Gambling is an increasingly popular pastime all over the world. Estimates are that around 1.6 billion people actively gamble every year, and this figure includes both land-based and online casinos. Many countries consider gambling illegal, but in Canada, it’s kind of a gray area.

Regulatory control of gambling in Canada is in the hands of individual provinces. Some provinces have decided to ban gambling totally, while others, such as Ontario and Quebec, are happy to issue permits. These provinces have even launched government-owned online casinos.

However, don’t think that this means people in Canada aren’t gambling. Canadian law doesn’t cover offshore online casinos, which means Canadians are free to play at offshore online casino sites as much as they like.

The only problem with offshore casinos is that all the profits end up in the pockets of companies in other countries. It was only natural that individual Canadian provinces decided they wanted a piece of the online gambling pie for themselves. But is it a good thing, or should provincial governments leave well alone?

The Pros and Cons of Provincial Casinos

Several provinces have embraced the world of online casinos. British Columbia took the lead in 2004 by launching PlayNow, the only legal site for online betting. On offer are poker, bingo, sports betting, and lottery. Manitoba followed by launching PlayManitoba in 2013.

Ontario is another province that has launched its own authorized online casino site, PlayOLG.ca. The operator of the site is the Ontario Lottery and Gaming Corporation.

Why have so many provinces opened their online casino doors? There are several benefits, most of which are social. For example, when regulations are written specifically for an individual province, they should be relevant and sensibly applied. With a local government calling the shots, it should also mean the casino follows the rules accordingly. As well as benefiting individual players, a state-run casino will also provide employment opportunities for residents.

There are, however, also some disadvantages to a state-run casino, the most obvious of which is that it reduces competition and consumer choice. If there is a lack of competition, it often leads to sub-standard products and services taking over the market. The customer has no alternative when what’s available is under par.

Provincial governments, such as Ontario and Quebec, are hoping to find the middle ground by allowing private operators to enter the market and comply with local regulations. That way, players enjoy a wide choice without having to sacrifice their safety when playing online.

The big question, however, has to be, is online gambling a net benefit to a province’s economy or not?

The best way to answer this question is to use the province of Alberta as an example.

Can a Province Benefit Financially from a Government-Operated Online Casino?

Using Alberta as an example, it’s estimated that the province’s residents spend $120 to $150 million a year playing online casino games offshore. Is a province passing up on free money, or is there a financial benefit to providing online casino games for residents?

As you might expect, the answer is a little more complicated than merely redirecting gamblers’ dollars into the provincial treasury.

After crunching the numbers, the result is not what you might think. It might seem counterintuitive, but getting into gambling tends to be a net economic loss rather than an expected or hoped-for gain.    

There is, however, some good news if we’re to believe the numbers from countries such as Sweden, France, and the UK. Having a government’s stamp of approval increases online gambling activity.

When residents have access to government-backed sites, it breaks down some of the barriers that make online gambling challenging. A country’s players trust their government will have processes in place that ensure winnings are paid, the games are fair and honest, and payment methods are secure.

In Alberta, around 3% of residents gamble online, and the amount they spend offshore equals approximately 0.15% of the province’s GDP. As more online casinos get the provincial thumbs up, it’s likely to double the amount of money people spend gambling. But how much of that is expected to end up in the government’s coffers? There is still going to be stiff competition from the thousands of offshore and already established gambling sites, after all. A researcher at the Alberta Gambling Research Institute estimates that a province can reasonably expect to capture just one-quarter of the money being gambled by its locals.

Sticking with Alberta as an example, this percentage would translate into an extra $50 to $75 million a year, which is a tidy sum, there’s no denying it. But it’s not that simple because economies don’t work in a vacuum. The extra money people spend on gambling is not being spent somewhere else. All the government-operated casinos are doing is transferring money from one sector of the economy to another. Most likely, it’s being pulled from other entertainment and retail sectors that don’t cause the same kind of social harm. People only have so much disposable income, so when a government encourages more of it to flow into gambling, they’re taking it away from other businesses.

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