Upping the Ante

The province collects more revenue from gambling than royalties from the oil sands. Much of the money funds social programs, including – treatment for problem gamblers.

By Amy Steele

It’s Saturday Night at the Deerfoot Casino, Calgary’s newest gambling establishment, and the mall-sized parking lot is packed. Inside, people of all ages and ethnicities are betting this will be their lucky night. Some play poker or blackjack but most feed coins into slot machines. The room is smoky and loud—not with the sound of laughter or conversation, but with the din of hundreds of slot machines—one has just paid out and is ringing incessantly, the music from hundreds more blurs in a dissonant sonic background.

Alberta may have gotten rich on oil and gas but the government has a new gusher of revenue coming in from gambling. In the 2004/05 fiscal year, the provincial government collected over $1.2-billion in gambling revenue, considerably higher than royalties from oil sands projects, which amounted to $718-million.

The Klein government likes to stress that Alberta has a charitable gaming model. All government gambling revenue is put into the Alberta Lottery Fund, which is then dispersed to various government ministries for a wide range of programs and services. Charities and non-profit groups receive millions in funding from the Alberta Lottery Fund on top of direct revenues from casinos, raffles and pull-tickets. These were extremely lucrative last year for charities, which earned $238-million directly from working casinos and bingos, holding raffles and selling pull-tickets. More than half of that revenue came from casinos.

On the surface, gambling may seem to be a harmless recreational activity that generates a lot of welcome revenue for government and charities. However, what troubles gambling experts is the disproportionate amount of that revenue coming from problem gamblers. According to Statistics Canada, 7.8 per cent of Albertans are at risk of becoming, or are already, problem gamblers. Statistics Canada relies on the recently developed Canadian Problem Gambling Index (CPGI). The CPGI uses various indicators, including type, duration and motivation of gambling activity, money spent, whether the gambler hid aspects of the activity and whether any health effects, including stress, were caused by the gambling, to determine where a person fits in the spectrum from non-problem to problem gambler. Problem gambling is defined broadly as gambling behaviour that creates negative consequences for the gambler, for others in his or her social network, or for the community.

Gambling expert Robert Williams, in a recent study funded by the Alberta Gaming Research Institute, estimates that 39 per cent of Alberta’s gambling revenue comes from problem gamblers and up to 60 per cent of revenue from VLTs and slot machines comes from problem gamblers.

Alberta is becoming increasingly dependent on gambling as a source of revenue. In a recent Canada West Foundation report, senior policy analyst Jason Azmier points out that despite Alberta’s vast oil and gas wealth, 5.1 per cent of the provincial government’s overall revenue in 2003/04 came from gambling. Among the provinces, this was second only to Manitoba. The report also showed that although Alberta makes up only 10 per cent of the Canadian population, its net profits from gambling amounted to 19 per cent of the national total. Alberta also has the highest gambling losses in the country, at $886 per person compared to the Canadian average of $596, as well as the third highest problem gambling rate.

Critics question whether it’s ethical for the provincial government and charities to profit from people’s addictions. This  philosophical debate will only become more urgent because the province is considering another wave of casino expansion. The province currently has 17 casinos, and nine more are at various stages in the provincial approval process. Of the nine casinos awaiting approval, seven are First Nations projects. Expansion is underway at the existing casino in Fort McMurray, and casinos in Red Deer, Calgary and Edmonton are awaiting expansion approval.

“Cheryl” knows all too well that gambling isn’t always a harmless activity. Between 1994 and 2002, she estimates that she gambled away $250,000 on VLTs and slot machines. At the height of her addiction she’d spend 10 hours a day or more gambling. Cheryl hit bottom when her husband threatened divorce if she didn’t get help. Unable to cover Cheryl’s staggering gambling losses, the family eventually had to declare bankruptcy.

“It really is a true addiction when I say I could not stop,” says Cheryl. “I can remember when I wouldn’t have any more lines of credit for the day because bank machine cards and credit cards have restrictions of $500 a day, and I can remember going out to the car and crying and saying ‘What’s wrong with me? Why am I doing this?’ For some people VLTs are like a fix. You need that fix until you can wrap your head around recovery. It’s dangerous. I did have suicidal thoughts that it was the only way out. It’s kind of a hard thing to admit when you lose your morals.”

Between 2000 and 2004, Alberta’s office of the chief medical examiner found gambling was linked to 46 out of the province’s 418 suicides. Gaylene Heidt, team leader of treatment counsellors at Aventa Addiction Treatment for Women, says gambling addiction is “horrendous.”

“The suicide rate is very high. Most women by the time they get here have made an attempt. They seem to have more guilt and shame and self-loathing than I’ve ever seen, even with women who drink,” says Heidt. “You can have a full-blown gambling addiction in a year, from the point of just trying it to being so badly in debt that you don’t ever see your way out,” she says. “The most difficult part is listening to these women when they finally get treatment, and hearing them sob because they’ve made such a mess of their own and their families’ lives and these debts are so overwhelming and so some of them think of killing themselves because they’ll never get out of the mess.”

When you walk into Aventa’s Calgary treatment centre, one of the first things you see is a large Alberta Lottery Fund plaque. Aventa is one of thousands of organizations in the province that receives funding from the government’s share of gambling revenue.

Heidt says she doesn’t have ethical qualms about the source of the funding.

“I’m thankful that a portion of what gambling addicts spend comes back to actually help them. I don’t have a problem with lottery money to help gamblers. I think that’s a responsible thing,” she says.

Heidt points out that the government also receives revenue  from the alcohol and tobacco to which some Albertans are addicted.

“I would feel probably more upset if there was no money allocated from that to help people, but there is. So I feel that that’s a responsible thing to give some of that money back,” she says. “We’re not ever going to get rid of alcohol or gambling. We do have to help those people who are troubled by addiction.”

For others the use of gambling as a source of funding for gambling addiction rehabilitation and research is problematic. Robert Williams, professor in the school of health sciences at the University of Lethbridge and a gambling expert, fears that organizations that receive gambling revenue from government become co-opted.

“I’m very uncomfortable with how AADAC is funded. Every single penny AADAC gets is from gambling dollars,” he says. “Because AADAC is benefiting so much from gambling revenue, you potentially compromise the groups who would normally be the most vocal critics of gambling policy.”

Similarly, almost all of the funding for the Alberta Gambling Research Institute comes directly from gambling revenue.

The question of whether or not charities should be so reliant on gambling revenue elicits a range of opinions in the province. Katherine van Kooy, CEO of the Calgary Chamber of Voluntary Organizations, which represents over 180 different non-profit groups, says some of her member groups feel “very conflicted.”

“This is a major source of funding from the province to the voluntary sector, and organizations frequently express concerns about feeling conflicted about sources of funding, but it’s such an important source of funds that they can’t walk away from it,” she says. “Organizations that deal with social issues in the community often feel that gaming activity is a contributing factor to the problems they’re trying to address, so it poses a moral problem for them.”

Van Kooy says organizations sometimes have difficulty finding volunteers who are willing to work in casinos because it goes against their personal principles, but many groups have found that working a casino is the most lucrative fundraising they can do.

“I can’t think of other ways in which organizations can raise that sort of funding so easily,” she says.

It’s becoming increasingly difficult for charitable groups to find revenue sources, she adds, because more groups are forming all the time and they all compete for funding. She says the charitable sector receives less funding from the three levels of government than it did in the past and the various levels of government have also downloaded onto charities and non-profits more responsibility for services governments once provided, making it difficult for groups to make ends meet.

“Every penny AADAC gets is from gambling. Because they are benefiting so much from gambling revenue, you potentially compromise one of the groups who would normally be the most critical of gambling policy.” —Robert Williams

The Salvation Army is one of a small number of Alberta charities that has decided not to resort to using gambling revenues. Major Gary Brown, public relations officer with the Salvation Army, says his organization is philosophically opposed to gambling, but the decision is also related to the fact that some of their clients have gambling problems.

“I’ve seen clients in our program who have been estranged from their families, they’ve lost their homes and their savings and they’ve lost relationships and it’s a real hard road back for them. Not only because they’re suffering but because their families have suffered through their addiction. Families can end up going without groceries. They can end up not being able to pay their rent because those resources have been squandered by someone addicted to gambling,” he says. “I feel really, really proud of the fact that this organization has not gotten compromised in some of these areas. These are social issues and it would be really easy to compromise on them and we’ve decided, no. There are certain lines we won’t cross and gambling is one of them.”

Brown says his organization doesn’t judge other charities for taking gambling revenue, but he says it’s an unfortunate situation.

“We are saddened by the fact that society’s at a place where charities almost seem handcuffed and dependent on gambling revenue in order to survive in such a competitive market. I just think it’s a sad comment on society that first of all our government relies on it so heavily and secondly that charities are forced to resort to using gambling for fundraising,” he says.

In January, Calgary Catholic Bishop Fred Henry weighed in on the issue, asking the Calgary Catholic School District to adopt a policy that would prohibit fundraising for school initiatives through casinos or other gambling methods. However, the school board has yet to make a decision on the issue.

Val Mayes, executive director of the Edmonton Chamber of Voluntary Organizations, says her organization has also chosen not to fundraise through casinos. She says partly that decision was made so the chamber didn’t have to compete with its member groups to work casinos. She says some member organizations really struggle with the issue.

“If people are looking at addressing issues around poverty reduction and you’re financing that through gambling revenues, for some organizations it’s a really tough decision. Sure, bingo or casino money gives you a real shot in the arm in terms of your revenue in a good way, but we have to ask ourselves where ultimately that money is coming from,” she says. “I think the entire issue of support to not-for-profits or NGOs or voluntary sector organizations needs to be examined.”

Mayes also points out that traditional charities are now competing with charities raising money for hospitals or schools. She questions why charities are having to raise money for MRIs, for example. “More and more services are being handed off to the voluntary sector to deliver. Things like programs for homelessness, food banks and recreational programming, all kinds of things have been turned over to the sector without the supporting funds to do that.” She says charities are also increasingly taking on immigrant aid services “because there’s a huge demand and government is not providing the service.”

Karen Lynch, executive director of Volunteer Alberta, which represents 175 non-profit organizations across the province, says all provincial funding for her organization comes from gaming revenue.

“Do I wish it were otherwise? Yes. Is it reality? Yes. Do we accept what we have? Absolutely. Do we do good work? Yes,” says Lynch.

She says some Alberta charities are fundamentally opposed to using gambling revenue and it puts them in a difficult financial situation.

“If you were a charity or non-profit organization that was aligned with a moral or a faith base, I could see where you’d have real problems with it, and kudos to those organizations that stand up and say we’re not going to do this. We’re going to find a different way to serve our members and to deliver our mission other than through gaming revenue,” she says. “The reality is that most organizations have to rely on gaming revenue.”

Lynch says if the government had to fund the charitable sector through its tax base it would be “unsustainable” and she says people in Alberta will continue to gamble regardless of whether charities accept gambling revenue or not.

“I think it’s a revenue source based to a big extent on people’s addictions,” she says. “But recognizing we live in a free country and people can choose their own entertainment the way they want, if that’s the way they choose their entertainment, that’s fine. It’s an individual choice.”

Alberta Gaming Minister Gordon Graydon agrees. He says Albertans like to gamble and the government is simply providing them with a choice of gaming entertainment. He says Alberta’s charitable gaming model is unique and he’s proud of it.

“Personally that’s one of the reasons why I can justify why we’re here because of where the money goes,” he says. “We do have a charitable model and over $1-billion goes back to Alberta communities through the Lottery Fund and then there’s over $200-million that goes back to the charities that are working that gaming event.”

“If you were a charity or non-profit group that was aligned with a moral or a faith base, I could see where you’d have problems with taking gambling money. I think it’s revenue based on people’s addictions.” –Karen Lynch

However, University of Alberta gaming research specialist Garry Smith points out in a 1997 report “Gambling and the Public Interest” that it wasn’t until the early 1990s that provincial governments embraced gambling, so socially sanctioned gambling as a means of entertainment is still quite a new concept in Canada. VLTs were introduced for the first time in 1992 and slot machines didn’t show up in casinos until 1996.

In the report, Smith writes, “When a stigmatized activity such as gambling becomes decriminalized it requires an image make-over to attain an aura of respectability. By successfully linking legalized gambling to the ‘greater good’ principle, governments changed what was once considered deviant behaviour into a widely tolerated activity.”

Williams says the government’s emphasis on its charitable model of gambling influences how Albertans perceive the industry, making it appear more socially acceptable and legitimate as a revenue source. However, he says calling the Alberta system a charitable model is “very misleading.”

“They call it the charity gaming model but the big charity is the provincial government coffers,” he says. “To be fair to Alberta, a greater percentage of the money goes to charities in Alberta than any other province and that is the advantage of this charity model. But the name sort of implies that charities would be the prime beneficiaries of gambling and they’re not. They’re really the front men for the government.”

When you look at a breakdown of who receives what percentage of gambling revenue, the Alberta government is the obvious winner. The provincial government receives 70 per cent of revenue from Alberta slot machines and 85 per cent of the revenue from VLTs. Slot machines and VLTs combined make up most of the total gambling revenue. Charities receive 15 per cent of slot machine revenue and casino operators collect the other 15 per cent. VLT retailers receive 15 per cent of VLT revenue. In 2004/05 VLT retailers made $113.8-million on VLTs and casino operators made $115.6-million. The provincial government collected $635 million from VLTs and $549-million on slots.

The government portion of gambling revenue is all put into the Alberta Lottery Fund, which does pour millions into community facility enhancements and initiatives and into thousands of non-profit organizations. However, the fund  also provides money for what many Albertans would consider essential government services such as construction of schools, nursing homes, hospitals, municipal grants and immigration support services.

Williams says research has shown that VLTs and slot machines are by far the most addictive forms of gambling, as well as the most lucrative for government. Alberta has capped the number of VLTs in the province at 6,000 and has reduced the number of locations by 13 per cent since 2001. However, according to the Canada West Foundation, the number of slot machines in Alberta grew by 74 per cent between 2000 and 2004. There are now 7,055 slot machines in the province. An Alberta Gaming Research Institute study found that 21.8 per cent of VLT players are problem gamblers. (The major difference between VLTs and slot machines is their location. VLTs are in bars or restaurants, whereas slot machines are only found in casinos.) Williams is very concerned about the large- scale expansion of casinos—including a large increase in slot machines—that’s about to occur in the province.

“Research shows that the greater the availability, the greater the likelihood someone will gamble. The greater likelihood someone gambles, the greater likelihood someone will be a problem gambler,” he says.

Gaming Minister Graydon, however, looks at the numbers a different way and points out that the problem gambling rate has remained “very stable” as gambling facilities have increased. “While that’s a small percentage, it’s a concern and it will always be a concern just the same as people who abuse alcohol are a concern,” he says.

Graydon says pressure from the charitable  sector is part of the reason the government is expanding gambling in the province. He says some charitable groups in the province must wait three or four years to work a casino because there’s so much demand. “We do get pressure from charities now to expand the number of casinos. A lot of charities are upset that the wait time is so long to get into a casino where they can work,” he says.

For “Cheryl” the government’s expansion of casinos is extremely disappointing. “It’s unbelievable, it really is, that the government wants to make this thing bigger and bigger,” she says. “It’s not easy to get out of once you’re into it, so bringing more casinos on, they’re looking for more addicts. There’s plenty of casinos here already. We just absolutely don’t need any more.”

Would the pressure to expand gambling in the province be so high if the public were aware of the impact gambling has on people like Cheryl?

U of L’s Williams says Albertans need to think about where the gambling revenue comes from. “Everybody supports the fact that charities are raising money for very worthy causes but you can’t be blind to where the money is coming from,” he says. “Anyone, whether it’s charities or government or even private industry, raising money through exploitation of a vulnerable segment of society is ethically problematic.”

Amy Steele is the news writer at Fast Forward Weekly in Calgary. Her freelance writing has been widely published.


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