Punters spent $14 billion, or $1,000 for every adult, last year as Australia's gambling addiction worsened.

There are about 300,000 Australian adults with "significant" gambling problems and about 130,000 with severe problems, according to a Productivity Commission report.

Gambling is blamed for 35 to 60 suicides each year yet Commonwealth and state laws urgently needed more work to curb social problems caused by gambling, Productivity Commission chairman Gary Banks said.

Many gamblers simply did not understand the odds were stacked against them getting a pay out.

One common misconception was the longer the time spent at a poker machine, the greater the chance of getting a payout.

The report's figures did not indicate how much gamblers won back from poker machines and casinos.

Gambling expenditure rose 15 per cent since 1997/1998 while spending on poker machines soared 57 per cent last financial year, compared to 52 per cent in 1997/1998.