Canada

Lottery mania

CANADIANS WILL TOSS ONE BILLION DOLLARS INTO ONE LOTTERY OR ANOTHER THIS YEAR, AND THINGS ARE JUST GETTING STARTED

Robert Miller March 8 1976
Canada

Lottery mania

CANADIANS WILL TOSS ONE BILLION DOLLARS INTO ONE LOTTERY OR ANOTHER THIS YEAR, AND THINGS ARE JUST GETTING STARTED

Robert Miller March 8 1976

Lottery mania

CANADIANS WILL TOSS ONE BILLION DOLLARS INTO ONE LOTTERY OR ANOTHER THIS YEAR, AND THINGS ARE JUST GETTING STARTED

Robert Miller

It is better to build sports facilities in Ontario than hospitals in Ireland.

ONTARIO CABINET DOCUMENT

For generations the overriding national characteristic of Canadians was held to be the fact that they would sooner put their money in the bank than risk it. How times have changed. Today Canada is on a gambling binge, with the state acting as a convivial if unlikely bartender and those sobersided paragons of yesteryear, the chartered banks, serving as even more unlikely cocktail waitresses. Lotteries, in their astonishing variety of shapes and sizes, are the wine on everyone’s lips, and according to all evidence the nation’s thirst

rages unslaked. Provincial government figures show Canadians will spend almost a billion dollars on lotteries in 1976, and the trend is up, up and away. Furthermore, the habit sneaked up on us, caught us unaware. We are not unlike the “social drinker” who sipped and sipped without concern until the day he woke thirsty and climbed straight into the 10 a.m. vodka.

Lottery organizers in Canada have consistently underestimated market demand, and just as consistently overestimated public resistance. When the Olympic Lottery, with its $10 tickets and its million-dollar jackpots, was being planned, there were grave doubts that Canadians would buy all

the 2.5 million tickets being printed. In fact they sold out months before the first draw—to the delight of the organizers, who promptly stepped up the press run, first to 3.5 million, then to five million, then to six and finally to the current level of 7.5 million. When the Ontario government, alarmed but mightily impressed by the flow of Ontario dollars to out-of-province lotteries, began warily to consider getting into the business itself, it braced for a storm of controversy. But, aside from one or two predictable grumbles from Protestant churchmen, the only thing that greeted Wintario (the province’s biweekly draw) was a mad scramble for tickets. The point was not lost on the West, which was so enchanted by Wintario’s success (the Ontario draw began with a surge of promotion by Don Harron/Charlie Farquharson who kept twanging that “she’s only a buck a throw,” sold 2,160,000 tickets almost overnight, stepped up the press run and the prizes, and now sells 5.4 million tickets once a fortnight) that it will soon launch in Manitoba its own biweekly lottery, called the Western Express. The new biweekly will, in turn, be a pilot project for the other western provinces which are already Manitoba’s partners in the quarterly Western Canada Lottery. Neither has the point of Wintario’s instant success been lost on the Atlantic provinces. They will announce this spring the establishment of an Atlantic regional lottery owned jointly by the four eastern governments.

The launching of the Atlantic lottery will complete the groundwork for a nationwide interprovincial lottery which intends to pick up the $10-a-ticket torch from the Olympic Lottery, when that successful operation closes down in August. By then, every province in the country will be in the business and those Canadians who, for one reason or another, failed to win their million in the nine Olympic draws need not despair: the interprovincial lottery now being planned will keep their chances alive indefinitely (as long as they continue to have the $ 10 for a ticket).

Dollar projections for 1976 by the major lotteries in Canada are impressive (Olympic $220 million, Loto-Québec $150 million, Wintario $140 million, Western Canada Lottery $24 million), but the Canadian lottery story only begins with them. There are also the lotteries not owned by governments, and they are likely to attract a further $400 million from the nation’s pockets

and purses this year. Some idea of the extent of these lesser operations can be gleaned from the fact that in Ontario in 1975 there were 78,000 events classed under the law as lotteries. These 78,000 events—mainly bingos, service-club raffles and the lik~ -grossed just under $200 million and returned roughly $85 million to presumably worthy causes. The lottery explosion seems all the more phenomenal when it is recalled that it was only six years ago that parliament amended the Criminal Code to legalize provincial lotteries. Before 1970, dream-chasing Canadians who wanted to risk a few dollars in the hope of winning many were limited to the (still ille-

gal) Irish Hospitals’ Sweepstakes.

Of course, lotteries in one form or another have been with us a long time. The Caesars used to organize them in Imperial Rome. Two hundred years ago, as the American revolutionary war was breaking out, the U.S. Congress authorized a national lottery. But, in Canada, despite ubiquitous bingo games and occasional charity raffles, there was little reason a decade ago to anticipate today’s lottery mania. When the province of Quebec declared Montreal Mayor Jean Drapeau’s 1967 ill-fated “voluntary two-dollar tax” lottery to be illegal (the province knew the mayor was on to a good thing), it didn’t

waste any time getting ready to go into the business itself. Loto-Québec, a Crown corporation that runs lotteries on behalf of that province, has been the godfather to the industry-at-large in Canada. LotoQuébec, an instant success, willingly assisted the Olympic Lottery when it started up (Julien Coté, the driving force of the Olympic draw, is a former Loto-Québec executive). In turn, the Olympic Lottery acted as a friendly consultant to Wintario, when the Ontario government decided to play.

Lotteries are an extraordinarily profitable business. Consider the example of the Olympic draws. They are able to generate hundreds of millions of dollars simply by promising to pay out 35% of the turnover in prizes. Of the balance, 40% goes to COJO (the committee organizing the Montreal games), 10% is eaten up by administration, 10% by sales commissions, and 5% goes to the provinces. Put another way, the overhead is low, the profits sky-high. The Olympic Lottery has only 58 employees, and as one of them says: “There’s not another business in the world with a $200million-a-year turnover and only 58 employees.” Guy Simonis, general manager of the Western Canada Lottery Foundation, says he was embarrassed by the parsimonious prize structure his operation used to have. From June, 1974, through four draws, the Western Canada Lottery grossed $22 million, but only paid out four million dollars in prizes. The balance, less $2.3 million in administrative costs, went to the four western governments. Now, though, the Western Canada Lottery has streamlined its operation and upgraded the' prize money to an average 35% of sales. “We’ve been giving the worst odds of any of the major lotteries,” Simonis says matter-of-factly. “But our public isn’t sophisticated enough to appreciate bad odds. At the risk of sounding patronizing, I’d say we’ve had to lead the western public.”

The public. Who buys tickets, and why? The answers are easy: Almost everyone and to win big money. Although every legal lottery in Canada claims to be in the aid of some worthy cause—religious, community, athletic, cultural, and so on—hardly anyone believes people buy tickets for altruistic reasons. Roger Sauvé, the genial Montrealer who, as Ontario director of the Olympic Lottery, presides over sales of almost $30 million per draw, seems amused by the question. “How big a factor is the Olympics in our sales?” he repeats. “I would say very little. Maybe 1%, maybe less. People buy our tickets because they hope to win a million dollars. It’s as simple as that, and it’s why I believe the $ 10 ticket will survive after the Olympics are over.” John Griffin, who manages Saskatchewan Super Loto (total prize money $250,000 in 13 draws, with a top award of $100,000), puts it more bluntly: “We base all our marketing strategy on greed. It’s our big selling point. People don’t buy tickets because they want to help a cause. They buy tickets

because they want to win.” Jack Shayne agrees, but with an important qualification. Shayne is the 63-year-old manager of the annual lottery held by Toronto’s Baycrest Centre for Geriatric Care, which embraces a Jewish home for the aged and a nonsectarian hospital, among other facilities. “I believe our charity appeal has an impact, that it helps our sales,” Shayne says. “I’m not saying that we’d get the same support without giving away prizes, because the lottery is an incentive for people to contribute.”

The idea that you can do something nice for yourself (win) while doing something nice for others (contribute) is fundamental to most lotteries in Canada. The “worthycause” element helps organizers and distributors counter what is still assumed to be a widespread view that lotteries are vaguely immoral, faintly seedy. Indeed, that was the view back in the bad old days when would-be winners bought their Sweeps tickets surreptitiously in barber shops, pool halls and cigar stores. Today they can buy tickets at their banks. As Roger Sauvé puts it: “Once the banks came in [to the Olympic distribution network], we had it made. Canadians have a great deal of faith in their banks.” They certainly do. And certainly public attitudes toward lotteries have softened as the lotteries have proliferated. A Gallup Poll done in June of last year for the Ontario Lottery Corp., which runs Wintario, found that 82% of the population supported the idea of a provincial lottery and that 71% bought tickets. Only 8% were opposed, while 9% had no opinion. Despite such overwhelming approbation, governments continue wary. Most provinces insist their lottery profits be earmarked for recreational or cultural projects. Wintario, for example, promises funds for everything from amateur brass bands to public libraries, and urges Ontario communities and groups to write to the government if they can think of a project that might qualify. Since Wintario has outstripped even the most optimistic profit forecasts (in less than a year it is operating at a rate its planners thought it would be lucky to reach in three years), Culture and Recreation Minister Robert Welch is swamped with cash.

Quebec, which pioneered in Canadian lotteries, is less equivocal, preferring to spend its lottery profits as it sees fit. These are not insubstantial, having amounted to an estimated $53 million in 1975 (thanks to the 50-cent weekly Mini-Loto, the twodollar monthly Inter-Loto, the five-dollar bimonthly Super-Loto, and the onedollar weekly Loto-Perfecta). As Finance Minister Raymond Garneau has remarked: “Loto-Québec is one of the reasons I have not had to raise taxes for four years.” In this attitude, Quebec is more like the 13 American states operating lotteries than its Canadian counterparts. The U.S. state-run games are regarded as essentially revenue spinners, and last year netted an estimated $500 million for hard-pressed

governments. As economic woes continues to plague Canada’s provincial governments, the lottery looks like an increasingly attractive alternative to tax increases. Says Nova Scotia Recreation Minister A. Garnet Brown: “People seem to have taken to the lottery idea, and we know it can generate revenue for the province.” Brown, a gregarious politician, sees nothing wrong with lotteries as a way to raise money. “If people don’t like them, then they don’t have to buy the tickets. It’s new money, that’s all.”

Is Brown right? Or are lotteries what their detractors claim—a tax on the poor? A confidential report prepared for the Ontario cabinet makes the claim that Quebec and U.S. studies show “that income is not a factor in buying tickets.” The report says ticket-buying in Pennsylvania was fairly consistent among income groups ranging from no-dollars a year to $25,000. In Quebec, it says, the bulk of tickets sold went to people making between $3,000 and $10,000 (1971 salary levels). Inexplicably, however, the report dismisses without comment its own figures showing that nearly the same number of tickets were sold to people making from nothing to $3,000 a year as were sold to people making more than $10,000—although in terms of percentage of income the poor were obviously playing lotteries far, far more heavily than the affluent.

What is it that sends defeated-looking little women to the bingo halls, that leads pensioners to spend scarce dollars on million-dollar dreams, that tempts working girls to skip lunches in favor of buying Wintario tickets? And is whatever it is likely to do serious harm? The hope for instant riches is the most frequently given answer to the first question. And, aside from a few churchmen, there seems to be agreement that the answer to the second is that the lotteries binge is harmless enough. Canadians, for all their sudden infatuation, are pikers when it comes to spending on lotteries. We spend slightly more than $40 per capita annually; the Western Europeans spend $70, the British anywhere from $150 to $225 (depending on how the figure is calculated), the Japanese $220. Obviously, there is still plenty of room for growth here—especially when Canada’s relatively higher salaries are taken into account. In fact such students of mass behavior as Toronto psychiatrist Milo Tyndel think the lotteries boom may even be healthy. “I don’t see any real danger to the national moral fabric,” says Tyndel, who studied gambling psychology while working with Ontario’s Addiction Research Foundation. “Man gambles because gambling is challenging the gods. We must challenge fate. It’s inherent in our nature. If we didn’t find an outlet in buying lottery tickets we might find one somewhere else. Drag-racing, for instance. Or something equally dangerous. Lotteries offer ordinary people a thrill, and they provide a harmless safety valve.”