BLASZCZYNSKI, Prof. Alexander, Private capacity

GAINSBURY, Dr Sally, Private capacity

Committee met at 16:11

Evidence was taken via videoconference—

The following evidence was taken in camera but was subsequently made public at the request of the committee—

CHAIR ( Mr Wilkie ): Good afternoon. We welcome by Skype Dr Sally Gainsbury from Southern Cross University and Professor Alex Blaszczynski from University of Sydney. Thank you again for making yourselves available to speak to the committee. We have been provided with the executive summary of your forthcoming paper, An investigation of internet gambling in Australia. Your research covering online gambling is obviously very important to the committee's work. The committee may recall that you provided a submission with preliminary findings of this research for the committee's inquiry last year into interactive and online gambling.

I understand that your research has not yet been published so you have requested that you speak to the committee in camera. However I understand that after your work is published we may be able to make this Hansard public, and I will leave that to the secretariat to work that out with you, if you don't mind. I also understand that you have been provided with information on parliamentary privilege. Professor Blaszczynski and Dr Gainsbury, I suggest that you make an opening statement and we will break for questions as we go.

Dr Gainsbury : I will start by briefly summarising the research in addition to the executive summary that you have. We surveyed Australian gamblers. We had 6,682 usable responses and what we were looking for was exploring how Australians are using internet gambling in addition to other forms of gambling and whether there are differences between those who did use internet gambling compared to those who only used the land based forms.

Briefly, what we found was that internet gamblers did have different characteristics. In terms of their gambling behaviour, they were more likely to be involved in different types of gambling activities and they were more frequent participants in terms of how often they would gamble. Really, they were more involved gamblers overall. It was not just that they were adding internet gambling; it was that they were adding internet gambling to an existing repertoire of heavy involvement.

In terms of their attitudes, internet gamblers appeared to have more positive attitudes towards gambling so they were more likely to think that more forms of gambling should be legal and they were less likely to think that gambling is morally wrong. The majority of people have been gambling since around 2006. The majority gamble from home and use their computers. Mobile gambling only represented around six per cent of internet gambling in terms of preferences and it typically occurred during relatively social hours, in the afternoon and evening.

The advantages of using internet gambling were, as you would expect: it is highly accessible and highly convenient; you do not have leave your house. Interestingly, there was also an indication that a certain proportion of internet gamblers have a preference for this mode and that they actually have an aversion to land based gambling. They said that they did not like the crowds. It was more physically comfortable. They did not actually like the unpleasant atmosphere of land based venues. That suggested that this might actually be creating a new type of gambler who would not otherwise be participating in land based forms.

In terms of the disadvantages, around a third of internet gamblers said it was too convenient and 15 per cent said it was more addictive, so there was some recognition that the accessibility and convenience of internet gambling was likely to potentially lead them to spend more money and cause more problems.

If we look at the problem gambling rates amongst internet gamblers, for those who were classified as potential problem gamblers based on the Problem Gambling Severity Index which is commonly used in Australia, there was not a significant difference between those who gambled online—and that was defined as people who had gambled at least once on one type of internet gambling, and that may include less frequent internet gamblers—but internet gamblers did appear to be in the at-risk groups and had higher rates of problem gambling symptoms.

Just briefly, in trying to tease out how internet gambling may contribute to problem gambling, it appears to be a bidirectional mixed effect. Although the majority of internet gamblers did report that their problems started after they first gambled online, around a third of internet problem gamblers attributed their problems to a land based form of gambling, most likely to be gaming machines followed by wagering. Also around two-thirds of gamblers attributed to the internet the most problematic form and around a third said that it was land based activity. So it appears that internet gambling does disrupt lives and amongst problem gamblers over half reported that it made them spend money, or they spent more money, because they were using electronic means. It appears to exacerbate existing problems for some existing problem gamblers who then add internet gambling to their repertoire.

So that is the basic summary of what we have found. The main conclusion at this stage to take away is that the participation levels of internet gambling in Australia still appear to be relatively low compared with other forms of gambling, certainly less than 10 per cent, but the level is increasing, and that is line with international trends. It does have a relationship with gambling problems so, although it is not the biggest cause of gambling problems in Australia, it certainly deserves to be looked at and regulated in more detail to ensure that this type of gambling, which is particularly popular amongst youth, does not develop into being a significant problem in Australia.

CHAIR: Professor, do you want to say anything at this stage?

Prof. Blaszczynski : No; I think that Sally summarised it fairly adequately. I think the key issue is that the evidence would indicate that those people who are on internet gambling tend to be the ones who use multiple forms of gambling and are the peak of the pyramid, if you like, in terms of their involvement in gambling and acceptance of gambling behaviour. As Sally mentioned, there is another population that may well have some sort of personality or comorbid psychiatric condition. They tend to be isolated or more schizoid in personality and prefer to be by themselves and spend time on gaming, internet and other things like that. It may represent a small percentage of at-risk people. Then there is another, wider proportion of people, that simply prefer to be by themselves rather than interacting in a social context.

CHAIR: To what degree are these new people? There has been much said about the risk of people migrating from other forms of gambling to online. How true or false has that ended up being with this new information?

Dr Gainsbury : We found that most people do tend to gamble on multiple forms. You have someone who gambles online and they might also buy lottery tickets, for example, or place bets. The way we ask the questions does not allow us to tease out too much of the detail at this stage, although we are revising the survey and relaunching it to further investigate some of these specific questions.

There do appear to be distinct groups. There is a group of people who are already highly involved in gambling, and internet gambling is just more convenient for certain individuals particularly for things like wagering and poker. So they are adding these to their repertoire and it may be reducing their land based gambling to some extent, but they are still heavily involved in land based gambling.

There is another group of people—and this is likely to be younger people—who are gambling online particularly in forms such as wagering, where they would not go into a wagering shop. That atmosphere can be quite intimidating particularly for certain groups such as women and younger people who are not familiar with that—and we have actually had place bets using pieces of paper. But they can use the online to try out this type of gambling and become familiar with it and they will typically prefer to use this medium for its convenience and accessibility.

CHAIR: Among the group of people who are involved in other forms of gambling who are taking on online gambling as well, do you see a pretty normal cross-section of people there, or is there a higher and disproportionate number of problem gamblers who are moving to something else to get their kicks out of something better?

Dr Gainsbury : One of the interesting findings was that when we looked at problem internet gamblers compared to non-problem internet gamblers, the internet gamblers who had problems actually spent a greater proportion of their time in land based venues. These were people who already had a high use of wagering most likely and they still tended to use those forms to a greater extent than non-internet gamblers. That suggested that the internet was exacerbating existing problems for those people. We have not broken down at the moment all the demographic factors to specifically to look at those.

Prof. Blaszczynski : Andrew, can I draw your attention to an article which has just appeared in the Journal of Gambling Studies by Skutle et al. I have not read the paper in detail so take what I say with a grain of salt—I read the abstract fairly quickly. They were looking at the characteristics of people presenting for treatment in Norway subsequent to the change in the slot or gaming machines in Norway. They were arguing that there is in fact a different characteristic for people presenting for treatment. I cannot recall the exact details but what they are arguing in one sense is that there is a shift in the characteristics of people presenting for treatment from what they noted prior to the change in the gaming environment there.

Senator XENOPHON: Who were the authors and what was the name of the paper in the Journal of Gambling Studies?

Prof. Blaszczynski : It is Skutle et al. I think it is the online or in the current version of the Journal of Gambling Studies. I only came across it today in my idle time.

Senator XENOPHON: Thank you for that.

CHAIR: People who are moving across from land based to online, are they moving to a more dangerous form of gambling? What is the rate of problem gambling among online gamblers compared with poker machines, in particular, or just land based gambling generally?

Dr Gainsbury : When we looked at the differences between internet and non-internet gamblers, there were not differences in terms of the number of people characterised in a problem gambling category. There were higher levels of problem gambling severity scores overall amongst those who gambled online, and in fact higher gambling severity scores was a significant predictor of someone being an internet gambler. So there does appear to be risk associated with the play but, as I indicated, the causal pathway is still unclear. As for some of the predictors for the people who do play online, certainly the majority appear to be at low risk or are playing in a recreational manner. But for a certain group of people, the predictors if you have played online were having a lower household income and higher levels of debt, also being significantly younger and less likely to be married. These are similar to risk levels in the general population of having gambling problems. It indicates that people who have a propensity to get into trouble and to have negative consequences associated with gambling are likely to gravitate towards this form and, whilst there are some responsible gambling measures particularly on the regulated sites in Australia and some of the off-shore sites, there are other off-shore sites that really have very few consumer protection measures, and potentially you could spend large amounts of money and get into quite serious trouble.

Mr CHAMPION: You talk about self-exclusion mechanisms on the websites and so on, how would they work? How would we perhaps encourage websites to take them up?

Dr Gainsbury : There is an interesting model that has just this year been adopted in Denmark. They have for the first time provided licences to online gambling operators. They have created a centralised agency of self-excluders and an individual can apply through a gambling website or directly to the agency. They provide their details and before any gambling operator is allowed to establish a player account, they have to check it against this list to make sure that they are not on the list of excluded players. That allows privacy for the individual, but it also allows all the operators to have a centrally maintained database so it does not cause any problems whereby an individual might exclude from one site but then open up an account on the same day at another site. That is a relatively recent model that might be something to consider.

Mr CHAMPION: Thank you.

Prof. Blaszczynski : One of the advantages of the internet is that you have to identify the individual through the opening up of an account. So they have to provide some sort of legitimate details for credit card transactions, for example, and from that then you can start to track players much easier than you can with other forms of gambling.

Senator XENOPHON: Thank you for your evidence today. When do you expect your paper to be finally published?

Dr Gainsbury : There is one paper that was just yesterday tentatively accepted for publication, pending minor revisions. It will take a few weeks to get through the copy proofing stage et cetera to be made online. So that will be a few weeks. The other papers are still being prepared.

Senator XENOPHON: So, as a time frame, are we still looking at three months or six months?

Prof. Blaszczynski : One paper will probably come out once the revisions have been have been accepted and we could send out preprints for that. As for the others, it is really up to the speed of the reviewers and the editors, and these things are beyond our control. We estimate probably within the next three to six months.

Senator XENOPHON: I will just go to page 5 of your executive summary where you make reference to:

The internet does appear to cause specific problems with some gamblers. The use of a credit card or internet bank transfer was reported to increase the amount spent for just over half the problem internet gamblers—

The Australian Bankers Association gave evidence to this inquiry that, if there were a list of blacklisted internet gambling sites, at least credit card transactions could be blocked for those unauthorised sites. Do you see that as something that could assist in reducing levels of problem gambling online?

Prof. Blaszczynski : I think it will for some individuals, but there are multiple forms of financial transactions—PayPal and others; I think there are 300 or—

Dr Gainsbury : There are around 300 different methods of online payment, and that does not exclude mailing cheques or going to kiosks set up for other purposes.

Prof. Blaszczynski : I think there are about 317 different ways of transacting money through the internet, so, whilst it would contribute to the everyday gambler, there would be clearly some people who would bypass those particular systems. And, again, a difficulty is that, as soon as you block one particular pathway, gaming operators provide additional avenues, so one always needs to be fairly proactive in identifying those sorts of trends.

Dr Gainsbury : It might be useful, though, in terms of protecting licensed wagering, licensed operators, which are required to provide responsible-gambling tools and resources. If they were allowed to have financial transactions and offshore sites were more proactively blocked, it could encourage players to play on the domestic sites.

Senator XENOPHON: Could I just move to the issue of Norway, where there was that period when they did not have poker machines, then they brought back poker machines with significant restrictions on the amounts of monthly losses, which I think you are more than well familiar with. Is it your understanding from the research that there was an increase, a significant uptake, in online gambling during that period when there were not poker machines or slot machines available and in the period subsequent to that when poker machines were available on a much more constrained basis? In other words, was there transference to increased levels of online gambling?

Prof. Blaszczynski : My reading of the material is that there is a transference, but again it is complicated. I think the data is difficult to interpret in part, but my view basically is that there has been some shift—an increase in internet gambling behaviour.

Dr Gainsbury : If you look at international jurisdictions, even without taking into account reductions in availability, there has been an increase in the proportion of gambling that is being conducted online. If you look, for example, at the UK and Canada, who do provide online gambling, you can see a shift, where land based retail venues have a reduction in the amount of money that is being spent there, whilst there has been an increase in online, so there does appear to be a shift of players generally as an international trend towards online gambling.

Senator XENOPHON: But that is different from a jurisdiction where they actually restrict a form of gambling. That is a bit different, isn’t it? Okay—I think others have questions.

CHAIR: I suppose it would be hard to disentangle that from the policy responses in specific countries because you have this rapidly increasing use of the internet over the top of everything.

Senator XENOPHON: Further to that, Western Australia does not have poker machines outside the Burswood casino. Did your research pick up any difference between the states in terms of whether in Western Australia they are more into online gambling or about the same, or not?

Dr Gainsbury : I did try very hard to get the survey promoted in Western Australia through the casinos and through the gaming regulators, but I achieved relatively little success, so the majority of the respondents really came from New South Wales and Queensland. I do hope that the next round of the survey will have greater support in being able to recruit people so we can look at those state based differences, because we just did not have enough people from Western Australia or Tasmania to be able to look at those sorts of differences. Hopefully that will be resolved in the next round.

Senator XENOPHON: I may be wrong on this, but I think one of the sports-betting providers said that proportionally WA was not much different—that there was not a much greater uptake in terms of customers—but that could be from a whole range of factors.

Senator DI NATALE: I have a related question. It is about the recruitment strategy that you have adopted. It would seem that, given the recruitment strategy, you are not going to get a particularly representative sample of the online gambling community, so I just wonder how useful the results are in terms of being able to generalise to the broader internet-gambling population.

Prof. Blaszczynski : It is a limitation certainly in terms of relying on self-report, but we would certainly be more than happy to accept research funding to look at it in more detail and get a sort of door-to-door interview and a more representative sample. I think the difficulty, basically, is one of access to funding.

Dr Gainsbury : It is also access to where we can put the site. We asked all the state agencies and quite a few gambling sites. We did not approach any of the offshore sites, the poker and casino sites, but we are trying for the next round to really overcome that and make it more representative. We had a relatively small budget, so we did pay for some ads on sites like Google and Facebook to try to get a more representative population. But we certainly are going to try and seek and would appreciate the committee's help in any way that they can in getting the links to the survey in as many different websites as possible to try and make it as representative as possible. But, as Professor Blaszczynski says, to get an advertisement on a really general site such as a media site, eBay or something like that just costs huge sums of money, which unfortunately we do not have, so it is a limitation.

CHAIR: Dr Gainsbury and Professor Blaszczynski, do you have any sense of what this industry is going to look like when it is mature? It is such early days, I suppose. Looking at a crystal ball, what will it look like in 10 or 20 years time?

Prof. Blaszczynski : I think in 10 or 20 years time there will be an increase in social media gaming based on iPads and smart phones, and I think the cohort coming through will certainly bring in an entirely new technology based form of gambling. I think the sports betting will increase. I think the electronic gaming machines will tend to remain but not be as popular as they are currently.

While I have both you and Nick present, one of the considerations I have had in regard to the precommitments and also the $1 maximum bet is that these are approaches that rely on external restrictions on a person’s gambling behaviour, but from a psychological perspective the primary motivator for people to engage in gambling is winning money, and some of the prize levels are quite extraordinary—$20 million on the lottery linked jackpots and so forth. Certainly my view would be that, if the prize levels themselves were restricted or reduced substantially, then first of all the motivation to gamble in the first instance would decrease. The amount of excitement that people would have about winning a $500 jackpot would reduce substantially and not make it likely that the person is going to then think of this as a way of earning income.

Secondly, it would reduce the motivation for people to chase losses—that is, if the maximum prize is, say, $200 or $500, people are not going to spend several thousand dollars to try and win that back. So I am just wondering whether consideration should be given to looking at some of the psychological principles, understanding why people gamble and then trying to modify those, rather than trying to force a change and impose restrictions on people's behaviours. These are just some thoughts that I have had.

I have an honours student at the moment looking at what the impact is of prize level in motivating a person to gamble and persistence in gambling. My preliminary reading of the literature is that very few people have actually looked at the relationship between prize level and gambling behaviour. I have recently come across one study on lotteries where the key issue predicting purchases of lottery tickets was the prize level. It is reflected in the notion that, if there is a lottery prize of $20 million or $30 million, we have long queues. If it is only $1 million then the queues are not in existence—although $1 million still to me represents a huge amount of money.

So I think consideration should be given to some of these alternative methods of achieving responsible gambling and reducing the incidence of problem gambling. But these are my personal thoughts and not based on substantive research at this stage.

CHAIR: Teasing that out, Professor, I was reading just in the last few days a paper out of the US-I cannot remember the author-from 2004 saying that people, unless they are a serious problem gambler, will be canny shoppers. If they really know the price proposition when they gamble, they will shop around. If they know what the real odds are on one machine or one form of gambling, they might move to another form of gambling or another machine which gives them better odds. It is a better buy. It is a better sort of investment. Does that gel? Does that sound right to you?

Prof. Blaszczynski : That would be true for the gambler who is familiar with gambling and enjoys gambling. I do not think it would be true for the general run of the population, who have a lot of erroneous perceptions and misunderstanding about probabilities, random events and mutual independence of events.

Dr Gainsbury : That is consistent with our research on internet gambling. Only around 18 per cent of players are really motivated to pick a site based on the payout rates or the odds. Similarly, in the UK, there was a study that found the same. The people were not actually picking sites based on the sites that offered the best odds; there were other factors that were more important to them. It actually becomes more of a habit and a routine. People are not as price sensitive as you would think they would be.

CHAIR: The author of this paper suggested that you could even take it to the extent where-I am just thinking laterally here and airing my thoughts-if you allowed poker machine venues to offer different returns to players and publicise that, you would set up competition between gambling venues, and the venue that is the best deal is where the gamblers might converge.

Prof. Blaszczynski : The difficulty there, I think, is with the US—

Senator XENOPHON: This amuses Dr Gainsbury, I think. Sorry, go on—Dr Gainsbury was looking amused.

Prof. Blaszczynski : Where you are looking at the 99 per cent player return rates in Las Vegas with the so-called ‘loose’ machines, there is a danger there of increasing interest in gambling-higher frequent reinforcing wins, with the notion that they are going to win a large jackpot. I do not think that at this particular stage we really understand what the optimal player return rate is that would achieve those particular goals.

Dr Gainsbury : I was smiling because I think of Vegas where they have the casinos that advertise ‘the loosest slots in town’. Those casinos are also the ones that offer the $5 all-you-can-eat buffets and they are the ones located off the strip in the dodgier parts of town and frequented by people who maybe are spending more than they can afford. So it is a model that has been tested and not necessarily empirically evaluated, but you can look at how it has evolved and the customer response to that price sensitivity, where you have customers who are spending more money still on the strip but they are in casinos that do not have the favourable returns, and you have the more impoverished players at the looser slots.

CHAIR: Just a footnote to that whole thing about jackpots, just to let you know: when we talk about $1 maximum bets, we tend to use it as shorthand for a collection of changes which would include—you are probably aware of this, I am sure—the $500 maximum jackpot. We certainly have an awareness here in the committee that it is the jackpot which is actually more relevant to kicking the volatility down than the amount staked.

Prof. Blaszczynski : I think it is important in motivating people to gamble if you have an amount of $186,000 or $200,000 in a linked jackpot that you could potentially win. That is a high motivator. If you are playing a standalone machine that has a maximum bet of $500, people are not going to put in $1 bets or multiple high bets in order to try and win those. But the important thing is that they are not going to start chasing money in order to try to win back any losses that they have.

Mr STEPHEN JONES: I have just one question. On page 7 of your executive summary, you make the observation that land based gambling was cited as the main cause of problems for a substantial proportion of internet gamblers. I am interested in your theories as to why this is.

Dr Gainsbury : The most attributed form of gambling amongst internet problem gamblers was wagering, which reflects the legalised form of gambling. The second most common form of gambling was electronic gaming machines. Amongst land based gamblers, that was reversed. They were most likely to be attributing problems to gambling machines, followed by wagering. I think that represents the high use—certainly we recognise that gaming machines in Australia are the most problematic form. They are likely to continue to be for some time.

However, there might be a shift towards internet gamblers, particularly if they are new players who are taking it up for the first time, who may be less attracted to playing gaming machines. There is some evidence that youth are not playing gaming machines to the same extent as they did several years ago. There might be a migration to this new form, and that will pose additional risks. Amongst internet problem gamblers, age was actually a significant predictor, so there is a risk of the next generation of gamblers coming through reporting games online as being the most problematic form. They may additionally play gaming machines, but we are seeing a bit of a shift at the moment in that.

CHAIR: As there are no further questions, Professor Blaszczynski and Dr Gainsbury, thank you very, very much. You have been very, very generous with your time with this committee. You have helped us out on a number of occasions and we are genuinely very grateful, so thank you.

Prof. Blaszczynski : It is a pleasure, thank you.

Dr Gainsbury : Thank you very much.

Committee adjourned at 16:43