No Safe Bet: Why Newfoundland & Labrador is Canada’s Casino Holdout

In 2010, when Colliers International was listing the Battery Hotel and Suites for $15 million, they dared buyers to imagine alternate usages for the property—even those that went against provincial policy.

“Newfoundland is one of only two Canadian provinces that does not have a provincially approved casino,” Colliers said in a brochure. “If this highly interesting situation changes, the site is sufficiently large to accommodate a Class A casino and hotel.”

“Our policy doesn’t permit casinos in the province,” then-finance minister Tom Marshall told reporters at the time. “There’s been no change in that policy.”

When asked if he’d reconsider the policy if a casino application was submitted, he was unequivocal: “No.”

By 2014, Marshall was premier and Charlene Johnson, then-finance minister, suggested to reporters that they might be willing to consider a good offer. Saying the government would review proposals stopped far short of saying they would be approved, but this flicker of willingness was a sign that maybe, the casino prohibition—in place since the 1990s and enshrined into policy—might not be immovable forever.

An email to Dwight Ball from a redacted sender on January 28, 2016, with the subject “$ solution” offered the following advice: “Simple: Allow casinos to be built. Try St. John’s first then expand to other cities. Tons of $ (sic) revenue and Newfoundlanders love to gamble.”

But a province entering the croupier game today needs a stronger rationale than that. Where jurisdictions once opened casinos based on promises of big revenues and hordes of new tourists, decades of hard data show it’s not the smartest move to grow an economy. 

An Unspoiled Opportunity

Today, Newfoundland and Labrador remains an unspoiled opportunity for casino operators, who in Canada often partner up with provincial gaming agencies in exchange for a large cut of profits. Operators have reached out to the province since at least 1993—including a pair of Nova Scotia businessmen, Sonco Gaming of Halifax (which developed Casino New Brunswick), and the St. John’s Entertainment and Racing Centre, among others. But these commercial operators look at costs and revenues differently than a government does. While concerned with making profits, operators (unlike provinces) don’t have to ask if the money is coming from outside visitors, or merely being recycled from locals. Only a few major tourist destinations around the world bring in big bucks from outside. 

Whether by design or by coincidence the discussion tends to appear at bad times in Newfoundland and Labrador: the years following the 1992 cod moratorium, and the oil and gas shock that rattled the country in the mid-2010s. Given the province’s current $2.1-billion deficit, the idea might be floated again.

Across the Cabot Strait in Nova Scotia, casinos came along in 1995 in large part to help solve a deficit problem, and the province became a cautionary tale. Expected to generate $50 million in provincial revenues annually, actual revenue, on average, is about 57% of what was expected. And this is before considering the additional infrastructure created to help operate a casino, like the Nova Scotia Gaming Corporation, or considering negative social impacts. With the possible exception of a few Ontario resorts—such as those directly across the U.S. border—there are few unqualified success stories in Canada. But the idea has continued to pop up in Newfoundland and Labrador from time to time, and Canada’s casino industry continues apace.

New Brunswick only got theirs in 2010 and multiple expansions or new casino projects are currently underway or planned, particularly in Ontario. It’s tempting to say Newfoundland and Labrador might never approve a casino, but with the continued interest of operators over the years it’s not a safe bet.

Given that the role of casino critic in Canada often falls to members of the public, not to governments, Newfoundland and Labrador stands out. Especially because the opposition has been steadfast, even when the province needed extra revenue or jobs.

Looking closer, this has to do with the province’s unique relationship to gambling.

A large but rarely articulated influence on this antipathy to casinos is the destruction already experienced from VLT gambling and years of economic hardship. To overcome this, the financial windfall has to be enough for the province to put these long-held worries aside—and there’s no saying that one day Newfoundland and Labrador won’t decide to roll the dice just like every other province.

Recycling Local Money

“Project Matthew,” revealed by CBC in 2015 via a heavily-redacted ATIPP request, proposed St. John’s as a viable casino market.

“Under direction from a former Minister of Finance (redacted) has undertaken efforts to develop a business case for a casino in St. John’s,” the Department of Finance information note reads. A later story revealed the assessment was conducted by the Atlantic Lottery Corporation (ALC).

It stated casinos were a “safe gaming environment when led by experienced, competent management,” and identified the project as “a progressive move for the NL market.”

But instead of outside tourists, the target market was identified as people living within a one hour drive of the facility.

Dr. Robert Williams, a health sciences professor at the University of Lethbridge and gambling expert, says this is adopting a strategy from the commercial casino company playbook.

“Basically, what they’re using is what the industry uses—that’s the rule of thumb no matter where you create a casino, at least in North America,” he tells the Independent.

Because local crowds mean recycling local money, the estimated provincial windfall of $20 million to $40 million Sonco Gaming proposed wouldn’t be the same as “new” money coming from tourist spending. And if Newfoundland and Labrador were to work with an outside operator—like Sonco—millions of dollars would be sent out-of-province over time.

Evidence in other Atlantic provinces suggests the more conservative the profit estimate, the better. Nova Scotia, despite two casinos and a larger population base to draw from, has only earned more than $30 million in casino gaming revenue six times between 1997-98 and 2018-19. New Brunswick earned $32.2 million from Casino New Brunswick and a smaller casino on the Madawaska Maliseet First Nation in 2018, the most recent year data is available online. And last year Prince Edward Island only received $951,000 in profit from Red Shores Racetrack and Casino, almost 50% less than the prior fiscal year.

“That didn’t seem right.”

When I speak with Clyde Wells—premier between 1989 and 1996—by telephone, he says no fewer than three times that allowing VLTs into the province was his biggest mistake.

“If I had my time back I would never permit VLTs in the province,” he tells the Independent.

Following their 1991 introduction, VLTs spread across the province, reaching a height of 2,700 machines in 2005. Some bars became known as “mini-casinos” with as many as 20 machines, skirting regulations which limited five per premises. Following a reduction plan, there are approximately 2,000 VLTs in the province today, run by the ALC. 

During Wells’ era, casinos were starting to be built more aggressively across Canada, including the 1994 announcement two would open in Nova Scotia. He remembers “at least one or more, maybe several” of the proposals the province has received over the years coming in during his premiership.

But Wells was uneasy about the impact gambling was having on the province.

“I was horrified by the fact that we were getting more revenue from Atlantic Lotto than we were getting from corporate business tax,” he says. “That didn’t seem right.”

Gambling quickly helped add to government coffers during the 1990s—but it’s not that a tolerance of risk was new. Reade Davis wrote a master’s thesis at Memorial University on VLT gambling and social change in 1990s Newfoundland and Labrador. In an article published in the journal Identities, he noted the longstanding attraction to games of chance in rural parts of the province “may be related to the tremendous risk and uncertainty that has always characterized the lives of the people that live there, particularly those engaged in the fishery.”

The province wasn’t totally unfamiliar with casinos, either. For more than forty years, there were slot machines in the Argentia naval base’s officer’s club, until its closure in 1994. By the end, they were reputed to take in over $3 million annually.

“A lot of people in the area were used to the casino and miss it dearly,” Wayne Young, then head of the Argentia Management Authority told the Canadian Press in 1995.

Nick Careen brought up this incongruity in the House of Assembly in November 1995, asking Wells “why a government that does not support a small 10,000 foot casino in Argentia, is quite willing to accept money from (VLTs) that are situated everywhere in this Province.”

At the time, Wells said “the government made a policy decision, I guess probably about two years ago, that we would not rely on gambling revenue and introduce and promote more and more gambling particularly by the establishment of casinos in this Province as a source of tax revenue.”

Today, Wells describes a discomfort with the growing prevalence of gambling in the province when he was premier. He even cancelled ALC advertisements for a period of time, because he felt they glamourized gambling too much—though they have long since returned.

“It just bothers me that we should be making life for government and taxpayers generally easier by inducing people who can ill afford it to spend their limited resources on gambling to produce revenue for government,” he says.

Wells remembers being told boogeyman stories that exploited a common fear at the time: that if government didn’t regulate gambling, organized crime would. So while some gambling was allowed to avoid this endgame, casinos were not.

“I didn’t see the casinos other than taking money out of the province and out of the mouths of children and poor families who could ill afford to do it, so I didn’t see any point in doing it at the time,” he says. “That was my reason for it. I can’t really speak to why successive governments have done the same.”

“A huge aversion”

Danny Williams, premier from 2003-10, also wasn’t interested in casinos in Newfoundland and Labrador. In May 2004, he told the House of Assembly that an expression of interest was flatly rejected. Even during his time in the private sector he didn’t like the idea.

“For the record … I was actually approached myself to bring a casino to this Province; something which can be deemed to be very lucrative, very profitable and I flatly rejected that because I am not prepared to make money off the backs of Newfoundlanders and Labradorians in this Province,” Williams said at the time to cheers.

During a recent phone interview, Williams told the Independent he had “a huge aversion” to a casino due to population size and the types of visitors the province attracts. “It’s more of an adventure or ecotourism type of a destination,” he says. “We’re not known for our hot balmy weather, eight, nine months of the year, and a lot of tourists going through for that reason.”

Williams says he was concerned that for most of the year a casino would feed on the domestic population.

“I don’t think people who are casinogoers would come to Newfoundland and Labrador to go to the casino in our province. I don’t think for one minute they would.”

Before I can ask how VLTs factor into his views, Williams says they were already “a mainstay” by the time he took power, not only as government revenue but as a support to the bar and restaurant industry. But again, like in Wells’ era, there was a desire not to take gambling that step further.

Former minister of finance Tom Osborne provided an email statement (prior to the recent cabinet shuffle) which says a casino isn’t on the government’s radar.

“The development of a casino in Newfoundland and Labrador is not a priority at this time, nor has it been for many years,” he says in the statement.

Osborne adds he can’t speak to the reasons former finance ministers haven’t pursued this idea, but notes he’s heard “very little public discussion on the issue.”

“Ultimately, in a province focused on spending public money on areas of high priority, when something is not a priority for the public it is not a priority for us. Right now, the idea of a casino is not a priority.”

Siobhan Coady, the current finance minister, says in an email statement that she’s looking to develop the province’s “high-potential industries” and natural resource reserves to help the economy rebound from the COVID-19 pandemic.

“I am always open to hearing suggestions to help us achieve that goal,” she says in part. “At this point, the development of a casino has not been raised with me as a priority for Newfoundland and Labrador and it is not one of our priority areas of focus.”

But the public doesn’t necessarily share the government’s trepidation.

Two Sides of the Same Coin

Despite the lack of political support seen in the past, there is at least some public support for a casino in Newfoundland and Labrador. In 2016’s Government Renewal Initiative (GRI) report “Build a Casino” was one of the top four Economic Diversification ideas. Though this isn’t necessarily a majority view, it suggests the government’s anti-casino view isn’t shared by everybody in the general population.

Engagement sessions for the report drew more than 1,000 participants across the province. The government also received more than 700 submissions in addition to thousands of ideas and comments on their Dialogue App. It’s notable then, that among all the ideas, casinos were prominent enough to garner mention in the final GRI report.

Coady, who was the minister responsible for the Office of Public Engagement at the time, recalls public opinion on the topic being significantly mixed.

“GRI laid the groundwork for what would become The Way Forward plan under Premier Ball, and a casino was not a priority that carried over into this plan,” she says.

But reading through the various casino-related submissions there’s a strange duality as participants acknowledge both a belief casinos will generate needed revenues, while referencing their potentially addictive nature.

For instance, app user NLMoose suggested allowing casinos “particularly in Happy Valley-Goose Bay, Corner Brook, Gander, and St. John’s.”

“I know that some money will have to be spent on (additional) Addictions Treatment, but it will also bring in much needed tax revenue and tourists,” they wrote in their submission.

I asked Robert Williams why the public still has a rosy view of casinos, despite the well-known negative side effects.

“I think more generally, the public and this includes most politicians as well, are very naive and uninformed when it comes to economics, not just casinos,” he says. Williams offers the example of citizens wanting both low taxes and a lot more spent on health care, and how difficult it can be to reconcile those competing ideas.

“Obviously, casinos make a lot of money. And (the public) don’t ask themselves well, where’d this money come from? Or who is the primary beneficiary of this money and how does it get redistributed? The general public are very poor economists, and it’s not restricted to casinos.”

Casinos vs. VLTs: What’s the Difference?

While VLT gaming has been in place for almost 30 years, and has had negative societal impacts, the government has presented casino gaming as much worse. But there’s a strong argument to be made that the difference between a casino and a bar full of VLTs is minimal.

In Nova Scotia, slot machines account for about 96% of casino games at Halifax’s casino and 98% of games at Sydney’s. Meanwhile, Casino New Brunswick’s website advertises “over 600” slots, but only “18 live Vegas-style table games.” The reality for a casino in Newfoundland and Labrador is likely similar, meaning there’s a strong argument that little difference exists between a casino and bars with VLTs. I asked the former premiers why there was strong opposition to a casino and not VLTs, and if there was similarity between the two forms of gambling.

Wells thinks as negative impacts from VLTs became clear, that squelched any desire for a casino in the province.

“By then VLTs had done a fair amount of damage to individuals and families,” he says. “And so there became a general public awareness of just how serious the downside was.”

For Williams, there’s an important difference in atmosphere.

“I think the casino is more of a social trap,” he says. The bright lights. The crowds. Activities and entertainment. Nice restaurants and bars. Meanwhile, he says VLTs, found in dark corners of bars offer “a bit of a social stigma” that can have a deterring effect for some players.

Another reason is the economic cycle—in particular seasonal work followed by extended unemployment and what Williams calls the megaproject problem where big projects are followed by economic dips.

“We are very sensitive to the vagaries of a steady stream of income,” he says.

Fun and Games

Robert Williams feels part of Newfoundland and Labrador’s political reticence for casinos is its population size and relative isolation.

“If the economics had been stronger, as you saw in virtually all the other provinces, that trumps social considerations,” he says.

“I mean, it’s not necessarily kudos to Newfoundland [and Labrador] for never introducing casinos, because I do think economics played a strong part in that. They certainly weren’t averse to introducing slot machines in every bar, i.e. VLTs. And those are just as harmful and require no additional infrastructure. So, they shouldn’t be praised.”

Peter McKenna, a professor at the University of Prince Edward Island whose 2008 book Terminal Damage examined VLTs in the Atlantic provinces, suggests the machines factored heavily into the province’s aversion to casinos.

“I think the devastation from the VLTs was pretty pervasive,” he tells the Independent. “There were a number of high profile cases of suicides. I managed to interview one or two in particular, in Newfoundland, it was very painful to listen to their stories.”

McKenna found it interesting that for many VLT gamblers, gambling was a social activity that became “problematic” for a number of people.

Derek Montague, a journalist and former mayor of North West River has gone public with his struggles with gambling addiction—which began when he was living in Labrador in 2011.

“When I went to rehab in Corner Brook I was told by a counselor that in her memory I was the only person to go to rehab specifically for gambling,” he tells the Independent. “In all other instances that she could remember gambling was sort of a ‘side addiction’ for lack of a better term.” (Gambling addiction has been found to frequently occur alongside other psychological issues, including substance abuse.)

I read him the email from the ATIPP request describing Newfoundlanders’ love of gambling and he wasn’t surprised by it, though he thought it lacked empathy.

“I wouldn’t even be shocked if a politician wrote that email promoting a casino coming to Newfoundland and Labrador,” he says. “And the sad part is, is that I don’t even think it would generate that much public backlash because there isn’t that much sympathy or awareness in the public about gambling addiction anywhere, especially in Newfoundland and Labrador.”

In July, the Supreme Court of Canada, siding narrowly with ALC, struck class action suit claims from Newfoundland and Labrador VLT players, which alleged the terminals were deceptive and breached the Criminal Code. (The damages sought were “equal to the unlawful gain obtained by the Defendant from VLT revenue,” according to law firm Koskie Minsky.)

Montague, now working as a journalist in Halifax, says Newfoundland and Labrador’s media often treat gambling as fun for everyone—reporting stories about long lines to buy 50/50 tickets or massive boxes of Chase the Ace tickets, requiring multiple people to stir.

“I never saw one story that investigated how many people chasing ace for that million dollars were giving up money that was meant to feed and clothe children (or) that was meant for rent money,” he says. “Because the stories did circulate in communities right across Newfoundland and Labrador that people were giving up portions of their paycheck that they couldn’t afford, hoping that they would win.”

“I don’t think we need it.”

Looking at the failed efforts made to sell Newfoundland and Labrador on a casino, it doesn’t feel like a likely next step for the province. Even a brief flash of openness to listening to a proposal didn’t substantially further the idea, and presently even that doesn’t seem to exist. While prior media reporting suggested there would be public consultation if a casino were to be opened, it has yet to make it to that stage.

But while it may not be in the best interest of the populace or government revenue, there are operating companies who see the potential for profit. Someday the right proposal might land on the desk of a sympathetic finance minister or premier. 

Financially, a casino alone isn’t enough to shift the province’s fortunes. In the case of a $2.1-billion deficit as the province currently faces, even a generous $40 million from a casino is a drop in the bucket. Maybe it’ll be sold as a job creation tool, a community investment, or a tourist trap—even if the biggest benefit of abstaining all these years has been to watch other Canadian jurisdictions and learn that opening a casino isn’t all it’s cracked up to be.

Danny Williams thinks a casino could very well open in the future.

“From a personal perspective, I wouldn’t like to see one here and I’d be someone who’d probably go to it from time to time and enjoy to sit down and have a game of blackjack,” he says. “I don’t think we need it. I think the economic impact would not be as big over time as we think it is.”

Montague thinks it would be “devastating” for the province’s gambling addicts.

“Only an idiot could look at the gambling culture of Newfoundland and Labrador and think that casinos wouldn’t ruin people,” he says. “I’m glad that governments throughout Newfoundland and Labrador history have at least seen that our province cannot afford a casino.

“The VLTs that sit in bar rooms have done enough damage to families, to children, to people who have committed suicide, to people who are like me [who’ve] ended up in rehab and have had to rebuild their whole lives. It would be a reckless decision.”

He says one of the biggest challenges would be the larger betting potential at a casino. Instead of a maximum bet of $2.50 on a VLT, there would likely be some table games and higher limit machines. Even the potential for 24 hour play.

But even though he sees a casino having a negative impact, Montague doesn’t think it would have a lasting one.

“A casino might bring in a lot of revenue for the first year or so and then everybody who’d want to gamble is broke,” he says with the faintest hint of a laugh.

Photo by Steve Sawusch on Unsplash.

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