Loaded Dice
Casino Crap-Shoot in Ontario

HighGrader Magazine  Jan/feb 1998
by Charlie Angus
This article may be downloaded but any reprints require prior permission from HighGrader Magazine.

The Ontario government's plan to open 44 permanent charity casinos received a setback in recent municipal elections. Numerous communities held special referendums, and voters across the province said "no" to the idea of permanent casinos. The government, however, appears confident that all 44 sites will open. Deals are being made with casino operators and referendums or not, Ontario appears open for the gaming business.
"There is no doubt that communities in Ontario will change if a casino comes to town. It brings crime, it brings prostitution, it brings a lot of things that maybe an area didn't have before. There is a big price to pay."
-- Mike Harris, May 17, 1993

Yves Mallette is the director of the Francophone community organization Centre Cultural LaRonde in Timmins. He helped spearhead the campaign against a permanent part-time casino in the Timmins area. Mallette is worried that casino revenues will drain badly needed dollars away from the community and into the coffers of Queen's Park.
"Two years ago, our Centre was making an $80,000 profit that we could redirect into social programs. Then the commercial bingo hall opened. Last year we broke even and this year we're facing a $20,000 deficit. The arrival of a casino would be life threatening to many non-profit organizations."
The anti-casino drive in Timmins was fueled by non-profit organizations, churches and family counselling centres. On the November 10th municipal ballot the community voted to reject the casino option.
Debra McCain is an assistant to Consumer Minister David Tsubouchi. She says that communities which voted no in the municipal referendums are still on the government's list as potential sites. "Those areas have not said no. They are communities that chose to put a plebiscite question on the ballot. The questions were different in any number of communities; they weren't consistent. Some of the questions were stacked: like they asked if you wanted a casino and these are not casinos, they are charitable gaming clubs."
McCain says the move to develop the 36 full-time and 8 part-time charitable gaming clubs is being done to benefit charities and will simply replace existing gaming activity with a more ordered and accountable system.
"Last year there were 4900 licenses issued for roving casinos in Ontario. These are three day licenses, so that's about 15,000 gaming days in the Province. The number of licenses have been growing at a rate of between 40 and 140% over the last 7 years. They (roving casinos) were designed for charities and yet charities were losing money."
McCain says that concern over security, the integrity of the games and surveillance necessitates the demise of the roving casino and its replacement by a permanent site.
Don Ohlgren is with Klondike Casinos, the operators of roving casinos across Northern Ontario. He says the government numbers do not stack up. "Mr. Tsubouchi has said that last year we had 4400 three day casinos but a lot of these licenses were for one night only like the Shriner's Stag, etc. It's really an average of two days per license which brings the number down to 8800 one night casinos. With his 44 new sites Mr. Tsubouchi will be doubling the gambling action in the province overnight."
Ohlgren admits that he is bitter that his operation lost in the bidding process which was dominated by large American casino interests. "Over the years we've asked the government to let us work out of a permanent hall with a few more games and maybe raise the limits from $10 a bet to $25 or $50. But now they've come out with this 44 casino plan running games 365 days a year with $100 bets and lots of VLT (video lottery terminal) action. The reason the communities are turning down these sites is because they don't want the VLTs."

Ohlgren says that the government is paving the way for new sites by discrediting the roving operators with talk about crime, lack of controls and poor payouts to charity. "I'm President of the Association of Registered Casino Operators of Ontario. We've been asking the government to do proper enforcement for over four years. They never seemed to be able to get at it. Suddenly, now its good for the public to think we're all thieves. I don't want to say they (the government) manufactured a problem but they are certainly publicizing problems in the industry because it is to their benefit."
Mallette agrees: "The bottom line is that the government knows that there is major money in charitable activities and they want to acquire control of it and take a portion. Right now they're out to discredit roving casinos. It's the same tactic they used on the teachers and health care workers. They'll discredit the system and then restructure it to suit their needs. I say if there's a problem with the roving casinos then fix the problem within the roving casino concept."

The Numbers Game
In order to outline where the new charity casinos should be situated, the government hired the consulting firm Coopers and Lybrand to do a market study of the entire province. As part of its "Win Analysis", the report outlines district by district the recommended size of casino and how many VLTs can be sustained.  "The purpose of the study," says Debra McCain, "was to determine what the market could bear." The report concluded that 37 of 49 regions across the province could not sustain the 150 VLTs and 40 gaming tables planned for each site.
For instance, last year North Bay held only a couple of roving casino nights. Under the Coopers and Lybrand report it was calculated that Nipissing District, with North Bay as its centre, could sustain 1/3 of a casino, 47 VLTs and 12 table games. And yet, under the bids being offered to Casino operators, North Bay is being marketed as a full time casino capable of holding 50 table games and 150 VLTs.
This difference between what the market can bear and what the market might actually get is a reflection of the "maximum flexibility" the government is promising casino operators. As McCain points out, "we've said the maximum that a club could operate is 7 days a week, 24 hours a day. The most it could have is 150 video lottery terminals and 50 table games. Does a community want it 24 hours a day? Can it sustain it? Those parameters are to provide the maximum flexibility in the dialogue between the operators and the community."
The Cochrane District, with Timmins as its centre, is slated for a part-time casino. Mallette isn't impressed with the designation part-time. "The government's own study said Timmins could support only 48 VLTs and yet they want to triple that and put in 150. Once you set up a permanent part-time casino it's only a matter of time before it becomes a full-time one."
McCain admits that there is no upper limit on the hours a part-time casino could operate. "Again this is a dialogue that needs to take place between the operator and the community."
On March 30, 1998 the government will put an end to all roving casinos in the province. The government is hoping that charities, cut off from the revenue they received from roving Monte Carlos, will apply pressure on reluctant communities. At stake is a promised $180 million payout to charities under the new system.

But a charity's slice of the pie might not be as juicy as it looks. In the new system, a local charity would put on an event just as they would in a bingo hall. In return they would receive 50% of the table game revenue after all the bills (operator salaries, hall costs, etc.) have been paid. Getting a cut of the VLT action, which makes up 3/4 of the gaming available, will prove more elusive. The VLT breakdown is as follows: 78% to the government, 2% for problem gambling research, 10% to the operator, 2% to the Trillium Fund and 8% to a local body for distribution among charitable causes in the community. The group that has hosted the function might never see a cut of this VLT revenue.
The $180 million take is based on the Coopers and Lybrand contention that 57% of the action will come from the table games and 43% from VLTs. Professor Bill Thompson, of the University of Nevada is one of the foremost gambling experts in North America. He  dismisses this figure as "complete hogwash." Thompson points out that gaming activity off the main Vegas strip is heavily centred on VLTs. "Your people (Northern Ontario) aren't going to be table gamblers. They will be rural-type gamblers, 70% of whom play the VLTs. People play machines. Its easy. Its friendly.  It's not intimidating. And your community isn't going to see any of that money. This is money that is 100% drained from your economy."

Paying the Piper 
The Conservative plan for the new charity casinos is raising eyebrows among other gambling experts south of the border. Bernie Horne, communications director of The National Coalition Against Legalized Gambling in Washington D.C. is well versed in what is happening in Ontario.
"This has got to be the stupidest gambling proposal in all of North America. Can you think of any other government that is proposing to do what these people are proposing to do? To set up a comprehensive system to drain money from residents, jurisdiction by jurisdiction, without even attempting to make it a tourist destination. At least in the United States when we set up casinos it is pretended that the money will come from other states."
Horne points out that the major revenues promised by the casinos will be revenues that otherwise went into local business. "What do small businesses do when a Wal-Mart comes to town? A casino is like the biggest Wal-Mart ever. Where do people think the money is coming from? Nearly 100% of that money will be coming from locals. It is money that is cannibalized from retailers and restauranteurs."
Thompson, who studies gaming activity across the United States, says the Ontario plan will make it the foremost gaming operation on the continent next to Nevada. "The government is abusing the word charity in order to get more money. Whatever the outcome, I can't see it being positive for the local communities."
Thompson says northern communities hoping to gain some tourist revenue from new casino action will be disappointed.
"Nobody is going to go up there to gamble. Some people who come may gamble, but it is money that likely would have been spent in restaurants and other things while they were there. A few hunting and fishing types might spend a few quarters in the casino, but they aren't bringing extra money with them to gamble."
Thompson says that the Ontario government studies have not looked into the societal costs that even a modest increase in problem gambling will bring. "Even if 1% of your population becomes addicted, you're looking at a drain of millions of dollars out of your economy. I studied problem gambling in Wisconsin and out of a population of four million, that 1% represented a loss of $300 million. The cost was $10,000 per person per year."

A study by the University of Manitoba puts the figure at $56,000 Cdn. per gambler.
Critics of the government plan point out that by allowing the clubs to operate 24 hours a day, 365 days a year, the government is targeting addicts. After all, who else will be in the local gaming club at 4 a.m.  Christmas morning?
Says Horne, "The only reason to be open at 4 a.m. is to get addicts' money. What kind of government does that? Government is supposed to protect people. They are supposed to be doing looking out for the best interests of their citizens. This is a government that is acting as a predator on the weakest of its citizens."
Thompson agrees. "Why do they want to run the casinos 24 hours a day? Who's going to be there at those late hours? A sick person. You're going to create a sickness in your society. I don't think the government has really considered this. Sure they say they'll throw some money to addiction research but its little more than a pittance. I think the government is flying blind. I think the government is flying with just one target in mind and that is sucking money down to Queen's Park."

From a government perspective, the revenues must be very tempting. According to a Report by the National Council of Welfare, gambling revenues in Alberta lightened the tax burden by $214 per person. With the Ontario government struggling to finance its tax cut, the prospective revenues from 44 gaming houses and the possible introduction of 14,000 VLTs (see The Money Pit- HighGrader May Ô97) into bars and restaurants must appear very tempting.
What could stake the shine off is a revolt of citizens in communities like Timmins.
Debra McCain, however, does not expect any of the communities to turn down the operators.
"If the City of Sudbury decides it isn't going to allow a club within its boundaries, it doesn't preclude (nearby) Rayside Balfour, which we both know is interested in having a club. For example, North Bay is the urban centre in a catchment area. It would be the preferred site (for a club) but that does not preclude (placing the site) within a roughly 40 kilometre radius."
McCain points out that there is "flexibility in the Gaming Commission" for determining the radius of the catchment area. Presumably if a centre in the north turns down a site, this "flexibility" would allow the Gaming Commission to bend the borders of the outlying regions to help find an alternative. This threat puts pressure on a municipality because if an outlying area offered to take the casino, the centre would face not only losing revenues and job benefits but, as McCain points out, the recalcitrant community would also lose out on the $1500 per VLT the Province is willing to pay to the host municipality.
George Mourosis, City Councillor for North Bay explains. "The government has been trying to bribe municipalities by offering $1500 per VLT machine. In North Bay we're supposedly slated for 150 VLTs and that would put $225,000 into the municipal coffers. That's not small potatoes. The money was laid out there as bait for this kind of situation. But I think it's a bad deal."
Mourosis says he is not against charitable gambling but feels the province's plan will do little to help local charities. "The problem with these casinos is there isn't a helluva lot of money in it for local charities. This is just another way for the Province to pick people's pockets. I don't think you'd have a great objection from the charities if there was a fair split."

North Bay has put the casino plan on hold by passing a by-law requiring any extension of gaming activity or introduction of VLTs to pass through a municipal planning process.
Timmins mayor Vic Powers has said he will listen to the will of the electorate who turned the casino option down.
Yves Mallette feels the casino plan for Timmins should be laid to rest. "The people said no. The people on Council said they would support the results of the Plebiscite. The Mayor said he didn't want it. Premier Harris said he wouldn't push the casinos on communities that didn't want them. I asked Mr. Tsubouchi personally on Ontario Today  and he said he would respect it. I know a plebiscite is not legally binding but when the Premier and Tsubouchi both say they will respect the results, that to me is both legally and morally binding."
What happens to the casino operators who have been given jurisdictions over communities that have said no? Will the government tell them the deal is off?
Says Debra McCain, "You're speculating about something that we don't anticipate happening....We don't anticipate it being a problem. We would anticipate that an operator will go in there and find somewhere to set up."

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