Counting the Cost
Inquiry into the Costs
of Problem Gambling
Final Report
December 2012
© State of Victoria 2012
This final report is copyright. No part may be reproduced by any process except in
accordance with the provisions of the Copyright Act 1968 (Cth), without prior written
permission from the Victorian Competition and Efficiency Commission.
Cover image of Spring Racing Carnival at Caulfield reproduced courtesy of the
photographer, Tony Feder.
ISBN 978-1-922045-32-4 (paperback)
ISBN 978-1-922045-33-1 (PDF)
Disclaimer
The views expressed herein are those of the Victorian Competition and Efficiency
Commission and do not purport to represent the position of the Victorian
Government. The content of this final report is provided for information purposes only.
Neither the Victorian Competition and Efficiency Commission nor the Victorian
Government accepts any liability to any person for the information (or the use of such
information) which is provided in this final report or incorporated into it by reference.
The information in this final report is provided on the basis that all persons having
access to this final report undertake responsibility for assessing the relevance and
accuracy of its content.
Victorian Competition and Efficiency Commission
GPO Box 4379
MELBOURNE VICTORIA 3001
AUSTRALIA
Telephone:
(03) 9092 5800
Facsimile:
(03) 9092 5845
Website:
www.vcec.vic.gov.au
An appropriate citation for this publication is:
Victorian Competition and Efficiency Commission 2012, Counting the Cost: Inquiry into
the Costs of Problem Gambling, final report, December.
About the Victorian Competition and Efficiency Commission
The Victorian Competition and Efficiency Commission (VCEC), which is supported by a
secretariat, provides the Victorian Government with independent advice on business
regulation reform and opportunities for improving Victoria’s competitive position.
VCEC has three core functions:

reviewing regulatory impact statements, measuring the administrative burden of
regulation and business impact assessments of significant new legislation

undertaking inquiries referred to it by the Treasurer, and

operating Victoria’s Competitive Neutrality Unit.
For more information on the Victorian Competition and Efficiency Commission, visit our
website at: www.vcec.vic.gov.au
Disclosure of interest
The Commissioners have declared to the Victorian Government all personal interests
that could have a bearing on current and future work. The Commissioners confirm their
belief that they have no personal conflicts of interest in regard to this inquiry.
13 December 2012
Mr Kim Wells MP
Treasurer of Victoria
1 Treasury Place
MELBOURNE VIC 3002
Dear Treasurer
VCEC Inquiry into the Social and Economic Costs of Problem Gambling
In accordance with the terms of reference received by the Commission on 14 June 2012,
we have pleasure in submitting the Commission’s final report Counting the Cost.
Yours sincerely
Bill Mountford
Presiding Commissioner
Dr Matthew Butlin
Chair
Terms of reference
Inquiry into The Social and Economic Costs of Problem
Gambling in Victoria
I, Kim Wells MP, Treasurer of Victoria, pursuant to section 4 of the State Owned
Enterprises (State Body – Victorian Competition and Efficiency Commission) Order (‘the
Order’) hereby direct the Victorian Competition and Efficiency Commission (‘the
Commission’) to conduct an inquiry into The Social and Economic Costs of Problem
Gambling in Victoria.
Background
The liberalisation of Victoria’s gambling laws in the early 1990s resulted in the
development of a substantial and important industry. Today, the gambling industry
plays a significant role in the Victorian economy, contributing to employment, tourism,
productivity, investment and state revenue.
It has been estimated that the net benefit to the community from Australia’s gambling
industry in 2008-09 ranged between $3.7 and $11.1 billion (Productivity Commission
2010). Given the relative size of our industry, Victoria’s share of the net benefit is
substantial.
There is, however, strong evidence that gambling can adversely affect some
individuals, their families and friends, and communities. The number of people affected
by problem gambling is likely to be significantly greater than the number of problem
gamblers in Victoria. The impacts associated with problem gambling include health
and emotional problems, family breakdown, financial hardship and gambling-related
crime, all of which create significant costs for the individuals, the community, business
and government at all levels.
While many of these costs are known, the full impact of problem gambling may not
always be readily apparent. Government receives the financial benefit from the
licensing and taxation of the gambling industry while the costs created by problem
gambling are more widespread, falling on, amongst others, governments, community
organisations, employers, families and individuals.
The Victorian Government has, therefore, committed to undertake an inquiry into the
extent of the social and economic costs of problem gambling in Victoria.
The aim of this inquiry is to inform policy makers and the community about the true costs
of problem gambling and where they fall. This will help ensure that government, the
community and industry have the information and incentives necessary to reduce
problem gambling, to develop harm reduction strategies that are based on robust
evidence, targets and performance indicators, and thereby increase the net benefit
from the conduct of gambling for all Victorians.
TERMS OF REFERENCE
VII
Scope of the inquiry
The Commission is to inquire into and report on the economic and social costs of
problem gambling in Victoria, including:
a) the cost of providing direct services designed specifically for problem gamblers
and their families and friends;
b) any other indirect costs to the social welfare system;
c) costs associated with impacts on mental and physical wellbeing for both individuals
and the health system;
d) costs to the justice system, including the cost of detecting, prosecuting and
punishing gambling-related crime; and
e) costs to business, including lost productivity and the impact of gambling-related
crime.
The Commission, as it considers relevant and appropriate for the above scope of the
inquiry, should have regard to:

previous studies that have examined the costs of problem gambling, particularly
the Productivity Commission’s 2010 Inquiry Report on Gambling;

the differential costs of problem gambling across geographical areas of Victoria,
for example between metropolitan Melbourne and regional Victoria, or between
local government areas; and

the costs of problem gambling to all sectors of the community, including the
gambling industry and the Commonwealth Government.
Inquiry process
In undertaking this inquiry, the Commission is to have regard to its objectives and
operating principles as set out in section 3 of the Order. The Commission must also
conduct the inquiry in accordance with section 4 of the Order.
The Commission is to consult with the gambling industry, responsible gambling and
welfare organisations, health and community groups, business and relevant Victorian
and Commonwealth Government departments and agencies.
The Commission should draw on the knowledge and expertise of relevant Victorian
Government departments and agencies, and may conduct special surveys or hold
public hearings at its discretion.
The Commission is expected to produce the following documents:

an issues paper at the beginning of the inquiry process;

a draft report containing analysis and initial findings for public comment; and

a final report after the receipt of public submissions to be provided to me as soon
as possible, but not later than 6 months after receipt of these terms of reference.
KIM WELLS MP
Treasurer
Received: 14 June 2012
VIII
COUNTING THE COST