Government should allow First Nations to freely compete in gaming industry

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Appeared in the Globe and Mail, September 29, 2020
Government should allow First Nations to freely compete in gaming industry

In 1985, at a time when Canada was working to reduce regulations in sectors such as telecommunications and air-passenger travel, Parliament amended the Criminal Code to give the provinces jurisdiction over gambling. The provinces proceeded to use their new jurisdiction to create cartels for their own profit, in which they either owned licensed casinos or took a large share of the earnings. When First Nations communities lost their court challenges against the provinces in court, they were forced to fit into the cartel system—and as a result, they had to take whatever was left over.

Only Alberta has meaningfully allowed Indigenous communities into lucrative metropolitan markets, with one casino each in Edmonton and Calgary. With a few exceptions—recently licensed First Nation casinos near Saskatoon and Winnipeg, the situating of Casino Rama in a popular resort location in Ontario, and Membertou video lottery terminal parlours in Sydney, Nova Scotia– First Nation casinos have been placed far from the main action, limiting their bottom lines.

This matters, because First Nations casinos can bring enormous benefit to their communities. For the few casinos located in or near cities and destination resorts, a new casino is often an inflection point in their Community Well-Being index scores (CWB is an aggregate of income, employment, education and housing data collected by Statistics Canada). After opening a casino, scores rose more rapidly than their previous rate of progress; the significant profits that can be earned can be used to provide better housing and other social services for members and also be leveraged for business and real-estate development, as is now happening in Edmonton and Calgary.

However, while casinos with rural locations are generally profitable and honestly run, and while they can generate useful amounts of cash and jobs for the host First Nations, hosting a rural casino generally has no demonstrable effect on the well-being of the hosts. The CWB scores of less favourably located First Nation casinos have not risen more rapidly than for First Nations generally, because the revenues from remote locations are not large enough to be transformative.

British Columbia and Manitoba plan to follow Ontario in giving First Nations a larger percentage of all gambling revenue in the province. Other analysts suggest allowing First Nations to keep a greater share of what they generate in their casinos. While these proposals have merit, an even better policy would be to relax cartel restrictions so that First Nations can get into more profitable big-city markets and earn more for themselves.

Doing so might mean that some First Nations would operate casinos in multiple locations off their present Indian reserves, but in cases where that becomes an issue, such communities can buy urban land and incorporate it into their reserves, in a model that’s well-established and could easily be applied more widely.

The federal government can advance the issue of such economic reconciliation by threatening to take back jurisdiction over gambling from the provinces; after all, what Parliament gave, Parliament can take back. Ottawa could also leave general jurisdiction with the provinces but assume regulatory power over First Nation casinos; this is the case for the gambling ventures of Indian tribes in the United States, and they are far more numerous and generate far more revenue for their hosts than in Canada.

But the best possible policy would be to abolish provincial cartels. Because of the large amount of money that’s involved, gambling requires strict government regulation to keep out organized crime, money-laundering and profit-skimming, but beyond that, gambling could well operate in a free market, much as other entertainment industries do. First Nations have shown their ability to compete, and they should be permitted to do so in such a market.

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