AUSTRALIA S GAMBLING INDUSTRIES - INQUIRY

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1 Mr Gary Banks Chairman Productivity Commission PO Box 80 BELCONNEN ACT 2616 Dear Mr Banks AUSTRALIA S GAMBLING INDUSTRIES - INQUIRY I refer to the Issues Paper issued September 1998 seeking submissions to the above Inquiry which is being undertaken by the Productivity Commission. Pease find attached the ABS submission to the inquiry. It focuses on item (h) as specified in the scope of the Inquiry: the adequacy of ABS statistics invoving gambing. If there are any queries about the submission, Inquiry staff shoud contact me on teephone (02) or by e-mai at russe.rogers@abs.gov.au. Yours sincerey (signed and sent RR) Russe Rogers Assistant Statistician Services and Sma Business Statistics Branch 21 December 1998

2 PRODUCTIVITY COMMISSION INQUIRY INTO AUSTRALIA S GAMBLING INDUSTRIES SUBMISSION BY THE AUSTRALIAN BUREAU OF STATISTICS 1. Introduction In referring Austraia s gambing industries to the Productivity Commission for inquiry, the Treasurer specified as part of the scope of the inquiry the foowing: "(h) the adequacy of ABS statistics on gambing". The purpose of this submission is to provide to the inquiry, information on the existing range of ABS statistics on gambing, the background and difficuties in providing statistics on gambing as we as ABS current and future pans for statistics in this fied. 2 In considering the issue of gambing statistics it needs to be recognised that there are two main views for which statistics can be

3 compied. First, it can be considered from a demand or expenditure side view (ie expenditure by individuas and househods on gambing services). This view from the individua or househod perspective might aso encompass measuring the socia effects of gambing and the impact it has on peope s ives. Aternatey, gambing activity can be considered from a suppy or income side view (ie the income generated by businesses providing gambing services). 3 There are three major sources of quantitative nationa data in respect of gambing. On the demand side the ABS Househod Expenditure Survey (HES) provides estimates of househods net expenditure on gambing. On the suppy side the Tasmanian Racing Commission produces an annua pubication on Austraia s Gambing Statistics which provides comprehensive data on net takings from gambing. The data in this pubication are sourced from the various State and Territory governments tax and reguatory bodies in respect of gambing. The other major source on the suppy side is the ABS survey of the gambing industries undertaken in respect of Section 2 beow discusses in more detai the current ABS statistics from the demand side (ie the HES), whie Section 3 addresses the issue from the suppy side (ie outines in more detai the ABS survey of the gambing industries). Section 4 outines ABS future pans for statistics reating to gambing. Section 5 provides some concuding remarks as to the adequacy of ABS statistics on gambing.

4 2. Gambing demand side statistics 5 Data on net expenditure on gambing by Austraian househods are coected in the Househod Expenditure Survey (HES) which is conducted every five years and is designed to provide information on the spending patterns of Austraian househods. Data in the HES are coected over a tweve month period from a sampe of househods and the estimates are weighted up to form estimates for the tota number of househods in Austraia. Househods are seected in the survey for a two-week period and during that period are requested to record in a diary a income and expenditures, incuding those from gambing during that period. The atest data avaiabe are from the HES. Estimates of net expenditure on gambing by Austraian househods in and are attached (gambe1.xs). The estimates are presented for a range of different types of gambing expenditure. 6 The estimates of expenditure on gambing from the HES are net of winnings. The estimates are derived by deducting from the respondents reported payouts any winnings which resuted from their expenditure on gambing. For some househods, expenditure on gambing may therefore be a negative expenditure. 7 In the HES, Austraian househods reported an average net

5 expenditure on gambing of $5.17 per week From this the tota yeary aggregate expenditure for Austraian househods is estimated to be $1,784 miion. 8 There are a number of potentia sources of differences between demand estimates (ie net expenditure on gambing services by househods) as measured by HES and suppy estimates (income by businesses providing gambing services) as measured by industry surveys. These incude reporting issues (eg househoders may have difficuty in recaing and isoating gambing expenditure separatey from other forms of expenditure such as food, drink and entertainment and/or may more readiy reca winnings as opposed to osses) and conceptua differences (eg HES excudes expenditure by overseas visitors to Austraia whereas they are incuded in industry estimates). However, the suppy estimates for of $6,972 miion as recorded in the Tasmanian Racing Commission pubication Austraian Gambing Statistics to indicate a very significant degree of under reporting in the HES which is unikey to be expained by the reporting errors mentioned above. This ceary indicates that respondents are deiberatey faiing to report the fu extent of their gambing activities. This may be due to a concern that they have that other members of the househod and ABS staff wi see the diary of expenditures and may judge their gambing activities as excessive and/or anti socia. These difficuties are demonstrated in the attached, to the extent that the HES estimates show househods in NSW, SA, WA and NT a

6 with negative expenditure (or overa winnings) on the TAB, on course betting etc for In addition to the quantitative data from the HES, the ABS has aso coected from househods (as part of its Popuation Survey Monitor (PSM)) a range of data for the period 1993 to 1998 on the incidence of gambing incuding type of gambing activity and, for the most recent years, information on the potentia for internet gambing. Other than these two sources ABS has no other data that shows the impact of gambing on peope s ives. Some resuts from these coections are attached (gambe3.xw). 3. Gambing suppy side statistics 10 As part of its service statistics strategy the ABS has been activey re-aocating resources to improve the data coection program and increase the range of information avaiabe in respect of the services sector. A key eement of the strategy is a program of in depth studies of seected service industries. Within that program, a detaied study was undertaken in of businesses invoved in the sport, recreation and gambing industries. The objectives of the study were to provide information on the nature and structure of businesses invoved in these industries. The survey covered businesses in the foowing industries: pubs, bars and taverns

7 hospitaity cubs sport otteries casinos TABs other gambing services. 11 Information coected from businesses in the survey incuded: empoyment takings from gambing by type of gambing other sources of income expenses incuding abour costs profitabiity number of gaming machines 12 Resuts from the study were pubished in a range of pubications. The most reevant to this inquiry was Gambing Industries, Austraia, (Cataogue No ). This pubication compements the existing data on Austraian Gambing Statistics from the Tasmanian Racing Commission in that it provides simiar estimates on net takings from gambing cassified by type of gambing. The pubication aso provided information on the gambing venue and type of business providing the gambing services, as we as information on the cost structures, profitabiity and empoyment of

8 the industry. Data were aso presented by State and by size of business. In another pubication tited Cubs, Pubs, Taverns and Bars, Austraia (Cataogue No ) data are presented separatey for businesses with gambing faciities and for businesses without gambing faciities. 13 More detaied tabuations from the study are avaiabe on request. 14 In addition to the above coections, the ABS conducts a monthy survey which coects data on retai turnover of businesses in the retai and seected services industries. Resuts are pubished in Retai Trade, Austraia (Cataogue No ). Incuded in that survey are cubs, pubs, taverns and bars. Estimates of net takings from gaming machines are avaiabe for these industries on a monthy basis and were the subject of a artice on gambing in the October 1996 issue of A copy of the Specia Artice is attached (provided in hardcopy ony). An update of this artice is currenty being produced and data up to June 1998 wi be reeased shorty. 4. Future pans (a) Demand side statistics 15 A further Househod Expenditure Survey (HES) is being conducted in respect of The wording of the gambing items have been varied to

9 try to improve the reporting of this item. However, these changes are unikey to substantiay improve the reporting of gambing expenditure, and there is no reason to beieve that this survey wi be any different to earier HES coections in terms of reporting probems in respect of gambing osses. Unfortunatey, within the broader scheme of a HES design, it is considered highy unikey that such reporting probems can be fuy addressed in a systematic fashion. The probems with accurate reporting of gambing expenses in HES are an internationa probem, not just restricted to Austraia. 16 The PSM coection on the incidence of gambing is user funded. Its continuation wi be dependent on the continued avaiabiity of such funding. It may be possibe to add new areas of questioning if the funding was provided. (b) Suppy side statistics 17 Subsequent to the study, annua studies have been undertaken of the casinos industry measuring its growth and performance over the ast three years. 18 ABS is currenty undertaking another study of gambing industries. The survey, in respect of , is simiar in scope and content to the gambing industries survey, athough information about internet gambing is being coected for the first time. Preiminary resuts are

10 schedued to be reeased in Apri 1999 with a fina pubication to be issued in Juy In terms of future coections, the program of service industries studies is currenty being reviewed. In spite of the redirection of resources to service statistics, the resources for the program are imited, athough on occasions they have been suppemented by user funding. The incusion of gambing industries in the future program wi be dependent on user requirements and the reative cost of undertaking the coection. It is expected that simiar suppy side data wi continue to be avaiabe on a periodic basis. 5. Concuding Remarks 20 In terms of suppy side statistics the ABS considers that the ABS program of coections reating to the gambing industries, in conjunction with the comprehensive annua information provided by the Tasmanian Racing Commission, have and wi for provide a comprehensive picture of the economic impact and significance of the gambing industries. The continued incusion of gambing industries in the ABS program of service industry studies, which is currenty being reviewed, wi be dependent on user requirements and the avaiabiity of resources. 21 In reation to demand side statistics the ABS recognises that the

11 information avaiabe is imited. The HES data on gambing is significanty under-reported and hence any anaysis based on, for exampe income distribution, may be questionabe. It may be possibe for the ABS to design and deveop a househod survey specificay focussed on gambing activity and its impact on individua and famiy we-being that may overcome some of the probems associated with the HES. However, the precise extent to which they coud be overcome, woud be probematic and woud need to be the subject of considerabe research and investigation. Austraian Bureau of Statistics December 1998