Gambling advertising, media sustainability and the 2% levy suggestion

The Australia Institute this week tabled an idea to impose a 2% levy on gambling businesses to replace the lost revenue incurred by local media businesses if a gambling ban is imposed on the category.

The logic seems sound. Gambling companies generate around $17.2 billion from Australian households. They spent about $239 million of that on advertising across media channels. 2% of $17.2 billion would plug that hole, providing a surplus that could be used to help fund public broadcasters the ABC and SBS.

The gambling ad ban is becoming a bit of a political football, with reports circulating that a ban could cost a league like the AFL $120m annually which would cost ‘grassroots football’ $12 million a year. Note, this was a report based on data provided by the wagering sector. The other challenge is there is now a blurring between two very different issues - gambling advertising and the sustainability of the local media.

Let’s have a closer look at The Australia Institute’s proposal and what it could mean (and the questions it also raises)

It would require a full ban. It wouldn’t be feasible or fair with the current proposal of advertising still being allowed but placement being restricted

No one is going to agree to a 2% levy on top of reduced gambling ad load. And to be honest it wouldn’t be relevant. If the reduced ad load proposal goes through as expected, what will happen is the gambling businesses will just spread their advertising across every single area they are allowed to advertise. Expect more out of home advertising, and much more TV spots in non sports programming. The name of the game is salience and they will find other ways.

It would require a body in charge of distributing it - and it’s unclear how the funds would be allocated to media companies

If you did take a 2% levy on all funds gambled, where would the funds go and how would the distribution be determined. It couldn’t be via a government entity as there is the potential of conflict of interest. It could be via an independent body but this would to be established and operated, and have the required knowledge of the sector to distribute fairly. And how is it distributed? Is it just based on the allocation per network/media owner pre ban? Does this just guarantee funds in perpetuity to the initial beneficiaries of the gambling ad dollars??

Shouldn’t the funds go directly to the leagues, the provider of the most value to these gambling businesses??

This makes the most sense to me. The highest value contributor to gambling is sporting leagues and it would make sense for them to receive the money. This may be offset in lower rights costs but only if there is a reduction in bidding ‘heat’ from networks and streamers. Sure, a handful of leagues are prosperous at present … but the majority of professional sports leagues in Australia are hardly minting money. Think of the A-League, NBL, Super Netball, Rugby Union, womens codes etc. They could benefit greatly from improved commercial terms, which could develop grassroots programs and more elite pathways.

My estimate is half of all gambling advertising revenue is going to three technology companies that are amongst the most profitable businesses in the world - would they also receive funds from this levy?

Let’s also remember 3 of the largest recipients of gambling advertising are Apple (via App Store paid search), Meta (via ads everywhere) and Google (via paid search, YouTube, GDN etc) - hardly struggling media companies. Would they continue to receive what is likely to be $130-150m between them every year?

Should we accept that the sustainability of local media is predicated on gambling losses by Australians?

I would say we shouldn’t. I know this is what Bill Shorten was clumsily saying when he appeared on Q&A … but it’s a weird argument to link media sustainability with gambling losses that impact millions of Australian households and families. It’s also lazy policy and ignores loads of other ways the government could help in creating a sustainable media sector that isn’t beholden to specific categories or individuals for survival.

At the end of the day, The Australia Institute is at least trying to come up with a solution. The government has been eerily quiet on the broad area of media sustainability since it was elected. And even since Meta decided to walk away from its obligations, and media companies all over Australia endure what is likely the worst operating environment this millennium, the government has sat on their hands and done a lot of information gathering but not a whole lot of governing.