Most gambling activities in the Atlantic region have been managed by the Atlantic Lottery Corporation (ALC) since its creation in 1976. All four Atlantic provinces are members of ALC, which runs ticket lotteries and the region’s network of 6,300 video lottery terminals (VLTs) on behalf of the Atlantic provincial governments. ALC is also responsible for the two Red Shores casinos, which offer horse racing, table games, and slot machines in Charlottetown and Summerside, Prince Edward Island.1
Gambling profits generated by the ALC are distributed to the four provinces according to each province’s share of gambling sales. The province of Newfoundland and Labrador receives its share of ALC profits directly. In Prince Edward Island, gambling profits flow through the Prince Edward Island Lotteries Commission. The provincial gambling corporations of Nova Scotia (the Nova Scotia Gaming Corporation) and New Brunswick (the New Brunswick Lotteries and Gaming Corporation) have somewhat more responsibility, as they also oversee casinos within their respective provinces. These casinos—Casino Nova Scotia, with locations in Halifax and Sydney, Casino New Brunswick, and Grey Rock Casino—are owned and operated by private-sector operators.2 In each of the four Atlantic provinces, gambling profits, just like income taxes, are directed to the government’s general revenue fund and used to pay for public services.3
Where the Money Comes From
ALC generated just over $1.2 billion in gambling revenue during the 2018–19 fiscal year. This revenue comes from three main business lines: ticket lotteries, VLTs, and entertainment centres (i.e., Red Shores casino facilities). Of the different game types, the largest share of ALC gambling sales comes from ticket lotteries, which brought in about 56 percent of total sales, at $761 million. The other major sales source is VLTs, which took in another 31 percent, at $421 million. Casino revenue made up the final 13 percent, with sales of $169 million. New Brunswick and Nova Scotia contributed an additional $72 million and $78 million, respectively, in casino sales, bringing the Atlantic region’s total gambling sales to $1.35 billion (Figure 1).
Prize payments and revenue allocations to casino operators shift the overall profitability of these games. VLTs, the most addictive medium (see below) are also the most profitable: 52 percent of net revenue came from VLTs. Ticket lotteries fall to second place, at 40 percent of net revenue, while casinos were a distant third, at 8 percent.4
Where the Money Goes
ALC’s revenue is destined for many pots.5 The corporation’s largest expense is prizes on ticket lottery sales: $436 million was paid out to winners across the region last year. Direct expenses, such as commissions to private-sector retailers and ticket printing, were a distant second, at $143 million. Other operating and administrative expenses—including employee costs and VLT leases—totaled $110 million. The corporation also spent $34 million on capital-related costs and $56 million to cover other expenses and distributions. Everything left over after all these bills were paid—$422 million, just under two-fifths of the corporation’s total revenue—was distributed to the Atlantic provincial governments (Figure 2).6
Who's Hooked? Gambling Profits as a Proportion of Provincial Revenue
Gambling has become a lucrative source of funds for the Atlantic region since ALC ran its first lottery in 1976. In that first year of operation, the corporation made a modest $5.2 million profit for its four provincial shareholders from $11.5 million in lottery sales; last year, the region’s $1.3 billion in gambling sales brought $461 million into provincial coffers.
As the gambling industry has grown in the Atlantic provinces, so too has the provincial governments’ reliance on it as a source of revenue. Each Atlantic province now collects between 1 and 2 percent of its income at casinos, VLT lounges, and lottery checkout lanes (Figure 3).7
But where is this money coming from? Who, and what communities, are the source of these funds (Figures 4 and 5)?
P(l)ayer Profile: Gambling Demographics
Most of Atlantic Canada’s population is paying into the pockets of ALC in one form or another. Survey data indicate that around four in five Atlantic Canadians gamble in a given year (PEI 82%, NL 77%, NS 73%, NB 85%).8 This is roughly consistent with estimates of the Canada-wide average (which hovers around 70–80 percent9).
Money In, Money Out: Gambling Spending by Income
Atlantic Canada’s population is not, however, paying ALC equally. The regressive nature of gambling revenue is hard to see on the surface. The data collected by Statistics Canada’s Survey of Household Spending (SHS) seem to show that those who have more money are more likely to gamble and to spend more money when they do: the average household in Canada’s highest-income quintile spends $240 on gambling each year, while the average lowest-quintile household spends a mere $134. A similar pattern emerges for the Atlantic region: highest-quintile households report spending $276, while those in the lowest quintile report spending only $139 (Figure 6).10
But first glances can be deceptive. Higher earners may be spending more of their paycheques at the casino, but gambling eats up a much higher proportion of the poor’s income. According to SHS data, Atlantic Canada’s poorest households spent more than twice as much of their income on gambling as did the richest (0.76 percent compared to 0.32 percent). Households in Canada’s highest-income quintile spent an average of 0.24 percent of their after-tax earnings on games of chance each year; those in the lowest quintile spent nearly three times as much, at 0.71 percent (Figure 7).11
Less than 1 percent of a household’s annual earnings may not seem like a lot of money, even for a lowincome family. These seemingly low numbers, however, should not distract us from the high-stakes problem at play: when the Atlantic provincial governments collect lottery and casino money, they are digging deeper into the pockets of the poor than of the rich. Gambling may be a “voluntary” tax (more on the accuracy of this description below as well), but it’s a tax these governments are reliant on nonetheless—which means the provinces are paying their bills in a way that hits low-income families hardest (Figure 8).