Go DAC go!

I finally figured it out, I think. Up until recently, I could not understand the city’s relentless focus on the SOEC as a convention facility. But a long a frustrating Google search of the BC Lotteries Corporation’s web site yielded the following tidbit from the 2003/04 annual report:

Host local governments where destination casinos are located receive a one-sixth share of the net income generated by that casino. Two-thirds goes to Government and one-sixth to the casino proponent for Development Assistance Compensation (DAC). […] DAC goes toward local economic development associated with a destination casino. This may include a service such as a restaurant, or a facility project such as a convention centre. Destination casino proponents received almost $8 million in DAC funding.

The city has worked hard to re-cast the SOEC as an integral part of the convention center, rather than as a stand-alone sports and entertainment complex. The difference between the two is critical. Ostensibly, the whole point of DAC funding is to encourage casino operators to invest in better facilities so that more people will gamble and casino revenues increase. DAC is not charity, but an investment to maintain and increase the government’s gaming revenue. As Las Vegas and other convention destinations vividly illustrate, conventions and gambling are economic complements. The availability of after-hours entertainment (e.g., a casino) makes a convention more interesting and a steady stream of conventioneers keeps money flowing into the casino. An events center, on the other hand, is an economic substitute for a casino. Indeed, one measure of the SOEC’s success will be its ability draw people out of the casino and have them spend a large chunk of their finite entertainment budgets on shows and sporting events rather than gambling.

The city has been very shrewd in emphasizing the convention aspect of the project and de-emphasizing the entertainment side. The proposed contract brings the SOEC under the same management and marketing contract as the Penticton Trade and Convention Centre (PTCC) and helps make the case that the SOEC is really just another meeting room—a Peach Bowl annex. Bravo to the city if they pull this off. The $25M or so in DAC funding, unlike the one-sixth share of gambling revenues that the city receives unconditionally, is project based. If we don’t get it, someone else will. DAC funding, if it materializes, will transform this project from a marginal luxury item to an unbelievable win for Pentictonites.

If the DAC funding falls though, then we should expect the convention-based focus to disappear from the city’s justification for the SOEC. (see the posting: “Conventions as an economic driver (a letter to the mayor)” on 23 May, 2006).