Will Toronto Roll the Bones?*

It's looking optimistic, but cast of characters stand in way of hometown billions

by , Jan 29, 2013 | 10:00 am

Toronto’s my adopted hometown. I’ve lived here off and on since I came to the University of Toronto for law school in 1993. Toronto has a lot going for it: great restaurants for a city of its size, wonderful family activities and amenities available, and mostly a clean and highly liveable place. It also has horrible traffic and transit and decaying infrastructure. It’s not Chicago or New York City, which really bothers Canadians in general and Torontonians in particular, but all in all, it’s a wonderful place to live.

One thing that Toronto doesn’t have is a casino. We have Woodbine Racetrack out in Etobicoke, which has some slots, we have gaming during the CNE in late summer, and we have a thriving underground poker scene. The casinos in Niagara Falls and Rama aren’t too far. Internet gaming is everywhere, and heavily advertised. But Toronto doesn’t have a full-fledged resort casino like those in Vegas, or even like the casion property in Montreal.

I think odds are good that that will soon change. It’s by no means a certainty, but the Ontario Lottery and Gaming Corporation (OLG — the provincial lottery monopoly) wants to develop a casino in downtown Toronto. This is a creating a big and growing debate here. In spite of the attention being generated by the ‘no’ side, I don’t think that Toronto will pass on the economic benefits that a casino property in the city stands to generate, nor do I think that it should pass on it.

Let Torontonians Decide?

I wrote a short post about the Toronto casino a couple of months ago, when the Superior Court decision to remove Mayor Rob Ford from office was released. (More on that item below.) I also gave some background on the prospective casino on a CEM Audio Edge podcast here. Essentially, while OLG has expressed a desire to partner with a commercial operator to build a Toronto casino, the monopoly has also clearly indicated that it won’t put a casino in a municipality where it’s not wanted. In fact, the regulations made under the Lottery and Gaming Corporations Act state that a municipality must (with some narrow exceptions) both seek public input into and pass a resolution in favour of establishing a new casino resort (see subparagraphs 2(2)(3)(i) and (ii) of the Regs.).

That’s what’s now happening in Toronto. The city council is trying to ascertain whether residents want a casino and make up its own mind about how to vote on it. There have been public meetings to solicit feedback held throughout Toronto. (The deadline for feedback from city residents closed last Friday.) The city has set up a consultation page, which gives a good overview of the process and has a useful repository of documents. Ernst & Young (great to see my old colleagues getting the work on this one) and the International Gaming Institute at UNLV have produced excellent studies on a Toronto casino, and Toronto Public Health has issued a Technical Report on the health impacts of gambling expansion in Toronto. I would commend all of these documents to the attention of someone wanting to read more on the issue.

Canadian Gaming Math

A new Toronto resort casino has some big pluses. The E&Y report suggests an initial GDP contribution to Toronto’s economy of $1.7-$2.1 billion on construction (assuming an integrated entertainment development) and recurring contributions to Toronto’s GDP of between $1.5 and $2 billion. When you aggregate the increased property taxes to the city, the OLG hosting fees, the sale or lease of city land to a development, and the jobs impact — not to mention the billions of dollars in private sector investment to build the integrated resort — it’s an attractive package that Toronto can’t simply ignore. As Paul Burns, the Vice President of the Canadian Gaming Association, put it to me, this is a unique development that could be a once-in-a-generation opportunity. The CGA has a great website up in favour of the casino project here.

The arguments against a casino resort are generally a mix of weak attempts at debunking jobs and GDP projections and concerns about cannibalizing local businesses, crime, and problem gambling — red flags that have themselves already been debunked, not quantified, or addressed. For example, critics argue that the government’s termination of the slots-at-racetracks programme will lose more jobs (province-wide) than the Toronto casino will create. But why is or should that be a relevant trade-off? That’s like saying that the government is laying off provincial bureaucrats in Ottawa, so it should save those jobs and also not establish a Toronto casino. The argument doesn’t actually undercut the jobs figures; it just says that critics don’t care as much about creating jobs in Toronto as they do about lambasting other policies of the provincial government. On cannibalization, the UNLV study points out that empirical evidence suggests a net gain from a casino to both gaming and non-gaming businesses (with the possible exception of lottery ticket sales).

Maybe the most bizarre argument against a casino resort, given voice by, among others, Olivia Chow, the federal Member of Parliament for a downtown Toronto constituency, is that it will bring too many cars into downtown. Even assuming that her figures are right, it’s disingenuous. Toronto has a serious traffic problem that needs to be addressed whether the city gets a casino or not. We need to get better at moving people around. Building a casino won’t change that. Neither will not getting a casino, as anyone who drives downtown most weekdays knows full well. This is not a consistent argument against downtown development, but against this kind of downtown development. No honest or serious observer believes that opponents would be against a downtown commercial development downtown housing, say, a pharmaceutical company or an Internet business that proposed to take up the same number of parking spaces.

No responsible person is saying that an integrated resort will come without costs. There will be costs in terms of municpal infrastructure and potential social issues. That’s not an argument for doing nothing. That’s an argument for an honest, empirical assessment of the costs and benefits associated with this project. My read is that there are considerably more benefits than costs.

The Strangeness of T.O. Politics

Lately I wondered if it’s a problem for the casino resort proposal that some of its loudest supporters on city council are idiots or crackpots. I had thought that perhaps they were doing some of the heavy lifting for casino opponents. Say what you like about Adam Vaughan and Gord Perks, two anti-casino city councillors, but they’re not stupid men. Still, the majority of councillors will look past all that noise and want to know what a casino brings to the city and what it means for them and their electors irrespective of what the council blowhards think.

A couple of months ago, I thought that Mayor Ford’s removal from office wouldn’t change the math about whether a casino would pass Toronto council or not. Just last week, the mayor’s appeal to the Divisional Court over his removal from office was allowed. (The original removal was based on the mayor’s voting to overturn a sanction against him by the city council. That was initially held to be a violation of the Municipal Conflict of Interest Act. But the Divisional Court overturned, stating that the city council didn’t have the jurisdiction to impose the sanction against the mayor in the first place, so the vote was a nullity and Ford’s participation in it or not was inconsequential.) Barring something unexpected, Rob Ford will keep his job until the next election in 2014. And perhaps longer; in spite of his antics, he remains popular with a large part of the electorate.

Rob Ford staying or going won’t matter much. He supports the casino resort proposal. He has one of 45 votes on the city council. If he had lost his appeal, it would only be one vote lost. Ford is a polarizing figure. Those who support the mayor at this stage probably don’t care what he does. They’ll continue to support him. Those who are against the mayor will likely continue to oppose him, come what may.

A majority of residents favour Toronto building a new casino in the city. Support across Toronto varies, but pollster John Wright of Ipsos Reid noted that even in the downtown (where some of the loudest anti-casino voices hail from), opinion is fairly split. The provincial government, large commercial gaming interests, and unions all want a new casino. At the end of the day, I’m cautiously optimistic that a majority of councillors will go with most residents and bless this project. There’s a long way to go and much could still go wrong for the pro-casino side, but the business case for — and the benefits to — the city are compelling and should win out.

* Thanks to David Schwartz for the title inspiration. I’m reading the latest edition of his book now, and it’s excellent.


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