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Something so addictive even governments can't resist (Part 2 of 3)

Friday, May 23, 2014   by: Bob Mihell

Governments are “addicted” to the money generated from legalized gambling in Ontario.

That is the opinion shared by two addictions experts, who nevertheless agree that gambling likely is here to stay.

“Governments are addicted to gambling revenue because it is a quick way to raise revenue without raising taxes,” said Nigel Turner, a research scientist with the Centre for Addiction and Mental Health.

“It is basically a form of taxation. It taxes people for how bad they are at math. It is a tax on the poor at best.”

Don Burditt, manager of addictions for the local program under the auspices of the Sault Area Hospital, agreed that governments are aware there is money to be made from gaming.

He added, however, that the rationale for government-run gambling is that since it is easily accessible anyway, at least they are able to “exert some control over it”.

Since 1975, when Ontario offered its first lottery draw, Wintario, gaming opportunities have expanded exponentially.

Ontario Lottery and Gaming Corporation (OLG) now employs directly and indirectly 17,000 people in the province, including over 800 in the Sault at OLGs corporate headquarter, and the charity casino.

In total, OLG, a Crown agency, is responsible for 24 gaming sites and the sales of lottery products at about 9,800 retail locations in Ontario.

In the fiscal year ending March 31, 2013, OLG reported revenues totaling $3.4 billion, with net profit to the Province of $1.8 billion.

As part of its modernization plan that would see the day to day operation of gambling activities taken over by private companies, the corporation has projected an annual increase in net profits to the province of about $1 billion by 2017-18.

That figure was higher in 2012 when OLG’s modernization plan first was unveiled, but the rejection by Toronto and Ottawa city councils of large destination casinos in their downtown core that OLG hoped would attract a new breed of richer and younger gamblers, represents a set-back to the corporation’s plan.

The city of Sault Ste. Marie, as host of an OLG charity casino since 1999, has received $22.7 million in gaming revenue, according to media reports.

Although the tax-free revenue has boosted city coffers, there have been serious consequences for problem gamblers in the Sault and across Ontario.

Since the local casino opened for business, five Sault women with admitted gambling addictions were convicted of defrauding their employers of a total of $1,103,000.

Although those criminal trials grabbed headlines locally, crime is not the most significant risk facing problem gamblers, according to the most recent data on problem gambling in Ontario.

Individuals with evolving gambling problems are at a much higher risk of suffering mental and physical health problems, financial debt or bankruptcy, marriage or family breakdowns, and suicidal thoughts or death, than are non-problem gamblers. (see companion article)

Turner said that when the Sault agreed to establish a casino, a motivating factor was to bring gamblers who were crossing to nearby casinos in Michigan, back to the Canadian side.

“The justification for putting in the Sault Ste.Marie casino was all the money was going to the Michigan casinos,” he said. “The alternative was never discussed, which would have been to discourage people from going over to the American side to gamble because it is a losing proposition. That issue never seems to come up in policy discussions.”

Joe Fratesi, chief administrative officer for the city, disagreed however, saying that Turner’s alternative was not realistic or doable.

“It might have been a different discussion if we weren’t located within an hour drive, five minutes in some instances, of 13 casinos that our people could take advantage of,” he noted. “We received in return none of the benefits from employment. So having a casino in our community at least allows us to have some of the benefits that come from those inclined to spend some of their money in gambling.”

Fratesi, who said his viewpoint had not changed, added that likely we would have had problem gamblers with or without the presence of a local charity casino in our city.

“It’s a free country and people will do as they please.”

Fratesi added that among the points made by the auditor-general in her recent report was that the Sault casino was focused on addressing problem gambling.

“I am not sure the same applies to the casinos on the Michigan side,” he said.

Although Paul Pellizari, OLG’s executive director responsible for promoting responsible gambling in Ontario, said the corporation takes it role in reducing the number of problem gamblers very seriously (see related article), Turner and Burditt said the OLG is caught in a paradoxical situation.

On the one hand, they want to attract recreational gamblers to their gaming opportunities, but on the other hand, a large percentage of their revenue comes from addicted gamblers, estimated at 24.1 percent, according to the most recent academic study.

The good news is that problem gambling has shown a steady decline, for a variety of reasons, since it peaked in the mid 1990s.

The problem for the OLG, Turner suggested, is how the corporation can fulfill its promise to raise more revenue for the province without reversing the downward trend in problem gambling.

“You pretty much have to addict people if you want to make more money from gambling because that is a large part of where they make the money,” Turner said. “The same problem, by the way, occurs with alcohol. A disproportionate amount of the revenue from alcohol sales comes from people with a drinking problem.”

Turner, however, said it is “definitely possible” to reduce the harm. Part of the solution would be to inform problem gamblers that “maybe they are gambling too much” at an earlier stage, before they start to lose control.

“That is one of the things OLG say they plan to do,” he said. “I would say OLG is doing better than they were in the past.”

Turner said that some problem gambling is inevitable, and the solution is to develop policies that creates a balanced approach.

“If you ban all gambling opportunities, you are giving that market to illegal operators.”

Meanwhile Pellizzari said the issue of problem gambling is important to the OLGs gaming operations and modernization plan.

“For us to derive too much of our revenue from a base of players who have a problem is not a good path for OLG to be on,” he stressed.

He said that there is a perception that OLG is “conflicted” in trying to make money from gambling while promoting responsible gambling.

He said that actually, the opposite was true for two reasons.

First, he said that OLG sites primarily served Ontario residents, and it was in OLG’s best interests, from a mature business standpoint, to broaden its base of people playing in a healthy way, rather than relying on a narrow base of problem gamblers.

Second, Pellizzari said, the OLG would do better on both ends of its mandate, “making money and protecting players”, by having responsible gambling safeguards in place to keep people from getting into trouble and ensuring they remain as customers.

And on a final point, he stressed that when OLG transfers the operations of its casinos and gaming activities to the private sector, that responsible gambling would remain a “pillar” of OLGs future role in protecting the public interest.

He said that there would be an obligation for private contractors both in requests for proposals, and written contracts to abide by OLGs responsible gambling rules, and oversight.

Those agreements would include: “Thou shalt put in responsible gambling centres where OLG says, thou shalt take CAMH training, and thou shalt use the technology we dictate.

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Part 1 - What makes gambling such a problem
 
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