Australia's Gambling Industries - Productivity Commission

The Commission’s treatment falls between the two approaches typically taken by
those estimating costs and benefits for gambling. Many studies of the costs of
gambling treat all the expenditure by problem gamblers as a cost and presume that
problem gamblers receive no benefit at all in exchange for their expenditure. The
alternative approach treats the consumption of gambling in the same way as other
products. This means that problem gamblers’ surplus is very large. This latter
approach assumes that, as problem gamblers choose to gamble at that level, they do
so because the benefits exceed or are matched by the cost, including all the other
costs in the form of unhappiness, marriage breakdown etc that are borne by the
problem gambler.
The Commission has considered that both the approaches are unrealistic. Arguably
there is some benefit gained by problem gamblers from their activity — all their
expenditure cannot be considered to represent a net cost. Conversely, it is equally
unrealistic to presume that problem gamblers consumption decisions are fully
informed and perfectly rational.
Total benefits are the sum of the benefits estimated for recreational gamblers and
the value of benefits (typically negative) estimated for problem gamblers.
C.4 The results
The estimates of consumer surplus for recreational, problem and all gamblers and
for different forms of gambling are presented in the following tables.
Table C.5
Estimated consumer surplus retained by recreational gamblers
1997-98 ($ million)
Range
Wagering 410 — 666
Lotteries 427 — 693
Scratchies 77 — 124
Gaming machines 1 404 — 2281
Casino games 305 — 495
Other 129 — 210
All gambling 2 745 — 4 460
Source: PC estimates.
C.24 GAMBLING