Australia's Gambling Industries - Productivity Commission

Debts
What is the level of gambling-related debt of problem gamblers?
Problem gamblers typically accumulate considerable debts. They include debts to
family and friends, debt with financial institutions, and sometimes significant debts
with the ‘informal’ lending sector, including loan sharks.
Information from other studies indicate that the level of gambling related debt can
be significant.
• Dickerson et al (1998, p. 80) reported that ‘… debts at the time of help-seeking,
range from $150 000 - $240 000 (excluding those with debts over $1 million).
Debts were owed to family (36%) major finance companies (37%) and credit
cares (28%).’
• Lesieur (1992) was reported in Goodman (1994) as finding that the mean
gambling-related debt of people in compulsive therapy in the United States
ranged from about US$53 000 to US$92 000.
• Goodman (1995) also reported that a typical middle-income compulsive gambler
who enters treatment usually owes about one to two years salary, while some
higher-income people often owe several million.
Information on debt was not available from the National Gambling Survey. The
Commission’s Survey of Clients of Counselling Agencies, however, found an
average debt level of $10 044. This appears low considering both the level of
spending by problem gamblers, the high rate of borrowing reported in the surveys,
and the information from other studies. Feedback from those conducting this survey
indicated that many respondents may have misunderstood this question. One
comment was that where, for example, the respondent had increased the mortgage to
finance gambling activities this was not considered by the respondent to be a
gambling-related debt.
Does debt represent a cost?
In itself, debt does not represent a cost to society as, when money is borrowed, it is
presumed to be used to generate an equivalent benefit (in terms of income if
invested or satisfaction if used for consumption) at least as large as the cost of the
debt, including any interest on repayment. Even bad debts do not represent a cost, as
the money would have been used elsewhere in the economy — either for investment
or consumption — to generate an equivalent benefit, irrespective of the source of
the funds.
MEASURING COSTS J.9