A Wynne-Wynne for Gambling in Ontario

I was hoping that the new premier would act on her convictions and take a stand against a Toronto casino.  Unfortunately, she doesn’t think that her convictions are affordable.  Instead she makes the argument that we need more gambling to reduce the provincial deficit.

While the OLG’s media blitz seems to have ended, and I’d like to believe the Premier helped, a backroom lobbying campaign has taken its place.  Glad-handing executives and advocates have picked up where clumsy government advertising left off.

Being a good citizen, I challenged myself to look at the issue again through Kathleen Wynne’s eyes.  She seems like a thoughtful, intelligent person, and all these rich, smart, powerful casino promoters can’t be wrong, can they?

Until now I’ve argued that governments should raise taxes when they need money.  It’s a more honest and accountable way to collect revenue than the expansion of a province-wide gambling empire.  If there is a sound reason for raising taxes, and the reason is communicated persuasively, the voting public can decide how they feel about it.  If there is a perception that money is being wasted or put to the wrong purpose, taxpayers will punish politicians at election time.  This kind of accountability is what makes taxation the most legitimate revenue source for government.

For the same reasons, I used to believe that gambling is an inherently dishonest and unaccountable means of funding government.  Gambling profits come out of the same pocket as tax money, however governments aren’t held accountable when that pocket is picked for them by the gambling industry.  Spending can increase without apparent increase in taxes, even though the public bears all the direct and indirect costs of raising that money.  That’s the sleight of hand behind the OLG’s feel-good, something-for-nothing, advertising message.  And, as has been argued previously, gambling is an economically inefficient  means of funding government.

Or so I once thought.  But who can resist the sheer power of the Premier’s logic?  We must have more gambling because the government needs more money.  

If she can overcome her personal aversion to gambling, it’s up to me to shed my prejudice too.   As a good citizen, I must at least try to make the Premier’s logic work.  Let’s take her at her word: the government needs money, so we need to gamble more.  Gambling may not be the only way to raise money, nor her favourite way, but she appears to believe that it’s a necessary part of her government’s revenue mix.

After some deep breathing exercises, I closed my eyes and imagined the practical consequences of Wynne’s argument in favour of more lottery and casino gambling.  Once I started thinking dispassionately about it, I started to see a kind of moral equivalence between gambling and taxation and my mind opened up to possibilities I’d never contemplated before.

Basically, they’re both ways of capturing a fraction of household income and transferring it to government.  The size of the fraction varies, but in both cases, most people get to keep most of their money, or at least that is the intention.  The casino game that give the house it’s biggest edge, for example, is roulette, and at 5.26% that edge is significantly less than the mean provincial income tax rate.  With taxation, the odds favour the house 100% of the time.

Once you dispense with the moral question, the biggest difference appears to be that gambling is more fun than paying taxes.  Another difference is that the payouts from casino games redistribute money in an inequitable way, whereas taxation simply leaves most of the money with the people who earned it.  Even though casino odds only slightly favour the house on each roll of the dice, prolonged gambling sessions tend to result in pockets full of other people’s money for the winners, while everyone else goes home empty handed.

Also, gambling is stigmatized because gamblers are playing with after-tax income.   They’ve already paid their taxes before withdrawing money from the ATM to go gambling.  When they lose money at a green felt table, and the government profits by their loss, it’s like being taxed twice.  Once is enough for most people.

We could correct this by enabling gamblers to play with pre-tax money.  They could contribute all year through payroll deductions to a fund, like an RRSP, for gambling.   Rather than investing it for their retirements, they could withdraw it and gamble tax-free at any of Ontario’s new and improved casinos.

Although this might be a fairer way of funding government through gambling, it would entail a lot of regulation and administrative work, and that would be unpopular.  But why take half measures when there is a more obvious and elegant solution?

If gambling is superior to taxation, replace the latter with the former.  Simply cease collection of provincial tax.  Then there would be more money to gamble, and people would feel better about themselves when they lose.  Instead of state-run gambling being “tax for the stupid,” gamblers would feel clever about their tax avoidance strategy whether or not they lose.  It’s a win-win!

Let’s face it, government already uses gambling to avoid taxes.  It’s a pretty transparent political choice.  By replacing taxes with gambling, the provincial Liberals would be almost certain to win a majority in the next election.  What party could fail with a plan to eliminate tax?

But why stop there?  Rather than passively profiting from the public’s gambling, the government should double down and get in the game itself.  It should take advantage of its AA2 credit rating, borrow as much money as possible, and send redundant bureaucrats from the Ministry of Economic Development, Trade and Employment to the nearest casino with stacks of cash.  If they win, the money will end up in the provincial treasury and if they lose, the government will still recover a share of their losses.  Since the government is rationalizing casino expansion based on that share of our losses, it’s in the government’s interest to help lose more and lose it faster.

It’s either a win-win, or a win-lose-win, but what does it matter as long as there is more winning than losing?  This is a form of economic development we can all understand.  Both the gambler and the government join in the pursuit of free money, and both avoid the pain of taxes.

Now that my thinking has reversed on this issue, I must apologize for insisting that there are better forms of economic development and better means of funding the work of government.  How can we afford not to gamble on, and in, a Toronto casino?  Gambling is much more fun than working and paying tax, and the Premier is certain that her government can’t operate without it.  What more do you need to know?

Let me reiterate, in the plainest possible terms:  There is no shorter or more certain route to prosperity and social wellbeing for Ontarians than the addition of new casinos, especially in Toronto.  My sincerest apologies to Paul Godfrey, Dwight Duncan, Premier Wynne, Rob Ford, and the good people at OLG, MGM, GCGC, and the Sands.

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