Australia's Gambling Industries - Productivity Commission

Box C.2
Estimating spend by problem gamblers in the absence of their
compulsion
The Commission looked at the median per capita outlay of regular recreational players
in each mode (except for table games, where the median for all recreational gamblers
was chosen) as the base for its estimate of the alternative spend by problem
gamblers.
The median was chosen rather than the average, because the average is skewed by a
few heavy gamblers. That is, the average is not representative of the behaviour of
most regular recreational gamblers, whereas the median is more representative of
what most of them spend.
In the case of casino table games, the median of all recreational gamblers was chosen
rather than the median of regular recreational gamblers, because there are very few
regular recreational gamblers in this category. The characteristic mode of play for
NPGs in the casino table game category, even ‘enthusiastic’ recreational players,
appears not to play weekly.
The elements of the calculations were as follows:
• Calculate the median of outlays per head of regular recreational gamblers in each
mode, except for casino table games where the median of all recreational gamblers
was used.
• Calculate the ratio of reported expenditure (loss) to reported outlays for all NPGs for
each mode of gambling. This accounts for the lower tendency of non-problem
(recreational) gamblers to recycle their winnings.
• Multiply the median outlay per head by this ratio to obtain an estimate of the
‘benchmark’ expenditure (loss) per head for regular NPGs
• Look at the per head outlays by each problem gambler in each mode. If this is
greater than the median outlay for that mode, assume that their recreational level of
expenditure is the estimated ‘benchmark’ amount.
• If their outlay is less than the median, then their expenditure is assumed to be their
reported expenditure.
Added together, this provides an estimate of what the expenditure by problem
gamblers would be if their spending patterns were similar to that of regular recreational
players.
Adjust the total of expenditure to match the known expenditure as reported by the
Tasmanian Gaming Commission and the ABS.
The reason that problem gamblers in each mode were identified as those outlaying
more than the median and those outlaying less than the median is that, in each
individual mode of gambling there are a number of problem gamblers whose primary
mode of gambling is different from the one in question. It would be unrealistic to
assume that those who spend little in that particular mode would increase their
expenditure to the level of regular recreational gamblers in that mode.
ESTIMATING
CONSUMER SURPLUS
C.19