Journal of Gambling Studies

, Volume 30, Issue 3, pp 713–727 | Cite as

Gambling with Stimulus Payments: Feeding Gaming Machines with Federal Dollars

Original Paper

Abstract

In late 2008 and early 2009 the Australian Federal Government introduced a series of economic stimulus packages designed to maintain consumer spending in the early days of the Great Recession. When these packages were initiated the media suggested that the wide-spread availability of electronic gaming machines (EGMs, e.g. slot machines, poker machines, video lottery terminals) in Australia would result in stimulating the EGMs. Using state level monthly data we estimate that the stimulus packages led to an increase of 26 % in EGM revenues. This also resulted in over $60 million in additional tax revenue for State Governments. We also estimate a short-run aggregate income demand elasticity for EGMs to be approximately 2.

Keywords

Stimulus payments Gambling EGMs VLTs Pokies Slots 

References

  1. Australian Bureau of Statistics (ABS). (2007). Government Benefits, Taxes and Household Income, 2003–2004, #6537.0.Google Scholar
  2. Australian Productivity Commission. (1999). Australia’s gambling industries: Inquiry report. Volume 3 Appendices, November.Google Scholar
  3. Australian Productivity Commission. (2005). Economic implications of an ageing Australia, Technical Report T10, Gambling Revenue.Google Scholar
  4. Coughlin, C., & Garrett, T. (2009). Income and lottery sales: Transfers trump income from work and wealth. Public Finance Review, 37, 447–469.CrossRefGoogle Scholar
  5. Delfabbro, P. H., & Le Couteur A. (2007). A decade of gambling research in Australia and New Zealand: Implications for policy, research and harm minimization. Report prepared for the Independent Gambling Authority of South Australia. http://www.iga.sa.gov.au/.
  6. Dowling, J., Moncrief M., & Martin P. (2009) Pokies binge follows hand-out: Figures indicate ‘bandits’ took plenty, The Age. January 24, Melbourne, Australia.Google Scholar
  7. Epley, N., Mak, D., & Idson, L. (2006). Bonus or rebate? The impact of income framing on spending and saving. Journal of Behavioral Decision Making, 19, 213–227.CrossRefGoogle Scholar
  8. Fomby, T., & Murfin, J. (2005). Inconsistency of HAC standard errors in event studies with iid errors. Applied Financial Economics Letters, 1, 239–242.CrossRefGoogle Scholar
  9. Gilliland, J., & Ross, N. (2005). Opportunities for video lottery terminal gambling in Montreal: An environmental analysis. Canadian Journal of Public Health, 96, 55–59.PubMedGoogle Scholar
  10. Hirschberg, J. G., & Lye, J. N. (2010). The indirect impacts of smoking bans in gaming venues, Chapter 11. In D. Slottje & R. Tchernis (Eds.), Current issues in health economics. Contributions to economic analysis (Vol. 290, pp. 243–259). Bingley: Emerald Publishing Limited.Google Scholar
  11. Ife, H., & Collier K. (2008). Shoppers urged to spend for Australia, Herald Sun. December 6, Melbourne, Australia.Google Scholar
  12. Keeler, J., James, W., & Abdel-Ghany, M. (1985). The relative size of windfall income and the permanent income hypothesis. Journal of Business and Economic Statistics, 3, 209–215.Google Scholar
  13. Lamb, D., & Young, M. (2011). ‘Pushing buttons’: An evaluation of the effect of aboriginal income management on commercial gambling expenditure. Australian Journal of Social Issues, 46, 119–140.Google Scholar
  14. Leigh, A. (2009). How much did the 2009 Fiscal Stimulus boost spending? Evidence from a household survey, Centre for Applied Macroeconomics Analysis Working Paper No. 22/2209 September.Google Scholar
  15. Lewis, L. (2009). Chinese bail-out cash heads for Macau’s casinos rather than Guagdong factories, The Times (London) Business, June 20, 51.Google Scholar
  16. Lewis, L. (2010). Gambling dens eye up Japan’s child subsidy: State pay-out is hidden bonus for pinball parlours, The Times (London) Business, March 11, 65.Google Scholar
  17. Liang, Y. (2010). China and the global financial crisis: Assessing the impacts and policy responses. China and World Economy, 18, 56–72.CrossRefGoogle Scholar
  18. Marshall, K. (2000). Update on gambling. Perspectives on Labour and Income, 12, 29–35.Google Scholar
  19. Marshall, D., & Baker, R. (2001). Clubs, spades, diamonds and disadvantage: The geography of electronic gaming machines in Melbourne. Australian Geographical Studies, 39, 17–33.CrossRefGoogle Scholar
  20. Marshall, D., & Baker, R. (2002). The evolving market structures of gambling: Case studies modelling the socioeconomic assignment of gaming machines in Melbourne and Sydney Australia. Journal of Gambling Studies, 18, 273–291.PubMedCrossRefGoogle Scholar
  21. Marshall, K., & Wynne, H. (2004). Against the odds: A profile of at-risk and problem gamblers. Canadian Social Trends, 73, 25–29.Google Scholar
  22. McCormack, J., Jackson, A., & Thomas, S. (2003). Gambling and older people in Australia. Australasian Journal on Ageing, 22, 120–126.CrossRefGoogle Scholar
  23. Parker, J. A., Souleles N., Johnson D., & McClelland R. (2011). Consumer Spending and the Economic Stimulus Payments of 2008, NBER Working Paper No. 16684 January.Google Scholar
  24. Perez, L., & Humphreys, B. R. (2011). The income elasticity of lottery: New evidence from micro data. Public Finance Review, 39, 551–570.CrossRefGoogle Scholar
  25. Productivity Commission. (2009). Gambling Draft Report, October, Commonwealth of Australia.Google Scholar
  26. Reilly, T. (2008), “Rudd’s handouts feed statewide betting binge”, The Age, 28 December, Melbourne, Australia.Google Scholar
  27. Reserve Bank of Australia. (2009). “The RBA’s role in processing the Fiscal Stimulus payments” Reserve Bank of Australia Bulletin August Article 1.Google Scholar
  28. Roy Morgan Research. (1997) Older people and gambling, report prepared for the Victorian Casino and Gambling Authority, September.Google Scholar
  29. Saces (South Australian Centre for Economic Studies). (2006). The South Australian Gambling Industry Final Report, Commissioned for South Australian Independent Gambling Authority http://www.iga.sa.gov.au/.
  30. Sahm, C., Shapiro M., & Slemrod J. (2009). Household response to the 2008 tax rebate: Survey evidence and aggregate implications, NBER Working Paper Series 15421 October.Google Scholar
  31. South Australian Centre for Economic studies (SACES). (2006). The South Australian Gambling Industry Final Report 2006, downloaded 23/3/2011 from www.iga.gov.au.
  32. State Government of Victoria. (1994). Review of electronic gaming machines in Victoria. Melbourne: State Government of Victoria.Google Scholar
  33. Stutz, H. (2008). Inside gaming: Stimulus payments may go out of pockets onto felt, Las Vegas Review-Journal, Business 1E.Google Scholar
  34. Suits, D. B. (1979). The elasticity of demand for gambling. The Quarterly Journal of Economics, 93, 155–162.CrossRefGoogle Scholar
  35. Tanton, R. (2009). Who received most from the household stimulus package? Commentary at Australian Policy Online, http://apo.org.au/commentary/who-received-most-household-stimulus-package.
  36. Vaughan, J. (2009). “Xenophon says handout money was poured into pokies”, The Advertiser, January 18, Adelaide, Australia.Google Scholar
  37. Victorian Department of Justice. (2011). The Victorian Gambling Study a longitudinal study of gambling and public health-wave two findings. Department of Justice, State of Victoria.Google Scholar
  38. Volberg, R., Abbott, M., Rönnberg, S., & Munck, I. (2001). Prevalence and risks of pathological gambling in Sweden. Acta Psychiatrica Scandinavica, 104, 250–256.PubMedCrossRefGoogle Scholar
  39. Zellner, A. (1962). An efficient method of estimating seemingly unrelated regressions and tests of aggregation bias. Journal of the American Statistical Association, 57, 500–509.CrossRefGoogle Scholar
  40. Zhang, Y., & Kwan, F. (2010). Financial crisis offers respite for the Macao economy. In Z. Yongnian & S. Tong (Eds.), China and the global crisis. Series on contemporary China (Vol. 22, pp. 159–178). Singapore: World Scientific Publishing Co. Pte. Ltd.Google Scholar

Copyright information

© Springer Science+Business Media New York 2013

Authors and Affiliations

  1. 1.Department of EconomicsUniversity of MelbourneMelbourneAustralia

Personalised recommendations