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Alberta Gets a Boost from Booze and Gambling

Posted on August 30th, 2010

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The province of Alberta in Canada is known to rich in oil and gas deposits. For decades, these natural resources have been the lifeblood of the province’s economy. But these days, it seems that the two have been eclipsed by a new couple that has been generating more income. Booze and gambling are now the rich combination that has been giving Alberta a much needed fiscal boost. In this budget year alone, income to be generated by the two vices and funneled to the provincial accounts is projected to reach $2 billion. The larger $1.3 billion will come from the gambling industry, while liquor is expected to contribute the rest of the amount. This can be compared to the royalties that the government will be getting from natural gas reserves, which has been the primary energy income source of the province, which is forecasted to reach only $1.9 billion by the end of the budget year. That is a $100 million difference from the projected G&L (gambling and liquor) income and a huge tumble from the heydays of 2006, when the government used to get $6 billion from natural gas. The conventional crude oil industry is also expected to contribute around $1.9 billion to the government coffers, which is still lesser by $100 million compared to the forecasted G&L income.

The increase in the revenue generated from gambling and liquor has established a trend since last year, which may prove to be alarming for the Tory government of the province, as it appears now that the gaming interests of the province’s citizens are proving to be more lucrative than what has been expected from the province’s natural geological riches. A coordinator with the Gaming Research Institute of the province, Robert Williams, had this to say: “It’s (gambling and liquor) a reliable source (of revenue) and they depend on it. That’s the worrisome thing.” Williams adds that the statistics of a gambling “addiction” in the province is worrisome and startling, as figures show that an average Albertan spends $951 every year in gambling, which makes the province’s residents the biggest gamblers in the whole of Canada.

As alarming as that may be, the Alberta government cannot deny the fact that income from liquor and gaming has become important, as it funds a number of the province’s social programs. The dollars collected from liquor is funneled back to the general revenue of the province for spending. Meanwhile, the income generated by gambling is kept by the Alberta Lottery Fund, which then does the allocation of the cash to hundreds of provincial agencies, groups and departments. Lynn Hutchings-Mah, a commissioner of the Alberta Gaming and Liquor Commission claims that the money does go to a wide spectrum of organizations, from government-initiated programs to grassroot projects that rely on community and volunteer participation.

Observers believe that Alberta should start getting used to the lackluster performance of conventional oil and gas, which is projected to continue in the coming years. That may be a cause for a huge headache to the province, which is facing a budget deficit of $4.8 billion for 2010. The director of the University of Alberta’s Institute for Public Economics, Bob Ascah, shares that natural gas revenues will continue to decrease in the future, driven by factors such as a reduction of the demand of neighboring US on Canadian gas caused by an increased shale gas activity in their own borders. Moreover, the production of conventional gas itself is also experiencing a decline.

He advices the province to look seriously into alternative sources of revenue which do not involve gas and oil. This may mean that Alberta should consider the path fellow Canadian provinces of British Columbia and Ontario have taken – the legalization of online gambling. He does admit, though, that the morality of depending on income derived from gambling would have to be considered as well—especially with the citizens. Thus, he also proposes another source of revenue which is more stable but not as morally controversial as liquor and gambling tax – a provincial sales tax. Ted Morton, the province’s Finance Minister did admit that the all methods of generating additional revenue should be discussed and considered by the government ASAP, although he adds that actual implementation of new measures will not happen the second they will be agreed on as they would need to go through consultations with the public and proper legislation, among other procedures.