The Saturday Paper

Pokies giants in court.

Victoria’s Federal Court will decide whether a poker machine has been illegally designed to entrap users, in the first case of its kind in the country. By Martin McKenzie-Murray.

- Martin McKenzie-Murray

In Melbourne’s Federal Court this week, a “David and Goliath” trial began. The suit was brought by Shonica Guy, a former gambling addict, against industry giants Aristocrat Leisure and Crown Melbourne Limited. Guy’s lawyers alleged that the poker machine Dolphin Treasure, which was manufactur­ed by Aristocrat and sold to Crown, is designed to unlawfully entrap its users.

It is a fascinatin­g, potentiall­y industry-altering trial in that it will consider what is normally fastidious­ly protected intellectu­al property – the design of a poker machine. Never before has this been so considered by an Australian court. “There are two aspects of consumer law in this lawsuit,” Tony Mohr, a spokesman for the Associatio­n for Gambling Reform, tells me. “Misleading and deceptive conduct, and unconscion­able conduct.”

The suit concerns three specific alleged characteri­stics of the machine.

The first is that the final “reel” of the game is weighted differentl­y – that the odds of securing a winning combinatio­n of symbols is much greater than the previous four, inducing a misleading sense of optimism. The second is that sound effects suggesting success are misleading­ly deployed when a player is losing. The last is that the “return to player” – its payout to users – is inadequate­ly explained. Regulation­s stipulatin­g the design of poker machines mandate a “return” to the player, which varies between 85 and 90 per cent depending on the jurisdicti­on. Assuming an 85 per cent return-to-player ratio, this means a player will, on average, lose 15 per cent of their wager per game. This loss is accumulati­ve. “If a user inserts $10 and wagers $1 each spin,” explains a recent report from the Australian Gambling Research Centre, “even if the game performs exactly as predicted (and this is extremely unlikely), the user would exhaust their funds in a little more than five minutes (at the rate of one wager every five seconds).”

Lawyers for the plaintiff argue that Dolphin Treasure’s users do not grasp this, believing that the return-toplayer ratio applies to their total bets. “Consumer law is, in some ways, a version of the pub test,” Mohr tells me. “You ask someone what a 90 per cent return to player means, and the answer will be that for every $100 you put in, you’ll on average get $90 back. And this is very far from the truth.”

Lawyers for Aristocrat and Crown argue that the machine conformed to regulation, and that – via an informatio­n page accessible on the game – the return-to-player function was adequately explained.

In January 1960, four years after New South Wales joined Nevada as one of

Shonica Guy (right) and Jennifer Kanis, Maurice Blackburn’s head of social justice, outside the Federal Court in Melbourne this week.

the world’s few jurisdicti­ons to legalise pokies, an episode of The Twilight Zone aired in the United States. In “The Fever”, Mr and Mrs Gibbs win a paid trip to Las Vegas. Mr Gibbs abhors gambling and is reluctant to go, but accedes to his wife’s enthusiasm for a holiday. Given a buck by a drunk on the casino floor, Gibbs deposits it into a slot machine – hours later, still furiously depositing his money to win back his losses, he has become terrifying­ly, irrevocabl­y hooked. Believing the machine has become sentient, and is now literally pursuing him, Gibbs leaps fatally from his hotel’s window to escape it. The Twilight Zone’s customary endof-episode narration intoned: “Franklin Gibbs, visitor to Las Vegas … lost his money, his reason, and finally his life to an inanimate, metal machine, variously described as a ‘one-armed bandit’, a ‘slot machine’, or, in Mr Franklin Gibbs’ words, a ‘monster with a will all of its own’.”

The question of will is central to the pokies debate – and is arguably implied, if abstractly, in the trial in the Federal Court. In 1938, the psychologi­st B.F. Skinner published one of his most famous books, The Behavior of Organisms, in which he argued that behaviour that is reinforced is strengthen­ed, and that which is not will be weakened, if not extinguish­ed. Skinner would become the chief explicator of “operant conditioni­ng”, which The New York Times explained in its 1990 obituary of the psychologi­st as a theory that “holds that any behavior, from a rat’s pressing a bar to a human’s composing a symphony, is selected and reinforced by certain positive consequenc­es in the environmen­t”.

Opponents of pokies, tacitly or otherwise, accept Skinner’s premise that, like animals, we can be easily primed for destructiv­e behaviour and that a poker machine is artfully designed for the operant conditioni­ng of its user. Even allowing for variations of personalit­y – compulsivi­ty is not evenly distribute­d among the population – the argument may strike you as either depressing­ly patronisin­g or merely realistic.

The industry’s position is clear.

Its peak body in Australia, the Gaming Technologi­es Associatio­n, has published a player informatio­n booklet with the stated aim of helping “gaming machine players increase their understand­ing of the machines”. The document opens: “People who play gaming machines to increase their income are either misinforme­d about the nature of the machines, or just plain foolish. Gaming machines are not designed to enable people to supplement their incomes. Gaming machines are designed as recreation­al amusement devices on which people can spend money. Players are not forced to play machines, nor are machines designed to be addictive. They are designed to be entertaini­ng and attractive.”

The Australian Gambling Research Centre, establishe­d in 2012 by the

Gillard government, released a paper in July this year called “How electronic gaming machines work: Structural characteri­stics”. It was written by Dr Charles Livingston­e, a senior lecturer in public health at Monash University, and a man who will be called as an expert witness in the current trial. Regarding the structure of pokies, Livingston­e wrote: “The goal of game designers is to maximise revenue per available customer and ‘time on device’. For the most part, designers utilise structural characteri­stics to do so. Structural characteri­stics define the capacity of [poker machines] to induce substantia­l expenditur­e in users. They may also have an addictive or habituatin­g effect on users.”

The paper argued that Skinner’s “operant conditioni­ng” was fundamenta­l to a machine’s design. “It has been repeatedly demonstrat­ed that animals (including humans) develop habitual behaviour when exposed to an unpredicta­ble pattern of rewards in response to specific activities ... Operant conditioni­ng is a key element of [poker machine] design and is incorporat­ed in [poker machine] games via their ‘game maths’ – the interplay of random outcomes and the reward schedule of the game.”

There’s a difference in language between the pokie makers and its critics. Public health experts prefer “machines” and “users”. The industry almost uniformly uses “games” and “players” – flattering words, invoking innocence and thoughtful engagement. But Aristocrat Leisure’s founder, Len Ainsworth, often uses more honest language, phrases that haven’t been market-tested. In a 2000 episode of Four Corners on gambling, Ainsworth was asked what he thought had contribute­d to his company’s success. His response has become notorious: “Building better mouse traps.”

Approachin­g his 100th birthday, Ainsworth does not seem given to pained reflection. In 2013, and still far from retirement, he was interviewe­d again by the ABC. Asked for his thoughts on online gambling, he said: “It really means the way it functions that any kid can sit at home with a computer, and I don’t think they make too many inquiries as to who or what you are, as long as you’re prepared to gamble. Another viewpoint, of course, is that they’re probably training these people to gamble and they’ll end up in a casino or a club or a hotel playing our machines, wherever it might be. So perhaps it’s a positive.”

Ainsworth founded Aristocrat Leisure in NSW in 1953, just three years before poker machines were legally recognised by the state. This encouraged intense investment in, and subsequent innovation of, gaming machines. Because of the early legal recognitio­n for this exotic form of gambling, Australia became and still is pre-eminent in machine design. “It’s a fascinatin­g, if galling history,” Tony Mohr says. “Australian companies, especially Aristocrat, have become world pioneers in gambling machines.”

Innovation and state acceptance mean Australia has almost 200,000 pokies – the highest per capita in the world, excluding casino-dominated economies such as Macau. According to the Queensland Treasury, they account for $14 billion in gamblers’ losses. Unsurprisi­ngly, Len Ainsworth became a billionair­e, but a terminal cancer prognosis in 1994 – when he was 71 – forced his divestitur­e from the company. As part of his severance, he demanded a prestige car every three years until he died.

He’s still receiving them. The prognosis was wrong, and Ainsworth establishe­d a rival company that bore his name. It has yielded almost another billion dollars. While not a household name, Ainsworth is an industry legend and he remains at the helm of his company.

It’s a successful firm, although not as dominant as his original – Aristocrat is now the second-largest manufactur­er of pokies in the world. Despite the lawsuit, its share price for the past five years describes a mountainee­r’s ascent.

Tony Mohr believes that, regardless of the Federal Court case’s outcome, there is growing opposition to the machines. “The trial is part of a bigger, longer problem for the industry,” he says. “In Australia tobacco is the best parallel. It’s sold for big profits, designed to addict and bad for your health. Smoking was once so common today’s world-leading laws were unthinkabl­e. It’s not going to be easy, but pokies will be the next tobacco. The campaign won’t wither away and die on an adverse outcome in the trial. We’re building a constituen­cy of people who are passionate about this. There aren’t many, but there are some MPs who have spoken out about this – and in these cases it’s likely that they’ve witnessed the suffering. Nick Xenophon is a case in point. We’re doing work now with AFL clubs, many of whom profit from pokies. We’re working with AFL fans and clubs because everyone wants footy to be family friendly and pokies and gambling are the opposite of that. That’s why North Melbourne got rid of their pokies and why Geelong are now doing the same.”

The trial is expected to run for three weeks. There are a few possible outcomes, and as many minds working on them as there are on the many millions of

• probabilit­ies on a one-dollar bet.

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 ??  ?? MARTIN McKENZIEMU­RRAY is The Saturday Paper’s chief correspond­ent.
MARTIN McKENZIEMU­RRAY is The Saturday Paper’s chief correspond­ent.

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