Poker Machines Deception by Design: Lawyers Declare Consumer War
Wednesday 28 October 2015 @ 11.34 a.m. | Corporate & Regulatory | Trade & Commerce
Recently, it was reported that law firm Maurice Blackburn intends to bring an action based on the Australian Consumer Law (the ACL) (Schedule 2 of the Competition and Consumer Act 2010 (Cth)) to argue that the operators of poker machines are engaged in "misleading and deceptive conduct" resulting from the way they place poker machines in their venues under the guise of entertainment - when they know that in reality it is quite likely that people using the poker machines may become addicted to them.
Maurice Blackburn principal Jacob Varghese is reported as indicating that the firm hopes to bring its legal action, which it is undertaking with the Alliance for Gambling Reform, a coalition of anti-gambling groups, in the Supreme Court of NSW early in 2016.
The Nature of Things and The Issue
A recent article in The Conversation explains the issue this way:
if all the money in your wallet was taken out by me then you would probably feel as though you had lost? However, if instead I only took 80 percent of the money from your wallet you - would you feel as though you had “won” the remaining 20 percent? And what if I gilded this dupe further by trying to convince you that you had actually benefited from this outcome by ". . . playing happy music and letting off a few firecrackers"?
It is this kind of deception that brings the Competition and Consumer Act 2010 (No 51 of 1974) (Cth) the ACL at Schedule 1, section 18(1) into play, namely that:
" . . . A person must not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive."
A law which, when contravention is established, can provide remedies which include injunctions, damages and compensation orders.
The Nature of the Problem
The nature of the problem which the Maurice Blackburn action is seeking to counter is what appears to be an intended effort on the part of poker machine makers and by extension operators to by-pass the rational part of the brain and tap into the addictive part present in most of us, in effect, a process not unlike any other addiction. In a report by The Guardian, Alliance for Gambling Reform spokesman Rohan Wenn is quoted as saying of the action:
“Our primary argument will be that the machines are designed to be deceptive and that consumers are unaware of this deception. Put bluntly, the machines are designed to get around the rational, thinking brain and into the animal part of the brain to create addiction, and the industry has been aware of this for a long time.”
Note in particular, the point that the effect is said to be something ". . . the industry has been aware of ...for a long time" and not just an unintended consequence.
Villains and Heroes or Sobering Statistics?
It is reported that, in an April 2015 report released by the Victorian Responsible Gambling Foundation, it was estimated that 300,000 people across the state of Victoria were affected by someone else’s gambling while in NSW, it is stated that only Nevada in the USA has more poker-machines (see Gaming Technologies Association report released 2014 as reported in The Guardian). This report also found that in 2013, 198,418 poker machines were in operation throughout Australia.
Even more sobering are the reported comments of the Chief executive of World Vision Australia and anti-gambling campaigner Tim Costello, who has commented that 60 percent of regular gamblers become addicted and also points out that:
"While Australians comprised 0.2 percent of the world’s population, 20 percent of its pokie machines were located in Australia . . ."
How to Fix it - The Law? Perhaps?
The law, as evidenced by Maurice Blackburn's attempts, is certainly seen as the way to fix the problem and not just by legal action but also by legislation, for example, The Guardian quotes Dr Charles Livingstone, from the Monash University’s school of public health as having studied the close relationship between governments and the gambling industry, and saying it is “. . . time to fight for gambling reform and much stronger regulation . . . Gambling machines are responsible for 75% of the harm caused by gambling in Australia, . . ”
Indeed, legislation is not a novel or new notion and many will recall the ill-fated attempts under the previous Labor Government to introduce limits on how much people are able to gamble, to bring the notion of "pre-commitment" and to some extent stem the damage done by gambling.
The problem with legislation is clear, governments at all levels in Australia have too much of a vested interest in the fortunes of the poker machine industry to be relied on to deliver viable legislative solutions - if anything many governments actively legislate to protect the tax revenue received from gambling and preserve the support they receive as political parties from the gambling industry. To quote Dr Charles Livingstone further:
“Politicians have relied on the poker machine industry for significant amounts of revenue, . . .The courts don’t have the same conflict of interest.”
Chances of Success
The chances of success for the Maurice Blackburn action are hard to gauge and probably also depend on what level they are considered. Certainly in its article The Conversation, considering the case law position and citing Australian Competition and Consumer Commission v TPG Internet Pty Ltd [2013] HCA 54 (12 December 2013) and Australian Competition and Consumer Commission v Coles Supermarkets Australia Pty Limited [2014] FCA 634 (18 June 2014), seems to imply that a good case could be made out that gamblers might be misled by the “losses disguised as wins” technique by drawing on recent Canadian research (Losses Disguised As Wins in Modern Multi-Line Video Slot Machines) which:
". . . found that the flashing symbols and music that accompany 'losses disguised as wins' trigger similar arousal levels in novice gamblers as real wins do – and that arousal is a key reinforcer in gambling behaviour."
This research, it is further contended, demonstrates that: ". . . novice gamblers do pay more attention to flashing symbols and music than they do to their credit balance."
On the negative side are the considerations that the gambling industry is well funded, employs lots of people and will, just like the tobacco industry in by-gone days, fight every effort in the courts or in the legislature to contain it, curtail it and regulate it. But while on the negative side, perhaps a point to consider is the real contradiction bought out by Tim Costello when he says:
“No state government sponsors ice, cocaine or heroin, . . . People who get addicted to gambling are doing exactly what the machines have designed them to do.”
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