Like a large proportion of the population (but unlike two lucky winners) I’m a little bit poorer after last week’s jackpot lottery. That might put me in the right frame of a mind for a visit to the Commonwealth Treasury next week where, among other things, I plan to talk about how to treat gambling in the context of the Henry Review of Taxation.
State governments are heavily reliant on revenue from gambling, which is a combination of explicit taxes and payments for monopoly privileges. But gambling (particularly casino gambling and racetrack betting) is socially destructive, since the majority of the revenue is derived from problem gamblers. And while restrictions on gambling were justified by these social ill-effects, the current structure of taxation actually makes things worse, by ensuring that gamblers lose faster. Policy must also deal with the fact that, for the great majority of participants (who only account for a minority of expenditure, however) gambling is harmless and pleasurable. That’s particularly true of non-instant lottery gambling.
I’ve been thinking about how to fix this, and I’ve had the idea of subjecting gaming enterprises like casinos to a (net) revenue cap. That is, rather than being restricted to a certain number of machines, tables and so on, they would be limited in the amount they could take from the machines in a given year. This would eliminate incentives to increase the take from gaming, and replace it with incentives to do more business selling food, drinks, entertainment and so on. It would also increase the incentive to comply with measures aimed at restricting the access of problem gamblers, since they would not change the gaming take and would presumably spend less on other goods and services. My worry, not fully worked out, is that gaming enterprises would just reduce service and extract their allowable revenue from the problem gamblers as cheaply as possible.
Any thoughts on this?
John Quiggin 
Personal attack deleted – please, nothing more like this
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Gambling has many similarities to alcohol – many use it with little or no harm, some encounter a great deal of damage. In alcohol policy, the two most effective strategies in reducing overall harm are to restrict supply and to increase the price.
In gambling, the answer is probably a combination of restricting the number of machines and hours of operation, slower spin rates, smart cards with expenditure limits and possibly higher taxes or reduced return to players.
BTW, wne thing you dont hear much about is the research conducted (presumably by pokies designers) on how to get people to use them more. I’m sure there are hoards of behavioural psychologists hard at work behind the scenes helping to design these things.
What would happen if you restricted the total payout a venue was able to make in a given year instead ? (with no restriction on the odds the gambling institution set)
My understanding of the psychology of gambling is that it is the wins which create the psychological reaction that leads to addiction. If you restrict the total amount paid out then you have restricted the amount of money available to create gambling addiction events (ie, big exciting wins by a punter).
Google: gambling addiction Norepinephrine
There is at least some evidence that problem gamblers are low in Norepinephrine, i.e., there is a biochemical factor involved.
1) It is well-known that for most people, for nicotine addiction to really “take”, you need to get people addicted when they’re teenagers. that is, one probably both needs the genetic/environmental susceptibility, and the exposure at the right time.
2) Never having been tempted by or studied gambling (math education + seeing that casinos stay in business => negative expected value :-)), I don’t know much about gambling compared to nicotine. Specifically, I don’t know whether there is anything like the age requirement.
3) Let me try some “what-ifs?”
a)Suppose there were a medical test that well-predicted susceptibility to problem gambling.
b1) Suppose this is like nicotine, i.e., the addiction really sets during teenage years, and if you avoid it then, you’re relatively safe.
b2) Alternatively, suppose the threat doesn’t ever fade away.
c1) Suppose there was a one-time drug that “fixed” this.
c2) Or suppose there was a drug that “fixed” it, but required daily dosage.
c3) Or there is no drug.
IF there is a strong biochemical factor, then a lot of the discussion here is trying to patch biochemistry with laws, and that isn’t easy. So, without *recommending* anything, I’m curious of people’s opinions, assuming a), and some combination of {b1 or b2} and {c1 or c2}:
a) Countries test people before they get driver’s licenses. Should there be “gambling licenses”?
a) and b1): should people be tested at the beginning of the dangerous age range? A standard test? recommended? Needed to get “gambling license”?
If found to be susceptible, what would you recommend under cases c1-c3.
a) and b2) Gambling license? If gambling problems and c1), could someone be encouraged to take the drug? Required? How about c2)? What if they stop taking it?
Obviously, there are all sorts of civil liberties issues versus societal costs issues. This is specific instance of the general case of:
We learn enough about brain to detect a biochemical basis for likely behavior considered negative. This is a fairly mild one. Consider the test for “you are likely to be paranoid, violent, and dangerous to other people”, detectable at age 12….
Relevant old story: Larry Niven, “The Ethics of Madness”, 1967.
(Paranoid has monthly adjustments of biochemistry by autodoc … which fails.)
I’d guess that between fMRI and biochemistry advances, within 10-20 years we might well have a) … one might hope for b1); one might hope for c1), but that seems unlikely. In any case, time to start thinking.