How gaps in Australian law enables exploitation of gamblers

It’s difficult to imagine Melbourne without Crown Casino nestled on the bank of the Yarra, or RSLs across Victoria and NSW filled with pokies.

But the future of Crown in Victoria is uncertain, as we await the final report of the Royal Commission into Casino Operator and Licence, to be handed down in the coming weeks.

The Royal Commission

After months of public submissions and hearings, the report will make recommendations as to whether Crown Melbourne is suitable to hold a casino licence, and if that is in the public interest for them to do so, and importantly: if the answer to those is no, what would need to happen to change this?

The scope of this inquiry spans the entirety of Crown’s Melbourne operation: from claims of money laundering and links to organised crime, to how this establishment manages problem gamblers.

The story of problem gambling – and the circumstances that enable them - in Victoria is a winding tale, and many of the events of recent years have brought us to where we are today.

Regulation of gambling in Australia

It might surprise many people to know that our gambling regulation laws are some of the most permissive in the developed world, and we also boast the non-enviable stat of the highest rates of gambling addiction and per-capita gambling losses.

The deregulation of gambling in Australia began in the 1980s, where machines like pokies, once only permitted at casinos, were installed at pubs and clubs via expansion of gambling licences.

It’s difficult to measure cultural acceptance of these changes, but with gambling losses in Australia topping $24 billion each year and 9.9 million regular gamblers, it’s clear that it has firmly embedded in the cultural landscape.

Pokies Case

In 2017, Maurice Blackburn tried a test case on behalf of a client, Shonica Guy, against Crown in relation to key design elements of pokie machines that were alleged to be misleading and deceptive.

These features included oversized reels (with more symbols) and starving reels (fewer of certain symbols), all of which are designed to make the chance of success appear much greater than it was, and therefore encourage addiction.

Our case – which didn’t seek financial compensation, but rather reform – included two key elements; one, it alleged a breach of Australian Consumer Law for misleading and deceptive conduct for the design of these games, and two, it alleged unconscionable conduct of the casino engaging with problem gamblers.

While the legal case was unsuccessful, it raised questions around the difference in between what a gambler sees, and experiences using these machines. The case was also concerned with the impact of these experiences on problem gamblers, who it was argued were a vulnerable class of people taken advantage of by Crown.

What does the law say about the responsibilities of gambling operators?

In 2013, the High Court heard a case against Crown Melbourne, brought by Harry Kakavas, who was a high roller with a gambling addiction (Kakavas v Crown Melbourne Ltd [2013] HCA25). The legal action sought to recover more than $20 million in losses over two years, after his ban on gambling at Crown had been lifted. The case argued that Crown should have been aware of his gambling addiction and that he was unable to make decisions in his own interests, and that by offering incentives (including use of a private jet, free accommodation, food and beverage and special rebates) Crown had deliberately exploited Mr Kakavas’ condition.

The case was unsuccessful, and the decision by the High Court confirmed that in the absence of relevant laws, there was no legal obligation on gambling operators to protect – by way of policy and practice – problem gamblers from themselves.

The state of play today

The above cases show that there are gaps in the existing private law protecting people with gambling addictions. These laws have been tested and found wanting.

With the release of the Royal Commission’s report, and the shift in public sentiment in recent years, the time is right to push for significant reform on how we regulate gambling, and put measures in place to protect people who have gambling addictions from predatory and exploitative conduct.

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