The Productivity Commission is quite wrong when it says that the gambling industry in Australia produces a benefit. It estimates the benefit at between $150 million and $5 billion a year. The fact that the upper and lower end of its estimated benefit are so far apart indicates a certain amount of woolliness. Gambling creates no wealth at all for anyone. It merely shifts wealth from some people to other people. There is no value adding in the gambling “”industry”.
The Productivity Commission’s report into gambling which was published on Monday, delivered some alarming statistics. It said that more than 330,000 Australians have serious gambling problems, losing an average of more than $12,000 each a year. It linked the growth in gambling addition to the spread of poker machines throughout the country. It said Australia had 180,000 poker machines — more than half in licensed clubs NSW – accounting for 21 per cent of the world’s electronic gaming machines. Australia was second only to the United States in the number of poker machines in use. Australians lost about $6 billion a year on poker machines, accounting for more than half of the $11 billion worth of gambling losses nationally each year. Gambling addicts represented only 2.3 per cent of gamblers, but they lost $3.8 billion a year, or almost 35 per cent of all gambling losses.
The commission is to be congratulated for finding out the facts. It will enable governments to take informed action. Now that politicians can no longer rely on talk-back radio for their information sources (they might be getting a kick-back from the gaming industry), it is just as well that there is now an objective assessment on the extent of gambling in Australia upon which politicians can act.
Social campaigner Tim Costello, from the Victorian inter-church gambling taskforce, is right is saying that the report has revealed a large amount of problem gambling which cannot be dismissed – as the gambling “”industry” would have it — as isolated cases.
It seems that problem gambling is directly related to the prevalence of poker machines. NSW has the highest number of machines per head and the highest number of problem gamblers per head. Western Australia, which has no poker machines in pubs and clubs, and Tasmania reported the lowest levels of gambling problems.
The commission’s report called for an independent body to regulate the industry and advise governments on gambling policies. It also suggested gamblers be given more information about their chances of winning through “”wealth warnings”, similar to health warnings on cigarette packets. It noted that many gamblers did not understand the risks and said that the warnings should educate gamblers about the risks of excessive gambling, how to spot signs of an emerging problem and where to receive help and advice.
These recommendations, however, smack more of economic theory than social and psychological facts on the ground. The commission’s ideas smack of the economists view that perfect information will lead to rational choices in a perfect market. If such economic theories were correct no-one would put any money in a poker machine or play any casino game other than those with a skill element.
Rather we have to look at the of prevalence of gambling highlighted by the commission. Why is it so prevalent. Sure, Australia’s history with its convicts and incessant gamble with the weather to make a living from the land might make the place more likely to be a nation of gamblers. But then we also have a wowser streak which has manifested itself in various laws to restrict gambling and drinking. No; we should look at other more recent developments for a clue to what seems like a more recent surge in problem gambling. When we do so, we see state and territory governments up to their necks in the gaming industry. The states have been starved of taxes from other sources. They have had an ever narrowing of their tax bases, partly through their own fault in pursuing competitive federalism with tax exemptions and reductions to attract business. Constitutional restraints have further narrowed the states’ tax base and made them ever more reliant on the Commonwealth. Small wonder, then, that when the milch cow came in the form of gambling – an exclusive state and territory form of tax revenue – the states and territories milked it for whatever it was worth.
Indeed, Australia’s present gambling crisis can largely be put down to the constitutionally driven fiscal imbalance between the Commonwealth and the states. It is a minor version of the constitutionally driven American experience with guns.
As with the US guns, people are talking about a right to gamble, and rights to social enjoyment in a similar way that Americans talk about a right to bear arms. Those rights are only valid up to a point. The commission’s report shows us that we have gone to far with gambling. We have thrown poker machines in people’s faces. We have thrust them at people in every club and pub in NSW. Victoria has made a cargo cult of gambling. It is more than enough. We do not need to outlaw gambling. But we can reduce temptations without denying the rights of those who really want to have a fling. We can only do that if the states become less reliant on gaming revenue. The GST should help, but that may only stop the states promoting growth in gambling; it will will do little to wind it back. Gambling is demand driven, and that demand is created through advertising – usually of a misleading kind that emphasises ease of winning. Advertising can be tightened up and resilience to it is probably better improved through better general education — which improves critical faculties – than through specific warnings.