Reducing the Harms from Gambling - Speech, House of Representatives


In the 1980s, economist Gary Becker developed the theory of rational addiction. Rational addiction, which applies to any sort of addictive substance, is the notion that as an individual considers whether or not to take up an addictive substance they think rationally about the probability that they will get addicted to it and the costs and benefits of all of that—so, when a teenager takes their first smoke, they're thinking rationally about the long-term impact it will have on their lives if they become addicted; when somebody takes their first drink, they're thinking about the risk of addiction and, mathematically, quickly doing all the costs and benefits as to the lifetime impact; or, when someone gambles, there are also computing the costs and benefits and considering rationally the probability of addiction.

If this theory sounds crazy to you, it's because fundamentally it is. Behavioural economics has taught us that people aren't rational when it comes to addictive products. The awarding of the Nobel prize to Daniel Kahneman and Richard Thaler reflected the better understanding in economics of addictions being irrational—how we find ourselves eating more than we should, exercising less than we want to, smoking more than we want to, drinking more than we want to and gambling more than we want to.

Gambling has been recognised as a disorder by the American Psychiatric Association in their Diagnostic and Statistical Manual. It lays out nine indicators of a person with gambling disorder: (1) needs to gamble with increasing amounts of money to achieve the desired excitement; (2) restless or irritable when attempting to cut down or stop gambling; (3) repeated unsuccessful efforts to control, cut back on or stop gambling; (4) frequent thoughts about gambling, such as reliving past gambling experiences; (5) often gambles when feeling distressed; (6) after losing money gambling, often returns to get even, 'chasing losses'; (7) lies to conceal gambling activity; (8) has jeopardised or lost a significant relationship, job or educational opportunity because of gambling; (9) relies on others to help with money problems caused by gambling. A person is considered to have gambling disorder if they present with four or more of those nine indicators.

The economics profession has also pointed to the role that chips and credit can play in causing gamblers to go over the top. It's a bit like the way in which we sometimes overspend when we use credit cards rather than cash. Casino chips and cash-out tickets from electronic gambling machines, and their virtual equivalents, can lead gamblers to bet more than they intend to. Modern gambling machines are designed with the help of psychologists who understand addiction, but from the opposite side—helping those who are trying to profit from gambling. They use something called variable interval reinforcement schedule, giving you payouts at unexpected times. They adjust the noises, the environment, the lighting—everything in order to encourage gamblers to bet big. For some, that can increase the pleasure of gambling; for others, that can increase the pain to themselves and to their families.

We know that this is a huge issue in Australia. Australians are the world's gold medallists when it comes to gambling losses.

As the previous speaker, the member for Fisher, has noted, Australians lose some $24 billion a year. Gambling losses in 2017 were estimated at $1,068 per adult, which is 40 per cent higher than the next-highest country, Singapore. Australian gambling losses per adult are twice the gambling losses per adult in the United States. Australians lose three times as much per person as Brits. We lose four times as much per person as a typical German or French adult.

As James Boyce noted in a recent article in The Monthly, that wasn't true of Australia in the 1970s. We have increased our gambling losses just over the course of the past generation. Part of that is the rise of poker machines. As Tim Costello has pointed out, Australia, a country with 0.3 per cent of the world's population, has 18 per cent of the world's poker machines. The member for Fisher has talked about some of the social harms that can occur as a result of problem gambling: bankruptcy, divorce, suicide and impact on the children of gamblers, who might not enjoy sport for its own sake, who might be captivated by in-play betting and think that to enjoy sport is to place a bet on the next play rather than to simply enjoy the game for its own sake.

The government has acknowledged that more than 240,000 Australians are experiencing significant harm from online wagering. Sometimes that harm can be tragic. Tim Costello has pointed to statistics from a Victorian coroner that indicate that, from 2000 to 2012, 128 suicides were tied to gambling. Financial Counselling Australia has warned that there is 'a desperate need' for the National Self-Exclusion Register and they have urged the government to make it a priority.

The Labor Party has been concerned that the government has not acted quickly enough on the National Self-Exclusion Register. We support it. It is a sensible behavioural economics intervention which allows people to choose a period of self-exclusion which would range from three months to permanent exclusion. Individuals would be prompted 14 days before their self-exclusion period ends. They will be able to re-register for another period. Each person who registers themselves can register up to five support people, and those support people will also be notified 14 days before the end of the self-exclusion period. That ensures that those who are suffering from gambling addiction are able to draw on the support of family and friends at that time.

Essentially, self-exclusion allows people to tie themselves to the mast just as Odysseus did for the Sirens. Odysseus knew that the Sirens would be too tempting to resist, so he had his men plug their ears with wax and tie him to the mast, with instructions that, regardless of what he said, he was not to be untied from that mast. Odysseus knew that the temptation of the Sirens would be something he would be unable to overcome. And so, too, will people who will use the National Self-Exclusion Register be able to tie themselves to the mast to exclude themselves from all online gambling. They won't have to deal with it site by site; they'll be able to do it holus-bolus—across the board.

The behavioural economic studies that have been done on these sorts of interventions suggest that there is a positive impact. A study by Damien Brevers and co-authors looked at the impact of pre-commitment on risk-taking while gambling and found that, in a randomised study, giving participants the opportunity to make a binding choice that made high-risk options unavailable caused them to decrease risk-taking. A study of Norwegian gamblers by Michael Auer and co-authors found that those gamblers who received personalised feedback in relation to limit-setting showed significant reductions in the amount of money gambled. These kinds of interventions are worth exploring more deeply.

But I do agree with the member for Fisher that there are other approaches that we should explore in this space.

If we had a national research funding body, it might be able to not only bring together the existing research but also generate more research as to how we can help people overcome their own addictions. We do this with other addictive products as a matter of course. We have a whole range of government programs that aim to assist smokers kick the habit, because three-quarters of smokers say they would like to quit. But there's much less application of behavioural economics and smart interventions grounded in evidence when it comes to dealing with problem gambling. So small-scale studies looking at the impact of voluntary pre-commitment, limits on advertising and in-play betting and measures to ensure that people aren't hurt through addiction to pokies would be welcome. Many Australians do, indeed, enjoy gambling, but we need to ensure that the harms that are done by gambling are wiped out.

I want to acknowledge the courage of Tasmanian Labor and Bec White in the last Tasmanian state election in their willingness to stand up to vested interests in order to reduce the harm done to vulnerable Tasmanians. The result of that election does illustrate the importance of donation transparency. Labor has recently called for real-time disclosure of donations in order to ensure that these debates are carried out based on evidence rather than simply political donations.

There's a lot more to be done to reduce the harm that is being caused, by the government's own estimate, to almost a quarter of a million Australians. We shouldn't be leading the world in gambling losses. That's not a gold medal that I want Australia to have.


Authorised by  Paul Erickson, ALP, Canberra.

Showing 2 reactions

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  • John Winkelman
    commented 2021-03-13 16:48:17 +1100
    I might add that the gambling industry has another aspect, namely laundering money, so is often involved with the criminal industry!
  • John Winkelman
    commented 2021-03-13 16:45:54 +1100
    Good speech, Andrew. Really, the gambling “industry” harms nearly everyone who gambles, not just the so-called problem gamblers. The latter are the economic base for the gambling industry and the gambling industry will only pretend to want to help them. The govt has a conflict of interest in this area. Gambling provides tax revenue, and the gambling industry has a lot of political clout through its campaign donations and advertising. Self exclusion sounds a nice idea but will probably only attract moderate gamblers. Banning or limiting on site ATMs might be more effective. Another idea is educating kids about the maths of gambling and the psychology of self control.
    I found it interesting that Australians gamble more than other nationals. Perhaps something needs to be changed in our culture!

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