Nothing reeks of desperation like the provincial government’s latest trip to the gambling-as-economic-strategy well. Calling the changes at the Ontario Lottery and Gaming Corporation (OLG) a “modernization of the system,” the government hopes to increase its revenues by more than $1 billion a year. Of course, we’re told that money will go towards schools, hospitals and other feel-good projects. True, but this is really about increasing revenues to tackle the deficit without meaningful cuts to spending – necessary downsizing – and maintaining the latest pledge not to increase taxes. This modernization is in the same vein as plans to hike driver and vehicle licence fees “to maintain roads and bridges.” You’ll be paying 32 per cent more in two years for the sticker on your plate, from $74 today to $98 in 2014, phased at $82 this year and $90 in 2013.
On the gaming side, the “modernization” includes closing three slots-at-racetrack operations in Windsor, Sarnia and Ft. Erie, coincidentally located near four money-losing border-area casinos. Overall casino revenue is down, in large part due to the strength of the Canadian dollar, border hassles and the stagnant economy. That said, there are plans for more casinos, this time built and operated by private businesses. Oh, the government will get its share, but more of the revenue will flow elsewhere. Not to worry, we’re told, as the moves will create 2,300 new jobs in the gaming industry and another 4,000 spinoff jobs. No mention of what plans to cut the horseracing industry out of the profits (10 per cent) of slots facilities beginning in March 2013 will do to direct and indirect jobs there, however. Host municipalities such as Elora, which has made almost $16 million with its five-per-cent share of the profits since the Grand River Raceway opened there in 2003, face a restructured deal on profit-sharing. Details are still sketchy, but the government maintains that revenues will remain relatively unchanged.
All the talk aside, this is all about the cash, just as was the case in 2010 when the province set its sights on revenues from mixed martial arts and online gambling. With hundreds of millions up for grabs, Premier Dalton McGuinty saw a way to add to the coffers while attempting to keep the lid on taxes, something he’s promised without always following through on. Gambling is big business in the province. OLG runs a variety of lotteries, charity and aboriginal casinos, commercial casinos, and slot machines at horse-racing tracks. According to OLG figures, the Crown corporation generated $3.7 billion in economic activity in 2011. About half that amount goes to health care programs, the operation of hospitals and the like. Other good works, such as the numerous community donations through the Ontario Trillium Foundation, which doles out about $110 million a year, are linked to gambling profits mostly to make us feel better about government-run gaming.
Gambling is still a controversial issue despite the fact many of us indulge in some form of it, even something as innocuous as buying a raffle ticket. Personally, I see little harm in the occasional flutter. Yes, there are those who are problem gamblers, but that’s a small minority – about 2.1 per cent of total gamblers, according to the Centre for Addiction and Mental Health. For the most part, gambling in Ontario is a voluntary tax – or a stupidity tax in some circles – that we pay with hope of getting something in return. Ideally something much bigger, which would offset all of that non-voluntary tax money we’ve paid out over the years.
As with online gaming and MMA, the province hopes changes to casinos and slots will help the province grab a slice of the gambling pie, keeping more money here at a time of falling revenues.
That’s all well and good, but the expansion of gambling is symptomatic of a bigger problem: government reliance on the revenues.
It’s no coincidence that governments got into the once-taboo area of gambling back in the ’70s, a time of economic trouble. Governments searching about for a new stream of money in a stagnant economy jumped on the gambling bandwagon. With wages stagnant – a trend that started at that time and continues through today – many of us took to gambling as a way to strike it rich. The parallels to the current situation are clear. In Canada, we amended the Criminal Code to allow for lotteries to raise money for the 1976 Olympics in Montreal. From there, a greater reliance on gaming revenues led to an explosion of gambling opportunities. There’s an ongoing debate about the negative impacts of gambling, with some studies showing we’ve already gone too far, most notably with video lottery terminals (VLTs). Venturing into online gaming could lead to more of the negatives, so far largely curtailed.
Current gambling issues may be manageable. Growth may not. Of course, the internet puts the issue beyond provincial control – thus the move to capture some of the money that’s being spent anyway. But, longer-term, we need governments to rely less on games of chance. They need to collect taxes in a more upfront way. To do that, they’ll need to show us the benefits of our remittances – most of the money goes to pay for important pieces of our quality of life. More immediately, they’ll have to prove to us that they won’t waste, steal or squander our money on their friends. Rather than change the policies that got us into the economic mess we see today, governments prefer to provide us with spectacles and other diversions, boosting gambling revenues and other sin taxes. That might change someday, but don’t bet on it.