Gary Mason Last updated on Monday, Aug. 24, 2009 GLOBE and Mail:
In government, one never says never. Which is why politicians should always be careful about proclaiming war on potential revenue streams. A couple of years ago, the minister in charge of policing in B.C. said he was out to eradicate online gambling. But then one day, Rich Coleman switched portfolios and was suddenly overseeing gaming, a huge government revenue producer. So when Mr. Coleman announced last week that the B.C. Lottery Corp. was increasing the limit for betting on its PlayNow website to $9,999 a week per person – up from $120 – it provoked great yelps of protest, both from the anti-gambling crowd and from those whose job it is to berate elected officials who talk out of both sides of their mouths.
Personally, I can't get too worked up about what the lottery corporation is doing. Victoria needs money desperately. The lottery injects more than $1-billion a year into the provincial treasury. The government likes to say that most of that money goes into health care and education, because it sounds better. The truth is, it goes into general revenue and so you can say it pays for anything you like.But a billion bucks is a billion bucks. Would we prefer the government to shut down lotteries and increase our taxes to make up for the billion-dollar shortfall? That might make some feel better, but it wouldn't stop people from buying lottery tickets. They'd just buy them somewhere else and another government would get the revenue instead.
British Columbians spend an estimated $87-million a year on online gambling sites – mostly poker – outside the province. By increasing the betting limits and introducing a poker product of its own, the B.C. government is trying to get a piece of the action. What does the B.C. Lottery Corp. have to offer to compete with these no-limit online poker games? Security for one thing. You can count on a) getting your winnings and b) assurance that any credit card information you give out isn't going to be misused. That won't be enough to deter many from continuing to gamble at popular sites such as Full Tilt Poker or Absolute Poker, but some will try the B.C. Lottery game out once it's operational next spring. (For now, it is offering a lottery game with a poker theme, outcome predetermined).
Now, the reason that lotteries set the limit at $9,999 instead of $10,000 is another matter altogether. And if anything should be raising eyebrows, it is this. You see, any bets over $10,000 have to be reported to Fintrac, the Financial Transactions and Reports Analysis Centre of Canada. It investigates money-laundering, and online poker is a popular way to launder proceeds of crime. Michael Graydon, president of the lottery corporation, told me he set the limit at $9,999 because the corporation didn't want to have to file reports to Fintrac. He also said that at limits below $10,000, there are “almost non-existent levels of money laundering.” A more cynical person might suggest that a limit of $10,000 would also scare away potential customers, especially those of the shadier variety. At $9,999, those people have much less to be worried about.
Gambling is like booze. Governments tried to prohibit it, and when that didn't work, they decided to make money by regulating the industry. That's what's going on with gambling now.The fact is, billions are being generated through gambling. A recent report by Merrill Lynch predicts online gambling will bring in $528-billion worldwide by 2015. Governments everywhere are struggling with the temptation that pool of money presents. A few years ago, the U.S. government outlawed Internet gambling by making it illegal for banks or credit card companies to process payments to online gambling operations. Mostly, what the government was doing was blocking online competitors from poaching gamblers from state-run lotteries. But now the United States is rethinking its position.
You see, Washington is cash-strapped too. And it's estimated that taxes raised from licensed online gambling operations could generate an additional $50-billion annually for the U.S. Treasury. The gross profit from online betting in Europe is thought to be about $5-billion a year. That's why Sweden, Austria and Italy – where, coincidentally, a winning ticket in the state lottery this past weekend earned a lucky player a staggering 146.9 million euros – decided to get in the game. In fact, B.C.'s jump into online poker is modelled on what those three countries have done. Gambling is here to stay. So governments might as well play a role in regulating it as much as possible and raking in much-needed revenue from it at the same time.
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