The South Australian Gambling Industry
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SOUTH AUSTRALIAN CENTRE FOR ECONOMIC STUDIES ADELAIDE & FLINDERS UNIVERSITIES The South Australian Gambling Industry Final Report Commissioned by: South Australian Independent Gambling Authority Report prepared by: The SA Centre for Economic Studies June 2006 PO BOX 125, RUNDLE MALL, SOUTH AUSTRALIA 5000 PHONE (+61-8) 8303 5555 FAX (+61-8) 8232 5307 FOURTH FLOOR, LIGERTWOOD BUILDING, UNIVERSITY OF ADELAIDE Copyright notice © Independent Gambling Authority, 2007 This publication is copyright. Except as permitted under the Copyright Act 1968 (Commonwealth) or otherwise set out in this copyright notice, no part of this publication may be reproduced in any form or by any means, electronic or mechanical, or stored electronically in any form without prior permission in writing from the copyright holder. The Independent Gambling Authority is an incorporated instrumentality of the Crown in right of South Australia. This publication is intended for use in the public domain. It may be copied (including being copied electronically and stored as a computer file) provided that it is copied in its entirety, that it is not materially altered and that no fee (other than a fee reasonably referable to actual cost of copying) is charged. All rights reserved. ISBN 978-1-921070-26-6 (print) 978-1-921070-27-3 (web) Independent Gambling Authority Level 4 45 Grenfell Street Adelaide Post Office Box 67 Rundle Mall South Australia 5000 + 61 8 8226 7233 (voice) + 61 8 8226 7247 (facsimile) www.iga.sa.gov.au [email protected] The South Australian Gambling Industry - Phase 1: Profile of the Gambling Industry Contents Phase 1: Profile of the Gambling Industry Contents Page Abbreviations (i) Overview of this Report (iii) Executive Summary (v) 1. Introduction 1 2. The History of Gambling in South Australia 3 2.1 Introduction 3 2.2 Racing and Wagering 4 2.3 Lotteries 6 2.4 The casino 6 2.5 Gaming Machines 7 2.6 Other Forms of Gambling 8 2.7 Conclusion 9 3. Structure, Size and Scope of the Gambling Industry 10 3.1 Introduction 10 3.2 National Gambling Industries 11 3.3 Electronic Gaming Machines 14 3.4 Racing and Wagering 24 3.5 Lottery Products 28 3.6 Casinos 32 3.7 Minor Gambling 34 4. Changes and Trends in Gambling Behaviour and Participation 36 4.1 Introduction 36 4.2 National Gambling Behaviour 36 4.3 Electronic Gaming Machines 39 4.4 Racing and Wagering 41 4.5 Lotteries 44 4.6 Casino 45 5. Employment in the Gambling Industry 46 5.1 Introduction 46 5.2 Electronic Gaming Machines 47 5.3 Racing and Wagering 53 5.4 SA Lotteries 56 5.5 The casino 56 6. Impact of Gambling on Non-gambling Expenditures 57 6.1 Introduction 57 6.2 Effect of the Introduction of EGMs on Household Spending 57 6.3 The Household Expenditure Survey 60 The SA Centre for Economic Studies June 2006 Contents The South Australian Gambling Industry - Phase 1: Profile of the Gambling Industry Phase 1: Profile of the Gambling Industry Contents (continued ...) Page 7. Government Revenue, Payments and Administration 64 7.1 Introduction 64 7.2 Government Revenue Associated with Gambling 65 7.3 Government Payments Associated with Gambling 68 Bibliography 79 Appendix A: Terms of Reference 82 Appendix B: South Australian Tax Rates for Various Forms of Gambling 84 Appendix C: Interstate Comparison of Gambling Taxes 2005-06 86 Contributions to Phase 1 included from the following researchers: Michael O’Neil, Director Anthony Kosturjak, Senior Research Economist Paul Huntley, Research Assistant Disclaimer: This study, while embodying the best efforts of the investigators is but an expression of the issues considered most relevant, and neither the Centre, the investigators, nor the Universities can be held responsible for any consequences that ensue from the use of the information in this report. Neither the Centre, the investigators, nor the Universities make any warranty or guarantee regarding the contents of the report, and any warranty or guarantee is disavowed except to the extent that statute makes it unavoidable. June 2006 The SA Centre for Economic Studies The South Australian Gambling Industry - Phase 1: Profile of the Gambling Industry Page (i) Abbreviations ABS Australian Bureau of Statistics BES BreakEven Services CPSE Centre for Population Studies in Epidemiology EGM Electronic Gaming Machine(s) FaCS Department for Families and Communities (SA) FTE Full-time Equivalent HDI Household Disposable Income HES Household Expenditure Survey IGA Independent Gambling Authority na Not available nec Not elsewhere classified nfd Not further defined OESR Office of Economic and Statistical Research (Queensland) OLGC Office of the Liquor and Gaming Commissioner SACES South Australian Centre for Economic Studies SEIFA Socio-Economic Index for Areas (ABS) TRSA Thoroughbred Racing SA The SA Centre for Economic Studies June 2006 Page (ii) The South Australian Gambling Industry - Phase 1: Profile of the Gambling Industry June 2006 The SA Centre for Economic Studies The South Australian Gambling Industry - Phase 1: Profile of the Gambling Industry Page (iii) Overview of this Report The Independent Gambling Authority (IGA) commissioned the South Australian Centre for Economic Studies to undertaken this study into the South Australian Gambling Industry. The study proceeded in sequence ─ Phase 1 and then Phase 2 ─ and each phase was reported on separately. The two phases were: • Phase 1: develop, prepare and present a comprehensive report on the Profile of the Gambling Industry in South Australia; and • Phase 2: undertake further research and analysis and prepare a report on the Economic Impact of Gambling in South Australia. The two components of the study were specifically designed in such a way that any research questions or significant points of interest documented or highlighted in Phase 1, could then be examined further in Phase 2. So for example, in Phase 1 in Profiling the Gambling Industry we sought to report on employment in the gambling sector, whether employment had been drawn away from other sectors, the job intensity of the gambling industry and to provide comparative analysis across selected states. In Phase 2 we were concerned to analyse whether the structure of the industry favoured employment in hotels more than clubs, the hotels sector more than ‘other gambling services’ such as lotteries, and how venues with gambling facilities compared to those without gambling. We were also concerned with questions of distribution, impact, benefits and costs. The design of the study allowed for multiple research and econometric techniques to be used to examine the economic impacts of gambling. Phase 1 ─ A Profile of the Gambling Industry ─ sought to describe and summarise the history of gambling in South Australia, the size and structure of the industry, provide relevant interstate comparisons where appropriate and consider changes in trends in gambling behaviour and participation, change in employment, the impact of gambling on other expenditures and government revenue and payments arising from the gambling industry. Phase 2 ─ Economic Impact of Gambling ─ asks (and answers) the questions: • what is the economic contribution of the gambling industry; • what is the economic impact of gambling on other industry sectors, on other forms of expenditure, on employment patterns; and • what are economic benefits and costs of the industry. Phase 2 specifically addressed questions of distribution, expenditure switching from other household expenditures and between gambling sectors (e.g., from wagering to EGMs), who gambles, who and where are problem gamblers located, what are the economic benefits and costs of the gambling industry and what are the benefits (e.g., changes in consumer preferences, tourism) and costs (e.g., crime, problem gambling). The two phases are drawn together here in one, final report. The study commenced in August 2005 and was completed in March 2006. The draft report was then subject to peer review and final comments from the reference group overseeing the study. The final report was submitted at end June 2006. The SA Centre for Economic Studies June 2006 Page (iv) The South Australian Gambling Industry - Phase 1: Profile of the Gambling Industry The Final Report is set out in the following manner: • a single Executive Summary that includes an overview and discussion of the research findings from the two phases of the study; • Phase 1: Chapters 1 to 7; • Phase 2: Chapters 1 to 8; and • a separate bibliography and the appendices are shown at the end of each phase of the report. The researchers were not requested to provide recommendations to the Independent Gambling Authority. Peer Review and Editorial Comments The authors record their appreciation of the many people who assisted with the study in supplying data, making time available for interview and checking and verifying the accuracy of draft material. The IGA and the research reference group provided valuable feedback. We record our appreciation of the assistance provided by Ms Christine Walter (IGA) throughout the course of the study. Two independent peer reviewers provided very helpful comments and suggestions and we gratefully acknowledge these. Michael O’Neil Director SA Centre for Economic Studies June 2006 The SA Centre for Economic Studies The South Australian Gambling Industry - Phase 1: Profile of the Gambling Industry Page (v) Executive Summary The Independent Gambling Authority (IGA) commissioned the South Australian Centre for Economic Studies1 to prepare a profile of the South Australian gambling industry and to analyse the economic impacts of the gambling industry on particular industry sectors and the South Australian economy. A consolidated Executive Summary is included here covering the major research findings and conclusions from the two phases of the study. Phase 1 Research Findings: Profile of Gambling Industry While there is no comprehensive account of the gambling history of South Australia, early forms of gambling involved wagering on thoroughbred racing (Adelaide’s first race meeting was held in 1838), greyhound coursing and later, trotting in 1880.