The 2018 GREF Lecture was given by Dr. Ingo Fiedler of the University of Hamburg. The title of the lecture was The Social Costs of Gambling, where Dr. Fiedler re-examined traditional conceptions of the economic evidence on the social costs of gambling in Germany. Dr. Fiedler has kindly made his slides available as a download.

In his own words, Dr. Fiedler described his presentation as follows:

“Gambling provides fun and enjoyment for recreational players, profits for operators and taxes for the state. At the same time gambling can lead to negative consequences for society form of addiction, match fixing, money laundering, and other form of crime. An economic approach to evaluate gambling compares the benefits to the costs to derive the so called welfare effect on society. However, nearly all studies on gambling focus on specific effects and a comprehensive study combining all effects is missing.

In this talk, quantitative results for Germany are presented to evaluate the whole gambling market as well as its segments. Three scenarios are considered: (1) WHO guidelines that assume fully rational consumers and only account for tangible externalities; (2) adding intangible external effects; (3) accounting for partially rational gamblers which and their quasi-externalities. It can be shown that the scenarios lead to different results in order of magnitude, but the ranking of the different forms of gambling is unchanged: Slot machines are by far the most detrimental form of gambling while lotteries actually add to overall welfare.

The results further allow to identify that the major costs of gambling arise in the form of gambling addiction while the main benefits come from the enjoyment of recreational gamblers. It can thus be concluded that gambling regulators can rely on the share of revenues derived from problem gamblers as a proxy for the necessity to intervene in a market and regulate a product.”

Dr. Fiedler is in the process of applying these criteria to gambling in a number of jurisdictions, with the aim of publishing his findings later in 2018.

Download the presentation in pdf format here – The Social Costs of Gambling GREF Lecture