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Joint Select Committee on Gambling Reform
20/03/2012
Prevention and treatment of problem gambling

DOBOS, Mr Victor James, Business Development Manager, Canberra, Roy Morgan Research

LEVINE, Ms Michele, Chief Executive Officer, Roy Morgan Research

WOODCOCK, Mr Norman, Director, Business Development, Roy Morgan Research

Committee met at 16:04

CHAIR ( Mr Wilkie ): Good afternoon everyone, including a couple of new faces. We welcome from Roy Morgan Research Ms Michele Levine, the Chief Executive Officer, Mr Norman Woodcock, Director, Business Development and Mr Victor Dobos, Business Development Manager.

Your research and findings are obviously very relevant to the committee’s work. Thank you for making yourselves available to speak to the committee. We all have the information you have already provided. I understand that you have requested that you speak to the committee in camera in case we stray into a discussion of other data that you may not be able to make public. The secretariat will work with you so that we can eventually make the Hansard public. I also understand that you have been provided with information on parliamentary privilege. I now invite you to make any opening comments that you would like to.

Ms Levine : Thank you for inviting us along. We are the Roy Morgan team. We are in the business of information. We are in the business of collecting information about a whole range of things, and we believe that information is important.

We think that any policy or strategic thinking that is going on should be based on informational evidence. We therefore thought it would be useful for us to share with you the information that we already have about Australian’s gambling habits, so we have put together the information that you have seen and we will take you through it. I think there are some really important points, though, to make about this source of information before we get started, because there are lots of surveys. There are all sorts of surveys that are done for all sorts of reasons, so why is this special?

Firstly, it is completely independent research. This is research that Roy Morgan Research conducts. We fund it and then we sell it to people who subscribe to it. It is not a survey that is commissioned by any one player from any industry at all. This is completely independent research. It is interesting, if I think about where this all began: Roy Morgan, who was our founder and who started the business in the forties, was asked to collect data on smoking. He was an absolutely antismoking person—would not have a smoker in the company—and he was asked to collect data on smoking incidence. He said, ‘Well, it’s a legal product, we’ll collect the information but we will make the information available to cigarette companies and the anticancer council and the government because this is important factual information.

So the whole concept of collecting factual information is at the heart of our business. Those of you who followed the cigarette and smoking debate in America would probably realise that an enormous amount of energy was wasted on arguments about what the smoking incidence was. Tobacco companies said one thing and the government said another. So we are on about collecting accurate information that is totally independent.

The research that we do is conducted continuously. We are surveying a cross-section of Australians, about 1,200, each week, and asking them the same kinds of questions. They are demographic questions; some of the questions happen to be about their gambling behaviour, but we also ask about their media consumption, their spending in a whole range of areas, their eating behaviour and their attitudes—lots and lots of things so that we collect a full profile of Australians.

It is a total population survey, aged 14-plus. Again, it might seem repetitious, but this is not a survey just of gamblers or anything, it is a total population survey. All the numbers are projectable to thousands of people and real dollars et cetera. It is national coverage, so it is possible to look at the data in terms of the whole nation, regionally, state based, North Sydney or whatever you want to look at. For the sample on an annual basis, the section of the data that deals with gambling is about 20,000 people per year, and some of the data that we are presenting here is for a decade—10 years. So there is a lot of information.

Normally we take you through very much an overview of the findings, which we hope will set the scene. We hope that you will see this as a fairly factual framework within which people should operate and get the facts right. We hope that it will encourage anyone who actually wants to have a voice to this committee, or to think about gambling or any of the policies and discussions that should go on—for anyone to have their say—to start first with the facts, not just bring in unsubstantiated views.

All research tends to create more questions than answers, and our aim today is definitely not to be able to answer every question under the sun, but to provide you with a really good starting point and then see where the questions go from there. It may well be that there is a suggestion that further research needs to be done in a whole range of areas. They may be projects for academics or they may be well beyond the scope of today’s discussion, but it starts the ball rolling. That is what we hope to do today.

I will hand over to Norman, who is our expert, to take us through some of the data. Interrupt or ask questions as seems appropriate to any of you.

Senator BACK: Before you do, can you confirm the method by which data is collected? Is it the basis of the person on interview for the one hour—

Ms Levine : We start with a personal interview. It is a random cross-section across the whole of Australia, where we identify the addresses that we are going to start with. Interviewers are sent to those addresses and the people there are interviewed in their homes. That is what we call our ‘establishment survey’. From there, there is a self-completion questionnaire in which they fill out a lot more detail, particularly about dollars spent et cetera.

Senator BACK: The reason I ask that is that by strange coincidence my wife actually acted as one of your interviewers for an extended period of time.

Ms Levine : Wonderful!

Senator BACK: I had the unenviable job of driving her around. I would like, if time permits afterwards, just to have that discussion about the selection, I guess—not so much about who you select but about those who are willing actually to participate or not.

Ms Levine : Yes.

Senator BACK: Over time, I think she found a trend of some people who were not willing. They are in-depth questions, aren’t they? It is an hour long: who you bank with and what bank account?

Ms Levine : Yes.

Senator BACK: So her observation was that she always wondered to what extent it was an unskewed population of people, based on those who actually might or might not be willing to share quite detailed information with a complete stranger who knocks on the door—personal information and financial information. I only ask that in that context.

Senator XENOPHON: Can I just ask a quick follow-up question on that? When the Productivity Commission did their survey back in 1999 they allowed for false positives or false negatives in people understating or overstating gambling expenditure or levels of problem gambling. Was that weighted in this survey? Did you consider that?

Ms Levine : No. I will explain why not. There are two issues about accuracy and validity of data. The first one is in terms of response rates. The key thing about response rates is that the highest response rate you can possibly get is with the face-to-face interview; it just gets much more than double what you will get with a telephone interview. Then, if you go to the internet, you are in real strife; you have no idea what a response rate is.

There is always a concern as to whether you are getting everybody, so what you can aim to do is to have as many people as possible respond. I have to say that it is getting harder and harder, so we are paying people more and more. We actually have to give gifts and incentives and pay more to ensure that the data is accurate.

At the end of the day we can only know that it is accurate when we actually take the information, multiply it up, weight it and project it and check it against a known fact. For instance, one of the trickiest things—and you mentioned it—is financial information. We ask people about the debts they have and assets they have—how much et cetera. We take all of that information, weight it, project it and then compare it with the Reserve Bank estimates. It is very solid: very solid. In fact, we find that the banks or people will not use the data unless it relates to reality—unless our overall figures relate to reality. So we are comfortable with that.

That comes back to your question about weighting for false positives and false negatives. At the end of the day—

CHAIR: Excuse me, Ms Levine. We have a division in the Senate, sorry. We will push on, if you do not mind, with the questions for the people who are here and hopefully those senators will not be long.

Ms Levine : So maybe I will leave that question?

CHAIR: Yes.

Ms Levine : Will we start looking at the findings? Is that a good place to continue? Would you like us to do that?

CHAIR: Yes, I think so.

Ms BRODTMANN: Do you treat the ACT as separate in your research?

Mr Woodcock : Yes.

Ms BRODTMANN: Right throughout this?

Mr Woodcock : Every state is treated separately, and every region is treated separately as well. So we can look individually at what is happening in the ACT versus what is happening in Queanbeyan or Sydney or whatever, if possible.

Ms BRODTMANN: Okay, thank you.

Mr Dobos : We can get as low as census collection districts, and that can be aggregated.

CHAIR: Because the ACT sample is a smaller group of people do you find you get enough information out of there to have sound findings?

Ms Levine : Yes, you do over time. Essentially, we interview spread as per population. So, yes, the ACT is relatively small but over a year you definitely get enough information—or over a six-month period.

CHAIR: Okay. You would have as high a level of confidence in your findings out of Canberra as out of Sydney, over time?

Ms Levine : Yes. Essentially, once you have about 600 to 1,000 interviews you can be confident. Where you would run into trouble in somewhere like the ACT is if you started looking at young males aged 14 to 24 who lived at home. Whenever you start slicing and dicing it is all about the size that you originally start with.

Mr Woodcock : Just to follow up very quickly on what Michele was saying, we ask people about their gambling habits. We do not ask them, ‘Have you gambled in the last 12 months?’—it is a little bit more sophisticated than that. We ask them, ‘Have you bought a lottery ticket, have you bought a scratch-it ticket, have you played the poker machines?’ et cetera, all the way through all the legal gambling forums. We ask them how often they do it, when they did it last and where they did it—very important—was it at an agency, was it online or was it at a venue and so on. And how much money they are spending on each of those particular activities.

We believe it is quite a sophisticated questionnaire, because at the end of the day we have to make sure that the data that we get from that survey is accurate. Chart 1 in the attachment that you have probably all seen shows what that aggregated number is. Of all of the types of gambling that people can participate in in Australia—legal forms of gambling, this is—63 per cent of the adult population—we filtered this to the adult population just to make it clear—have participated in some form of gambling in the last 12 months. That represents about 11 million people if you multiply the figures out.

That has come down from 76.2 per cent of people just 10 years ago, so that is quite a significant decline. That decline has occurred in almost every state and territory in Australia.

Mr CIOBO: Incredible!

Mr Woodcock : But what is quite important from our perspective is that the gambling participation rate varies considerably from state to state and region to region. The state with the highest gambling rate is Western Australia, which may be a surprise to you because of the illegality of poker machines there, but there is the very strong popularity of lotteries.

Mr CIOBO: It’s lucky Nick has left!

Mr Woodcock : Queensland has the next highest participation rate—particularly rural Queensland areas, where there are lots of clubs and lots of NRL activities. That participation rate is very, very high. Victoria has the lowest; in fact, Melbourne has the lowest in Australia. So that 63 per cent that we see as a national figure varies from something like 70 per cent in Queensland down to 54 per cent in Melbourne. It is a very big variation state by state but, as I said, the declining trend we are seeing nationally is occurring in all of the states and all of the regions, which is quite good news.

We also can look at it by any of the demographic characteristics. The number of people who are gambling in Australia is 63 per cent, but for the 18- to 24-year-olds it is only 44 per cent. It is quite an important differentiation. And as a person is older, the more likely it is that they can participate in gambling.

Mr CIOBO: Is it fair to say that the more disposable income people have that the higher the incidence of gambling?

Mr Woodcock : More higher income people gamble than lower income people.

Mr CIOBO: Would it be fair to say to correlate it?

Mr Woodcock : Yes, there is a correlation, but it is not the only correlation.

Mr CIOBO: Sure. But there is a correlation?

Mr Woodcock : There is that correlation.

Ms Levine : One of the things about the data is that it is possible to look at it in terms of people who are employed or unemployed or high socioeconomic status or low socioeconomic status—or is it about the family or societal situation? There are many, many ways that you can cut this data, and in order really to understand what is driving things it is quite a deep, analytical exercise.

CHAIR: This is obviously the participation rate, not the rate of problem gambling, which is quite a different matter?

Ms Levine : Correct, absolutely.

Mr Woodcock : Total participation rate in the community.

Mr FRYDENBERG: What if they put more than one form of gambling?

Mr Woodcock : They are one participant. But if you want to go to chart 3, that shows—

Mr FRYDENBERG: Yes, sorry, that is what I am on.

Mr Woodcock : We saw that the total was that 63 per cent of the population do any form of gambling in a 12-month period. Any form of lotteries or scratch-it tickets is 54 per cent of the population. That is also a significant link—it has declined from that 67—

Mr FRYDENBERG: So 54 per cent of the total?

Ms Levine : Of people—Australians?

Mr FRYDENBERG: Yes, based on your numerical sample, which was 21,000—is that right?

Ms Levine : Per year.

Mr Woodcock : Correct.

CHAIR: So 54½ per cent of Australians—

Mr Woodcock : Used lotteries or scratch-it tickets in the last 12 months.

CHAIR: Total adult and youth population?

Ms Levine : Yes, 18-plus.

CHAIR: Wow!

Ms Levine : So 54 per cent have been in some kind of lottery or scratch tickets.

Mr FRYDENBERG: And 25.9 per cent have—

Ms Levine : Have played poker machines—of Australians aged 18-plus.

Mr FRYDENBERG: Right, so those same people could have played a pokie and a lottery?

Ms Levine : Correct.

Mr Woodcock : Correct.

Mr Dobos : Correct.

Mr CIOBO: And again, just to clarify: let us take, for example, 54 per cent of the population or 54 per cent of gamblers?

Ms Levine : No, the population base of Australians, 18-plus.

Mr CIOBO: Okay, so it is the population.

Ms Levine : Yes.

CHAIR: What about on chart 2? We have heard evidence in the committee, particularly with poker machines, that there are a lot of young men gambling and a lot of older women. But chart 2 does not really reflect that.

Mr Woodcock : Chart 2 represents all forms of gambling combined, and it is heavily weighted towards lotteries.

CHAIR: Because of the smaller numbers?

Mr Woodcock : There is a greater number of people who play the lotteries and only one-quarter of the population play poker machines.

Ms Levine : Chart 5 will be helpful here. Are we all on board with chart 3?

Mr Woodcock : The reason we put in chart 3 there was to show not only the incidence or the proportion of the total adult population that is playing each of those games but also that there has been a decline—quite a considerable decline—in the last 10 years. That decline looks like it is going to continue, if you follow those lines through.

Mr CIOBO: Can I ask about Texas Hold 'em poker—where does that sit? Pubs and clubs pretty much across the country have Texas Hold 'em poker nights. Whereabouts would that sit? Would that sit under casino table game or would that sit under something else?

Mr Woodcock : We do not measure that. We measure what you do at a hotel in terms of your poker machine, your TAB and your online gambling, but not poker.

Mr CIOBO: Poker would probably be one of the biggest recreational gambling pursuits, although not always for money.

Mr FRYDENBERG: That is probably why it is not mentioned.

Mr CIOBO: That is what I am wondering.

Mr Woodcock : It is not gambling per se in a lot of people’s minds. It is the same reason why we do not mention the office footy-tipping competitions. A lot of people participate in them but they are quite hard to define and to get the right information on. We are looking primarily at those five categories that you can see there.

Mr CIOBO: So it is something that involves a wager of actual cash, is it?

Mr Woodcock : Correct.

Ms BRODTMANN: Did you do online horses as well as the sport element too?

Mr Woodcock : Yes.

Ms BRODTMANN: You did.

Mr Woodcock : Online horses and—

Ms BRODTMANN: Online horses would be in betting.

Mr Woodcock : Correct.

Ms BRODTMANN: And the other elements of online: you have pokies online identified?

Mr Woodcock : Yes, we have.

Ms BRODTMANN: What are the online sports with—

Mr Woodcock : Yes.

Ms BRODTMANN: Okay, thank you.

Ms Levine : Maybe we should stay with everyone together, or we will lose our track?

Mr Woodcock : We will soon jump into that side.

Ms BRODTMANN: Okay.

Mr Woodcock : We put chart 4 in there because this is the proportion of each of the age groups that are playing poker machines. That is that 25.9 per cent of the adult population have played a poker machine in the last 12 months at least once. The 18- to 24-year-olds are about average: 25.9 and 26.4 per cent. It declines slightly until you see an increase in the 50- to 64- and 65-plus years.

The reason, I admit, that we put that in there is that many, many years ago the 18- to 24-year-olds had by far the highest participation rate—particularly males. They had the highest participation rate in playing pokies. That decline, which we have put on slide 5, shows that it has declined from 45 per cent to this 26.4 we were talking about—very close to the national average.

Ms Levine : So the point you were making before was obviously correct, but it has changed.

Mr FRYDENBERG: But you do not have male and female, you just have male. Or do you?

Mr Woodcock : That is male and female on that chart.

Mr FRYDENBERG: But you just said male, didn’t you?

Mr Woodcock : Male and female are very similar. Males have come down a little bit higher—

Ms Levine : A little bit more.

Mr Woodcock : They have come down from a higher number—come down further—than females. It is not shown.

Mr FRYDENBERG: That is not shown?

Ms Levine : No, it is not presented in this chart.

Mr FRYDENBERG: That is right.

Mr Woodcock : We have done a little bit of analysis, firstly to try and understand that—to verify it in our own minds and to help to come up with an hypothesis of what is happening. There are a couple of interesting points that I might make.

The 18- to 24-year-old activities in the last five or six years have certainly edged towards more at-home activities and less out-of-home activities. There is less going to the pub for a drink—one of the dimensions that we measure. There is just as much going to the pub for a meal or to socialise, but going to the pub to play pool or going to the pub for a drink—drinking on premises on Friday night, where you have quite a few drinks and you drive home—a lot of that behaviour has decreased significantly. That ties in quite strongly with this position of 18- to 24-year-olds participation rate at poker machines being in decline faster than it is in the overall population. It is quite a surprising fact.

CHAIR: I wonder what would happen if you were to overlay the increase in online gambling, and whether some of that slack is taken up there?

Ms Levine : It is possible. We could do that analysis.

Mr CIOBO: But this is consistent with the overall rate dropping by some 18 per cent.

Ms Levine : Yes.

Mr FRYDENBERG: Sorry for coming in a bit late, but in terms of the methodology and so forth: was this work commissioned?

Ms Levine : No. This is part of our ongoing work, which we call Roy Morgan Single Source. We ask questions about demographics, gambling and all sorts of activities—media usage and a whole range of things—that we then package up and people subscribe to it.

Mr FRYDENBERG: So did you say 1,200 a week?

Ms Levine : Yes.

Mr FRYDENBERG: So those people are paid to come and be interviewed?

Ms Levine : We do a cross-section of people and we go out to their home addresses. We select them randomly, go to their houses, interview them there and then leave them with some self-completion material because some of the things actually require that they think about dollars that were spent et cetera. So there are the two components of it. But it is completely independent.

Mr FRYDENBERG: Are they paid to—

Ms Levine : They are—they are incentivised. Over this decade there has been more incentivisation.

Mr FRYDENBERG: In terms of—

Ms Levine : Gifts, incentives, donations to charity—a range of choices that people make for their ‘reward’.

Mr FRYDENBERG: And you say here that results will be weighted to reflect the geography, age and sex distribution.

Ms Levine : Yes.

Mr FRYDENBERG: So it is all balanced?

Ms Levine : We seek actually to get as perfect a sample as you can. But life is never perfect, so you weight and project. It is a fairly sophisticated weighting system—age within gender within geography—so that you are actually getting a really good representative set of data.

Mr STEPHEN JONES: I presume you do map the change over the last decade in participation in higher education of 18- to 24-year-olds: would you get the mirror opposite of that?

Ms Levine : I do not know the answer to that.

Mr STEPHEN JONES: I reckon you would.

Ms Levine : You may—

Mr STEPHEN JONES: I am just guessing, but I reckon—

Ms Levine : All of these kinds of questions are easy to do at the tap of a data query. We definitely have seen education levels increasing—massive increases in education levels across Australia. There is that one dimension flying in the face of this. It may well be that the better educated you are the less likely to gamble you are—that sort of thing.

Mr STEPHEN JONES: I am not necessarily making that conclusion—although you might. I am just saying that they are more likely to be spending their spare time either working or studying on youth allowance than the same cohort would have been 10 years ago. We are dealing with sources of alternative—

Ms Levine : It is a really interesting hypothesis, and looking at gambling as part of a whole repertoire of leisure activities is a really good study that could be done. I think that is important. But we are also seeing, overall, less drinking, less smoking and less gambling. We are seeing those things trending down in general. You might want to keep moving because we have some really good stuff to get to.

Mr Woodcock : We have! I have gone to the slide of chart 6 because it is a very important slide. It says that $18.1 billion is the total amount of money Australians have lost or spent on gambling in the last 12 months alone.

Mr CIOBO: Which is it—is it lost or is it spent?

Ms Levine : What they call ‘spent’ is.

Mr Woodcock : We asked them what they have spent.

Mr CIOBO: So it is turnover?

Ms Levine : No, it is not. As I understand it—and correct me if I get this wrong—the Commerce Commission data, which records the pooling of government revenue from gambling, comes up with a similar number to this. So it is a loss, really.

CHAIR: So this is net of the 84, 85, 86, 87 or 92 per cent return, or whatever it might be.\

Mr Woodcock : That is correct. This is the amount that consumers spend.

Mr CIOBO: 'Spend' is different; it is important to get the language right.

Ms Levine : At the end of the day, this is a really vexed question, and people go insane wondering what you ask a person who is going to gamble. Have they spent? Have they lost? How much were they willing to spend? There are all those sorts of things. In practice we found that if you talk about how much they spent they get it. When we add up the numbers we come up with the same sort of numbers as the state revenues pooled together. And this is quite an important thing, too, about data validity. If when asking people about these numbers we came up with $50 billion we would know that the numbers were just too rubbery—that people could not remember or there was something wrong with the data. When you survey people you ask them, you add up all the numbers, you weight it and you project it. And when your numbers gel with a totally different source you feel comfortable. You feel comfortable enough to then drill down into what kinds of people they are—old and young, rich and poor, from the country and from the city.

Mr CIOBO: So this is an anecdotal figure, is it? I know it is calculated. When I say it is anecdotal I mean that you say to your interviewee, 'How much did you spend?'

Ms Levine : Correct.

Mr CIOBO: And they would say, 'A hundred bucks'. What I am saying is, you calculate that—

Ms Levine : It is a reported figure. It is a recalled and reported figure.

Mr CIOBO: It sounds interesting. You are saying that correlates with expenditure as recorded or revenue as recorded by the various state jurisdictions.

Ms Levine : Correct. Every time we ask people these tricky questions we think: how is this going to work? It is like when we asked people about their loans and how much they still owed. We thought: are we going to get the truth? But when you put it all together and you weight it and project it and it comes up the same as the Reserve Bank estimates you say, 'Well, it's all working.' Funnily enough, people find it easier to just tell you the truth than not to.

CHAIR: I am just a little bit confused by the churn. If they go in at 20 bucks and they win $100 and then lose $100 and then lose the $20, have they lost $120? Or have they lost $20? I would say they have lost $20.

Mr Woodcock : They believe they have spent $20. That is why they use that analogy from the consumer's perspective.

Ms Levine : So, back to what we found.

Mr Woodcock : We estimate that $18.1 billion was spent last year—2011, the 12 months. The interesting thing about that chart—actually, there are a few interesting things—is that 60 per cent of those dollars are poker machine dollars, or $10.9 billion. Bearing in mind that only 25 per cent of the Australian population have played poker machines and that a huge number have played the lotteries, it is quite phenomenal that 60 per cent of the dollars are going through poker machines.

Mr CIOBO: Not really. Sorry, but this is the value-laden stuff that I take exception to. The average punter on the poker machine probably plays for an hour; the average person who reports as buying a lottery ticket probably scratches the ticket for somewhere between 15 and 20 seconds and does it once. There is nothing particularly—

Ms Levine : It is not meant to be value-laden.

Mr CIOBO: No. I am not trying to be rude, but that is why I think it is—

Senator XENOPHON: I take exception, Mr Ciobo.

Mr CIOBO: Hang on—you can in a second. My point is that that is why it is very important that we use neutral language. It is not phenomenal; it is entirely consistent with the fact that somebody who buys a lottery ticket for two bucks and scratches it for 15 seconds spends less money than someone who plays a poker machine for an hour. That is all my point is.

Mr Woodcock : Okay.

CHAIR: I am acutely aware that Roy Morgan Research collects the data.

Ms Levine : Yes.

CHAIR: And you have been very generous with your time telling us what data you have collected.

Mr Woodcock : Chart 7 shows that trend over time. You can see that $18.1 billion—that is trending down. Perhaps more importantly, that $10.9 billion collected from poker machines in the last 12 months has trended down significantly from $14 billion 10 years ago. Nearly all of those revenue streams, if you would like to call them that—or money spent on each of those forms of gambling—are trending down, except for betting, which is made up of racing and sports betting, and that has slightly increased to $3.6 billion. There is about $2.6 billion of racing and $1 billion on sports betting.

Mr CIOBO: Presumably that is real dollars, is it?

Mr Woodcock : Yes, real dollars.

Ms Levine : No, no—what do you mean by that?

Mr CIOBO: Adjusted for inflation.

Ms Levine : No, they're straight dollars, aren't they?

Mr Woodcock : Yes, they're unadjusted.

Mr CIOBO: So they are not adjusted for inflation?

Ms Levine : No, they are not.

Mr CIOBO: So the real spend is significantly lower.

Ms Levine : Yes, if you were to do that kind of adjustment in today's dollar versus the past. These are the dollars that people told us and that we calculated in 10 years ago.

Mr CIOBO: Over a period of 10 years, in real terms the drop in expenditure would be massive, if these are nominal dollars rather than real dollars.

Ms Levine : Yes. There has been no apparent change in that.

Senator XENOPHON: Perhaps I could just add something—without shooting the messenger or even aiming at the messenger! The Productivity Commission came up with quite different figures. From the various state and territory gambling authorities there are figures, because of the monitoring of machines now, on how much is actually lost on poker machines. Do these figures correlate with those figures?

Ms Levine : I do not think they are different at all. There is no substantive difference, no.

Senator XENOPHON: Does the figure on casino table games include the poker machine losses at casinos?

Mr Woodcock : Yes, it does.

Senator XENOPHON: So it is casino table games, including poker machine losses at casinos. Is that correct?

Mr Woodcock : Sorry, no—casino table games means purely the table games.

Senator XENOPHON: So the casino loss figures would be in the poker machine figure, because you have extrapolated those?

Mr Woodcock : Playing a poker machine at a casino is included in the poker machine number. Chart 8 summarises most of that information that we have talked about before. The highlight, I guess, is the average spend per player in that right-hand column. The average Australian spends $1,641 per annum gambling. The average poker machine player spends $2,407 per annum on poker machines. So that is a very good summary table that shows the number of participants, the spend—which does correlate with the Productivity Commission numbers quite well—and therefore the average spend per player.

We have put Chart 9 in there because the internet as a method of gambling has come on the scene quite strongly in the last year or two. Our figures are showing that 5.8 per cent of the Australian adult population have used the internet to gamble in one form or another in the last 12 months. That is about one million Australians.

Mr STEPHEN JONES: It goes up in an election year.

Mr Woodcock : It possibly does.

Mr STEPHEN JONES: It goes up in the NRL and the ARL season as well.

Mr CIOBO: What were those numbers again?

Mr Woodcock : In Chart 9, it was 5.8 per cent, or about one million people. Of the gamblers in Australia—the 63 per cent we talked about earlier on—that represents 9.3 per cent who have used the internet to gamble in the last 12 months, of all the gamblers in Australia. You can see that of the poker machine players only 2.4 per cent have played the poker machine online—a very small number. Of the betters, or wagerers, 15.5 per cent have actually used the internet to do their wagering at least once in the last 12 months. And it is a very small number for lottery tickets, at 3.7.

Mr CIOBO: It has been put to me that a lot of internet gambling now is a transfer of on-course betting, for example, across to the web. You know what lies behind these numbers, so is that consistent with your observation? Or are you not in a position to judge?

Mr Woodcock : It is a hard question to answer. There has definitely been a flattening of the wagering in the conventional way—at conventional outlets, in terms of the number of people who are using a TAB or similar outlet to wager—and an increase in the number of people who are wagering online. But the biggest increase in the number of people wagering online has been for sports betting. Rather than a swap from going to the TAB to bet on a horse race to go online, the increase has occurred in the number of people who are using the online activity for sports betting.

Senator BACK: So it is the same form of wagering but just doing it differently.

Mr Woodcock : It is a different bet, yes—a different activity.

Mr CIOBO: Given, then, that we know that overall gambling has declined both in terms of incidence and in terms of total spend, where is that cannibalising?

Ms Levine : Do you mean where is the money going?

Mr CIOBO: No, I mean where is it coming from; what is getting cannibalised? We know the incidence is declining and we know the total spend is declining, but you are saying that the incidence of people gambling in what we could call new betting derivatives, like sports betting, is increasing. So where is that coming from? Where is it declining? Overall the number of bets has actually increased, I think you said.

Mr Woodcock : The amount of money that is being bet per person has stayed about the same. The number of people betting has declined, and therefore the amount of revenue has declined. What are people doing because they are now not betting like they were doing before? What they are doing with that money is a very difficult question to answer.

Mr CIOBO: What I am asking is this. The person who now bets on an NRL outcome, for example—and this is obviously broad-brush—historically would have bet on something else. Which sector are we seeing declining in order for that to be supplemented by an increase?

Ms Levine : I think we do not know the answer to that strictly. Everything is declining, so theoretically from that they could be coming from anywhere. What you would need to do is analyse the data to see what kinds of people were doing what sorts of things. Otherwise you would need a longitudinal study, such as asking, 'What were you doing before you did this?'

Mr STEPHEN JONES: Somebody who bets on the NRL is an NRL aficionado; somebody who bets on the nags is a nags aficionado. They are unlikely to transfer between the two. They may also play pokies.

Ms Levine : That is a good thought, and we could check that in the data. That could be an analysis, because we know whether they are an NRL aficionado, we know what they do in terms of football, we know whether they attend horse races and whether they watch the races. You would see whether they are two different bunches of people—are they primarily gamblers who gamble on anything, or are they footy freaks who are happy to engage in football in whatever form it is?

Ms BRODTMANN: And there are also new products on the market, particularly with sports bets.

Ms Levine : Absolutely.

Mr STEPHEN JONES: And Smartphones.

Ms Levine : Yes, and what we see with so much technology is that whatever is there, people will trial. They may not necessarily be engaged in any of the activities that are being presented to them, but then it is on their phone and they will have a go. So that is what technology does as well. And we are tracking all of that. For all of that you can see whether people are taking up new forms of technology, and you could analyse that. They are all really interesting. I knew there would be more questions than answers!

Mr Woodcock : In chart 10 that total pie represents $1.6 billion spent gambling using the internet in a 12-month period. That is the total pool of money that we estimate was spent online. In that top left-had corner is the sports betting number, at 34.9 per cent—that is a very big number—and 32.9 per cent is spent on racing, including the trots and thoroughbreds and greyhounds and so on. They are broadly the same. Those two together represent approximately two-thirds of the total annual internet spend.

CHAIR: I cannot remember the exact figure off the top of my head, but I think we found in our last inquiry that about as much is spent offshore as onshore, online.

Ms Levine : On gambling or just online?

CHAIR: No, about as much was being spent on non-Australian sites, mostly unlawful ones, as was being spent on lawful Australian sites. Does this include just Australian sites?

Mr Woodcock : No, this is both. We asked people to report what their activity has been, and we will pick up what activity people say they have participated in. If it is illegal activity it is very unlikely that they will record it in our questionnaire.

CHAIR: They probably do not even realise it is illegal.

Ms Levine : Maybe even some of what they tell us includes some of that as well. The actual questions asked would probably be quite helpful to you.

Mr Woodcock : There is one last chart before we get into the detailed questions—chart 16. We have had a look at what we have called at-risk gamblers, or you might call them problem gamblers. There are a number of ways and a number of pieces of information that you could use in this survey to identify an at-risk gambler. We have taken the total amount of money they spent on gambling in a 12-month period—any form of gambling—and looked at their total annual income. The key to that chart is the 1,106,000 people who spent 10 per cent or more of their annual income on gambling. Of the total gamblers—the 11 million people—we have one million spending 10 per cent or more of their total annual income on different forms of gambling—horses, poker machines or whatever.

Ms Levine : We really throw that into the mix not on the basis that 10 per cent is a magic number but on the basis that there is a lot of discussion about problem gambling, and it would be a shame if that just kind of evaporated because people could not define 'problem'. Is it a self-defining thing? Whenever it is discussed I hear debate around what it is. Maybe nobody will ever get a grip on it. Sometimes it is quite useful to ask whether there is something solid you can start with. So we started and asked, 'What about if you said 10 per cent of your income is spent on gambling?' It may be that it is decided that it has to be 20 per cent. As I said, there is no magic, but if you look at that there are a million people who are spending 10 per cent on gambling.

Mr Woodcock : Down the bottom we have shown that they represent 1.1 million people who spend $12.7 billion per annum on all forms of gambling.

Senator BACK: Again, perhaps I could ask—through the chair—and going back to the question that is actually asked of a person in their kitchen, are they asked, 'How much do you spend on gambling?' Do you have that as a proportion of their income, or do you specifically ask them how much they lose? I do not bet, but if someone said to me, 'How often do you go to the gallops and how much do you bet?' my answer would probably be '50 bucks'. But that would be a different answer to the one I would give if I was asked how much I lose. I know all about losing at the poker machines, but we are talking now about horse racing, about which I do know a fair amount. Most people would answer the question in terms of what they spend, not in terms of what they would actually lose. Perhaps you could let me know if the question that is framed is a question about spending or a question about losing.

Ms Levine : It is about spending.

Senator BACK: So when you say that that 10 per cent—

Mr STEPHEN JONES: Say I walked in with 50 bucks in my wallet and walked out with zero, it does not matter how much you churned while you were there at the course. It might have gone up to $200—

Senator BACK: That is exactly what I am trying to get to.

Mr STEPHEN JONES: That is the point; it is the walk-in walk-out amount.

Ms Levine : We have found that that question actually gives us the most reliable data—the data that seems to validate against known facts. But it is important that we do not ask people what proportion of their income they spend on gambling. We go through the details such as 'Which of these things have you done?', 'How often do you do it?', 'How much did you spend on the last occasion?' or whatever. It is quite a detailed thing.

Mr STEPHEN JONES: I think the question goes to, 'You won big on the first race and blew it all on the other races and walked out with nothing.'

Ms Levine : Yes.

Mr STEPHEN JONES: Your question does not answer that churn while you are at the course.

Ms Levine : No, I do not think it does. It seems to measure that walk-in walk-out.

Mr STEPHEN JONES: Which is fine.

Ms Levine : Yes. But I know it is easy to be paralysed by considering whether you should ask this and whether you should ask that. There are many different views, and we have spent an inordinate amount of time trying to come to terms with the right one. At the end of the day we come back to spend. That seems to be the one that does the trick to get, overall, an accurate piece of information.

Senator BACK: And you think that term 'spend' does reflect what you are saying, Stephen: the difference between what you walked onto the course with and what you walked off with.

Ms Levine : Yes.

Senator BACK: That would surprise me, just in terms of how I would have thought people would respond.

Mr Woodcock : We have done a lot of correlation of our results with other publicly available data. The University of Queensland has some very good data. The Productivity Commission a couple of years ago did two excellent studies. The state governments collect a lot of this factual data—it is absolutely factual. So with the correlation we have done we are very comfortable with the way our numbers match publicly available information on each of the different forms of gambling.

I will make one last point about chart 16 before we move on. The bottom right-hand corner talks about the annual average spend of an at-risk gambler. We talked about how the average player spends $1,641 on gambling. These at-risk players we have identified in this way—by saying that 10 per cent of their income or more was spent on gambling—are spending an average of $11,499 per person each year. We thought that was a fairly good identification of an at-risk gambler.

Senator XENOPHON: Through you, Chair: what definitional basis did you use? Was it the Canadian Problem Gambling Index, or another index?

Ms Levine : No, it was 10 per cent.

Mr Woodcock : Just 10 per cent of the annual income of the individual.

Senator XENOPHON: So that was your threshold—there were no other factors?

Ms Levine : No. We want to be clear: we are not actually making that as a positioning statement at all. We just want to say that it is possible to look at these things in terms of a factual piece of information like that. Perhaps, Norman, it is worth mentioning something about the kinds of people who tended to fall into that category.

Mr Woodcock : Yes. We actually had a look at that category and also a category in which people spent 30 per cent of their income on poker machines. I wrote down very quickly some of the characteristics of that particular group. One of the key factors was that they spent a lot of time at a venue on a poker machine. It might sound really obvious—if you spend a lot of money you spend a lot of time—but that is not necessarily the case. We thought they spent on the high-revenue machines—the $1 and $2 machines. But there is not a correlation between an at-risk gambler and the dollar value of the bet on the machine. It is almost not related at all to the size of the bet but is very strongly related to the amount of time you spend in a venue. And some of these people, as we know, are spending three, four or five hours at a venue. They tend to be older—50-plus, 60-plus—and to have lower socioeconomic characteristics, poorer education, coming back to Stephen's earlier point. They are far less likely to be working at all. Often they are retired, because a lot of them or over 50 or over 65. They are more likely than the average person to be living alone, with no children in the house. I am not going to describe them as lonely, but they are certainly living in the house on their own.

Mr CIOBO: That is consistent with anecdotal evidence we have as well.

Mr Woodcock : Yes.

Mr CIOBO: With respect to your at-risk gamblers, you have also identified people who are professional gamblers, haven't you?

Mr Woodcock : We could. Are you talking about the amount of money? Is that how you would define a professional gambler?

Mr CIOBO: I am just saying that I have read on the front page of the Australian, I think it was—going back several months—that one of the biggest horse wagerers on the planet spends a million bucks a year—and I would say 'spends', rather than 'lost'—betting on the gee-gees. I am going to guess that he is spending more than 10 per cent. Whether he is a problem gambler is a whole separate issue. That is all my point is.

Mr Woodcock : I doubt whether he is in our survey!

Mr CIOBO: He is a professional punter. I know that is how he earns his income. But my point is that he could be completely in control in spending more than 10 per cent. You have also identified in here professional gamblers.

Mr Woodcock : Yes, that is right. And a lot of these people may not be problem gamblers. If you earn $100,000 a year and you spend $10,000 on the races, are you a problem gambler? In our classification we have called them at-risk gamblers.

CHAIR: I am very conscious of the time, and Senator Back looks like he needs to leave. Do you have any questions you want to ask before you go?

Senator BACK: No, but I am going to study this in more detail. I have found it very interesting.

Mr STEPHEN JONES: Chair, I have to go, but I thank you for a very interesting and full presentation.

CHAIR: We need to follow this with a committee meeting. We will wrap this up shortly.

Ms Levine : If you have any more questions, over to you. Otherwise we will let you get on with your meeting.

Mr CIOBO: I have one question. Is there anything we have discussed today that you would not be comfortable having published? So the committee could perhaps publish that?

Ms Levine : No, we are comfortable.

CHAIR: Is there anything else from Roy Morgan?

Ms Levine : No.

CHAIR: I have found this really very helpful, much of it consistent with other evidence we have heard and some of it not.

Ms Levine : I think there were a few surprises.

CHAIR: Yes.

Ms Levine : But hopefully what it shows you is that there are some facts available and that it is possible to drill down, hypothesise and test some of those hypotheses. Thank you for your time.

CHAIR: No, Ms Levine and Mr Woodcock, thank you for your time. That has been a really helpful session, and you are very generous—the three of you, and Roy Morgan.

Senator XENOPHON: And no shots were fired at you! It was more between each other.

Ms Levine : We are very glad!

Mr Woodcock : Thanks for saying that; that makes us feel much better!

CHAIR: Safe travels to you. Because we only have the room for a little bit longer and because people have other commitments, we might go straight into the committee meeting.

Committee adjourned at 16:59