Casinos and Governments

Casinos are proof that governments love money more than people.

As the Ontario Lottery and Gaming Corporation (OLG) continues with plans to overhaul and expand their casinos and other gambling operations, I’m struck by how irrelevant it is to discuss whether this is good for the people. We debate the wisdom of making gambling available everywhere, but we always end up expanding more so governments can get more revenue.

I have no religious or philosophical objection to gambling; I enjoy a little gambling myself once in a while. But how many casinos do we really need so that people can satisfy their gambling itch occasionally? The answer is that this question is irrelevant. What matters is that expansion will bring in more money.

Never mind that casinos are a net loss to the country as a whole. Casinos cost money to operate, so government revenue is less than gamblers’ losses. Casinos create some jobs, but take away more jobs because gamblers buy fewer good and services. In the end, the net loss to the country is the diversion of human work from useful pursuits to running casinos. But none of this matters; governments need more money.

One of the most powerful arguments in favour of government-approved gambling is that without it gamblers will find ways to gamble illegally or in other countries. This argues for a modest amount of government-approved gambling to eliminate most of the gambling profits that would have gone to organized crime or other countries. However, if this were the real goal, then governments would run their gambling operations very differently and would advertise them much less.

Another common argument for government-approved gambling is that it supports hospitals. Who could be against hospitals? However, we could just as easily say that hospitals are funded from income taxes, and that gambling revenues fund less popular programs. The truth is that any difference between how gambling revenues and income tax revenues get spent is completely artificial.

Even municipal governments show their love of money over people. As an incentive to support the building of casinos, municipal governments are offered a slice of profits. The total amount of money leaving a city due to a casino far exceeds the slice of profits kicked back to the municipal government. But that doesn’t stop municipal governments from approving casinos; they want the money even if it hurts the city’s economy.

Government hunger for more money will not stop as long as they continue to run so inefficiently. Governments have bloated administrations in most areas and have too much duplication of effort. However, the biggest problem is the difficulty of firing people who are bad at their jobs. Unions present the image that their members are equal, but the truth is that some government workers are dedicated and competent, some are lazy and incompetent, and others have just had the desire to do good work drained from them by bureaucracy. The range is very wide.

If the problem of being unable to fire poor workers could be solved it would completely change the incentive structure of government and improve efficiency greatly. Governments would then be able to offer additional useful services or offer existing services at lower cost. A side benefit would be improved morale among government workers once they understood that competence is the best path to job safety. Despite the human tendency to be lazy, we are generally happier when we feel we’re contributing to an effort that matters.

Don’t hold your breath waiting for these problems to be solved. It would take a gargantuan battle with public-sector unions to make things better. Politicians have little appetite for such battles. It’s easier to just build more casinos.