Archive Article: Gambling On The Courts
February 28, 2009

Australia’s gambling problem is getting worse and there are some terrible social problems. However, keep an eye on the legal system because there may be some interesting developments.

State governments are addicted to gambling. It has become a major source of revenue for them. The NSW Government gets almost a billion dollars a year from poker machines and it is set to rise by a further 25 per cent over the next four years. Indeed, 10 per cent of all the poker machines in the world are in NSW.

As we have seen in the debate over the Commonwealth Government’s internet gambling legislation, once an industry reaches a certain size, the tail begins to wag the dog. In 1948, George Orwell wrote his novel “1984” and he was criticized for the novel’s depiction of governments being financed by gambling. Gambling was then largely illegal – or at least heavily regulated – in all developed countries. It seemed impossible that governments in developed countries could ever come to rely on gambling as a major source of revenue. Well, that is precisely what has happened – and as the industry has got bigger so its lobbying power has become more influential.

A trend to watch out for is the use of the legal system to assist the victims of gambling. If politicians will not assist these people, then perhaps the legal system can.

Wesley Mission’s Wesley Community Legal Service recently acquired a great deal of publicity for its success in court where its client, a problem gambler, sued a hotel whose staff had extended him advances on a credit card. In the initial suit, American Express commenced proceedings against the client for $88,000 charged to his card. The client then cross-claimed against American Express and the hotel where he gambled regularly. The court found in his favour against the hotel. The defendant claimed that he suffered from a special disability, namely that he was a pathological gambler, a recognized psychiatric condition. But the hotel staff continued to give him access to cash advances. The court found in his favour.

This ruling will not open the floodgates of similar litigation because of some specific factors, such as the nature of the premises, the fact that a small but regular number of employees dealt with this client, the client told the licensee that he had a gambling problem, and the client was the only person regularly obtaining large amounts of cash.

But in much the same way as the victims of smoking are now suing the tobacco companies, who knows how future litigation could evolve? For example, a group of gambling addicts in the Canadian province of Quebec, is launching a legal action against poker machine distributors, claiming damages because the machines did not carry a warning that there were addictive. So far about 50 people have joined in this action. But with an estimated 125,000 people with gambling problems in the province (about three per cent of the total population), lawyers expect thousands more people to join in the litigation. In 1999, at least 33 suicides had direct links with gambling. By the way, the Quebec Government gets about $2billion from gambling and so it is addicted to gambling just like the NSW Government.

Therefore, keep an eye on the use of the legal system by the victims of gambling. The victims of smoking have shown how the legal system can be of use to them. Gambling victims may be next.