Expenditure on electronic gaming machines (EGM) located in hotels and clubs fell across most regions of South Australia in 2016/17. These results are contained in the latest edition of SACES’s Gambling Database which provides regional level data on gaming machine activity in South Australian licensed venues (excluding the Casino).¹ The database is compiled from data provided by Consumer and Business Services.

Total expenditure – or player losses – on EGMs in South Australia fell by $38.3 million or 5.3 per cent to $680 million in 2016/17. The decline in expenditure was broadly based, with 41 of the 44 regions (93 per cent) in our database recording a fall in expenditure in 20016/17. The only regions that recorded an increase in EGM expenditure were the local government areas (LGA) of Wakefield (up 1.6 per cent), Alexandrina (up 0.6 per cent), and the grouped LGAs of Kimba, Cleve, Tumby Bay and Franklin Harbour (up 0.3 per cent).

A continued long term decline
The recent fall in EGM expenditure for South Australia was the largest annual decline in both aggregate and proportional terms. It continues a pattern of falling expenditure that has been evident since expenditure peaked in 2006/07. Total EGM expenditure in 2016/17 was down $112 million or 14 per cent from its peak of $793 million in 2006/07. Those factors behind the continued decline in EGM expenditure are uncertain, but probably include a combination of:

• broader economic factors that have negatively impacted discretionary spending at various times, including the Global Financial Crisis of 2007 – 2008, and more recently, sluggish wages growth over recent years associated with weaker macroeconomic conditions;
• maturation of the EGM industry whereby it has lost its novelty factor, leading to a decline in participation – previous prevalence studies indicate that participation in EGM gambling fell between 2005 and 2012;
• emergence of other forms of entertainment (e.g. smartphone applications, internet entertainment services etc.) and gambling activities (e.g. sportsbetting); and
• changes in problem gambling – it is possible that EGM related problem gambling has declined, but this is a purely speculative suggestion in the absence of any recent prevalence studies.

Looking at changes over the 10 years to 2016/17, all regions with the exception of Clare and Gilbert Valleys experienced a decline in EGM expenditure. Excluding unincorporated and very remote areas, the largest proportional declines in expenditure over this period occurred for the group of Roxby Downs, Coober Pedy and Flinders Ranges (-46 per cent), Wakefield (-41 per cent), Adelaide (-39 per cent), The Coorong and Tatiara (-39 per cent), and the groups of Kimba, Cleve, Tumby Bay and Franklin Harbour (-36 per cent), and Goyder and Northern Areas (-34 per cent). Regional areas clearly figure prominently in those areas experiencing relatively large declines, which may reflect factors such as weak population growth or even decline, and the impact of the mining downturn.

Large regional variances in EGM activity persist
There remain quite large differences in EGM activity across regions. The Adelaide LGA continued to have the highest level of relative expenditure on EGMs in 2016/17 at $1,099 per adult, which of course reflects its role as a major entertainment hub. For similar reasons Norwood, Payneham and St Peters ($1,021 per adult) had the second highest level of relative expenditure. It was followed by Port Augusta ($927), Whyalla ($810), Port Lincoln ($774) and Gawler ($751). On the other hand, relative EGM expenditure was quite low for Goyder and Northern Areas ($114 per adult), the Adelaide Hills ($133), Mitcham and Burnside ($160), and Light and Mallala ($190). Such regional variances are the product of multiple complex factors, including differences in the relative prevalence of gaming venues and machines, socio-economic conditions, demographics, consumer tastes, and presence of complementary facilities and services (e.g. retail and entertainment) that attract visitors.

In terms of the prevalence of gaming machines, there was an average of 9.0 machines per 1,000 adults for South Australia as at 30 June 2017, down from a peak of 12.7 machines per 1,000 adults in 2003.

The prevalence of EGMs in 2017 was highest for Adelaide (38 machines per 1,000 adults), Roxby Downs, Coober Pedy and Flinders Ranges (23), Port August (21), Yorke Peninsula (20), and Berri and Barmera (20). At the other end of the scale, EGM density was lowest for Mitcham and Burnside (2.5 machines per 1,000 adults), Campbelltown and Tea Tree Gully (3.6), Marion (4.5), Playford (5.3) and Light and Mallala (5.5). Such regional variances in EGM density have been relatively stable over the past 10 years.

[1] The regions are comprised of local government areas and grouped local government areas. The latter has been adopted where there are less than 5 venues in order to protect the confidentiality of individual venues.