On July 19 at 1.30pm, the Productivity Commission released its draft report, Australia's Gambling Industries, via the internet. It's much anticipated release resulted in a huge clog up of the site, with a lengthy wait the first day of up to 10 hours to slowly download the mammoth 5-megabyte file.

And no wonder. The huge compilation of research data, surveys and findings available in the two-volume reports totals around 2 reams of paper and takes around a week to read thoroughly. Fortunately the report, commissioned by federal Treasurer Mr Peter Costello, also included an executive summary, outlining the key findings.

Essentially, the report rejects many of the industry's arguments against the increase in gambling and comes down squarely on the side of more restricted regulation.

It flags imposing controls on advertising, restricting access to ATM's, and introducing an independent regulator in each state and territory to advise ministers on public interest matters such as gaming machine caps and licence applications.

Pokie venues

Analysts expect that many of the proposals will be implemented by Australia's states and territories, especially the hard-hitting approach towards the gaming machine sector. The gaming machine industry is a likely target for new regulations because of its size. Prime Minister John Howard was recently quoted as saying that he was ashamed that Australia had more than 20 per cent of the world'' machines, although this percentage has remain unchanged for the most part of the last three years.

According to the report, gamblers have little knowledge of the odds they are playing, particularly on poker machines. As a result, their chances of winning should be clearly identified.

The proposal to label poker machines with odds of winning has not been well accepted by the industry, due to the confusion and unfair expectations it could cause. The highest return of all forms of gambling is poker machines,although the returns vary from machine to machine. If one machine is labelled as paying 88 per cent and one that pays 95 per cent, surely this would cause some confusion to the player.

Casinos

A number of proposals in the Productivity Commission report suggest restrictions on the casino sector, such as opening hours and forcing properties to provide natural light. On these issues, the commission received many submissions, especially the concern expressed over the lack of "passage of time" for patrons in casinos. The report says, however, that "wall mounted clocks would probably do little to ameliorate problem gambling, while a provision for natural lighting would be potentially very costly for many existing gambling venues, with unknown efficacy."

>From the industry's perspective, it's fair to say that the report provides an objective analysis of the industry. There are lengthy
considerations assessing government policy, but rightly so its recommendations are based on the fact that consumers should generally make their own informed decisions about gambling. The report clearly exposes the significant benefits and entertainment for consumers, in addition to the tax benefits for governments and employment opportunities - where 7,000 businesses currently employ around 150,000 people.

While most expenditure on gambling is judged as a benefit because it gives people pleasure, the Productivity Commission also points out that problem gambling makes it necessary to assess the continual growth of the industry for the community's benefit.

The report's findings on problem gamblers refer in large parts to a survey conducted with 10,500 people, including 3,900 problem gamblers.
It said the average punter lost $625 a year - almost double the loss in the United States, new Zealand and Sweden. Problem gamblers, according to their sample survey, accounts for 2.3 per cent of the adult population. This equates to 330,000 gamblers losing an average of A$12,000 a year, accounting for35 per cent of the total $11 billion a year lost by punters.

This is only the beginning. The landmark study has sparked a debate on gambling controls, and public hearings over the coming months will be followed by a final report later this year.

It should be noted that the commission is independent of governments and other vested interests. The significance of this 1,000 page report is that it attempts to quantify the extent of gambling and objectively legitimise the concerns addressed within the community about one of Australia's favourite past-times.

What's the solution?

Rather than refer to the Productivity Commission report's key findings, it's worthwhile reflecting on the comments written by Tim Colebatch, an economics editor at The Age newspaper. This is part of his review as published July 20:

"On one hand, 82 per cent of us participate in some form of gambling. On the other hand, 75 per cent believe gambling does more harm than good, and 92 per cent want to stop further expansion.

"... The commission shares that ambivalence. It tells us that gambling produces a net "consumer benefit" of at least $5 billion a year. But it also estimates that gambling produces "social costs" of between A$1 billion and $5 billion a year. Put them together, and the commission estimates a "net benefit" from gambling of anything from $152 million to $5.2 billion.

"These numbers may grab headlines, but they are very imprecise, based on rubbery assumptions and guesswork. The real value in the commission's report lies elsewhere; in its attempt to map the real size and impact of problem gambling, and in its proposal to refocus gambling regulation on protecting consumers and minimising harm.

"... This is just a draft report, and the commission has appealed for public responses. I hope its final report will focus more intently on people with minor gambling problems, on what we can learn from other countries (non US experience is virtually ignored here), and on strategies to roll back the costs.

"It has done well on highlighting the problem; we really need a sharp focus now on solutions."