Editor’s Note: Sydney’s casino turns 25 this week and to mark its quarter-century anniversary, Rob Csernyik takes an in-depth look at the promises — and realities — of casino gambling in Cape Breton. This is Part I.
The walk to the Sydney casino from a cruise ship or waterfront hotel takes you past empty storefronts and properties “For Rent.” At night, it’s dimly lit enough to feel like a ghost town.
Inside the casino are no columns or water features; no marble finishes or high-end shops. There isn’t even a wide variety of games – as of April 2019, there were only 285 slot machines, with denominations ranging from a penny to $25 and six table games including roulette, blackjack and let it ride.
The machines, lit up in gold and jewel tones, help create an escapist fantasy. You might fool yourself into thinking you were in Las Vegas for a moment – the ringing slots, the flashing lights – as long as you didn’t look up (the industrial metal ceiling is like an airplane hangar) or down (the autumn-colored carpet looks like sloughed off pine needles).
Celtic Junction Bar and Grill, Casino Nova Scotia Sydney
In the wee hours before it closes for Remembrance Day, Casino Nova Scotia is filled with people and you get the sense it’s not just a desire for entertainment driving them. Unlike a recent night at the Halifax casino, the crowd is disproportionately elderly, white and female – and they’re surprisingly alert for pushing midnight. But there’s no atmosphere of mirth. The players push buttons joylessly, like it’s their job.
Behind the bar there’s a bright yellow Rubbermaid garbage can that says “Roof Leaks,” but no bartender. Only one is working and he leaves his post periodically to deliver drinks to patrons at machines. Even though a few customers stand around waiting, nobody gets short with him. As I travel home, my cab driver informs me there are standing appointments to take elderly ladies back and forth to the casino.
What’s clear tonight is that the dutiful play of these people at this hour on a long weekend is far from the province’s dream of high-rolling tourists filling provincial coffers, funding charitable groups and enriching First Nations.
It’s actually more a cause for concern.
Despite being considered a failure almost from the start, with some observers predicting a swift demise, Sydney’s casino turns 25 this month. It’s outlasted a lot of Cape Breton businesses for which people had much higher hopes.
The “why” of the casino’s longevity isn’t such a mystery – casinos draw casual gamers as a form of entertainment and more frequent ones by feeding an addiction. But whether Sydney and the rest of the CBRM are better off for its existence is a much more complex question, one that requires some deep digging into the spin-off effects of Sydney’s gaming palace.
After 25 years, it’s much easier to count the problems caused by casino gambling than its positive impacts on the region.
The early 1990s found Nova Scotia in the grip of a recession – with Cape Breton particularly hard hit.
Unemployment sat near 25% – the same as the height of the Great Depression. Fishing quotas were reduced by as much as 70% at one point, shuttering local plants. In a 1992 report, a group called the Urgent Agenda Committee determined much of the island’s unemployment was caused by a “dramatic” decline in Cape Breton’s goods-producing industries. The nineties would mark the last gasps of mining and steel-making as ways of life for Cape Bretoners – Sydney Steel, in particular, faced total closure and its pension fund needed propping up.
Bernie Boudreau (Source: IntelGenxCorp)
“Generally the economy was terrible, I mean huge problems and no apparent solutions,” remembers former Liberal Cape-Breton-the-Lakes MLA Bernie Boudreau.
The province wasn’t doing much better, a situation Boudreau blames, perhaps unsurprisingly, on the “previous government under [Tory] Premier John Buchanan, who wasn’t a bad person by the way, but spread largess, very broadly, in an attempt to secure his ongoing popularity and by the way, it worked very well because he was reelected four times. But by the time we came in the province was running huge deficits.”
Boudreau says while Halifax was somewhat sheltered economically due to the number of government jobs in the capital, communities elsewhere, like Cape Breton, were in a bind.
What was needed, the Liberals, under Premier John Savage, decided, was a project that would help curb the deficit, but also create spin-off benefits like new jobs and increased tourism. That’s why in April 1994, Nova Scotia’s government hit on the same solution dozens of other North American jurisdictions had already turned to: casinos.
Commercial casinos, promoted as economic development tools, began popping up across the United States in the late 1980s. Here in Canada, the transfer of gambling control from federal to provincial jurisdiction in 1985 was followed by the establishment of the country’s first commercial casino in Winnipeg, Manitoba in 1989. By the early 1990s, other provinces were following suit.
By December 1994, Boudreau was begging the indulgence of the house to make a lengthy announcement, having signed a memorandum of agreement to bring the project to life with Boston-based operator ITT Sheraton. He spoke expansively of the many benefits the province would receive from the deal:
“Casino gaming brings thousands of direct and indirect jobs – well paid, secure jobs – to Nova Scotians,” he said. “The casino project means millions of dollars of new investment in our province. Casinos will provide new revenue to the government, revenue to support the economic and social programs Nova Scotians need and expect. Casinos will attract tourists and convention visitors to Nova Scotia, bringing additional jobs and economic opportunities.”
But elsewhere in the legislature, there was trepidation.
Halifax Fairview MLA Alexa McDonough, who had stepped down as leader of the provincial NDP just a month earlier, didn’t mince words with her opinion of Boudreau’s speech, describing him as “drunk with power” with “sugar plums dancing in his head like dollar signs.”
“In the financial statements of this minister today, what we see is exactly what happens to a compulsive gambler and their family; they calculate the wins, they ignore the losses,” she said. “They talk about all the revenues, they do not talk about the net impact when those dollars are diverted away, not just diverted away from small businesses and local economic activity, but diverted absolutely away from producing some goods and products and services that have inherent value.”
PC MLA George Moody bemoaned the government’s rush to enter into the project. “If we were going to go ahead with casinos, why couldn’t we have done it right? Why couldn’t we have done our socio-economic impact studies ahead of time?”
It was a good question, given the province had actually begun considering the possibility of a casino in the 1970s.
In 1975, D. Owen Carrigan, professor emeritus of history and former Saint Mary’s University president, authored a study called “Casino Gaming” for Nova Scotia’s tourism department. The goal, he says, was to increase tourism by attracting gamblers to our shores.
“I saw some beautiful operations in my study,” Carrigan said in a telephone interview from his Halifax home. “And I don’t think I saw any that couldn’t be duplicated at one level or another — small, medium, or large — here in Nova Scotia. It was never envisaged that we would put up these little rinky-dink operations… [with] no real program to attract international gamblers.”
In fact, Carrigan warns there are so many differences between his original vision for casino resorts and what the province ultimately opened, any attempt to compare them is apples to oranges.
His report, available in the provincial legislative library, recommended government-run four-season resort casinos: “Facilities should include a shopping center, marina for the boating enthusiasts, beach, campsite, heated swimming pools, picnic and hiking facilities.”
Keltic Lodge, August 2019. (Photo by WabbitWanderer from London, Canada / CC BY-SA)
A “casino-resort-marina complex” would be unique in North America, he wrote, and “the one thing Las Vegas can’t offer.”
The concept, he said in 1993, could be introduced at established provincial resorts like the Keltic Lodge, which would not only turn the lodge around but “turn that whole region into a world-class resort.”
Using the Nova Scotia Liquor Commission’s 1974 net profit ($33,137,552) as a guide, he estimated “a well run casino industry” could produce revenues exceeding that figure, worth approximately $159,500,000 in today’s dollars.
His vision was ahead of its time, and not just because, in the 1970s, North American casinos were still concentrated in Las Vegas. “What happened, of course, was that the moral tenor of the population at that point was such that it was too risky politically to open up casinos,” he says.
Fast forward to the 1990s, though, and times had changed. Nova Scotia was entertaining casino proposals and the initial ones were not so “rinky-dink.”
In 1992, for example, Minnesota-based Grand Casinos proposed a massive $105 million, 359-acre resort in Ragged Lake Industrial Park, featuring a 160,000-square-foot casino, golf course and RV park. Then in 1993, the former Halifax Hilton (now the Westin Nova Scotian) pitched a 31,000-square-foot casino including a trolley system to encourage gamblers to explore downtown.
What neither pitched was a sister casino in Sydney. But in 1994, when the government confirmed Halifax would get its gambling palace, the public, like an expectant mother surprised by an ultrasound, discovered a casino in Sydney had become part of the deal.
Sydney was a strange place to put a casino.
This was especially so in the mid-nineties, when Sydney was somewhere you got off the plane or passed through en route to the Fortress of Louisbourg, the Cabot Trail or the Newfoundland ferry. It wasn’t a tourist destination in and of itself. But before Celtic Colours, cruise ships and Cabot Links, Cape Breton as a whole hadn’t come into its own tourism-wise, though it was on the radar as a way to improve the island’s fortunes. Furthermore, it wasn’t a huge population center like Montreal, or adjacent to the American border like Windsor, Ont., traits which allowed casinos recently opened in those cities to be considered successful by industry observers.
Also strange was the site chosen for Sydney’s casino: smack dab in the middle of the city attached to the underused Centre 200, within smelling distance of the as-yet-to-be rehabilitated Tar Ponds. Opened in 1987, the 5,000-plus seat arena built to mark the city’s 1985 bicentennial was home to the Cape Breton Oilers of the American Hockey League (AHL) from 1988 until 1996. The Cape Breton Breakers of the National Basketball League played out of the arena for one-and-a-half seasons (1993-1994) before both the team and league folded.
Centre 200 under construction. (Cape Breton Post “submitted” photo.)
But there were plans to make it more viable. According to a 1995 letter from the Nova Scotia Gaming Corporation’s Ralph Fiske, “The upper half of the old forum site will be held in reserve for a proposed City sponsored Convention facility.” The goal was that the arena, convention center and casino would support each other providing “enhanced year round use and improved economic viability to the underutilized [Centre] 200.”
In soliciting opinions about the decision to build a casino in Sydney, I’d heard suggestions it was political – if Halifax got one, then Premier Savage’s Cape Breton finance minister, Bernie Boudreau, got one, too.
But during our interview, Boudreau said it would have been more popular not to require a casino in Cape Breton:
“None of the proponents, either in the formal process that we instituted or prior to that, nobody wanted to build a casino in Sydney,” he said. “As a matter of fact, a number of them very clearly expressed a reluctance to do that.”
Many Nova Scotians had also “very clearly expressed” their reluctance to welcome casinos anywhere in the province – 57.7% of respondents in a 1993 poll opposed them and a petition circulated by a group called People Against Casinos in Nova Scotia garnered 50,000 signatures. A full 83% of Cape Breton Board of Trade (now Chamber of Commerce) members opposed it, concerned it would have a long-term negative effect on the economic stability and health of the community.
In the absence of public or proponent support, it was the government, according to Boudreau, that insisted on a casino for Sydney. In addition to the reasons he preached to the legislature, an agreement was made with participating First Nations in February 1995, offering half the casino’s profits if they wouldn’t open their own casinos.
“Principally, it was going to be for the Mi’kmaq community across Nova Scotia, and that the profits coming from it, we would sit down and basically come to some agreement as to how those profits should be used. Our suggestion was that they’d be used for economic development purposes on the various reserves.”
Boudreau added it was also necessary to get rid of “gray” or unregulated video lottery terminals which the government, having legalized VLTs in 1991, was trying to eradicate. But these important roles of charity and First Nations economic development were assigned only to Sydney’s casino. The business case wasn’t great – ITT Sheraton didn’t see itself catering to high-rollers in Sydney, and top-end customers were estimated to be worth half as much there as in Halifax – but these social responsibilities were supposed to make the endeavor worthwhile.
In June 1993, the Nova Scotia Lottery Commission had suggested temporary casinos be opened as pilot projects for a year and that they be internally run, after which, assuming the test runs proved successful, proposals from private operators could be entertained.
Boudreau told me the Lottery Commission’s recommendation wasn’t taken and stresses the government never intended the casinos, which opened in 1995, as a trial:
“[I]t was not ever contemplated that at some point, we’d make a decision, ‘No, no, we’re not going to go with the casino in Sydney, or no, no, we’re not going to go with the casino in Halifax,’” he said.
“Those were two permanent facilities.”
The Sydney casino plan became a reality a mere 15 months after being announced, when a $25.7 million gambling palace – funded by ITT Sheraton – opened next to Centre 200.
“Cape Breton gambles twice: Sydney casino, super-municipality open for business today,” proclaimed The Daily News on 1 August 1995, the same day the Cape Breton Regional Municipality (CBRM) came into effect, bringing a city, six towns and a county under one umbrella. Of the region’s eight municipalities, six were insolvent or close to it. Together, it was hoped, new efficiencies would be found and collaboration, never a strong point for Cape Breton municipalities, would prove possible.
But the casinos didn’t deliver – not for the province, but especially not for Sydney.
In the government’s vision, the permanent casinos would put $50 million annually into government coffers through a combination of a 20% win tax and profit-sharing. Sydney’s profits would include distributions for charities and community groups of between $2 and $4.4 million annually, and an equivalent amount for First Nations. The casinos would create the equivalent of 1,072 full-time, well-paid jobs, 268 of them in Sydney, and generate more than 1,000 indirect jobs. ITT Sheraton estimated tourists, with their deeper pockets, would represent 18.8% of casino visitors but 27.2% of gaming revenues.
Only a few months after opening in Halifax, Sheraton realized they needed to downsize future plans for Halifax’s casino because the market had been misjudged. The Sydney casino, though, was already in its permanent form, so while its first year was a disaster, there was no opportunity for re-evaluation.
Slot machines (Photo by Antoine Taveneaux / CC BY-SA (https://creativecommons.org/licenses/by-sa/3.0)
The marketing plan, completed mere months after the casinos opened, forecast a shortfall in Sydney of approximately $1 million by end-1995, growing to a cumulative $1.9 million by end-1996. “Although we are confident that Sydney will meet its contractual commitments, including payment of the deferred shortfalls, in the long-term, it must be recognized that it is unlikely that there will be cash available for charitable distribution for the next few years.”
Between 1997 and 2019, the two casinos paid the province only 57% of what had been anticipated. Sydney’s casino has about 500,000 fewer visitors than it did at the turn of the century and provincial revenue has declined almost 40% in the same period. Since 2000, Sydney’s casino workforce has declined by half. The fees paid to the CBRM – about $620,000 annually in property taxes and lease payments – have remained static over time. The original mission as a charity casino was abandoned years ago and reports of “gray” machines continued for years after the casinos opened.
On top of all of this, Sydney’s casino – which has always attracted more locals than tourists – has fed the addictions of problem gamblers, adding to the burden of the island’s already overtaxed and underfunded mental health system.
But over the years, as politicians and casino operators have come and gone and government reliance on casino dollars has declined, Cape Bretoners have had no say about the casino and its impacts: they’ve been stuck with it, like a booby prize from a lottery they never actually entered.
Rob Csernyik is a freelance journalist who was born and raised in Sydney, but currently lives in Saint John, New Brunswick. He has written for The Globe and Mail, The New Republic, Quartz at Work and Vice and edits Great Canadian Longform. Rob was selected for the 2019 investigative journalism intensive at The Banff Centre for Arts and Creativity where he started his research on the impacts of Nova Scotia’s casinos.
