COVER

The Curse of CASINOS

JOHN NICOL STEPHANIE NOLEN May 11 1998
COVER

The Curse of CASINOS

JOHN NICOL STEPHANIE NOLEN May 11 1998

The Curse of CASINOS

COVER

JOHN NICOL STEPHANIE NOLEN

Wearing a tiara and bell-skirted dress, the bride swept down the grand staircase of Casino Niagara like Scarlett O’Hara. For a brief moment, at 2:30 a.m. on a recent Sunday, her wedding party’s early morning stroll interrupted patrons engaged in Canada’s new national pastime. Gamblers stuck in a slot-machine stupor or crowded around green baize tables looked up and, at the urging of the wedding party, clapped half-heartedly.

But within seconds, they turned their attention back to the tick-ticking of roulette wheels, the slapping of cards, the tinny cha-chink sound of slot machine payoffs. The country’s most successful casino was pulling in another $4 million for the weekend—and no one but the wedding party was headed for the door.

For governments and casino operators, gambling has provided the basis for a very profitable marriage. There are now 55 casinos in Canada, earning $2.5 billion a year, of which governments pocket $1.2 billion. The lion’s share of that action is in Central Canada, where five glitzy casinos—in Ontario, Niagara Falls, Windsor and Casino Rama near Orillia; in Quebec, Hull and Montreal—raked in close to $2 billion. But other forms of gambling have also flourished, especially video lottery terminals (VLTs)—the hot-ticket item in the Maritimes and much of Western Canada (page 48). Add them, along with lotteries, bingos and horse racing, to the mix and gambling represents a $27-billion industry in Canada, with the average household betting $1,200 every year—more than twice what American households wager.

In the case of casinos, they bring jobs, tourism and urban revitalization to towns across the country. That, at least, is what governments and casino promoters from Sydney, N.S., to Nanaimo, B.C., have promised. But economists, police, psychologists, social workers and citizens groups tell a different story. Casinos destroy at least one job for every one they create, they cause bankruptcies that bleed communities dry, they breed crime and corrode families. Fear of the menace has spurred on an army of volunteers to keep casinos at bay. But cash-strapped governments, hooked on gambling revenues, are searching for new ways to feed their addiction. “We shouldn’t have to exist,” says lawyer Connie Fogal, Vancouver spokeswoman for a nationwide movement called Citizens Against Gambling Expansion. “We elect

people to protect the citizenry, and they are corrupting the citizens instead. Our elected people have become our gambling industry.”

At the Canadian end of the Rainbow Bridge, which spans the Niagara River, an old tourist • town’s newest attraction is taking in money with the speed of water going over the nearby falls. Crowned by a tower of flashing lights, Casino Niagara appears to be a gleaming example of what the pro-gambling lobby promises: a casino on the Las Vegas, Nev., model attracting foreigners, namely U.S. citizens from the other side of the river, legally separating them from their money—and sending social problems back across the border with them.

The 17-month-old casino has been heralded as a savior for the economically depressed city. One local banker says the establishment, which in its first full year of operation took in $512 million, has been a catalyst for the rejuvenation of Niagara Falls. It has directly created 3,600 fulland part-time jobs at the casino, while casino operators claim to have indirectly spawned another 3,000 jobs in the supply and tourism sectors. Bridge crossings from the United States are up 11 per cent, and entrepreneurs credit the casino for all the good news.

It has come at a price. Aris Centeno became enthralled by gambling while working at Casino Niagara. Barred from playing at his workplace, he travelled to Casino Rama, where he lost several thousand dollars one February night and hanged himself in his motel room, leaving behind a wife and young daughter. Dixon Wininger, a 32-year-old St. Catharines father of two and a regular at Casino Niagara’s Caribbean stud poker tables, robbed two banks last summer to feed his gambling addiction and is now serving time in a Brantford, Ont., jail.

The casino may have led Wininger to crime, but others were already there. Police privately say that loan-sharking and extortion in the Niagara area have increased dramatically since the advent of the casino. Publicly, law enforcement officials are silent on the issue— for fear of embarrassing their political masters, as some officers quietly acknowledge. But the overall crime rate in , Niagara Falls has risen 10 per cent since the casino opened, and reported instances of people passing counterfeit money, mostly Canadian $50 and $100 bills, went from 129 in 1996 to 693 in 1997, the casino’s first year.

The statistics do not tell the story of the longtime Niagara area automotive factory employee who stole parts from work, sold them to feed his gambling addiction, and was quickly retired. In a tale that has been repeated across Canada, other residents have quietly gone bankrupt. ‘We had one guy who wouldn’t leave the casino and missed two days of work,” says Glenn Lyons, an employee counsellor at General Motors in St. Catharines who, in the past six months, has referred a dozen problem gamblers for treatment. * “We had to get two guys to drag him out. It shows you the power of it. It has developed some jobs, but at what expense?”

Some observers blame the Olympics for giving the biggest boosts to gaming in Canada. In 1969, Ottawa decriminalized some forms of gambling after heavy pressure from the Quebec government, which wanted a lottery to finance the 1976 Montreal Olympic games (taxpayers were still left with a $l-billion debt). In 1984, as part of a funding deal for the 1988 Winter Games in Calgary, the federal government shifted all control of gambling to the provinces.

Casinos got their start soon after decriminalization. In 1969, the Social Credit government of W. A. C. Bennett in British Columbia legalized a low-betting form of charity casinos. Alberta established the first permanent charity casino in 1986, with British Columbia following suit the next year. Canada’s first commercial casino opened on the eve of 1990: the Crystal Casino in Winnipeg’s Hotel Fort Garry. Montreal was next, in 1993, with the Casino de Montréal in the revamped Quebec pavilion at the Expo 67 site.

Today, only Newfoundland, New Brunswick and Prince Edward Island are without casinos.

The profusion of gambling—and the willingness of governments to sanction it—have left many critics shaking their heads. “Every time the public is asked if they want more legalized gambling, the public turns it down,” says Jim Gray, a prominent Calgary businessman who is leading a citizens’ fight in Alberta to restrict VLTs. “But the governments fell into this source of money with nary a second thought, with no feel for the long-term costs.”

Perhaps nowhere does the casino dream ring more hollow than in Sydney. Two and a half years after it opened, Cape Breton is still waiting for the 240 tourists a day the operators of the Sheraton Casino promised. The casino had made only $1.3 million profit by the beginning of this year (paltry compared with other sites across Canada). But ITT Sheraton Canada Inc., a hotel operator, is pay-

ing the provincial government $25 million a year for four years for exclusive rights to run the two casinos in the province (the other is in Halifax). And opponents say that the infusion of cash into provincial coffers means that the Sydney casino will stay open—in spite of mounting evidence of its negative local impact. Bingos once funded dozens of Cape Breton charities. Now, no match for the glitzy casino down the road, they can barely scare up a crowd. The new establishment was meant to fill that gap by donating 40 per cent of its profits to charities and native bands—but the

Nova Scotia Gaming Commission has yet to give charities a penny. (Ten native bands that signed a deal with the provincial government promising not to operate their own casinos split a $700,000 payout in March; the province says charities will get the next one.) As for the social costs, one employee calls the casino the worst thing to ever happen to Sydney. “I sit

there and watch my neighbors, who I know don’t have the money, gambling it away, for nothing,” she says, adding that she is sickened by her job: doling out cash advances on credit cards. “But this is Cape Breton,” she notes. “It’s not like I have other opportunities.”

Economic boon or curse? The debate has raged across the United States, where casinos now exist in 23 states. Instead of being beneficial to a community, says John Kindt, a professor of commerce and legal policy at the University of Illinois and author of several studies on the subject, casinos cost taxpayers as much as three dollars for every dollar the government reaps in revenues. According to Kindt’s studies, they frequently lead to a loss of jobs from the surrounding region (because gamblers take disposable income to the casino), to increased crime, and to more social-welfare costs. And businesses near a casino can an-

Critics say bankruptcies have risen

ticipate increased absenteeism, declining productivity and theft.

Easy access to credit compounds the problem. Many casinos themselves extend credit, at no interest, to be paid back within one to four weeks. “Cashcall” machines at casinos permit loans of up to $70 for a fee of $14.25, or $7,050 for a fee of $179.25, and users are then subject to normal credit-card cash advance terms. Automated banking machines, which in casinos dispense money but will not accept deposits, are never more than a few feet from the slots; they have earned a reputation as the casinos’ most dangerous machines.

But governments forge ahead. In British Columbia, where there are 17 charity casinos, the government is entertaining 32 proposals for new gaming venues, including what it calls “resort casino destinations.” The government would keep two-thirds of the casino profits and divide the other third between the casino developers and local communities. In Ontario, where

there are now four commercial casinos, the provincial government announced last year it would establish permanent charity casinos in 44 communities, which would allow charities across the province to earn up to $180 million a year (the government would pocket between $300 million and $1 billion). In non-binding plebiscites held during last autumn’s municipal elections, 39 of those communities rejected the idea of a casino in their city (in spite of intense lobbying by the pro-gambling side, which typically spends $50 advancing its cause for every $1 spent by its opponents). But the government is now attempting to find more receptive host communities—and frying to sweeten the casino pot by increasing the cut they will receive.

In Alberta, a province with 17 casinos and 5,900 VLTs in licensed establishments, a 1996 study for the Alberta Alcohol and Drug Abuse Commission showed that eight per cent of teenagers in the province are problem gamblers, and more likely to get in trouble with the law (problem gamblers among the adult population number 5.4 per cent). In early April, at a casino in Kamloops, B.C., one college student gambled away his $1,000 student loan. A professor at Queen’s University in Kingston, Ont., says he saw students losing $500 to $600 a night at a 1997 charity casino held in the city. A comprehensive 1996 study by the National Council of Welfare called “Gambling in Canada” argues that “governments are ignoring, if not promoting, a new generation of problem gamblers.”

Although casino promoters like to argue that they attract a wellheeled clientele, a visit to most of the country’s casinos shows a blue-collar crowd at the slot machines. American studies, meanwhile, reveal that casinos get a quarter to half of their money from the five percent of the population that is at risk for problem gambling. Terry LaLiberte, a Vancouver criminal lawyer, has seen firsthand what he calls the social cost of feeding someone’s addictions. Among his clients is a 45-year-old man who once had a heroin addiction. To get the drug, he burgled homes, stole from stores and committed fraud. Then he kicked that habit. “He went to a small B.C. town,” LaLiberte says, “and was doing quite well away from drugs and alcohol.” But in his spare time, the man began to frequent casinos, leading to a new addiction—and a new cycle of crime. “It’s a real hypocrisy for the government—because they need more resources—to hide behind this bullshit idea that everyone has a right to gamble,” LaLiberte says. “It’s really a cash cow for them to milk.”

Even as such stories multiply, organizations are launching new studies into the full impact of casinos. The Addictions Foundation of Manitoba, for one, is now beginning a study of gambling by seniors. “If you go to a casino at any given time, there are a lot of seniors there, yet they rarely attend problem gambling clinics,” says Gerry Kolesar, the foundation’s co-ordinator of gambling programs. ‘We don’t know why they don’t, but maybe they are too

proud, or feel they don’t need to deal with the embarrassment or shame of accessing treatment at that stage in their life. We have calls from adults who are afraid their parents are spending their inheritance, but the parents don’t want to come for treatment.”

Across the country, casinos are sending buses to retirement homes, often for free, to fill up the stools in front of the slot machines. But seniors are not the only target group. Las Vegas-based Navegante, the American company that runs Casino Niagara, made no secret of its plans: it obtained explicit permission from the Ontario Casino Corp., the provincial overseer of casinos, to direct its marketing at neighboring U.S. states—and at the Asian community of Toronto (other casinos, Hull and Edmonton among them, have also made efforts to target Asians). “Gambling is, comparatively, a more acceptable social activity in the Chinese community,” notes Rose Yu, a social worker with Chinese Family Life Services in Toronto, whose organization is just beginning to develop programs to treat gamblers with casino addictions. And Selina Volpatti, a Niagara Falls city councillor, expresses unease about the ethics of targeting one ethnic community. “If gambling is a problem in the Asian community,” she asks, “should we be feeding into that problem?”

In casinos across Canada, meanwhile, loan sharks lurk among the players. They run a sophisticated operation, whipping out pocket-size photocopiers to copy the borrower’s identification, and they do not like tardiness—one Toronto-based loan shark has “repossessed” a few dozen luxury cars while awaiting payments. And those payments can be steep. With a $1,000 loan, the shark withholds $100 right at the start—while a weekly 10-per-cent interest rate runs the balance up to $1,500 in a month. Officers from three different police forces

explained the system to Maclean’s, but none would go on record— fearful of the repercussions of embarrassing the provincial government. “It would be career suicide,” says one officer.

For some law enforcement officials, the connection between the casinos and police is already too tight. In Windsor and Niagara Falls, the casino pays for the salaries, benefits, cars, bicycles, clothing and guns for an extra 25 regional police force officers to patrol the vicinity around the casino. Some officers say that such arrangements have muzzled them when it comes to speaking frankly about casinos’ impact on their towns. When Ontario Liberal gambling critic Jim Bradley wrote and asked about casino-related crime last December, Niagara Regional Police Insp. Peter Gill responded that child abandonment was an unanticipated problem, leading to 11 charges—including one criminal charge of abandonment against a couple who left their two-year-old child sleeping in a casino arcade at 2:30 a.m while they gambled two floors away.

But Gill said there had “not been an increase in violent crime.” In fact, along with the 10-per-cent increase in Niagara Falls’ overall crime rate, violent crimes went up 11 per cent in the first year the casino was open, at a time when the regional crime rate actually dropped by three per cent.

The biggest problem, casino opponents say, is that by the time studies prove conclusively that casinos are a drain on communities, it will be too difficult to close them down. Casinos have become part of the Canadian landscape: Alberta’s West Edmonton Mall has a casino; Regina’s old CPR train station is now a casino; street signs all over Montreal point the way to the casino. “How do you stop a casino?” asks Nancy Langille, a member of Citizens Against Gambling Expansion in Belleville, Ont. “Once the business is in place, there is no reverse gear, there are no brakes. Too many people—employees, suppliers—become dependent on them.” Not to mention governments, who continue to push ahead with the great Canadian gamble. □