Governments that were once a check on the ambitions of the gambling industry are now enthusiastic supporters, despite the devastating effect it still has on the community, writes Mike Steketee.

Whatever happened to gambling reform, the issue that not so long ago was such a big issue on the national agenda?

No, in case anyone was wondering, it has not magically resolved itself. Problem gambling, mainly poker machine addiction, is still wreaking havoc through the break-up of families, suicides, bankruptcies and resort to crime.

It is just that it is no longer a political priority and therefore receives little attention. All the grand promises the minority Gillard government made to address the issue disappeared in a puff of smoke when Labor came up with its fiendishly clever plan to elevate the not-so-admirable Peter Slipper to the job of House of Representatives Speaker, meaning it no longer had to rely on the vote of independent Tasmanian and pokies reformer, Andrew Wilkie, to survive in office.

But it's worse than that. The cause of gambling reform has gone rapidly into reverse. Legislation introduced by the Abbott Government and passed in March with the support of Labor marked the complete capitulation to the clubs industry.

It repealed the few measures that survived after Julia Gillard, under pressure from Kevin Rudd and the NSW right, broke her agreement with Wilkie for meaningful reform. They included limits on withdrawals from ATMs, fitting replacement poker machines with so called pre-commitment technology - thus enabling players to nominate beforehand a limit on how much they were prepared to lose - and a trial of a mandatory pre-commitment scheme.

The parliamentary debate was notable for the resort to weasel words, such as those from Labor frontbencher Senator Claire Moore that "we have decided, because of the sensitivities, the pain and the frustrations, not to continue with the measures that were in place and which had not received full commitment across all of the various interests in this area".

It would have been much simpler to say that the clubs had waged a highly misleading campaign that scared the hell out of Labor MPs in marginal seats. Greens Senator Richard Di Natale summed it up when he said that Labor's surrender "represents everything that is wrong with politics in Australia".

But that also has not been the last of the retreats on gambling reform. Last month the Victorian Government extended the licence for James Packer's Melbourne Crown Casino by 17 years to 2050 and approved an expansion of its operations, including 128 more poker machines.

The pokies will have to be bought from Victorian clubs and pubs, thus not adding to the state's total of almost 30,000 machines. But according to one estimate, they will generate at least three times as much income at Crown as at suburban venues.

The new agreement with Crown contains an additional, quite remarkable, provision - the Government will have to compensate Crown for any measures taken between now and 2050 to tackle problem gambling. That covers all the proposals and plans that were canvassed by Wilkie and the Gillard government, including $1 dollar limits on bets, mandatory pre-commitment and restricted access to ATMs.

This surely must set a new low standard in political surrender to vested interests. Why did the Government decide to extend a licence that was not due to expire for another 19 years, let alone agree to what is close to a veto over gambling reform for the next 3½ decades?

First to placate an angry Packer after poker machine taxes were increased in the last state budget. Second because Crown will make payments to the Government of up to $910 million as part of the agreement, including $250 million this election year.

You might think an opposition, particularly one in a parliament where the numbers are precarious, might want to try blocking such a deal, since it requires legislation. To the contrary: Labor says that, despite misgivings, it will not oppose the bill. It is as anxious to placate Packer as the Government.

Emboldened by its comprehensive political victory, the clubs industry is looking for fresh fields. Clubs Australia has suggested to a Productivity Commission inquiry that, in return for tax concessions, clubs would be in a good position to provide childcare facilities.

It based its proposal on a report ClubsNSW commissioned from the McKell Institute (a Labor think tank), which argued that up to one-third of the 4000 clubs in Australia that currently paid income tax could gain tax exemptions if they diversified into both aged care and child care. With cheap meals and plenty of pokies thrown in, it gives a whole new meaning to cradle-to-grave welfare.

Governments that were once a check on the ambitions of the gambling industry are now enthusiastic supporters. The Newman Government is particularly gung-ho about turning Queensland into a gambling mecca.

It has shortlisted a Cairns casino and hotel project on which the Chinese developers plan to spend $8.15 billion. Although meant to cater mainly for tourists and international high rollers, it includes plans for 1500 poker machines, which traditionally have been of no interest to Asian gamblers.

The Queensland Government also has given preliminary approval for another giant project with Chinese financial backing on the Gold Coast valued at $7.5 billion. And it is offering another casino licence for Brisbane. Such grand plans - on a bigger scale than anything previously seen in Australia - may not translate into reality but it will not be for want of urging from the state Government.

Tim Costello, chair of the Australian Churches Gambling Taskforce, told me this week his concern was that the real reason international high rollers wanted to come to Australia was to launder money.

There is already a casino in Cairns. I can't imagine how this project, which is 3½ bigger than Barangaroo (Packer's casino development in Sydney), could be viable other than through junkets and laundering money.

As the ABC's Four Corners revealed this week, so called junket operators in Macau organise visits by high rollers to casinos, including providing them with credit. It is big business and the companies often have links to organised crime. Singapore, which has opened two mega-casinos in recent years, has refused to allow Macau-based junket companies to use its venues. Australia has no such blanket restrictions, though junket companies are subject to probity checks.

Perhaps the saving grace will be that the new Australian facilities, if they materialise, will not make a major contribution to problem gambling by Australians. But perhaps not. If Costello is correct and if the authorities crack down on money laundering, say by banning junket operators as in Singapore, then the casinos will have another sure fire way of making money - poker machines.

The Productivity Commission's 2010 report calculated total gambling losses in Australia at more than $19 billion in 2008-09, a tripling over 20 years. It found that pokies were the gambling drug of choice for 75-80 per cent of Australia's 115,000 problem gamblers.

Though relatively few in numbers, they accounted for 40 per cent of total losses on poker machines. Xenophon's office estimates the current number of poker machines in Australia at 198,096, including more than 95,000 in NSW and almost 43,000 in Queensland.

Casinos in Hobart, Launceston, Darwin, Alice Springs and Adelaide all started without poker machines but have now all installed them. In at least one year for which figures are available, Crown casino in Melbourne made more money from pokies than from high rollers.

Both Costello and Senator Xenophon believe it is only a matter of time before poker machines are allowed at Barangaroo, although the development has been approved on the basis of catering solely to high rollers.

"James Packer himself has said he is trying something that has never been done anywhere else in the world," Xenophon told me. "I can't see how it is going to work without there eventually being pokies."

Mike Steketee is a freelance journalist. He was formerly a columnist and national affairs editor for The Australian. View his full profile here.