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Jerome García December 1, 2023 3 min read
Super Funds in Australia Reevaluate Gambling Stocks Investment
Aristocrat announced its plans to host an ESG day, inviting some of its biggest investors, including superannuation funds in Australia
Over the last few years, Australia initiated changes to its gambling industry. This move comes amid growing concerns about more people being affected by problem gambling and punters losing more per capita than any other country. Losses surpassing hundreds of millions of dollars every month result in an estimate of more than AU$20 billion ($13.2 billion) annually, a figure that underlines that gambling is a serious public health issue in Australia.
While punters continue to lose money, gambling stocks are on the rise. As suggested by a newly released report by Bloomberg, over the last 10 years, gambling stocks soared an average of 300%. This result reaffirms the potential of the sector, its expansion, and designates it as lucrative for investments.
With gambling stocks on the rise, superannuation funds are grappling with the ethical implications of benefitting from such investments. Considering the negative impact of gambling, some funds find it increasingly more difficult to justify their investments in gambling stocks. At the same time, such investments prove to be controversial from an ESG point of view.
Recently, the leading developer of gambling machines and major gaming and entertainment company, Aristocrat, confirmed its plans to hold an event devoted to ESG. The company invited some of its biggest investors, including a few of the biggest superannuation funds in Australia to the event that will be taking place in Sydney on December 5, 2023.
Investment in Gambling, a Controversy from an ESG Point of View
According to Bloomberg, AustralianSuper, Australia’s largest super fund, is likely the one that has the biggest gambling holdings with an estimate of AU$2.7 billion ($1.79 billion) in shares. It is the default investment option for the fund unless members select a different savings strategy. Mark Delaney, the CIO of the $300 billion fund, spoke on the topic and explained: “Gambling is a classic ESG issue.”
Moreover, he outlined: “It’s one whereby the social appetite and the regulatory environment evolves over time, and we need to be forward-looking about how we do it.” Despite the controversy between gambling and ESG, the fund doesn’t plan divestments from gambling.
Currently, the investments of retirement savings by superannuation funds in Australia is publicly accessible information. Yet, many residents are not aware in what sectors are their pensions invested.
It is unclear whether the controversial connection between gambling and ESG will result in the transitioning of funds. Compared to other stocks, the gambling sector remains one of the best bets in Australia when it comes to investment.