Provinces hit gambling jackpot

It’s a rainy Monday evening in Welland, and Main Street seems even more deserted than usual. This southern Ontario steel city has seen better days — unemployment is high, recovery prospects are bleak and many of the downtown businesses have closed their doors, boarded up their windows and beaten a path to the mall on the city’s outskirts.

Yet, through it all, there’s one business on the dilapidated downtown strip that continues to thrive.

Good times or bad, this former department store near the old canal buzzes with excitement. Tonight, as usual, it’s filled to capacity. Welland’s Bingo Palace is doing a brisk business — even on a Monday night.

Harmless night out
The scene here is identical to the one being played out in countless bingo halls across the country. The patrons, most of them older women, have set out their good luck charms and are listening intently for the caller to drone out the next number.

Then, there’s a flurry of activity as they “dab” the corresponding number on their cards. The tension builds again as they wait expectantly for the next number to be called.

Until about a decade ago,he bingo hall was one of the few places (other than buying a lottery ticket or betting at a horse race) where Canadians could legally satisfy their gambling urges.

A weekender to Las Vegas or Atlantic City was also a possibility but those towns were viewed as expensive, sleazy, even downright dangerous destinations.

A bingo outing was a harmless night’s entertainment, a chance to get out of the house and win some pin money. Even if you didn’t hit the jackpot, at least your losses were limited.

Plus, you had the good feeling that all the money was going to a worthy cause. After the operators were paid, all the revenue was forwarded to a local charity.

Governments are addicted
But nowadays, the old smoky bingo hall has some stiff competition for your gambling dollar. With the addition of more than 50 glittering casinos, plus no end of flashy slot machines and a plethora of lotteries to wager on, Canada’s betting scene has hit the big time.

And it seems we’ve all been bitten by the gambling bug. In 2000 alone, we wagered a staggering $18 billion at Canada’s 100,000 gaming outlets. Hardest bit are the provincial governments who’ve grown addicted to the big payouts.

Two factors have driven gambling’s explosion over the past decade:

“It’s promoted extremely well by governments who love the revenue, and it’s fuelled by our seemingly inexhaustible demand for more,” says Jason Azmier, senior policy analyst at the Canada West Foundation, an Alberta-based think-tank which has issued a series of in-depth reports examining the impact expanded gambling has had in Canada.

And this trend shows no sign of letting up. “Our fascination with gambling has yet to be maxed out,” says Azmier.

That’s music to the ears of provinces and territories, which have grown dependent on this enormous new stream of revenue.

Next page: Pays for services

Pays for services
About 10 years ago, cash-strapped provincial governments saw that by easing Canada’s tight gambling laws, they could raise money—without raising taxes—to pay for programs and services downloaded on them by the federal government.

Even though this gambling (or gaming, as governments prefer to call it) revenue became known as “suckers’ tax” or a “tax on the stupid,” governments forged ahead.

And the majority of the public played along, willing to overlook evidence that this involuntary tax was coming out of the pockets of Canadians who could least afford it, many of them low-income Canadians or seniors on fixed budgets.

Where money goes
A recent report by the Canada West Foundation shows how the provinces spent the $18 billion wagered by Canadians in 2000 at lottery retailers, slot machines, video lottery terminals, casinos, horse tracks, bingo halls, etc.

• Right away, $9 billion went to the winners
• Gaming operators, commissions to retailers and the provincial regulatory agencies grabbed another $3.5 billion
• So the combined provincial net profit is $5.5 billion.

This combined provincial windfall was funnelled by the provinces into services, health care, community services and debt repayment.

Out of total net profit, $675 million was shared by14,400 national charities.

A further $174 million went to First Nations from various “on-reserve” gaming events, such as casinos and video lottery terminals.

Provinces pick priorities
Each province determines how it will allocate its gaming profits.

British Columbia is a typical example of how a province divvies up its gaming intake. In 2000, the province cashed in more than $500 million from various gaming ventures.

Of this:

• $143 million went to a special health care account
• $86 million for charities
• $20 million for municipalities
• Ironically, $2 million went to problem gambling programs.

The rest, $272 million, disappeared into the vast pool of money in general government revenue and is rendered untraceable.

Why won’t the provinces track every gaming dollar?

“It’s simply an issue of accountability,” says Azmier, who points favourably to Alberta as being the only province that accounts for every gaming dollar.

“It’s not like the money is going into some government slush fund, but gambling is such a touchy issue—perhaps we need a system that better tracks where the money is going.”

Next page: Gambling provides boost

Gambling provides boost
But it’s even more important to know where the money is coming from, rather than where it’s going. Many suspect that lower-income Canadians (including many seniors) or those with gambling problems are the major source of gambling revenue.

Obviously, the provinces would rather focus on the positives and it’s hard to fault them.

Nova Scotia is an example of a smaller province that benefits greatly from a liberalized gaming policy. Last year, its gaming profits topped $174 million—used to fund government programs and services such as health care, education and road works.

“Gaming has proved to be quite an economic boost for our province,” says Julia Watt of the Nova Scotia Gaming Corporation, the body that provides policy direction and maximizes gaming revenues in the province.

“Our gaming sector employs about 1,200 people, accounting for $29 million in salaries and benefits,” she says. Plus, the 1,900 video lottery terminal and lottery ticket retailers share about $50 million in commissions.

Watt also points out that Nova Scotian businesses win big as well. Last year alone, Casino Nova Scotia purchased $13.6 million worth of goods and services from local suppliers.

Finally, casinos represent another way of extracting dollars from tourists’ pockets.

Provinces across the country agree gaming creates jobs, increases government revenue and generates tourist dollars. A recent survey at Casino Windsor (minutes from the Michigan-Ontario border) showed that 41 per cent of its patrons were from the United States, most of them saying they wouldn’t come to Windsor for any other reason but to gamble.

Negative economic impact
But the economic boost gaming provides to local and provincial economies is deceptive, says Richard Lipsey, a professor at Simon Fraser University in B.C., who’s researched the effects of gambling in that province.

He feels gambling actually siphons money away from other legitimate businesses. If a gambler is spending his or her extra cash at the casino, local businesses, restaurants and other arts and entertainment venues in that region are losing out.

“It’s easy to point to jobs created in gambling because they are localized and visible. It’s difficult to track the jobs destroyed by the diversion of expenditures [to gambling],” Lipsey argues.

“When dollars migrate to slot machines and away from more labour-intensive activities, such as bars and restaurants, the effect upon the local economy is negative.”

Next page: Work is part-time

Work is part-time
Statistics Canada figures show that gaming now employs 47,000 people across the country. Lipsey counters that figure by saying, one-third of those are part-time employees.

Moreover, full-time gaming sector employees earn $4,300 less a year than their counterparts in the non-gambling sector.

And the increasingly popular electronic gaming machines don’t even need employees to operate them, a fact not lost on the provinces that allow them.

Calculating social costs
But with gambling revenue expected to exceed $10 billion this year, it’s the incalculable social costs that get overlooked most often.

No one knows how many problem gamblers there are (many become quite adept at hiding it). But it stands to reason that as the number of gambling outlets has increased, so to has the number of problem gamblers. 

More tragic than the loss of dignity—not to mention life savings—caused by gambling addiction is the potential loss of life.

In the nine years since Quebec legalized gambling, the province’s coroners have reported more than 100 suicides of those with crushing gambling debts or those who could see no other way out.

Some experts feel this number could be four or five times higher because many suicide victims don’t leave a note explaining their desperate actions.

“How can you measure this loss of life in monetary terms?” asks Azmier, who’s spoken to families who’ve lost loved ones to gambling suicide.

Picture is disturbing
Seniors blowing their life savings, families devastated by suicide—a disturbing picture begins to unravel. Of course, none of these images ever appear in the government-sponsored ads that promote gaming nor are they included in the government’s glowing financial reports that advertise how fiscally successful gaming has been.

That’s why many are calling on the governments to slow down.

“At least, let’s stop gambling expansion until we can get the research done,” says Azmier.

What research is planned? What will it prove? He hopes new research tools will determine where the gambling dollars are coming from and how many people are falling victim to the addiction—ultimately coming up with a way of measuring the social effect on society.

Limit on gambling
“There is a finite limit to how much gambling a society can absorb,” says Azmier, who wants governments to do a better job warning Canadians of the dangers of gambling—as  they do with smoking and drinking.

Meanwhile, back in Welland, someone shouts “Bingo!” A few curse under their breath, others resignedly begin packing up to leave but most look forward to the next game.

The general feeling is that many in the crowd have had an enjoyable evening. The local Lions Club, tonight’s charity, will get some cash to fund worthy local causes.

Pros and cons
Twenty minutes up the road from Welland is the pulsating Casino Niagara, where thousands of people bet vast sums of money 24 hours a day. The cash generated there makes the bingo hall revenue seem pathetic. Yet no one blew his or her life savings at the Bingo Palace tonight. Nor were there any suicides.

Big-time gambling is a source of huge revenue and funds many excellent programs. But do these financial rewards compensate for the tremendously negative effect it can have on people’s lives?

Right now, that’s a bet the provinces seem willing to make. And until their winnings dry up, they’re showing no signs of leaving the table and cashing in their chips.