January 22, 2013

# The house always wins

The Herald has a good story about gambling: the total expenditure net of winnings is \$2 billion/year, [update or \$16billion gross] about \$3600 per capita.  That’s quite a lot. For example, looking at the Retail Trade Survey, it’s about twice what we spend on alcohol, and about the same as expenditures on all recreational goods.

What’s harder to tell is how the expenditures break down across

It’s quite possible that the last category is a large fraction of total expenditure, while being a small fraction of total people.

[update: the \$3600 figure includes winnings. Losses are a more plausible \$450/capita]

Thomas Lumley (@tslumley) is Professor of Biostatistics at the University of Auckland. His research interests include semiparametric models, survey sampling, statistical computing, foundations of statistics, and whatever methodological problems his medical collaborators come up with. See all posts by Thomas Lumley »

### Comments

• Martin Kealey

Which half-million (~555,555) people count for the “per capita”? Presumably that excludes everyone who doesn’t gamble at all?

• Martin Kealey

Just to be clear, \$2.068 bn was the net expenditure (spending minus winnings), while the the gross expenditure (turnover) was \$16.06 bn (the quoted “\$3600 per capita”).

• Thomas Lumley

Hmm. That’s a good point. I didn’t check the arithmetic.

Looking more carefully, \$3600 is actually the average gross expenditure, not expenditure net of winnings: 16 billion divided by 4.5 million.

• Steve Black

Another query or two on denominators:

The article begins “New Zealanders lost…” but does this mean that sufficient data is collected so that the Dept of Internal Affairs can remove overseas visitors? Or is there some modelling going one to figure that out from other sources like border control?

Do Internal Affairs and/or the Gambling establishments even have a way of establishing how many gamblers there are? From other surveys of household expenditure? Just curious.

• Thomas Lumley

There was a big survey in 1999, but not much since. I thought it might be in the Health Behaviours Survey along with drug use, but it doesn’t seem to be.

It looks as though the new continuous NZ Health Survey will have a gambling module that rotates in periodically.

I don’t know of data that would separate out foreign gamblers.

• Mark

Does using trademe / online auctions count as gambling?

• Martin Kealey

Life is a gamble; of more interest here is whether one can calculate probabilities & expected returns.

Let’s assume that everyone who bids or sells has a rational utility function and sets limits accordingly.

The bidder’s gamble then is whether one will win the auction, and by how much below one’s bid limit. (The vendor has a corresponding gamble: whether the item will sell, and by how much above the reserve.)

In theory this is a game where nobody loses, provided they behave rationally: heads you win (sale made with an non-negative margin), tails you don’t lose (no sale).

Of course, this is working in isolation. Perhaps for some items, the bids placed by other people may affect your own utility function; especially for unique items like artworks where “collectibility” is important.