Capone should have had it so good

Hey there, time traveller!
This article was published 11/05/2012 (5180 days ago), so information in it may no longer be current.

Former crime boss Al Capone would shout a hearty “Bravo.” The one-time king of American mobsters, convicted only of income tax evasion, would fully understand and endorse the provincial government announcement of its intention to consolidate and unify the Manitoba Lotteries Corporation and the Manitoba Liquor Control Commission.

In Capone’s heyday in the U.S., the main activities and the sources of revenue of the mob were the sale of prohibited liquor and the numbers racket.

The government of Manitoba and organized crime have something in common. Both recognize that people will drink and gamble and this propensity is an opportunity to make big money. The mob was ready to risk criminal sanctions to take advantage of this opportunity. The provincial government faces no such risk. It merely makes legal what used to be criminal.

Like the provincial government, the mob bosses had to make their organization more efficient from time to time. This usually involved eliminating some of their competitors using a crude system that was made necessary by their status as outlaws.

The provincial government can combine the operations of selling liquor and running the numbers racket in a much more refined way since it has the luxury of government power.

But the main and most important similarity relates to the making of money.

Last year, government profits from liquor sales were about $250 million and gambling profits accounted for about $350 million. When we add the other sin tax, on tobacco, the total revenues come to about $1 billion, about 10 per cent of all provincial revenues.

Most important is the fact that very few people complain about the tax. Most of these taxpayers feel they don’t have to drink or gamble and are, therefore, prepared to pay the penalty.

But there is something fundamentally wrong with the collection of public revenue by the government becoming the monopolistic gambling czar. There is a reason for the use of the term “sin tax.” It implies that gambling is something that should not be encouraged.

There is good reason for discouraging the gambling bug. Many people cannot control the habit. It is well-documented that indulgence in gambling has led to numerous suicides, marriage breakdowns, financial miseries and other related problems.

The government is well aware of the evils that have resulted from the gambling addiction. It has adopted measures designed to mitigate the problems but which have certainly not eliminated them — or even made a substantial dent.

Furthermore, the government has itself become addicted to the gambling bug because of the revenues it has come to depend on. The government concedes the revenues are a sin tax, and then fills the role of the serpent by tempting and encouraging the sin in order to maintain the revenues it reaps from its commission.

The government is in a clear conflict of interest. On the one hand, it says gambling is sinful. On the other hand, it encourages people to gamble so it can maintain the revenue.

I was an MLA when the first Lottery Act was passed. The minister at the time, Russell Doern, assured the legislature it would be a one-time affair to help in the celebration of our centennial.

It turned out to have the effect of just one drink on a confirmed alcoholic.

It is difficult to imagine a government of any political stripe having the wisdom and courage to eliminate this regressive and demonstrably harmful tax that is not based on any equitable formula but relies entirely on exploiting a human frailty.

I do not wish to be misunderstood. I see nothing immoral about gambling and I am convinced people will engage in it whether we have government-sponsored gambling or not.

I tend myself to agree with Adam Smith, who, in The Wealth of Nations, mathematically proves that your chances of winning a lottery decrease in direct proportion to the number of tickets you buy.

Think about it. If you buy all the tickets, you are sure to lose. If you buy no tickets, you can’t lose.

The objection is not gambling as such. The objection is to the government sponsoring and encouraging it. Some of the ads promoting the lotteries would surely be classified as false and misleading if engaged in by private businesses.

 

Sidney Green is a Winnipeg lawyer and former NDP cabinet minister.