The Productivity Commission’s key findings -  26 Nov 1999
· Gambling provides enjoyment to most Australians, over 80 per cent of whom
gambled in the last year — spending about $11 billion — with 40 per cent gambling
· Gambling is a big and rapidly growing business in Australia, with the industries
currently accounting for an estimated 1.5 per cent of GDP, and employing over
100 000 people in more than 7000 businesses throughout the country.
· The main source of national benefit from the liberalisation of gambling has been the
consumer gains from access to a service that gives people enjoyment.
– Net gains in jobs and economic activity are small when account is taken of the
impact on other industries of the diversion of consumer spending to gambling.
· The principal rationales for regulating the gambling industries any differently than
other industries relate to:
– promoting consumer protection;
– minimising the potential for criminal and unethical activity; and
– reducing the risks and costs of problem gambling.

· Around 130 000 Australians (about 1 per cent of the adult population) are estimated
to have severe problems with their gambling. A further 160 000 adults are
estimated to have moderate problems, which may not require ‘treatment’ but
warrant policy concern.
– Taken together, ‘problem gamblers’ represent just over 290 000 people, or 2.1
per cent of Australian adults.

· Problem gamblers comprise 15 per cent of regular (non-lottery) gamblers and
account for about $3.5 billion in expenditure annually — about one-third of the
gambling industries’ market.

They lose on average around $12 000 each per year, compared with just under
$650 for other gamblers.

· The prevalence of problem gambling is related to the degree of accessibility of
gambling, particularly gaming machines.
· The costs include financial and emotional impacts on the gamblers and on others,
with on average at least five other people affected to varying degrees. For example:
– one in ten said they have contemplated suicide due to gambling; and
– nearly half those in counselling reported losing time from work or study in the
past year due to gambling.

The adverse impacts on individuals and the community, help explain the
ambivalence of most Australians about the gambling industries, despite their
widespread involvement:
around 70 per cent of people surveyed believed that gambling did more harm
than good
; and
92 per cent did not want to see further expansion of gaming machines.
· Quantification of the costs and benefits of the gambling industries is hazardous.
Uncertainty about key parameters constrained the Commission to providing low and
high estimates. For the gambling industries as a whole, estimates of their net
contribution to society, ranged from a net loss of $1.2 billion to a net benefit of $4.3

– This masks divergent results for different gambling modes, with lotteries
revealing clear net benefits, whereas gaming machines and wagering include the
possibility of net losses.
· Policy approaches for the gambling industries need to be directed at reducing the
costs of problem gambling — through harm minimisation and prevention measures
— while retaining as much of the benefit to recreational gamblers as possible.

· The current regulatory environment is deficient. Regulations are complex,
fragmented and often inconsistent. This has arisen because of inadequate policymaking
processes and strong incentives for governments to derive revenue from
the gambling industries.

· Restrictions on competition have not reduced the accessibility of gambling other
than for casino games. With the possible exception of casinos, current restrictions
on competition have little justification.
· Venue caps on gaming machines are preferable to state-wide caps in helping to
moderate the accessibility drivers of problem gambling. However, more targeted
consumer protection measures — if implemented — have the potential to be much
more effective, with less inconvenience to recreational gamblers.
· Existing arrangements are inadequate to ensure the informed consent of
consumers, or to ameliorate the risks of problem gambling. Particular deficiencies
relate to:
– information about the ‘price’ and nature of gambling products (especially gaming
– information about the risks of problem gambling;
– controls on advertising (which can be inherently misleading);
– availability of ATMs and credit; and
– pre-commitment options, including self-exclusion arrangements.

· In such areas, self-regulatory approaches are unlikely to be as effective as explicit
regulatory requirements
. In most cases, regulation can be designed to enhance,
rather than restrict consumer choice, by allowing better information and control.
· Counselling services for problem gamblers serve an essential role, but there is a
lack of monitoring and evaluation of different approaches, and funding
arrangements in some jurisdictions are too short term.

· Services, awareness promotion and research activities related to problem gambling
are likely to be most effectively funded from earmarked levies on all segments of
the gambling industry, with the allocation of funds independently administered.
· Internet gambling offers the potential for consumer benefits, as well as new risks for
problem gambling. Managed liberalisation — with licensing of sites for probity,
consumer protection and taxation — could meet most concerns, although its
effectiveness would require the assistance of the Commonwealth Government
· On the basis of available information, there is not a strong or unambiguous case for
significantly reducing gambling taxes, with the possible exception of lotteries. Any
changes would need to be incremental and carefully monitored.
· The mutuality principle, combined with lack of constraints on gaming machine
numbers, appears to be distorting the investment and pricing decisions of some
clubs, with impacts on competitors. Of the options for dealing with it, only tax action
at the state level appears feasible.
· Policy decisions on key gambling issues have in many cases lacked access to
objective information and independent advice — including about the likely social
and economic impacts — and community consultation has been deficient.

· An ideal regulatory model would separate clearly the policy-making, control and
enforcement functions.

· The key regulatory control body in each state or territory should have statutory
independence and a central role in providing information and policy advice, as well
as in administering gambling legislation. It should cover all gambling forms and its
principal operating criteria should be consumer protection and the public interest.