When the chips are down

At certain times, when the moon and the winds are exhibiting rare and inscrutable behaviours, there are interesting items in newspapers that are not the National Post. The Toronto Star had one on Friday, written by reporter David Bruser. Bruser noticed a few months ago that Ontario resort casinos have a program whereby they advance short- term, zerointerest credit to gamblers. I know what you’re thinking here. What you’re thinking is: “Wait, really?”

I have the impression that Mr. Bruser probably had this reaction too, and when you’re a reporter you spring into action when somebody describes the worst idea in the universe. Bruser asked the Ontario Lottery and Gaming Corp. if it had ever lost any money when customers defaulted on house credit. OLG, being a Crown corporation that is accountable to the public, immediately provided the reporter with all the detailed information he wanted.

Hahaha, kidding. They told him: “You’ll have to file a Freedom of Information request.” After batting around the FOI form for a while, they admitted to Bruser that their unrecoverable losses on house credit total $ 10.4 million in 605 accounts since 2010. These losses are divided amongst the credit departments of four casinos, but OLG would not say how. After all, the casino operators they license have reputations to protect.

You might be thinking, as I would if I were an Ontarian, that OLG also has money to protect. And you might be wondering if it is doing such a nifty job. Giving away $ 10 million worth of casino chips is not a good look for a public trust. It is, at the least, a very obvious pathway to corruption.

Agents for a private, forprofit casino in Vegas or Atlantic City might “comp” a well-known customer, a bigspending “whale” type, to keep him at the table, hoping that the house will get back what it risks and then some. But they would do it knowing that any losses came out of their own bottom line — not out of the state’s budget for hospitals and roads. Private casinos can act pretty fast to fire employees who lose them money.

Ten million dollars is a drop in the bucket next to the OLG’s overall revenues, as the corporation swiftly pointed out to Bruser once they were obligated to start talking about the losses. And maybe the practice of advancing house credit does lead to higher net earnings overall, even when the defaults are taken into account. If so, it should be a simple matter for OLG to demonstrate this, and that should be required. Remember, this is the same agency that let its retail partners rip off lottery customers for years by cashing in discarded winning tickets. You may remember how truculently OLG behaved when reporters and statisticians found evidence that this was happening, and how it had to be shamed into adding new protections for lotto winners.

And I am afraid I could not help flashing back a little when I read some of the spin OLG offered to the Star — which, being the Star, treats Bruser’s scoop more as a story about the possible exploitation of problem gamblers than a story about possibly misallocated or siphoned funds. Why should OLG casinos offer house credit at all? Vice-president John MacFarlane explains: “We don’t want people coming in with pockets full of money, from a customer safety and security (standpoint).”

In a largely cashless world, this is a baffling statement. OLG supposedly does not extend house credit anyway until customers prove they have funds in an account somewhere to cover the loan when 30 days are up. What the corporation is discovering, to its apparent surprise, is that sometimes the collateral account is empty 30 days later. Why not just create accounts for high-rolling gamblers at the casino and have them deposit funds electronically before playing? Used-car lots don’t hand out interest-free credit to prevent buyers from wandering onto the lot with “pockets full of money.” Not that this is something you would ever expect to hear a car salesman complaining about.

OLG also emphasizes that casino chips are not money, slyly implying that nothing is really lost when a customer defaults on an advance of house credit. “They’re just using our chips,” says MacFarlane. “They have no value outside the casino property ... We’re not out any cash.” One is tempted to track down MacFarlane and demand a free handful of these tokens that aren’t cash, and that have no value at all outside a casino, unless you have legs or a wheelchair that you might use to betake yourself to one.

This is a frankly fantastic account of casino tokens, coming from a casino executive. Presumably there might have been patrons who received house credit and came out ahead after a day at the tables: weren’t they able to convert their tokens to money? Isn’t that the whole premise of a casino? Do the cashiers at Ontario casinos tell winning bettors, “Sorry, those chips have no value outside these magical precincts?” If so, well, goodness; it is a wonder that anybody goes.

USED- CAR LOTS DON’T HAND OUT INTERESTFREE CREDIT. — COLBY COSH (TOKENS) HAVE NO VALUE OUTSIDE THE CASINO PROPERTY.