Fraser Institute: First Nations Needs Casino Freedom

The Fraser Institute published a study several weeks ago presented the case for First Nations to operate gambling establishments with greater freedoms. Senior Fellow Tom Flanagan concluded that the current approach is a “cartel” model, one that relegates First Nations casinos to tribal lands, is outdated. And First Nations is being deprived of earning more revenue and competing in a fair and free market with other gambling providers.

Unconnected to the Canadian federal or provincial governments by grants or contracts, the Fraser Institute is an independent Canadian public policy research and educational organization. They focus on analyzing government policies and the economic stability of Canadian communities.

Brief History of First Nations Gambling Laws

Canada started regulating gambling – as did many countries – by trying to prohibit gambling, viewing it as a sin. The first Canadian law to do so was in 1338 when dice games were prohibited. In more modern terms, however, Parliament declared gambling illegal in the 1892 Criminal Code.

From that point forward, Parliament generally passed laws in a piecemeal fashion, addressing one aspect of gambling at a time. For example, Parliament exempted charitable raffles at certain functions in 1901 and betting on horse races in 1910.

In 1969 through 1985, however, the government took a broader approach. Parliament granted permissions for the individual provinces to regulate charity-based gambling and lotteries in their territories, though the federal government retained the right to collect some tax on the industry.

The provincial oversight of tribal matters technically came from the Constitution Act of 1867, but the laws of the past half-dozen decades extended that oversight to gambling. In the 1980s, First Nations took notice of the rights of Native Americans in the United States and sought similar rights. First Nations wanted to operate gambling on their reserves and used American precedent to do it.

The Shawanaga First Nation in Ontario was the first to assert their right to gambling on their own lands and started with a bingo hall. Ontario authorities took First Nations to court. Ultimately, the Canadian Supreme Court took on the case in 1996 and declared that gambling was not an integral part of the Shawanaga culture.

Thus, First Nations had no right to regulate its own gambling. They could and have operated casinos and gambling halls since then only via provincial licenses and per regulations set out by the provincial governments.

Fraser Institute Interpretation

Flanagan referred to the provincial casino business as “cartels.” His executive summary of the study, entitled “Cartels and Casinos: First Nations’ Gaming in Canada,” noted that provinces used their power to create casino “cartels” for their own profit.

Since First Nations’ challenges in court have lost, “they have had to fit into the cartel system and take leftovers.” Flanagan noted that Alberta is the only province to allow First Nations to operate gambling establishments in metropolitan markets (Edmonton and Calgary), but most others have yet to allow prominent placement for First Nations’ properties.

Flanagan concluded that First Nations benefit greatly from casinos and gambling halls. Bigger profits would increase that revenue to improve housing and social services for First Nation members. They could also move into larger, non-gambling businesses like real estate, which he said is happening in Edmonton and Calgary.

On the other hand, First Nations’ casinos restricted to reserves do not produce enough income to “have a transformative effect” on the communities.

Suggestions for First Nations

The broader suggestions by Flanagan to improve First Nations’ revenues and reduce the burdensome regulations of provinces are rather simple:

  • Provincial governments must allow First Nations’ casinos into big-city markets and off reserves.
  • Another option would be to allow First Nations to purchase urban land and create extensions of their reserves in order to operate gambling establishments there.
  • Parliament in Ottawa should encourage provinces to do this or threaten to resume federal jurisdiction over gambling.
  • Parliament could, instead, simply take back its regulatory power solely over First Nations’ gambling rights and extend them on the federal level.

Flanagan’s favorite solution, however, is to abolish all provincial cartels. While provincial regulations could remain to monitor for and prevent organized crime and profit skimming activities, gambling should be a free-market industry.

“First Nations have shown the ability to compete,” wrote Flanagan, “and they would be winners in such a market.”

First Nation Casino Details

The full Fraser Institute report provides up-to-date and helpful information about First Nation casinos. First, it notes the specific locations and opening dates of the properties across Canada:

  • Alberta = 5
  • British Columbia = 1
  • Manitoba = 6
  • Nova Scotia = 1
  • Ontario = 3
  • Saskatchewan = 7

The report goes on to note how revenue is collected and allocated via the First Nations Development Fund. Flanagan also provides information about casino effects on housing and overall well-being in host communities.

Data showed that certain factors created more opportunities for the success of casinos and, thus, the communities they support:

  • Location in or adjacent to a large city
  • Location at a convenient driving distance from a city
  • Shared location with a resort
  • Shared location with multiple business developments

These all present better advantages due to customer traffic and relationships with surrounding areas.

Final Flanagan Suggestions

Toward the end of the full 38-page report, Flanagan boils down his suggestions to create more economic development opportunities for First Nations:

  • Amend S.207, the part of the Criminal Code that relegates First Nations’ gaming to provinces. He says the provinces have a conflict of interest and should not exercise jurisdiction over First Nations’ gaming activities.
  • Abandon the provincial cartels in favor of a more competitive approach. This would resemble the way entertainment and entrepreneur-based industries are handled.
  • Allow First Nations greater access to lucrative markets. As previously mentioned, the federal government should encourage provinces to offer more opportunities.
  • Adjust the distribution of revenue to be less egalitarian. A larger portion of revenue to First Nations could spur entrepreneurship.

 

 

Jennifer Newell

Jennifer Newell

Jennifer Newell has been writing about poker and gambling since 2004. As the online gaming sectors have changed and grown, particularly in the United States and Canada, she has followed it all and written about it for websites like World Poker Tour and PokerScout. In her free time, she runs a small business, reads, cooks, and enjoys music.

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