A report by the NSW Auditor-General into the regulation of gaming machines has found that efforts by the state’s regulatory bodies to oversee the industry are not supporting harm minimization outcomes effectively.
The detailed 47-page report, published Thursday, listed a series of concerns around the effectiveness of gambling reforms, including the pace at which gaming machines numbers are being reduced, a lack of communication around desired harm minimization outcomes, the absence of reliable data around gaming machine compliance issues and ineffective training of venue staff around the responsible conduct of gambling.
NSW was home to 87,749 gaming machines as of the end of the reporting period on 30 June 2024, raking in profits of more than AU$8.4 billion (US$5.5 billion).
The report noted that NSW is home to more than half of all the gaming machines in Australia, including triple the number of machines per 1,000 adults than the next most populous state of Victoria. While the Gaming Machines Act 2001 establishes a tradeable gaming machine entitlement scheme that has a stated goal of reducing the number of gaming machines in NSW, the reduction has been gradual and there has been an increase in the number of gaming machines in NSW since 2021–22, the report explained.
“One of the objectives of the Act is to provide for an ongoing reduction in the number of gaming machines in the State,” it stated. “At the time the Act was introduced, there were more than 100,000 gaming machines operating in clubs and hotels in NSW. This number has reduced by 13,758 since 2001–02, which is an average of 598 machines per year. At this rate, it will take more than 55 years for NSW to reach parity with the national average for gaming machines per 1,000 adults.”
One of the key findings of the report is the ineffectiveness of Responsible Conduct of Gambling (RCG) training, which it says does not encourage venue staff to proactively address potentially harmful gambling behaviour. Likewise, the Department “does not have a structured approach to monitoring the quality of RCG training, despite this being a key harm minimization measure under the Act.”
It adds that recent regulatory activities have overly focussed on educating and testing venues for compliance with recent reforms that ban external signs advertising gaming machines, restrict the location of ATMs within venues and require venues to have Gaming Plans of Management and assigned Responsible Gambling Officers. These activities do not, however, assess the application of RCG in practice and the Department does not have a clear strategy for assessing requirements that relate to the venue culture or the actions of staff, the report found.
To address concerns, the Auditor-General has issued a series of recommendations for both the Department and for ILGA.
The Department should, it says, establish baselines and targets for improvements relating to gambling harm minimization; increase its focus on enforcing regulatory requirements that have the most direct impact on harm minimisation outcomes, including staff compliance with responsible conduct of gaming requirements; evaluate and report publicly on its activities with a focus on outcomes achieved, in addition to activities or outputs; and review the operation of the gaming machine forfeiture scheme including a review of all current exemptions to the scheme and removing exemptions that are not clearly justified by evidence proposing additional measures for clubs and hotels to forfeit gaming machine entitlements voluntarily.
ILGA should, by June 2026, commence periodic reviews of licence conditions for venues operating gaming machines in the highest risk locations; increase clarity about its decision-making for gaming machine applications to industry and other stakeholders by; and ensure statements of reasons for decisions are published in a timely manner while providing venues whose applications are refused with a detailed rationale for the decision.
According to the Auditor-General, the report into the regulation of gaming machines in NSW was “commissioned with the purpose of assessing the effectiveness of the Department and ILGA’s regulation of gaming machines in clubs and hotels, with a focus on harm minimization requirements. This includes assessing the effectiveness of the administration of applications to operate gaming machines and the approach to the compliance and enforcement of harm minimization requirements.”
In a media release, the NSW state government said that both ILGA and the Department had accepted the recommendations contained within the report.
