Australia has a problem with gambling. It is home to less than 0.5% of the world’s population but houses 20% of its pokies, and 80% of those located outside of casinos. The result is a country with the worst average gambling losses per year: Over $1000 dollars per adult each year.
Nearly half of the country’s $25 billion annual gambling losses goes into poker machines. And the issue appears to be getting worse, as the share of Australians with a gambling problem has doubled over the past 10 years, to more than 1%.
One of the major reasons for this problem is the accessibility of gambling in Australia. Unlike in most parts of the world where electronic slot machines or pokies are confined largely to casinos, they are found everywhere in Australia, from pubs to clubs, and are even marketed as VIP lounges.
Where did pokies come from?
The history of pokies in Australia dates back almost 100 years when illegal mechanised pokies dubbed “one-armed bandits” began to appear in the 1930s. By 1956, they were so widespread that authorities in New South Wales decided to legalise them in the hundreds of social clubs that had opened during the postwar boom. However, no other state legalised them at this stage.
During the 1990s, pokies use exploded in Australia, and electronic pokies allowed players to play more games, faster, and with more flashing lights and music, making them even more addictive. In New South Wales, pokies were bringing in so much money that clubs were seen to have a competitive advantage over pubs, and to even the playing field, the NSW government allowed casinos, pubs and hotels to install pokies in the mid-1990s.
Today, Australia has 200,000 pokies, with nearly half of them belonging to New South Wales, which has more poker machines than the whole of Las Vegas. Many of Australia’s clubs and pubs rely on revenue from poker machines. On average, 48% of profits for social clubs come from gambling, with the rest coming from alcohol sales, food and meals, and other services. Not every club and pub is the same, but for that to be the average is a worrying look at the revenue mix and reliance on poker machines.
Who makes the pokies?
Some of the biggest gaming machine companies are in Australia, and Aristocrat, the world’s largest slot machine manufacturer, was founded in Australia in 1953 by Len Ainsworth, who was right at the forefront of the legalisation of pokies in New South Wales and the growth of poker machines around the world.
Ainsworth left Aristocrat in 1984 after being diagnosed with prostate cancer and recovered to found Ainsworth Gaming Technologies in 1995. The two companies that Ainsworth founded have been on the forefront of many of the gaming industry’s trends globally, including the shift to online gaming. Aristocrat has a booming online computer game business, which accounts for over 40% of its revenue, and it has a game called Anaxi, a real money online gaming platform. The company has also developed a number of free-to-play mobile games that make money through in-app purchases.
Gambling is big business in Australia, with governments collecting over $7 billion in taxes per year across all gambling sectors. The profits of pokies flow to the casinos, pubs, and clubs that own licenses to run them, making it a significant source of revenue for these establishments. However, the social costs of gambling addiction are immense, with many Australians struggling with the negative impacts of this pervasive problem.
If you want to learn more about why Australia has so many electronic slot machines, check out our recent episode of The Dive!