Canada Gambles on Slot-Machine Income

TWO years ago, there wasn't a single chapter of Gamblers Anonymous in Nova Scotia. Now this tiny province with a population of 900,000 has a dozen chapters helping people get ``unhooked'' from gambling.

The sudden popularity here of the gambling addiction treatment program modeled after Alcoholics Anonymous is no mystery to Ken Hannah.

``Gambling is in a very upswing cycle in Canada,'' says the executive director of the Halifax-based Foundation for Compulsive Gambling, a former ``problem gambler'' himself. ``It's happening because governments aren't prepared to do without the money.''

Canada's 10 provinces have long had lotteries, and the western provinces have legalized many types of gaming. But provincial governments are now knocking down barriers to more addictive forms of gambling such as video slot machines and are legalizing casinos near big cities.

Nova Scotia, for instance, has been hit hard by a long recession from which it is only now emerging. Unemployment remains high at 14 percent (11.3 percent nationally). Nova Scotia's government is being pressed to stimulate the economy, create jobs, and cut its large budget deficit - all without raising taxes.

Bingo, racing, and the lottery were the only legal forms of gambling in Nova Scotia 2-1/2 years ago. But in May 1991, the province legalized video slot machines (also called video lottery terminals or VLTs), placing thousands of them in corner stores, bowling alleys, restaurants, and other areas frequented by the general public in order to raise revenue.

Millions began pouring into government coffers. Machines removed

But then something unusual happened. Outraged over widely publicized reports of broken marriages and wrecked lives, Nova Scotians forced the government to remove 2,400 machines from corner stores, leaving 1,100 in bars. Removing the machines would mean a C$40 million (US$30.4 million) annual loss, the government estimated.

Before all the machines could be removed, however, a man who found his former wife gambling away his alimony check at a corner store made headlines in February by taking a sledgehammer to a video slot machine.

Despite such displays and polls showing that Nova Scotians overwhelmingly reject both casino gambling and VLTs, Nova Scotia's new Liberal government, elected last spring, is expected to decide soon whether to put the machines back in corner stores and whether to permit casinos.

The government is conducting public hearings on the VLT issue. Corner-store owners, who had enjoyed huge profits from the machines, are pressing to have them reinstated. Opposition politicians say the government is looking for a politically safe way to ease the machines back into stores. The government says it is following due process.

``We're looking to the consultative process with regard to all forms of gambling,'' Minister of Finance Bernard Boudreau says. ``The VLTs are part of the same process. But I don't think it's realistic to expect any decision that will see their complete removal.''

Nova Scotia isn't the only province where VLTs have taken root. Video slot machines have been legalized in New Brunswick, and British Columbia, Saskatchewan, Manitoba, and Alberta are weighing whether to legalize them.

Overshadowing the VLT debate has been a recent move by Canada's most populous provinces to embrace casino gambling. In 1990, Manitoba became the first and is still the only provincial government to own a casino, which is in Winnipeg. Smaller-scale charity operations have thrived in Canada's western provinces, while casinos have been largely inaccessible to the large urban populations in eastern Canada. That is about to change.

Next month the doors to a new casino in Montreal will swing open, followed in January by another in Windsor, Ont., across the river from Detroit. Both casinos will be owned by their respective provincial governments. Ontario is considering a recent Coopers & Lybrand study showing that if the province built seven casinos, including one in Toronto, it would bring the province C$4.2 billion ($3.2 billion) annually and create 97,000 jobs.

The Montreal and Windsor casinos represent ``a whole new level'' for Canadian gambling, says William Eadington, director of the Institute for the Study of Gambling and Commercial Gaming at the University of Nevada at Reno.

Casinos have historically been kept away from urban areas for fear of problems ranging from gambling addiction to prostitution to organized crime, Mr. Eadington says. Public attitude changes

The shift toward urban casinos reflects a long-building change in public attitudes toward viewing gambling as a legitimate leisure activity instead of immoral behavior. Lotteries have helped foster the view that gambling is innocuous, experts say.

Despite that prevailing view, the impact of casinos on big cities in Canada and the United States is unknown.

``What gambling adds to the picture of a big city is more financial stress on people who indulge,'' Eadington says. ``And what emanates from that is hard to predict. We've never really had urban casinos before, and now we're going to have a lot of them.''

Nova Scotia is facing no fewer than 13 casino proposals, though just two are well-defined. One widely touted casino proposal by Minnesota-based Grand Casinos Resorts Inc. would build a C$102-million ($77.5-million) resort its proponents say would bring the province C$13.6 million ($10.3 million) in tax revenue annually. Though not widely advertised, however, the plan also envisions some 1,300 VLT terminals in the casino, according to Owen Carrigan, former president of St. Mary's University in Halifax, who reviewed the plan.

That news sends a tremor through Jim, a ``problem gambler'' who asked that his real name not be used. His fear for himself and for society centers on VLTs, which he says seem innocuous to begin with, but actually have sharp teeth.

As a Halifax-area high school teacher, Jim says he used to bet on sports and other forms of gambling without a problem, but became instantly hooked on the VLT machines. Squandering his life savings, mortgaging his house, and borrowing against his car, Jim says he spent approximately C$100,000 ($76,000) in two years of nonstop gambling on the government's VLT machines.

Now a member of Gamblers Anonymous, Jim blames himself for the breakup of his marriage shortly after becoming addicted to a popular VLT game called ``the swinging bells.'' Still, the government should not be promoting the highly addictive machines, he says.

``The very nature of the activity itself is innocuous,'' Jim says, shifting uncomfortably in a hotel lounge chair. ``The gratification is very quick, and that in itself is one of the problems. I think it is morally bankrupt for governments to put these things in and not educate people about them.'' Government cash grab

Derrick Kimball, a lawyer and former chairman of the Nova Scotia legislature's Standing Committee on Community Services, investigated government involvement with VLT machines. The C$43 million ($32.6 million) government income from VLTs last year was ``a cash grab by government ... motivated by a desperate need for revenues,'' said the committee's April report. It also said that C$25 million ($19 million) in public funds went to buy thousands of machines.

``This is something the people should have been consulted on,'' Mr. Kimball says. ``This isn't a decision to buy paper clips. This is an activity we know damages people.''

To try to balance the damage done by Kimball's scathing report, the Nova Scotia Lottery Commission recommended in June that VLTs not be reintroduced to corner stores, but stay in bars - even though 64 percent of Nova Scotians polled in the study opposed the machines. The report recommended a ``pilot project'' involving two casinos, although those polled were 58 percent opposed to casinos.

The new government, however, is not bound by either recommendation.

``There is so much money to be made that gambling seems to answer a lot of the questions government is trying to answer right now about jobs and the economy,'' says the Rev. John Boyd of the First Baptist Church in Halifax. ``But I think they are vastly downplaying the social costs.''