The Real Winners in Gambling

Australian Report Calls for Reforms

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By Father John Flynn, LC

ROME, JULY 4, 2010 ( A lucky person just won a $50 million dollar lottery prize in Canada, but while some win, concerns continue over the social impact of gambling.

An example of this is the protracted debate in the Massachusetts state Senate over a proposal to allow three casinos in the state. Supporters of the bill argue that the casinos will create jobs and prevent locals from going to other states to spend their money, the Boston Globe reported June 23.

Critics, however, are worried about problem gamblers and other side effects such as crime and drug use. After seven days of debate over the proposal on Wednesday, Senate President Therese Murray said that no further delays would be allowed, the Boston Herald reported June 30.

The vote took place on the night of July 1, with the Senate approving three casinos, the Boston Globe reported July 2. What remains now is to reconcile the Senate version of the bill with that of the House that had passed its own legislation approving casinos in April.

While gamblers are lured by the temptation of easy money, an article published prior to the Canadian lottery draw alerted readers to the improbable chances of success.

On June 4, the Lotto Max lottery total grew to $50 million after not producing a winner. Nobody won, but Canadians had spent over $60 million in lottery tickets, the National Post newspaper pointed out June 24.

A week before the eventually successful draw, another $124 million was spent on tickets in more vain attempts to win.

The article explained that a ticket holder has a one-in-620,000 chance of winning one of the runner-up prizes, and a one-in-28-million chance of grabbing the top prize.

Mathematicians who were quoted in the article said that you are more likely to be struck by lightening three times in your life than win the prize, or to land on heads 25 times in a row when tossing a coin.


The only real winners in gambling are the governments and those running the business. With regard to governments, the Wall Street Journal commented in a May 11 article that the recession is forcing state governments — faced with record deficits — to turn to vices to generate revenue. 

In Ohio, after years of opposition to gambling, ground was recently broken on a casino that will replace a car plant. Meanwhile Oakland, California, has begun to tax sales of medical marijuana and other states are considering whether to legalize pot sales. Others have loosened laws that put restrictions on Sunday alcohol sales. According to the Journal, about a dozen states have recently discussed or passed plans to ease restrictions on gambling.

Then, there are the clubs and casinos. The Australian situation was described in a March 10 article published in the Sydney Morning Herald newspaper.

Clubs in the most populous state of New South Wales admitted that almost $800 million of their annual revenue, around 40% of their poker machine revenue, could come from problem gamblers, the article affirmed.

Concern over the effects of gambling led to a study by the Australian Productivity Commission, which was released by the federal government June 23.

Australians have always been keen gamblers, but as the report explained, the liberalization of laws in the 1990s led to rapid growth in opportunities to wager.

In fact, the total recorded expenditure (losses) in Australia reached just over $19 billion in 2008-09, or an average of $1,500 per adult who gambled.

For a population of just over 21 million people around the country, 5,700 hotels and clubs provided gaming opportunities in 2008-09, according to the report. As well, there were 4,500 TAB outlets, where people can bet on racing and sports. There were also 4,700 lottery outlets and 13 casinos. 

The changes following the relaxation of laws meant that the gaming machine and casino share of spending rose from 40% of gambling expenditure in 1986-87 to 75% in 2006-07. There were 198,300 electronic gaming machines (EGM) in Australia in 2009, with 97,065 machines in New South Wales alone.


The importance of gambling as a source of revenue is clearly evident in the data published in the report. Hotels derived 28% of their revenue from gambling, clubs 61%, and casinos 78%.

Annual revenue per EGM was around $59,700 in 2008-09. Annual gaming machine losses per EGM player averaged around $3,700 in New South Wales; $3,100 in Victoria and $1,800 in Queensland.

More gambling has produced a windfall for state governments and they now rely on it as a major source of income. State tax revenue from gambling was $5 billion in 2008-09 — 10% of all state tax revenue. The state of Victoria had the highest tax dependence, at 13%.

When it comes to problems caused by gambling the report argued that the majority of people use it as an enjoyable bit of relaxation and that many forms of gambling pose no great risks.

There is, however, considerable disquiet over people who regularly use poker machines. Gaming machines account for 62% of total gambling expenditure. According to the report around 600,000 adults play at least weekly. The data varies, but surveys show that around 15% of these regulars — 95 000 people — are problem gamblers. 

Estimates of this as a percentage of the adult population range from 0.7% to 1.7%. This might seem nothing to worry about, and in fact the report noted that some in the gambling industry use this to argue that it is an issue of little significance. 

It’s not so trivial, the report argued, when put in context. Only around 0.15% of the population are admitted to hospital each year for traffic accidents and around 0.2% of the population are estimated to have used heroin in the preceding year. “Small population prevalence rates do not mean small problems for society,” the commission asserted.


The harm caused through problem gambling includes suicide, depression, relationship breakdown, lowered work productivity, job loss, bankruptcy, and crime, according to the report.

One survey in 2008 found that gambling was the most common motivation for fraud and that the average loss was $1.1 million per incident. 

In addition there are what the report termed “ripple effects” of problem gambling. For every problem gambler others are affected, ranging from family members, friends and colleagues. 

A recent survey carried out in the state of Tasmania found that half those asked said they personally knew someone who was experiencing serious problems with gambling.

When it comes to putting a monetary value on problem gambling it is difficult to quantify it exactly, the report admits. Nevertheless, conservative estimates put the cost at several billion dollars annually.

The report acknowledged that in the last decade governments have introduced regulations to reduce the negative impact of gambling. At the same time the commission called for a more coherent and effective policy.

Among the measures the report suggested was reducing the speed with which the gaming machines operate. If played at a high speed it is possible to lose as much as $1,500 in one hour.

Other steps that could improve matters is to limit the amount of cash that players can feed into machines at any one time, and also to lower the limit as to how much can be bet at a time.

Moving ATMs away from gaming floors and imposing a daily cash withdrawal limit in gaming venues would also help some gamblers, the report added.

Gambling revenues tempt governments with an easy solution to reducing budget deficits, but a high cost to many families and to society as a whole.

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