How games of chance became more profitable to Alberta than natural gas

How games of chance became more profitable to Alberta than natural gas

The State
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Naomi Knoch, SEARCH Apprentice Writer

[] Albertans have an insatiable appetite for gambling. And the provincial government obligingly provides a wide selection of gaming options to feed their hunger.

VIDEO: [Fifth Estate] Gambling on addiction. How Canadian governments prey on problem gamblers. [Dec 8, 2017]

In fact, the popularity of this high-risk entertainment has more than once earned Alberta the distinction of being the gambling capital of Canada. Small wonder: According to the Alberta Gaming and Liquor Commission (AGLC) the province has 19 traditional casinos, 22 bingo facilities, four Racing Entertainment Centres (REC’s), five Host First Nation Casinos, 2,731 lottery ticket centres, 5,984 video lottery terminals (VLT’s) and 14,160 casino gaming terminals in REC’s and casinos. That’s a veritable buffet of options for losing money.

It is, after all, tough to beat the house. The probability for winning the Lotto 6/49 jackpot is one in 13,983,816. And, while VLT’s are programmed to pay back 92 percent of all money wagered, the payout is a percentage of those dollars averaged out over millions of spins, so winning is random and scoring big is rare – for the players, anyway.

The government on the other hand, is raking in a considerable amount of revenue from gambling. After all, why would they be in the business of gaming if it wasn’t profitable?

AGLC’s most recent annual report shows a staggering net revenue from gambling at $1.4 billion. That’s after non-profit organizations get their share of the funds.

AGLC’s 2017/18 annual report also shows 18,013 charitable gaming licenses issued and a whopping $331 million earned by charities.

Interestingly enough, Albertans have such a penchant for gambling that even a limping economy and a brutal slump in oil prices hasn’t caused a great vacancy within gaming establishments or much loss in revenues. For the year ending 31 March 2017, the Government of Alberta’s net gambling revenue was $1.7 billion. That was down from the two preceding years, but only slightly: $1.85 billion in 2016 and $1.9 billion in 2015. During a downturn that has seen tens of thousands of people pushed out of their jobs, gaming has remained a steady income source for the government.

It has in fact, been a staple revenue source for many years.

Ted Byfield’s comprehensive series on the history of Alberta (Alberta in the 20th Century, Volume 12) has some intriguing statistics. Before VLT’s were introduced in 1992, gambling revenue was already at about $800 million per year. But, by 1996 – just four years later – there were 6,000 VLT machines across the province bringing in an additional $500 million annually. In 1998 the percentage of Alberta’s total revenues that came from gambling reached 3.7 percent: At the time, it was a record.

But perhaps not a record to be happy about.

A 2006 article in The Walrus stated that though the province made up only 10 percent of Canada’s population, the five percent of Alberta’s revenue that was generated by gambling in 2003-2004 was 19 per cent of Canada’s national total. And according to Statistics Canada, in 2006 Albertans had the highest rate of all Canadian provinces.

Alberta Government Revenue Breakdown, 2018Nothing has changed. Alberta’s economic statement for 2016/17 shows gaming and lottery revenue at $1.4 billion, greater than receipts from fuel levies, crude oil and gas royalties.

Is Alberta still the gambling capital of Canada?

It’s worth asking, after costs and expenditures, how much profit does this seemingly lucrative revenue generator produce and what happens to it?

The Alberta gambling scene has its fair share of pros and cons. Does one side outweigh the other?

Let’s start positive. In light of the numbers already mentioned, gaming generates revenue and employment for Albertans. Casinos create jobs, VLT’s help draw in customers to establishments they’re placed in, charities and religious organizations profit tremendously by the funding opportunity made available to them. Schools, art galleries, drama and film festivals, agriculture societies and many more have all directly benefited from Alberta Lottery funding.

For, after the ALF has collected its dues, it distributes them to programs and foundations that directly support volunteer and community-based initiatives. Last year, for example, the Canada Games Host Society in Red Deer received nearly $150,000, Grand Prairie’s A Bright Beginning Child Care Society was given $36,000 and AAA Fencing Club of Medicine Hat over $15,000.

Slot machine revenue is 15 percent to the operator, 15 percent to the charity and 70 percent to the Alberta Lottery Fund (ALF).

Now to take a look at the cons.

In 1992 Calgary Herald columnist Barry Nelson greeted the introduction of VLT’s to Alberta with a prediction that the government would become addicted to the new revenue source. “The slots will be a bonanza for the government. They will also cause significant changes in the social climate,” wrote Nelson.

Was this an accurate prediction?

Well, VLTs have proven to be especially problematic. The flashing lights and live screens of VLT’s have since become the government’s most remunerative form of gaming as well as the player’s most addictive. VLTs are often called the crack cocaine of gambling. Each machine has a set number of available wins, which leave the players competing only against each other for that tantalizing instant cash payout, so teasingly close yet too often, so elusive.

Reports vary on the extent of the addiction problem, but everyone agrees that a problem exists and has the potential to grow.

The University of Calgary’s Addictive Behaviours Laboratory says that up to three percent of Albertans struggle with a gambling addiction. However, addictions counsellor Kim Knull stated the number is probably much higher. “I’d say it’s easily 10 percent, if not more — a lot of it’s not reported,” said Knull.

He’s probably right. Statistics Canada says 7.8 percent of Albertans are at risk of becoming, or have already become problem gamblers and 40-50 percent of total gaming revenue is made off those seriously addicted.

One way to look at it is that if some people want to pay what amounts to a voluntary tax, that just means other people can pay less. But that does seem a rather nasty way to fund good endeavours, no matter how good they might be. And once the ill effects of problem gambling are considered, are the social costs just cancelling out any tax savings the non-gamblers thought they were getting?

The Walrus article cited earlier stated that the RCMP routinely reported thefts, assaults, suicides, bankruptcies, suspected arson, child neglect, and families destroyed due to divorce – that in their view were related to VLT addiction. Should we assume these problems have all magically gone away over the years, or are they in fact worsening?

Some addicts have resorted to theft of shocking amounts of money to feed their habits. In 2013 an Edmonton VLT addict pled guilty to defrauding her employer of $200,000 over two years in order to fund her gambling habit. It’s certainly not an isolated incident and is not contained to Alberta alone. Nova Scotia sentenced an addict two and a half years in 2016 for theft and fraud totalling to $220,000 due to “an uncontrollable VLT addiction.” There are many other disturbingly similar stories.

Experts agree that the effects of financial ruin can be devastating. The suicide rate among problem gamblers is viciously high and some women who seek help have already attempted to end their lives. The sense of guilt and shame felt by problem gamblers is said to be more extreme than those struggling with an alcohol addiction.

Some argue that the government is aiding and abetting the process of lives being ruined and is itself addicted to the revenue generated.

Others say that even if the government has become addicted to gambling revenue, it’s for worthy causes and easily justifiable.

The question should be asked, how does it pan out in the end? Do the gains and losses balance each other out, or is there a side that tips the scales?

In future columns I’ll be offering answers to those questions by taking a detailed look at the history of gambling in Alberta and tracking the revenue from its source to its investment and weighing the societal damage caused.

It’s time to examine in detail every aspect of the gaming industry in Alberta.

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