Gambling in New Zealand: A National Wellbeing Analysis A report prepared for the Gaming Machine Association of New Zealand April 2021 www.tdb.co.nz TDB Advisory Limited L5, Wakefield House 90 The Terrace P.O. Box 93 Wellington New Zealand Email: [email protected] Team members involved: Phil Barry George Nelson [email protected] [email protected] 021 478 426 027 8555 022 Acknowledgements We would like to thank all those in the industry, government and community who met with us, reviewed drafts of this report and generously shared their valuable insights and experiences with us as this report was being prepared. We would also like to thank the independent referees, Professor Paul Delfabbro of the University of Adelaide and Professor Lew Evans of Victoria University of Wellington for their invaluable contributions on drafts of this report. Responsibility for the final product rests solely with the authors, TDB Advisory Ltd (TDB). Disclaimer This report has been prepared by TDB with care and diligence. The statements and opinions given by TDB in this report are given in good faith and in the belief on reasonable grounds that such statements and opinions are correct and not misleading. However, no responsibility is accepted by TDB or any of its officers, employees, subcontractors or agents for errors or omissions arising out of the preparation of this report, or for any consequences of reliance on its content or for discussions arising out of or associated with its preparation. TDB Advisory Ltd Gambling in New Zealand: A National Wellbeing Analysis 2 Table of contents Table of contents................................................................................................................................. 3 Glossary ............................................................................................................................................... 5 Key findings ......................................................................................................................................... 6 Summary report .................................................................................................................................. 7 Introduction ........................................................................................................................................ 7 Gambling in New Zealand ................................................................................................................. 7 Framework ......................................................................................................................................... 9 Costs and benefits quantifiable in monetary terms .......................................................................... 10 Costs and benefits not quantifiable in monetary terms .................................................................... 12 Conclusions ..................................................................................................................................... 13 Introduction ................................................................................................................................ 15 1.1 The context for this study ...................................................................................................... 15 1.2 Historical context of gambling in New Zealand ..................................................................... 16 1.3 Gambling today ..................................................................................................................... 18 1.4 Data on gambling in New Zealand ........................................................................................ 19 1.5 Structure of this report .......................................................................................................... 19 Gambling in New Zealand ......................................................................................................... 20 2.1 Introduction ........................................................................................................................... 20 2.2 Gambling participation .......................................................................................................... 20 2.3 Regulatory environment ........................................................................................................ 23 2.4 The gambling industry .......................................................................................................... 24 2.5 Industry summary ................................................................................................................. 29 2.6 Gambling harm ..................................................................................................................... 30 2.7 Harm minimisation and prevention ....................................................................................... 34 2.8 Offshore online gambling ...................................................................................................... 36 Framework .................................................................................................................................. 37 3.1 Introduction ........................................................................................................................... 37 3.2 National cost-benefit analysis ............................................................................................... 37 3.3 Application of NCBA to gambling .......................................................................................... 41 Costs and benefits quantifiable in monetary terms................................................................ 44 4.1 Introduction ........................................................................................................................... 44 4.2 Consumption-side ................................................................................................................. 44 4.3 Production-side ..................................................................................................................... 54 4.4 Gambling duties .................................................................................................................... 64 4.5 Overall estimates of the costs and benefits quantifiable in monetary terms ......................... 65 TDB Advisory Ltd Gambling in New Zealand: A National Wellbeing Analysis 3 Costs and benefits not quantifiable in monetary terms ......................................................... 66 5.1 Introduction ........................................................................................................................... 66 5.2 Costs not quantifiable in monetary terms ............................................................................. 66 5.3 Benefits not quantifiable in monetary terms .......................................................................... 80 5.4 Overall assessment of non-quantifiable costs and benefits of gambling .............................. 81 The overall costs and benefits of gambling ............................................................................ 83 6.1 Sensitivity analysis ................................................................................................................ 84 Conclusions................................................................................................................................ 86 Bibliography ............................................................................................................................... 89 Appendix 1: The Problem Gambling Severity Index (PGSI) .......................................................... 94 Appendix 2: Prevalence of gambler types by country .................................................................. 95 Appendix 3: Estimate of expenditure by gambler types ............................................................... 98 Appendix 4: Estimates of price elasticities in the literature ....................................................... 101 Appendix 5: 2019 Class 4 grants breakdown ............................................................................... 102 TDB Advisory Ltd Gambling in New Zealand: A National Wellbeing Analysis 4 Glossary Adult Person over the age of 18. Consumer surplus The net benefit obtained by consumers because they are able to purchase a product for a price that is less than the amount they would be willing to pay. DIA Department of Internal Affairs. EGM Electronic gaming machine. Expenditure The net amount spent by people who gamble, that is, the total amount wagered less the amount returned in winnings. GMANZ Gaming Machines Association of New Zealand. Gross benefits Total benefits received. Low-risk gambler Gamblers with a score between 1 to 2 on the PGSI. This group will have answered 'never' to most of the indicators of behavioural problems in the PGSI and are unlikely to have experienced any adverse consequences from gambling. MoH Ministry of Health. NCBA National cost-benefit analysis. Net benefits Gross benefits minus costs. Net proceeds Revenue received by the gambling operator minus costs, levies and taxes. Moderate-risk gambler Gamblers with a score between 3 and 7 on the PGSI. This group indicate a moderate level of behavioural problems related to their gambling and may or may not have experienced adverse consequences from gambling. PGSI Problem Gambling Severity Index. Problem gambler Gamblers with a score between 8 and 27