Australia is gambling addicted, and this applies to governments as well as gamblers. On gambling, we spend more than any other country across the entire world, with pokies our sore spot.

The motivation for controlling pokies is that they harm people more than other kinds of gambling. The biggest category of harm from gambling is damaging relationships. A lot of divorces follow from problem gambling. You can ban kids from pokie areas in pubs and clubs, but you can’t exclude them from being caught up in the harms of pokies.

A major problem with pokies is that they meet the needs of the addicted. They differ from a lottery, where you can play only once or twice a week. Pokies can be played whenever you want, for hours at a time, with the machines optimised to hijack our dopamine systems and make us want to give them another spin — and then another.

Who falls into this trap the most? The people who can least afford it. As the next chart shows, spending on pokies in Victoria is associated with socio-economic disadvantage. The places with the lowest scores spend the most on the pokies.

The big difference between gamblers and governments is that for governments, the payoffs are positive and predictable.

As the next chart shows, Australia’s three most populous states are pulling in generous flows of pokies revenue. New South Wales makes the most, while Victoria is now in second place after a recent surge brought it ahead of Queensland.

Gambling revenue is a mainstay of state budgets. It accounted for nearly $3 billion of the expected 2025-26 revenue in Victoria’s budget, brought down yesterday. That sum is growing, even though pokies revenue is actually one of the slower-growing categories in the state budget, with lottery revenue growing the fastest.

The moderate growth of pokies revenue in Victoria is a policy decision. The state has introduced some of the country’s strongest pokie control laws, with players able to put in only $100 at a time, and new machines required to spin 40% slower than the maximum speed permitted on old machines.

“Almost 30% of Victorians who play gaming machines experience gambling harm,” said Victorian Gaming Minister Melissa Horne earlier this year, when she announced the new rules.

The policy path Victoria has taken seems appropriate, having reduced pokie spending per capita. Inflation-adjusted, Victoria’s gambling spending is the same as it was in the late 1990s, despite a booming population. This suggests policy can work.

However, for policy settings, you really can’t beat the approach of Western Australia, where pokies are banned outside casinos. As a result, pokie spending at pubs and clubs per capita is recorded as zero, and in 2022-23, per capita gambling spending was $4,500 compared to $13,500 in Queensland. The WA state government seems to do just fine without huge pokie revenue.

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Gambling taxes account for just 1.3% of the revenue flowing to Treasury coffers in central Perth. The federal government does not compensate for that policy with higher GST distributions either. The capacity to raise gambling taxes is assumed to be equal across all states on a per capita basis. Indeed, part of the reason for Victoria’s recent budget challenges is that pokie revenue has declined following the tighter rules.

Pokies spending is a crummy way to raise revenue and drive economic activity. If pokies are shut down, problem gamblers will spend their money in the economy anyway. And if they’re paying rent and buying food for their families, the government may well find a lower amount of social problems it needs to mop up later.

Shutting down pokies is a good idea, but we need to be vigilant that sports betting doesn’t just replace it. The ability to play 24 hours a day on a highly accessible device on an app full of flashing colours and blinking lights makes sports betting just as rich an addiction as the pokies. It is already becoming the next big frontier for gambling addiction.