The reciprocal effects of gambling expenditure and crime.

Background

Gambling is a major social problem in many countries and Australia ranks at the top when it comes to per capita gambling losses. Despite this, very little research has been conducted on the impact on crime of electronic gaming machine (EGM) expenditure, even though they account for the bulk of gambling expenditure in many countries. The few studies that have been conducted on EGM expenditure and crime have mostly been cross-sectional and/or lacked strong controls

Methods

We use panel autoregressive distributed lag (ARDL) modelling to explore the impact of gambling expenditure on crime and the impact of crime on gambling expenditure. Panel ARDL models give us greater control over omitted variables than conventional time series modelling. The panel nature of the analysis automatically controls for time-fixed differences between areas in social and economic characteristics. We use trends in EGM gross profit per local government area (LGA) as our measure of gambling expenditure and trends in the recorded rate of eight crimes in each LGA as our measure of crime. The data span the period from the 28th of December 2015 and the 5th of January 2020

Results

There is a reciprocal relationship between gambling expenditure and crime but the effect of gambling expenditure on crime is much stronger than the effect of crime on gambling. We estimate that every 10 per cent increase in gambling expenditure in New South Wales results in an additional 2,385 assault offences, 2,018 break and enter (dwelling) offences, 1,405 motor vehicle thefts, 1,719 stealing from a motor vehicle offences and 3,515 fraud offences

Conclusions

EGM gambling expenditure is a major driver of crime rates. Governments concerned about crime should take steps to reduce expenditure on EGMs.