Casino Calamity: One gambling guru thinks the province is going too far

By David South

Id Magazine (Canada), May 16-29, 1996

Will Ontario become saturated with gambling? It is a question being asked more and more as the provincial government moves to allow unprecedented choice for gamblers.

Bars and hotels will soon have video one-armed bandits (known as video lottery terminals and slammed by the Addiction Research Foundation as video crack) and permanent charity casinos will be set up throughout the province.

Finance minister Ernie Eves’ budget may have brought joy to the hearts of the province’s gambling fanatics, but whether this is sound economic policy is less certain. Eves hopes to reap $60 million this year from the VLTs, or fruit machines.

Speaking to id under anonymity due to the sensitivity of his work, a private gambling consultant to the provincial government says the extended gambling could monkey-wrench the government’s on-going plans to build casinos to attract American tourists.

He says, “There is a maximum to any market area, to the number of people who will come. In Ontario, the idea was to have monopoly markets to create jobs and revenue for government. Spreading casinos out on the border areas would maximize jobs. But the introduction of VLT machines and permanent charity casinos means there will be a narrowing of the market. As soon as you set up the VLTs, there will be a permanent impact.”

He believes littering the province with casinos – both large and small – and VLTs, will be the equivalent of pissing in the wind for the government, arguing tourists will only be attracted to Ontario casinos if they consist of only a few, flashy must-see attractions based on the Las Vegas model.

Tourist temptation

The focus on tourists is key. Research has shown that gambling aimed at residents living near casinos can actually harm other local businesses like restaurants and movie theatres, as people spend more of their entertainment budgets on gambling. Add to this equation the fact that most of the profits go out of the community to Queen’s Park, and a casino can hurt local economies.

Knowing this, the government has instead focused on attracting tourists. In the case of the Windsor casino, it has worked – 80 per cent of gamblers there come from the US. The economic equation is simple: every dollar sucked in by the casino is a net gain for Canada that doesn’t hurt any other Canadian businesses (as for Detroit, that is anther story).

If the government keeps on its current course, Ontario could have 10 working government-owned casinos in the near future. By year’s end, the Windsor casino will be joined by Niagara Falls and the Rama First Nations casino near Orillia.

According to Anne Rappe of the government-owned Ontario Casino Corporation public outrage could change plans. “The government has been clear in its commitment to letting voters voice their view on casinos for other sites.”

Just a fad

Governments, like people, follow fads. The trend towards harder forms of gambling, like casinos and VLTs, as opposed to softer gambling like lotteries, represents a desperate move by local governments to hang on to tax revenues.

Even more than flashy schemes to build theme parks, art galleries and museums, casinos are seen as a sure-fire way to revive ailing communities by attracting tourists. Throughout North America, consultants and casino companies are telling government to turn to gambling if they hope to boost public treasuries and generate jobs. The pitch in these hard economic times goes down a treat with governments beseiged by voters to, on the one hand, reduce debt and deficits, and on the other be seen to be creating economic opportunity in the age of downsizing.

Casinos also serve another purpose. While taxes seem punitive, making money off of gamblers appears on the surface to be a win-win situation. The government gets the money it wants,while gamblers get the adrenaline rush they crave, and maybe some cash. The whole arrangement seems to be victimless – if you want to gamble, you pay the price.

For their part, gambling advocates envision Ontario as a Mecca for American gamblers chasing our low dollar, low crime, no tax casinos. They say we can have it both ways: a safe, low-crime Ontario in which islands of gambling fever suck in much-needed American dollars to prop up the provincial government treasury.

Gambling has been legal in Canada since 1969 (though the oldest casino is the gold rush-era Diamond Gerties in Dawson City, Yukon), but it wasn’t until the New Democrat government of Bob Rae that the idea of government-run or sanctioned permanent casinos became an option in Ontario.

The gambling consultant says the appeal of casinos is that they offer a sure-fire anchor to a local economy. He criticizes other developments like theme parks for being “too risky.” To make the most money, he says, casinos should avoid any pretensions to be slick, high-society affairs and instead go after the folks with “the family restaurant-style dress code.”

While the casino in Windsor is a lucrative success for the government – taking in a “win” of $500 million – local businesses have yet to report any of that money coming their way. Gambling experts say that isn’t about to change. With $400 million going directly to the government, and the rest covering expenses and the management fee paid to an American consortium running the casino, there will be little left for anyone else.

The Windsor casino is also drawing criticism for being a social parasite on Detroit, which supplies 80 per cent of the casino users. The influx of $1 million into Windsor means between 2,000 and 3,000 jobs are lost in Detroit, according to gambling expert William Thompson of the University of Nevada. Because of this, it is believed Detroit will soon set up a casino if voters say so.

A 1993 Coopers and Lybrand study commissioned by the government estimated Windsor’s win would be reduced by 60 per cent if Detroit were to open a casino.

That same study strangely found comfort in its findings that the average “pathological gambler” is male, under 30, non-Caucasian, unmarried and without a high school diploma.

It then goes on to say, “The typical US casino gaming patron earns thirty per cent more than the average of the US population, is between the ages of 40-64, is college educated and lives in a household of two or more members.” Just the kind of market that sends corporations into ecstasy.

Quebec example

The Quebec experience offers some valuable lessons for Ontario. Quebec’s three casinos were also looking to be a success until recently. The Quebec government and gambling advocates maintained the casinos (located in Montreal, Pointe-au-Pic and Ottawa’s sin-bin, Hull) were squeaky clean. Just like in Ontario, they remarked upon the impressive revenues – $1 million a day – and the huge influx of tourists. But closer scrutiny reveals the three casinos have not come without a cost.

Both Montreal and Pointe-au-Pic casinos have been criticized for preying on poor locals who spend the pittance out of their entertainment budgets on gambling. The casinos have also been involved in high-profile drug busts, money laundering scams and even murders committed by gambling addicts trying to extort money from relatives. At the Montreal casino, enterprising youth gangs targeted winners as they left the casino when it closed at three am. The robberies worked like this: A confidant would spot winners in the casino and then use a cellphone to tell accomplices waiting outside to mug the unsuspecting “lucky” ones still intoxicated by their good fortune.

All the rosy projections about casinos reviving the Ontario economy are based on several key assumptions: Americans will be the main users of the casinos, casinos in Ontario will not compete with each other or other sectors of the economy (restaurants, movie theatres, etc.), the social costs will be low and crime will not increase significantly, and most importantly, American casinos won’t lure away gamblers.

As for the gambling consultant, he doesn’t think the casinos slated to open later this year in Niagara Falls will drag the city down any farther. “Niagara Falls isn’t the nicest place now. The casino will finally give an economic reason to upgrade these places (hotels, motels and restaurants).”

And while the Niagara Falls casino will most certainly be popular, it will not be able to operate free of competition for long. Across the Rainbow Bridge at Niagara Falls, New York, preparations are being made to open a casino by 1997.

Windsor will also face competition from the American side. Voters in the state of Michigan will be asked to vote on whether to allow casinos at the next state elections. Several groups, including a local Indian band, have been pushing for a casino to be located in downtown Detroit. Canadian casinos must also compete with river boats from Illinois and Indiana.

The government has reached a watershed in its gambling policy, leaving it with few choices. It can either allow unfettered growth in casinos as more and more communities scramble to find any means necessary to generate jobs and tax revenues, or it can recognize there is a limit to gambling as a solution to economic woes.

As the source says, “The government is in a quandry: they like the revenue but hate the way it is raised.”

Update: Story featured in Schizophrenia: A Patient's Perspective by Abu Sayed Zahiduzzaman (Author House), 2013. 

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Land of the Free, Home of the Bored

Underwhelmed by Bill Clinton’s Democrats

By Nate Hendley and David South

Id Magazine (Canada), November 14 – 27, 1996

Toronto – It’s Tuesday, November 5 – American election night. A crisp autumn evening greets our search for the political philosophy buried in the US Democratic Party. Is it really the liberal heart of the United States as legend has it, or is it, as critics charge, a carbon copy of the arch-rival Republicans?

Inside the University of Toronto Women’s Club, the 80s chintz has given way to stars and stripes. A broad-mouthed woman with a bright red suit jacket and big, blonde hair greets the arrivals to the election party sponsored by Democrats Abroad, a group of expatriate American citizens living in Canada. Flags hang from the ceiling, political posters and Clinton/Gore in ’96 buttons are scattered throughout the club’s rooms. The dull cocktail party ambience contrasts with tonight’s occasion: a victory party to celebrate the rare re-election of a Democratic president. The wealthy looking and nearly all-white supporters of the Toronto chapter of Democrats Abroad – the organization boasts 600 members Canada-wide – spend the evening sipping wine and politely cheering as election results flash on three TV screens.

The tepid atmosphere is subdued in the extreme: nobody gives out war whoops, dances on tables or misbehaves as the election results trickle in. The reaction to Clinton’s win reflects a tepid Democratic campaign notable for conservative proposals, silly promises and an abandonment of the kind of liberalism the Democrats once stood for.

Conservative Clinton

Clinton’s enemies might accuse him of being a leftist, but in truth he’s been one of the most conservative Democrats to occupy the White House this century. Clinton’s less-than-liberal achievements in his first term include more crimes punishable by the death penalty, a promised additional 100,000 police on the streets, “V-Chip” technology in television sets, an intensification of the war on drugs and an abandonment of federal responsibility for welfare. Clinton’s re-election campaign featured promises to encourage school kids to wear uniforms, a vow to get even tougher on drug use by such measures as forcing teenagers to pass urine tests before issuing them driver’s licenses, and a recommitment to eliminating the US federal deficit.

The mostly monied professionals at the party are well aware of Clinton’s rightward turn since taking office in 1992, but put the president’s conservative leanings down to pragmatic politics.

“Am I disappointed in Clinton?” asks Bill Cronau, the past chair of Democrats Abroad and self-professed liberal. “Sure, but I’m not surprised that Clinton became more conservative. He is a Southerner after all.”

Arkansas-born Clinton used law and order issues “to chop GOP off,” adds Cronau, an insurance manager for Manulife, on the president’s theft of the Republican’s thunder.

The closest thing at the party to an actual living American politician is Tom Ward. Ward, with a detached air and the glow of a politician, soon attracted an audience when he entered the room. Ward twice ran unsuccessfully to become a Democratic congressman for Indiana, and agrees that overall Clinton has been “a disappointment as a liberal.”

He also agrees the president has moved far more to the right than previous Democratic presidents such as Jimmy Carter or Lyndon Johnson. Still, Ward, who has lived in East York since 1989, gives Clinton liberal kudos for his attempted passage of health care reforms. Yet Clinton’s proposed health care plan fell apart in 1994 following intense debate and criticism from the Republicans. Ward says he would try to introduce Canadian political ideas such as universal health care and stricter gun control were he to return to Indiana for a third run at Congress.

Canada or Clinton?

Joan Sumner, a psychologist originally from New York City, says she was initially impressed by Canada’s health care system, and by Clinton’s attempt at passing similar legislation in the US. But now she’s having second thoughts.

The Republicans, under Ronald Reagan and George Bush “decimated the health care system in the United States,” she says. “To run a medical practice became like running a business. It became difficult to collect from the insurance companies, who were reluctant to pay for psychiatric care.”

Sumner, who works with people who have “closed-head injuries,” has lived in Canada for 11 years. At the time she arrived, she found Canada’s health care system in good shape. “Now it’s a disaster and going from bad to worse. Truth be told, I am thinking of looking back across the border, especially with Clinton’s second term. The federal Liberals and the provincial government have no commitment to the people of Ontario.”

She complains about the extent of America’s influence on the Canadian political system.

Mike Harris, she fears, is borrowing his ideas from conservative Republican governor Christine Todd Williams in New Jersey. She would prefer Harris to look to liberals like former New York governor Mario Cuomo for inspiration. Unfortunately, Cuomo’s version of liberalism is out of fashion in both Canada and the United States these days.

While nearly everyone at the party expresses displeasure with Clinton’s turn to the right, few can explain why they supported him over his Republican challenger, Bob Dole.

In one corner is a bearded man in a white sweatshirt littered with Clinton/Gore campaign buttons. This super-supporter is Tim Wilkins, a Toronto social worker originally from Florida. When asked what policies attracted him to support the Democrats, Wilkins becomes flustered and unable to give any specifics.

“Been with the Democrats since 1988,” says Wilkins. “I could not identify with the Republicans at all. I think Bush was a very poor selection, and when he selected Dan Quale as his running mate, I thought ‘my Lord, you’ve just blown that ticket.’ The Republicans are just too right-wing, completely out of touch with Americans. And that’s an example of what’s happening tonight. Bob Dole and (running mate) Jack Kemp are completely out of touch. They have no agenda, no economic plan.”

Clinton and Chretien

Byron Toben, a Montreal Democrat, thinks a Clinton win will cement the close personal relationship between Clinton and prime minister Jean Chretien.

“Clinton and Chretien have something of a mutual admiration society going,” says Toben, who does immigration work, helping US citizens to move to Canada. “Clinton and Chretien are both on the same wavelength.”

Anne Kerr, the Canadian-born wife of Tom Ward, also agrees. She says Clinton’s victory is important to Canada because Liberals have more in common with the Democrats than the Republicans.

True enough, both Chretien and Clinton represent parties traditionally viewed as left-of-centre. Both men ran on vaguely liberal platforms for election, and both turned sharply conservative after deciding that deficit-reduction was more important than social spending or government activism. The federal Liberals in Canada and the Democrats in the United States now support conservative agendas that aren’t too much different than the platforms of their right-wing rivals. The biggest difference between the two nations, as Ward points out, is that the United States now lacks any major left-wing party such as the New Democrats. The Greens, running as a left-wing alternative to the Democrats, with consumer crusader Ralph Nader as their candidate, pulled in slightly more than a half-million votes on November 5. That is more than other minor parties such as the Libertarians or US Taxpayers Party, but hardly enough to convince Clinton to turn sharply leftwards in his second term.

Disappointment with Clinton’s first term aside, the Democrats Abroad party briefly jolts awake towards the end of the evening when Clinton’s re-election is confirmed. Champagne corks are popped by the club’s wait staff, but nobody is in a hurry to grab a glass. The mood becomes slightly effervescent as tipsy Democrats grow more animated, only to be hit with some mind-numbing post-victory speeches by the group’s executive. After a few toasts, the moment passes and a steady stream of Democrats slips out, thankful their man had won over Bob Dole, becoming the first Democratic president to win a second consecutive term in office since Franklin Roosevelt in 1936.

Id Magazine was published in Guelph, Canada in the 1990s.

Books by Nate Hendley: 

Al Capone: Chicago's King of Crime, Five Rivers Chapmanry, 2010

American Gangsters, Then and Now: An Encyclopedia, ABC-CLIO, 23 Dec. 2009 

The Big Con: Great Hoaxes, Frauds, Grifts, and Swindles in American History, ABC-CLIO, 2016

Black Donnellys: The Outrageous tale of Canada's deadiest feud, James Lorimer & Company, 2018

Bonnie and Clyde: A Biography, Greenwood Publishing Group, 2007

The Boy on the Bicycle: A Case of Wrongful Conviction in Toronto, Five Rivers Publishing, 2018

Crystal Death: North America's Most Dangerous Drug, Five Rivers Chapmanry, 2011

Dutch Schultz: The Brazen Beer Baron of New York, Five Rivers Chapmanry, 2011

Edwin Alonzo Boyd: Life and Crimes of Canada's Master Bank Robber, James Lorimer & Company, 2013

Motivate to Create: A Guide for Writers, Five Rivers Chapmanry, 2010

Publications by David South: 

Southern Innovator Magazine Issue 1: Mobile Phones and Information Technology 

Southern Innovator Magazine Issue 2: Youth and Entrepreneurship

Southern Innovator Magazine Issue 3: Agribusiness and Food Security

Southern Innovator Magazine Issue 4: Cities and Urbanization

Southern Innovator Magazine Issue 5: Waste and Recycling 

This work is licensed under a
Creative Commons Attribution-Noncommercial-No Derivative Works 3.0 License.

 

Man out of Time: The world once turned on the ideas of this Guelph grad, but does the economist John Kenneth Galbraith know the way forward?

By David South

Id Magazine (Canada), January 23 to February 5, 1997

It was with hungry enthusiasm that I rushed to hear the great liberal economist John Kenneth Galbraith speak. It was with enormous disappointment that I found a genius emptied of solutions to the current political battles in today’s Ontario.

For those unfamiliar with Galbraith, think of him as a hybrid of the liberalism of former prime minister Pierre Trudeau and the manner of Jimmy Stewart. Now 88, the former Guelph agricultural economist became a servant of the US government just as president Franklin Roosevelt was beginning to introduce the New Deal – today’s rusting welfare state – as a solution to the cruel hardships imposed on Americans as a result of the Great Depression. Galbraith rode out the Second World War in a senior government position as Roosevelt’s price-control czar. He later advised Democratic presidents John F. Kennedy and Lyndon Johnson, before seeing his influence in American economic thought wane under Ronald Reagan’s Republicans.

Galbraith has long followed the ideas of British economist John Maynard Keynes, who believed goverments should keep money tight in good times, but should spend their way out of bad times to avoid undue hardship. Galbraith also made the plight of the poor one of the pillars of his economic theory, and criticized the unnecessary appetites and demands created by the goliath American advertizing industry. He has supported wage and price controls and once, in the 1930s, even wanted to join the American Communist Party.

Last week, Galbraith breezed into Toronto with his ivy league roadshow. Speaking to a stodgy crowd of liberals (and Liberals, including former prime minister Pierre Trudeau and failed Ontario leadership candidate Gerrard Kennedy) at the University of Toronto, Galbraith was at an institution that comes as close as Canada gets to his current stomping ground, Harvard.

Symbolically, Galbraith couldn’t have visited Ontario at a better time. The Conservative government of Mike Harris is in the middle of an ambitious campaign to reverse everything that Galbraith has stood for: budget deficits to avoid depressions; social programmes to prevent poverty; taxes on the rich to fund those programmes; government policy subservient to public good. Harris oozes contempt out of every pore for the pillars of Galbraith’s thinking. In fact Ontario, once the bedrock of Canadian liberalism, is now joining Alberta in dismantling the welfare state.

A graduate of the University of Guelph when it was still the Ontario Agricultural School, Galbraith took his bitter memories of farming in southern Ontario to the University of California, Berkeley and subsequently to the Roosevelt government.

In his day, Galbraith was amongst a rare species of mainstream economists that earned respect from the once-abundant Marxists who cluttered universities. Not that the Marxists liked his compromises and complicity with the American government, or his assertions that he could save capitalism. But they thought he softened up the system for some body blows to be delivered by the workers’ revolution.

I am a member of generation that grew up on government largesse, well-funded public schools, family allowance, university grants, and make-work progammes. But we have seen a lot of that eroded over the past eight years, during a period of high unemployment not seen since the Depression. It was time to see if this titan of liberal thought had something new to say.

Galbraith’s talk had two main points: the market economy is the best system going; he supports a guaranted minimum salary to prevent poverty. Other than that, Galbraith’s speech was a rehash of the same ideas he has been mulling over for the past 50-plus years. It could be called Liberalism 101.

His speech was peppered with euphamisms like the “socially concerned.” Perhaps he was pulling his punches so as not to offend the “distinguished” audience. The most exciting moments displayed his dry wit: “In the United States , the war against the poor having now been won,” or “We, the socially concerned, do not seek the euthanasia of the rentier class.”

He struck out against annual balanced budgets because they have been used as an excuse in the US to cut off benefits to the poor. He also slammed the globalization-uber-alles philosophy that sees welfare policies as uncompetitive – a sentiment that doesn’t seem to be in vogue these days with liberals. Last week, Prime Minister Jean Chretien told the South Koreans they need to remove jobs-for-life provisions to join the global marketplace.

His ideas and his approach to communicating those ideas come from a special historical time. A time when governments under pressure from trade unions and the far-left and right political parties decided to make capitalism a little friendlier. But they needed advisers who could speak the language of the elite. Eloquent, confident, pragmatic – advisers who felt comfortable in the courts of the democratic government. They didn’t want hot-headed union guys or hectoring left-wing demagogues.

Galbraith takes credit for civilizing capitalism and ensuring its survival: “It would not have survived had it not been for our successful civilizing efforts. We, the socially concerned, are the custodians of the political tradition and action that saved classical capitalism from itself. We are frequently told to give credit where credit is due. Let us accept it when it is ours.”

Galbriath’s economic theories have always been grounded by morality, preferring to avoid being a servant to flow charts. It is his most insightful side. When many fear to speak in broad terms about current economic problems, where many fear to make connections, Galbraith has pieced the complex puzzle together, much to the frustration of those who believe capitalism should be left unfettered. It is his worthiest legacy.

The Galbraith Interview

You point out it is reforms that have given capitalism a new lease on life. What policies would alleviate the worst aspects of today’s capitalism?

We still have the oldest problem. (That is) to eliminate the cruelties that are inherent in the system. In the United States, and I imagine also in Canada, we still have the terrible problems of the urban poor, of the people who do not make it. I see one of the central tasks of our time is to do two things: to provide a safety net so that in a modern rich society we don’t let people starve, and that we provide the means for escape from urban poverty.

How would you elliminate poverty?

No novelty about that. Two things are absolutely essential. One, that there be a basic safety net. That we accept in a modern society that there has to be a level of income below which people are not allowed to go. I do not join this attack on welfare, this notion the poor should be allowed to starve. Another thing is a strong educational system, which allows people to escape from poverty in the next generation. Those are the two absolute essentials.

Should government just concentrate on ending poverty and abandon universal programmes like public health care?

You can always have a conversation that separates itself from the reality. I think in Canada if some politician or some political group wanted to repeal the health system, they would soon find themselves in considerable disfavour. If they were committed to allowing the poor to starve, they would get a reputation for cruelty that no civilized society would tolerate. And if they started saving money on the schools, as some already have, we would find out how absolutely essential good education is for economic and social well-being. So we have a difference between what is possible in oratory and what is possible in reality … When the axing comes, it is a good deal less popular than it is in the previous rhetoric.

Who do you think, within or outside political movements, represents the socially concerned today?

I don’t speak generally on this. There is in all countries a substantial voting and politically expressive group. In the United States it is the political left, in Britain it is the Labour Party, in France it is the socialists, in Germany the social democrats. They are broadly committed to the welfare state and I think will remain so.

Would you include the Liberal Party in Canada amongst those?

I would include a substantial part of the Liberal Party in the United States. The Liberal Party in Canada, like the Democrats in the United States, have a double orientation, on one hand to the welfare state and on the other hand a more centrist attitude. Both parties have an internal problem to resolve.

Do you think they have lost interest in the welfare state?

To some extent I regret that. We must take some responsibility for human suffering and human well-being.

You don’t see that with the Democrat Party?

I prefer it to the Republicans.

Are some of these policies like welfare reform in the US making it harder for the poor?

I was not in favour of welfare reform.

I grew up in a very poor household but was able to go to the University of Toronto because of various government policies. In fact, they have kept me from destitution. You have written about a culture of contentment that prevents further social reforms. Will it whither?

Those of us who have been associated with the welfare state have made a lot of people comfortable, happy and conservative. We have undermined our own political influence by our success.

Do you think current levels of high unemployment and economic stagnation might erode that contentment?

No, if we suffer another recession there will be a desperate effort to have the government do something about it. The present conservatism is an aspect of good times. We had it in the 1980s under Reagan.

Are we still in good times?

We still have a lot of people who have a problem. We should have sympathy.

Do you see any political parties in Canada who defend the welfare state?

I’ve lived all my life in the the United States and I’ve always avoided coming back to give Canada advice. As I said in my lecture, anybody who does that should have stayed in Canada for his own lifetime. Let Canadians look after their affairs in Canada.

You said the socially concerned don’t seek income equality. I guess that is where you split with socialists?

I accept the inevitable, that people are going to be different in aspirations, ability and luck and probably different in parentage. All of this is going to mean differences in income.

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