16 March 2004

It's time to legalize sports wagering

By David Agren

The NCAA basketball tournament dubbed “March Madness” tips off this week, but the real action plays out in office pools across the continent.

A bettors dream, the event crams 61 single elimination games into a three-week frenzy. It spawns thousands of unsanctioned betting pools, which seduce its participants to gamble on the outcomes of a sport they know nothing about.

The pools attract so many participants, an office consulting firm calculated the businesses lose $1.4 billion in productivity during the event.

The FBI estimated bettors wager a staggering $2.5 billion annually on March Madness – 95 per cent of it illegally. Only Super Bowl generates more illegal betting. The U.S. Department of Justice estimated Americans illegally bet $80 billion on sports in 1997.

A legal and socially accepted diversion in the United Kingdom, sports bettors wager on anything and everything (U.K. bookmakers offer 66-1 odds the son of soccer star David Beckham and Posh Spice will play in Premier League). Yet sports wagering remains under tight control in North America – Pandora’s box no jurisdiction except Nevada has dared to open completely.

In Canada, the criminal code prohibits head-to-head wagering, but permits parlays (multiple event bets), which Canadians may place through Sports Select, which attracted wagers worth $343 million in 1997.

Sports Select players must correctly select the outcome of two or more games to claim a prize. The game provides limited gambling options, offers notoriously low odds and returns a meager 63 per cent of wagered money to bettors.

Bill Thompson, a professor of Public Administration and gaming expert at the University of Nevada at Las Vegas, said Nevada bookmakers offer payouts of 95 per cent.

“In Canada, the player is getting screwed,” he remarked.

No wonder betters seek out alternatives. The Globe and Mail reported a bookmaking syndicate in Quebec and Ontario attracted $20 million in wagers in just five months. They thrived on a thin five to eight per cent profit margin, almost thirty percentage points better than Sports Select.

Police busted the operation and a judge leveled a $300,000 fine against the operators to send a message.

Although perceived as the domain of organized crime, Mark Haller, a history professor at Temple University in Philadelphia who studies the history of urban crime and illegal activities, said his research has never demonstrated a link between organized crime and bookmaking.

He described the average bookmaker as an independent operator who likes what he is doing and sees himself as an honest businessman who must protect his reputation with his clientele.

“When they (the bookmakers) lose, they pay. When the customer loses, they don’t pay,” he said.

Bookmakers thrive by offering what the state sanctioned games lack: better odds, better selection and better customer service.

Garry Smith, a gambling research specialist at the Alberta Gaming Research Institute said sports wagering is less addictive than electronic forms of gambling takes a certain amount of skill to play.

“It’s one of the few forms of gambling where the player has a realistic chance to win,” he added.

The Alberta government installed ultra-addictive video lottery terminals – considered the crack cocaine of the gambling industry – in neighbourhood pubs ten years ago, but continues to outlaw sports bookmaking. Why the contradiction?

A version of this article originally appeared in the Mount Royal College Journal last April.

04 March 2004

The Fed's Advertising Scheme is a Joke

By David Agren

Big Brother is watching you. Actually, the rink boards and display ads in areas and stadiums across the country brandish the Government of Canada logo, but they might as well display the well-worn slogan from 1984, George Orwell’s chilling and prophetic vision penned over 50 years ago. The ads were placed throughout the country (mostly in Quebec) through the federal government’s mismanaged and recently suspended $250-million advertising program.

Auditor General Sheila Fraser recently rebuked the program in a tersely worded audit, saying the federal bureaucrats in charge “broke nearly every rule in the book,” and that the agencies hired to place the ads pocketed $100 million for work of dubious value.

Besides laundering taxpayers’ money through firms connected to the Liberal Party in Quebec, the advertising program stealthily subsidized professional sports — a practice Canadians rebelled against in 2000 when the federal government attempted to assist Canadian NHL teams.

The perpetually imperiled Canadian Football League collected almost $1 million to stick the maple leaf on its players’ helmets — similar to the tiny American flags its NFL counterparts voluntarily wear for patriotic reasons. A government-sponsored study found only six per cent of fans and one per cent of television viewers recalled seeing the government logo at CFL games while 25 per cent remembered the Molson ads. It also questioned the value of advertising in CFL stadiums when the league’s clubs fly the flag for free.

As with virtually all government spending decisions, the entire sponsorship program and process for placing ads became a political football. Former prime minister Jean Chrétien hatched the advertising scheme after Quebec voters narrowly rejected separation in 1995 to sell separatists on Canada’s value. Accordingly, most of the ads were placed in the province by Quebec-based ad agencies.

The minor-league Montreal Impact soccer club snagged $250,000 in ad revenue, while the bureaucrats rejected a request from the Edmonton Drillers, a soccer club that folded. Government ads blanketed the cavernous and often vacant Olympic Stadium, home to the Montreal Expos, even thought the team draws the majority of its fans from English-speaking parts of the city that voted overwhelmingly against separation. As far back as 1998, the Ottawa Citizen reported that Eastern NHL teams received more sponsorship money than their equally cash-strapped Western brethren.

Even worse, crown corporations like Via Rail and Canada Post and their provincial cousins regularly purchase advertising in sporting events despite having little reason to do so. Canada Post enjoys a monopoly on mail delivery, forcing Canadians to use its service. Chronic money-loser Via Rail still advertises in cities it abandoned.

The Liberals’ advertising fiasco drew in both crowns as they paid politically connected agencies outrageous fees for work that private corporations would balk at. While working for Via Rail in 2001, double Olympic gold-medallist Myriam Bédard questioned an inflated invoice sent by Groupaction — a firm mentioned in Fraser’s damning audit — and got fired for her trouble. Via Rail chairman Jean Pelletier, who was once chief of staff to Chrétien, disparaged the whistler blower in La Presse, calling her “a poor girl... a girl who doesn’t have a husband that I know of.” “She has the stress of a single mom who has economic responsibilities. Basically, I pity her,” he added.

But why does the federal government — and its provincial counterparts of all political stripes — advertise in the first place? Economists recognize that information is not free. Advertising simply imparts information to consumers, thus lowering their transaction costs. Political advertising drops the cost of voting — with the price measured in time, another economic good.

While corporations impart information to consumers to drive sales and swell profits, government ads strive to build political capital and concentrate power. The federal government’s ads frequently scold, nag and exhort Canadians to modify their lifestyles and behave in a patronizing fashion. Quit smoking, pay child support, register all your guns and don’t drink the water while hiking.

In the case of Quebec, placing ads at hockey rinks and other events reminds residents of where their prosperity supposedly flows from. It’s not Big Brother watching, but Big Mother, a benevolent entity responsible for their health, welfare, security and quality of life — even their recreation. It’s time for all governments to exit the advertising and sports sponsorship arenas.

This article originally appeared in The Reflector