FILE: OLG lottery tickets (Photo by Raysonho @ Open Grid Scheduler / Scalable Grid Engine Own work, CC0)
Ontario Lottery and Gaming (OLG) is down on its luck. On top of this springs leadership and layoff controversies, the corporation needed to be put on financial life support by a $500-million government loan when pandemic closures cut off most of its revenue. But theres a more serious problem plaguing Ontarios gambling industry. The government of Ontario is addicted to gambling money a hidden tax on the provinces most vulnerable citizens that harms the very people the government has a responsibility to help.
Pre-pandemic, OLG was a lucrative source of revenue for the Government of Ontario. The corporation generated $2.5 billion for the provincial treasury last year the provinces largest source of non-tax revenue, as OLG is quick to point out. Yet Ontarios gambling scheme is a tax in all but name. Lottery and casino profits are piped directly into the Consolidated Revenue Fund the same as income and sales taxes, and the government relies on gambling money to finance core public services.
Yet Ontarios gambling tax is regressive. Our recent report, titled Pressing Its Luck: How Ontario Lottery and Gaming can work for, not against, low-income households, demonstrates that gambling taxes collect a greater share of income from the poor than from the rich. Households in Ontarios lowest income quintile (the lowest-earning 20 percent of households in the province) are likely to spend more than 4.5 percent of their incomes on gambling each year two-and-a-half times more than households in the highest-earning quintile, who spend less than 2 percent. (The average annual after tax income of the lowest quintile is $18,738 and the actual spending on gambling is $920, whereas the average annual after tax income of the highest quintile is $103,950 and the actual spending on gambling is $1,803).
The progressive income tax system, in contrast, collects nearly 10 times more from the wealthiest Ontarians compared with the poorest. The gambling tax burden also disproportionately harms other vulnerable Canadians, including those with lower levels of education and Indigenous communities.
These figures cannot be dismissed by labelling gambling a voluntary tax contributed by citizens who have freely chosen to participate. The problem with such a free will argument is not just that it ignores the evidence that shows the governments gambling scheme to be inequitable and regressive, but that it fails to account for the ways in which the system is designed to overcome individual players wills.
If half of the provinces gambling tax is collected by machines designed to override players conscious control of their spending, this tax cannot be labelled voluntary.
In the same way that social media platforms are carefully engineered to keep users scrolling, slot machines are designed to maximize players time and spending with features that encourage distorted perceptions of the game. These features include near misses where the display of symbols makes it appear that the player was close to winning, even though the outcome of each play is completely random. There are also losses framed as wins, where audio and visual effects celebrate a player winning an amount less than he or she wagered, even though the player lost money. If half of the provinces gambling tax is collected by machines designed to override players conscious control of their spending, this tax cannot be labelled voluntary. Ontarios gambling sector relies heavily on slot machines: around 56 cents of every dollar Ontario has received from OLG since 2000 has come from slots.
Problem gamblers, meanwhile, are disproportionately responsible for financing Ontarios gambling industry, contributing up to 24 percent of gambling revenue despite making up only 1 to 2 percent of the population. Players whose voluntary control has been overpowered by addiction are painfully aware that their decision to spend money on gambling is not a free choice.
Government-run gambling is not simply meeting a demand: pervasive government advertising actively encourages Ontarians to gamble more. We analysed the marketing expenditures OLG notes in its annual reports. Adjusting for inflation, OLG has spent an average of $320 million a year on marketing over the past two decades more than $6 billion in total. This aggressive promotion is conspicuously inconsistent with the strict marketing rules for alcohol and tobacco, other potentially addictive products whose sale is limited to adults (and, lets remember, whose sale is still market-driven rather than monopolized by the state). In 2018, OLGs marketing spending ($282 million) was nearly four-and-a-half times more than its spending on problem gambling prevention and treatment ($64 million). Halving OLGs marketing budget and boosting funding for problem gambling services would help reorient the corporations priorities.
Disentangling gambling money from legitimate tax revenue by moving OLG profits into a specific fund preferably aimed at relief of poverty would be the equivalent of the government admitting it has a problem.
Its time for Ontario to reform its gambling scheme so that OLG works for, not against, the provinces most vulnerable. Disentangling gambling money from legitimate tax revenue by moving OLG profits into a specific fund preferably aimed at relief of poverty would be the equivalent of the government admitting it has a problem, admitting that it has harmed the public it is intended to protect, and forming the first steps to making direct amends. If Ontario reformed gambling, it could use the proceeds to boost the income equality or savings of low-income households instead of taxing them disproportionately to support the rest of the province.
There are several policy approaches Ontario could take to gambling reform. One option is to return OLG profits directly to the poor through cash transfers. Instead of keeping OLG revenue for itself, the government could use the profits to fund a new benefit for the provinces neediest households: lets call it the Ontario Gaming Equality Benefit (OGEB). Such a system could be tied to income levels, based on the same sliding scale used for, say, the Canada Workers Benefit. OGEB could be used to enhance existing cash transfer programs like Ontario Works or the Ontario Disability Support Program (ODSP). As with other transfers, OGEB could be designed to help families support their kids, giving a boost those who have to cover child-related expenses.
Alternatively, gambling profits could be used to incentivize savings by contributing to savings accounts for low-income families. This policy might follow the RESP model: the government tops up the savings account by a certain percentage of the account holders contributions. In a more ambitious model, the government matches (up to a cap) the savers contributions. An American example of the latter program is individual development accounts (IDAs), which are designed to help low-income participants save for specific investments like post-secondary education, home ownership, or small business start-up expenses. Canada tested an IDA program in the early 2000s, and the results suggest a matched saving program would have a positive impact on the savings habits of low-income households.
If Ontarians want the excitement of chance and the thrill of winning, the province could offer the opportunity to channel those desires toward saving with prize-linked savings (PLS). In savings accounts that follow the PLS model, account holders forgo some or all of the fixed interest they would normally earn on their savings in exchange for the chance to win a prize. These accounts have proven popular when introduced: Save to Win, a PLS product offered by credit unions throughout the United States, has seen great success since its launch in 2009; Walmart customers moved more than $2 billion through a PLS feature on the retailers prepaid cards in the programs first two years of operation; and the lottery bonds offered in the United Kingdom are held by a third of the countrys population. Research suggests PLS products are particularly appealing to low-income savers and can increase total saving.
Ontarios gambling scheme is ripe for reform. The pandemic has highlighted both the importance of improving financial security for Ontarians and provided a unique opportunity for the province to cut its gambling addiction cold turkey: with casinos shut down and OLG revenue plummeting, the costs of getting clean have never been lower. Its time for government to kick its gambling habit for good.
This article first appeared on Policy Options and is republished here under a Creative Commons license.
View original post here:
Ontario's gambling profits flow from a hidden tax on the vulnerable - Philippine Canadian Inquirer
- Gambling Addiction and Problem Gambling: Learn How to Stop ... - December 12th, 2016 [December 12th, 2016]
- Remote Gambling Association (RGA) - December 16th, 2016 [December 16th, 2016]
- William Hill Casino Club - Up To 150 Casino Bonus - December 19th, 2016 [December 19th, 2016]
- Gambling - The New York Times - December 31st, 2016 [December 31st, 2016]
- Trusted Online Gambling Sites Since 1996 - Online.Gambling.org - January 7th, 2017 [January 7th, 2017]
- Casino Gambling Web | Best Online Gambling News and Casinos ... - January 11th, 2017 [January 11th, 2017]
- Gambling Addiction and Problem Gambling - helpguide.org - January 15th, 2017 [January 15th, 2017]
- Industry: Crackdown on illegal gambling in the Philippines now ... - GamingTodaySlotsToday - February 7th, 2017 [February 7th, 2017]
- Military should screen for gambling disorder, GAO says - Virginian-Pilot - February 7th, 2017 [February 7th, 2017]
- Gambling with people's autonomy | Liberties | Risk | spiked - Spiked - February 7th, 2017 [February 7th, 2017]
- Bill introduced to lower age for legal gambling in Nevada - Las Vegas Review-Journal - February 7th, 2017 [February 7th, 2017]
- FIFA YouTuber Pleads Guilty To Gambling Charges [UPDATE] - GameSpot - February 7th, 2017 [February 7th, 2017]
- Gambling Stock Roundup: Macau Sales Rise Again in January, Nevada Records a Drop in December - Yahoo Finance - February 7th, 2017 [February 7th, 2017]
- Super Bowl sets gambling record at Nevada sports books - Reuters - February 7th, 2017 [February 7th, 2017]
- Older gamblers face worse odds for addiction - Times Herald-Record - February 7th, 2017 [February 7th, 2017]
- How to Handle Gambling Wins and Losses This Tax Season - TheStreet.com - February 7th, 2017 [February 7th, 2017]
- GAO report recommends military members be screened for ... - wtkr.com - February 7th, 2017 [February 7th, 2017]
- The Newest Challenge in Gambling: Finding Growth - Motley Fool - February 7th, 2017 [February 7th, 2017]
- Raising a question about gambling prohibition - Dothan Eagle - February 8th, 2017 [February 8th, 2017]
- A Creepy Dude Is Your Inner Gambling Addict in These Horrifying PSAs From Tom Tagholm - Fishbowl NY (blog) - February 8th, 2017 [February 8th, 2017]
- Super Bowl Betting Tally Helps Make the Case for Legalized Sports Gambling - TheStreet.com - February 8th, 2017 [February 8th, 2017]
- MLB commissioner admits the league is rethinking its stance on gambling - FOXSports.com - February 8th, 2017 [February 8th, 2017]
- Why I love fake gambling and in-game casinos according to a psychologist - PC Gamer - February 8th, 2017 [February 8th, 2017]
- YouTubers fined for running illegal FIFA 17 gambling site - Ars Technica - February 8th, 2017 [February 8th, 2017]
- Deducting Gambling Losses on Your Taxes - TheStreet.com - February 9th, 2017 [February 9th, 2017]
- Gambling pot grows for Madison County - Utica Observer Dispatch - February 9th, 2017 [February 9th, 2017]
- How Vietnam Is Changing Its Gambling Rules To Win Foreign Investment - Forbes - February 9th, 2017 [February 9th, 2017]
- No truth to alleged link between missing Spencerport teen, illegal gambling - 13WHAM-TV - February 9th, 2017 [February 9th, 2017]
- The world's biggest gamblers - The Economist (blog) - February 9th, 2017 [February 9th, 2017]
- Idaho House Panel Introduces Bill Limiting Indian Gambling - Boise State Public Radio - February 9th, 2017 [February 9th, 2017]
- Pennsylvania Omnibus Gambling Bill Presented to House - Casino.Org News - February 10th, 2017 [February 10th, 2017]
- Gamblers caught in Hat Yai open-air casino bust | Bangkok Post: news - Bangkok Post - February 10th, 2017 [February 10th, 2017]
- Men Fined Over FIFA Gambling Operation - Card Player - CardPlayer.com - February 10th, 2017 [February 10th, 2017]
- Rob Manfred may change MLB's stance on gambling - SB Nation - February 10th, 2017 [February 10th, 2017]
- Do you have a mobile gambling/gaming problem? - KMTV - February 10th, 2017 [February 10th, 2017]
- OUR VIEW: Transparency needed in gambling operations - Pacific Daily News - February 11th, 2017 [February 11th, 2017]
- New York State transformation into the gambling big leagues nearly complete with opening of newest casino - The Daily Freeman - February 11th, 2017 [February 11th, 2017]
- Kenya: Gambling in Kenya Gets Out of Hand - AllAfrica.com - February 11th, 2017 [February 11th, 2017]
- Gambling Responsibly - New York Times - February 11th, 2017 [February 11th, 2017]
- Duterte targets illegal gambling in the Philippines - Yahoo News - February 12th, 2017 [February 12th, 2017]
- US Grabs Biggest Global Gambling Industry Win Share in 2016 - Casino News Daily - February 12th, 2017 [February 12th, 2017]
- UFC 208 odds, gambling guide - MMA Fighting - February 12th, 2017 [February 12th, 2017]
- Calendar urges gamblers to cut their losses l Dayton, Ohio - Dayton Daily News - February 12th, 2017 [February 12th, 2017]
- Gambling Manga "Akagi" Begins Countdown to Conclusion - Crunchyroll News - February 12th, 2017 [February 12th, 2017]
- Football's gambling problem: You better, you better, you bet - Football365.com - February 13th, 2017 [February 13th, 2017]
- States are gambling with law enforcement safety - The Hill (blog) - February 13th, 2017 [February 13th, 2017]
- AFL's gambling ads concern for Cats star - Wide World of Sports - February 13th, 2017 [February 13th, 2017]
- Celeb Gambling Ring Members Fear They've Been CAUGHT On Wiretaps Making Illegal Bets, Source Claims - Radar Online - February 13th, 2017 [February 13th, 2017]
- Highway Patrol: Raid of Warren bar uncovers illegal gambling - WKBN.com - February 13th, 2017 [February 13th, 2017]
- Scary graph shows how Australians are the biggest losers - NEWS.com.au - February 13th, 2017 [February 13th, 2017]
- Bato: War on illegal gambling won't be bloody - Philippine Star - February 13th, 2017 [February 13th, 2017]
- Last holdout Lakewood to vote on repealing video gambling ban - Northwest Herald - February 14th, 2017 [February 14th, 2017]
- AFL's gambling ads a concern for Geelong Cats star Harry Taylor - The Age - February 14th, 2017 [February 14th, 2017]
- Online Casinos Generate A Third Of UK Gambling Dollars - CardPlayer.com - February 14th, 2017 [February 14th, 2017]
- Darlington deputies bust gambling house in Hartsville | News ... - SCNow - February 14th, 2017 [February 14th, 2017]
- Kim Jong Un's gambling half-brother reportedly assassinated - CBS News - February 14th, 2017 [February 14th, 2017]
- BitcoinCasino.us Ensures Instant Payouts and Responsible Gambling - newsBTC - February 15th, 2017 [February 15th, 2017]
- Gambling operators are cashing in on teens' addiction to online games - The Canberra Times - February 15th, 2017 [February 15th, 2017]
- Americans Lost $116.9B Gambling In 2016: Report - CardPlayer.com - February 15th, 2017 [February 15th, 2017]
- Levine: Rick Hahn, White Sox Gambling On Right Trades At Right Time - CBS Local - February 15th, 2017 [February 15th, 2017]
- Wesfarmers considers pokies exit in bid to tackle problem gambling - ABC Online - February 15th, 2017 [February 15th, 2017]
- Massive felony gambling raid in Marietta | WAGA - FOX 5 Atlanta - February 15th, 2017 [February 15th, 2017]
- 'War on gambling' starts with small fry - Inquirer.net - February 16th, 2017 [February 16th, 2017]
- Edgeless Casino Introduces Revolutionary Transparent 0% House Edge Online Gambling - newsBTC - February 16th, 2017 [February 16th, 2017]
- FF12: When is gambling illegal in Kansas? - KWCH - February 16th, 2017 [February 16th, 2017]
- Osage woman accused of stealing, gambling mother's money - Waterloo Cedar Falls Courier - February 16th, 2017 [February 16th, 2017]
- 'Operation Parlay' Leads To Gambling Raid, Arrest - Patch.com - February 16th, 2017 [February 16th, 2017]
- Pete Rose defends legal gambling: 'Who am I hurting?' - Yahoo Sports - Yahoo Sports - February 16th, 2017 [February 16th, 2017]
- Cops bust alleged gambling ring being run out of Cobb storefronts - Atlanta Journal Constitution - February 16th, 2017 [February 16th, 2017]
- Dunlap: State Rep. Gets It Right With Sports Gambling - CBS Local - February 16th, 2017 [February 16th, 2017]
- Gambling Addiction Treatment Center, Rehab - Non Gambler - February 16th, 2017 [February 16th, 2017]
- Problem Gambling Online Resources - Drugfreeinfo.org - February 16th, 2017 [February 16th, 2017]
- Attleboro seeks gambling grant for new dispatch center - The Sun Chronicle - February 17th, 2017 [February 17th, 2017]
- House gambling bill teed up for next week - SaintPetersBlog (blog) - February 17th, 2017 [February 17th, 2017]
- Firms oppose Bill regulating gambling - Daily Nation - February 17th, 2017 [February 17th, 2017]
- Tim Simona faces NRL deregistration after alleged breaches of gambling rules - The Sydney Morning Herald - February 17th, 2017 [February 17th, 2017]
- Washington State Gambling Commission - February 17th, 2017 [February 17th, 2017]
- Online Casino USA Friendly Online Casinos for 2017 - February 17th, 2017 [February 17th, 2017]
- Records: 70 gambling machines seized, two arrested in Alamo raid ... - KGBT-TV - February 18th, 2017 [February 18th, 2017]
- Florida House Goes Conservative on Gambling Expansion with New ... - Casino News Daily - February 18th, 2017 [February 18th, 2017]