Canadians launch a rich gambling spree and fuel a risky business

RAE CORELLI May 30 1994


Canadians launch a rich gambling spree and fuel a risky business

RAE CORELLI May 30 1994



Canadians launch a rich gambling spree and fuel a risky business


From neighboring Detroit and elsewhere in Michigan, from Ohio and across southern Ontario, they converged by the tens of thousands last Tuesday on the boom-and-bust industrial city of Windsor, a place few of them once would have picked for a weekday excursion. Hunched against the stiff breeze off the Detroit River, they laughed and wisecracked and shuffled forward between long lines of candy-striped tape that eventually funnelled them inside the mirrored, jingling, neonwashed Casino Windsor, Ontario’s first. “I’m gonna help donate to the provincial deficit,” said Milton Crafts of London, Ont. He had plenty of company. At week’s end, upwards of 100,000 donors had tried the 1,702 ■rDHTTl slot machines and 65 gaming tables, leaving behind an estimated $6.5 million to be split between Queen’s Park and the Las Vegas-based owners. But they will be back this week—80 per cent of them from Detroit, most of them in baseball caps, jeans and running shoes—to give another boost to the latest entry in the Great Canadian Crapshoot.

Actually, there are no craps—Section 207 of the Criminal Code inexplicably forbids gambling with dice—but there is blackjack, baccarat, roulette and the rest of the risky but obscenely profitable business of casino gambling, all of it coming soon to select Canadian locations. In fact, casinos have become the frenzied focus of a worldwide gambling boom that includes lotteries and charity gaming. Last year, the Canadian gambling industry alone had gross revenues of $11 billion—nearly twice the cost of running the federal government. And the money keeps on flowing. “I’m gonna go real heavy,” said Woodrow Davis, a Detroiter, in last week’s Windsor lineup. “I m gonna try to take Canada back with me.”

On the other hand, once-puritanical Ontario, deficit-ridden and strapped for cash, wants to send Americans home happy but broke. It is the third province to conclude that yesterday’s vice could well be tomorrow’s virtue. Manitoba dealt first, opening the $5-million Crystal Casino on the seventh floor of downtown Winnipeg’s Fort Garry Hotel in 1989. Quebec joined in last October with a $92-million renovation of Expo 67’s French pavilion on Montreal’s lie Notre Dame and has been so swamped that it will spend another $90 million for more gaming tables, slot machines and parking spaces.

Then, last February, the Vancouver Port Corp. approved in principle a developer’s scheme to build a $750-million complex on Burrard Inlet, which would include a 1,000room hotel, restaurants, shops, a cruise-ship terminal and a 125,000-square-foot casino, larger than many of the lavish gambling palaces in Las Vegas. Not to be outdone, Indian bands across the country are demanding the right to open their own casinos—Ontario, for example, has promised to approve one of 14 applications. In late April, the gaming passion reached the East Coast when Premier John Savage announced that Nova Scotia would license two privately run casinos, one in Halifax, the other in Cape Breton. “The benefit to taxpayers,” Savage said, “will be substantial.”

So is the price tag of a casino—slot machines, for example, cost up to $9,000 apiece—but the projected payoffs for recession-battered governments are enormous. Loto-Quebec, the provincial lottery company that owns the Montreal casino, originally estimated its annual net profit at $50 million from a daily attendance of 5,000, but the crowds have been more than twice that size—and revenues will be nearly triple. The government-owned Manitoba Lotteries Foundation, which opened two more slot machine and bingo parlors in Winnipeg last June, took in $29.3 million in the first six months compared with the initial investment of $35 million.

For Ontario, whose ruling New Democrats once opposed casinos, Windsor may be only the beginning. A government-sponsored study, made public last August, said the province had room for seven casinos that would likely yield combined annual profits of $880 million. The Windsor

casino alone, quartered temporarily in what used to be the Windsor art gallery (and was a brewery warehouse before that), is expecting annual gross revenues of $300 million. Domenic Alfieri, the mandolin-playing president of the Ontario Casino Corp., says the $375-million permanent hotel and casino—scheduled to open in 1997—should attract yearly gross revenues of $500 million. The depleted coffers at Queen’s Park will get $200 million and the balance will cover the salaries of 1,600 employees, the utilities and the operator’s cut—now 2.75 per cent of gross operating revenue and five per cent of the net.

If blind faith and enthusiasm are all it takes to succeed, it would appear that the province can’t miss. At a black-tie reception in Windsor prior to the official casino opening, 4,100 VIPs sipped champagne, placed single bets as high as $5,000 and explored the three floors of the old gallery (renovation cost: more than $60 million). The gallery rented the building to the casino for $6 million for three years and moved to a shopping mall where it is attracting more people than it did downtown. “These are momentous days for Windsor,” said Mayor Mike Hurst, giving a slot machine handle a ceremonial yank. ‘Windsor is a city of hope.” The Windsor Star headlined its coverage of the reception: “Sparkling start.” Trumpeted the opening-day headline: “GOOD LUCK!”

For a variety of economic and social reasons, Windsor— or any city gambling on casinos—may need it. Casinos never go broke; an executive of one in New Orleans recently said that failing “would be like spitting and missing the floor.” And although some communities—Montreal, for instance—claim that casinos have helped business and created jobs, others have fared poorly, or at least not well enough to boast. Robert Goodman, professor of urban planning at the University of Massachusetts in Amherst, says that Atlantic City, the faded New Jersey resort that ended Nevada’s monopoly in 1976, is a prime case of what can go wrong. “During a 16-year period,” Goodman said, “they pulled in revenues of $44 billion—more than $1 million for every man, woman and child in the place. It was a major benefit for the casinos, but the community lost 26 per cent of its population and 100 of the 250 restaurants that were there when the casinos moved in. On top of that, the city has the highest unemployment in the state and a lot of homelessness.”

Ordinary merchants are not the only ones that can be affected. Across the continent, casinos have cut into the revenues of racetracks. “The conventional wisdom,” says David Gorman, a vice-president with the Ontario Jockey Club, “is that a casino in the neighborhood of a racetrack will have an adverse impact of 20 to 40 per cent.” Already battered by competition from lotteries and sports betting, Ontario tracks have fought back by broadcasting—and taking bets onraces from other tracks between live races. And now they offer teletheatres: 75 off-track betting sites, mostly in sports bars. When casinos posed yet another threat, the Ontario Jockey Club’s Woodbine Racetrack near Toronto, together with ITT Sheraton, applied for the government franchise that eventually went to Windsor.

As Goodman sees it, what is needed is a serious study of the costs and benefits of casinos and the role of governments, which have gone from regulating gambling to promoting it. “In the late 1980s, the revenues in all the lotteries in the United States were either declining or flattening and that’s when the states began looking at other forms of gambling—slot machines, riverboats, casino gambling. We couldn’t find one example of a citizens’ group arguing for more gambling. We did find that governments—dependent on gambling and finding their revenues declining—looked for new gambling ventures.”

Governments aren’t the only victims of dependency. Giving people the opportunity to gamble legally, says William Thompson, professor of public administration at the University of Nevada in Las Vegas, leads to at least 1.4 per cent of them becoming compulsive gamblers; that would be approximately 40,000 people in the Windsor-Detroit metropolitan areas. And authorities, says Thompson, agree that each compulsive gambler costs his community about $17,000 a year in lost productivity, in social services, theft, jails and specialized policing—which would work out to more than $650 million in Windsor and Detroit. ‘What you have to ask yourself,” says Thompson, “is if you have an urban casino that delivers a product to the same people day after day, is it worth that kind of cost?”

Whatever strain casinos place on community resources,

Thompson says, they are no longer controlled by underworld figures like Benjamin (Bugsy) Siegel, whose Flamingo Hotel gave Las Vegas a bad name in the 1940s. There have been sporadic, bloody battles for control of casinos since then: in the late 1970s, when gambling came to Atlantic City, some 16 mobsters were murdered. But overall, there has been a cleanup of the casino business through state licensing, regulation and periodic on-site inspections. “If you have control,” says Thompson, “you don’t need to worry about organized crime too much. But they’re always going to try. If you have bigstakes gambling, you’re going to have loan sharks.”

There are other factors to consider. Because of the historic prohibition against casinos, says William R. Eadington, professor of economics at the University of Nevada in Reno, “there are legitimate

concerns about what widely available casinos might do to a previously unexposed public.” While a casino’s economic impact can be measured in terms of jobs, payrolls, tax revenues and new investment, there is an intangible downside “such as increased financial distress within families, a greater incidence of spousal and family abuse and a higher propensity for embezzlement and petty theft.”

For the people of Windsor, there was sobering news closer to home. A University of Windsor study of 935 randomly selected teenagers,

published on April 29, concluded that five per cent were already problem gamblers and an additional 9.4 per cent were at “high risk.” The project, undertaken by psychology professor Ron Frisch and Nicholas Rupcich, a counsellor and administrator of the Canadian Foundation on Compulsive Gambling’s Windsor office, will re-examine gambling patterns after 18 months and again in 1997. “Sooner or later, we’re going to have to start asking ourselves what the hell the next generation is going to be like,” Rupcich said. “If we’ve got one in 20 teenagers gambling out of control, what are we going to see up the road?”

For decades, the popular notion of casinos had more to do with danger and excitement than with economics and social ills. The casinos in movies and on TV were an odd blend of Depression-era, gangster-ruled Las Vegas and the princely playgrounds of the super rich—Monte Carlo and Cannes. Reality has long since superseded that perception. Last year, Canadians bet about $1.3 billion in Las Vegas and Reno alone, contributing to the $20-billion gross revenues of U.S. casinos. Gaming houses have been approved, licensed or opened in 23 of the 50 states. There are casinos on Indian reservations in at least a dozen states and on riverboats along the Mississippi from Iowa to the Gulf of Mexico. Not all the riverboats are afloat: some, lacking engines, are moored at landing stages, and others, loosely interpreting the law permitting dockside gambling, are wooden buildings that overhang the water.

Historically, social scientists say that one reason there were so few objections to the legalization of gambling in Nevada in 1931 was that only the rich could afford to travel there from the big cities of the East and Midwest. With the appearance of government-run North American lotteries—New Hampshire was the first, in 1963—the paternalism surrounding gambling was replaced by public concern for morality and social responsibility.

But not for long. The rapid growth in lotteries—37 states and all 10 Canadian provinces now have them—enriched public coffers and charitable and arts projects and reassured many people (who were buying tickets anyway) that the industry was worthwhile. In the late 1980s, says Eadington, governments concluded they could overcome the political risk of legalizing casinos only by first identifying potential benefits: tax revenue, job creation, regional economic development, more tourism. At the start, the

Ontario government claimed all four advantages would accrue to Windsor and surrounding Essex County once the casino opened. Ironically, the local economy has been doing well for at least the past year—the Big Three automakers, the city’s lifeblood, have been running at near-capacity.

The casino’s eventual impact, says the University of Nevada’s Thompson, will depend on where the gamblers come from. “It’s no damned good if all the money comes out of your local economy,” he says. “It works in Las Vegas be_ cause 90 per cent of the money § comes from outside.” For Windsor, § that means Detroit. Although I Detroit Mayor Dennis Archer and g Michigan Gov. John Engler are opis posed to casinos (except on Indian reservations), gambling supporters had begun circulating petitions among Detroit voters even before Windsor opened—posing potential competition for their Canadian neighbors.

Meanwhile, the Windsor police department’s uniformed casino squad spent most of the first week chatting with visitors and cruising the streets in the late May sunshine. Fears of traffic jams in the WindsorDetroit tunnel and on the Ambassador Bridge failed to materialize, and the casino’s fleet of burgundy vans whisked visitors back and forth to distant parking lots without incident. Standing in the casino lineup, Windsor resident Frank Somodi said: “I think they’ve looked at all the different aspects—the negative side, the positive side—and we’re looking forward to being a good thing for the city of Windsor and also Ontario.”

“Do you ever go to Las Vegas?”

“Oh, yeah,” said Somodi. “I was just there in September.”