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Saturday, March 17, 2012

The biggest gambling addict of them all

The biggest gambling addict of them all
Governments won't give up on gaming, so the only debate is where best to place a new casino
By Mark Sutcliffe, Ottawa Citizen

Once upon a time, there would have been debate about whether Ottawa wanted a casino. Today, the discussion seems to be only about where to put it.

There are so many casinos in North America now that we've given up any moral evaluation of whether government-sponsored gambling is appropriate or harmful. We've surrendered to the idea that gaming is here to stay, whether it's a good idea or not. Other jurisdictions are doing it, so we have to as well, just to keep up.

A decade or two ago, we worried that building casinos would cause more people to have gambling problems. But now it's the government that has the biggest gambling addiction of all. The province has come to depend on the big revenues from casinos and lotteries, which have helped fuel massive spending increases. Even the City of Ottawa gets a nice share from the slot machines at Rideau Carleton Raceway. So now, naturally, both levels of government want even more gambling revenue.

Imagine if you had a friend who regularly spent more money than he earned and his solution was to use gambling as a way to help him fix his cash-flow problem. That's effectively what the provincial government is doing, and it's not the first time. The first wave of casino gambling was introduced in 1992, again when Queen's Park was coping with a big deficit.

But the strongest argument against gambling isn't that it's harmful, it's that it creates very little new wealth. Oh, of course, some people - a select few - get wealthy from gambling.

But they're just taking money from all the people who lose.

For the entire population of participants, gambling is a zero-sum game. In fact, it's even worse, since the odds are stacked so the house makes money.

The bottom line is that when the government is involved, gambling is a form of voluntary taxation. If you don't feel you've given the government enough money so far this year, buy a lottery ticket or go to a government-run casino. There's a small chance that you'll come out ahead. But the odds are much higher that at the end of your experience, the government will have more money and you'll have less.

Gambling produces revenue for the government, but it doesn't create much economic benefit. Lotteries and casinos just move money around from person to person and from person to government. Most of it is money that would have been spent on other forms of entertainment anyway. Compare that to economic activities that create value, including new jobs and wealth.

Does gambling spur tourism revenue? In some cases, yes. But we're not talking about creating a Las Vegas North. Ontario is not going to become a market leader in the casino business. We're just trying to get our small piece of the revenues. And since casinos are everywhere now, it's unlikely someone will choose to visit Ottawa just to gamble.

And any big gains in prying gaming dollars from visitors are usually short-lived. After Ontario opened a casino in Windsor, Michigan opened three in Detroit.

As a result, the population of Americans crossing the border to lose their money in Canada dropped dramatically.

Taking more money from taxpayers, whether they choose to give it to you or not, is not a particularly solid economic development strategy. Instead of figuring out how to get more consumers' dollars into the hands of government, and promoting the appeal of getting rich quick, the province should be trying to create more wealth through innovation, business growth, productivity and good old-fashioned hard work.

Here in Ottawa, there's a small argument to be made in favour of a new casino if your only goal is generating more revenue for the government. We likely would keep more cash in the province if we more effectively competed with the Casino du Lac-Leamy, which sends the voluntary taxation of many Ontario residents to Quebec City instead of Queen's Park.

That would help the province's cash flow, but it's not clear how much it would help the community, since Ottawa-Gatineau is one economic region. Once again, we're just moving money around instead of creating new wealth.

But since city councillors are already putting in pitches on behalf of their wards, if we're going to build a new casino in Ottawa, it should be right downtown.

Councillor Peter Hume is right that Scotiabank Place and Lansdowne Park are not the right locations. (Although he went a bit far when he said the former was "in the middle of nowhere." Apparently he hasn't been to Kanata lately.) The ideal location would be within a few metres of major hotels and the Ottawa Convention Centre, so that more tourists will find it convenient to gamble away their money. If the government's going to move money around by promoting gaming, it might as well get as much as it can from tourists rather than residents.

Our new motto could be: what happens in Ottawa stays in Ottawa.

Only by "what happens" we actually mean "the money you gamble."

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