A 13 to 1 benefit to cost ratio

May 16th, 2013 at 1:00 pm by David Farrar

The Herald reports:

The Department of Internal Affairs has warned the Government that extra pokie machines at SkyCity, resulting from its convention centre deal, risks increased harm to the community, Steven Joyce confirmed yesterday.

Gambling opponents cite research suggesting the extra 230 pokie machines alone could cost society as much as $6.6 million a year. But with the Government touting a $90 million annual boost to the Auckland economy from the international convention centre, Cabinet “decided on balance that it was best to go with the deal”, Economic Development Minister Mr Joyce said.

That’s a 13:1 benefit to cost ratio. Not even close to marginal.

Costs at a glance

230 extra pokie machines at SkyCity
184 extra problem gamblers
$36,000 a year’s potential cost to society of each problem gambler
$6.6m total annual cost to society of additional problem gamblers
$90m annual injection into the economy from the international convention centre

They loo pretty good numbers to me. 800 more people in jobs.

Tags:

35 Responses to “A 13 to 1 benefit to cost ratio”

  1. labrator (1,879 comments) says:

    I’d like to see some of the vitriol directed at this convention centre deal also directed to Lotto. Now that’s real state sponsored gambling.

    Vote: Thumb up 14 Thumb down 1 You need to be logged in to vote
  2. Judith (8,526 comments) says:

    Actually what a great idea – better for the economy! I like that.

    Why don’t we do the same with P and other such drugs – lets make the dealers pay taxes and add their income to the economy figures – think of the boost. Hell, they could even build huge convention centers to deal them from. Perhaps not, we’ve got one of those coming, maybe a multi-storey whore house then.

    Why the hell are we stopping with gambling addiction – lets make it open season on any addictive substance – think of the profits and the jobs.

    Vote: Thumb up 0 Thumb down 13 You need to be logged in to vote
  3. alex Masterley (1,504 comments) says:

    So, 230 machines in Sky city means that 184 problem gamblers will instantly appear there (over and above those using the machines).

    The logic escapes me.

    Popular. Like or Dislike: Thumb up 20 Thumb down 0 You need to be logged in to vote
  4. unaha-closp (1,154 comments) says:

    But that’s all the growth we can get because our idiot government banned all new investment in the sector for 35 years.

    Vote: Thumb up 3 Thumb down 3 You need to be logged in to vote
  5. ross69 (3,652 comments) says:

    Why the hell are we stopping with gambling addiction – lets make it open season on any addictive substance – think of the profits and the jobs.

    So true. Think of all the revenue the govt could rake in if it legalised marijuana. The benefits surely would outweigh the costs…which it seems is the only criterion worth worrying about.

    Vote: Thumb up 1 Thumb down 8 You need to be logged in to vote
  6. DylanReeve (181 comments) says:

    Where does the 800 new jobs number come from? I’ve seen it a few place – no idea where it comes from.

    Vote: Thumb up 0 Thumb down 3 You need to be logged in to vote
  7. ross69 (3,652 comments) says:

    But with the Government touting a $90 million annual boost to the Auckland economy from the international convention centre…

    OK, so that’s not a real figure, just one that Joyce hopes to achieve. We’ll see if the reality is different.

    Vote: Thumb up 0 Thumb down 8 You need to be logged in to vote
  8. Lance (2,612 comments) says:

    Yes, I can see the billboards now;
    Vote for the Greens and Labour… we will ban Lotto
    And Booze
    And Pies
    And Chips
    And…. the ‘boil up’.

    Vote: Thumb up 7 Thumb down 0 You need to be logged in to vote
  9. In Vino Veritas (138 comments) says:

    How does 184 new problem gamblers work? In the last MoH statistics on gambling in NZ, 52% of NZ’rs or 1,833,000 people gamble (this includes Lotto and Bingo etc). Around 3% of those people gamble on gaming machines in Casinos. So thats 55,000 people. 22% of any people gambling at gaming machines in casinos are at risk of becoming a problem gambler. Thats 12,100. Only .3% of the total population are considered problem gamblers. So that makes around 11,000 in all of NZ. Not all of them can be from gaming machines in casino’s! to get 184 new problem gamblers, you’d have to add another 61,000 NZ gamblers to the pool, or convert more than the 22% of at risk gamblers – the number would have to go to somewhere around 40%!
    Bottom line, we are talking about very small numbers of people here. It is not the Governments role to protect people from themselves constantly, isnt that one of the reasons that Labour got voted out in 2008?

    Vote: Thumb up 11 Thumb down 0 You need to be logged in to vote
  10. Elaycee (4,346 comments) says:

    @labrator: A valid point re Lotto. A similar observation could be made about the TAB…. for example, there is nothing to stop someone placing a $100,000 bet on a horse running 1200 metres – a scenario that could see them lose the lot in a matter of 70 seconds. Whereas, it is physically impossible for someone to do that via a gaming machine. But do we hear any shouting from the zealots about the TAB? Or internet based sports betting? Or organised poker tournaments? Nah – of course not.

    Hypocrisy is alive and well in the land of the anti-gambling zealot.

    What these zealots also fail to recognise, is that there is no ‘magic arm’ dragging people into the various Sky City venues – people go there of their own volition. And, it’s a sad fact that there are people in society who cannot manage themselves when it comes to gaming machines. But that should not prevent the 96% of people that don’t have a problem, from going to Sky City and enjoying themselves. But the zealots have a myopic outlook on life – if they don’t like something, then no-one else should be able to do it.

    It’s pathetic.

    Vote: Thumb up 7 Thumb down 0 You need to be logged in to vote
  11. MD (62 comments) says:

    These are clearly the 184 people, who want to be problem gamblers but haven’t made it to the front of the queue to play on a pokie machine yet. When they get there Whammo!
    I am concerned about the proliferation of pokie machines and problem gambling, but the least worst place has to be an existing venue where there are already significant numbers of pokie machines. In fact if they keep the sinking lid that just means it’s coming out of some of those other places as they come up for replacement, a far better alternative. And there are some constraints in place for them to manage problem gamblers, which doesn’t happen at your local “sports bar”.

    Vote: Thumb up 8 Thumb down 1 You need to be logged in to vote
  12. RRM (9,735 comments) says:

    It’s all very well in a theoretical space to monetize the “cost to society” of a problem gambler as $36k… but that cost is borne by his kids who don’t get fed properly. To then talk about this being “well worth it” barely a week after arguing we should not do food in schools… But we should encourage the crap parental irresponsibility that makes those kids hungry in the first place… It makes economic sense… I’m sorry but that stinks DPF. Do you see why the left is able to make hay out of “tory scum don’t care about poor kids”…?

    It’s a great deal for you and me because we aren’t the ones paying the cost.

    Vote: Thumb up 3 Thumb down 6 You need to be logged in to vote
  13. dishy (241 comments) says:

    Let’s see……$6.6m……230 machines……so that’s an average annual cost to society of $28,695.65 per machine. Golly.

    What’s the “research”? Which populations is it based upon? Does it take into account the number of new pokies as a proportion of existing pokies? Does it take account of population size and the ratio of visitor users to local users (We’re talking here about an international convention centre, not some local boozer). How is the cost to society established and calculated? Are we talking net cost? I’ll leave it for somebody else to ask whether the $6.6m includes GST.

    Vote: Thumb up 4 Thumb down 0 You need to be logged in to vote
  14. dishy (241 comments) says:

    Dylan: Many of the jobs will be for those who are employed to build the centre, or work in the centre itself or industries that support it.

    It’s easier to see where the 800 jobs will come from than it is to see where the FIVE THOUSAND jobs will come from if people can save $6 a week o.n.o. offer on their power bills.

    Vote: Thumb up 5 Thumb down 0 You need to be logged in to vote
  15. Kea (11,878 comments) says:

    If hard working Asian folk want to buy NZ a flash convention center I think the Department of Internal Affairs should simply say -Thank You- and leave it at that.

    Vote: Thumb up 3 Thumb down 0 You need to be logged in to vote
  16. Elaycee (4,346 comments) says:

    @In Vino Veritas: Good points. Some zealots throw numbers around like confetti….

    The anti-gambling website ‘Choice Not Chance’ (who has the slogan “Let’s choose to end harmful gambling”), states:

    For many of us, gambling is an enjoyable activity and we do not experience any direct problems. While the actual number of problem gamblers is not known [my emphasis], it is thought that between 10,000 and 60,000 New Zealand adults have a gambling problem [my emphasis again].

    Not known..? It is thought..? Between 10,000 and 60,000..? Guesswork, much?

    But, even using their higher figure, it suggests that less than 3% of the adult population has a ‘problem’ with gambling. ALL gambling. That includes TAB, Lotto, Scratch & Win, Poker, Roulette, Blackjack, Internet betting, Housie etc, – as well as machines. I’m not suggesting these people shouldn’t be helped – far from it. But the numbers need to be kept in perspective. It’s no different to suggesting that we shouldn’t be able to drink a glass of wine with dinner at night – because some people in society cannot handle it. Because both suggestions are patently absurd.

    It seems very clear that the zealots have a political agenda in play. Because their own numbers don’t match the hysteria when they scream that Sky City should not be building a new Convention Centre (complete with a trade off 230 extra machines and several more table games).

    Vote: Thumb up 3 Thumb down 1 You need to be logged in to vote
  17. Kea (11,878 comments) says:

    Will they make gambling compulsory just like they did with gay marriage and sodomy ?

    Vote: Thumb up 6 Thumb down 6 You need to be logged in to vote
  18. Judith (8,526 comments) says:

    DylanReeve (86) Says:
    May 16th, 2013 at 1:23 pm
    Where does the 800 new jobs number come from?
    ————————————–

    Problem Gambling Councillors and Services related to cleaning up the social mess.

    Vote: Thumb up 0 Thumb down 9 You need to be logged in to vote
  19. Kimble (4,440 comments) says:

    And how much benefit to the non-problem gamblers?

    I am sick of this factor simply being ignored. The anti-gambling wowsers want to think it doesnt exist, its inconvenient that the act of gambling has positive private benefits.

    Vote: Thumb up 4 Thumb down 1 You need to be logged in to vote
  20. SPC (5,531 comments) says:

    13 to 1 ratio, sounds like the return on adult education or insulation of rental property or food in schools.

    Vote: Thumb up 1 Thumb down 1 You need to be logged in to vote
  21. Grizz (578 comments) says:

    Go to Australia. All of Auckland’s pokies put together would fit inside a typical leagues club. The proliferation of pokies in Auckland is minuscule compared to Sydney.

    Vote: Thumb up 5 Thumb down 1 You need to be logged in to vote
  22. OneTrack (2,941 comments) says:

    “Lance (1,919) Says:
    May 16th, 2013 at 1:26 pm
    Yes, I can see the billboards now;
    Vote for the Greens and Labour… we will ban Lotto
    And Booze
    And Pies
    And Chips
    And…. the ‘boil up’.”

    And Coke and McDonalds (well they are big American companies so that means they are “bad”)

    And dairy milk has all that fat in it so you better ban milk. What? Fonterra are giving innocent children fatty milk for free. The bastards.

    Vote: Thumb up 0 Thumb down 1 You need to be logged in to vote
  23. SPC (5,531 comments) says:

    2008

    A PricewaterhouseCoopers study for Adult and Community Education Aotearoa estimates the economic impact of the adult education sector to be between $4.8 and $6.3 billion – for every dollar of government funding invested, between $16 and $22 is generated.

    http://www.stuff.co.nz/dominion-post/news/local-papers/the-wellingtonian/8678669/Adult-student-numbers-plunge

    Vote: Thumb up 0 Thumb down 1 You need to be logged in to vote
  24. OneTrack (2,941 comments) says:

    “Judith (2,480) Says:
    May 16th, 2013 at 1:12 pm
    Actually what a great idea – better for the economy! I like that.

    Why don’t we do the same with P and other such drugs ”

    Well the Greens want to do that too. Metiria wants to pay Maori “entrepreneurs” public money to grow the green stuff. P must be next – “look you can learn all about chemistry at the same time as earning an income for your whanau”.

    Vote: Thumb up 2 Thumb down 0 You need to be logged in to vote
  25. Silly Will Bunions (143 comments) says:

    As I keep saying, anyone who is going to be a problem gambler, already is a problem gambler.

    Extra poker machines will increase the number of problem gamblers by a negligible amount, just as doubling the amount of booze in New Zealand will lead to very few extra alcoholics, if any.

    I speak from experience, both of my own, and my knowledge of others.

    God I hate the words “pokie machine”. Can you imagine playing ‘pokie’ with your mates and a deck of cards?

    “C’mon guys, get the cards out – let’s have a game of pokie”

    Vote: Thumb up 3 Thumb down 1 You need to be logged in to vote
  26. RightNow (6,918 comments) says:

    SPC – I wouldn’t believe the PWC study, I pulled it apart back in 2009 and found a lot of double accounting when calculating PV.

    One interesting figure from it though – the number of survey respondents who undertook ACE primarily for the purpose of improving employment prospects is <6%. Add in those that had improving employment prospects as a secondary reason and the total is about 12%.

    88% of people undertaking ACE weren't doing it to improve their employment prospects.

    Vote: Thumb up 1 Thumb down 0 You need to be logged in to vote
  27. chris (607 comments) says:

    the extra 230 pokie machines alone could cost society as much as $6.6 million a year

    Given the number of pokie machines is dropping every year, we must be saving society millions of dollars a year too ;)

    Vote: Thumb up 4 Thumb down 1 You need to be logged in to vote
  28. James Stephenson (2,118 comments) says:

    So, 230 machines in Sky city means that 184 problem gamblers will instantly appear there (over and above those using the machines).

    The logic escapes me

    Same here. Surely the number of people personality-wise inclined to problem gambling is a constant, so how does an increase in the number of pokie machines nowhere near where most of them will be living cause an increase in problem gambling?

    SkyCity aren’t building a new casino at the heart of a new low-cost housing subdivision are they?

    Vote: Thumb up 6 Thumb down 1 You need to be logged in to vote
  29. RightNow (6,918 comments) says:

    SPC – further on the PWC report in ACE, the table 7.2 suggests private investment in ACE yields 10x the return of government subsidies.

    Table 7.2
    Gross Economic Benefit $million: Funding $ million: Net Economic Benefit $million: NEB: Per Dollar Return
    Private $3,759 – $4,903: $22: $3,737 – $4,880: $167 – $219
    Government $1,142 – $1,526: $66: $1,076 – $1,460: $16 – $22
    Total $4,902 – $6,429: $88: $4,814 – $6,341: $54 – $72
    http://www.crystaladventures.co.nz/ACE/ACEPrice%20Waterhouse%20Coopers%20%20FINAL%20REPORT%20June%2008.pdf

    That seems to me like a massive argument for more private education!

    Vote: Thumb up 1 Thumb down 0 You need to be logged in to vote
  30. dishy (241 comments) says:

    So Judith, you’re having a laugh, aren’t you, when you say that the (supposed) “new” 184 problem gamblers will generate 800 NEW jobs for “Problem Gambling Councillors (sic) and Services”, i.e. 4.35 new jobs per gambler?

    Vote: Thumb up 2 Thumb down 0 You need to be logged in to vote
  31. Viking2 (11,332 comments) says:

    $36,000 a year’s potential cost to society of each problem gambler
    ah Ok, So lets talk about the cost of a criminal, the cost of a beneficiary, the cost of another civil servant, the cost of another council servant and more imortantly the cost of useless MP’s and pollies.

    So I reckon that really the problem gamblers appear tp be the chepest and mybe it might be better to have them than the rest I have listed. :lol;

    Vote: Thumb up 1 Thumb down 0 You need to be logged in to vote
  32. Steve (North Shore) (4,537 comments) says:

    Extra pokie machines everywhere I reckon. The pokies take money from stupid people.
    If you want a little flutter, fine, but the taxpayer should never ever bail out those who can not afford to lose – that becomes Welfare.
    Stop the Welfare and you stop the gambling losers

    Vote: Thumb up 1 Thumb down 0 You need to be logged in to vote
  33. Mark (1,460 comments) says:

    DPF you are being a bit sly here. Not only 230 extra pokies but extra gaming tables to the equivalent of 300 more pokies so in real terms over 500+ extra pokie equivalents so if you recast you numbers based on real numbers the 13:1 benefit ratio may be just a little illusionary. Whilst pokies are regarded as more damaging even if an allowance for that is made the cost benefit is going to be 7 or 8:1 not 13:1.

    I am not against the government decision to proceed here apart from the dodgy way they went about it but the benefits are not quite as great as you try to paint.

    Vote: Thumb up 0 Thumb down 1 You need to be logged in to vote
  34. Andronicus (219 comments) says:

    What’s next? National brand cigarettes, National whiskey and government-owned racehorses?

    Vote: Thumb up 0 Thumb down 0 You need to be logged in to vote
  35. Paulus (2,580 comments) says:

    Please, Please, do not drag me, as I will scream to the media, as you drag me into the Casino to gamble.

    Vote: Thumb up 1 Thumb down 0 You need to be logged in to vote

Leave a Reply

You must be logged in to post a comment.