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Travel report - Minister Marlene Kairouz, United States of America, July 2017

Minister’s name The Hon Marlene Kairouz MP
Portfolio/s Minister for Consumer Affairs, Gaming and Liquor Regulation
Did the Minister’s spouse accompany the minister in an official capacity? No
Accompanying ministerial staff Mr Michael de Bruyn
Countries visited United States of America
Date of travel 18 July 2017 – 29 July 2017
Number of official travel days (include day of departure and day of return) 12 days
Funding source (list Department/s or Agency) Department of Justice and Regulation
Air fares (including taxes and fees) $12,490.08
Accommodation (including taxes and fees) $9,082.68
Other expenses (including surface travel and travel allowances) $13,598.96
Travel cost for Minister and ministerial staff $35,171.72*

*The above costs are not final and complete

Purpose of travel

The purpose of the Minister’s travel was to engage with legislators and shared economy providers to help inform future policy discussions, attend the National Conference on Problem Gambling to learn about emerging gaming products ahead of their introduction to Victoria and potential strategies to curb problem gambling and to learn about the strong consumer protection regime in California.

The National conference on Problem Gambling focused on many key issues and goals shared with Victoria such as increasing public awareness on problem gambling, increasing accessibility and quality of problem gambling services and providing support and advocacy at a state and federal level. The conference allowed the Minister to learn about strategies and network with other countries, states and experts on strategies to curb problem gambling. The Minister additionally learnt about emerging gambling products such as e-sports and cash fantasy sports ahead of their introduction to Victoria.

Whilst in California and New York, the Minister learnt from shared economy providers and legislators the benefits and challenges in the shared economy. Following the recent parliamentary review into short stay accommodation it is important to engage with cities and jurisdictions that regulate short stay and sharing accommodation.

In California the Minister met and learnt about the state’s strong consumer protection regime including understanding their “lemon laws” on third party automotive sales. This is something that the Minister would like to explore as an initiative for Victoria, and the meetings with relevant authorities about the challenges and outcomes is important to further develop any future potential policy.

Further to these initiatives the Minister met with experts, policy makers and advocacy groups on key government commitments with links to the portfolios, such as domestic violence and the link with problem gambling and how other areas of the portfolio could work to incorporate further domestic violence strategies.

Benefits of travel to the State of Victoria

Gaming and Liquor

Unlike Australia, sports betting is banned in most state jurisdictions and is seen as particularly harmful and problematic. This sentiment appears to be borne out of a number of historical ‘fixes’ in professional sports. The NCAA, which overseas amateur college based sports tournaments nationally across many disciplines is a strong opponent of the legalisation of sports betting, has inflicted competition bans on jurisdictions that move to legalise sports betting, Oregon amongst them.

It is likely in coming years that more US jurisdictions will move to legalise sports betting following the rise of illegal offshore wagering and the proliferation of these providers and ease of access for consumers. New Jersey has moved to challenge laws that prevent states from legalising sports betting and public opinion is shifting towards favouring its reintroduction. The Minister discussed the Australia experience and the various challenges with regulators in both Oregon and New York.

Much of the Oregon’s gambling is regulated and run centrally via a state run ‘Lottery’. In addition to traditional lottery products such as scratch its and tickets for lottery prize pools, the Oregon Lottery offers a product called ‘Video Lottery Machines’ which operate essentially as traditional slot machines or Electronic Gaming Machines (EGMs) do in Victoria.

At any given time, most Oregonians are within hundreds of metres of one of these 12,000 state owned and run VLTs across 2200 venues, making the jurisdiction remarkably similar to Victoria. This stands in stark contrast to many other US states where ‘slot machine’ gambling is limited to tribal casinos. Critics point to the convenience of and accessibility of these machines as being a major driver of harm. The prevalence of problem gambling in Oregon is similar to that of Victoria and other Australian jurisdictions.

The Minister discussed both regulatory challenges and problem gambling support services offered by the state in the face of the popularity of slot machines, which is arguably a greater concentration of harm given the ongoing ban on sports betting in the state.

The National Conference on Problem Gambling (NCPG) allowed the Victorian Government to connect with harm minimisation experts and industry figures from around the globe.

The evolution of gambling products was a key discussion point at the NCPG. The landscape of the gaming industry is constantly changing with new and emerging technologies threatening the status quo, posing a challenge for both regulators and government.

A hot topic of the Conference was the emergence of skill based gambling in slot machines as well as Fantasy Sports and E-Gaming as products that require jurisdictions to adapt to regulate them properly.

The emergence of Daily Fantasy Sports in the United States via the platforms ‘DraftKings’ and ‘FanDuel’ has posed a major challenge to state jurisdictions across the United States. Critics contend this is a form of sports betting and gambling under the pretence of fantasy sports. Daily prizes are won depending on the money staked by the player. It is estimated that 1% of players win 99% of the cash prizes available. There are some examples of these products already in Australian jurisdictions which are backed by established corporate bookmakers. The challenge for Government will be to monitor these products to ensure that they are both responsible and offer consumers the appropriate consumer protections.

In the United States, EGMs have taken on skill based elements to increase attractiveness to consumers. Some casinos are now offering skill based games to gamblers with the prospect these may soon be introduced to Australian jurisdictions.

Conference discussions also canvassed the need for Government to understand and adapt to the increased prevalence of gambling within apps and games with no age restriction, many targeted towards children. These games help normalise gambling to children at an early age.

The emergence of E-Sports and competitive gaming has also emerged as a new driver of gambling and is a $5b industry with organised competitions and a viewership higher than many mainstream US national sporting codes. Within these computer games and online competitions, players can bet with real money in unregulated markets to get better weapons and ‘skins’ (quasi badges to be worn by players within the game). Skins can be acquired for money and are given status in the gaming community.

The Conference heard the story of a 16 year old who became a gambling addict via online skins betting which link players’ accounts to gambling sites. This creates a largely unregulated and illegal gambling industry where real money is wagered on sites by players – many of whom are underage. There can be little doubt that this is occurring in Victoria and should be examined by Government and reiterates the challenge posed by the normalisation of gambling to minors within products like computer games.

We have seen in Australia and Victoria already some AFL clubs and governing bodies (the AFL) investing in establishing professional e-sport teams and e-sport competitions. It is important to understand that these emerging sports carry the same dangers of corruption by participants and gambling as more recognised mainstream sports do. There are betting markets available for such competitions in addition to the gambling within the games by players. The Government and the state regulator will need to turn its attention to these competitions as they become more prevalent in the Victorian jurisdiction.

The Victorian Responsible Gambling Foundation (VRGF) is world renowned and respected as one of the leaders in the field and was commended at the conference. VRGF resources were shared at plenary sessions and held up as examples US jurisdictions may wish to replicate and consider as part of their prevention strategies.

Liquor

The US liquor landscape is forever shaped by its era of prohibition. Tight-house laws operate in many state jurisdictions which ban ownership and control of more than one of the manufacturing, wholesaling and retail offering of alcohol.

Oregon offered an excellent insight into how Governments can support the liquor industry whilst balancing harm. The Minister met with the Governor’s office and regulators to discuss their approach to supporting both the liquor industry whilst minimising alcohol related harm in the community.

Oregon is famous for its craft brewing which is not limited to beer but is ever expanding through gin, whiskey and other distilleries. The explosion in these cellar door operations have helped drive tourism to Oregon. The state also offers tax breaks to Oregon based breweries to encourage investment and promote local industry and jobs.

Despite tight-house laws existing, the growth of the craft beer and spirit distilleries in Oregon has seen the State allow these industries to apply to operate as a retail outlet agent and sell bottled products manufactured at the distillery directly to consumers. Victoria currently prohibits distillers from selling their products ‘at the cellar door’ unlike breweries and wineries. The ongoing work to review the Liquor Control Reform Act being conducted by the Government may consider this as a reform to promote businesses, tourism and jobs in the state.

Bend, Oregon is a town famous for its density of breweries and distilleries and has seen a significant increase in investment by the craft beer industry who see it as a place to do business with a tourism benefit.

‘Travel Oregon’ tourism campaigns in recent times have focused heavily on the state’s brew scene as an attraction and has been a key driver in the increase in tourism to the state.

Much like Australia and Victoria, Family Violence remains a serious criminal issue in Oregon with alcohol and drugs often a factor in many reported incidents. The state offers drug courts and domestic violence courts with treatment programs attached to help reduce recidivism and assist individuals with their battle against addiction.

The Minister also met with Family Violence experts in New York to discuss the ongoing policy work in reviewing the Liquor Control Reform Act (LCRA). Recommendation 93 of the Royal Commission into Family Violence requested the Government ensure its review of the LCRA consider family violence and alcohol related harms and involve consultation with individuals who have expertise in the relationship between family violence and alcohol abuse.

The Minister met with representatives from the New York City Mayor’s Office to Combat Domestic Violence and toured the Family Justice Centre in Manhattan.

Consumer Affairs

The sharing economy has challenged established players in both the transport and accommodation sectors in recent years across the globe.

Whilst there is little doubt that New York City is a unique jurisdiction, lessons can be learned for Melbourne and Victoria. New York has adopted some of the most restrictive laws for short stay accommodation in the world. In New York City, Short-stay accommodation can only be let out for a minimum period of 30 days in the absence of a tenant. Short stay accommodation for a period less than this 30 day period can only be for a ‘room’ in the presence of the owner or tenant, rather than a whole apartment.

The Minister met with Rep. Linda B. Rosenthal of Manhattan who has driven short-stay accommodation legislation in New York City, to better understand the policy rationale behind these restrictions. New York City has a crisis of accommodation and rental affordability across the city and especially in inner boroughs that have or are gentrifying and becoming more attractive to live in.

Growing concerns around housing affordability and the availability of housing stock close to Melbourne’s CBD will continue to pose a challenge to governments into the future as the attractiveness of short-stay accommodation to investors becomes greater. Inner urban areas may become even less affordable as rentals are taken offline and converted into short stay accommodation. The Government has put housing affordability and rental rights at the centre of its agenda and must be vigilant to ensure that the New York experience is not replicated in Melbourne.

Similarly to Victoria, Consumer Affairs in New York have a focus on raising awareness and educating consumers about scams. One of the biggest issues in New York is predatory lending, where vulnerable individuals are locked into contracts and loans they have no hope of paying off. The Minister met with representatives from the Department of Consumer Affairs and discussed education campaigns and the importance of these as a tool to raise awareness in marginalised and vulnerable communities. 

The Minister met with regulators in both California and New York to discuss their state’s lemon laws as Victoria participates in the review of the Australian Consumer Law (ACL) to consider laws around motor vehicle defects in Australia. The Minister discussed the ACL Review and the approaches taken by both New York and California, the compliance of the automotive industry and the effectiveness of these regimes in protecting consumers.

Next steps / follow up

My office has been in touch with many of the bodies and individuals I met with to follow up on key discussion points and initiatives.

The National Association of Gambling Studies (NAGS) Conference is due to be held in Melbourne in late November. It is anticipated many of the attendees of the NCPG Conference in Portland will be present, allowing for continued sharing of the latest research and problem gambling strategies at a government level as well as information on the latest emerging gambling technologies in overseas jurisdictions. The chair of the NCPG, Keith Whyte has indicated he hopes to attend this year’s conference in Melbourne.

New and emerging gambling technologies and the ‘gamification’ of gambling are new frontiers in regulation and addressing harm that will need to be considered by Government. Examination of this by the department and the Victorian Responsible Gambling Foundation should be a priority to ensure Victoria strikes the right balance between appropriate regulation and consumer protection and harm minimisation.

Ongoing work on the review of the LCRA in the short and longer term will benefit from the insights gained from jurisdictions like Oregon and their investment and support for their liquor industry as a jobs creator and tourism generator.

Meetings with Family Violence experts in both Oregon and New York will additionally assist in implementing Recommendation 93 and ensuring the review of the LCRA involves consultation with experts in the fields of family violence and alcohol use.

Engaging with legislators and state regulators in New York, California and Oregon on short-stay accommodation provided differing approaches as to the challenge from the sharing economy to the traditional accommodation industry. This will inform the Government response to the parliamentary inquiry into short stay accommodation and the next steps in this area. Ongoing stakeholder engagement with short-stay providers such as AirBnB and Stayz will continue to ensure that if regulation is required the unique conditions in Melbourne and Victoria are considered, as differences across jurisdictions require more than a ‘one size fits all’ approach.

The work done nationally in the Review of the Australian Consumer Law (ACL) is giving consideration to reforms to ‘lemon laws’ across states. Victoria will look to adopt the recommendations of the ACL before considering whether there is a need to go further. Information from the Californian and New York state jurisdictions will inform this work.

Aboriginal & Torres Strait Islander flags

The department acknowledges Aboriginal and Torres Strait Islander people as the Traditional Custodians of the land and acknowledges and pays respect to their Elders, past and present.