News
Canada’s casinos ‘threatened’ by Liberal stance on sports betting
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The Canadian gaming industry is losing billions of dollars in sports betting revenue to the black market each year due to federal prohibitions — and a recent legalization push in the U.S. could further threaten the viability of casinos in this country, proponents say.
Casino boosters in Canada, including NDP MP Brian Masse, are hoping the recent legalization of single-event sports betting in U.S. border states like Michigan and New York will force the Liberal government to act now to save casino jobs — especially at places like Caesars Windsor and the Niagara Falls-based Fallsview, which depend on a steady stream of U.S. gamblers to stay afloat.
A years-long effort to legalize single-event sports betting — betting on a single football game, for example — stalled when the federal Liberal government voted against legislation to allow this sort of gambling in Canada.
Voting against the legislation in 2016, the government cited major sports leagues’ claims that single-event betting might lead to match-fixing. But that opposition has been blunted since sports leagues, including the NBA and NHL, have partnered with U.S.-based casino operators like MGM Resorts to bolster sports betting stateside.
Masse, who introduced a private member’s bill to dismantle the prohibition, said the Liberal government should take up the issue when the House of Commons returns next week. The government only needs to drop one sentence from the Criminal Code to end the prohibition — a change Masse said could be made through legislation or an order-in-council from cabinet.
“We are in a lose-lose position right now. We would have been ahead of the curve if we had actually defined our own destiny, but instead U.S. courts, as expected, moved ahead and left us behind. The consequences for Canada are very high,” Masse told CBC News.
A recent U.S. Supreme Court ruling overturned decades-old federal limits on sports betting in states other than Nevada. The result has been a push by state lawmakers — notably in New Jersey, New York and Michigan — to legalize single-game bets at casinos, racetracks and online.
Single-event legalization has unleashed a revenue boom for state coffers already; New Jersey casinos collected $4.5 billion in revenue last year alone.
Sports bettors in Canada are limited to “parlay” bets — meaning they have to place bets on more than one game, and pick the winning team in each contest, to see any sort of windfall. The odds of a winning bet are low. Canadians gamble roughly $500 million a year in parlay bets through lottery games like Pro-Line.
“Capital investments in Canada are being delayed, jobs are being lost, customers are going to be lost for the long-term. We inherit all the problems of sports gambling, but we don’t get any of the benefits or the supports to deal with the situation,” Masse said.
Canada’s gaming industry employs about 180,000 people — many more than the automotive manufacturing sector.
Masse said Windsor-area Liberal candidates in the last election promised voters a re-elected Trudeau government would do away with the Criminal Code prohibition to help those casinos compete, but the Prime Minister’s Office has since shied away from the issue.
Not an ‘immediate priority’: minister says
In a statement, Justice Minister David Lametti’s spokesperson said gambling reforms are simply not “immediate priorities.”
“Minister Lametti was honoured to receive his mandate letter in December, which outlines the immediate priorities he has been tasked with. Reforms to gambling laws are not included as part of these immediate priorities,” Rachel Rappaport said.
“Our government is aware of the recent changes to the legal frameworks for legalized gambling in the United States, which have produced consequences on both sides of the border. We continue to monitor the situation, as well as meet with and hear from individuals and groups that have been affected.”
Masse said the government’s stance betrays the voters in places like Windsor and Niagara Falls who trusted the Liberals when they said they’d take action.
“It’s very much a paternalistic approach by the federal government, denying Ontario, Quebec and B.C. and others. The message is basically, ‘Canadians can go to the internet or the black market, instead of a regulated, open market where provinces can make their own decisions,'” Masse said.
“It’s a bizarre position and I’m quite shocked that they’ve been able to skate on this so long.”
An estimated $14 billion in annual sports betting — $10 billion through the black market through bookies and $4 billion more through off-shore online outlets, according to figures from the Canadian Gaming Association — is wagered by Canadians through illegal channels, beyond the regulatory control of the government. The biggest draw of these other outlets is the fact that they allow bettors to gamble on just one game.
Paul Burns is the president and CEO of the Canadian Gaming Association, the lobby group that represents casino interests.
Burns said the Liberal government should simply adopt the approach it took to the legalization of cannabis. Prime Minister Justin Trudeau proposed changes to drug laws as a way to take profits out of the hands of criminals and legitimize a practice dominated by illegal sellers. Burns said the same standard should apply to sports betting.
“This would take money out of the hands of bad guys and give real benefit to the hundreds of gaming communities across the country,” Burns said.
“‘This issue isn’t going away. It’s getting worse. We’re saying to the federal government, ‘Don’t put us in a position where we have one arm tied behind our backs.’ These are great, good-paying jobs and they’re threatened. And yet, there’s a very simple solution.”
Federal and provincial governments don’t get a cut of revenues from gaming through these illegal channels. For the province of Ontario, for example, that means an estimated $400 million a year in lost profit, said Jim Lawson, head of Woodbine Entertainment, the group that runs the main horse racetrack in Toronto.
“So much money is moving offshore and offshore now includes sports wagering in the U.S. We’re really starting to feel the pressure — it’s having a dramatic impact,” Lawson told CBC News.
“There’s a huge revenue miss at a time when government is trying to keep up with health care and education costs. And when I say a revenue miss, we’re in the hundreds of millions of dollars range.”
Lawson said Woodbine Entertainment employs 15,000 people in Ontario directly or indirectly, but the horse racing industry is facing “extreme challenges” due to demographic shifts and robust competition from the U.S.
He said flowing some of the sports betting through racetracks and off-track betting shops would help stabilize an industry crucial to rural communities.
“We should be allowed to participate rather than it all going into foreign pockets and for-profit offshore operators,” Lawson said, adding that leaving horse tracks out of the equation would “decimate” racing.
More money will land in the pockets of Canadian families on Friday for the latest Canada Child Benefit (CCB) installment.
The federal government program helps low and middle-income families struggling with the soaring cost of raising a child.
Canadian citizens, permanent residents, or refugees who are the primary caregivers for children under 18 years old are eligible for the program, introduced in 2016.
The non-taxable monthly payments are based on a family’s net income and how many children they have. Families that have an adjusted net income under $34,863 will receive the maximum amount per child.
For a child under six years old, an applicant can annually receive up to $7,437 per child, and up to $6,275 per child for kids between the ages of six through 17.
That translates to up to $619.75 per month for the younger cohort and $522.91 per month for the older group.
The benefit is recalculated every July and most recently increased 6.3 per cent in order to adjust to the rate of inflation, and cost of living.
To apply, an applicant can submit through a child’s birth registration, complete an online form or mail in an application to a tax centre.
The next payment date will take place on May 17.
News
Capital gains tax change draws ire from some Canadian entrepreneurs worried it will worsen brain drain – CBC.ca
A chorus of Canadian entrepreneurs and investors is blasting the federal government’s budget for expanding a tax on the rich. They say it will lead to brain drain and further degrade Canada’s already poor productivity.
In the 2024 budget unveiled Tuesday, Finance Minister Chrystia Freeland said the government would increase the inclusion rate of the capital gains tax from 50 per cent to 67 per cent for businesses and trusts, generating an estimated $19 billion in new revenue.
Capital gains are the profits that individuals or businesses make from selling an asset — like a stock or a second home. Individuals are subject to the new changes on any profits over $250,000.
The government estimates that the changes would impact 40,000 individuals (or 0.13 per cent of Canadians in any given year) and 307,000 companies in Canada.
However, some members of the business community say that expanding the taxable amount will devastate productivity, investment and entrepreneurship in Canada, and might even compel some of the country’s talent and startups to take their business elsewhere.
Finance Minister Chrystia Freeland unveiled the government’s 2024 federal budget, with spending targeted at young voters and a plan to raise capital gains taxes for some of the wealthiest Canadians.
Benjamin Bergen, president of the Council of Canadian Innovators (CCI), said the capital gains tax has overshadowed parts of the federal budget that the business community would otherwise be excited about.
“There were definitely some other stars in the budget that were interesting,” he said. “However, the … capital gains piece really is the sun, and it’s daylight. So this is really the only thing that innovators can see.”
The CCI has written and is circulating an open letter signed by more than 1,000 people in the Canadian business community to Trudeau’s government asking it to scrap the tax change.
Shopify CEO Tobi Lütke and president Harley Finkelstein also weighed in on the proposed hike on X, formerly known as Twitter.
We need to be doing everything we can to turn Canada into the best place for entrepreneurs to build 🇨🇦<br><br>What’s proposed in the federal budget will do the complete opposite. Innovators and entrepreneurs will suffer and their success will be penalized — this is not a wealth tax,…
—@harleyf
Former finance minister Bill Morneau said his successor’s budget disincentivizes businesses from investing in the country’s innovation sector: “It’s probably very troubling for many investors.”
Canada’s productivity — a measure that compares economic output to hours worked — has been relatively poor for decades. It underperforms against the OECD average and against several other G7 countries, including the U.S., Germany, U.K. and Japan, on the measure.
Bank of Canada senior deputy governor Carolyn Rogers sounded the alarm on Canada’s lagging productivity in a speech last month, saying the country’s need to increase the rate had reached emergency levels, following one of the weakest years for the economy in recent memory.
The government said it was proposing the tax change to make life more affordable for younger generations and fund efforts to boost housing supply — and that it would support productivity growth.
A challenge for investors, founders and workers
The change could have a chilling effect for several reasons, with companies already struggling to access funding in a high interest rate environment, said Bergen.
He questioned whether investors will want to fund Canadian companies if the government’s taxation policies make it difficult for those firms to grow — and whether founders might just pack up.
The expanded inclusion rate “is just one of the other potential concerns that firms are going to have as they’re looking to grow their companies.”
He said the rejigged tax is also an affront to high-skilled workers from low-innovation sectors who might have taken the risk of joining a startup for the opportunity, even taking a lower wage on the chance that a firm’s stock options grow in value.
But Lindsay Tedds, an associate economics professor at the University of Calgary, said the tax change is one of the most misunderstood parts of the federal budget — and that its impact on the country’s talent has been overstated.
“This is not a major innovation-biting tax change treatment,” Tedds said. “In fact, when you talk to real grassroots entrepreneurs that are setting up businesses, tax rates do not come into their decision.”
As for productivity, Tedds said Canadians might see improvements in the long run “to the degree that some of our productivity problems are driven by stresses like housing affordability, access to child care, things like that.”
‘One foot on the gas, one foot on the brake’
Some say the government is sending mixed messages to entrepreneurs by touting tailored tax breaks — like the Canada Entrepreneurs’ Incentive, which reduces the capital gains inclusion rate to 33 per cent on a lifetime maximum of $2 million — while introducing measures they say would dampen investment and innovation.
“They seem to have one foot on the gas, one foot on the brake on the very same file,” said Dan Kelly, president of the Canadian Federation of Independent Business.
Some business groups are worried that new capital gains tax changes could hurt economic growth. But according to Small Business Minister Rechie Valdez, most Canadians won’t be impacted by that change — and it’s a move to create fairness.
A founder may be able to sell their successful company with a lower capital gains treatment than otherwise possible, he said.
“At the same time, though, big chunks of it may be subject to a higher rate of capital gains inclusion.”
Selling a company can fund an individual’s retirement, he said, which is why it’s one of the first things founders consider when they think about capital gains.
Mainstreet NS7:03Ottawa is proposing a hike to capital gains tax. What does that mean?
Tuesday’s federal budget includes nearly $53 billion in new spending over the next five years with a clear focus on affordability and housing. To help pay for some of that new spending, Ottawa is proposing a hike to the capital gains tax. Moshe Lander, an economics lecturer at Concordia University, joins host Jeff Douglas to explain.
Dennis Darby, president and CEO of Canadian Manufacturers & Exporters, says he was disappointed by the change — and that it sends the wrong message to Canadian industries like his own.
He wants to see the government commit to more tax credit proposals like the Canada Carbon Rebate for Small Businesses, which he said would incentivize business owners to stay and help make Canada competitive with the U.S.
“We’ve had a lot of difficulties attracting investment over the years. I don’t think this will make it any better.”
Tech titan says change will only impact richest of the rich
Toronto tech entrepreneur Ali Asaria will be one of those subject to the expanded capital gains inclusion rate — but he says it’s only fair.
“It’s going to really affect the richest of the rich people,” Asaria, CEO of open source platform Transformer Lab and founder of well.ca, told CBC News.
“The capital gains exemption is probably the largest tax break that I’ve ever received in my life,” he said. “So I know a lot about what that benefit can look like, but I’ve also always felt like it was probably one of the most unfair parts of the tax code today.”
While Asaria said Canada needs to continue encouraging talent to take risks and build companies in the country, taxation policies aren’t the most major problem.
“I think that the biggest central issue to the reason why people will leave Canada is bigger issues, like housing,” he said.
“How do we make it easier to live in Canada so that we can all invest in ourselves and invest in our companies? That’s a more important question than, ‘How do we help the top 0.13 per cent of Canadians make more money?'”
More money will land in the pockets of Canadian families on Friday for the latest Canada Child Benefit (CCB) installment.
The federal government program helps low and middle-income families struggling with the soaring cost of raising a child.
Canadian citizens, permanent residents, or refugees who are the primary caregivers for children under 18 years old are eligible for the program, introduced in 2016.
The non-taxable monthly payments are based on a family’s net income and how many children they have. Families that have an adjusted net income under $34,863 will receive the maximum amount per child.
For a child under six years old, an applicant can annually receive up to $7,437 per child, and up to $6,275 per child for kids between the ages of six through 17.
That translates to up to $619.75 per month for the younger cohort and $522.91 per month for the older group.
The benefit is recalculated every July and most recently increased 6.3 per cent in order to adjust to the rate of inflation, and cost of living.
To apply, an applicant can submit through a child’s birth registration, complete an online form or mail in an application to a tax centre.
The next payment date will take place on May 17.
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