The second and concluding part of the paper on gambling by the Bermuda Environmental Sustainability Taskforce (BEST) follows.Compulsory question 7: Would we want to support a public policy that puts additional financial stress on social services and charities that are already struggling with funding, that could put additional pressures on local businesses that are barely making a profit, and that puts additional emotional stress on already troubled families?Importantly, the negative social and economic effects of gambling have been shown to disproportionately affect the less wealthy and more vulnerable sectors of the population, with Toronto Public Health warning that building a casino in the city of Toronto could “exacerbate social inequalities,” and the statistics released in Canada’s latest report on gambling evidencing that gambling imposes a greater financial burden on lower socio-economic groups. Similarly, legalised gambling activities have been said to act as a “regressive tax on the poor,” making “poor people poorer” and having the potential to dramatically intensify many pre-existing social-welfare problems. Furthermore, locals spending money on gambling activities can lead to corresponding reductions in the money spent in other establishments. One study found, for example, that “More than ten percent of the locals would spend more on groceries if it were not for the casino, while nearly one-fourth would spend more on clothes. Thirty-seven percent said that their savings had been reduced since the casino had opened ...”The Task Force on Gaming suggested that, in order to achieve the high quality, well-marketed casino product that we are targeting, there are strong arguments that well-known international operators rather than locals should operate casinos. This will inevitably lead to some leakage of revenues from the Island, at least some of which will come from local pockets and the remainder of which will mostly come from visitors who might otherwise have spent their tourist dollars in existing local businesses on the Island. Given the unlikelihood that a casino will attract large numbers of visitors in its own right, it seems that the majority of any tax revenues that Government would collect as a result of a casino would ultimately come from the pockets of those locals who can least afford it, and from the cash registers of local businesses. Even if some of the revenues generated are ploughed back into community projects or tourism development, the net effect to the community would be negative.Compulsory question 8: Do we really want to generate additional tax revenues at the expense of the most vulnerable members of our society and our local businesses, and allow many of the untaxed revenues to be lost overseas or, as one commentator asks, “Aren’t lawmakers sworn to protect the public, not fleece them?”The Green Paper concludes that “the positive of introducing gaming to Bermuda outweigh the negatives by a significant margin.” However, this appears to be based on some weak and overly optimistic assumptions. Assumptions include that we will be successful in filling the casinos midweek, that the introduction of casinos will lead to a 29.2 percent increase in visitor nights and that 81.7 percent of gambling revenues will be from visitors (based on the recommended scenario). As discussed previously, it seems highly unlikely that the introduction of casinos will materially increase visitor numbers, let alone by 29.2 percent and, if these additional visitors cannot be attracted, casinos will inevitably become more dependent on locals for revenue, which will reduce the economic benefit and increase the associated social costs. In addition, the Green Paper does not account for the opportunity cost of the loss of business to existing establishments caused by the increased competition for consumer dollars, and cannot quantitatively account for the whole range of social costs. Instead, it is very plausible that, once properly accounted for, the social costs will overwhelm the perceived economic advantages which, importantly, are small for Bermuda to begin with. For example, one study, which totalled the added costs cities pay in increased crime, bankruptcies, lost productivity and diminished social capital following the introduction of casinos, found that gambling generates roughly $166 in social costs for every $54 of economic benefit. Similarly, field research throughout the US indicates that every dollar the legalised gambling interests indicate is being contributed in taxes usually costs the taxpayers at least three dollars, and higher numbers have been calculated. These costs include relatively high regulatory costs, expenses to the criminal justice system and large social-welfare costs.Compulsory question 9: Would we want to take the risk that the downsides of legalising casino gambling could far outweigh the relatively small potential benefits?Another potential downside to casino gambling that Bermuda should most certainly be considering is the potentially adverse consequences of casinos for business development. The association between casinos and money laundering, tax evasion and corruption are well documented, and apparently “Companies tend to avoid locating in areas allowing legalised gambling” as “Gambling activities and the gambling philosophy are directly opposed to sound business principles and economic development.” Under the section on internet gambling in the Green Paper, the Innovation Group points out that “The perception of illegal activity occurring within Bermuda’s borders could serve to deter business in the financial sector from locating or maintaining their offices in Bermuda.” Isn’t this something that could extend to casino gambling? While Switzerland appears to be an example of a jurisdiction that has successfully maintained both international business and casino gambling, it also has responsible gaming regulations that have been described as “[p]robably the strictest in the world”. It is certainly worth Bermuda treading carefully, particularly in the current “anti tax haven” environment. Even on a small scale, opening up avenues for money laundering could have the potential to tarnish Bermuda’s reputation among international leaders, regulators and rating agencies. Furthermore, money laundering through casinos could make it easier to get dollars from illegal activities into circulation, which could be used to further perpetuate gang activity. There have been several allegations of corruption in Bermuda politics in the international media in recent years and, given the recognised link between casinos and corruption, their legalisation could offer increased opportunities for this and serve to further mar our image in the international community.Compulsory question 10: Would we want to legalise gambling if there is even a small risk that this decision could deter international business, which currently brings in close to ninety cents of every dollar of foreign currency arriving on the Island and is crucial to Bermuda being able to service our current debt repayments?The potential downsides of gambling, both social and economic, are becoming increasingly well-documented and, as touched on in several studies, these can outweigh the potential benefits, particularly in areas where the economy is already strong. In fact, the NGISC “is concerned about the significant danger posed by the continuing expansion of legalised gambling into places where the economy is already prospering” due to the small economic benefits, rising social costs, and the reduction in revenue to “more deserving places” due to the increased competition.Similarly, a more recent article discussing the possibility of a casino for Toronto asserts that “while destination casinos in economically challenged areas can have economic benefits for the host city, positive economic effects are ‘muted or mixed’ in more economically robust areas”, and the California Governor’s Office asserted that, on a regional level, the combined ranges of the various socio-economic costs are so large that they tend to dwarf the localised economic positives. Despite a rise in unemployment in recent years, Bermuda still maintains a relatively strong economy by global standards. The preceding evidence therefore seems to suggest that the net economic outcome would be small to negative before even factoring in the inevitable social costs. While some evidence from Switzerland suggests that the profits from gambling do exceed the economic value of the social costs, it remains unclear whether the net effect would still be positive after accounting for any business lost from other establishments caused by the introduction of casinos. It is also worth noting that casinos in Switzerland have only been profitable in the larger population centres and that a recent vote has led to an amendment to the Swiss constitution that will require gambling operations to do more to counter compulsive gambling. This is despite Switzerland already having some of the strictest gaming regulations, worldwide. Overall, it seems that the potential of small economic gains cannot justify the long list of potentially serious social costs that will inevitably accompany them, and the potential economic risks we may be taking.ConclusionsThe Bermuda Environmental Sustainability Taskforce (BEST) began this research hopeful that the legalisation of gambling had some potential for improving our tourism industry. In the Green Paper on Gaming for Bermuda, the Task Force on Gaming concluded that the question we should be asking is “Are the rewards that [gambling] may bring to Bermuda worth the risks that Bermuda would take by proceeding with [gambling]?” Unfortunately, the more we have researched, the more it has become apparent that the answer is “No”, and that the legalisation of gambling is a bad idea in general and an even worse idea as it relates specifically to Bermuda. Certainly before any decision to legalise gambling can be made, we must first be able to satisfactorily answer the ten compulsory questions raised throughout this research. Given the relative certainty that any rewards gambling may bring to Bermuda will be relatively small, and the huge uncertainties surrounding the risks involved, it seems that this is one gamble we would be wise not to take.In summary, legalisation of casino gambling is highly unlikely to attract large numbers of new visitors and is therefore likely to hurt local businesses rather than help them by increasing competition for both local and existing visitor dollars. Similarly, new hotel development is likely to hurt existing hoteliers by increasing the number of hotel rooms when we already have an oversupply, and this does not constitute a valid reason for legalising gambling. Unless locals are prevented from gambling, the legalisation of casino activities will in all likelihood have a disproportionately negative impact on the poorest members of our society, while placing additional burdens on our already stretched social services and local charities. The economic costs of regulation, additional policing and the potential for increased crime, as well as the emotional toll of problem gambling on our community, could be high. In addition, an overseas operator, which is suggested could achieve the high quality casino product and marketing that we are targeting, will inevitably lead to the leakage of Bermudian dollars overseas. Casinos could potentially provide gangs with a way to launder funds from illegal activities and, critically, the associations of gambling with money laundering, tax evasion and corruption could conceivably reduce our viability as an international business centre. Given that the casino market in North America is approaching saturation and is also under threat from online gambling, and that the net economic benefits of casino gambling are known to be small at best for already well-established economies (without even factoring in all of the unmeasurable social costs), a casino for Bermuda just doesn’t seem to make a lot of sense.The Bermuda National Tourism Master Plan suggests developing Cultural Tourism, Business Tourism and Sports Tourism as our three core product offerings. A high end casino features only as a small part of the complementary Leisure and Entertainment Tourism product in our plan, which raises questions about our apparent fixation on it? Instead of distracting ourselves with the one incidental aspect of our proposed tourism strategy that has a high potential to do more harm than good, we would do better to focus on the core elements of our Master Plan and the identified eight strategic objectives that will enable us to achieve these.From the perspective of US economic history, the United States has had previous economic cycles with widespread legalised gambling activities. Some economists suggest that the re-criminalisation of gambling, along with the state constitutional provisions that were used to make it as difficult as possible for future generations to re-legalise it, lends substantial credence to arguments that, both historically and currently, the legalisation of gambling eventually causes increased taxes, loss of jobs from the overall region, economic disruption of other businesses, increased crime and large social-welfare costs for society in general and government agencies in particular. Utilising legalised gambling activities as a strategy for economic development has in the past been thoroughly discredited, and “Those who forget the lessons of economic history are condemned to relive them.” Let’s learn from the mistakes of others, not repeat them.