The application of a concentration measure in assessing expenditure and tax yield implications of the distribution of Electronic Gaming Machines

Abstract

Electronic Gaming Machines (EGMs) are a key source of tax revenues for the Australian states and territories permitting their operation. Due to their accessibility, they are also a major contributor to problem gambling and its impacts. This paper introduces the use of a concentration measure, the Herfindahl-Hirschman Index, in assessing the distribution of EGMs and the associated expenditure and tax yields that typically trigger gambling impacts. In its regulation of EGM gambling, the New South Wales (NSW) State Government has relied on ‘EGM density’, expressed as the ratio of resident adults to total EGMs in an area, to assess impacts. The approach proposed in this paper provides an alternative and complementary measure of distribution based on EGM numbers across venues within a defined area, which may also be applied in relation to other gambling modes and jurisdictions.