Municipalities, non-profits lose out on casino revenue due to COVID-19
Smaller communities around province will have a harder time absorbing losses
A lengthy closure of B.C.’S casinos and gaming centres would deprive local governments and community groups of millions of dollars in gaming revenue and grants.
However, despite the communities’ reliance on gambling revenue, provincial health officer Dr. Bonnie Henry has said casinos are last on her list when it comes to reopening the economy.
“I would have to be convinced that there’s a valid reason and a safe way to do it, and I think that’s something that is for further down the line,” Henry said. “It’s certainly not in the first phase of what I’m considering or what we’re considering in terms of how do we get things moving again in our economy and in our social structures.”
Casinos, community gaming centres and bingo halls closed across the province on March 16, following a directive from the provincial government. Most of the industry’s 10,000 workers were laid off.
In the 2018-19 fiscal year, the B.C. Lottery Corp. delivered $1.4 billion to the province, $982 million of which came from casinos and community gaming centres. Each year, about $249 million in gaming revenue is distributed to charities and local governments. Figures for this fiscal year are not yet available.
The corporation said in an email that playnow.com, the province’s regulated online gambling site, “is experiencing unprecedented growth,” but did not provide details. Local governments that host casinos and community gaming centres receive 10 per cent of the net casino gaming revenue from operations in their jurisdictions. Across B.C., municipalities received more than $98 million in gaming revenues in the 2018-19 fiscal year, and have collected more than $75 million in the first three quarters of this fiscal year.
In discussions with the Union of B.C. Municipalities, local governments in the province identified the loss of variable revenue, including gaming revenue, as a significant financial challenge resulting from COVID-19.
Richmond received more than $16 million last fiscal year — the largest amount of any municipal government — and $11.4 million in the first three-quarters of this fiscal year. Mayor Malcolm Brodie said it is too early to tell what kind of effect the closure of River Rock Casino will have on revenue, but the city won’t be in dire financial straits.
“The expression is that it’s easy for a government to get addicted to gambling, and that’s what will happen if you put that right into your operating budget. So, what we tend to do is we keep the gaming funds separately and we use them for one-time expenditures,” Brodie said. “By keeping it separate, our ambition is that if it’s reduced or cut out, then we can still operate with adjustments.”
Brodie said there are varying opinions about how quickly casinos should reopen.
“Hopefully, we get more active in the near future, so long as it can be safely done,” he said.
Likewise, the City of Burnaby, which received more than $12 million last fiscal year, uses its revenue for special projects, such as giving out grants to subsidize community programs, paying for festivals and special events, or painting rainbow crosswalks.
“They’re certainly all going to be affected — to what level, we don’t know at this time,” said Mayor Mike Hurley.
Smaller communities will have a harder time absorbing the losses.
New Westminster Mayor Jonathan Coté estimates the city, which receives about $6 million per year in casino revenue, is losing about $500,000 each month that the Starlight Casino is closed. The city uses the revenue to pay down debt on infrastructure projects.
“The loss of that income does create some challenges for a city like New Westminster that still has obligations to make those capital debt repayments. Casino revenue along with the loss of parks and recreation fees are the two top lost revenue fees so far because of COVID-19 in the City of New Westminster,” Coté said.
The City of Langley, population 27,000, expects to see its gaming revenues, which come from Cascades Casino, cut in half from the $7.5 million it received last fiscal year. It has already handed out community grants for this year and has budgeted the gaming money it should still receive for use on capital projects. A new community plan has been put on the back burner.
Mayor Val van den Broek said the city will likely feel the effects of the missing cash over the next couple of years, and may have to look at its capital plan when the time comes.
Non-profits and groups that receive money from municipalities aren’t the only community organizations that will take a hit. Local, regional and provincial non-profit organizations and school and district parent associations can apply for community gaming grants and capital project grants each year. In the 2018-19 fiscal year, about $140 million was granted to these organizations. They also earned almost $27 million from games and events, such as bingo and raffles.
In an emailed statement, the B.C. Gaming Industry Association said it is working with the B.C. Lottery Corp. on developing a plan for reopening, which will then be submitted to the provincial health officer. The focus will be on worker and customer safety.
The lottery corporation said in a statement that reopening plans will prioritize enhanced sanitation and physical-distancing measures “to reduce player density.”
Henry said the enclosed environments of casinos and gaming centres, and the older clientele who would be most vulnerable if infected with COVID-19, are the top reasons why the facilities are not a priority for reopening.
There are also myriad hightouch surfaces and items in casinos, from slot machine screens to playing cards and gambling chips.
The association hopes that restaurants and other amenities at casinos and gaming centres will be allowed to reopen at the same time as the restaurant industry, so some employees can return to work.