Downtown Casino Still Not a Bet Worth Taking

Special Report: Casino

Downtown Casino Still Not a Bet Worth Taking

Despite yesterday's vote, we may well end up having to watch Council panic in 2014 and chase its losses, with another municipal election coming and enormous pressure to make a fear-based decision.

By Ryan McGreal
Published February 15, 2013

After a marathon debating session yesterday, Councillors voted unanimously on a compromise motion that establishes Flamborough as the only location for a new casino in Hamilton - but that Council will consider other locations if there are no acceptable bids for Flamborough.

The motion was led by Councillor Sam Merulla, whose opposition to a downtown casino has been early, strong and consistent. Merulla, along with Councillors Judi Partridge, Jason Farr, Brian McHattie, Rob Pasuta and Bernie Morelli, have all staked out clear positions and defended them resolutely.

McHattie went so far as to argue that Council should consider not keeping a casino at all, but no one else wanted to have that conversation since the City currently depends on $4.5 million a year in revenue sharing from the slots at Flamboro Downs.

On the other hand, no member of council was willing to stake a formal position in favour of a downtown casino. The closest was Councillor Terry Whitehead, whose commentary unquestionably favoured a downtown casino but who nevertheless insisted that he had not made up his mind.

Mayor Bratina has also sounded at times like he supported a downtown location, but overall he said little over the course of the months-long discussion and exerted almost no influence on how Council's position unfolded.

The rest of Council has remained on the fence, and that is ultimately the position that carried yesterday's vote. While Merulla manged to get his vote in favour of a Flamborough-only casino location, it was only by agreeing to an escape clause big enough to race a stable of horses through.

Ontario Lottery and Gaming Corp (OLG) has an opportunity to define the request for proposals such that no Flamborough bid can meet its requirements. That means there's still plenty of opportunity for Council to bolt from the course they set yesterday.

Unfortunately, this means we may well end up having to watch Council panic in 2014 and chase its losses, with another municipal election coming and enormous pressure to make a decision based on fear of losing the slot revenue.

Many Moving Parts

Years ago, I had a friend who played for the Hamilton Tiger-Cats. He told me the players used to joke that CFL stood for "Can't F---ing Lose", because with three downs it is much harder for the winning team to run out the clock.

As a result, dramatic shifts in fortune can transform a game at any time, right down to the last play. It makes for exciting football.

Over the past several years I have often mused that Hamilton politics is no different. Big issues remain in play until the bitter end, and even seemingly guaranteed outcomes can shift suddenly as the various players jockey relentlessly for advantage. (Perhaps ironically, this was most evident in the Great Stadium Debate, where the dramatic reversals came on an almost daily basis.)

In the casino issue, there are still far too many moving parts to be able to predict an eventual outcome.

Will Great Canadian Gaming Corporation, which currently runs the slots at Flamboro Downs, be willing to jump through whatever hoops OLG places in front of a Flamborough location?
Will the Ontario NDP, whose leader represents Hamilton-Centre, nudge the Liberals to make a Flamborough casino work as part of an agreement to make the minority government work?
Will Global Spectrum/Live Nation treat a downtown casino/entertainment complex as a deal-breaker in their contract to operate Copps Coliseum and Hamilton Place?
Will OLG, which is desperate to make up losses in tourism gambling, be willing to accept Council's conditions in order to salvage something of the Hamilton market?

Have no doubt that intense back-channel lobbying is going on right now by a variety of parties with competing interests. In the machinations to come, Council would do well to remember that it has leverage as well as exposure.

Polarizing Debate

It scarcely needs to be pointed out that the downtown casino debate has been extremely polarizing. People I respect and admire have taken positions on both sides of the issue, and the discussions have been extremely heated.

In too many instances it has gotten ugly, with individuals on both sides leveling nasty personal attacks against each other instead of sticking to the issues.

That's deeply unfortunate, because eventually this debate will be over one way or the other, but we will all still have to live in the same city and find ways to work together.

Evidence-Based Decision

I stayed quiet about the casino issue for a long time because I was struggling to make up my mind about it.

On a few occasions, local news media have contacted me about making statements on the issue or participating in panel discussions. I declined every offer: I did not consider myself informed enough to speak on the matter, and in any case I wasn't sure what I had to say.

I did eventually form a conclusion after studying the evidence carefully. The social harm argument carried significant weight with me, but what really decided me was the economic argument, which of course includes the social costs.

When you net it all out, a downtown casino in a city that is not already a major tourist destination is mathematically guaranteed to take more money out of the local economy than it puts into it.

It's easy to point to this or that city as an example of any outcome you like, but an evidence-based approach must consider the whole set of examples to discover a median or modal case that represents the most likely outcome for Hamilton. Otherwise you're just cherry-picking.

Again, the full weight of evidence indicates that a downtown casino will do some good and some harm, but that when you net it out, the overall harm will be greater. In light of this, my thinking has solidified over the past couple of months.

When I first heard about the proposal of a downtown casino, my initial reaction was, "Hey, why not?" As Bill Maher argues, governments should not be in the business of legislating taste ('I think casinos are yucky so they should be illegal') and I think people should have the freedom to seek their entertainment however they want.

However, because the casino strategy is coming from OLG, and because the model is to locate casinos close to local populations to offset shrinking revenues in tourism gambling, and because the Ontario government has given itself a monopoly on issuing casino licences, this becomes an issue of public policy.

A Bet Not Worth Taking

I don't begrudge anyone for forming a different conclusion than I have - or to remain neutral, as a lot of people have done - and there have been a lot of spurious arguments on both sides.

It's entirely possible that my conclusion is wrong, and that a casino in downtown Hamilton would be a positive addition. My best guess at this point is that at least directly, it would have a modest negative impact - i.e. neither as good as its proponents claim nor as bad as its opponents warn.

However, social/economic change is rarely linear, and big transformations can happen on the margins.

The equation for private investment in downtown Hamilton seems to have shifted just enough over the past several years that a number of impressive developments are now going ahead. The marginal cost of a new downtown casino only has to nudge the equation very slightly in the other direction to forestall that progress.

In other words, we're looking at a very small maximum upside balanced against a very large maximum downside. That's rarely a bet worth taking.

Ryan McGreal, the editor of Raise the Hammer, lives in Hamilton with his family and works as a programmer, writer and consultant. Ryan volunteers with Hamilton Light Rail, a citizen group dedicated to bringing light rail transit to Hamilton. Ryan wrote a city affairs column in Hamilton Magazine, and several of his articles have been published in the Hamilton Spectator. His articles have also been published in The Walrus, HuffPost and Behind the Numbers. He maintains a personal website, has been known to share passing thoughts on Twitter and Facebook, and posts the occasional cat photo on Instagram.

36 Comments

View Comments: Nested | Flat

Read Comments

[ - ]

By J (registered) | Posted February 15, 2013 at 13:44:12

"a downtown casino in a city that is not already a major tourist destination is mathematically guaranteed to take more money out of the local economy than it puts into it."

I've heard this argument before and am not sure it's 'evidence-based' at all. The issue is whether the dollars leaving are already leaving - if so then there's no issue. If gamblers would be spending their money otherwise on vacations to Cuba then more of the money will be staying in the city. If they are spending it at Toronto Maple Leafs games then more is staying in the city. If they're spending it at Montana's before a film at the Cineplex, then I have no idea but assume it's pretty neutral. If they're spending it at Lo Presti's before a show at the Casbah then more money is leaving the city. But I've yet to see any evidence on this.

Raise the Hammer

Special Report: Casino