The Vice Squawk

Can’t live with it, can’t live without it: debating the complicated business of sin and the public purse

In the 2001 provincial election campaign, the Liberal government-to-be promised not to expand gambling in B.C., an industry entirely under the thumb of provincial regulators. And yet the Canadian Partnership for Responsible Gaming counted 8,900 slot machines in the province in 2008 compared to 3,300 slots in 2003 – an increase of 170 per cent. Technically, this has been done without opening any new venues but rather by converting bingo halls to “community gaming centres” and expanding existing casinos. Why the broken promise? Because gambling tax revenues, like gambling itself, are addictive.
 

While the government’s gambling habit didn’t become a major election issue in 2009, just watch what happens in city halls across the province whenever a gambling expansion requiring zoning changes is proposed. Gambling industry spokespeople, politicians, potential customers and moral opponents clash regularly over the complex ethics and practicalities of allowing more “vice” in their communities.

Addiction, organized crime, charity, public health and government budgets all make it into the debate, just as they do with our other government-sanctioned vice industries: liquor and tobacco. Meanwhile, a decision about what to do about our booming marijuana industry, currently run by underground horticulturalists and armed international gangsters, looms in our future.

To help make sense of these dilemmas, BCBusiness sat down with two experts who shared their thoughts: David Cadman is a Vancouver city councillor, and Charles Weinberg is a professor of marketing at UBC’s Sauder School of Business.

BCB: Let’s start off with gambling and Vancouver’s example. How much gambling do we have in this city, and what kinds of revenues does it bring in for city hall?

David Cadman: We have two gaming venues now: one on the old Expo site and the other one out at the racetrack. The argument that comes from casino operators is, Look, if people can’t get it in your city, they are going to go next door to Richmond or Burnaby or Coquitlam. So this is going to happen, and you might as well have it in your venue and gain revenue from it. So revenue projections are always very, very high. I think our total take is probably in the order of $6 million; the projections were substantially higher than that. And for politicians it’s a very nice way of bringing in revenue because it doesn’t represent a tax increase. Although some would say it’s a tax on stupidity.  

Charles Weinberg: I think a clear fact of the matter is that gaming is very profitable. And we’ve seen from the mid-1990s a real growth in the gaming industry: more widespread distribution, better products and technology. But it fits in this class of dangerous consumable products, or vice products, such as tobacco and alcohol, that all have the same characteristic of having a certain amount of harm attached to them. But we know there are significant numbers of people who want to engage in this activity, and banning it entirely just doesn’t seem to be effective. And for a lot of people, it’s a healthy indulgence. How does one draw the line?

Cadman: There’s a whole morality in saying, Don’t let more gambling in. And I understand that, in a way, because it’s usually people who can least afford to lose money who are in fact losing money – and that has implications for their families, their kids and the society in which they live. And we know we’ve had a number of suicides, a number of bankruptcies and those kinds of things. And I know people who have actually told me that they have put themselves on a list and said, “Please, please, ban me from coming into a casino; I’m an addict.” And it doesn’t work. They walk in and they’re admitted right away. So even the system that they have set up to try and deal with people who have addictions is not really working.

BCB: Well, it does seem to be a line-drawing exercise. The province stipulates we are going to have gambling but we are only going to have this much – the idea being to allow it but to also limit it.

Weinberg: An equivalent is when we went from provincial-run liquor boards and allowed it to be privatized. There’s a lot more distribution now, which suggests people want to get liquor at different hours close to where they live. So restrictions presumably have an impact on the level of gaming. Nevertheless, it’s been a substantial growth product over the past 10 to 15 years. And it’s changing from friendly gambling events among friends to a very serious commercial product. And what we’ve seen is, all these industries are changing how they market themselves to make these behaviours more attractive to people.

BCB: And it’s the governments that are doing the marketing to improve their revenues, presumably.

Weinberg: Governments are in gaming: Lotto 6/49 is the government. But then there are these companies, such as Great Canadian Gaming, which are highly regulated but private companies, so we have both entities engaged in this activity.

BCB: The thing that’s ironic with gambling is that you see ads that encourage you to go to casinos and then a couple of minutes later you see ads for problem gambling services. Isn’t there something contradictory about governments relying increasingly on revenue from these activities and, on the other hand, trying to mount campaigns to discourage them? What do they really want?

Cadman: The real issue is when you are making money off of alcohol and gambling, you may want to do something that may help those people who have chronic problems but you really don’t want to slow down. The revenue side of it is a very attractive aspect of your whole fiscal approach. It’s a real problem. From one perspective, the government says, Why don’t we at least capture the benefits of it – in other words, money – and use it for our purposes rather than having to raise taxes? Same thing with cigarettes, same thing with alcohol. The sin taxes are the ones people like, because it doesn’t touch them, they figure, in the same way.

Weinberg: Yes, the biggest gambling addict is the government that runs it. We have a fundamental dilemma, and we need to find mechanisms by which we allow these products to be legal but still try to prevent the negative effects. Certainly the gaming industry has taken some steps to deal with these issues.

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BCB: What are some of these mechanisms?
 

Weinberg: One of the issues with tobacco, for example, is that over time there’s a decrease in smoking. So, in fact, there can be effective campaigns to reduce the incidence of some of these behaviours. So rather than arguing to ban tobacco, it seems advocacy is one approach to take that can have some impact.

Cadman: I would argue quite frankly that the anti-smoking campaigns really did not have a large effect. What had an effect was when municipalities said, We’re not going to allow smoking in restaurants, in pubs or in office places. And already there, you saw a falloff. And there’s another dynamic: it’s a minority of the population that smokes. So when you say, all of the sudden, there is no smoking in pubs, in restaurants or in workplaces, it frees up the majority of people to say, “There’s no smoking here; you don’t have the right as a minority to pollute my air for your habit.”

Weinberg: It’s really fascinating because the question is, When do you use regulations? We certainly know there are lots of regulations that are not obeyed at all. We have such things as marijuana, which a substantial portion of the population uses despite being illegal. And so bans do not end the issue by themselves, but they are often very effective. I think the time was right in terms of public opinion to bring the smoking bans about. When they’re accepted by the broad public, they turn out to be quite effective.

BCB: There are frequently public awareness campaigns about the risks associated with these activities, but are they really effective?

Weinberg: If we go back and look at alcohol, Australia had a long-term, very effective campaign to reduce incidences of drinking and driving, and other vehicle problems. And some people say it’s through their very graphics ads. But it’s not the graphic ads; it’s that these are very well-funded campaigns over a 20-year period.

So it’s not like a number of other harm-reduction social-marketing programs. It’s sustained over a period of time and is highly targeted. And if you do that, you can have an impact on behaviour. But how do you fund these types of campaigns? If you look at other issues, it’s not in the government’s interest; there are economic interests in sustaining these activities.

BCB: The B.C. example that comes to mind is what we did with seatbelts. Do we not lead a lot of North America in seatbelt use as a result of one of these long-term campaigns?

Cadman: But you see, I would argue that it’s not the result of a campaign; it’s the result of a consequence. So in places like Sweden and Australia, if you drink and drive, you lose your licence right away. Likewise, with the buckle-up campaign, it was a consequence of a large fine if you didn’t buckle up and the consequence that your insurance isn’t valid if you’re hurt in an accident where you are not buckled up. So those are the teeth that bite.

Weinberg: Another approach is to actually create non-profit organizations whose objective is to deal with these issues. But to have a David and Goliath situation is not going to be an effective long-term strategy. So I think one approach to consider is funding organizations that are concerned about these behaviours at a level that’s commensurate with the spending of these industries. That’s not been tried in a substantial way.

Going back to Australia, they spent enormous amounts of money on their safe driving campaigns, and how could they afford to do that? Well, they could afford to do it because those campaigns are run by a commission that’s funded by their equivalent of ICBC. And they figured out that if they reduce accidents, they save money. And so they’re willing to spend at a very aggressive level.

BCB: If we were to set up a system like this – where there’s the chance to make a lot of money providing a product many people seem to want, but it’s one we don’t particularly like – what sort of framework makes sense for dealing with those conflicts?

Cadman: Well, I don’t know. I think there’s the obvious way in which tobacco, liquor and gambling has been done. And the next one we have to face, quite frankly, is going to be marijuana. We know it’s a $7-billion export industry, we know there are people shooting themselves on the streets here over drugs and yet we can’t seem to say, We got rid of the problem of gangsters and alcohol by regulating it, can we move to regulations with some of these substances as well?

And the export market here of marijuana has a consequence: what’s being imported is cocaine, heroin, methamphetamines and guns. That’s what not regulating it buys us. All of which, quite frankly, is far worse than allowing it. You can have 2,000 to 3,000 people outside the art gallery smoking pot and all of them breaking the law, and nobody intervenes because everyone recognizes that the judge is going to say this person doesn’t belong in prison.

BCB: But there is a moral segment of the population that’s outraged and thinks all of them should be put in jail.

Cadman: And are they prepared to pay for the costs of incarcerating somebody? I don’t think so.  

BCB: Probably not. But that’s the reason why a politician proposing legalizing marijuana probably isn’t going to win an election. It’s not politically palatable.

Cadman: The reality is that anyone who proposes to legalize drugs in this society is going to have to deal with the U.S. and closure of the border. And for the rest of the Canadian economy, that is simply not acceptable. If you had seen the chief U.S. drug czar who came up here when we opened Insite and said, “This is it, we are going to close the border!” I mean it was quite over the top.

BCB: Do you think we can make this same argument with handguns from the U.S. side?

Weinberg: This is the dilemma between popular but illegal products, whether it’s pot or pirated versions of DVDs: it’s very hard to control these behaviours. Eventually, society has to decide which of these behaviours are worthwhile legalizing, but it takes quite a bit of time to make a decision to take a product that is illegal and make it legal. And if it’s already a widely engaged-in type of behaviour, what are we going to do about it?

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A representative from Great Canadian Gaming Corp., a Richmond-based private company that operates 17 gambling venues (nine in B.C.), was invited to join this discussion but was unable to attend due to an unspecified emergency.