Could a public inquiry into money laundering lead to a B.C. government takeover of casinos?

    1 of 5 2 of 5

      Over the past few days, I've been musing about the B.C. NDP's deep interest in addressing money laundering.

      This is going over well with voters. They loathe white-collar criminals and drug dealers. NDP voters, in particular, despise sky-high housing prices.

      The crusade against money laundering, which is being led by Attorney General David Eby, may even lead to a public inquiry. The cabinet is expected to make a decision fairly soon on this issue.

      If there is an inquiry, that could determine who's responsible for turning a blind eye to crooks washing the proceeds of crime through B.C. casinos and real estate.

      This isn't a new concern, as you'll see below.

      The first casino in Vancouver opened in 1986 in the Holiday Inn on West Broadway.
      Holiday Inn

      First, some history

      Great Canadian Gaming was formed in 1982 in the depth of a brutal B.C. recession. John Hoegg was the founding president and his partners were Ross McLeod, Freddie Glasgow, and Jim Conklin.

      The first casino opened in the Holiday Inn on West Broadway in 1986 with blackjack, roulette, and sicbo. Electronic gaming was launched in partnership with the B.C. Lottery Corporation in Surrey in 1987.

      The founders of Great Canadian had a good working relationship with the Socred government, enabling them to gain a legal foothold in the gambling industry.

      Other casinos followed, including the Royal Diamond on the north shore of False Creek. It was owned by Gary Jackson, who was a supporter of one of the province's most powerful politicians, Grace McCarthy.

      Another big player to emerge was Gateway Casinos.

      The Socreds liked private companies to operate the casinos as long as they shared a healthy percentage of the profits with the provincial government.

      This model remained in place throughout the 10 years of NDP rule from 1991 to 2001 and continued through 16 years of B.C. Liberal rule. There are now 37,000 people employed in the gaming industry in B.C.

      In the early 1990s, the existence of casinos troubled some commercial crime investigators, who worried about them becoming de facto laundromats for gangsters. These concerns were covered extensively by a reporter of that era, Don Ramsay.

      Around the same time, Vancouver residents were also extremely worried about money laundering in casinos.

      That was one reason why Las Vegas-based casino mogul Steve Wynne and Concert Properties weren't able to win approval from the City of Vancouver for a gambling and hotel complex called Seaport Centre on the Vancouver waterfront.

      A report by a young city planner named Larry Beasley helped kibosh this idea.

      Concert Properties was created with the help of union pension funds.

      In the early 2000s, there was great alarm again in Vancouver over the introduction of slot machines. In a narrow vote in 2004, Vancouver city council first allowed them at the Plaza of Nations at the casino owned by Jackson.

      Council also approved slot machines at Hastings Racecourse, which was owned by Great Canadian Gaming Corp. This vote drove a wedge within the Coalition of Progressive Electors, which had a large majority on council.

      One of the key lobbyists at that time was John Horgan, who was a partner in a company called IdeaWorks. (Horgan's current chief of staff, Geoff Meggs, was then a top assistant to the mayor, Larry Campbell.)

      Horgan previously worked for the B.C. Ministry of Management Services, which oversaw the expansion of gambling across the province under the last NDP government. Meggs was communications director for that NDP government as it was expanding gambling.

      In 2004, Horgan said that he and his partners were hired by casino owners Jackson and Len Libin of Gateway, and worked closely with charities, unions, and community groups. A former NDP cabinet minister, Ian Waddell, and SFU criminologist Neil Boyd were also retained to help make the case.

      "Our objective here was to bring those diverse groups together to see the benefit of allowing slot machines in projects through increased revenue, a future for charitable organizations through a new facility, and jobs for trade unionists," Horgan told the Straight in 2004. "Once the fabric all came together, the cloth looked pretty impressive for a majority of council, and that's why we were successful."

      So it's clear that Horgan, who is now premier, doesn't have any philosophical objections to casino gambling.

      He just doesn't like the proceeds of crime being laundered through these facilities.

      Long before John Horgan became premier, he spearheaded a campaign to persuade Vancouver city council to approve slot machines.
      Stephen Hui

      Unions are key players

      But what if there's another agenda at play alongside the fight against money laundering?

      Let's look at this through the lens of labour relations. There's a patchwork of collective agreements.

      The B.C. Government and Service Employees' Union represents workers at Great Canadian Gaming's River Rock and Hard Rock Vancouver casinos. Their relationship has, at times, been extremely rocky.

      The BCGEU has donated more than $1.2 million to the B.C. NDP since 2013.

      And the BCGEU has been particularly vocal in calling for a public inquiry into money laundering. 

      Great Canadian Gaming Corp. also has casinos in Victoria, Nanaimo, and Surrey. Its Chances facilities in Chilliwack, Maple Ridge, and Dawson Creek offer bingo and slot machines. The company's shares are traded on the Toronto Stock Exchange, and it also has facilities in Ontario, Nova Scotia, New Brunswick, and Washington state.

      Moreover, the BCGEU represents many workers at Gateway casinos. They walked off the job last year at casinos in Kelowna, Vernon, and Penticton until an agreement was reached.

      Another union, MoveUP, represents surveillance workers at Gateway's casinos in Penticton and Langley. Gateway is a privately held company that also has casinos in Alberta and Ontario.

      Workers at the Parq Vancouver casino, on the other hand, are represented by Unifor. This giant Canadian union was created in a merger of the Communications, Energy and Paperworkers and the Canadian Auto Workers.

      In 2018, it broke off from the Canadian Labour Congress. So at the national level, it's outside the House of Labour.

      Unifor's representation of casino workers resulted from the CAW organizing workers at the former Royal Diamond casino on the north side of False Creek, many years ago.  The Royal Diamond casino licence transferred to the Edgewater Casino, which later became the Parq.

      BCGEU president Stephanie Smith has been one of the province's more vocal advocates for a public inquiry into money laundering.

      What might a public inquiry achieve?

      From the NDP's perspective, a public inquiry into money laundering has the potential to destroy the political careers of B.C. Liberal politicians who allowed this situation to fester for so long.

      That provides a powerful incentive to launch a far-reaching probe.

      But there are other potential consequences.

      For example, a commissioner might recommend stronger whistle-blower protection for casino workers who want to report suspicious transactions.

      A commissioner might also recommend a more uniform labour-relations approach. He or she might say that all casino workers should enjoy similar protections in their collective agreements.

      That's hard to accomplish when several unions represent gaming workers, while other employees are unrepresented.

      It's even possible that a commissioner could conclude that it was a mistake for the Social Credit government of the 1980s to contract out the management of casinos to private companies. There could be a recommendation to have them all run by the publicly owned B.C. Lotteries Corporation.

      That could set the stage for the province to take over the casino business, just as it took over electricity generation in 1961 under the former W.A.C. Bennett government.

      In an odd coincidence, one of B.C.'s most outspoken advocates of organized labour, Bill Tieleman, wrote a master's thesis in 1984 about the nationalization of B.C. Hydro.

      "This study concludes that the mobilization of significant class forces behind a viable economic development strategy is one way in which the relative autonomy of the state can be considerably strengthened," Tieleman wrote 35 years ago.

      W.A.C. Bennett also nationalized ferry service in 1960. And he created B.C. Rail, which was later privatized by the Gordon Campbell government.

      Nobody's talking right now about the B.C. NDP government nationalizing casinos.

      But that's not out of the question if the NDP cabinet orders a public inquiry into money laundering. You never know what a commissioner might conclude in his or her report.

      In the meantime, the B.C. government's moves to tighten up disclosure rules in casinos has already hurt the bottom line of places like the Parq Vancouver.

      It shouldn't come as a huge surprise that Paragon Gaming decided to sell its stake earlier this year.

      Shares of Great Canadian Gaming Corp. closed on May 10 near its 52-week low.

      Gambing money being shared with First Nations

      It's fair to say that the actions of the B.C. government are likely lowering the value of B.C. casinos.

      No doubt, more recommendations would result from a public inquiry, possibly leading to even lower gambling revenues in the future.

      And that would make a provincial government takeover less expensive.

      At the same time, the provincial government is sharing more of its gambling-created booty with First Nations.

      This was first hinted in Premier Horgan's 2017 mandate letter to Indigenous Relations and Reconciliation Minister Scott Fraser.

      Horgan instructed him to work with Finance Minister Carole James to make "substantive progress" in negotiating with First Nations leaders and communities "around expanding opportunities for their share of B.C.'s gaming industry".

      This year, the Vancouver Sun's Vaughn Palmer reported that the first $200 million is being paid this spring. It's part of a 25-year plan to share $3 billion in gaming revenues.

      There's no hard evidence at this point that the NDP government has any interest in taking over the management of casinos and ensuring that one union, perhaps the BCGEU, would represent all the workers.

      Nor is there evidence that the government plans to add new casinos on First Nations land near heavily populated areas, like the North Shore of Vancouver. Simply receiving a greater share of the take might be enough to satisfy the First Nations leadership.

      And there's likely zero possibility of any takeover happening before the next election and while the NDP has a minority government.

      But keep an eye on this file. Public inquiries can sometimes lead to unpredictable results.

      Horgan has already demonstrated in the past that he can be quite a smoothie in changing the landscape around casino gambling.

      It happened in 2004 in Vancouver when a supposedly left-wing council endorsed slot machines, unlike its NPA predecessors.

      So we shouldn't rule out the possibility of major unanticipated changes taking place across the province in the years to come.