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Casinos Run By Government May 11, 2003 Mayor Daley doesn't just want a casino in Chicago. He wants a piece of the action. The way to get it, he says, is to look north of the border. And he doesn't mean Wisconsin. Since floating the idea of a city gambling palace last year, the mayor has been touting Ontario, Canada, as a model for the way the state could own casinos and make more money from them. Now, Gov. Blagojevich is talking about Ontario, too, much to the gambling industry's chagrin. A comparison of 2002 financial figures for Illinois and Ontario casinos shows that Daley is right about the province keeping a bigger take from its casinos than Illinois does. In U.S. dollars, Ontario's three major casinos turned a profit of more than $541 million for the government last year--about 50 percent of their $1.08 billion in total revenues. Illinois' nine casinos generated more money in taxes for state and local coffers--$666 million--but that's only about 37 percent of the $1.8 billion they took in. Ontario's casino cash, however, comes with some prickly political strings. That's because the government is in the strange position of regulating, managing and promoting gambling. What's more, there's a concern that government has become too addicted to casino cash, spawning an expansion of gambling that is happening too quickly for its social costs to be assessed. Beyond that, U.S. casino analysts question whether the Canadian model could be legally retrofitted into Illinois, where licenses have been granted and companies have sunk billions of dollars into riverboats and floating barges. "Governments are pigs when it comes to gambling," University of Nevada at Las Vegas gambling expert Bill Thompson said after Blagojevich first discussed state casino ownership. "They aren't thinking of whether it's a good arrangement. They're only thinking they're going to get more money for their state budget." Despite those criticisms, Ontario's casino model could make its trial run here if state lawmakers grant Chicago its first casino. Daley even has a company familiar with managing Canadian casinos in his own backyard. Firms owned by Chicago's wealthy Pritzker family and city real estate mogul Neil Bluhm are among the partners in Falls Management Co., which manages Casino Niagara in Niagara Falls, Ontario. Bluhm also is a partner in Walton Street Capital, which has plans to redevelop Chicago's old main post office into a hotel and office building. But the cavernous building also is considered a top casino site, so Bluhm's interest in it could prove valuable to Daley. Meanwhile, Bluhm also has a deal with Des Plaines officials to help lure the state's long-stagnant 10th casino license to the suburb. Casino Niagara is one of Ontario's three so-called commercial casinos, each of which is more than double the size of Illinois' casinos, which are capped at 1,200 "gaming positions" apiece. Falls Management also is building a second casino for $800 million in Niagara Falls and will be reimbursed by the Ontario Lottery and Gaming Corporation after it opens in 2004. Rather than build the casino itself, the province contracted Falls Management to do the job so that taxpayers would not be held liable for potential cost overruns. Niagara Falls Mayor Wayne Thomson, who has served in that post for 17 years, said he couldn't be happier with the casino's impact on his city of 80,000. Crime, he said, hasn't increased because money from the casino has allowed the city to hire 25 more police officers. And the government's gambling regulatory body, he said, is all the more stringent about the hiring of casino employees because it knows that's a hot-button issue for critics. "The model that's been created up here has been really unique," said Thomson, adding that his city's decision to let voters decide if they wanted a casino led to a provincial law that requires such votes before other gambling venues can open. "It's extremely successful." Still--despite the millions that Ontario's commercial casinos contribute to health care and other governmental needs--Thomson takes issue with the way gambling has grown in the province. After Casino Windsor opened across from Detroit in 1994 and the other two large casinos opened, five smaller so-called charity casinos were built, and 8,675 slot machines were installed at horse tracks. The charity casinos are smaller and have lower betting limits than the commercial casinos, with some of their proceeds going into a charity fund for the province. Opponents of Ontario's casino system worry the province could be doing too much to advocate gambling rather than consider its social costs. The province spent nearly $95 million on casino promotion last year. "It's not that we're trying to get rid of gambling. It's a question of responsible policy," said Nancy Langille, of the group Gambling Watch Network Ontario. "At least with a private-operator model, you could have more public pressure to force legislation and [gambling] impact studies. "We realize we don't have the power to stop gambling, but we have the power as consumers and as parents to insist on product-safety guidelines and informed-consent risks." Anne Rappe, a spokeswoman for the Ontario Lottery and Gaming Corp., said the province is constantly reviewing gambling's effect on citizens, spending $26 million on such programs last year. A strong indicator of how Canadians feel about gambling came in a 2001 study by the nonpartisan Canada West Foundation, which concluded that 65 percent of Canadians prefer raising money through gambling to increased taxes. "We're looking at a public here that is demanding a high level of service but no increase in taxation," said Jason Azmier, the foundation's point man on gambling. At the same time, "I think Joe Citizen is uneducated about the full costs of gambling" because information for a thorough analysis is still "five or six years away." While the prospect of converting all Illinois casino licenses to the
state appears dim because of the existing system, Niagara Falls' mayor
said he wouldn't rule it out for a new casino in Chicago. "There's
no question it could be done," Thomson said, "and probably be
beneficial."
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