Maureen Bader: On-line gambling business too risky for B.C. taxpayers

Governments love “sin” taxes. They fill up the coffers while creating the illusion that government is the high-minded protector of society’s moral well-being. But should government be running “sin” businesses? If the performance of the B.C. Lottery Corporation is any indication, the answer is no—it creates far too much risk for players and taxpayers.

The B.C. government made the province the first jurisdiction in North America to legalize on-line gambling. Government says people in B.C. spend $100 million per year at illegal offshore gambling sites and it wants in on the revenue from “sin”. The government assures us it’s the right move because the expected cash injection will go to education and healthcare.

But the B.C. government’s expansion into on-line gambling is a move in the wrong direction. If government wants a piece of the action, it should set the rules of the game and let the private sector take the risk.

On the day the new on-line gambling site opened, the CEO of the government’s gambling monopoly, the BCLC, said, “a safe, secure, and regulated alternative operated in B.C. is a sensible decision”.

But is it safe and secure? Seems not.

On that very same day, the site had to be shut down because some people were able to play using other people’s money—so much for safety and security.

However, this isn’t the first time bungling at the BCLC has created risks for both players and taxpayers.

One woman, while on a BCLC list that was supposed to stop her from going inside B.C. casinos, managed to lose $331,000 inside two casinos. She is now suing the BCLC. This “regulated alternative” is leaving taxpayers at risk for big legal bills.

But wait, there’s more.

The BCLC was also fined $670,000 by the Financial Transactions and Reports Analysis Centre, a federal regulator, for breaking the federal Proceeds of Crime (Money Laundering) and Terrorist Financing Act more than 1,000 times. Leaving aside the much bigger issue of potentially helping criminals launder money, the blundering BCLC is leaving taxpayers at risk for big fines like these.

And let’s not forget about the $603,362 severance package paid to the previous BCLC CEO. He was fired after an ombusdman report found the BCLC wasn’t monitoring lottery ticket retailers very well, and the BCLC itself was not being regulated by government at all before 2006. The fired CEO certainly hit the jackpot, though. His severance payout gave him $842,201 in total compensation in 2007-08. These severance prize packages are another risk just too big for taxpayers to bear.

Given all the problems at the BCLC, the very last thing the government should be doing is getting even more involved in the “sin” business. However, there is still a way for government to cash-in on “sin”.

The government collects about $700 million in tax revenue every year from sales of another “sin” product, tobacco, without a fumbling Crown corporation to oversee those sales. Meanwhile, of the $2 billion in revenue the BCLC collects, about $1 billion goes to government and $1 billion covers BCLC’s costs. If the government can generate a pile of cash on tobacco sales without a B.C. Tobacco Corporation, it could probably also win big without a B.C. Lottery Corporation. And you can bet the government would be a lot more careful about regulating private companies than it is about regulating itself.

The government isn’t in the tobacco business and it shouldn’t be in the gambling business either. Government dens of iniquity are not safer or more secure for gamblers and create huge risks for taxpayers. Government can still get a piece of the gambling action by setting the rules of the game and taxing private gambling businesses. Let’s leave the games of chance to those playing with their own money.

Maureen Bader is the B.C. director of the Canadian Taxpayers Federation.




Jul 27, 2010 at 1:46pm

"The government isn't in the tobacco business and it shouldn't be in the gambling business either." You're right. Pray tell, why is the government in the liquor business? Guess they have to raise money somehow to pay for everything they fill obligated to give away - needles, clothing, housing, hey why not free bikes too. Not to mention stupid works of "art" like that hideous set of wedding rings along False Creek. The city took those hunks of metal down a couple of years ago when Vancouver had their big "art" sale. Apparently, nobody wanted the rings, so the city felt it necessary to spend the money to move them down the road. That's an example of a waste of money that must come from somewhere. People in Vancouver want everything, they just don't want to pay for everything.

bob's your uncle

Jul 27, 2010 at 6:27pm

It's the right sentiment, and we need groups like the CTF to keep everyone on their toes, however the FEDERAL law is pretty clear. Only the provinces can run gambling (it's called conduct and manage). If they don't, gambling is illegal. There's no option for the private sector to be fully licenced to run gambling anywhere in Canada.
Pick on the feds to change the laws and you might see some competition. Although, it might be too late to change your bet on that.

glen p robbins

Jul 27, 2010 at 8:36pm

The new talk is how could the web site have operated so dysfunctionally--your running a billion dollar business - like its a lemonade stand.

Everyone agrees that a percentage of BC gambling (and sinning--) proceeds must be legally diverted from general revenues--and directed to appropriate social programs related to addiction--in this instance gambling addiction- (and one would think an entire system of health expansion into these areas)-----(as ethically and intellectually disturbing this relationship would be)---it is the only way.

Otherwise---you might as well change the name of the province from BC to Deviltowne (put the "e" in the town--blame it on Quebec).

I suggested 4-5%--------if that or thereabouts isn't Rich Coleman's next announcement--his prospects to launch a BC Liberal leadership campaign--are likely done.


Jul 28, 2010 at 8:13am

Bader and the CTF jump on the band wagon for Mom and apple pie but ignore the HST and other tax rewards given business while the average joe and jane pay and pay and pay..... Curious isn't it? Could it be that her sponsors are reaping huge rewards from the HST from the rest of the people in the province? Hmmmmmm....... I think her protest will become more muted once she gets the phone call from the gambling mafia to keep her nose out of their business.


Jul 28, 2010 at 1:20pm

Other outrageous costs carefully hidden from taxpayers are the rents payed by the LDB for liquor store spaces. These rents are negotiated secretely with no oversight. Rumours of payoffs by landlords and rents
well in excess of market rates are commonplace.
The LDB hides behind the Crown corporation veil and doesn't have to disclose anything. Without public scrutiny it is a safe bet that these rumours are probably right

glen p robbins

Jul 29, 2010 at 11:03pm

Maureen = will you marry me?