Law and Management

Centre for Sustainable Regional Communities

Publications

Measuring the Economic Impact of Electronic Gaming Machines in Regional Areas - Bendigo, a case study

Abstract

Regional impact analysis using input-output modelling has had a long history. An examination of a number of impact studies working in areas as diverse as infrastructure issues, forestry, tertiary education and tourism offer a range of possible approaches. Areas examined include the general purpose of the study, the choice between existing regional models verses the use of purpose-built models, the sources of data relating to the impacting agent, and the methods by which the economic impact is assessed.

An approach was then selected to study the impact of electronic gaming machines in an Australian regional city (Bendigo). At the time of the survey, gaming revenue (net losses) amounted to $32.35m. The findings suggest that the present distribution of gaming revenue lead to poor relative performance of the sector and large leakages out of the regional economy. This is a result of the extremely weak linkages with all other sectors in the region. Had spending followed normal patterns of consumption, then levels of output, income and employment would have been considerably higher. These figures have been quantified with output and income in non-gaming expenditure up by more than $8m and employment up by an equivalent of over 237 full-time jobs.

An attempt was then made to estimate the extent of external effects for EGM use. While some positive economies were detected, these proved no match for the high levels of estimated social costs of problem gambling. The present returns of some of the funds raised under the Community Support Fund appear to be a mere drop in the bucket. All these estimated effects have also been quantified.

This is followed a discussion on the present formula for the sharing of revenue, the massive drain on regional expenditures and possible solutions to this problem.