Am sharpening my pencil and will review this in more detail. But a couple of issues do emerge early:

1) Why not disclose the study methodology? This seems an odd thing to excise;

2) The total estimated incremental gaming win from the Edgewater redevelopment (pp.36) is $64.5 m annually;

3) New destination tourism, with the exception of overnight tourism (presumably in conjunction with sporting events) is discounted as a major revenue factor.

The implications of #2 arise in the provincial context, and confirm one of the major risks associated with the capital intensive business model pursued by BC Lottery Corporation (more on that in a later post).

Total incremental annual revenue of $64.5 million translates to approximately $36.44 in net revenues to BC Lottery Corporation associated with this project (calculated at 56.5% of total revenue per BCLC financial stmts).

But that is not the whole story, because BCLC remits roughly 10% of its net revenue back to Paragon Gaming for capital development–and this is not calculated on an incremental basis, but per operation. Consequently, the Deloitte Report outlines that the parties capital payments from BCLC to Paragon of $16.9 million annually (pp4 of the report), to assist with the cost of construction of the casino and ancillary structures. This is a built in annual fee structure called the Facility Development Commission (FDC).

Once the FDC is factored in, the net incremental return to BCLC from the development of Edgewater is $19.5 million.

So not only will the lease payments of $6m per year not pay for the $563 m roof, the incremental casino revenue will not pay for it either.

It seems to have been at Paragon’s insistence that we committed to a retractable roof over the more modestly priced alternative. Yet according to these figures, I don’t see how we can ever recoup that expense.

From the provincial point of view, this resembles the Olympic Village more and more with each emerging detail.

I’m surprised to see what I think is the key point of the article buried at the very bottom: that is, that having large local casinos increases gambling rates of nearby residents. This report backs up casino opponants and the health region, who have both said that this casino will likely increase problem gambling, or lead to those with gambling problems spending more of their money at casinos. This is definately worrisome.

Yes, it might keep more gamblers in Vancouer, but how much of a drain on other local services and other taxpayers will that cause? Certainly much of that money will be taken out of circulation from local, independently owned businesses and instead funneled through this American corporation, with much of the revenue leaving the province. What about increased demand in services related to problem gambling?

@Tessa

DT and the surrounding area skews younger, IMO they probably will incorporate gambling more with the proposed casino. West Vancouver skews older, so perhaps that’s another reason why they would shun gambling.

http://geodepot.statcan.ca/Diss/Maps/ThematicMaps/age_sex/CMA/Vancouver_medage_ec_f3.pdf

interesting to see that most of south of fraser spends less on gambling than other areas.

Great analysis, Garossino. The net incremental return to BC Lottery Corporation is $20 million per year. About the city tax revenue flowing from 20,000 units, or some 45,000 population. Yet, I’m not seeing something here. Help me out. Bridgeport… and Edgewater. Two casinos linked by the Canada Line. One on the YVR flight path, the other on our riviera… False Creek.

Gamers don’t care about location. Go to Las Vegas. It’s an “in door place”. The public spaces in Las Vegas are horrible. The strip is a driving strip. Walking from one casino to another makes as much sense as walking from on regional shopping centre to another if they were all strung along the same dull highway like lemons in a used car lot. It takes more than 5 minutes to walk through a casino. It’s as if each were a medieval hill town. Except the casinos are dull and unimaginative inside. Even the one that is decked out like Venice, and as a result is easier to navigate (yes, you can take a gondola), is still just a shopping and gaming warehouse when all is said and done.

A similar fate has befallen Niagara Falls. Apparently four families control the land development. You can’t recognize the place. Tall hotels. Big casinos. Outside the street is a former ghost of itself. There is no character, no street life. Everybody is inside gaming. No visible signs of people enjoying themselves.

No culture. No interaction. No soul. You can’t make cities out of that. No community life. The only time the gaming industry loses is when they let you out. Their entire revenue focus is on keeping us in, spending.

The Edgewater in the Expo ’86 B.C. Pavilion along False Creek is in a world class location… Gamers really couldn’t care less. I walked around there the other day. The pedestrian footpath arrives at a parking lot scene. The “Plaza of Nations” now resembles the loading dock side of a Safeway. Lots of black top, nothing going on. The outdoor stage is a left over prop. This place is all leftovers. Party’s over. Nobody’s done the dishes for 25 years. Even the arse side of the Stadium is going to be a bit of a dog with a roof that is scaled to be seen from about as far away in space as the Great Wall of China. What’s the gaming industry going to add here? Nothing.

Where is the best place to put the black jack, the one-arm-bandits, the shopping that no body wants, and those one of a kind stage shows? No brainer.

A short and classy Canada Line ride from the city, not False Creek. Let casino guests use the train and generate revenue for our public transit off peak when there is capacity to spare. A return for our investment. Government can still get the gaming revenues. Edge of the water can be a community centre with a really good gallery space. Outdoor stage next door for local talent.

At 180 units and 400 residents per tower, it will take over 100 towers to match the casino revenue. Metro 2040 calls for 140,000 new residents in Vancouver, or 65,000 units. The question we must really ask is where do we want to “spend” our new city expansion potential? On the NE corner of False Creek? Put all new growth in condos?

Or are there other places that might benefit from the new jobs, tax revenue, and the regenerative forces that only residential growth unleashes? Can we build neighbourhoods and grow local culture? You know, the stuff casinos don’t give a hootenanny about?

@ Gentle Bossa Nova,

I would agree with you concerns entirely. We have to demand a high level of urban fit for this proposed casino.

IMO the existing edgewater site looks bad because the landlord is already thinking of redeveloping the site and edgewater’s lease is due for expiry in the next year or two.

Max and Mezza,

Gee, you guys treat the gambling industry with the reverence and respect usually associated with law abiding enterprises. 🙂

Clearly, expanded gambling comes with expanded problems–more so than with any other enterprise.

And yet, you only seem to measure success of an enterprise by the somewhat suspect numbers provided by Paragon. I put it to you that we actually do have ethical imperatives that factor into our decisions to permit other businesses–would we put a nuclear reactor in that spot, for instance? What is it about the expanded casino and it’s proven, inherent problems, that makes you want to turn your heads away and give it a “pass”?

The issue is very simple:

What kind of Vancouver do we want?

The kind of rinky-dink city, that desperately casts about for any extra dough (actually just another $10 million, once you strip away what is already coming to the city, plus property taxes) that it can find, made on the backs of 15% of the population that are problem or at risk gamblers? A place that, as you already note, will likely add more youth to that not-so-great statistic. Hey kids, forget university. You’re gonna become the next great Poker Star!

And, please Max, don’t give us the libertarian line about how each individual is master of his or her domain when it comes to gambling problems. You can shrug your shoulders about the fact that up 35% of casino revenues comes from that cohort? How is it that you, of all people, could possibly think that inviting and creating MORE addiction in a city that is already lousy with that problem, is a good thing?

(BTW, you also neglect to take into account the 8 or 9 other people directly and indirectly affiliated with a person who has a gambling problem. They didn’t ask for that problem, yet they will be the ones who suffer it. This isn’t just a sob story. We are taking about deep-rooted financial problems that touch not only families but creditors, social services, policing, etc. There is a rather big financial downside to the supposed easy money story).

And yet you would say that it’s OK for our governments to be involved in this business that is statistically guaranteed to create more problems? You must be in the risk management department at BCLC…

Back to government culpability in all this: they say, astonishingly, that this enterprise, as part of an “entertainment complex”, is a NECCESITY for the “health” of the provincial and local economies ?

Do you not smell the irony in that last sentence?

Politicians mouth far too many platitudes about city building and job creation, then promptly default to the “easiest” money making enterprise they can think of—one that is fraught with problems for individuals, surrounding residential communities and other local businesses —and then expect our tax dollars to subsidze the same enterprise, and all the associated problems that is created from same!

I won’t bring up the fact that casinos are self-contained money laundering, human trafficking (golly, great to have those hotels right there. Very handy to have your daughters become part of the entertainment trade–at least you know where they are, right?), loan sharking, gang bangin’ meeting places, that don’t exactly encourage their patrons to partake in other nearby locally owned, privately financed businesses outside the “fun zone”. Oops. Looks like I just did.

Such a deal! Such vision! Such city building! Not.

This is the best that we can hope for, for Vancouver?

I suggest that instead of building a casino three times the size of the present one—one which is clearly designed only for the local Metro market, and in fact just continues the cycle of cannabalization between venues, that our governments actually invest in supporting an economic base that provides more value all round, including real growth in jobs and the tax base.

They could start by looking here here, in an article from today’s Globe + Mail: http://tinyurl.com/4p3l5ld

PavCo has finally admitted that they don’t need the expanded casino to pay off the stadium renos. Nor will lack of slots deter them from forging ahead and building the rest of their proposed development.

Let them rework the plan.

Vancouver doesn’t need an expanded casino. It’s needs an expanded vision of what is possible and what will actually benefit all its citizens.

Hastings Race Track recently announced its revenue is down 19%… over saturation of gaming?

Uhm… Creek’er & Mezzanine… my suggestion for a community center, art gallery and outdoor stage for local talent on this site really amounts to closing the Edge water. To go to Mezzanine’s point: I don’t see an urban fit, or a community fit for that matter.

The Horseman has my vote. I’d argue that keeping it in one site contains the problem. If it doesn’t, we can look at the next step.

Creek’er,

Absolutely correct—we already have enough gambling. So keep it at the level we have and do a far better job of regulating it than is previously seen.

Since you’ve pointed it out, both smoking and drinkinb are heavily regulated. There are either severe taxes (smoking, drinking) or severe penalties (drinking) to be paid back to society in order to cover some of the associated costs that these activities produce.

You have no such regulators on gambling. Those anti-societal things associated with gambling are vastly underfunded. It’s a complete joke.

But more than that, I say that expanded gambling is not going to be either sustainable over the long term to the locals it intends to depend on for its revenues, or as a way to help build the tax base, in general.

@ Bill,

from your #15, I found this interesting….

“we will be financially, as well as socially and culturally better off with the Casino at the size it now is.”

and not closed entirely?

And to add to my #19

We could only hope that this type of public outcry would take place surrounding the ongoing and growing addiction issues in the DTES. Those caused by the illegal drug trade, gangs, etc.

But then again, it is not in the False Creek area – so the NIMBYism is not there. Out of sight, out of mind.

And the costs associated with the illegal drug trade in the DTES far outpace those of legalized gambling. ($1 million a day and counting)

Not to even mention the costs to the human factor.

But hey, it is a 50 year old problem in the DTES so I guess it is just easier to accept and ignore it.

@ Mez 18, 4th Horse’s: “But slow and steady does win some races..;-)” applies here.

The issue at hand is whether to expand the Edgewater in the City of Vancouver. If we could step back and change the gambling infrastructure in B.C. I would be running for Provincial office. I am not, I comment accordingly.

If one were to contemplate doing so, some of Max’s perspectives need to be considered in the mix. And, given some human-kinds propensity to damn their own souls, is there any other provincially regulated gambling model which could have fewer negative consequences and a financial and social net benefit?

Then there is the matter of historical degeneration. Wasn’t the Province’s leap into the gambling abyss justified by all the good controlling the bad would do? This dubious justification in the 1st place has taken +/-15 years to become the BCLC’c predatory model.

This is a very complex issue at several levels, both for governments, as well as all of us as individual citizens. Given their past history, will either Provincial party really initiate the public discussion needed for us to reach a consensus? I continue to live in hope.

Money laundering at casinos is not adequately quantified. But it’s estimated by FINTRAC to process 20% of the total: http://www.fintrac.gc.ca/publications/typologies/2009-11-01-eng.asp.

Casinos are extremely convenient venues for money laundering by organized crime because of the scale of cash they deal in. No other institution handles hundreds of thousands of dollars in cash on a casual basis.

Small restaurants and banks don’t readily manage large scale cash transactions with the public on an hourly basis, but casinos do it 24 hours a day.

Thanks, Sandy,

That is true. I have talked with RCMP who are advising business on money laundering. Casinos are hands down, absolutely the worst of the worst. Too much cash is a bad thing.

JJJ. Read my posts. Absolutely inadequate self policing and a lax regulatory environment doesn’t make it right. I don’t think that the casinos are that eager to call the cops, at any rate.

Money launderers might not be beating up folks in the parking lot, but you might want to ask about the loan sharks…

Don’t know the exact crime stats for petty theft or break-ins but that I would suggest that is the beauty of the current Edgewater location. It is in its own zone., like the River Rock.

@ S. Garrosino #24

Vancouver didn’t even rank in the top 10 of most liveable places to live in Canada.

Victoria rated #2 under Ottawa, which was in the #1 place.

If anyone commenting here thinks that ‘they’ are going to bubble wrap others from gambling, they are highly naive.

I think the issue surrounding this project is more to do with the size and less with the gambling.

But the gambling is an easy crutch – like I said, the low hanging fruit.

Max, on 1 feb this year the City Manager reported to Council about the DTES. The part that got a lot of attention in this blog had to do with the origin of the DTES residents. All of them were graduates from either provincial or federal programs. 10% were said to be out of province. Corrections, mental health, trauma, adoption, were among those cited. Most have involvement in multiple ‘programs’, yet they all end up in the same place. I’m sure the case workers know it.

It is a festering problem I agree. We have de-coupled the Four Pillar approach from the state of functioning of the locality in the usual places of social, economic and environmental.

Underlying it all is the problem of providing housing & supports. And, yet I see signs of progress on all these fronts.

Oh, yeah. And the biggest step I see is a kind of acceptance that to do it is going to cost a heap. But, not to do it is costing even more.

Keeping someone in Federal lock-up: $80,000/year; Provincial lock-up: $60,000/year; off the street in supported housing: $40,000/year. These are order of scale numbers from a CBC interview in the last month, but they paint the picture.

@ Gentle Bossa Nova:

As someone who has voluteered at a shelter in the DTES, for several years, (I will state I am no longer volunteering) I would disgree with the ‘City Manger’s’ report that the strong portion of person living in the DTES are from outside BC.

I will also state that I tried to Google the report of Feb 1, with no success.

I am gathering from your comment, that the City has chosen to take a hands off approach because, and according to their report, some of the people in the DTES are there because of circumstance.

Government or otherwise.

This does not encompass the entirety of the population in the DTES, and gives no reason as why we should turn a blind eye to it. Not ALL are from out of town or have been wards of the ‘state’ at some point. That is BS.

Perhaps this is Vision’s lame attempt at hiding/candy coating the ongoing and growing issue.

How about some real independence when we are asked, through our elected representatives, to evaluate the casino proposal.

For one, there is a conflict of interest in the proponent producing a study of the economic benefits. Just institutional bias or the appearance of institutional bias.

Two, the regulator (BCLC) who oversees the casino then produces it’s own economic impact study. Not by an independent researcher but by the regulator itself. Again there is an appearance of a conflict of interest and the appearance, real or perceived of institutional bias.

If the regulator, in this case, BCLC, is incapable to seeing this credibility issue, then they are failing in their public interest role.

Anyone familiar with assessing policy knows, or should know, that the first task is to remove, to the extent practicable, the appearance of conflicts of interest or institutional relationships that may produce optimistic assessment.

So, why not an arm’s- length independent assessment of the benefits and costs – including health impact assessment ?

What is so alien about that?
-30.

Policy analysis, forensic audit, community values, neighbourhood voices, and a bit of urban analysis thrown in. Just another day at making the “good” urbanism.

Remains to be seen if flushing the system with cash will actually turn out anything of lasting value. New Westminster is one of those stories in Metro that will only be told in the rear view mirror.

I’m not familiar with the projects quoted, but I have been to the community festival when Columbia Street was closed to traffic and opened to automobile collectors. Quite a show.

New West’s problems start just south of there with Front Street and the parkade that was built by the time I first got there in the 1970’s (there was a move to glass over Columbia in those days—just like on Robsonstrasse). The railway cuts the downtown off from the river front, and that rupture in the urban fabric just won’t go away.

A horrible bridge was built for the copy-cat Public Market and casino. Granville Island triumphs because it embraces its history. New West has been turning a back on its historic assets for as long as I can remember. The casino is another Bridgeport story. The local Council sought to cash in on the riverfront and bombed.

Bring in the cash cow to fix it.

Skytrain adds to the rupture caused by the rail way, passing overhead alongside the tracks and putting a visual block for the river from the hillside above. Then, heads downtown for one station above ground and one station below.

While it is above ground New West offers the warning for Port Moody: Skytrain on grade spells d-i-s-a-s-t-e-r. Parallel chain link fence with razor wire on top flank the south side of Begbie Square driving the last nail in the coffin of that once fine urban space. Above grade station on 8th Ave has always been a trouble spot for crime. Station design looks like it has a great deal to do with that.

Then came the condo towers. Dotting the neighourhoods and challenging the thing that was truly valuable in New West: its street plan and neighbourhood scale.

Towers are not new to New West. Up on 6th and 6th they were built in the 1960’s. They never did anything for neighbourhood revitalization. They just added blight at the street level. The nearby New Westminster Mall and theatres went up in the 1970’s and only served to further blight 6th Street’s exquisite sense of scale.

$60M and all the King’s horses won’t be enough to get New Westminster what it really lacks: a way to build the next increments of urban intensification that is not just respectful, but builds on the legacy of the past. That requires a new mind set, not a new charge code.

Street for street, block for block, New West has the best neighbourhoods in the region. So long as all the “mega-projects” don’t screw it up, and they cling on to live long enough, they too may see a new dawn.

Then, the rest of us will see realized the true potential of an urbanism of the finest calibre.

@ Mezzanine: Short answer is no.

Let me emphasize that the Vancouver Not Vegas objection to this project is on the grounds that it is bad urban planning for a host of reasons. But it is also a poor business deal, and the subsidies are one reason why.

These subsidies are the FDC’s and AFDC’s paid from the BC Lottery Corporation to private casino operators to encourage redevelopment and upgrading of casino facilities. The formula is based on gross wins.

It is through this program that BCLC has incentivized major capital projects like the redevelopment of Grand Villa Casino and the proposed Edgewater expansion. Over the last number of years more than $400 million has been transferred to private casino owners for this purpose. BCLC has budgeted $346 million in capital expenditure over the next 3 years, to give you some idea of the scale of this spending. We don’t have a breakdown as to how much of that is in this incentive program.

The Deloitte report estimates that the near term annual transfer to Paragon Gaming (a foreign company) to under-write their construction costs will be $16.9 million. In reality that figure will probably be closer to $12 million, as the Deloitte revenue projections are much higher than what look like more accurate internal BCLC numbers.

While in theory incentivizing redevelopment sounds good and results in nicer facilities, the question remains whether it’s a good investment or business strategy.

Eg: Grand Villa went through a $180 million redevelopment, and now generates only 6% higher gross returns than it did beforehand. Have yet to confirm this number, but if I’m not mistaken, Grand Villa actually nets lower returns than it did pre-redevelopment, due to the significantly higher operating costs of running the new hotel. And construction is subsidized by the public purse. It’s doubtful a private investor would have built a hotel without public incentive somewhere in the mix.

Eg: Alberta doesn’t have this incentive program, and spends less than half what we do annually on capital projects (we clock in at around $120 m annually), yet they net significantly higher returns to the provincial treasury AND can still transfer more than twice as much as we do to charities and non-profits.

Eg: According the the HLT report, the potential incremental return to BCLC from the expanded Edgewater is only about $36 million (the BCLC share of $64m estimated total win potential). Subtract the $12-17 million AFDC subsidy, and the ceiling on this deal starts to look very low.

Downside risk is that, like Grand Villa, which fell into the hands of its creditors, Edgewater fails to make the expected incremental return for BCLC. Its the incremental return and not the individual casino gross that determines whether this is a good deal for the province or not.

In any event, the public could be left partially holding the bag for construction costs, doesn’t own the building it is sinking millions into every year, and still hasn’t found a way to pay for the roof.

forgot the link:

http://www.bclocalnews.com/greater_vancouver/newwestminsternewsleader/news/118025629.html#

Should governments expand gambling?

That’s a good one (and I will read it). It rings like… “Should governments regulate black market activities?”

Of course we should!

In no particular order: Gaming, sex trade, fire arms, drugs (including cigarettes & alcohol), all of the bits and pieces that don’t fit nicely into the economy but nevertheless form a part of human bartering, should come under government purview.

On the one hand, it speaks to the fundamentals of governance. On the other, it points to the necessity of restraint. Everything in moderation. We don’t want our governments “addicted” on the easy cash flow of a burgeoning gambling trade.

mezzanine 42:

“I’m not sure how often you would frequent Downtown New West in the past, but to my memory things were frankly dying prior to skytrain arriving. I don’t think that new west “turned its back” on its downtown, rather than they lacked people wanting to invest in the downtown until recently.”

I’m in New West often enough, have been since 1970… I don’t think skytrain “killed it”. However, I would pass a statuette on a pedestal to skytrain for having perpetrated a boondoggle on the design of our first provincial capital city.

Let’s be clear: my point is not that New West “turned its back on the downtown”.

Rather, my point is that it “… has been turning a back on its historic assets for as long as I can remember”.

Confusing “historic assets” with “downtown” may be at the root of the problem. Back in the 1960’s and 1970’s (i.e. the post-war suburban era) being the oldest urban site was seen as a huge problem & embarrassment. Today, we can point to localities the world over that have turned the “we were here first” status into the jewel in their crown.

I’m not getting how towers-and-skytrain in New West is leveraging on that historical advantage. The facts on the ground tell the real story: urban fabric, neighbourhood structure, and the livability of the urban environment are threatened because they are not well understood.