Australia's Gambling Industries - Productivity Commission
Australia's Gambling Industries - Productivity Commission 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
To the extent that borrowed money is not used to generate an equivalent benefit, this is already accounted for in chapter 5, where estimates have been made of the extent to which problem gamblers may not be getting ‘value for money’ on their expenditure on gambling. The failure to repay debts does, however, involve a transfer of money from various members of the community, and even when debt is repaid, the burden is often borne by other members of the family (chapter 7). Lesieur (1998) commented: The pathological gambler’s financial burden is chiefly borne by the family. Added debt may mean that fewer family expenditures are possible. The mortgage, rent, gas, electricity, telephone, and other bills may be late or overdue. In extreme cases, utilities are shut off, automobiles or furniture is repossessed, household items are sold, and there is the possibility of being evicted from an apartment experiencing a foreclosure on the mortgage. To get some idea of the possible magnitude of this transfer, the Commission assumed that half of the debts of problem gamblers represent a transfer from other members of the family. As this does not include debt that may have been paid off prior to seeking treatment, the true cost could be higher. How has the value of the debt transfer been calculated? To estimate the extent of the transfer of gambling related debts the Commission has used the following information: • the value of debt of $10 045 per problem gambler from the Commission’s survey of problem gamblers in counselling; • as the information on debt levels relates to gamblers in treatment, and these are generally those with the more extreme manifestations of problem gambling, the Commission has applied the average debt rates only to the number of people who are likely to be particularly severe problem gamblers — those scoring 10 or more in the SOGS — or 46 800 adults nationally; and • it is assumed that half of the value of debt is borne by other members of the family. As information was not available on the level of debt accumulation and repayment on an annual basis, this is an estimate of the extent of the transfer over the period of problem gambling — a ‘lifetime’ estimate. On the basis of the information from the Survey of Clients of Counselling Agencies that gambling problems have lasted for an average of 8.9 years, this is estimated to be equivalent to $26 million annually. J.10 GAMBLING
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- Page 199 and 200: it is likely to represent the more
- Page 201 and 202: Table J.1 presents the information
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- Page 229 and 230: of their gambling during the period
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- Page 233 and 234: Table J.10 continued People a Per p
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- Page 239 and 240: Table K.2 Summary of cost estimates
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To the extent that borrowed money is not used to generate an equivalent benefit, this<br />
is already accounted for in chapter 5, where estimates have been made of the extent<br />
to which problem gamblers may not be getting ‘value for money’ on their<br />
expenditure on gambling.<br />
The failure to repay debts does, however, involve a transfer of money from various<br />
members of the community, and even when debt is repaid, the burden is often borne<br />
by other members of the family (chapter 7). Lesieur (1998) commented:<br />
The pathological gambler’s financial burden is chiefly borne by the family. Added debt<br />
may mean that fewer family expenditures are possible. The mortgage, rent, gas,<br />
electricity, telephone, and other bills may be late or overdue. In extreme cases, utilities<br />
are shut off, automobiles or furniture is repossessed, household items are sold, and<br />
there is the possibility of being evicted from an apartment experiencing a foreclosure on<br />
the mortgage.<br />
To get some idea of the possible magnitude of this transfer, the <strong>Commission</strong><br />
assumed that half of the debts of problem gamblers represent a transfer from other<br />
members of the family. As this does not include debt that may have been paid off<br />
prior to seeking treatment, the true cost could be higher.<br />
How has the value of the debt transfer been calculated?<br />
To estimate the extent of the transfer of gambling related debts the <strong>Commission</strong> has<br />
used the following information:<br />
• the value of debt of $10 045 per problem gambler from the <strong>Commission</strong>’s survey<br />
of problem gamblers in counselling;<br />
• as the information on debt levels relates to gamblers in treatment, and these are<br />
generally those with the more extreme manifestations of problem gambling, the<br />
<strong>Commission</strong> has applied the average debt rates only to the number of people who<br />
are likely to be particularly severe problem gamblers — those scoring 10 or more<br />
in the SOGS — or 46 800 adults nationally; and<br />
• it is assumed that half of the value of debt is borne by other members of the<br />
family.<br />
As information was not available on the level of debt accumulation and repayment<br />
on an annual basis, this is an estimate of the extent of the transfer over the period of<br />
problem gambling — a ‘lifetime’ estimate. On the basis of the information from the<br />
Survey of Clients of Counselling Agencies that gambling problems have lasted for<br />
an average of 8.9 years, this is estimated to be equivalent to $26 million annually.<br />
J.10 GAMBLING