Casino impacts: Lessons from Australia & New Zealand

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Dennis Walters
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1 Casino impacts: Lessons from Australia & New Zealand Professor Jan McMillen Centre for Gambling Research The Australian National University The Australian context A nation of gamblers - historical overview Gambling as big business, privatisation & expansion The central role of government regulation Three waves of Australian casino development 1970s: small, remote British club style (Tasmania, Northern Territory) 1980s: large, mass market American style (Qld, WA, SA, ACT) 1990s: big is better, focus on Asian highrollers (Melbourne, Sydney) New Zealand 1990s: Auckland and Christchurch Smaller regional casinos (Hamilton, Dunedin, Queenstown) The changing social and economic context Proliferation of gaming machines in clubs, hotels Internet gambling Problem gambling - Productivity Commission 1

Northern Territory) 1980s: large, mass market American style (Qld, WA, SA, ACT) 1990s: big is better, focus on Asian highrollers (Melbourne, Sydney) New Zealand 1990s: Auckland and Christchurch

2 Real gambling expenditure Real Expenditure ($m) 16,000 14,000 12,000 10,000 8,000 6,000 4,000 2,000 Racing Gaming Total Gambling Gambling expenditure as % of household disposable income (HDI), Expenditure as a % of HDI Racing Gaming Total Gambling

expenditure as % of household disposable income (HDI), 1976-2002 Expenditure as a % of HDI 4.0 3.5 3.0 2.5 2.0 1.5 1.0 0.5 0.

3 Expenditure by gambling activity Racing 12.6% Other 1.0% Casino 16.9% Gaming Machines (outside casinos) 59.4% Sports Betting 0.5% Lottery Products 9.6% Australia-Macao: similarities/differences Accepted culture of gambling, social traditions Rationales: Tourism growth, economic development Revenue Macao: upgrade/reform industry practices Australia has world s best practice Focus on Asian market + local market Urban casinos, residents way of life (?) Influence of US casino styles: adapted to local conditions (?) Cultural & political-legal differences = difficulties for US operators Macao = table games; Aust/NZ = more machines Competition between casinos, other gambling: But Aust/NZ = regional casino monopolies Macao = STDM Macao=small land mass; Aust/NZ = decentralised countries Competition from other Asian casinos Threat from internet gambling Aust/NZ = highly regulated; Macao = regulatory reform 3

Australia has world s best practice Focus on Asian market + local market Urban casinos, residents way of life (?) Influence of US casino styles: adapted to local conditions (?

4 What do we know about casino impacts? Costs and benefits are shaped by the fit between the casino/s and the local community Impacts are dynamic, vary over time & between casinos Need for longitudinal studies, comparative analysis Competition tends to result in aggressive commercial practices can lead to market failure, costs problem gambling, erodes consumer benefits Consolidated economic power can result in capture, corruption, regulatory failure Sustainable economic performance depends on stable markets management of competition & public confidence Management is a key variable in maximising local benefits Proactive policy initiatives can ameliorate negative impacts not revenue neutral, costs to industry and public services Counting the costs and benefits Predicted vs actual impacts Economic impacts Disagreements over economic models, methodologies Difficulty of identifying causality, effects of externalities Relationships between social & economic impacts What data are currently available? Quantitative and qualitative national level data, local area data relevant issues and indicators data currency, accessibility, validity practicality for specific, ongoing applications A practical, flexible & cost-effective methodology 4

Competition tends to result in aggressive commercial practices can lead to market failure, costs problem gambling, erodes consumer benefits Consolidated economic power can result in capture,

5 Economic development Data gaps result in estimates, not actual measurement Open to manipulation, bias Industry & government funded research need for independence Construction/refurbishment stage + operational stage different costs & benefits to the local community Tourism growth has been limited, variable Needs an integrated strategy, events, conventions Tourism benefits are vulnerable to external forces Benefits from rents, public infrastructure, urban redevelopment Multiplier effects are unknown Employment Benefits are illusory (job displacement) Equilibrium models not suitable for local area analysis (aggregate estimates) Need for data specific to each region/community level of unemployed resources, % low income earners, casual workers, etc Impacts on local business Varies, depending on links to casino & casino performance Restaurants, other leisure facilities Assumptions in equilibrium models affect the estimates Models aggregate impacts, but they vary across the diverse range of local sectors Qualitative data may be valid, but not reliable basis for judgement Local business statistics rarely complete, reliable Need for triangulation of data sources, cross-check 5

external forces Benefits from rents, public infrastructure, urban redevelopment Multiplier effects are unknown Employment Benefits are illusory (job displacement) Equilibrium models not suitable for

6 Social impacts Impacts on community life: lifestyle, community wellbeing entertainment patterns, cultural & sporting activities community pride, perceptions of gambling impacts Surveys of behaviour, participation, community attitudes often snapshots, few longitudinal studies data not available for all communities (cultural groups, tourists) data sets are inconsistent across regions different timeframes, lack currency Crime: a key issue for effective regulation, policy Criminal involvement, integrity of casino operations Australian regulatory model has set international standards Community crime = relatively successful Need to differentiate casino-related crime from other factors Causal relationships cannot be assumed Casino crime Money laundering, junkets Problem gambling 2.1% have gambling problems (PC s evidence, 1999) generate 33% of gambling expenditure problem gambling can affect anyone, no psychiatric or psychological predictor affects individuals, families & community occurs along a continuum The extent of problems varies by type of gambling Gaming machines are the major source of gambling problems (9.27% of regular players) Lotteries the lowest (0.28%) Public costs: Financial, living standards Relationships, family breakdown Lost productivity Crime, legal costs Public services, community agencies 6

timeframes, lack currency Crime: a key issue for effective regulation, policy Criminal involvement, integrity of casino operations Australian regulatory model has set international standards

7 How to measure problem gambling? SOGS = clinical populations CPGI = designed for general population Minimum Data Set collected by support services demographic profile of service client their gambling activities the impacts of gambling activity on individuals, families analysis of clients use of the service and service activity How to measure community problems? Measures of community wellbeing and harm Cultural values and practices Identify at risk groups (low income, women, cultural groups, isolation) Impacts on community support services Problem gambling is a public health issue Characteristics of machine & venue design Environmental factors - eg access Solutions: Australia & NZ have developed a range of strategies for: support services & treatment for people with problems consumer protection, prevention harm minimisation policies, regulation Responsible gambling programs, concepts of social responsibility Shifts regulatory priority to consumer protection Raises question about individual or corporate responsibility Implications for governance, policy and litigation Corporate governance self-regulation on consumer protection preferred before 1999 duty of care, litigation individual responsibility has prevailed in common law cases Onus of responsibility has shifted 7

gambling activity on individuals, families analysis of clients use of the service and service activity How to measure community problems?

8 How can impact methodology be improved? Need for baseline data (validity, reliability, standardisation) Practicalities of integrating social issues/data into economic models Causal relationships cannot be assumed Layered geo-mapping Community characteristics/profile, social disadvantage Distribution, density and intensity of gambling activity, expenditure, etc Prevalence of problem gambling (MDS) Needs analysis and help-seeking behaviour Alternative social infrastructure & recreational facilities How can the impact model utilise/incorporate qualitative data? Mechanisms for community input, consultation Is research a help or a hindrance? The value of independent scrutiny and review the risks of capture and loss of credibility the risks of public backlash and loss of legitimacy The case for sustainable development social and economic sustainability is it achievable? The need for an integrated approach to research, policy & industry development 8

9 Casino impacts: Lessons from Australia & New Zealand Professor Jan McMillen Centre for Gambling Research The Australian National University 9

Public Health Association of Australia: Policy-at-a-glance Gambling & Health Policy

Public Health Association of Australia: Policy-at-a-glance Gambling & Health Policy This policy should be read in conjunction with existing PHAA Gambling Industry policy Key message: Summary: Audience: