Raise the Hammer

As expected, it's a little rosier than our reality but it's nice to see that he didn't ignore some of the negative stuff that we need to work on. We really are in the midst of some very positive change, hopefully we can take it to the next level.

I find the casino sales pitch in the middle quite disconcerting. There's this obsession with casino supporters that the only negative impact is related to gambling addiction (or morals).

The problem is, there's no net economic benefit. It's the worst of both worlds. I've done the research, I've read the numbers straight from the OLG reports and the end result will be Hamilton money being funneled out of Hamilton.

Unfortunately it looks like the mayor has been taken in by the sales pitch by the OLG and the prospective casino/hotel operators, who coincidentally are the only ones in a casino deal who stand to make any money. Their basic sales pitch is: Jobs, Money, Development, Tourism.

Jobs: The "jobs created" would mostly be moved from Flamborough, and even if we considered every casino job as if it were newly created, they represent a drop in the bucket when it comes to citywide employment. We'd be better off paying a college or university to put a satellite campus downtown if we wanted to bring quality jobs here.

Money: We are being offered a kickback of less than one percent of our annual budget. Over 95% of the money that people lose at a downtown casino will be sent out of Hamilton to the OLG, who will send a large chunk of that to a U.S. based private operator. This is essentially a "sin tax" that Hamiltonians will pay to an American private company. In order to generate the kickback that the OLG promises us, 87 million dollars a year need to be lost at the slots (and that doesn't count the money lost at table games - the OLG and U.S. operator get to keep 100% of the losses from those!). So what we'll see is over $100,000,000 being sent up to the OLG in order to "earn" our 5 million dollar kickback.

Development: Other cities have proven that additional economic spinoff is generally absent near casinos. The only development this will attract will be the construction of the casino itself along with the attached hotel. Then these facilities will compete with our existing hotels, restaurants and entertainment venues. Casinos are built to keep patrons inside by providing all sorts of services. This has been shown to have minimal positive impact to the surrounding area (and sometimes a negative impact). Just ask the mayor of Brantford. He has been clear that, while the kickback money was put to good use by them, there has been no development or economic spinoff from their casino aside from the kickback they get from the OLG.

Tourism: Local casinos simply don't attract tourists - tourists only go to casinos in cities that are already tourist destinations. We will be competing with the two biggest tourist destinations in Ontario: Toronto and Niagara Falls. American gambling tourism is down almost 90% over the past 10 years. There will be no influx of tourists due to a casino.

The OLG's official mandate is to create more Ontario gamblers. It's in their strategic review. So we can be sure that the majority of the 90 million of gambling losses required for the casino to "earn" us our 5 million kickback will come from local Hamiltonians - and a portion of these will be new gamblers that the OLG creates through advertisement and through placement of casinos closer to residents' homes. These new gamblers will be losing money at a casino that they otherwise could have spent locally.

Over 95% of every dollar lost by gamblers in a Hamilton casino will leave the city. This is not good economics.

There are two possibilities here:

1. Mayor Bratina does not understand the facts surrounding the OLG plan

or

2. Mayor Bratina understands but does not care

Either one of these is unacceptable.

The picture is even more dismal on the provincial level. The OLG originally opened casinos in border towns in order to capture American gambling losses as our own. Casinos aren't an industry. They don't produce things. I wouldn't say they are a great long-term economic idea. But at least the border town model made economic sense as it meant cash flowing into Ontario from another region.

But now the Americans have their own border casinos. The OLG says "Over the past 10 years, the profits from gaming facilities close to the U.S. border have dropped from $800 million in 2001 to $100 million in 2011.".

The new OLG plan is to create more Ontario gamblers and to open more Ontario casinos closer to where high concentrations of Ontarians live. Then hire U.S. based operators to run the casinos and take a cut.

This is terrible economics. The OLG is going to turn casinos from a revenue generator for Ontario into a huge expense at the provincial level.

We may not have direct control over this at a provincial level, but we still have the opportunity to say no locally, and refuse to create more gamblers here so that we can feed a struggling provincial body and their American helpers with our money.

Let's keep our money here so that we can put it to good use.

Comment edited by seancb on 2013-01-30 09:20:52