Costs of Gambling – comprehensive study

The following study is available at Casino Watch, a US website providing resources and research on the casino industry in North America. (You may also be interested in the Oregon site “PACT: People Against a Casino Town.”) The following study was conducted in the 1990s at the University of Illinois:

“Business Profitability Versus Social Profitability: Evaluating Industries with Externalities, The Case of the Casino Industry”

By Earl L. Grinols and David B. Mustard
Download the PDF

 

Abstract

Casino gambling is a social issue, because in addition to the direct benefits to those who own and use casinos, positive and negative externalities are reaped and borne by those who do not gamble. To correctly assess the total economic impact of casinos, one must distinguish between business profitability and social profitability. This paper provides the most comprehensive framework for addressing the theoretical cost-benefit issues of casinos by grounding cost-benefits analysis on household utility. It also discusses the current state of knowledge about the estimates of both the positive and negative externalities generated by casinos. Last, it corrects many prevalent errors in the debate over the economics of casino gambling.

Highlights

At the conclusion of its investigation, the commission recommended a national moratorium on the expansion of gambling and more study of gambling’s effects, costs and benefits, before making further decisions about it.

Many studies pay a great deal of attention, for example, to estimating the number of direct and indirect jobs that casinos create and to tallying the taxes casinos pay, but do not explain the social value of an additional job or calculate the lost taxes of competing non-casino businesses.

For example, the effect of casino gambling on firm profits should be summed over all firms, not just casinos. The increased profits of the casinos should be netted against lost profits of other firms that compete for consumer spending.

If casinos temporarily reduced unemployment faster than it would have fallen otherwise, this transitory effect could correctly be counted as a benefit of casinos. However, we know of no study that has made this case.

Although casino profits and taxes are highly visible, they are invalid measures of social benefits because they do not adjust for the entire economy for the lost profits and taxes of competing businesses.

Read the rest of this entry »

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Proposed expanded Edgewater Casino thinks it can compete with Singapore for big gamblers from China?

“Destination casino” – that’s how the BC provincial government and Vegas gambling corporation Paragon Gaming plan have designated the proposed new Edgewater complex. What does this mean? It means that the casino complex intends to reach its projected revenues, the casino would have to attract significant gambling tourism, not just locals. In the case of the Edgewater Casino, a large fraction of the the targeted market is supposedly wealthy gamblers from China. There are a number of troubling issues associated with destination casinos, and we’ll deal with those at the end, but the first question we are asking here is this: has the BC government really thought out whether this “destination casino” can really do what it says it can and attract these gamblers? Because it’s very unlikely that it can deliver. Consider just one of many competing mega-casinos:

Singapore, which is a world leader in planning and which very carefully designed its casino industry to market almost exclusively to tourists and very wealthy clientele;

Singapore, which has almost the lowest crime rate in the world, strict and well-funded policing and zero tolerance for gang activity;

Singapore, which wants the Asian/Chinese high-roller gambling dollars that we naively think we can compete with them for;

Singapore,which is only a short, low-cost flight away from Hong Kong or China.

And when you get to Singapore, you get this:

Do BC and Vancouver really think we are going to induce the Chinese big spender to come halfway around the world to be impressed by this?:

Now, let’s look at other issues associated with mega-casinos.

What we sometimes hear from our elected public officials on this topic goes like this: “oh, the new casino isn’t in a residential area, and lots of cities have them.”

Wrong.

Ask the False Creek Residents Association whether or not they agree that this is not a residential area! And this district is extremely close to both Yaletown (2 minute walk away) and Gastown, not to mention Strathcona, only a 10 minute walk away—and  with the Prior/Venables artery, gamblers and loan sharks will be passing right through the neighbourhood daily.

Furthermore, do other cities really put mega-casinos in their downtown core?

No, they don’t. Chicago, for example. Their “downtown” casino? It’s 20 minutes outside of Chicago downtown, very like our current River Rock Casino in Richmond. Singapore’s casinos charge $80 for locals to enter, and they have one at their huge major resort downtown that is very far from any residential area. The other is on an island 10 miles from the city. Everything is strictly designed for tourism, not local gambling.

Montreal’s casino is on the Expo island–again away from the city residential heart, as is the casino in Edmonton. NO cities except declining poverty traps like Detroit have allowed this.

This is not normal urban planning. We are not even approaching the frontier of “urban planning” here. After the decades and tens of millions of dollars that have gone into making Vancouver the most livable city in the world, are twe are going to plop Las Vegas into it? And for what? So that our rich and corporations can have the lowest taxes anywhere? And on that topic, what has that done for us lately? Where are the waves of major corporate head offices coming our way because of the low taxes? Non-existent.

Vancouver! You—City Council as well as Vancouver citizens— must stand up and defy the province on this one.


ThinkCity: “It’s Time to Hold ‘Em, Mayor”

Below is an excerpt from a November 17, 2010 article by Neil Monckton of ThinkCity, a thoughtful Vancouver citizen-participation group that focuses on Vancouver’s civic and development issues. Click at bottom to read the whole article at ThinkCity:

“Can city council move all in on the province’s much-expanded gambling plans for Vancouver? Last March, the province announced a new “destination casino” in one of the city’s most rapidly growing areas. In the coming weeks, citizens and their council will finally have an opportunity to table their demands for future benefits. And they had better, because so far the BC Liberal government has not offered Vancouver much in return for accepting this controversial development.

It is controversial for three chief reasons.

First, the city may get a far lower share of the gambling revenues than promised by the province in past agreements.

While the revenue-sharing agreement has yet to be finalized, the city’s take is expected to be much lower than it would have been ten years ago. In 1999, the then-NDP government promised a 16.7 per cent share of gaming profits for those municipalities which allowed destination-style casinos. However, Solicitor General Rich Coleman recently dismissed the BC Association for Charitable Gaming claim for a 33 per cent share of the new casino’s gaming revenue, as promised in a related 1999 agreement. If the BC Liberals are renouncing an eleven-year-old profit-sharing agreement with the province’s charitable sector, why would they honour a similar deal made with civic governments?

Some civic watchers believe Vancouver may see its share cut to less than 10 per cent. With $130-million in annual revenues expected for the province this means the city may be shorted by as much as $10-million a year.

Second, this massive new casino will certainly have some negative impacts on the area. With triple the capacity of the existing Edgewater site, this monster gambling house is 61 per cent larger than BC’s biggest casino, Richmond’s River Rock. It will feature 150 tables and up to 1,500 slot machines – nearly 15 per cent of all the slots in the province…”

Click here to read more.


So you think the stadium lands are BC gov’t property & it can do whatever it likes with them? Not true!

Something we keep hearing in this fight against the massive expansion of the Edgewater Casino is that “it’s on BC government-owned land, so the City of Vancouver can’t stop it.”

Not true. Very much not true.

PavCo (short for BC Pavilion Corporation), the BC government’s crown corporation, is not free to do anything it likes. It is subject to Vancouver city processes and regulations like everyone else. It must go through the rezoning application process for the casino (which is currently much smaller and more hidden away) and it must go through the application process for gaming expansion in Vancouver city limits.

Please see the Memorandum of Agreement on Gaming Policy Between: The Union of BC Municipalities (UBCM) and The Government of British Columbia (the Province).

It’s interesting reading.

In it, the province affirms municipal jurisdiction over land use and gaming licenses, and explicitly agrees to abide by local government decisions.

This massive casino expansion smack in the middle of our downtown is not a done deal, and it must not be rubber-stamped by City Councl just because the City is being bullied by the Province. If you want to learn more about why the City of Vancouver is having trouble saying no to the province, read on or look at this excellent series of investigative articles on the Edgewater expansion by the Vancouver Observer.


Anti-casino crusader points finger at Vancouver city hall


Opponents argue that slot machines and games tables create gambling.
Photograph by: Dan Toulgoet, Vancouver Courier

Reprinted from the Vancouver Courier:

Complex will boast 1,500 slot machines

By Mike Howell, Vancouver Courier
November 15, 2010

You can hear the exasperation in Bill Chu’s voice.

After years of unsuccessfully fighting city council and others in the Lower Mainland to keep casinos out of municipalities, Chu is frustrated at the lack of public outcry against a Las Vegas-style resort casino planned for downtown that could be the largest in B.C.

“If people were as mad about this as they are about the [harmonized sales tax], then we might see a difference,” said Chu, coordinator of the Multicultural Coalition Against Gambling Expansion. “Personally, I spent 10 years fighting casinos. Our energy is spent and somebody else has to step up and do something. This is not the duty of a few citizens.”

In March, Premier Gordon Campbell announced a new 68,000 sq. foot entertainment complex attached to B.C. Place that will include two hotels, a casino with up to 150 games tables and 1,500 slot machines, restaurants, a theatre and cabaret.

The proposal, however, first has to be approved by Vancouver city council, which will decide whether the property is an appropriate use for such a complex and whether gambling should be expanded in the city.

Before the end of the year, council is expected to refer the proposal to a public hearing for some time in 2011. Until then,Vision Vancouver Coun. Geoff Meggs said he won’t decide whether the $450 million project should go ahead.

“I’m not going to comment on whether I favour it or don’t favour it until I’ve heard all the information from people,” said Meggs, who noted the lack of mobilization by anti-gambling proponents against the proposal. “What I’m struck by is how quiet that whole business is. I don’t see any heat on it. It could come but it hasn’t started yet.”

Meggs suggested the lack of interest could be related to people not understanding the magnitude of the project. As he pointed out, a new casino would be more than double the size of the Edgewater Casino at the Plaza of Nations, which will relocate to the proposed complex. Edgewater has 65 games tables and 493 slots.

“Maybe the public is fine with that, and we’ll see once it’s referred to public hearing, but it is striking how quiet it is (compared to previous casino proposals before council),” Meggs added.

Las Vegas-based Paragon Gaming Inc. owns Edgewater, having bought it from local owners Len Libin and Gary Jackson in September 2006 for $43 million. The deal made Paragon the first foreign owner of a casino in B.C.

The company specializes in Native American and First Nations gaming in the United States and Canada. Paragon formerly operated the Sahara Hotel and Casino in Las Vegas.

Hastings Racecourse, which is operated by Great Canadian Casino, is home to the only other casino in the city and has 600 slots. More than five years ago, previous councils approved slot machines at both casinos, despite pushback from community groups and a minority of councillors.

Until those approvals, the city councils of the day boasted about not allowing slot machines in the city. The biggest rejection occurred in 1994 when the NDP government floated a mega casino to be built on the Vancouver waterfront by Las Vegas gambling magnate Steve Wynn.

But Chu believes the current council, which includes politicians who voted for slot machines, will approve the mega casino proposal. The fact that profits from developing the land slated for the complex will be used to pay for the $458-million retractable roof being built on B.C. Place is more evidence the proposal is a done deal, Chu said.

Chu has argued that slot machines and adding games tables would create gambling addicts and attract criminals such as gangsters and loan sharks, which has occurred in Richmond.

The Vancouver Police Department announced Nov. 8 that three men were arrested in connection with a robbery of a Vancouver customer of the River Rock Casino in Richmond.

The VPD also investigated a similar robbery in 2006 when a customer of the Edgewater Casino was followed home and hit over the head with a pipe and slashed across his abdomen and back.

“We’ve seen one council after another not choosing to listen to the people, but listening to the casino proponents,” Chu said. “It is now become government for the casino and by the casino. The resistance from us has obviously not been working too well.”

In July 2009, the city released a report that said the addition of 600 slot machines at Hastings Racecourse was not harming the surrounding community as was anticipated by residents.

The staff report said traffic, problem gamblers, prostitution or crime has not increased in the area. The report, however, pointed out that 150 slots began operating at the racecourse only in November 2007. An additional 450 slots weren’t added until August 2008.

“While it may be early to do a full analysis of impacts, indications are that the addition of slots has not materialized in some of the negative impacts raised as concerns during the rezoning process,” wrote Mario Lee, a city senior social planner.

If council approves the B.C. Place proposal, it will get a small percentage of the profits. That number hasn’t been revealed, although a government news release issued in March indicated “the facility is expected to generate up to $130 million in gaming revenues that will be distributed to the province in the first full year.”

According to a city report released in June 2008, the total contribution to the “Edgewater Casino Social Responsibility Reserve” was $700,000 and expected to grow at a rate of $200,000 a year until July 2013, totaling $1.7 million.

At the time of the report, more than $220,000 of the money was allocated for community grants and $75,000 for a “crime-free multi-housing program.”

mhowell@vancourier.com

Twitter: @Howellings

© Copyright (c) Vancouver Courier


Rich Coleman Declares Casinos Open for Business to Gangs

To the average member of the public, gangs are associated with violence and turf wars. This view masks the reality that organized crime is fundamentally a large scale and powerful business, with operations throughout society.

If you think organized crime will not touch you or your family through the expansion of gambling, think again. Last year Betty Yan, a mother with children at a prestigious west side school, was shot to death in a Richmond parking lot. She was a loan shark working with gangs. Her clientele were gambling addicts in Lower Mainland casinos.

The damage didn’t end with her death. Parents at the west side elementary school, afraid for the safety of their own children, forced the woman’s young and traumatized children out of the school. And Yan was not the only murder victim tied to gambling and organized crime.

In 2006, loan shark Lilly Li left her regular shift at Richmond’s River Rock Casino with somewhere between $20,000 and $300,000 in cash, and disappeared. Her body was found months later, buried in a shallow grave at Jericho Beach.

This is happening in our city–our Metro Vancouver–and it is part and parcel of the expansion of legalized gambling and the building of casinos in our midst.

Right here in Metro Vancouver loan sharks charge up to 20% a day, and victims don’t believe police can do anything to protect them. Terrified of reprisals against the debtor or an innocent family member, loan shark victims are often forced into prostitution and drug-dealing to pay off their gambling debts: CBC News – British Columbia – Casino loan sharks a tricky target: RCMP

And just who do you think is there to help them with that little money-making sideline? Why, the gangs, of course. All under one roof, care of the BC taxpayer.

It didn’t used to be this way.

BC gambling in the old days mainly involved provincial lotteries and smoky bingo halls operated by charities. Those days are long gone, and the glittering gambling palaces that replaced the bingo halls are the perfect venue for budding young Scarfaces with their loan shark, money laundering, and drug dealing activities operated by the Hell’s Angels, the Asian triads, the UN gang, and Indo-Canadian gangs.

Apart from correctional institutions, casinos have the highest concentration of gangsters anywhere in BC, says Fred Pinnock, the former commander of BC’s Integrated Illegal Gaming Enforcement Team (IIGET): Ex-unit commander questions government’s commitment to “meaningful” illegal gaming investigations – Public Eye Online

Pinnock goes on to say “There’s a ton of criminal activity being conducted in these places every day, including money laundering, loansharking and other enterprise crimes.”

Policing legalized gambling operations requires highly specialized resources, training, sophisticated data bases and communications, and a far-reaching law enforcement strategy.

Naturally, you would expect that our provincial government, concerned as it is about the protection of the public and the perception that legal gambling operations are squeaky clean, would aggressively target the criminal element. Yup, and there is a great bridge for sale in Brooklyn, too.

The fact is that Minister Rich Coleman, who takes the gaming portfolio with him to whichever ministry he is moved to, has completely abdicated his responsibility to ensure the public is adequately protected in BC casinos. Faced with a report in January 2010 from IIGET that casinos are a hotbed of illegal activity (RCMP Money Laundering Report), and the team does not have nearly enough resources to do even rudimentary investigation, Minister Coleman immediately took decisive action: he disbanded them.

Minister denies illegal gaming report allegations

Now there is no serious oversight of gang and organized crime activity in casino operations. Now, as a result of the most recent cabinet shuffle, BC’s minister responsible for gaming is ALSO the Solicitor-General, and responsible for policing.

Even for gangsters, BC is Open for Business!


Please sign the BCACG’s petition

Gambling was expanded throughout BC with the understanding and agreement that it would substantially fund BC’s crucial charities and non-profits. This has not come to pass, and charities are suffering. Minister Rich Coleman cuts them off from gaming revenues at will—and, so far, with impunity. But perhaps not for much longer. Why should we have a huge, crime-attracting casino in our city’s downtown if it’s not even going to fund the charities that keep our communities healthy?

Remember to sign the BCACG’s petition asking the City of Vancouver not to consider the BC provincial government’s application to expand gaming in the municipality until the province comes to the table to discuss its radical cuts of gaming-derived funding to charities and non-profits throughout BC.

The BCACG or British Columbia Association of Charitable Gaming is a non-profit organization that represents the charities who receive funding out of BC’s gaming revenues. Charities currently receive only about 10% of those revenues; BC legislation states that fraction must be 33%. Read the BCACG’s open letter to Minister Rich Coleman. Please send the petition link around!