rabble blogs are the personal pages of some of Canada's most insightful progressive activists and commentators. All opinions belong to the writer; however, writers are expected to adhere to our guidelines. We welcome new bloggers -- contact us for details.

The dubious case for casinos

Please chip in to support more articles like this. Support rabble.ca in its summer fundraiser today for as little as $5 per month!

Photo: PianoWow/Flickr

Change the conversation, support rabble.ca today.

I got way off my usual research agenda this morning for a business panel on CBC radio. The topic was the economics of casinos, the result of the City of Surrey voting down a new casino proposal. I have often disparagingly compared stock markets to casinos, but in fact I knew relatively little about the actual business of casinos. I don't even buy lottery tickets. Perhaps it is the economist in me that knows the odds are stacked against me.

Like drugs, when it comes to gambling, my preference is that we shine daylight on it, regulate it and tax it, and make sure that we put the funds into mitigating harms. Gambling has long been with us, from poker parties and hockey pools through to lottery tickets and horse racing. But casinos are a form of gambling that has seen a massive expansion across North America in recent years. Back in 1989, there was Atlantic City and Vegas, period. Now they are almost everywhere, with 17 in B.C. and thousands across the continent.

A big part of the casino bandwagon has been governments seeking revenues to pay for services without having to raise taxes (reminiscent of natural gas or oil sands royalties). This avoids having the conversation we need to have about how to pay through taxes for the services we want. Gambling revenue in general is a bad way of funding our public policy priorities. My grad school prof, Richard Lipsey, in a co-authored paper comments that the biggest addicts are governments, who are in a conflict of interest as both promoters and regulators of gambling.

It is not at all clear that there is a net revenue gain to governments from casinos. True, the B.C. government now gets more than $1 billion per year in net income through the BC Lottery Corp, but economists note that there will also be lower revenue from sales taxes on other expenditures that were diverted to gambling. Although higher rates of taxation on casinos relative to sales taxes may lead to a positive gain, one economist reckons that:

[C]asino expenditures come at the expense of noncasino expenditures to such a large extent that, despite the high tax rates applied to casino revenues, the reductions in non-casino spending lead to declines in sales tax revenues that are even larger.

Casinos mostly redistribute income from gamblers to wages, profits and taxes -- that is the business model. And because a large portion of those revenues come from a smaller percentage of problem gamblers, they are a tax predicated on harm to their (and their family's) well-being.

There is an interesting similarity between proposals for casinos and proposals for pipelines or LNG plants. As a matter of public policy we need to assess the benefits against the costs. On the benefit side, proponents from the industry or government tend to overstate the gains, while neglecting losses in other parts of the economy and the cost side of the ledger.

There is a Wal-Mart effect here, where income for the casino and new jobs are offset by losses in other sectors, some related (horse racing) and some not (bars, restaurants and music venues). Only if there is a net increase in tourism would there be a net gain, and the social problems are mostly exported when they leave town. In any event, such opportunities have been greatly reduced by beggar-thy-neighbour competition among new casinos and other online options.

In addition to cannibalizing other parts of the economy, casinos don't make for a solid economic development strategy. They don't improve the live-ability of our cities, as they are big boxes without proper frontages to the street, even lacking windows. They are not consistent with the development of walkable and bikeable communities.

In terms of costs, we know that about 1 per cent of the population are severe problem gamblers, and a wider swath are moderate problem gamblers. In B.C., the BC Medical Association estimates that there are 31,000 of the former and 128,000 of the latter. And it is these folks who are responsible for two-thirds to four-fifths of bets. Compounding addictions include alcoholism and drug problems (with cheap drinks the norm at casinos). Beyond the individual there are private costs to families and friends who get roped into financial problems, and employers in the form of lost productivity and embezzlement. Then there are "externalities," social costs in the form of mental health care, social services, policing and the judicial system. Casinos are also an ideal place for organized crime, in the form of loan sharking and money laundering.

These are harder to measure due to under-reporting, and given the proliferation of casinos in recent years it seems like there is still a lot more research to be done to nail these numbers down. Still, attempts to add these costs together suggest that social costs likely outweigh any economic benefits from casinos.

Photo: PianoWow/Flickr

Thank you for reading this story…

More people are reading rabble.ca than ever and unlike many news organizations, we have never put up a paywall – at rabble we’ve always believed in making our reporting and analysis free to all, while striving to make it sustainable as well. Media isn’t free to produce. rabble’s total budget is likely less than what big corporate media spend on photocopying (we kid you not!) and we do not have any major foundation, sponsor or angel investor. Our main supporters are people and organizations -- like you. This is why we need your help. You are what keep us sustainable.

rabble.ca has staked its existence on you. We live or die on community support -- your support! We get hundreds of thousands of visitors and we believe in them. We believe in you. We believe people will put in what they can for the greater good. We call that sustainable.

So what is the easy answer for us? Depend on a community of visitors who care passionately about media that amplifies the voices of people struggling for change and justice. It really is that simple. When the people who visit rabble care enough to contribute a bit then it works for everyone.

And so we’re asking you if you could make a donation, right now, to help us carry forward on our mission. Make a donation today.


We welcome your comments! rabble.ca embraces a pro-human rights, pro-feminist, anti-racist, queer-positive, anti-imperialist and pro-labour stance, and encourages discussions which develop progressive thought. Our full comment policy can be found here. Learn more about Disqus on rabble.ca and your privacy here. Please keep in mind:


  • Tell the truth and avoid rumours.
  • Add context and background.
  • Report typos and logical fallacies.
  • Be respectful.
  • Respect copyright - link to articles.
  • Stay focused. Bring in-depth commentary to our discussion forum, babble.


  • Use oppressive/offensive language.
  • Libel or defame.
  • Bully or troll.
  • Post spam.
  • Engage trolls. Flag suspect activity instead.