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Cost Benefit Analysis of Interactive Gambling Act 2001. Presented By: Josephine Chuk & Paul You. What is Interactive Gambling Act 2001?. Passed on 28 June, 2001 Objective of Act:

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Cost Benefit Analysis of

Interactive Gambling

Act 2001

Presented By: Josephine Chuk & Paul You


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What is Interactive Gambling Act 2001?

  • Passed on 28 June, 2001

  • Objective of Act:

    To address the issue that interactive gambling may provide a “quantum leap” in access and an increased risk of problem gambling.

  • Content of Act:

    Prohibits online casinos from taking bets from Australian Internet users but allows the provision of interactive sports betting and wagering services.


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Growth in Australian Gambling Expenditure

1987/88: $45 B

1997/98: $115 B

256%


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Expenditure by Type of Gambling Activity

Gaming machine & casino shares 72% of total, grow by 190%


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IGA2001 Benefit-Cost Analysis Framework

CBA of IGA2001

“Without” Path

“With” Path

Opportunity Cost of IGA2001

Externalities of IGA2001

Benefit of IGA2001

Cost to Implement IGA2001

Other

Externalities

Social Impact of IGA2001Implementation in & outside Gambling Industries

“With”Case

“Without” Case

Positive Impact

Negative Impact

Net Social Impact

Net Benefit or Cost of IGA2001 in 2003

Net Benefit/cost of IGA2001 in Perspective


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Net Impact Measurement Framework

Positive Impact

E

A

C

Negative Impact

D

F

B

ABCD: Gambling Industry

CDEF: Internet Industry

CD: Internet Gambling

  • What we want to measure: C – D

  • How we measure: C – D = (A+C-A) – (B+D-B)

    • A+C-A: Positive Impact

      • A+C: “Without” Case

      • A: “With” Case

    • B+D-B: Negative Impact

      • B+D: “Without” Case

      • B: “With” Case


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Positive Social Impactsof IGA2001 Implementation

  • Consumer Surplus

  • Taxation Effect

  • Adjustment for Problem Gamblers

  • Adjustment for Problem Gamblers with Taxation


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Negative Social Impact of IGA2001 Implementation

Tangible Cost -

  • financial costs (bankruptcy)

  • productivity loss

  • job change loss (income, job replacement)

  • crime and legal cost (police, court, jail sentences)

  • Problem gamblers treatment costs

  • loss of online gambling revenue

  • additional legal cost on illegal website

    Intangible costs –

  • Personal and family cost (distress, relationship break-up, depression, etc)

  • Diminish people’s enjoyment benefits




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