  But the same hypothetical is very enticing for a student who is looking at just a pass or a fail anyway, as they have just about nothing to lose in gambling their poor grade.

Now I understand that this analysis may be a fallacy when it comes to explaining why some people in the poorer demographics tend to gamble more than those in the richer areas, but I think for some people there would be a relationship between the respect you have for the money you’ve earned through time and hard work and the likelihood you would risk losing it all through gambling.

Casino Gambling

When you step into a casino to gamble it’s easy to be overwhelmed by the number of options in front of you. With rooms of pokies, card tables, dice games and spinning wheels it’s a good idea to find out how each game works before you play. Otherwise, you may find yourself losing more money than you imagined.

Each game has a house margin which is the overall percentage of money bet that is kept by the casino or house. Skilled players may be able to reduce the house margin slightly to be in their favour in games of skill, but in games of chance, the margin always remains the same.

Skill-based games are never an assurance of winning and the odds are always in favour of the house.  Just like the poker machines, this is how the casinos make their money.

BLACKJACK is a card game of chance and skill where players may improve their chance of winning by using a better strategy. After receiving two cards from the dealer, the player can choose to be dealt more cards so as to have a total score closer to 21 than the dealer’s total – without going over 21. Face (picture) cards count as 10, aces count as 1 or 11 and the cards 1 to 10 count as their face value. The house margin for Blackjack is generally less than 1% for skilled players.

CARIBBEAN STUD POKER is a game of chance and skill where an initial “ante” or “stake” is bet and players receive five cards face down. The dealer receives four cards face down and one face up. If a player thinks they can beat the dealer’s hand they must double their original bet. If they don’t think they can beat the hand, then they forfeit their original bet. The best poker hand between the player and the dealer wins. Jackpot bets are also available, but even with an allowance for the jackpot, the house margin is around 5.5 percent.

BACCARAT is a game of chance in which cards of 10 and below count as their face value, aces count as 1, and 10s and “face cards”, such as Queens and Kings count for 0. Two cards are dealt to each of the players and the banker with an optional third. The total of the hand’s value works by dropping the first digit (a hand totalling 15 would be counted as 5) the aim being to get a hand value closest to 9. Bets can be placed on the player’s or the banker’s hand, or on the hands being tied. The house margin for Baccarat is around 1.2 percent.

SIC BO is a dice game of chance in which three dice are rolled and players try to predict possible outcomes and totals of the dice rolls. Players can bet on the dice rolls amounting to particular totals, combinations of two dice, single numbers being rolled through to specific triple rolls. There are no betting strategies to reduce the margins of Sic Bo, depending on the bet placed the house margin remains between 2.8 and 16.2 percent.

ROULETTE wheels in Australia have 37 numbers on them, 18 red, 18 black and one zero. Double Zero Roulette has an additional zero to make 38 numbers. The wheel is spun and a small ball is sent spinning in the opposite direction. Bets can be placed on the ball landing on specific numbers or colours (red or black), on odd/even outcomes or on “low” or “high” numbers. The house margin is 2.7 percent for roulette and 5.26 percent for Double Zero Roulette.

PAI GOW is a chance-based game played with 32 tiles. 22 of these tiles form 11 Identical Pairs and the remaining 10 tiles form 5 mixed pairs. After the game has been dealt, each player and the Bank (house) needs to construct two separate hands with their four tiles called a Low Hand and a High Hand. The player’s hands and the Bank’s hands are then compared to determine who wins. Pai Gow has a house margin of 1.5 percent.

BIG WHEEL is a game of chance in which a wheel is divided into 52 compartments, each one showing one of seven different symbols. Players simply bet on a symbol and win if the wheel lands on that symbol. The house margin for Big Wheel remains consistently at 7.7 percent.

POKER at Crown Casino in Melbourne has become very popular since the dedicated room downstairs was started and the Aussie Millions is held there every year.  A lot of poker players believe they are playing the casino game where they have the most control over their fate, and that a good player can always make money.  In a pure cash game this may be the case, but at the casino there are some factors that make turning a consistent profit much more difficult.  With the hourly time charge and rake from every hand, the bottom line is that if players sat down with the same amount of money and no extra money was added to the table, the casino would end up with the majority of their money over time, with only one player having what was left.

As of 2012, Crown Casino in Melbourne takes the following rake per hand from the low limit cash game:

$1/$2 – 10% capped at $15 (plus $5/hour time charge)

Lottery Games

I’m not going to go into great detail about playing the lottery as it is a pure game of chance.  The following are some common Australian lotteries and the odds of your numbers actually coming up.

LOTTO draws are made on both state and national levels. 45 balls numbered 1 to 45 are combined and six balls are randomly selected to create the winning combination, with another two balls selected as the supplementary numbers. At least four games are played per Lotto card and your chance of choosing the six winning numbers and receiving the Division One prize with a single game is 1 in 8 145 060.

POWERBALL uses two machines each containing 45 balls numbered 1 to 45. Five balls are drawn at random from one machine, while one ball, the Powerball, is drawn from the second machine. You must play at least two games in a draw. Your chance of matching all five balls plus the Powerball is 1 in 54 979 155.

KENO is played in a registered venue such as a club, hotel or casino and consists of 80 numbers (1–80) where 20 numbers are drawn at random. On a $1 game players choose 10 or 15 numbers. If a player chooses between 7 – 10 numbers, a proportion of their bet is allocated to a jackpot. Your chance of winning the jackpot on the 10 number game is 1 in 8 911 711.

Beaner

References

http://www.gambleaware.vic.gov.au/know-odds/how-gambling-works

http://serendip.brynmawr.edu/bb/neuro/neuro05/web1/isiddiqui.html

http://www.addictscience.com/gambling/