The Effectiveness of Sinking Lid Policies in Reducing Gambling Expenditure

In many countries, problem gambling is a significant public health concern. Gambling addiction has been linked to poor health, psychological distress, financial difficulties, and strained interpersonal relationships. In New Zealand, problem gambling is estimated to affect over 10% of the population. To minimize harm, the Gambling Act of 2003 was introduced to limit the number of electronic gaming machines in non-casino establishments. Beyond national-level restrictions, local governments were required to adopt gambling policies of their own and review them every three years. One specific policy that emerged at the local level, found exclusively in New Zealand, is the sinking lid. Sinking lids are designed to gradually reduce machine caps by prohibiting the transfer of gaming licenses. This study leverages variation in the geography and timing of local policy interventions to estimate the effect of sinking lids on gambling expenditure. Results suggest that sinking lids reduce gambling expenditure by 13% relative to regions not adopting policies beyond national-level restrictions.