Committee Transcript 1996-Aug-12 | Legislative Assembly of Ontario

ALCOHOL, GAMING AND CHARITY FUNDING PUBLIC INTEREST ACT, 1996 / LOI DE 1996 RÉGISSANT LES ALCOOLS, LES JEUX ET LE FINANCEMENT DES ORGANISMES DE BIENFAISANCE DANS L'INTÉRÊT PUBLIC

Consideration of Bill 75, An Act to regulate alcohol and gaming in the public interest, to fund charities through the responsible management of video lotteries and to amend certain statutes related to liquor and gaming / Projet de loi 75, Loi réglementant les alcools et les jeux dans l'intérêt public, prévoyant le financement des organismes de bienfaisance grâce à la gestion responsable des loteries vidéo et modifiant des lois en ce qui a trait aux alcools et aux jeux.

BURLINGTON CENTRAL LIONS CLUB

The Chair (Mr Gerry Martiniuk): Good morning, members of the committee and ladies and gentlemen. This is a continuation of the hearings of the standing committee on administration of justice considering Bill 75. I see a quorum. The member for the third party, Mr Kormos, has phoned and advised that he is unavoidably detained and consented to the committee proceeding this morning. Our first presenter this morning is the Burlington Central Lions Club, represented by Mr Mike Wallace and Mr Ron Bell.

Mr Ron Bell: Mr Chairperson, members of the committee, my name is Ron Bell and I'm the chair of Nevada ticket fund-raising for the Burlington Central Lions Club. I'm here with fellow Lion Mike Wallace. I wish to thank you for the opportunity to present our club's perspective on the introduction of video lottery terminals in our community and the changes we would like to see to Bill 75.

The Burlington Central Lions Club has reviewed the proposed legislation, Bill 75, and we have identified a number of areas of concern we wish to bring to your attention. Our purpose here today is to make concrete suggestions on how the bill can be improved to serve the needs of local charities and their communities.

It is our understanding that Bill 75 will allow video lottery terminals to be introduced in liquor-controlled establishments throughout Ontario to raise revenues for provincial programs and for charities in the province. The use of VLTs will be restricted to those 19 years of age and older.

As members of the Burlington Central Lions Club, it is our strong opinion that the proposed legislation will have a negative effect on our club's ability to fund-raise for local charitable needs. At present, the Burlington Central Lions Club has a Nevada or break-open ticket outlet in a licensed liquor establishment in Burlington. We also share Nevada ticket revenue from the bingo hall in which we are a sponsor organization. This source of fund-raising is a key component of our club's ability to carry out our charity work in the community. In real dollars, our net proceeds from Nevada ticket sales are $20,000 per year. This represents as much as one third of our total fund-raising efforts for the club.

As federal, provincial and municipal governments continue to cut back their expenditures, there is more and more pressure on service clubs and other community groups to assist in meeting the needs of their community. Here are two examples of the Burlington Central Lions community work. In 1995 our club raised over $50,000 for our local hospital's capital needs, and this year we are raising a similar amount for defibrillators for the Burlington fire department. These are only two of our projects and both are meeting the local needs that governments are unable to fund.

Areas of concern: We are not necessarily opposed to the use of VLTs in the province to raise both charitable and government revenues, but we believe Bill 75 could be improved. After reviewing Bill 75 and consulting with our Lions Club and other charitable group leaders, we believe there are two areas of concern Bill 75 needs to address:

(1) That local charities within the municipality be the direct recipients of the VLT charitable revenues.

(2) That the percentage of revenue generated by the VLTs for charitable purposes be clearly defined.

Local charity involvement: The act in its present form does not identify which or how many charities will benefit from VLT fund-raising. Local charities rely heavily on bingo and break-open ticket revenue to support their activities in the community. The introduction of video lottery terminals could wipe out this revenue source for our club. If our present Nevada ticket outlet was to introduce a VLT into its business, our ticket sales would likely be greatly reduced or eliminated. Under the proposed legislation the charity revenue from the VLTs would go to the province to be allocated on the recommendation of the minister.

It is our opinion that VLT locations should be associated with local charities, similar to the present system for bingo and break-open tickets. At present, it is the responsibility of local charities to find commercial sites willing to operate as Nevada ticket outlets and sell break-open tickets on behalf of the charities, which must register the outlets with a municipal licence. The local charities are responsible for the administration of the Nevada ticket sales at these commercial outlets and directly receive their share of the ticket revenue. A similar system should be adopted for VLT locations to ensure local charities have the ability to serve their local needs.

Percentage for charities: The legislation as proposed leaves the amount and payment of revenues earmarked for charities to the recommendation of the Minister of Consumer and Commercial Relations. The Minister of Finance has in the past stated that 10% of the revenue will go to charities in Ontario. We feel that a minimum percentage should be incorporated in the act to ensure that a significant sum of VLT revenues is available to charities in Ontario. We would suggest that a 20% minimum should be incorporated into the legislation. This would ensure that local charity work could continue at its present level.

Our club has approached the city council of Burlington for support of our position. The city has responded and its position is attached in appendix 1 to this submission.

In conclusion, we strongly recommend that you incorporate our suggestions into Bill 75, as they will have a threefold effect:

(1) Greater acceptance of the video lottery terminals as constituents will have a clear understanding that a large percentage of the revenue will go directly to their community.

(2) Better distribution of the charitable funds as VLT charity revenues will be allocated by local volunteers for local needs.

(3) Local charities and community groups will be able to continue their fund-raising efforts in partnership with the province instead of in competition with the government.

Thank you for your time, and we would be happy to answer any questions.

Mr Bruce Crozier (Essex South): Good morning, gentlemen. Mr Bell, I think you've hit the nail right on the head with your suggestions as to how charitable fund-raising should be done and how it should be community-based. In your recommendations I see where you have the community at heart. Your last comment, that you're "able to continue...fund-raising efforts in partnership with the province instead of in competition with the government," is a very good point, because as you're well aware, the government is going to take 70% of the revenues from this, notwithstanding the fact that it says that the bill is "to fund charities through the responsible management of video lotteries."

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But I want to get to the point on break-open tickets and your reliance upon them. The information we have is that in Ontario the profit to charities is $197 million a year. The government, in its largess, has said, "We'll give you $180 million from VLTs." They have no idea how it's going to affect your Nevada tickets, and I believe, as you do, that it's going to drastically eat into those Nevada ticket sales. We've heard figures of 40% and more. So what they're saying is that notwithstanding the fact that in Nevada tickets alone you're hardly going to get the revenue you got before, they're even going to suggest that you'll get less than the total Nevada tickets in the province of Ontario.

As far as the local control, how would you propose that you would work with the government to see that the funds are retained locally? In other words, regulation we need to control lottery revenues, I don't suppose you want to get involved in that regulation, but you want to be part of the distribution of those funds. Is that correct?

Mr Bell: Yes. Perhaps I could ask my colleague Mike Wallace to go over this portion with you, which we have done in conjunction with the city.

Mr Mike Wallace: To answer your question directly, we spoke not only to our club but to a number of sponsor charity groups within the city of Burlington. They're happy, actually, with the way the Nevada ticket operation and the bingo operation work, where there's a municipal licence and they deal with the local government to do the administration of the funds. Their feeling was that a system which would allow the local municipality to determine how many VLT outlets there are, where the locations are and which charities are earmarked for those funds, done through the local municipality, would be the best, most efficient way, rather than trying to deal through the bureaucracy down here in terms of whether the local Burlington Central Lions would ever see a penny from a VLT that was in a bar that we had previously had our Nevada tickets in.

Mr Gerard Kennedy (York South): I'm wondering if you're concerned that this might take away completely the role of the Lions in the sense that the Lions Club acts as a conduit for community goodwill, deals with a lot of requests, identifies needs in the community, and the government takeover of the gambling may find instead people applying directly to government. I also wonder if you might want to comment on what happens when there are so many charities that could apply because it's no longer just you acting as a community service club. Seen as a government involvement, won't there be a tremendous number of the charities operating in Burlington that will want, then, to have part of the revenue? How could that possibly be handled?

Mr Wallace: Our concern is that what will happen is the dollars come in here and the large, organized groups -- the cancer society, Easter Seal Society, the large charities with the local staffs -- will get the provincial money from their provincial offices. For us, as a local service club, we're all volunteers, and the money is raised and distributed by volunteers. We identify the local needs, which you have mentioned, that don't necessarily fall within the realm of what those other larger organizations are doing. We are concerned that we would never see any trickle-down from that.

The other advantage to dealing with us is that it is volunteers who are putting in the time to do the administration, where when you're handing out funds to provincial or national or international organizations, some of that money will get eaten up in their administration of the cash through their staffing and their staffing levels.

Those provincial groups, which I have worked for in the past, have professional fund-raising staff. They have the ability to implement programs, whether it's direct mail or whether it's event fund-raising, that the local volunteer group doesn't have the expertise or the time to be able to do to replace the money we're going to lose off Nevada tickets. Nevada tickets, to be honest about it, are relatively easy for us. There is some administration to it. It raises a fair amount of dollars for us, one third of our budget approximately. As a volunteer group, we need that ability.

Mr Jim Flaherty (Durham Centre): Good morning. We've had several days of hearings, and I'm pleased to hear from a Lions Club. We have not heard from a Lions Club yet, I don't think. We have heard from Rotarians. A number of the members of this committee are members of service clubs, so you're talking, to some extent, to the converted about the need to raise money for charities.

A number of the suggestions you've made, which we all appreciate, deal with matters that are not in Bill 75, but deal with implementation matters. There will be further consultation. We're very pleased as part of this process to receive input on that, although it's not our direct concern with Bill 75, which sets up the enabling legislation, the structure, so that the government can go forward with the consulting about implementation, about what's a charity and what isn't a charity and how proceeds can be allocated.

I would say this about the figures mentioned by Mr Crozier, the member for Essex South: The overall charitable revenue now, revenues going to charities under the present situation, is about $290 million. This legislation would result in up to another $180 million going to charities. So from all of our points of view I'm sure we all can take some joy from that, because the goal of the exercise, after all, whether it's the Lions Club or whoever raising the money, is to get more money into the hands of needy charitable causes.

Under Bill 75 there will be the permanent charity gaming halls as a source of funding for charities. I imagine the service clubs would be involved in them, as they have been over the years in various bingo halls and so on around the province, providing the manpower so that they get revenue from it. The second source will be the funds coming from video lotteries, which you've mentioned, at 10% excluding video lotteries at racetracks. The roving charities, the Monte Carlo nights, will continue to exist on a limited scale. They'll be only one day rather than three days and they'll be scaled back, but that opportunity to raise money for charity will still be there.

As I say, the overall revenue we're looking at is up to $180 million more for charities. With respect to the Monte Carlo nights, which are earning charities $10 million to $15 million per year, we're looking at an increase of more than 10 times what charities in Ontario are receiving today.

I raise these points with you in a hopeful way that the service clubs will take hold of these opportunities under Bill 75. I welcome the suggestions you've made, which are here. We'll certainly look at those as the matter proceeds through the implementation consultations, and there will more of those.

Mr Frank Klees (York-Mackenzie): Along the same lines, I just want to reassure you that this legislation that's before us, as Mr Flaherty has indicated, is the framework only.

I also want to reassure you in terms of the attitude this government has towards the volunteer sector. You'll recall that the Premier appointed his parliamentary assistant, Julia Munro, with the express responsibility for coordinating volunteer initiatives around the province and to ensure the volunteer sector has the attention of the government and also has the assistance of the government in delivering its services.

I'd like to make a recommendation to you. That is that you perhaps communicate in writing with Ms Munro, expressing your concerns and, more importantly, your recommendations in terms of implementation and that you perhaps volunteer to participate in this process, because that's really what this is about. What these meetings are about is to provide you with an opportunity to come forward and make your recommendations so that we can ensure this is delivered to everyone's benefit.

The Chair: Mr Bell and Mr Wallace, I thank you for your attendance here this morning. It's most valuable.

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COMMUNITY POLICE LIAISON COMMITTEE, METROPOLITAN TORONTO POLICE, 12 DIVISION

The Chair: Our next presenter is the community police liaison committee of 12 division, Ms Barbara Spyropoulos. Good morning and welcome.

Ms Barbara Spyropoulos: Good morning. I'm with the community police liaison committee from 12 division. We're a partnership with the community, the politicians and the police who try to make sure that our community is in relatively good working order.

I've prepared a handout for you. It's on this hideous salmon-coloured paper for two reasons: (1) You won't lose it in a stack of paper, and (2) that's what was donated.

I'm not going to go over any of the objections that have probably been made in the past. I've been sort of monitoring the newspaper. We have all those objections, but we're not going to waste time talking about them here. You've heard them already. Our concerns are with regulation, with formulation of payout and with enforcement of whatever laws it is we finally cook up in the end. Our perspective is from a crime prevention and enforcement point of view.

Basically, what we're after is the video slot machines themselves. The first part of your plan is to put them into the casinos and we figure: "Well, fine. What the hell." Right? I mean, the gambling is in there anyway. It's a fairly easily monitored and enforced venue, so we're not going to discuss that. But our concerns are with the second and third phases of your plans where you want to put them into restaurants and bars and then who knows what else. Probably the last thing we want to see is have them in the back seat of the churches.

In our community, we have some serious problems with drug dealers, street prostitution and all the crimes that accompany them. We're really worried that the institution of video slot machines is going to make things even worse for us, and I'll try to outline why we think that.

What we've got here in this handout is a collection of recommendations and concerns that we've brought up in a lot of our discussions. The first point is, we really don't want to see anybody with a criminal record be given access to these machines. I'm not talking about playing the machines themselves; I'm talking about having an establishment either as a manager or as an owner in which these machines are located because we have a problem with medium-sized and smaller establishments which have been taken over by drug dealers and pimps and they use them as bases of their operations. We feel that if you've got video slot machines in there, it gives these people an excuse to hang around in these places. We already have problems with the pinball machines. If they're in a location, these guys hang around the particular sites like flies around honey. Giving them a slot machine to play with, allegedly, just is not going to cut it for us.

We're really concerned that the charities receive a significant portion of the profits because, quite frankly, we rely on them very heavily to provide outlets for our youth to try to discourage them from loitering and hanging about and getting into all kinds of trouble.

Our people also want to see that the government profits be put into specific concerns rather than just disappear into a large pot. Someone suggested that they would like to see warning labels on the machines to the effect that gambling is addictive, the same way as you make these warning signs mandatory on cigarette packages.

We're very, very concerned that the slot machines be in venues which are not accessible to minors. There isn't one person we've talked to who would like to see their children playing with the slot machines for a whole variety of reasons that you probably already know yourselves. We feel that if you put them into restaurants and bars, you're not going to be able to stop the teenagers from using them. It's not like when you're serving drinks where you have a one-on-one relationship between the server and the patron. The server can walk up to the person and say, "Your ID's no good" or "You don't look old enough. I'm not going to serve you." With a slot machine, it's the machine that's standing off on its own and it doesn't take much for a person to enter a premises, walk over to the machine and start to play with it. We had major problems with the pinball machines with our youth and the slot machines are not going to be any better.

We don't think it's fair to put the onus on the business owner to monitor who's using the slot machines and who's not, because, frankly, it's not going to happen. We know what happens in our community right now and monitoring is not a big priority when you're trying to make a buck. So what we suggest is keep it to venues where admission is restricted to 19 years old or over. That would be the casinos, that would be clubs, whatever else, but not bars that double as family restaurants, like, for example, an O'Toole's. They obviously cater to the younger generation but they also promote themselves as a family restaurant. If you have that hybridization, we would suggest it's not appropriate to put video terminals in there.

We'd also like to see there be a minimum seating capacity before a place is eligible to have a slot machine. This is for the reasons that I outlined before. Some of the smaller establishments, you put in a slot machine and it's a target for the dealers and the pimps to hang around as an excuse. It's happened in our community, it continues to happen in our community and we're having a lot of trouble trying to oust these people. So please don't make it any harder for us.

What we've also noticed is that if you institute something whereby these people are able to hang around and loiter, you do get an increase in crime, in petty theft, in shoplifting and in assaults. What we've found is kids with behavioural problems, such as what tend to be drug addicts and so on, will take out their frustrations, if they lose on a pinball machine, on what's often the single clerk in the establishment, whether it's the waiter, whether it's the owner, whether it's the server behind the fast food place, whatever, and there is physical violence. Especially in the small establishment, if you've only got one person there in the first place, you don't want to set him up.

I've also included in the handout two articles. One of them is from the New Yorker and I somehow forgot to put the proper credit on the top. I apologize for that. The other one is from a presentation that was given in a crime prevention conference that was held in Vancouver recently. Neither one of them deals with video slot machines per se, but the principles behind what they address are identical. The bottom line of the two articles can be broken into two different things: One is that if you're going to do this, you must limit the number of establishments that are eligible to have these machines; and secondly, and this is critical, in the establishments which have the privilege of having the machines on their premises, enforcement must be strict. If they disobey the laws which are set out, then they must be dealt with quickly and effectively. We're not sure that there's a political will to do this because we see what goes on with the Liquor Licence Act, and quite frankly, we have major, major problems with that.

We have establishments in our division which have had shootings and all kinds of violations against the Liquor Licence Act and nothing is done. They're open two years later. In fact, when they know they're going to be set up, so that two years from now they're going to be closed down because they're going to eventually lose their licence, what they do is they simply stop paying the rent and they get two years' worth of free rent out of the landlord. So you have to enforce whatever rules you're going to make up and if you're not willing to do that, then don't put the slot machines in our neighbourhoods because it's just not going to work.

We had a lot of discussion about this and when we finished, we were still at the point where we couldn't figure out why it is that something that has been proven to be a problem in other jurisdictions is being proposed in Ontario. This doesn't make what's called common sense.

Finally, once you set out your draft of what laws you want, we would like to have further input into it. With that, I'll close, if there are any questions.

The Chair: Thank you very much. We have approximately three minutes per caucus.

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Mr Terence H. Young (Halton Centre): In your view what is the source of the fact that they can't police the existing liquor laws now?

Ms Spyropoulos: We see it as being the liquor board itself, because we do all the paperwork, the police go in, they do their investigations, citizens make their representations, we get all the petitions together, we go before the liquor control board and it's really a namby-pamby sort of attitude, "Well, maybe this and maybe that." As far as we're concerned, having any of these things, for example, a liquor licence or whatever, should be considered a privilege and not a right, so anybody walking in off the street should not automatically be eligible for this thing. You should prove your worth, you should prove that you're concerned about the community, you should prove that you're willing to abide by the laws, and if you're not, don't give it to them.

Mr Young: The problems you're having now are related to loitering around pinball machines?

Ms Spyropoulos: Not specifically. The problems in our community go down to the very bottom line, which is drug abuse. What I'm trying to explain is that having pinball machines, having anything like that becomes an excuse for pimps and dealers to hang around the premises and then all the addicts congregate to that particular site because they know they can pick up there. Of course, that causes all kinds of problems for the surrounding community.

Mr Klees: I share your concerns regarding the need to control who has access to these machines. You've made some good points. It is the intention of the government, by the way, to extend some very strong responsibilities not only the licensee but, as a result of another part of this legislation, ultimately through to the land owner who owns the premises.

Ms Spyropoulos: That would be a help.

Mr Klees: As we see this, it is a potential for abuse if we don't have the proper restrictions and penalties in place that are meaningful. You're aware that a liquor licence is very valuable. The intention of the government is that where there's abuse on the control of gambling and allowing minors under the age of 19 to do so, at risk is not only a substantial fine but ultimately the loss of the liquor licence.

Ms Spyropoulos: That's the problem, the "ultimately."

Mr Kennedy: Thank you very much, Ms Spyropoulos, for your presentation and the original content in it. We have not had as much input from people who are actually thinking about the consequences of this in their community. I wonder if I can ask you about what you think the consequence of VLTs will be in terms of pressures for enforcement that are experienced by police now.

Ms Spyropoulos: It's almost impossible to patrol now. The police are so understaffed in our community that it's ridiculous. You end up with what they call the FIDO philosophy which, pardon the expression, loosely translated is, "Fuck it and drive on," because they know that the courts aren't going to pay attention. This is not going to help.

Mr Kennedy: Do you feel a great deal of confidence? The government's plan is to have the liquor control board combine with the gaming commission, the same people, the same structure that exists now, to enforce this. Does that give you a great deal of confidence?

Ms Spyropoulos: Confidence? You must be joking.

Mr Kennedy: Could you elaborate a bit on that?

Ms Spyropoulos: It's not going to happen. They can't patrol what they've got to do now. You extend it any more -- it's not going to happen. We don't have the manpower.

Mr Kennedy: The members on the government side of the committee have tried to portray video slot machines as entertainment, as useful things in the community, helpful to the hospitality industry, beneficial to charities and worthwhile in terms of any social outcomes that we could take.

I just want to do a quote from Staff Inspector Gottschalk that I read into the record last week. He says VLTs are a bad idea, a nightmare. His conversations with other police forces lead him to believe that crime will rise significantly. He notes that of people in prison populations, 30% have gambling addictions while only 7% have drug problems, and this is a tendency you don't want to have in your local community. Could you comment on those two things: the government's position and the police's concern?

Ms Spyropoulos: We're having enough trouble patrolling the 7% of drug addicts, and if you add to that 20%, you said, who are going to be gambling addicts, forget it. Let's put it this way: In 12 division there are six patrol cars. I've got more cars in my driveway. What do you want from them? They can't do it.

Mr Kennedy: There is some sense from the government side that we really shouldn't be concerned, that gambling machines like this are innocuous in the sense they wouldn't bring on crime. You've talked about pinball machines, you've talked about some of the existing establishments. How does this make you feel?

Mr Spyropoulos: Mr Kennedy, I heard until I was absolutely nauseous that street prostitution is a victimless crime, I've been told that drug addiction is a victimless crime, that drug dealing is a victimless crime. Anybody who says that -- why don't you come into my community? I'll give you a guided tour and I'll show you just how victimless those crimes are. This is not going to be any different.

What about the guy who gets addicted and goes and blows his salary on this nonsense? Let me tell you it doesn't take much. I was in Winnipeg last month and I saw people at these stupid machines and it was unbelievable. One woman came in, sat down at the machine, the poor guy she was with sat at the table, they ordered and she came over; he had to call her six times to come to the table. She came, grabbed two French fries and went right back to the machine. This is an addiction. We've got problems with other addictions.

Mr Peter Kormos (Welland-Thorold): Thank you, ma'am. I appreciate your candour. I don't come from Toronto; I come from down in Welland-Thorold, which is smaller-community Ontario. The FIDO syndrome -- I love it because it's dead on -- is across the board and it's not to fault our cops, because they're doing the best they can with increasingly diminishing resources.

Part of what Bill 75 does is that it eliminates the Liquor Licence Board of Ontario. It goes -- granted, in my view -- the one big step towards privatizing the regulation of the liquor and gaming industry. I suspect we're going to hear from liquor licence inspectors who are going to talk about the limited resources they have.

Advocates of slots talk about 2% to 3% of the general population being gambling addicts. Again there are data that say that, but what's interesting -- we're talking about slots now, we're talking about the introduction of this brave new world and we're talking about a generation of young people who have been nurtured on these electronic games, almost conditioned Pavlov-style -- a researcher called Frisch down at the University of Windsor says that among adolescents -- he's not talking about the general population -- he identifies as a result of his research 17% of the adolescent population, approximately half of which have a pathological gambling problem, the other half of which are at high risk. Holy zonkers, and these slots are right up their alley.

What I'm fearful of, and again I appreciate what the researcher from the Netherlands said about statistics and researchers, "Statistics are often used in the same way a drunkard uses a lamppost: for support instead of enlightenment"; I appreciate that comment as much as I do the FIDO acronym -- I'm concerned about there being a new phenomenon of a new generation of people for whom gambling is even more addictive than it was for you and me and any of us. It's not the "other"; anybody in this room is as capable of becoming an alcoholic or a drug addict or a gambling addict, and any of us who think that we're not, that we can't succumb to that disease, are living in another world. I'm worried about the new generation.

Ms Spyropoulos: I'm worried about them too.

The Chair: Unfortunately our time has elapsed. I thank you for attending this morning and making your presentation.

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ONTARIO LIQUOR BOARDS EMPLOYEES' UNION

The Chair: Our next presenter is the Ontario Liquor Boards Employees' Union. Mr Nielsen and Mr Ristan, welcome this morning. Please make yourselves comfortable. You have 20 minutes in total, including any questions the committee might like to ask you. Please proceed.

Mr Heino Nielsen: I just wanted to start by saying that my name is Heino Nielsen and I want to thank you all for allowing us to make this presentation today. Art Ristan has joined me and in the crowd is Sharon McTamney, our union representative for the clerical people at the Liquor Licence Board of Ontario as opposed to the inspection people.

You've got our report. I want to pick some comments from the report to read out and I'll try to leave some time for questions which may come out of this. I'll launch right into it.

The widespread introduction of gambling in our province, including but not limited to the introduction of video lottery terminals at licensed establishments, will have a major impact on all sectors of our society. Legalized gambling operations will signal an acceptance of gambling that will, in effect, give permission to many who would not otherwise have engaged in gambling to do so. This increase in gaming activities will negatively impact on the quality of life for individuals and our communities. Youth and those prone to addiction will be most affected.

The manner in which the government, on a very hurried timetable, has introduced the act and set into motion the reorganization of the current Gaming Control Commission and the Liquor Licence Board of Ontario is also of great concern given that the working lives of the employees of both those organizations will be thrown into disarray. The reorganization will result in the termination of employees at both agencies, with only select employees being offered re-employment at the AGCO for a six-month period. Most of these dedicated employees will, as a result, lose their current benefits and entitlement. Some will also face unemployment. In the rush to legalize gambling in Ontario, the government has ignored the public interest and has failed to ensure that this initiative will be implemented in a measured and controlled way.

The act identifies public interest as a duty of the proposed Alcohol and Gaming Commission of Ontario: "The commission shall exercise its powers and duties in the public interest and in accordance with the principles of honesty and integrity, and social responsibility." The statutory definition of these principles is, however, left undefined. Without proper definition, the act fails to ensure that the level of control over gambling will in fact be sufficient.

All employees of the LLBO and GCC are deeply concerned with this government action. Seventy-seven members of the OLBEU are currently employed with the Liquor Licence Board of Ontario, an agency that will cease to exist with the passage of the act.

In this report we've set out four points we want to comment on, and they are just some comments about the introduction of gambling; the importance of strict enforcement in the event that gambling is indeed legalized; some concerns about the staffing of the new Alcohol and Gaming Commission of Ontario; and an alternative approach.

To start with, some comments: The act sets into law a framework for the introduction of legalized gambling in the province of Ontario. To oversee gambling operations, the act also sets up a legislative structure and bureaucracy to monitor and control the growth of various types of gaming operations.

Minister Sterling stated that the introduction of legalized gambling through casinos and VLTs would have broad positive economic impacts for this province. Further, he stated that the introduction of gambling would be "measured and controlled." The numbers of VLTs would be the lowest on a per capita basis of all provinces where such machines are permitted.

Bill 75 in and of itself does not ensure that any of these goals will be met. Only the introduction of strict regulations and a large enforcement arm for the AGCO can safeguard the province from the wide variety of problems and abuses that arise with the introduction of gambling.

Currently there are 15,586 licensed establishments in the province. These establishments can be divided into three groups: hotels; chain restaurants and dining lounges, including what are called family restaurants; and finally, bars and taverns. Most of these licensees will apply for VLTs. In the case of hotels, whole banquet rooms may be converted to VLT parlours. Bars and taverns in turn will set aside sections of their establishments for VLTs. Many chain restaurants and dining lounges will also seek to introduce gambling. There can be no question that competitive pressures within the hotel industry will force this expansion. Licensee patrons will want full-service establishments, and full service in the future will include the ability to gamble.

Under provincial regulations, people under the age of 19 can frequent licensed establishments, including strip bars. Although the law prevents their being served alcoholic beverages, they can certainly be on premises. This further complicates the control and enforcement requirements, as a person of legal drinking age will as a result, potentially at least, be exposed to VLTs.

Further, the introduction of legal VLTs will do nothing to stop the existence of illegal video payout machines which have become quite common in many non-licensed establishments. While many of these machines are marked as being purely for amusement, a significant number of establishment owners pay machine users for accumulated credits even now.

What will be the future structure of gambling in Ontario? Many non-licensed retailers will continue to maintain illegal payout lottery machines. The existence of these machines will remain uncontrolled and access to these machines will be available to all age groups. Youth who legally enter licensed establishments will also be exposed to the VLTs of the AGCO. Over time, banks of VLTs will be found in over 10,000 of Ontario's licensed establishments, ranging from taverns to restaurants to major hotels. Permanent charity casinos and racetracks will also feature a full range of gambling opportunities to patrons. Finally, large dedicated casinos similar to the ones operating in Windsor and by the Rama First Nation will expand to many other communities. In all these cases, the consumption of alcohol will be intertwined with the opportunity to gamble.

Some comments about the need for strict enforcement: The creation of the AGCO, and the dissolution of the current LLBO and GCC, in and of itself will not ensure that the VLTs and other gambling establishments are adequately controlled. They have also stated that the legalization and licensing of gambling operations will reduce the illegal gambling that already takes place. It must be noted, however, that to date no concerted effort has been made to stop illegal gambling through increased enforcement or strict penalties for those convicted of illegal gambling. Therefore, legal gambling operations may simply add to the quantity of gambling that takes place in Ontario rather than replacing illegal gambling which already exists.

The Liquor Licence Board of Ontario is currently responsible, as I said, for 15,586 licensed premises. LLBO inspectors are also responsible for over 82,000 special occasion permits which are issued to allow for the sale of alcohol at all kinds of events like community festivals and weddings. This function is currently carried out with 33 inspectors, three investigators, five regional managers and of course their director.

With their current mandate, which does not include any responsibilities in respect of gambling, the inspection system is already stretched to the limit. On average, each inspector is responsible for 500 establishments and over 2,400 special occasion permits annually. Adding to this ongoing workload, about 2,000 calls for inspector services are being logged on the inspection computer system monthly. Many of these calls require two or three inspections to be resolved. In fact, most of an inspector's time is now dedicated to responding to such calls for assistance, leaving regular inspection of establishments as a low priority. An establishment can expect a regular inspection once every six years. With the current workload already at a crisis level, any increase in responsibilities would stretch the capacity of inspectors beyond the breaking point. Without adequate inspection, the door will be open for rampant abuse.

In addition to the current workload of the LLBO inspection branch, the approval process for granting renewal and transfer of licences must also be considered. If the government makes good on its plans to introduce VLTs in licensed establishments, a high standard of licensing is essential. I've put in some numbers -- I won't bother reading them -- just one year's workload for the employees who do licensing at the Liquor Licence Board. That's the previous year.

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Overseeing the licensing process are 15 employees. These employees prepare reports and documentation which are then submitted to the liquor licence board for their approval.

This workload precludes extensive evaluation and assessment of applications. The licensing process will be compounded by the additional approvals and procedures that will be required with the introduction of VLTs in many of those establishments. The minimal staffing will work against a measured and controlled implementation of gambling in Ontario. A quantum increase in staffing levels will be required to address this problem.

Some concerns about the way the new agency will be organized: The creation of the AGCO has proceeded without consultation with the unions representing the employees of the liquor licence board and the GCC. A single meeting with representatives of Management Board of Cabinet was described by those representatives as negotiations. However, at best it was a meeting during which the vague intentions of government were laid out to the representatives of the three unions affected. Management Board representatives refused to disclose the intentions in respect of staffing at the new agency, and without such basic disclosure, meaningful negotiations could not take place.

They stated that with the creation of the AGCO, the current LLBO and GCC would be wound up. Employees who opt to go to the new agency would defer their severance rights in lieu of a guarantee of at least six months' employment at the AGCO. It would take at least six months for management at the new agency to determine the staffing requirements for the agency, including areas of staff duplication. Soon after the expiry of the six-month adjustment period, the combined staffs would be reorganized, with presumably some hirings and some layoffs.

Further, aside from their deferred severance packages, employees at the new agency would have no legal representation through a union and no collective agreement to define their terms and conditions of employment. A range of issues of great importance to those employees would be left to the discretion of management. Some of these are employee pension rights; seniority rights, especially since there'll be layoffs; the order of layoffs, including who bumps who; the calculation of vacation credits and other rights that are now associated with the length of service or seniority of an employee, as well as the wages and benefits paid to the employees of the AGCO.

These issues cut to the heart of the employment relationship. Clearly, at the time of its creation, it will be crucial to have a committed and loyal workforce to manage and control the implementation and operations of the new gambling enterprises. The first year will be critical in that during the period a high level of supervision and control must be exercised to ensure that casinos and VLTs are installed and operated in accordance with the act. During the first year there will be a flurry of applications for VLTs and thousands of licensees across the province will begin to incorporate these terminals into their establishments.

The staff of the AGCO will be required to react quickly to these challenges. Given the cloud of uncertainty caused by the probability of reorganization and layoff, as well as the undefined terms and conditions of employment, the employees will be less able to deal with their sizeable workload in the new and developing work environment.

To clarify the rights and benefits of employees during this transition, the unions involved proposed that the collective agreements currently in effect continue to apply to those employees reassigned from the GCC and LLBO to the AGCO. This proposal was rejected by members of Management Board of Cabinet.

We have an alternative approach. The union proposes that the government modify their plans for the implementation of VLTs. The union asserts that VLTs should be restricted to racetracks, charity casinos and casinos. This more restrictive approach, while still providing wide public access to VLTs and other forms of gambling, would significantly reduce the control and regulation problems which would result from the more wide-open approach.

Further, before the introduction of any gambling operations in a community, the municipality should be approached by the AGCO and have the right to approve or disapprove gambling in their communities. Municipalities should also be given the right to impose specific additional restrictions should they deem such additional measures to be appropriate.

This restricted approach would reduce the need and benefit to be derived from the creation of the AGCO. The current GCC could instead be expanded to enable it to inspect and regulate casinos, racetracks and the VLTs.

To maintain close cooperation, the GCC and LLBO could at that time, then, simply have a working group to ensure that information is passed expeditiously and that prosecutions which are required could proceed in an effective and controlled manner. As a further element of the union's proposal, functions and regulations currently assigned to the Liquor Control Board would remain with that agency. Three years ago, the union proposed an amalgamation of the LLBO and the LCBO. While applauded by the Premier at that time, no serious consideration appears to have been given to the union's proposal, and we resubmit it.

In conclusion, the union urges a more moderate approach to the introduction of gambling. The proposal set out above can satisfy both the agenda of the government and the concerns over control of gambling operations. In conclusion, in the words of Alberta's Steve West, Minister of Alcohol and Gaming, who warned his Ontario counterpart, Norm Sterling, to think twice about allowing VLTs in bars, I leave you with these comments -- and these are Steve West's comments: "Once you've gone down that path you live with it." "If you had your druthers you would put them," meaning VLTs, "in central locations and control them in that nature."

The Chair: Thank you, Mr Nielsen. We only have one minute per caucus.

Mr Kennedy: Thank you very much for your presentation. I want to focus on your alternative approach, and particularly leaning as it does on your experience in terms of regulating the current alcohol provisions in this province, and whether you believe, because it's not quite expressly stated, that the widespread proliferation of these gaming machines can be enforced and, if so, under what conditions that would be.

Mr Nielsen: Again, our proposal or counterproposal, if you will, is specifically catered because of what you've just said, because with the number of VLTs that would appear, if basically most if not all licensees end up having them, unless you have a huge army of inspectors -- because the police are overburdened -- to police these licensees with VLTs, it'll become impossible to enforce the laws. You can have very stringent laws or regulations, but without an army of people out there making sure that those laws are in place and are being adhered to, the laws on paper don't really give you much comfort.

Mr Kormos: This is going to be fast. You're not telling stories out of school here, are you, when you talk about an establishment can expect a regular inspection once every six years? Is this well known among the 15,000-plus licensed establishments?

Mr Nielsen: Yes, that's correct.

Mr Kormos: And when you talk about $800 million worth of illegal alcohol sales, primarily through licensed establishments, I trust you're talking about booze that's bought from outside of Ontario and transferred into Ontario bottles; I trust you're talking about after-hours sales totalling $800 million, most of it in licensed establishments. Once again, is this restricted to sawdust joints?

Mr Nielsen: No, not at all. The point is this: I don't think the past experience indicates a will on the part of government generally to have the kind of enforcement that you would need to introduce gambling. Unless, as I said, there's an army of people going to be recruited to police these establishments, then I fear the introduction of gambling in a wide way.

The Chair: Mr Flaherty, one minute.

Mr Flaherty: I'm going to speak quickly, because we only have a minute and you've raised a number of issues. With respect to merging the LCBO and the LLBO, there's an obvious problem, and that is that we would have a monopoly vendor regulating itself, and we're not interested in doing that for that obvious conflict reason.

With respect to regulating VLs, you're aware of the computerization that is involved in regulating VLs. You're also aware that the province has a history of dedicating additional resources to the regulation of gaming as gaming activities have expanded, and that's been true throughout the process.

With respect to enforcement, you know that this legislation contains the salting-the-earth provision, which will alleviate this problem we have of licensees flipping around licences as tenants. That's in the legislation and will prohibit an application for a licence for two years. It's very important in the west end of Toronto and other areas of the province.

As well, we will have the smallest number of VLs in Canada in the nine provinces that will have them, the smallest number per capita, and that's even after reductions are made in other areas.

Also, we are introducing a regime which would put licensed premises in the position of not only losing their VLs, but also losing their liquor licence if they were to permit someone under the age of 19 to be in the area -- not playing the machines, but even in the area where the machines are located -- plus facing a fine of $250,000, a very, very stringent regimen set out in Bill 75.

Mr Nielsen: If somebody catches them.

The Chair: Mr Nielsen --

Mr Kormos: I didn't hear what Mr Nielsen said.

Mr Nielsen: That's only if someone catches them.

The Chair: Thank you, Mr Nielsen and Mr Ristan. I apologize for the shortness of time, but this committee is attempting to hear from close to 200 organizations and individuals. You've done an excellent job this morning.

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SKILLS CANADA -- ONTARIO

The Chair: We have Skills Canada, Mr Tom Evans, director of the board of directors. Welcome.

Mr Tom Evans: I want to start off by saying that we appreciate the opportunity to appear before you. I want to tell you a little bit about Skills Canada. We are first of all a national organization. I'm here representing the board of directors and speaking specifically about the Ontario chapter of Skills Canada.

Skills Canada is national non-profit organization of educators, students, employers, government and labour groups. Our mission statement is, "To champion and stimulate the development of excellent technological and leadership skills in Canadian youth and to strengthen our competitive edge in the global marketplace."

Skills Canada has strong program operations in Ontario, with close to 500 elementary and high schools, plus 15 community colleges throughout the province. This represents a reach of more than 40% of the student population in Ontario alone.

On a global level, we are the provincial affiliate to the International Organization for the Promotion of Vocational Training. In 1999 our country, Canada, will be the proud host to over 30 nations at the 35th international vocational training competition in Montreal, which we also call the Skills Olympics.

Skills Canada provides viable solutions to Canada's skilled labour requirements through the pursuit of three main goals: first, to improve the level of technology awareness and its impact among Canadian youth; second, to create tangible opportunities for the private sector to interact with and enhance education for students pursuing technology and trade careers; and third, to improve the image of trade and technological career tracks, as well as the self-esteem and achievement levels of students who pursue them.

Skills Canada provides innovative and highly successful programs that stimulate interest in technology among Canadian students, help teachers integrate technology into their curriculum and foster closer ties between business and education.

Today's rapid technological advances and expanding globalized markets have created many challenging and rewarding opportunities in the world of trade, yet hundreds of well-paid positions go unfilled because the qualified entry-level employees are not there. Skills Canada is acting as a catalyst to unite industry and education in strong, meaningful partnerships that can reshape technology education today and help create a skilled, globally competitive workforce for tomorrow.

The scope of our operations includes our target group participation rates for the 1995-96 school academic year, where in terms of the elementary system we had 217 affiliated schools in 39 school boards across Ontario. These schools represent a reach of our program to 57,159 students. In total, Skills Canada has reached over 600 elementary schools across Ontario since 1993. In addition, 1,300 teachers participated in our Techspo workshops, which are designed to assist teachers in presenting hands-on activities in technology to their classrooms.

One hundred grade 7 and 8 students competed in the design and technology challenge at the Ontario skills competitions in Hamilton; 600 grade 4 to grade 6 students participated in hands-on activities at Techspo Grande at these same competitions; and a further 800 students took part in two regional Techspo days in Hamilton and Napanee.

In addition to the elementary students, we are dealing with high school and college students. Of those, 169 affiliated high schools in 63 school boards across Ontario are members of our organization. In total, since 1993 Skills Canada has reached 341 schools out of a possible total of 740; that's 46% of Ontario's high schools. In addition, we have 13 community colleges that are active participants.

Sixty-seven guidance counsellors participated in two-day workshops on career advisement and technological careers; 41 math, science and technology teachers participated in a two-day workshop of subject integration; and, finally, 524 secondary and post-secondary level students competed in the Ontario skills competitions, with over 7,000 people in attendance, including Minister Snobelen.

That presents a reasonably fair picture of the scope of activities of Skills Canada -- Ontario. The reason I took the time to introduce you to that group is that we rely primarily on funding from non-government sources. The revenue from our break-open ticket municipal licences represents 29% of our gross income projected for the 1997-98 fiscal year. The Ontario Ministry of Education has never contributed any funding to Skills Canada, and therefore we are solely dependent on private industry, school board affiliations and activity revenues.

It is anticipated that the VLTs will directly impact on the Nevada ticket sales revenues. The loss of our Nevada revenue would seriously jeopardize our ability to continue to offer our services to students, educational institutions and business partners.

With the present system, the sale of Nevada tickets creates revenue for each municipality through lottery licensing fees; provides greatly needed financing for approximately 15,000 local and provincial charities and non-profit organizations in Ontario, such as Skills Canada; provides substantial revenues for selling locations such as convenience stores, Royal Canadian Legions, bingo halls etc; and the revenues generated by charities through the sale of Nevada tickets goes back to the municipalities.

In our view, the proposed system would see 90% of the revenue generated going back to the province. Municipalities would stand to lose up to 50% or more of the revenues generated by Nevada tickets. We feel the Ontario Lottery Corp is very aggressively eliminating all competition in the gaming industry. We also feel that some charities and non-profit associations would be unable to continue. The potential sizeable loss of revenue to student councils, whose task is to help pay for student activities, would be substantial. With educational budget reductions already in place, this has already become a major challenge.

In conclusion, we feel that before the Ontario government is allowed to take over these revenue-generating activities, charities such as Skills Canada should be allowed to comment on how these funds would be distributed, the percentage of revenue to go to charities and how we would be able to access these funds.

Our fear is that when similar VLTs were introduced in the province of Alberta the Premier said basically the same thing we've heard from the Ontario government, that 10% of the VLT revenues would go to some charitable groups. However, our understanding is that after a couple of years there have not been any moneys paid to charities in Alberta. We would not like to see the same thing happen in Ontario. Also, our fear is that the lineups and the paperwork and the bureaucracy involved in terms of charities, which are already understaffed, to access whatever funds are available would be frustrating and demeaning.

Mr Kormos: Yours is a one in a series of similar comments by groups, organizations -- non-profit every one of them -- that have used their sweat equity within their organizations, along with the help of small business people, to raise funds. B'nai Brith Canada suggested a model wherein the portion of the proceeds was based on the historical fund-raising capacity of the organization. I suppose the only difficulty we had there was in pursuing that the question was on a provincial level, out of head office, just like many other organizations, be it Lions, Kiwanis, what have you, or at a local or regional level.

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How do you respond to that? The government has said nothing. No models have been put forward that might even be there for consideration or that people like you could try to grapple with. How do you respond to the historical model and then how do you reconcile the regional or local versus the provincial capacity to fund-raise?

Mr Evans: That is our concern. Although we are a province-based organization, our reach is through the municipalities across the province. As far as we know anyway, in terms of the bill and the legislation proposed, there were no clear-cut guidelines in terms of how we, as a provincial organization, could access these funds and so forth. Our concern is that unless that is in place, and it's fairly simple because a lot of the charities and so forth -- we are not overburdened with staff; we simply want to be able to access and be accountable for the funds. We're not suggesting that we wouldn't be. We would like to see some type of mechanism in place that would allow us, on a provincial basis, to access the funds that we require in order to carry out our services on a local basis.

Mr Kormos: Where do municipally based and perhaps not province-wide, non-profit organizations go to then? In Welland-Thorold, where does Women's Place go, which does all its fund-raising regionally? They have a provincial lobby group, OAITH and so on, so then how do they rank? Again I'm not suggesting you're in any way insensitive to these competing groups, but how does a totally municipally based organization that may be endemic to that region or municipality factor in?

Mr Evans: That's a good question. I'm not sure I have the answer to that. What I can do is talk to the way our groups interact. We've structured in such a way that they would come through our provincial organization and we in turn would access the provincial fund.

Mr Flaherty: Good morning and welcome. It's nice to see you. I see that a number of presenters this morning are dealing with the issue of break-open tickets and the current structure. If I may make a few points and then ask you for some comments about implementation, I think your concern about a mechanism to access funds that you require really is important and there are going to be consultations about the implementation of the structure that's created by Bill 75.

I think it's important for charities in Ontario to know that their revenue is going to increase by up to $180 million under the announcements that have been made by the province with respect to Bill 75. That's in the budget and it's in the record of Hansard in the Legislature of Ontario.

The revenue from Monte Carlo nights is going to go up about 10 times what it has been. They are so difficult to regulate, roving as they are around the province. There's a commitment for 10% of the video lottery revenues, excluding those machines at racetracks, to go to charities, which will be a substantial sum of money, but there is the fact that the roving charities, the so-called Monte Carlo nights, will still exist in a limited form with one day rather than three days. The important point, I think, is the overall increase in funding in charities.

I trust that your organization is prepared to assist with your advice on implementation so that as the charity gaming halls are set up and so on it's done in such a way that organizations such as yours, doing the good work you do, the beneficial work you do in education, have a mechanism to access funds, to use your words.

Mr Evans: We would be very happy to help you in deciding on the implementation of it. I'm awfully glad to hear that there will be some consultation on that.

Mr Flaherty: Absolutely.

Mr Klees: I'm interested in your comment that you feel the proposed system would eliminate all competition in the gaming industry. What I think I hear you saying, however, is that you would prefer that there not be more competition in the gaming industry because you're opposed to the introduction of video lotteries. There seems to be a bit of a conflict. How do you explain your position?

Mr Evans: We're not against gambling per se; I think it's going to go on. The real issue here is that we feel VLTs are going to be a real money machine for the government. In the other provinces where they have been put in our understanding is that, you're right, the amount of money that's been expended on these has increased substantially. The experience we've had is that in Alberta, for example, charities were promised certain things and nothing materialized.

With the current system of Nevada tickets we know what our revenues are, within reason, on an annual basis. We can plan reasonably well. With this new system being implemented and without the implementation guidelines in place we are uncertain as to how those funds will be distributed, if any.

Mr Kennedy: Thank you very much for your presentation. It is very helpful for us to know the specific impacts that could happen in terms of Skills Canada's large dependence on the break-open tickets. I think you might agree that we can only know now from the government's plans what's in the legislation, and from what we see there, charities' considerations, especially those which depend on break-open tickets and other forms of gambling available to charities, don't seem to be fully taken into account. Would you agree with that statement?

Mr Evans: Yes.

Mr Kennedy: I wonder if you have reckoned what will happen when the government takes over this flow of revenue from the public and what that will mean in terms of the tens of thousands of charities we have in this province which are not currently participating in gaming as part of their revenue and what that might mean in terms of the slicing up of the pie. There is some controversy as to whether or not the pie will get bigger. We've heard numbers that say it would net out at less for charities; we've heard figures, mainly from the government side, that suggest that there will be some net gain, but that pie is only going to grow so much and there are so many people who may be coming forward for a slice. How do you and your organization look at that?

Mr Evans: We've heard both sides of the story as well. With the other fiscal restraint measures that have been put into place, yes, there are a number of charities that are really hurting. They may not have accessed these funds in the past, but my guess is that they will in the future if they become available.

Mr Kennedy: Being active in the charitable field, you know the number; there's only a minority of charities now getting money from gaming.

Mr Evans: That's right.

Mr Kennedy: There are at least 10,000 charities out there, and the vast majority of them will end up applying for the very funds that you're depending on.

Mr Evans: That's right.

Mr Kennedy: I guess this is not fully rhetorical, but you do realize that this act is called An Act to regulate alcohol and gaming in the public interest, to fund charities through the responsible management of video lotteries. Do you think that's the main intent of this bill at this time? I'll let you not answer that, but I would say there's clear evidence from your presentation that the charities are only the marketing element of this. I say that with respect for your presentation, because you've made many other points in terms of how this could be shaped for better benefit of charities, and we appreciate that. I want to commend you for the work that Skills Canada does -- I want to re-emphasize a point you made -- without any government funds.

Mr Evans: That's right.

Mr Kennedy: One thing I'd like to hear you comment on is, would it jeopardize the future of Skills Canada if you lose a substantial part of that revenue? If you're out of the swim because of the sheer number of people who come to this new, government-controlled environment, what will happen to Skills Canada?

Mr Evans: We feel very strongly that without the funds we are currently getting we will not be able to survive and that a lot of the effort we've put in, in our position in terms of the Skills Olympics, over the last 20 years in Ontario, our global position, will be seriously undermined.

The Vice-Chair (Mr Ron Johnson): Thank you, Mr Evans, for your presentation, on behalf of the committee.

Mr Evans: Thank you. As a final say, if there is some public consultation on the implementation of available funds for charities, we would love to be able to comment on that as well.

The Vice-Chair: Okay. Thank you, sir.

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CHARITIES FIRST ONTARIO

The Vice-Chair: Our next presentation will be Charities First Ontario, Jeff Wilbee and Pati Greenwood. Good morning.

Mr Jeff Wilbee: Thank you very much. My name is Jeff Wilbee and I'm the chair of Charities First Ontario. My colleague today is Pati Greenwood, the secretary of Charities First Ontario.

Mr Chairman and committee members, on behalf of the hundreds of charities that Charities First Ontario represents, let us thank you for the opportunity to express our views on Bill 75. This bill may have immense impact on how charities will go about their business of maintaining and improving the quality of life for all citizens. Our Premier has expressed the need to get back to more grass roots with less reliance on government and more dependency upon voluntary groups and community involvement. We in the charitable sector welcome that challenge. However, if we're to meet the challenge, we must have the resources to do so.

Charities First is a not-for-profit, voluntary organization. We were born out of a response to the 1990 Ontario government document Charitable Gaming: Putting the Charities Back in the Driver's Seat. We picked up on that challenge then, and we request the opportunity to be partners with the government and our colleagues in the commercial area on the challenges presented by this bill.

We presently consist of over 70 umbrella organizations. Each member organization represents many branches, affiliates and members. We are here representing thousands of volunteers who positively affect every aspect of our friends' and neighbours' lives.

Charities First is disappointed that the video lottery terminals are to be introduced in the absence of a provincial gaming policy and strategy. In 1995, we commissioned a report on VLTs. Most of you not only read it but replied to us. The report indicated that we did not know enough about VLTs and their impact. We concluded that there needs to be an overall assessment of gaming activities and what influence growth in one sector or event has on the others.

If we are to bring VLTs into the gaming market in our province, our first point to you is that their entrance, through the proposed phases, should be closely monitored.

The Honourable Norm Sterling, in his statement of intent introducing this bill, stated, "We are determined to accomplish these initiatives in a measured and controlled fashion." We at Charities First strongly support the minister's intention and suggest that a comprehensive policy will assist us in reaching that goal.

We support the establishment of up to 50 charitable casinos in which VLTs will be available. The establishment of these centres will go a long way to improve the security, accountability and hopefully profitability for the charities in this particular event. The revenues created through the VLTs in these establishments we hope will result in a net increase in funds for charities. We expect some losses from our other charitable events such as bingo and break-open tickets; we don't know how much.

Although charities will not directly benefit from the introduction of VLTs at racetracks, we believe the strategy of starting at racing venues will be beneficial to the whole gaming industry if an evaluation of their impact is done before a wholesale expansion into the other areas.

Our major concern is VLTs in licensed establishments. Although we do not know the exact impact on the revenue of other charitable events, experience in other jurisdictions strongly indicates the loss of revenue, particularly in break-open tickets. Other presenters may offer estimates of that loss, but we will resist the temptation to do so. The fact is that we just don't know.

What we do know is that the revenue from VLTs will have to be much greater than the loss for it to strongly appeal to charities. Under the proposed scheme, as we understand it, we not only lose revenue, we lose autonomy. Charities are interested in earning money, not just asking for handouts through the process of filling out grant request forms to some adjudication body. The present break-open ticket and bingo programs allow for autonomy while raising the revenue.

We appreciate that our colleagues in the hospitality industry see the introduction of these machines as a major means of revitalizing their industry. We do not have the expertise to be able to support or refute that position. However, the July 27, 1996, Toronto Star, reporting on a trip Mr Sterling made to Alberta, stated that he was "advised against introducing video lottery terminals to bars and restaurants." Since the province of Alberta has had experience with this form of gaming, it would be imprudent not to at least give some consideration to that advice.

The minister should be congratulated on not only allocating 2% of VLT revenues to assist problem gamblers but also on the development of a comprehensive strategy of research and public awareness along with treatment to deal with problem gambling. However, we cannot just set up a system of picking up the casualties after the fact; we must ensure that these activities create as few casualties as possible to begin with.

There is a major concern that we also have at Charities First, and that's fund distribution. The disbursement of the funds to charities must be fair and equitable. There are two basic questions that are complex but need to be addressed. One, what types of organizations should be participating in the proceeds from VLTs or, for that matter, any charitable gaming activity? Two, what process should be used in fairly distributing the funds?

First is the question of what organizations should participate. We recommend that you define within the legislation the term "charity." Charities First would be pleased to be part of those discussions.

Secondly, we have not talked to a charity that is in favour of the setting up of a local, regional or provincial foundation or other adjudication body to distribute the funds. In fact, this type of process may put smaller local charities at a disadvantage since they may not have the same ability to write grant requests as some of the larger, more sophisticated groups.

We find it curious that the proposed plan does not consider VLTs in the bingo halls. Bingo halls, along with the racetracks and casinos, are already heavily regulated. The pooling method of distributing funds that is already in place at bingos and could be in place at the charity casinos would reduce the distribution problems we are concerned about. Some of the experts in bingo I have talked to suggest that revenues the government wishes to raise could be realized with VLTs in the halls.

Charities First believes that if there is to be responsible management of video lotteries, charities also need to be accountable. Charities First is willing and able to take a leadership role in this. CFO is in the position to not only train charity groups but also develop an accreditation process. Charities, like all other participants, must be able to demonstrate that they have a basic knowledge of what is becoming an increasingly complex area.

We expect that Minister Sterling will agree with our comment on the complexity of the gaming industry, since he made the following point in his statement of intent: "Being a first-time initiative, the method used to introduce video lotteries across the province is complex and new to much of the industry and the Ontario Lottery Corp." We offer Charities First's members' considerable expertise in gaming in working through those complexities.

In summation:

(a) Charities First recommends the development of a provincial policy and strategy for gaming in the province so that all charitable gaming activities can compete on a level playing field.

(b) Charities First wishes to caution that the introduction of VLTs into the Ontario gaming industry has a number of complexities, including the distribution of the proceeds to charities as well as the possible negative social impact.

(c) There's a need for the growth of the use of these machines to be tightly managed, particularly going into licensed establishments. We need to carefully evaluate the impact of phase 1 before proceeding on to the other phases.

(d) We need to ensure that there is a strong partnership and consultative role for the charities in both the distribution of VLT proceeds and the evaluation of the phases through such organizations as our own.

We thank you for the opportunity to present this brief.

The Vice-Chair: Thank you, Mr Wilbee. We will turn to questions: four minutes per caucus.

Mr Flaherty: I have just a quick comment. The putative leader of the Liberal Party, Mr Kennedy, has left again, but he commented that we've had some presenters here suggesting that there would be less money for charities under Bill 75. That's patently untrue in two ways: One, no one has come forward and said that; two, the evidence before the committee is just the opposite. There is some redistribution of money, so that break-out tickets, for example, might have less revenue under this system. But overall there's been no suggestion before this committee of any diminution of revenue to charities. In fact, the evidence is that there will be up to $180 million more for the charities of the province under Bill 75, which is what this is all about. It's about charities; it's not about businesses making money raising money for charities.

Mr Crozier: It's about government revenue.

Mr Flaherty: With respect to the controlled introduction of video lotteries, which the minister committed to, and you quoted him, may I suggest to you with respect that that is exactly what the government is doing. We will have fewer video lotteries than any other province per capita; we will have high fines; we have a phased introduction so that there's time for reflection and assessment as VLs are introduced in the province; and we have a further consultation process with respect to a number of the issues you've raised, which are really important, about what is a charity and what isn't and who should share and who shouldn't and in what proportions and so on. So I hope your Charities First Ontario will participate in the further discussions concerning implementation.

Mr Wilbee: I think, sir, we're pleased to hear that indeed this will monitored all the way through and we'll make decisions as we go. It's very difficult to start to do projections in any business venture, I suppose, until you're out there in the marketplace.

The Vice-Chair: Mr Klees, do you have a question?

Mr Klees: I just want to again thank you for your presentation and also your very straightforward caution to us not to proceed helter-skelter. I just want you to know that many of us on this committee feel the same way. It was based on the undertaking we received that there would be a very careful implementation strategy that we were prepared to support this legislation. So we're with you on that. I want to assure you that this government will be monitoring very carefully and will be assessing the impact of this legislation throughout the various phases. As Mr Flaherty indicated, we invite your participation in the discussion of the implementation. We need that kind of support and advice.

1050

Mr Crozier: Good morning, sir. Good to see you again. Just a quick response to what has been said by the government side, which said this bill is all about charities. That's baloney. It's all about government revenue. If it were all about charities, I would challenge the government to introduce their VLTs and give all of the money save operating expenses to charity, but they won't do that because they need the money. This probably will be the biggest non-tax cash grab in the history of the province of Ontario. I think you and I know that and I think the public knows it, and I'm not so sure you should think the public is so naïve as not to know that.

Mr Kennedy: Mr Wilbee, I'm wondering if you would address a question I addressed to the earlier participant about what you think will happen when this becomes a formalized government system of disbursing funds. Are you not gravely concerned about the number of charities that are not participating in gaming in its present form right now? How in the world do you think this will be worked out and what are your concerns about that?

Mr Wilbee: I think it's a good question, sir. We do have concerns and I guess that underlines our recommendation that there needs to be that kind of policy and strategy. You're quite correct that indeed not all charities are involved. If you're in a local area and you want to participate -- let's say you're a new charity, a new voluntary group -- you may have difficulty getting into some of the gaming ventures. So again, we feel there needs to be some planning done on this. We need, as we rush towards the cliff, to make sure there's water on the other side.

I would suspect that we would have to also see what happens in the marketplace. If in fact there are more positions than these 50 casinos, we would not like to see 50 pop up just right off the bat. There may be more opportunities for the charities not involved to get involved, but I think that's exactly what we're saying here: that we just don't know enough, that there isn't a strategy, there isn't a policy, so therefore, sir, we have to go slow and try to answer that very important question.

Mr Kennedy: You've heard the minister say that there are going to be 20,000 machines implemented. These will be on the street corners, in the sense of being in the bars, as quickly as this government can do it. They've put out requests for proposals, they've withdrawn them, there are more requests for proposals coming out. This government is proceeding with abandon.

Mr Flaherty: That's not true.

Mr Kennedy: Mr Chair, I would ask you to direct him not to interrupt.

Mr Garry J. Guzzo (Ottawa-Rideau): He can do that; he's allowed. Come on.

Mr Kennedy: What I would like to emphasize in terms of the implementation is that there are absolutely no assurances here for charities in terms of their interests being looked after, and I'm wondering if you're not concerned. The government side, you've heard, is not concerned that this is going to take away money. They deny it will happen, that this will take money away from charities. We've had charity after charity, the break-open association, all the groups who know, who have talked to their counterparts in Manitoba and in other provinces: They know this takes away revenue. You need to say more plainly to this government not just that you'll consult with them, but you need to tell them the kind of risk they're creating for your members.

Mr Wilbee: I think we attempted to do that in a very short period of time, sir. We had some assurances here and we will be certainly monitoring that. This is a parliamentary system, I understand, and questions are asked. So I again would hope, when this is all over, that in fact Ontario has, if you like, built a better mousetrap, not just a smaller one.

Mr Kormos: Your concerns, as we've spoken to others, are consistent with a whole lot of groups similar to yours -- not omnibus, as yours is, representing a number.

One of the interesting things is that I took a look at the local riding newsletter for Bruce Smith, MPP from Middlesex. He's a government member, and in it he said, "Slots do not cannibalize in other forms of gaming due to the fact that the games, prize points, prize structures and sales venues are different." He suggested in his newsletter that the slots aren't going to have an impact on other forms of fund-raising, be they commercial, profit-oriented or non-profit, and then he went on to say that the government returns range from 50% to 65% of gross sales. There's going to be precious little left.

Look, I wasn't an insider in the last government and I'm certainly not an insider in this one, but he's certainly going to be privy to information that I'm not if government returns range from 50% to 65% of gross sales. Having said that, we should remember things like the environmental lottery some time between 1987 and 1990, from which, remember, the proceeds were to be dedicated to environmental work. It simply didn't happen. Tantamount to the tire tax. You remember that. What was it? Five bucks a tire dedicated to the disposal of tires. It didn't happen.

I share your concerns. I'm concerned that charities are being used as a shill, as part of a scam to legitimize this. I take a look at the list of your members, and short of St Basil the Great Parish, most of them are charities that could be defined as being dedicated to research -- I don't know the right language to use -- and I distinguish them from groups -- for instance, where I come from, we've got Casa Dante Lodge, we've got the Hungarian cultural centre, we've got the Polish hall, the Croatian hall, which aren't organizations like Big Sisters. They do dedicate some of their funds to community work. My concern, and I'd like you to comment on this, is that these are the very groups that may be squeezed out of charitable consideration, even though they dedicate a lot of their person power to raising funds, bingos, break-opens, what have you.

Mr Wilbee: I'm going to let my colleague Pati get in.

Ms Pati Greenwood: I would suggest to you that you'll see a lot of those community organizations represented through those bingo hall associations. Many of those small organizations cannot afford the full membership fee of Charities First, so they choose to be represented through their bingo hall association. You'll see them represented on our membership in that way.

Mr Kormos: I'm concerned about there being a peeing contest as such between different sectors within the non-profit community, some saying, "We are more charitable than somebody else is," when in fact both are currently doing the same sort of work to raise money for good purposes.

Mr Wilbee: I think that's one of our major points that we pointed out, our concerns of what is a charity, who should be involved not only with video lottery terminals but charitable gaming. We have recommended strongly that you as a committee consider in your recommendations that the term "charity" or who should participate in be defined in the legislation.

Mr Kormos: Would you recommend a broader --

The Vice-Chair: Mr Kormos, we are out of time, and I want to apologize for that. Mr Wilbee, Ms Greenwood, on behalf of the committee, I want to thank you very much for your presentation.

Mr Klees: Mr Chairman, while the next group is coming up, could I get a clarification from the parliamentary assistant on a matter, please?

The Vice-Chair: Quickly, yes.

Mr Klees: Mr Kennedy made a comment again earlier about the fact that an RFP had been submitted.

Mr Crozier: That's out of order, Chair.

Mr Klees: I would like the parliamentary assistant to clarify for the record --

Interjections.

The Vice-Chair: One moment. It is in fact in order to get some clarification on a point, and we will allow you to continue to do that.

Mr Crozier: Then perhaps the Chair will allow us to clarify points as well.

Mr Klees: I would like a clarification from the parliamentary assistant on a point that was made by Mr Kennedy that an RFP had in fact been sent out, and could we have that for the record, please?

The Vice-Chair: Mr Flaherty.

Mr Kormos: Chair, why don't we get Sterling back here and find out who's telling the truth.

Mr Flaherty: As I stated last week on the record, there has been no RFP, request for proposals, issued with respect to the acquisition or purchase of video lotteries. I thought I'd made that clear. I don't know why members would persist in stating the contrary, because that is the reality, that is correct, and I can't do anything more for you than tell you that that is exactly the situation.

Mr Kormos: The reason we're concerned is because senior staff in the ministry have been quoted by responsible media people to the contrary. Now, who's telling the truth? Somebody is lying. Let's find out who.

The Vice-Chair: Just one moment here. That is unparliamentary language, Mr Kormos, and I would ask you to withdraw that.

Interjection.

The Vice-Chair: I'm telling you. You know that it's unparliamentary language.

Mr Kormos: Obviously somebody is lying. Somebody is not telling the truth. Let's find out who it is.

The Vice-Chair: We do have a number of presenters before us who do have to get in before the end of the day, so we will continue.

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CHARITABLE GAMING FEDERATION OF ONTARIO

The Vice-Chair: Next is the Charitable Gaming Federation, and it will be Terry Sisson. Mr Sisson, welcome. You'll have 20 minutes for your presentation, and you may wish to leave some time for questions.

Mr Terry Sisson: I do thank you for your time.

The Charitable Gaming Federation of Ontario represents the partners that make charity gaming work in Ontario. The charities and non-profit groups are represented by an association called Charities First Ontario, whom you just heard from. The bingo hall owners are represented by the Registered Gaming Suppliers of Ontario. The Nevada ticket distributors and managers are represented by the Break Open Ticket Program Management Alliance. The casino operators are represented by the Association of Registered Casino Operators of Ontario. Finally in the mix, the manufacturers of gaming products are represented by the Registered Gaming Manufacturers of Ontario.

Collectively, these members of the federation account for billions of dollars yearly in sales and thousands of jobs in this province. Charitable gaming is a major industry.

The people involved in the Charitable Gaming Federation of Ontario have watched this industry grow rapidly over the last few years and have worked hard to make it a success. Everyone in our industry is very aware of the benefit to charitable and non-profit organizations throughout the province. We assist millions of people in thousands of charitable organizations in almost every municipality of Ontario. We are, as an industry, proud of the fact that we help improve the quality of life for everyone in Ontario.

The charities and non-profit organizations, our most important partners in this industry, are not just in Metro Toronto or our big cities. They are in small towns and villages throughout this province, and they range from large, health-related charities, like Multiple Sclerosis, to the local Kinsmen Club.

The federation believes that the Conservative government has taken their commonsense commitment into the area of video lottery terminals or VLTs and we commend them on their decision to place these machines in existing gaming venues, such as racetracks and casinos. We wanted to speak here today to ask you to keep to that commitment.

Every survey that we have seen as we have studied the VLT issue over the past year indicates that VLTs are tremendously addictive. We are confident that you are on the right track by restricting their use to gaming venues and our policy statement (motion 96.08.087) reads as follows:

"The Charitable Gaming Federation of Ontario believes that the government of Ontario should not allow the use of video lottery terminals, slot machines or any other similar form of electronic gaming device in Ontario outside of legitimately operated casinos, racetracks or bingo halls until such time as a long-term strategy for gaming in Ontario has been developed and agreed upon by all stakeholders affected by gaming in the province."

Our member associations have provided you with estimates on losses to the charities from VLT implementation and we are sure that you must be wondering what the real effect would be on break-open and bingo revenues to charities and non-profit organizations.

The federation is also concerned as to the consequence of placing VLTs in bars and hotels.

By now, you will have heard the horror stories about the VLT that was attacked by the baseball-bat-carrying husband in the Atlantic provinces when he arrived home to find out that his wife had just dumped the grocery money into the VLT at the local variety store.

By now, you will have heard the horror stories from Alberta where a leading financial institution was shocked by a $100,000 theft from an employee who lost that kind of money to the dreaded VLT in his local bar.

By now, we are sure that you have heard of the revolt by the municipalities in British Columbia who passed council resolutions that effectively closed the doors to VLTs in their towns.

In fact, we're sure you've heard by now all kinds of stories.

We feel that by now you will listen to the commonsense solution to the implementation of VLTs in this province. It is simple: Place gaming machines in existing gaming venues only, such as racetracks, casinos and bingo halls.

Charitable gaming has become a major industry in Ontario that generates millions of dollars for charity and non-profit organizations. It is the largest charitable gaming market in North America and well regulated and managed.

Video lottery terminals do have a place in established gaming environments, such as casinos, racetracks and bingo halls, where gaming entertainment is a focal point and where they would enhance the revenues for the existing activity. The estimated 8,500 units that are to be placed in these locations would provide the Ontario government with $637 million in revenue and $502 million in profit, using average sales and cost projections of VLT operations in Alberta. This would be achieved without a significant negative impact on existing forms of charitable gaming in the province.

The government of Ontario is hoping to generate a lot of income by putting VLTs into bars and hotels. Suppose they do. Suppose they make a lot of money. But at whose expense?

Should this province want to make money at the expense of a provincial charity that is making $1 million a year for local patient services and much-needed research to find a cure for a disease that attacks 70,000 Ontario residents? What could they lose if 40% of their revenue on break-open tickets was lost from their Nevada ticket program? Where would the $400,000 come from? A 40% loss would hurt as much for the local Optimist Club that earns $10,000 on their program; it means that $4,000 a year is not available for those local projects.

The government has stated that it will give $180 million back to charities and non-profit organizations from anticipated VLT revenue. The Ontario Lottery Corp operates one of the best lotteries in the world, and yet charities and non-profit organizations go crazy trying to apply and receive a Trillium grant they desperately need. If they get one, it takes several more years to apply. What happens while they wait? Do they reduce their program or just close their doors? We also wonder what happens to the program of the local humane society in one of our bigger municipalities, which recently told me that if it lost its Nevada site the program would fold. They would obviously be hurt too. Trillium-type payouts would not save this program. Charitable gaming in this province directly helps thousands of organizations stay afloat, especially with other grants being cut in an effort to meet budgets.

We were told in a Southam News article earlier this month that Mr Sterling was told outright by his counterpart in Alberta, Dr Steve West, that if he had to consider VLTs in his province again, he would now allow them in bars -- "We would put them in central locations and keep them controlled."

Before you consider putting VLTs in the bars of Metro and rural Ontario, we urge you to develop a strategic game plan with all parties involved in Ontario gaming, to include the Ontario Lottery Corp, the Ontario Casino Corp, the horse racing industry, the first nations gaming operations and the Charitable Gaming Federation of Ontario.

Common sense seems to be speaking out from everywhere and common sense should prevail in this case too. In closing, we'd like to ask you to remember these things: VLTs are addictive. We ask you to go slow and see what problems arise, we ask you to place them only in existing gaming venues and study them carefully and we ask you to consult the charitable gaming industry before you proceed. Thank you very much.

Mr Crozier: Thank you, sir. You've got some interesting and I think legitimate suggestions and points that you've made. I want to ask you simply, because I think your presentation has been complete, what you think we can do to emphasize to the government the points you have made and to attempt to convince it that it should keep these in mind when Bill 75 is implemented?

Mr Sisson: I think the only thing we can really do is have sessions like these so that the government does in fact get an idea of what it's playing with. Also, I think you have to realize some time too that the municipalities are looking around at this and going, "There are ways that we can stop the whole thing," and that's by taking them out of the municipalities themselves.

Mr Crozier: But do you see your organization playing a proactive role -- in other words, not just walking away today, because we get such a short time together -- and do you see your organization, through those affiliated organizations, raising public awareness on this so that we might get the message to the government?

Mr Sisson: That's exactly the approach we are taking. We've been writing letters and letting people know, and we won't stop here because we really do fear what's going to happen if they go into the bars.

Mr Kormos: Thank you, Mr Sisson. You're down from, I guess, not just my neck of the woods but Mr Hudak's neck of the woods too. One of the interesting things is that you speak of Toronto and then you speak essentially of the rest of Ontario, the vast majority of Ontario. There are some parts of the province -- we were up in Kenora last week and had no quarrel with the fact that, especially in summertime, there's an incredible influx of non-Kenorans or non-indigenous people to that community. There are in Niagara Falls and there certainly are in Toronto, but most of smaller-community Ontario's population is fixed -- not to say that Grimsby doesn't attract tourists or Thorold or Welland or Port Colborne, what have you.

One thing that has been raised is about the impact. You see, the ratio, because the government keeps saying we've got fewer slots per capita than any other gambling jurisdiction, still comes to one for every 550 population. The city of Welland, 48,000 people, 87 slots; the city Thorold, based on its population, some 50 slots, give or take. If each of those machines in Welland, let's say, draws a mere $2,000 a week, that's $160,000, $170,000 a week that isn't being spent with the volunteers who are manning the break-open ticket booth over at the Welland County General Hospital, that isn't being spent on raffle tickets, be it the Lions Club raffling off an RCA TV set, more often than not, because the money ain't out there any more.

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Mr Sisson: That's right.

Mr Kormos: It's tougher and tougher for volunteer groups. If they aren't raffling off TVs, as often as not somebody's knitting an afghan. Well, it's true, because you can't risk the investment. Also, not all of Ontario is Toronto with its millions of tourists; not all of Ontario is, let's say, the city of Niagara Falls with its millions of tourists. Most of Ontario has its base community and those are the people who contribute to their local charitable gaming. I'm concerned about siphoning these huge amounts of money out of communities not just with respect to charitable gaming but with respect to what it does to the local economy, because that money ain't being spent in the barber shop; it ain't being spent in the department store and the supermarket. Do you see Toronto as being somewhat different, perhaps, from the rest of Ontario in that respect?

Mr Sisson: There might be a lot more people in Toronto but obviously they have a lot more causes to support, but I suspect that Toronto could probably weather the storm a lot better than rural Ontario, that's for sure.

Mr Kormos: You speak of the people, in effect, whom you assist in raising money. I should tell you I suspect there will be amendments before this committee during our clause-by-clause consideration that give effect to your recommendation; you're not alone in that. Again, you've got to understand I wasn't a big casino fan. I voted against the legislation. But the fact is that they're here now, and it seems to me logical that if you're going to have this type of slots, at least put them in gambling-oriented destinations, to wit, casinos, and I'm prepared to concede as well racetracks. Bingo parlours was a new one; that came up several times. Would you then require bingo parlours to undergo the same types of regulatory supervision as casinos currently operate? Would you want one model of supervision, that is, a casino model of supervision and that's it -- racetracks, bingo parlours, charity casinos -- in Windsor, Niagara Falls, Casino Rama, to boot?

Mr Sisson: I would suggest so, yes. Again, if you're going to put them in gaming venues they've got to be controlled as gaming venues are. Unless you have the control, if they get into bingo halls that are not supervised, then you're risking all kinds of dangerous problems.

Mr Kormos: Interesting observation. Thank you, sir.

The Vice-Chair: To the Conservative side now, I've got Mr Klees, Mr Young and Mr Flaherty.

Mr Klees: How much time do we have?

The Vice-Chair: Four minutes.

Mr Klees: I'll defer first to the parliamentary assistant.

Mr Flaherty: Good morning and welcome. I want to raise just two points with you. Since you spend your time raising money for charities I'm sure you'll agree with me that the key issue for charities, as opposed to those who raise money for charities, but for the important charities in Ontario, is that there be a substantial increase in charitable revenues to them, which is what this legislation would result in; that is, an increase to the charities now of up to $180 million more. If one is a charity, multiple sclerosis or whatever, that's what's important for the charities in Ontario.

I want to ask you about business too.

Mr Sisson: You made an assumption there. Do I get to reply at all?

Mr Flaherty: Certainly, as soon as I finish, if you don't mind. I want to ask you a question, if I may. I understand you own a break-open ticket business. You're in business for yourself, are you? You own a distribution company?

Mr Sisson: Yes.

Mr Flaherty: So you'll be concerned about jobs. You employ people?

Mr Sisson: That's correct.

Mr Flaherty: We were in northern Ontario last week, in Thunder Bay and Kenora. The majority of witnesses there, from development, from tourism, from the hospitality industry, are desperately seeking the same privileges they have in Manitoba and Alberta, which are their neighbouring jurisdictions, particularly Manitoba.

We have an estimate before this committee that this extension of video lotteries to the hospitality industry would result in 10,000 new jobs for people, particularly in rural Ontario. Would you agree with me that this is desirable? You're somebody who employs people; you know the value of business and jobs.

Mr Sisson: I agree that if it's going to create jobs and not hurt anything else, that would be great. One of the problems I have with that is stories that have been sent to us the other way around where the person is running a happy little bar, it's got all kinds of people in there singing songs and drinking and having a good time, and once they get the VLTs in there, the next thing you know they've got a little area where they're sitting down and there's nobody singing songs; they're sitting over at a machine playing. We've had that come back to us.

I appreciate what you're saying about jobs and everything, but at what point? Then they get caught in a little trap where, on the other side of the coin, they now have nobody singing songs but they have nobody buying beer either.

Mr Flaherty: A pub atmosphere is important. Having just returned from Ireland, I can assure you that I'm in favour of music in the pubs of Ontario.

Mr Sisson: Yes, and I just came back from England, where they have their fruit machines in all the gaming halls as well. There was another point that you made. Could I answer to it?

The Vice-Chair: Very quickly.

Mr Sisson: What was the first point that you made?

Mr Flaherty: The increase in revenues of up to $180 million to the charities of Ontario under Bill 75, in addition to the $290 million or so that is now received by the charities in Ontario.

Mr Sisson: I think that's an overall amount, is it not, or is that strictly from the bar?

Mr Flaherty: Total revenues.

Mr Sisson: One of the points I wanted to make here, and I appreciate what you're saying, is that charities come back to us and say: "We don't want handouts. When we have to go before that Trillium grant and get some money it's for special things that we do but the regular, ongoing programs for the next couple of years are messed up." So yes, you get extra money, but what kind of extra money is it? I just wanted to make that point.

Mr Klees: Mr Sisson, my question is along those lines. You're not opposed to VLTs as long as they're at racetracks, in gaming halls, and you've added bingo halls as well. Is that right?

Mr Sisson: That's correct.

Mr Klees: So you obviously have no concern about the addictive aspect of gaming, do you?

Mr Sisson: Yes, I do. If I had my druthers I wish they wouldn't come into the province at all. But you know that's not going to happen; they're going to come in.

Mr Klees: I find that interesting, seeing as you're chair of the Charitable Gaming Federation of Ontario. However, let me put it this way. The reason you say that you are opposed to VLTs is because it will result in a net source of revenue to charities. Is that correct?

Mr Sisson: No, I'm here because of the people and the industry I represent. We think overall that it's going to hurt the industry. That's why I'm here.

Mr Klees: That's what I'm saying. I just want to clarify that. The fact of the matter is that the policy of the government, however, is very clear in that it will actually result in a net increase to charities, as opposed to a decrease, in the range of $180 million. Having said that, if the people you are representing, who are concerned that there will be a net decrease in revenue to them, had the assurance, as a result of the commitment of this government, that it wouldn't have that negative effect, that there actually would be a net increase to the charities around this province, how would that position you?

Mr Sisson: It also depends on how they're going to get it. If you take a big, health-related industry that is dealing in literally $1 million a year from a program and it's going to lose $400,000, but you're going to come along and give them $400,000 next year but take it away for the next two years because you're going to send it over here to the church or whatever, then their ongoing programs really do suffer at that point, and that's the point we're trying to make back. If we did have your assurances that we're going to be consulted as an industry and you say, "Let's work together and find a common solution to this problem" --

Mr Klees: That is the commitment, and we would look to you for some help on that.

Mr Sisson: If that's the commitment we'll walk away as happy people.

Mr Klees: That would make you happy?

Mr Sisson: As long as it's going to work that way.

Mr Klees: Then we look forward to working with you on it.

Mr Sisson: Thank you very much. I appreciate that. Thank you very much for your time.

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QUARTER HORSE RACING OWNERS OF ONTARIO

The Vice-Chair: Our next presenter is the Quarter Horse Racing Owners of Ontario, Skip Willis and Ken Mucklestone. Good morning, sir. If you could identify yourself for Hansard, you'll have 20 minutes for your presentation and you may wish to leave a little bit of time for some questions at the end.

Mr Skip Willis: Thank you very much, Mr Chairman. My name is Skip Willis. I expect to be joined by Ken Mucklestone, the vice-president of our association, but he is not here as yet so I will proceed. I will endeavour to be brief, both to allow for questions and also respecting the time constraints that the committee operates under.

The Quarter Horse Racing Owners of Ontario welcome the opportunity to appear before this committee today to express our strong support for the legalization of video lotteries at racetracks. We would like to focus our remarks today on economic issues and what the legalization of video lotteries, exclusively at racetracks and inclusively at all racetracks, can mean for the quarter horse industry in Ontario.

We recognize that there are social issues involved in a further proliferation of gambling in Ontario. We are confident that over the course of these hearings these issues will be discussed in depth by people far more knowledgeable than ourselves. We will focus our presentation today on the potential economic impact on quarter horse racing.

Mr Mucklestone has joined me.

For most people, horse racing means thoroughbreds and standardbreds. To some extent this is understandable. In an industry with a total betting handle of $1.1 billion annually, our total handle is approximately $115,000, barely rounding error. We have 21 race days at one track, where we have a total racing population of approximately 125 horses. Looking at those statistics, it's not hard to understand why we've been virtually ignored in the past.

There are, however, other statistics that tell a very different story. There are over 25,000 registered quarter horses in Ontario. Our association is associated with the American Quarter Horse Association, which has a full-time staff of 260 people at their head office in Amarillo, Texas.

Last year, the Ministry of Agriculture, Food and Rural Affairs did a study comparing the quarter horse and thoroughbred populations in Ontario. They found that the total capital investment in facilities and stocks for quarter horse owners was $680 million. The same investment by thoroughbred owners was $250 million. The annual expenditure on supplies and staff by the quarter horse industry was $31.5 million; the annual expenditure by the thoroughbred industry was $27.8 million.

We would like to acknowledge immediately the very significant difference between the quarter horse industry and quarter horse racing industry. Of the 25,000-plus registered quarter horses, slightly more than 125, or half of 1%, are currently racing. The critical point we want to make is that there is a large quarter horse population that could be attracted to racing given the proper circumstances, and we believe the legalization of video lotteries is an important first step in creating those circumstances.

There is ample evidence that the horse industry is a highly efficient job creator and therefore a stimulus to the economy of Ontario. For the fortunate few, owning and raising horses is a very enjoyable hobby, with economics as a secondary consideration. For the vast majority, however, horse ownership and breeding have to make economic sense. Viability in our business is a three-legged stool. Those legs are an adequate horse population, a proper racing facility and adequate purses. For the stool to be stable, all three legs must be strong.

The same is true for our industry. At the present time, we have half of one strong leg on our stool: We have a very large potential horse racing population. In 1995, the total purses that we raced for were just over $200,000. That means that if every horse raced equally well, the expected earnings per horse would be $1,700 a year, which is not an economically viable level.

On July 28, representatives of the American Quarter Horse Association unveiled a plaque at Picov Downs where we race, recognizing 25 years of breed-sanctioned, official quarter horse racing. Although we've been racing for over 25 years, we still do not have the first-class facility that we need. The legalization of video lotteries exclusively at racetracks, but including all racetracks, would be an important first step in increasing the revenue and therefore the purses available to our industry. We have already commenced negotiations on the possibility of building a first-class racing facility at Picov. At the appropriate time, we will be approaching the government to apply for a licence to have a permanent charity hall at our proposed new track to further strengthen its economic viability.

The American Quarter Horse Association has conducted extensive surveys, copies of which we will gladly arrange to have supplied to this committee, on the audience for quarter horse racing. They have found consistently that the audience is far younger and roughly balanced between males and females as compared with the normal audience for standardbred or thoroughbred racing. First-time visitors to Picov Downs are amazed by the crowds we draw. A significant portion of our normal crowd is composed of family groups, many of which contain pre-teen children. This is an audience the horse racing industry must learn to attract if continued fan support is to be maintained.

We in the quarter horse industry are already successful in attracting that audience. Our challenge is to build from our current very modest base to the solid and thriving industry we see in other jurisdictions. This development would be significant not only for people who would be interested in racing horses, but also farms that could breed horses for the track.

The economic ripple effect of a growing quarter horse racing industry can be very significant for the economy. The legalization of video lotteries at racetracks only, and including all racetracks, on a reasonable basis, is an important step in strengthening one of the three critical legs of our industry.

We thank you for the opportunity to appear before you and we'd be pleased to answer any questions you may have.

The Vice-Chair: Thank you very much, Mr Willis. We'll first turn to the NDP caucus. We're looking at about three or four minutes per caucus.

Mr Kormos: I counted four.

Thank you, sir. Indeed, succeeding you today is the Ontario Horse Racing Industry Association making its submission. You folks, not disparagingly, are sort of the odd people out in that industry in terms of stature?

Mr Willis: I think that would be a reasonable description. We tend to be ignored when people talk about horse racing.

Mr Kormos: You said something interesting, because you might have more in common with your colleagues in other facets of horse racing than you thought. The vast majority of them who have come before this committee have said, "We think slots are a great idea. The racetrack is capable of dealing with them. Putting them into other licensed establishments like hotels, motels -- no, you should stop at the racetrack."

Mind you, similarly, the Ontario Hotel and Motel Association doesn't want to share either. They say, "We understand you've got to put them in racetracks, and hotel and motel people, who are licensed, can handle them, but don't go beyond that. By God, don't put them in corner stores," even though corner stores sell the vast majority of lottery tickets in Ontario. Corner stores are the biggest purveyors of gambling in Ontario right now and they seem to have done a reasonably good job. How come you don't want to share? How come you want it to stop at the racetrack?

Mr Willis: Our rationale on that point is, first of all, from a clear, self-serving perspective, monopolies are beneficial, and if we're the only show in town, we get the major benefit. We also have the experience, being regulated by the Canadian Parimutuel Agency, of operating in that kind of environment. For people who are concerned about the proliferation of gambling, you're talking about racetracks where there is already parimutuel gambling, so there isn't a geographical proliferation.

As I stated in our presentation, from our industry's perspective, what we need is to find sources of revenue that are going to augment our purses, and the VLTs would help us.

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Mr Kormos: No problem. You got it. Talk about cash flow.

Mr Sisson, who preceded you, had one of the most interesting observations so far in the hearings. He basically said, "A gambling venue is a gambling venue is a gambling venue." As a result of our discussion, we had the proposition that maybe there should simply be one type of regulation, and that is of a gambling venue, be it a casino, a charity casino or a racetrack, which is the status quo. They're there. There's parimutuel. You can't turn the clock back. Would you accept that type of regime, where there was one standard applied to gambling venues?

Youngsters under 19 aren't admitted into casino gambling venues. Racetracks have been trying to say: "We're family. Bring your wife, bring your spouse of either gender, bring the kids of either gender. This is family stuff." If racetracks are being subjected to the same standards as a casino, those kids ain't going to be there. Would you live with that?

Mr Willis: As I suggested in the presentation, we've been successful in having a very family-oriented experience. Anyone who's come out to Picov Downs on a Sunday, and I recommend it -- Mr Flaherty I think is the only one here of whom I'm aware who's been out to our facility. It is very much a family experience from that perspective.

It is difficult to comment, when you're asking a conceptual question about a revolutionary change in regulations, as to whether or not it's something we could live with or not live with. We take great pride in the fact that ours is an atmosphere that families feel extremely comfortable in and demonstrate that by their presence, and we wouldn't want to lose that.

Mr Kormos: Thank you, Mr Willis. I appreciate it.

Mr Young: Apparently this is in his riding.

Mr Flaherty: It's in the neighbouring riding. As MPP for Durham Centre I want to welcome Mr Willis here on behalf of the quarter horse industry. It is excellent family entertainment in Durham region. Not only is Picov Downs the leading racetrack in Durham region, it's also the only racetrack in Durham region and we appreciate having it. Thank you for coming, Mr Willis.

Mr Douglas B. Ford (Etobicoke-Humber): Mr Willis, would you explain to me and to some of the people here who are not familiar with racing what a quarter horse is as compared to standard thoroughbreds and sulkies and different things like that?

Mr Ken Mucklestone: I could probably help in that regard. A quarter horse is a breed association in exactly the same fashion as thoroughbreds are a breed association and standardbreds are a breed association. It is the largest breed association in the world.

Mr Ford: What is the difference between a quarter horse, though?

Mr Mucklestone: Different breeding. They all trace back to, I believe, seven stallions. The majority of quarter horses have a significant amount of thoroughbred in them. They are allowed to interbreed with thoroughbreds under controlled conditions.

Mr Ford: They run a different course.

Mr Mucklestone: They run an entirely different race. They are bred for short sprint races.

Mr Ford: What is that, a quarter-mile?

Mr Mucklestone: A quarter-mile is the maximum race we can run down here because that's as large as our track is.

Mr Ford: And they're partly thoroughbred, are they?

Mr Mucklestone: Most of them are partly thoroughbred, yes.

Mr Ford: So they're a mixed breed, then.

Mr Mucklestone: No, they are not a mixed breed. They are a controlled breed and they happen to be able to interbreed with a thoroughbred as part of that controlled breeding.

Mr Ford: That gives us some information. Thank you very much.

Mr Guzzo: Sir, thank you for your presentation. I think you have a legitimate claim and I don't know whether you've really dwelled on the area. I mean, 25,000 animals in Ontario -- where are they stabled? Are any stabled at Picov Downs right now, on a non-racing day?

Mr Mucklestone: Yes, there are approximately 80 to 90 horses stabled on non-racing days.

Mr Guzzo: Great. So where are the other 25,000 stabled?

Mr Mucklestone: Fifteen of them are in my field.

Mr Guzzo: Tell me about the people who look after them. Do you hire people? Do you create employment by caring for those horses?

Mr Mucklestone: Yes, we do.

Mr Guzzo: You hire from the community?

Mr Mucklestone: We hire people from the community.

Mr Guzzo: And some of those people would have trouble, sir, outside the horse game where they're looking after animals, finding employment any place else.

Mr Mucklestone: Some of them would have an extremely difficult go of it if they tried to find employment outside the horse industry.

Mr Guzzo: The rest of these animals aren't stabled at racetracks like standardbreds, even a percentage of them. They're on the farms, they're in the rural areas, they're in farming Ontario and they're creating employment in farming Ontario. That is your best argument; that's what this government is after in doing what we're doing. I think you're entitled to your share, and I thank you for your brief.

Mr Crozier: Welcome, gentlemen. I hope, as Mr Guzzo has said, this government is willing to look at giving you your share because you have mentioned several times that you would like video lottery terminals, if they're introduced at racetracks, to be at all racetracks. I may be off by one or two and I'm sure the parliamentary assistant will help me if I am, but there are some 18 racetracks in Ontario. The plan as we know it is to introduce the bulk of them at only four tracks. We can understand why. It's because you're small change, to use the vernacular, and they want these things where the big bucks are. So I too share your concern that if we are going to treat everyone fairly, you should be included.

The 21 race days you have, give me some sense as to when they are: in summer, once a week, how does that run?

Mr Mucklestone: From mid-May to mid-October, roughly, and Sundays only.

Mr Crozier: And Sundays only, great. The fact that they're raced at one track, have they ever on an experimental base been introduced at any other tracks, be they small or major tracks?

Mr Mucklestone: The quarter horse racing people want to be recognized by the American Quarter Horse Association. In other words, they are racing not only for the purse but they are racing for other considerations as far as the breed association is concerned. The breed association has only licensed one track east of Manitoba, ourselves, and we have had demonstration races at other tracks. That's as far as it's gone.

Mr Crozier: I think, as Mr Kormos has alluded to, we have difficulty in getting each of the vested interests a share with the others and we can understand that. I looked at the schedule and we have almost two weeks to go on these hearings. We will be hearing from horsemen's associations, racetracks, track associations, and certainly we'll be posing those questions to them on your behalf to see if they're willing, along with you and along with Mr Guzzo's encouragement, to have the government share the benefits of this with you as well. Thank you for being here.

Mr Willis: Thank you very much.

Mr Flaherty: Mr Chair, just before we go on, I've been asked by the ministry and I would like to provide some statistics with respect to inspections by the liquor board in Ontario, given what we heard here earlier today. I am advised that the LLBO currently does some 7,000 spot audits per year. The LLBO also red-flags problem premises for inspection and investigates any formal complaints. There are approximately 300 to 350 hearings each year. With respect to the merger of gaming and LLBO, inspectors will be able to do multiple inspections, both liquor and gaming, and the Gaming Control Commission and the province have a history of increasing regulatory and enforcement employees as gaming activities increase.

Mr Kormos: A vain attempt at spin-doctoring and damage control.

ONTARIO HORSE RACING INDUSTRY

ASSOCIATION

The Vice-Chair: Our final presenter this morning is the Ontario Horse Racing Industry Association. Mr Robert Hall and Jane Holmes, I'd like to welcome you to the committee. You have 20 minutes for your presentation. You may wish to leave some time for questions.

Mr Robert Hall: I don't think we'll need all 20 minutes, but I'd like to introduce myself again: Robert Hall, chair of the Ontario Horse Racing Industry Association, which we call OHRIA. With me is Ms Jane Holmes, executive director of OHRIA. Thank you for providing us with the opportunity to make this presentation to the committee on behalf of OHRIA.

This is a very interesting organization. It's a non-profit corporation, bringing together all the major players in racing in this province -- perhaps the only type of organization, certainly in North America and perhaps in the world, where all the major players are together. They came in with agendas but we've done pretty well; most of our decisions are unanimous and we're very pleased with that. We realized some years ago that we'd either have to be together or sink separately because the racing industry found itself in a very calamitous position.

The umbrella industry represents all the major participants: the Ontario Harness Horse Association -- that's the owners and the trainers of harness horses; the Horsemen's Benevolent and Protective Association of Ontario -- that's the thoroughbred owners and trainers; the Canadian Standardbred Horse Society; the Canadian Thoroughbred Horse Society -- that's the breeders of both breeds; Racetracks of Canada, Ontario division; the Ontario Jockey Club; and all of the independent tracks in the province. These are the regular voting members of OHRIA. We do have associate members and at this time the Canadian Quarter Horse Association is becoming an associate member. Perhaps within a short time, as their industry grows, as their breed grows, they will no doubt become a regular voting member of our association.

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I speak on behalf of OHRIA. You will hear other presentations that may differ slightly -- people have a clear mark on what they wish to have for racing -- but I think we're unified on some fronts, which I will discuss in a few moments. The purpose of OHRIA presenting today is to provide the broad horse racing industry perspective on Bill 75, specifically as it relates to video lotteries.

We support Bill 75 with regard to the legalization of video lotteries in Ontario. As the oldest and most highly regulated form of legalized gaming in this province, our industry is well aware of the negative impacts the grey market has on legal operations.

We do not believe the Ontario government can or should turn a blind eye to the seriousness of the grey market. In addition to the reported 15,000 to 25,000 illegal video lottery terminals in this province, there are other forms of illegal gaming. For example, Internet now offers numerous and varied online wagering activities for anyone willing to play. These operators are often based offshore and the money flows out of the country instead of being retained in Ontario. Illegal operators are not subject to the regulatory controls to which the Ontario horse racing industry and other established legal gaming operations are subjected.

The grey market provides no protection to the customer. Revenues do not flow to legal businesses that pay taxes -- federal, provincial and municipal -- as well as licensing fees, nor do revenues flow to the government. The grey market contributes to problem gaming. However, these unscrupulous operators do not provide funding to address this problem, unlike the proposed 2% which would flow from the proposed video lottery program. Based on the size of the grey market, it appears that there is a demand for this form of gaming in our province. It must, however, be in a controlled and regulated environment.

Why locate video lotteries at racetracks?

We are an agricultural-based industry that is the oldest legal gaming business in Ontario.

Horse racing is highly regulated both federally and provincially and is committed to maintaining the integrity of the gaming industry.

The principal employees at racetracks involved with parimutuel wagering are licensed and have been thoroughly investigated by the OPP under the provisions of the Ontario Racing Commission.

Security and surveillance systems exist at racetracks.

The horse racing industry is technologically advanced in the operation of its computerized parimutuel systems.

Our employees and management are experienced in serving the gaming customer and handling large amounts of money.

The industry is prompt in remitting revenues to the government.

Racetracks have the infrastructure and the necessary customer amenities to accommodate the video lottery operations.

Social responsibility? The horse racing industry recognizes its social responsibilities as a gaming industry. As you've heard previously, our racetracks contribute to the funding of problem gambling associations. As well, OHRIA has actively participated in the development of the comprehensive provincial strategy on problem gambling. The horse racing industry is cognizant of its role in facilitating preventive measures so that gaming remains an enjoyable form of entertainment.

We support video lotteries in permanent charitable gaming halls. Our industry has been actively involved in the community by providing fund-raising events for local charities. There is an established relationship between racetracks and charitable organizations, and this relationship could be further developed for the benefit of both of these established gaming operators if permanent charitable gaming halls were located at racetracks.

The horse racing industry would like to go on record at this time that we would be very concerned if a private sector operator was responsible for video lotteries in any form at racetrack locations. We are extremely concerned that the integrity of our parimutuel operations may be jeopardized by the involvement of third parties at our locations. If the government's intended direction is to further maximize private sector involvement in the acquisition and operation of video lotteries, the Ontario horse racing industry is prepared to enter into direct negotiations with the appropriate government bodies to develop a mutually acceptable agreement to get the industry into the ownership position of video lotteries at racetracks while still enabling the government to meet its requirement to conduct and manage the lottery scheme.

The racetracks currently have communication linkages to the Canadian Pari-Mutuel Agency, our federal regulatory body, to facilitate the control over and auditing of the parimutuel wagering. As well, there are linkages between racetracks.

It is a concern of the industry that there will be some element of cannibalization of parimutuel wagering as a result of the new casinos being opened and video lotteries being introduced on a widespread basis. Ontario is unique from other horse racing jurisdictions in North America, with the number of racetracks operating, 18, and with the size and growth of the parimutuel handle in the last two years. In other jurisdictions where these machines have been installed at racetracks, there has been an overall decline in the level of parimutuel wagering. Much of this decline can be directly attributable to nearby casinos and the introduction of video lotteries.

While we have witnessed the positive impact on horse people's purses in jurisdictions with the introduction of video lotteries in those jurisdictions, the horse racing industry received a significantly higher revenue share and a greater number of machines than is being proposed for the Ontario industry. If implemented, we would respectfully request that the potential cannibalization be considered in the allocation of revenue shares, and that a review be undertaken on the impact of video lotteries on existing gaming operations and social impacts before any further expansion goes beyond the proposed phase 1.

The horse racing industry has developed a strategic plan and sees racetracks becoming multiple gaming-sport-entertainment centres. However, we are committed to remaining true to our core business: horse racing. The vision of the Ontario horse racing industry is to be a world-class leader in horse racing and breeding. Revenues derived from video lotteries will be reinvested into horse breeding and racing. This will have a dramatic multiplier effect on the provincial economy, because of the labour-intensive character of the horse racing industry. This will result in the creation of new jobs, primarily in rural communities, where it is difficult to create economic revival.

Horse racing generates 33 person-years of employment for every $1 million of incremental industry expenditures. The Ontario horse racing industry, if provided with the opportunity, will integrate video lottery gaming into our racetracks to create a quality gaming entertainment destination centre. We'll work in partnership with the government to ensure that this is done in a professional and socially responsible manner, which supports the long-term viability of the Ontario horse racing industry.

The horse racing industry, for those who are not aware, is the third-largest agricultural industry in this province, after beef and dairy, employing directly, we estimate, 26,000 persons, and probably indirectly an equal amount, most of whom would be largely unemployable in the workforce.

We thank the committee for your time. Jane and I are prepared to answer any of your questions.

The Vice-Chair: Thank you very much for the presentation. The first question is from the Conservative side.

Mr Tim Hudak (Niagara South): Thanks for the presentation. I've heard it described that the racing industry was in a rather calamitous position until this government came into office and then there were some changes announced in the budget, predominantly what we're dealing with today, Bill 75. Is that an accurate assessment of the way the racing industry was? And perhaps you could tell me how the future looks.

Ms Jane Holmes: This government has recognized the importance of the horse racing industry by reducing the parimutuel taxes to one half of 1%. That's put us on a level playing field with other horse racing jurisdictions in North America. We're not competing in a provincial or national marketplace; we're competing in an international marketplace. That is seen as one of the large movements forward to help support this industry to continue to be strong and viable.

Right now, we're the fifth-largest horse racing jurisdiction, and in standardbred racing our racetracks are considered number 1 and number 2 in North America.

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Mr Hudak: How important is Bill 75 in terms of the 40,000 jobs associated with racing in Ontario?

Ms Holmes: The industry sees it as an opportunity to become competitive within the gaming marketplace in Ontario. At one point in time we were a monopoly in the gaming environment. Now we're about 11% of that environment. As we see new casinos and other forms of lotteries and charitable gaming growing, our market share keeps diminishing. We believe video lotteries will give us an opportunity to compete in that playing field as well.

Mr Hudak: So in terms of the 40,000 people associated with racing, this is certainly a good move forward.

Ms Holmes: We believe that if video lotteries are a success in contributing revenues to the horse racing industry, we will grow that number of jobs.

Mr Hudak: You mentioned something that's very interesting in your presentation. You talk about a multiple gaming-sport-entertainment centre. The way the opposition tends to portray it, because it suits their purposes, is that VLTs are a type of machine where people get ratcheted to it, get locked to it by a chain, that they're zombies and they don't do anything else but play VLTs. But from what I see here, and what I've noticed in some research and discussions in other areas like Dover Downs in the States and Delaware and such, you can make a multi-entertainment centre a destination. I believe that's an accurate assessment. Perhaps you could tell me if that's right.

Second, when the money comes in from the VLTs, how will that be reinvested? Is that just lining the pockets of the Ontario Jockey Club, or is that going to be reinvested in the racing industry?

Mr Hall: We keep on hearing about the Ontario Jockey Club. They're just one of our participants. What is the proportion of money coming back from the tax?

Ms Holmes: To the jockey club?

Mr Hall: Yes.

Ms Holmes: Well, their wagering represents 80% of the industry, but half of that goes back to the horse people who run at the jockey club. I think that's the important thing that people forget, that half of the jockey club is the horsemen. We see the revenues from the VLTs going back to support the horsemen in their purse money, and the purse money is what pays for the breeding and horse racing industry in Ontario.

Mr Hudak: The Fort Erie track, for one, is a beautiful track, the most beautiful I've been to, and it's in my own backyard, but it certainly needs a little bit of work in the grandstand area and maybe in the stables. Do you see this money from the video lottery terminals being reinvested in this track?

Mr Guzzo: Fix the leaky roof.

Ms Holmes: One of the things that's happened is that the horse industry has been underfinanced because of our high parimutuel taxes, so we haven't been able to reinvest back into our facilities the way the new casinos and the new SkyDome and the other theatres have been able to do. We need to reinvest into our plant to be able to draw people back out to the racing industry and to the racetracks and make it an entertainment experience.

Mr Crozier: Thank you, Mr Hall and Ms Holmes. Prior to the announcement of the introduction of VLTs in the province of Ontario this spring, had you approached the government, had the government approached you, and had you lobbied for video lottery terminals?

Mr Hall: In our strategic plan that we presented to the previous government and also to this government prior to the budget, we didn't champion VLTs. At that time we were concentrating on a significant reduction, which fortunately came through, in the parimutuel tax. But we did say, "If you're going to bring them in, we are the logical place to have them. Yes, we would like them exclusively," because we have a regulated environment where betting can take place. People come to the race tracks to bet and we have the surveillance, we have the tremendous amount of control of anybody going to a racetrack, whether it's a youngster betting or whether it's a person who is unwieldy in the room betting. We have more than a jaundiced eye; it's very carefully controlled.

Ms Holmes: We did have a couple of our members, not through OHRIA. As an industry we did not approach on video lotteries at all. There were some individual members, but they were racetracks that had casinos in the backyards. For example, Ottawa, which has experienced a 15% to 20% drop in its parimutuel since the casino in Hull has opened.

Mr Guzzo: Mr Bouchard kept that money and he's put it to good use. He's breaking up the country with it, in keeping with the Liberal plan.

Mr Crozier: Chair, are you just going to let him tear on like that?

Mr Guzzo: Well, he won't recognize me legally.

Mr Crozier: I can understand why.

I understand some of the problems the racetrack industry has. We had a small track operating in our town until a few years ago. It interests me why, if they are so important now, you wouldn't have lobbied for them previously.

Ms Holmes: I think the parimutuel tax reduction was far more important to the industry than the introduction of video lotteries. We cannot compete with other jurisdictions in terms of payout to our customers without the tax reduction, and the horse owners and the track are reinvesting money back into the breeding operations. As far as our priorities were concerned, it was getting the parimutuel tax reduction so we could compete in our core business, which is horse racing.

Mr Crozier: In the third-last paragraph of your presentation, you note that the revenues derived from video lottery terminals will go into the creation of new jobs, and you relate this to horse racing generating 33 person-years of employment for every million dollars of incremental industry expenditures. I want to make sure this is not just inferred: Will that be the same for video lottery terminals?

Ms Holmes: No. The revenues that go back into the breeding section is where it creates the 33 new jobs. It's our reinvestment back into the horse racing industry. We do expect that there will new jobs created from video lotteries. When we looked at Hippodrome in Quebec, they have a small number of video lotteries, and while you have synergies, they've created 14 to 20 new jobs just at that small track, which is comparable to one of our class 3 tracks here.

Mr Crozier: When we throw statistics around, I just want to make sure that somebody doesn't read something into it.

Mr Kormos: Again, your submission is parallel to so many others from your industry as well as to the hotel-motel association. They're saying they've got hard times too; they want a piece of this action. Why let the horse race industry grab it all? They want a share.

You do make reference, though, to the phenomenon of the grey market and the 15,000 to 25,000 illegal video lottery terminals. Even at 20,000, that'd be the same ratio as the government is proposing for slots: one for every 550 population. I am going to seek some clarification, because I suspect the number is based on the actual de facto number of these video slots whether or not they're being paid off on. Otherwise, the preponderance of them would be so great -- I mean, talk about grey market. Heck, I grew up in Welland-Thorold, and you've got to be talking about bookage too. I don't think Welland had, or still has, any more or any less -- I remember Ace. He's dead now, but he was one heck of a bookie. He wore a white wig and he used to keep his betting slips up under the wig. As often as not, the police would walk into the Dexter Hotel, and he wasn't sure whether they were there to place a bet or to bust him, but poor Ace would flip that wig up and the little tabs would be hanging out all over the place, and as it was, one of Niagara region's finest only came in to check for the underage crowd.

But here's Welland real close to the Fort Erie track, and the proximity of Welland to the track didn't seem in any way to diminish the number of bookies. These people were entrepreneurs. I know bookies, hard lives in their own right, who sent their kids on to university and their kids are professionals now. None of them would ever become politicians, which speaks to the quality of their parents.

I mean, how are legal slots going to eliminate illegals?

Mr Hall: Having acted for bookies, I can say a lot of them are very reputable. There'll always be bookmakers; the payoff is going to be better.

Mr Kormos: In fact, there's half the maximum on the longshots.

Mr Hall: Yes, that's right.

The only thing I wonder sometimes is that by having slots or the video lotteries in every boondock and every hotel/motel, Mac's store or 7 Eleven, if that's proposed -- and incidentally, I don't think the provincial treasurer went that far. I hear people talking about 7 Elevens and Mac's milk stores. I don't think he went that far in the proposed bill.

But the point is that the security, the care and the -- I don't see how they could do it. With the hotels that have liquor licences today, my goodness, you don't have enough supervisors to supervise liquor, so we were just wondering where in the world they're going to have the supervision and control of the hotels and motels. It's going to be one very difficult job, especially for tourists coming in. You have to isolate them in a room which presumably will be, and has to be, only for that gaming venue, whereas racetracks have it built in; we have that now.

Mr Kormos: Point made. I'm hard-pressed to quarrel with you on that specific issue.

The Vice-Chair: Sorry, Mr Kormos. Our time has expired. Mr Hall and Ms Holmes, on behalf of the committee, I would like to thank you very much for your presentation.

This committee will stand in recess until 1:20.

Mr Kormos: Chair, before we go to recess, I know the research staffers, among others, are compiling a précis of each of the submissions which will be made available at the end of the hearings. I don't want to put the staff under inappropriate demand, but it probably would be convenient for most if not all of us if we could use this type of annotation to have a brief breakdown so we can review it. If stuff is available, I think all of us would appreciate receiving it when it's available if we could have it. I certainly would.

The Vice-Chair: Is it an interim summary you're looking for at this point?

Mr Kormos: Yes, but only if it's available.

The Vice-Chair: We'll make that available, will we? Okay, we'll get that.

The committee recessed from 1202 to 1319.

BIG "D" BINGO

The Chair: Good afternoon, members of the committee, ladies and gentlemen. Our first presentation is Big "D" Bingo. I understand the spokesman is Mr David McNevin. Mr McNevin, if you would introduce anyone else who will take part in the presentation for the purposes of Hansard.

Mr Philip Katz: Actually, my name is Philip Katz and I'm the president of Big "D" Bingo. With me are Francis Lucier, David McNevin and Ron Foster. On the first page of the submission it indicates who we are -- not what we are, but who we are, anyway.

Mr McNevin will do a short presentation, and then we'll take your questions.

Mr David McNevin: Good afternoon, Mr Chairman and members of the committee. In my submission today I will be covering four basic issues. First of all, I'll discuss briefly the nature of the bingo industry in Windsor, with a particular emphasis on the relationship between charitable organizations and commercial bingo hall operators; second, I'll discuss the types of charities that utilize our facilities at Big "D" Bingo; third, I'll discuss what we perceive to be the anticipated impact of VLTs in Ontario; and finally I'll outline the factors and considerations which in our view militate in favour of installing VLTs in commercial bingo halls.

The bingo industry has grown tremendously in the last five to 10 years, and particularly in Windsor, where bingo generates approximately $137 million annually. Some $25 million of that goes directly to charitable organizations. Over a thousand charitable organizations in the Windsor-Essex county area participate in bingo and raise proceeds in that manner.

Windsor has a disproportionately large gaming industry. It has two temporary casinos. It has a racetrack and temporary Monte Carlo events and 13 bingo halls. Given the fairly small size of Windsor's population, it's important to note that this market draws largely on its proximity to the United States, with five million residents in southeastern Michigan within an hour's drive.

The advent of the casinos has impacted the bingo industry to some extent. Initially the impact was fairly dramatic, but it has stemmed over time and it's been estimated that the overall impact is approximately 5% to 10% loss of revenues.

Big "D" Bingo is a leader in the bingo industry, and at tab B of our submission we've provided some photographs of what we understand to be the first theme bingo hall in Ontario. We're very proud of that operation. Big "D" Bingo operates four bingos in the Windsor area, and another bingo in the Leamington area under the Bingo Country name.

At page 3 of our submission we've outlined a typical breakdown of a bingo event to give you some background on how bingo operates. The essential point to take from this illustration is that a given charitable organization can generate as much as $45,000 annually in one of our halls. That's a substantial amount of money, particularly for grass-roots charities or smaller organizations. Part of the focus of our submission today is their role in the introduction of VLTs.

The partnership between charitable organizations and commercial bingo hall operators is an extremely important one. Big "D" Bingo deals with approximately 250 groups in the Windsor area and an additional 50 to 60 in Leamington. The charities rely on the commercial hall operator to market the hall and to provide suitable products for selling bingo. In turn, the hall operator relies on the charities to come and staff the events and so forth. Indeed, it is a very critical and crucial relationship. We've provided a number of examples of groups that deal with us, particularly a number of what I call grass-roots charities, many of which are groups that but for bingo would not exist at all. In my submission, it's our belief that these groups are probably the most vulnerable to the advent of VLTs if they were to lose substantial revenues through bingo.

Turning to the anticipated impact of VLTs, the Ontario government, as you know, has estimated it will earn as much as $350 million to $400 million annually, with an additional $90 million to $180 million going to charity and an additional $9 million to combat gambling addiction. It would be my submission that these predictions perhaps are even on the low side. We've looked at the experience in other provinces, and clearly, across the country, VLTs have had a tremendous impact and are generating substantial revenue.

A downside of VLTs, among others, that we're concerned about is that they do not create a destination attraction like the casino does. Although the casino, as already noted, has had somewhat of a negative impact on bingo, it nevertheless draws new customers to the gaming market, so to speak, 80% of whom are estimated to be American in the Windsor market. VLTs, because of their wide dispersion among a number of locations, in other provinces in any event, have not had a similar type of effect. People don't travel from other jurisdictions to go play VLTs in a particular market. So in this regard, we believe the introduction of VLTs will dilute the gaming revenue that's already being spent, and that will certainly affect bingo and other types of charitable gaming. In this regard, we present our case to have VLTs included in bingo halls, and I will outline a number of reasons for this.

First of all, in other jurisdictions across Canada, VLTs are not in bingo halls. That is because in all other jurisdictions but for Ontario, there is no minimum age to play bingo. In Ontario, the minimum age to play bingo is 18, and so we don't have the same kind of policy considerations that might be in place in another jurisdiction to restrict the placement of bingo halls. I would note that racetracks are among the first locations slated to have VLTs. The minimum age to bet at the racetrack is 16, so clearly Bill 75 will have to address this issue in terms of placing VLTs in an area where persons under the age of 19 cannot have access to them.

One of the other arguments in favour of putting VLTs in bingo halls is that the charities that are going to be affected could potentially be directly compensated, and it's our submission that charities should take a direct share right out of the revenues of VLTs.

In our partnership with charity, one of the key partners is our charities association, which is an amalgamated group of all the charities we deal with. Ron Foster is the president of this association representing 250 charities. This group administers $10 million annually and distributes $3.1 million directly to charities, and in our submission this group is ideally suited to distribute the proceeds of video lottery terminals directly to charities. In our recommendations section, we've outlined a potential percentage breakdown in that regard.

Another factor is that the municipalities presently screen charitable groups and determine whether or not to grant them bingo licences. In this regard, having the municipalities determine what charities in effect merit funds and are going out to work for these funds through conducting bingo basically eliminates the necessity for any other body to be created to serve this function and allows for local preferences and priorities to be reflected in those types of organizations that receive funding.

Finally, and I know you've heard this many times, we're looking for a level playing field. If racetracks are going to have VLTs, if permanent Monte Carlo sites are going to have VLTs and it's clearly going to have an impact on us, we want the tools to compete, we want the tools to continue to maintain our viability, and our charities want the funds that they derive from bingo.

Those are my submissions. We now open it up for any questions.

Mr Crozier: Welcome, gentlemen. Mr Katz, we have to stop meeting this way. The only time we meet, it's across the table and we're talking about bingos and gambling. But it's good to see you again.

Mr Katz: Thank you.

Mr Crozier: In the limited time we have, I'd like to zero in on a couple of your recommendations. Number 7 says, "The existence of some grass-roots charities is seriously at risk following the implementation of VLTs across the province." Could you comment? If I say I interpret that to mean you don't really support VLTs, but if we're going to have VLTS, then -- no, I'll rephrase my question. I wonder to what extent you feel it will hurt the small grass-roots charities.

Mr Katz: The small grass-roots charities, by and large, have this one venue from which they can raise substantial amounts of money. They don't have enough people to go out with chocolate bars on corners or whatever. So if there is going to be an impact on the gaming dollar as a pool, if we make the assumption that there's a gaming dollar out there and some of it is going here and some of it is going there, how can we selectively say that we're going to give this part of the gaming dollar an added advantage and this part not?

Windsor or Leamington is a small area. The demarcation line for people going to this place to gamble and therefore this place is kind of a fortress and won't be hurt by the fact that the money is going over there is not true. We're affected by everything that goes on in our community. All we're saying is, don't selectively leave us out. Alternatively, if they're not there, we'll live with that.

We're not saying to you, "Let's have VLTS," and we're not saying to you, "Let's not have VLTs." We're saying to you we're operating in the gaming industry. We're operating for very important reasons. We want the same tools everybody else has so we can compete fairly on a level playing field.

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Mr Crozier: How do you feel about the local option, where a municipality may or may not want to have VLTs under its jurisdiction?

Mr Katz: In Windsor we had a particular example of what happens when an operator is just outside the governed area and does not comply with the rules or guidelines that have been set down in the region; as an example, Windsor. He's had a major impact on a portion of the market in Windsor because he has a different set of rules. If a locality is left out and somewhere nearby, and they will travel a certain distance, they can get the opportunity for the better entertainment or whatever we call it, they will go there and the local municipality or area will suffer for it.

Gaming has grown up. Gaming is different now than it was. Bingo halls, as we used to understand them, have got to meet the new world, the new corporate world. The opportunity to become a place of destination is important. We have to compete with casinos; we're going to be competing with permanent charity casinos. We've got to be able to give these people products so that we become a place of destination. We can't be left out.

Mr Kormos: I appreciate your comments. In conjunction with what we've heard over the course of a week now I agree entirely with what you say about bingo. I come from Welland-Thorold, a strong church community, and back into the 1950s people were driving by busloads from Buffalo to come to Welland for church basement bingos, which was the hottest action in town, no two ways about it. When you speak of maturation, similarly the centralized bingo hall operations with bigger prizes have put the church basement bingos as fund-raisers out of business. I notice among the clientele you list are any number of churches that probably 30, maybe even 20, years ago ran their own bingos and now rely upon the large bingo hall with the greater consumer base.

I don't think you were here this morning. One of the interesting things is that nobody wants anybody else to share in any of the action. The horse race industry thinks VLTs and slots are a great idea as long as they're at racetracks and they don't want anybody else to have them. That's a generalization but it's reasonably accurate. The Ontario Hotel and Motel Association thinks it's a great proposition and it's happy that racetracks have them and that hotels and motels are licensed to have them, but they don't want anybody else to have them because they don't want to share any proceeds.

When you talk about maturation of the industry, has bingo grown to the extent where bingo halls are gaming operations on the same plane as casinos -- be they Windsor, Casino Rama in Orillia, Niagara Falls or be they charitable casinos -- such that we should be looking at regulating them with a model? You refer to that in some of the material in here. You raise questions about resolving the problem of age by raising the age of playing bingo to 19 or reducing the age of playing slots to 18. Are we off track here in terms of somehow isolating bingo from the overall gaming casino industry rather than saying it's all part and parcel of the same industry, and if you want to talk level playing fields, let's get serious about that and put casinos, bingo halls and racetracks on a level playing field in terms of the same models of regulation?

Mr Katz: Absolutely. When somebody speaks about the hospitality industry, they don't selectively take out some restaurants because they only serve ribs or others because they only serve hamburgers.

As much as we don't like the idea, occasionally we have to take a page out of the American book, and in Windsor we've been working very hard to get to that. We're trying to get past the day when we're competing with each other and getting products into each bingo hall or being clever in each bingo hall, whereby we attract some of my neighbours' or my competitors' clients. We're trying to take the model from Las Vegas. Although everybody knows the various names in Las Vegas, whether it's Caesar's or Harrah's or whatever, they tend to sell themselves as a region, the whole of Las Vegas. We have to do the same thing. There's a market out there. Next to us there's a market of six million people. We want to attract them. We're not going to attract them by splintering ourselves off.

I don't fight the casinos; I join them. When they went to 24 hours a day, we as a bingo hall, for the first time I think in Canada, went to a 24-hour-a-day bingo, and it worked. I didn't say they were doing wrong; I tried to do it their way. I think we have to sell ourselves as a whole region, as a gaming region, and therefore we have to have products which help us to be part of that destination.

Mr Ford: Mr Katz, what benefits do you see flowing to charities in the move toward permanent venues and away from roving Monte Carlo nights? Do you think the safety and security of the sites will be improved from the perspective of charities, operators and patrons? I think, in my own experience with bingos, a different type of person goes to a bingo hall than to casinos. Am I right or wrong?

Mr Katz: To some extent you're right. Bingo players spend their money differently, at a different pace. Bingo halls do have, for lack of another way of saying it, a certain social aspect. They meet some of the same people there on a regular basis, there's some camaraderie among the players, so to some extent there is a difference. I don't know that there's going to be a major impact, as long as we're not kept isolated from the growing market.

Mr Ford: What about the fixed sites rather than roving? You know what I'm talking about.

Mr Katz: My personal opinion is that the fixed sites --

Mr Ford: Do you think that's going to improve the flow to charities?

Mr Katz: It improves the atmosphere. I think the caravan did not look good, it didn't give it a good atmosphere and we had a bad feeling about it coming and going.

Mr Ford: What about security and everything else?

Mr Katz: If everything is in place, if the field is levelled, everything will find its place. Like any other marketplace, various products fit in with a certain clientele; they develop their clientele and they're able to do that as long as everybody knows what the rules are, as long as we know in advance that this is how we're going to play the game.

Mr Ford: What level of investment would you expect to make in a community where a permanent charity gaming hall was being built?

Mr Katz: What level of investment? Meaning?

Mr Ford: Meaning character of the place, investment in the place, the atmosphere, all kinds of things.

Mr Katz: If you take a look at those pictures we had --

Mr Ford: Yes, I did see some of them.

Mr Katz: -- we took the position -- and that's an experiment; I admit that.

Mr Ford: That's an experiment, yes.

Mr Katz: That experiment is in the $4-million category. We, as a corporation, are prepared to do that to bring ourselves into the 21st century. We think that's where we have to go.

The Chair: Gentlemen, Mr Katz and your associates, I'd like to thank you for your very professional presentation here today.

Mr Flaherty: Chair, if I might raise one matter with you before we begin with the next presenter. I have a letter from the Minister of Consumer and Commercial Relations addressed to yourself as chairperson. It's dated August 12, 1996, addressed to:

"Mr Gerry Martiniuk, MPP and chairperson,

"Standing committee on administration of justice

"c/o Donna Bryce, clerk

"Room 1405

"Whitney Block

"99 Wellesley Street West

"Toronto, Ontario M7A 1A2.

"Re: Bill 75, the Alcohol, Gaming and Charity Funding Public Interest Act, 1996.

"I understand that questions have been raised by certain members of the committee as to whether a request for proposal has been issued regarding the acquisition or purchase of video lotteries.

"I have confirmed with the Ministry of Economic Development, Trade and Tourism, and would like to state for the record, that no such request for proposal has been issued at this time.

"I would appreciate your bringing this matter to the attention of the committee members.

"Sincerely,

"Norman W. Sterling

"Minister."

I would ask that the copies be distributed to the members of the committee, and further, that you as Chair instruct the members or safeguard the accuracy of this in this sense, that members have repeatedly said that RFPs have been issued for the acquisition or purchase of video lotteries, which is not the case.

The Chair: Thank you, Mr Flaherty. The letter will be filed. I'm sure the opposition members are pleased that there was an answer to the question.

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Mr Kormos: Mr Chair, I have stated and will continue to state that senior ministerial officials have been quoted as saying that a request for proposal was issued. I appreciate and I thank Mr Flaherty for the letter from the minister but I think this warrants some inquiry. I ask the government members, and they control this, to ensure that the minister appears here to determine how this -- the fact is undisputable that a senior ministry official is quoted as saying that an RFP was issued. I appreciate that the minister says no, but once again, somebody wasn't telling the truth and I think it's imperative that we get to the bottom of this. I would ask Mr Flaherty to arrange for Mr Sterling to appear before this committee so that we can question Mr Sterling about that very matter.

The Chair: Thank you, Mr Kormos.

OUTSIDERS ROADHOUSE ASSOCIATION

The Chair: Our next presentation is from the Outsiders Roadhouse Association, Mr Endemann, would you please proceed.

Mr Harry Endemann: Mr Chairman, members of the committee, my name is Harry Endemann. I am the general manager of Outsiders Roadhouse. We are a small family operation. We're an approximately 150-seat restaurant-bar located directly on a highway in rural Ontario, in an place called New Hamburg, which is roughly halfway between Kitchener and Stratford, so we are, as I stated, a small operation. The reason I'm here is that I represent the view of a restaurant owner as a single operation. Trafficwise, we draw from the local area and we also draw some highway traffic trade because we are directly on Highways 7 and 8.

One of our concerns as a single operation is with the grey machines that are out there currently. Approximately two years ago we had a gentleman come into our establishment. He said: "We've got a new video machine. Put it in your place and see how it works." He brought it in, put it in, and after it was installed he said, "Oh, by the way, if you would like to make a large amount of money per week, this is what you do," and explained how to use this video machine as an illegal gambling machine, which we did not do. A friend of ours being on the OPP, we spoke to him and said: "Look, this is one of those grey machines. We can use it as an illegal machine, but we won't." The machine continued to stay there for approximately a month. After that period of time the man said, "It's not making enough money, so we have to pull it out."

The sad part is, if I want a grey machine I can get one; I can have one sitting anywhere this afternoon. The thing is, the machine itself is not illegal; it's once the operator takes the machine and uses it as an illegal gambling machine.

What we're afraid of is that if VLTs are not done equally across the board -- to the restaurateur, to the hotel industry, to the racetracks, to all the groups to make it a level playing field -- you're going to find that some operators will get more of these machines in and will actually use them as illegal machines.

One other factor we're looking at is job creation. With the advent of VLTs in our establishment, naturally we would extend our hours to give people access to them. What we'd be looking at in our own establishment is anywhere from two to four more people. As more people come in, maybe they'll only stay 20 minutes, half an hour, but they're going to come in, they're going to play a little bit of the VLT and they're going to want something to drink, be it alcoholic or non-alcoholic, be it bottled water, a can of pop or a beer. Perhaps they'll want something to eat, a small snack, or they might decide they're going to come out and have a meal. What we're trying to do is just get that person to come out maybe once or twice more a month than they used to.

We look towards VLTs as an entertainment factor. Over the past two and a half years we've changed from what we were into more of an entertainment facility as a restaurant-bar. We've brought in pool tables. It allows couples to come in, people to come in in the afternoon who might want to play two or three games of pool. That's all they're there for. They'll play two or three games, they'll have a beer and they might have a small snack. It draws people in.

We're not competing against the restaurant or bar down the street. What we're competing against is the fact that people are staying home who have decided: "I don't want to go out. There's nothing new to do out there." What we can do with this is say, rather: "Come on out and spend 20 minutes, half an hour. Play the VLT. If you win something, great. If you don't, that's fine too, but it's up to you to decide whether or not you want to use it." Doing it across the board will make it quite easy.

To take one step back again with the grey machines, instead of the money going into the pockets of operators of grey machines, why not get the money into public coffers? That way it can be used to help further different programs and also help reduce the deficit of the province. Why not have it so that the money can be used legally instead of illegally?

I realize this was a very short presentation. If you have any questions, please feel free to ask. Thank you.

Mr Kormos: I understand why you, like so many others who have come here, would want a machine or several machines. It was interesting, a participant in northern Ontario indicated his estimate that seven machines in his bar-tavern-dining room would generate $80,000 a year for his cut, his piece of the action. He based that on the experience of, I believe, a relative in Alberta who had a similar setup and that's what seven machines produced, for his brother, I think it was, or brother-in-law. Those numbers are consistent with some of the information we got this morning. That's not a small amount of money, so I understand that.

Mind you, the racetracks say they don't think hotel-motel people can be trusted to run the machines as well as they can. The hotel-motel association, by and large, tends to suggest they don't think that little operators like you -- and again, where I come from, we're chock-full of them -- can be trusted to do it, because nobody wants to give; nobody wants to share.

You talked about these grey machines. You're not quite as old as I am, but heck, back downstairs in Nero's pool hall you can get paid off on a pinball machine -- this is pre-video games -- at the right time in the right place. I'm sorry, but this is not a novel experience. This is as old as any other number of professions which predate our generation in this decade.

Let me tell you what the anti-rackets says here in Ontario, and I wish the government would listen. An internal police report prepared for the Criminal Intelligence Service Ontario reads, "Until the government provides meaningful enforcement, illegal gambling and gaming will continue under a façade of honesty and integrity."

The police complain that they're at a disadvantage for two reasons: (1) the Criminal Code gaming section is antiquated -- it is an old section of the Criminal Code; and (2) -- they call it "manpower" -- manpower is insufficient.

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If I've got an illegal machine, I don't have to share with anybody, I don't have to piece off the government, I don't have to pay out the portion to charitable institutions; I get to keep it all. There's still going to be an incentive to have illegal machines even if there are 20,000 legal slots, because the profits are there.

The police are saying they need the resources to clamp down on these. This is consistent with what the OPP anti-rackets told the government a couple of months ago, that legalizing slots -- and, again, that's a separate argument; and you know where I stand on that -- is not going to address the issue of illegal machines. Do you agree with the CISO report and with the OPP anti-rackets squad?

Mr Endemann: You also have to look who the operator is and what they will do. There will be operators who will still run those grey machines; there's nothing you can do about that. What you have to do with the combination of the gambling and liquor licence is use that to the advantage of the government.

Mr Guzzo: Thank you for your presentation and thank you for the personalized aspects of it. I want to make it clear that I'm not asking you for names or the identification of people, but when you're offered a grey machine in your area of the province, I really would like to know where you believe the profits from that machine would end up. Not the name of the person, but would it be within the province of Ontario, would it be outside the province of Ontario? Do you have any idea?

Mr Endemann: This particular gentleman left us a business card, which we've since gotten rid of, but I believe Montreal is where this particular organization was based out of.

Mr Guzzo: You see, where I come from, in the eastern part of the province, all the money from the grey machines goes to Montreal, and if they bother to pay tax on it, that tax is paid to the province of Quebec and goes to a Premier who is destined to break up this country.

Mr Kormos: He's a former Progressive Conservative.

Mr Guzzo: No, he started as a Liberal and he's going to get around to your party very soon. I know if you had been elected leader, you'd close the door right now. You wouldn't let him in.

Mr Kormos: He's still a Tory; he's just a separatist Tory now.

Mr Guzzo: He speaks highly of you, Peter, and I tell you right now that --

Mr Kormos: If his economic policies are anything like yours --

Mr Guzzo: Is he taking my time, by any chance?

The Chair: Yes, he's trying to.

Mr Guzzo: I want to tell you that when we were in the north -- and quite frankly I had never seen as many grey machines per capita as I did in the north -- we had an indication that the profits were going outside the province also, to a foreign country. Here in Toronto it seems, when you inquire, that the Buffalo market seems to be supplying them here; I underline that.

The other thing is that I assure you that there will be amendments introduced to make it an offence to even have one of those machines, as it is in Alberta. With that changed, it will be much easier to enforce, and we will enforce.

The other thing I would like to ask in terms of the grey machines in your area is, do they in fact ever pay off? Some of them in the Ottawa area, people haven't seen a winner since New York was a prairie. Quite frankly, nobody has any idea as to what percentage goes back to the player.

Mr Kormos: If they never pay off, they're not illegal.

Mr Endemann: The way the gentleman explained this particular machine is, the machine was called a Cherry Master, and the way he described it to us is that you use the machine, people play the machine. A dollar gets you 10 credits. As the people play, when they get an equal number of either 100, 200, 300, any denomination of an equal 100 points, you would go to the bartender, the waiter, whoever --

Mr Guzzo: Yes, but that's not my question. I know how it works, but I want to know how often it pays off. Is it programmed to pay back 92% of the money that's bet, 88%?

Mr Endemann: That I have no idea, sir.

Mr Crozier: Good afternoon, sir. When you brought pool tables and other kinds of attractions to your establishment, did it increase the number of patrons?

Mr Endemann: Yes, it did.

Mr Crozier: Has that been sustained?

Mr Endemann: Yes, it has.

Mr Crozier: Notwithstanding the fact that perhaps the neighbouring bar saw how well you were doing and said, "Gee, maybe I better put in some pool tables?"

Mr Endemann: Actually, they already had pool tables. We're not drawing from their clientele; we're drawing from -- you see, the neighbouring bars are downtown. They're a good mile and a half away, so they draw from directly in town. We draw a little bit of trade from in town. Most of ours comes from out of town because we are in the country.

Mr Crozier: At least you increased the entertainment value that was available in your establishment.

Mr Endemann: Yes.

Mr Crozier: If we are to believe that these devices are entertaining, why wouldn't you have taken up the promotion of the fellow from Montreal who could supply you with machines, not pay them off, as Mr Guzzo has suggested, and just use them as entertainment? They wouldn't be illegal.

Mr Endemann: I would prefer not even having those machines in our establishment.

Mr Crozier: Why is that?

Mr Endemann: Why bother having a grey machine in there of which someone says, "Oh, you're using it as an illegal gambling machine." We won't even have it in the place.

Mr Crozier: No, it's not a grey machine we're talking about. We're talking about a game you play, a video game.

Mr Endemann: We had it in there, but he claimed that it wasn't making enough money so he pulled it out.

Mr Crozier: Oh, okay. Then you wouldn't buy one on your own? You wouldn't invest any money in it?

Mr Endemann: No.

Mr Crozier: Your circumstances may be a little different because you're separated from other establishments, but when every establishment gets its own complement of video lottery terminals, how do you think that's going to make your establishment any more attractive to go to than the one next door?

Mr Endemann: What it's going to do is bring the people who are staying home out maybe once or twice more a month. As I stated, we're not competing against the bar down the street; what we're competing with is the fact that more people are now staying home.

Mr Crozier: Why are they staying home?

Mr Endemann: That I don't know.

Mr Crozier: Could they be staying home because they don't have the money to spend in restaurants and bars that they used to have because of their economic uncertainty, because they're not certain about their job, because they pay more user fees in the municipality than they used to?

Mr Endemann: That I wouldn't know.

Mr Crozier: That's what we're trying to get at. I'm trying to get at what's so magic about these VLTs that's going to get them to come to your establishment as opposed to anyone else's? What's going to draw them out of their home? What we seem to think it could be to some extent is their addictiveness.

Mr Endemann: Actually, what I was looking at was their entertainment value.

Mr Crozier: Ah, then I'm back to entertainment. If it's entertainment, if it's fun to play, why bother losing money on it? Why not just play it?

Mr Ron Johnson (Brantford): Because the gambling is part of the entertainment.

Mr Crozier: Now we're getting to it: The gambling is the entertainment, not the VLT.

Mr Endemann: To give you an idea, we also have from the Ontario Lottery Corp itself one of their scratch-and-win machines; it dispenses scratch tickets. People might spend $2 or $3 on it; they might stay an extra 10, 15 minutes. What'll happen is that they might stay a little longer, and as I said, some people come in just to scratch a couple of tickets and have a drink. It increases the entertainment value.

Mr Crozier: Would you expect that the employees of your establishment, as they are in casinos and at racetracks, should be licensed?

Mr Endemann: I hadn't even addressed that concern.

Mr Crozier: If you had a moment to think about it, what would you think?

Mr Endemann: I see nothing wrong with it.

Mr Crozier: They should be licensed?

Mr Endemann: They should go through some training procedure, as with the prior server intervention program or now with the new program.

Mr Crozier: I've seen what the prior server intervention program has done. It may enable you to recognize a drunk, but they sure still serve them. I think they should be licensed.

Mr Endemann: That depends on the establishment, again.

Mr Crozier: Yes, you're absolutely right.

The Chair: Thank you very much, sir, for your attendance here today.

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KAWARTHA DOWNS RACEWAY

The Chair: Our next presentation will be by the Kawartha Downs Raceway, Mr David Wood, director of administration. Mr Wood, welcome. Was the drive from your location pleasant this morning?

Mr David Wood: I was able to make it from Peterborough to downtown in an hour and a half. That's the first time in a long time.

Mr Chair and committee members, Kawartha Downs Raceway appreciates the opportunity to appear before this committee. Kawartha Downs, its employees and the horse people of our district support Bill 75, in specific the introduction of VLTs into racetracks.

In appreciation of this committee's time, I will not repeat all the issues and concerns we have heard, as they were discussed quite well, I might add, by Mr Hall and Ms Holmes earlier today. We support their presentation in its entirety.

Kawartha Downs does have certain concerns as they relate to any potential cannibalization at our racetrack and would like to see some kind of review of this some time in the near future. Another concern we have currently is the number of grey VLTs that are both in our immediate community and in our trading area, if you will. This bill, the way I've read it, will certainly address those concerns.

I echo Mr Hall's concerns relating to introducing VLTs at racetracks. The extremely high levels of regulation by both provincial and federal governments currently in place would certainly present the right climate and atmosphere as well as perception that all matters concerning implementation would be in the right and proper manner to all concerned.

We have spoken briefly with a few charities in our area regarding a possible permanent charity events hall. This would truly make Kawartha Downs a total gaming entertainment facility.

In closing, the introduction of VLTs into Kawartha Downs Raceway would enhance our ability to be open for business more days of the year, which in return would allow for more employment opportunities for both our employees as well as the many horse people in our district. I could go on, but I echo OHRIA's views and I feel that it's time-consuming to rehash them. I thank you for your time.

Mr Flaherty: Nice to see you this afternoon. We had the quarter horse people with Picov Downs in Ajax here today. My riding, Whitby, is not that far from Kawartha Downs and I must say I've had the pleasure of visiting Kawartha Downs. How's it going this year? How's this season?

Mr David Wood: Our live handle is down, I think a lot like most racetracks in the province right now. The introduction of intertrack wagering has certainly helped us. We, along with all racetracks, are biting at the bit for the new provincial regulations concerning takeout rates being implemented. I think it will greatly help Kawartha Downs, all racetracks and horsemen.

Mr Guzzo: Sir, how many nights are you racing live now?

Mr David Wood: We race 50 days live.

Mr Guzzo: How many horses are stabled on your grounds today, approximately?

Mr David Wood: We do not stable horses on the grounds. We allow horsemen to ship in on race nights. They practise daily on our track.

Mr Guzzo: They ship in to train on your track as well?

Mr David Wood: Yes.

Mr Guzzo: A typical 10-race card would require approximately 80 horses?

Mr David Wood: That's correct.

Mr Guzzo: The individuals train on the farm and ship in?

Mr David Wood: They train on the farm and they also take advantage of our 5/8-mile track to actually train on off days.

Mr Guzzo: Where are those horses stabled?

Mr David Wood: They're stabled at local farms in the Peterborough area.

Mr Guzzo: In rural Ontario, and they hire people from the local communities to groom and care for those horses.

Mr David Wood: Correct.

Mr Guzzo: From your observations, over the years, of the people doing that type of work, are these people who could conveniently move into other jobs if this industry were to be allowed to drop?

Mr David Wood: Traditionally, from what I've seen, I don't think very easily.

Mr Ford: Good afternoon, sir. With the introduction of video lotteries in the racetrack, what kind of job appreciation would you see there?

Mr David Wood: Naturally, if our facility is open more than 50 days a year vis-à-vis perhaps year-round, there has to be certain security, maintenance, as well as technical jobs that probably would be available, administrative.

Mr Ford: Do you have any idea of approximately the number you're doing with the volume? I guess it's very hard to tell.

Mr David Wood: It's hard to tell because of numbers -- I would suggest that it could be in the 10 to 20 range.

Mr Ford: That's the whole season?

Mr David Wood: In addition to the current employees we already have.

Mr Hudak: I have a question I asked another racing group. I'm trying to understand how VLTs will fit into the racetrack. Are you going to be catering to two different markets? Are you going to have a bunch of people who come in just to play the VLTs and are chained to the machines like a bunch of zombies, as has been alleged by opposition members, that they play VLTs and that's all they do, that they don't spend their money anywhere else? Or are you going to be bringing in more customers who are going to play both the VLTs and the track? Do you see yourself as two separate entities or are you going to be a much better destination?

Mr David Wood: I would think there are naturally going to be some people who want to play that but it is my perception, and the reason we would like to continue, that there will be a cross in patronage, as we saw with intertrack wagering in our facility.

Mr Hudak: This is an observation I have. I don't mean to stereotype some of the racing fans. I used to work at the border and some them come across at the time. Some people refer to them as the greying market, the race fans, at least a lot who came across from the States from the Fort Erie Race Track. Do you think this will help you bring in some new customers and educate them in how horse racing works so they can enjoy the entertainment of a good horse race?

Mr David Wood: I absolutely believe that.

Mr Crozier: Good afternoon, sir. You mentioned just a few minutes ago that your handle was down.

Mr David Wood: Our live handle, yes.

Mr Crozier: What's the reason for that, do you think?

Mr David Wood: My obvious perception is perhaps -- we all say the economy. We are now in competition with a lot more gaming games in the industry as we know it today. We have to compete like everybody else.

Mr Crozier: Sure. When the government allows up to 50 permanent charitable casinos in the province, do you think that will further erode your handle?

Mr David Wood: It's something I haven't given consideration to at this point.

Mr Crozier: What would be your first thought? Would it concern you?

Mr David Wood: Obviously I'd have a concern. I would like to be one of those.

Mr Crozier: Yes, that's right. You've mentioned that. When they go further and put in phase 3 with, I suggest, a minimum of -- they don't want to treat you like a major racetrack, probably, so you wouldn't get as fair a treatment as the big guys would.

Mr David Wood: I think it's relative.

Mr Crozier: Yes. After those, there are about 12,000 or 13,000 VLTs left that they're somehow going to try to distribute among 15,000 licensed establishments. Do you think that's competition that might further erode your handle?

Mr David Wood: I would be naïve to say no. I believe that would enter into it.

Mr Crozier: You've already said you're concerned about the cannibalization, what it might do to your current handle, if you put VLTs in as well.

Mr David Wood: I'm willing to try and introduce our product to a greater segment of the population and address it in the near future and make our own decision: Is it viable or not? I believe it is or I would not be sitting here today.

Mr Crozier: What's the comparison in, let's say, your net revenue if people were to bet in the offtrack area of your facility or live or the VLT? Which will be the most profitable of the three?

Mr David Wood: Obviously our live portion.

Mr Crozier: Why would you then want to have VLTs come into your facility and cannibalize the live portion?

Mr David Wood: I'd like to bring more patrons into my facility and show them what a world-class product we can provide them.

Mr Crozier: But we've just discussed that you've got a concern that they're going to charitable casinos. Maybe they'll stop at the bar or restaurant on the way to your facility. Is it your position that you would prefer to have them only at racetracks, where it's a controlled environment and you already have the facility to control them?

Mr David Wood: I would say yes to that but I have more to offer than the other industry. I would like to become a total package where they can come and watch everything.

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Mr Crozier: So you're not totally convinced that these slot machines should go into all the licensed establishments in the province?

Mr David Wood: I don't know whether I have an opinion on that at this point in time.

Mr Crozier: You're in the business. You're going to have to have an opinion somewhere along the way. Otherwise you won't be any influence on the government.

Mr David Wood: It's easy to sit here and say, "No, I'd like to have it at the racetrack and only the racetrack," but unfortunately I don't have the ability to make that decision.

Mr Crozier: No, you can say anything you want.

Mr David Wood: That's my view, that's what I'd like to see, sure.

Mr Crozier: Quite the contrary. That's why we have you folks come before us, because we want to know what it is you think and how you feel about this particular policy, the direction the government's going in. If you don't believe in some part of it, then you should help us understand that.

Mr David Wood: I would say then that I would like to see it at racetracks only, and the charitable events.

Mr Kormos: Other representatives of your sister tracks have said much the same thing, with great candour. Everybody here understands that. You were here when the gentleman from Outsiders Roadhouse earlier talked about how a slot or two was going to mean a boost in the arm, a shot in the arm, hopefully; it's an untried experiment for his restaurant-tavern, his roadhouse. I appreciate your very candid response about your wanting slots so you can attract more people who may not have been horse race people before, because if they were horse race people, they already would have been inclined to go to your or another track. Fair enough?

Mr David Wood: Correct.

Mr Kormos: Again, there's no big secret about it. Heck, we were here last week and one fellow from the race horse association -- Jeez, to get him to concede that gambling is how the racetrack made its money, you would have thought I was asking him to confess to an axe murder. It was a rhetorical question. We understand that; that's how the racetrack makes money, right?

Mr David Wood: In portion.

Mr Kormos: I know there's admissions and there's food and beverage sales. Then a fellow from the Jockey Club was much straighter, saying the food and beverage sales and the admission at the end of the day aren't what it's all about, it's the handle, right?

Mr David Wood: They all are part and parcel.

Mr Kormos: It's the gross amount bet that's the important number. What you seem to be suggesting is that if there are slots, there are going to be more people introduced to horse race gambling.

Mr David Wood: It can't help but rub off.

Mr Kormos: That's consistent. You know, there are very few secrets, really, about all of this, because through the course of a week and a half now some of us have been trying to suggest to others that any expanded forms of gambling, expanded legalization of gambling is going to increase the number of people who gamble. That's not a difficult proposition, is it?

Mr Flaherty: That doesn't follow.

Mr David Wood: Are you asking me my view on that?

Mr Kormos: Yes.

Mr Flaherty: You don't have to answer.

Mr Kormos: You see, you've had these little caveats thrown in, because you know the problem is --

Mr David Wood: I guess I'd better.

Mr Kormos: That's right, go ahead. That's okay, because again, the silence speaks volumes, because you see, that's what every researcher across North America has had to say, including Goodman in the United States in 1994. There's nothing to be ashamed of here.

Mr Flaherty: There's the American research; always the American research.

Mr Crozier: There is no Canadian research.

Mr Flaherty: Oh, yes there is. You should have read it by now.

Mr Kormos: The research says that increased types of gambling increase the number of people who gamble and the amount of money that's gambled. You don't have to be a rocket scientist and there's nothing to be ashamed of.

Mr David Wood: I'm not ashamed.

Mr Kormos: That's right; I'm sure you're not ashamed. Gambling is a big industry in the United States and is becoming one here in Canada.

Do you have concerns about the fact that research among adolescents in 1995 at the University of Windsor indicates that as compared to the figures which range anywhere from 0.42% for the current adult population as pathological gamblers all the way to 9.1% for the province of Alberta --

Mr Flaherty: That's nonsense. Not pathological. It's just not so.

Mr Kormos: These people, when you hit a nerve, they want Novocaine administered. I'm just reading what the research says. There's a whole variety of -- I give the lowballs too. I'll acknowledge one research story that says 0.42% and I'll acknowledge that another says 9.1%.

In any event, are you concerned about the fact that the University of Windsor indicates that in 1995 among adolescents 17%, approximately half of whom are already confirmed pathological gamblers and the others at high risk -- grossly out of sync with the anywhere from 0.42% to 9.1% in the current research -- are you concerned that there seems to be an upsurge in proclivity for gambling addiction among adolescents?

Mr David Wood: I'm afraid you have me at a disadvantage; I'm not familiar with those statistics.

Mr Kormos: I just told you what the statistics were.

Mr David Wood: I'd have to take you at your word that this is what they are.

Mr Kormos: It's Frisch, University of Windsor, who did the study there among adolescents. It's Goodman, 1994, in the United States, who did the research on availability of gambling. I tried to give my friends a bibliography of reading material last week, but with all the hooting and hollering it was impossible.

Would that concern you if indeed the research showed 17% of adolescents are either pathological gamblers or at high risk?

The Chair: Thank you, Mr Kormos. We must move on. Mr Wood, thank you for your presentation and attendance here today.

BILLY D'S NIGHT CLUB AND EATERY

The Chair: Our next presenter is Billy D's Night Club and Eatery, Ms Schweitzer.

Mrs Eke Schweitzer: Good afternoon, ladies and gentlemen. I'd first like to take this opportunity to introduce myself. My name is Eke Schweitzer. This is Kim Adderley. We are managers of a small nightclub and restaurant-eatery in Simcoe, Ontario. We are not politicians, we are not public speakers and I'm nervous.

We're here to discuss with you today Bill 75. We understand that on this committee there will be a chair and a commission and that there will be a minister and a registrar. We agree that these positions should be approved and that trusted, honest, responsible persons should hold these positions.

We are of the position that we would like to see Bill 75 passed. It is a proven fact by research and the great success that charity fund-raisers within our province have had that it is a very viable, positive way to raise money for the communities and in this case for the government, so we don't have to implement new forms of taxes.

I understood Mr Kormos's comment where he was saying, "The bottom line is money," and part of that is true for us. I'm here today because if there is some money to be made, as small business people we would like to be involved in it. With our business, as the industry and the nature of the gaming institution is changing, we would like you to know we are interested in that.

On page 8 of the bill, the Liquor Licence Act, subsection (6.1), we are of the opinion that stronger enforcement and possibly stiffer penalties should be enforced. Detailed documentation should be kept by licensing boards to ensure that violators who have proven they are not licence holders do possibly not get the opportunity to get involved with VLTs and gaming. We would like to see stronger enforcement of this in the public interest.

One of the questions I would like to pose to you today is the government plan to police the enforcement of this act for violation. Because many restaurant and hotel licence holders now have house policies that do admit under-aged patrons to enter their establishment, strict measures need to be in force to ensure that minors are not permitted to be involved in any form of gaming. Our argument for this to anyone in opposition is that any well-established licensed premises in Ontario now, their management and their staff are familiar with those rules.

We did unfortunately come in a little late, and a question was asked about someone being drunk in a tavern. There are restaurants within Ontario that don't follow the liquor licence regulations, so those same establishments may not follow the video and gaming regulations. With the government undertaking this, we feel, as owners, it's the government's responsibility to act on that and to enforce that. That is part of our argument to this.

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We accept only government-issue photo ID in our establishment at present from anyone who is of questionable age. We would expect that policy to continue through in the event that our restaurant or other licensed bars and establishments were allowed to have gaming. Anyone who has questionable ID -- no government-issue ID -- you don't get in. So for us, it's very cut and dried.

We would also like to see that contained facilities be set up in licensed establishments for the purpose of gaming and video terminals. Again, with these points, we repeat that part of the board's job, what we would like to see, is a screening of applicants and the enforcement of the act.

Miss Kim Adderley: Basically, what I want to talk about is that we feel it is basically a win-win situation for everybody going into the gaming or the VLT situation. For us, obviously, we feel it will be a draw into our bar. It will be another reason for people to stay, which obviously will increase our food and bar sales. The tips will go up, which is going to keep the waitresses and bartenders happy. And the charities are going to make money, which is definitely going to help to keep the economy rolling.

Some of the questions we have to ask, as a small operation, are about the implementation of the VLTs, the amount of money the bars themselves are going to have to put into that. We didn't want to be in a position where we're competing with a big Toronto hotel or something like that, that has millions of dollars to go into this. We didn't want it to be given out to the people who have big money only; we wanted to know if there would be some kind of government loans available to get smaller businesses up and running in this area. We don't want just the rich to get richer sort of idea.

We really feel our community will benefit from having the charity events going on and we feel the money should go back into our community. If the people in our community are supporting the VLTs, the money should go back into the community for parks or to send kids to camp, whatever the community is doing.

I think that's about it.

The Chair: Thank you very much. We have approximately five minutes per caucus and we'll start with Mr Crozier.

Mr Crozier: Welcome to the committee. Certainly you may be nervous, but don't necessarily feel nervous. We're only trying to find out how it is other people besides ourselves feel about video lottery terminals. Certainly we've heard from presenters before who are in the position that you're in, and you have valid reasons for wanting to participate in this gravy train that is going to be established in the province of Ontario.

The bill itself says it's to regulate, and I think the term is -- wait a minute, I don't want to get it wrong -- "to fund charities through the responsible management of video lottery terminals." Please understand that what I feel is that it's to fund government through video lottery terminals, because the government's going to take 70% of the revenue from these things and you're going to be left with a small part of it, albeit you're interested in your small part. So that's where we come from on this.

Mrs Schweitzer: You're saying the government's going to take 70%?

Mr Crozier: At least. Isn't that something?

Mrs Schweitzer: Well, 70% still gives the charities 25% and it still gets people coming in to our establishment for the entertainment, the food, the camaraderie. You guys have got to make --

Mr Crozier: Just so we understand --

Interjections.

Mr Crozier: No, it only leaves charities 10% and you get 10% and there's 10% for what's called operating costs or something like that. I just want you to understand that's the way I feel. You've told us how you feel; that's the way I feel. If they were really concerned about charities and/or small business, you'd get a bigger chunk of the action.

You may have been here when I was asking a previous operator how they feel this is going to affect their business and you've perhaps heard some of the answers, so I'll try and ask them a little differently. I'll ask you different questions.

After the racetracks get their share of these video lottery terminals and the permanent casinos get their share, it's going to leave somewhat less than, let's say, 15,000 machines for you folks, which means even if they dole them out fairly to everyone, one apiece, you expressed some concern that you don't want to have to compete with the big guys with millions of dollars.

Well, let me tell you a fact of life that we should think about and that is when push comes to shove, if these are going to go in appropriate numbers to fewer establishments, you little guys are going to get screwed there too. Okay? They are going to go to the big guys.

What we're trying to find out is what's fair in this business and I just want you to be able to tell us what you think is fair. Since I've told you there's going to be less than one machine per licensed establishment in the province, what do you think might be fair for you to have as a minimum?

Mrs Schweitzer: As a responsible establishment that has never been in violation of liquor laws, has never had problems with the police, I think the bars and restaurants that do get the terminals should not have violations, should not have been written up by their liquor inspectors, should not have been closed down for two or three days because of serving reservation rye and serving minors or where the police go two, five, six times on a weekend and again, the liquor licence board has all of that information.

Part of the reason we came, sir, too was because we are a small establishment. We figured this place would be packed with the big hotels, the big casinos and we wanted our small voice to be heard.

Mr Flaherty: Good for you.

Mrs Schweitzer: If it's allocated that there's 15,000 machines and there's 15,000 bars in Ontario that qualify, each bar should get one machine.

Mr Kormos: I'm glad you're here because the hotel-motel association, they've had lobbyists working on this. They've made a half a dozen presentations. They had some sort of slick speech written for them that they've given in each and every city we've been in now and they're speaking for groups like Days Inn and Best Western, you know, big operations with a lot of rooms and a lot of tables.

Look, here you are and you don't have the big lobby group and I appreciate that. You might have been here when the owner of the Outsiders Roadhouse was here a little while ago, an operation up near the Kitchener-Stratford area.

Mrs Schweitzer: No, I apologize, we weren't, we got lost.

Mr Kormos: Again, a very similar type of operation, owner-operated bona fide small business. I've got to tell you, I am familiar with Simcoe because I'm down from Welland-Thorold, so I get back through here a whole lot of times. My grandparents were tobacco farmers out in Delhi, so I know Simcoe. Mind you, it's much bigger than it was when I was a kid travelling to visit grandfolks.

We had the liquor board employees' union here this morning, the people who work in the Liquor Licence Board of Ontario. You're right, they gave a number of 15,568 licensed premises here in the province of Ontario. I dare say, I bet you most of them are more like your operation than they are the big hotel-motel, big dining room-tavern operations. They've got a total of 33 inspectors for 15,000-plus licensed establishments and they expressed concern about the capacity of 33 inspectors -- three investigators too, so 36 -- and five managers. They expressed concerns about the ability of that small number to adequately police all these places. What's your view on that? Because I think you've got a good handle on the numbers and the size of your industry.

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Mrs Schweitzer: I didn't know if we'd be getting information or not, because that was one of our questions: How would the enforcement of this act be policed? I know what the liquor licence board does. They have inspectors who go around to the establishments. They also work on anonymous calls or people telling who it is that's calling to complain, and they'll act on it. So there are a number of ways it can be done.

Mr Kormos: The other thing that's been talked about of course are these grey machines. There are some, we're told, 15,000 to 25,000 machines. It's a little unclear whether they're actually currently being used as illegal slots. It's probably more likely there's 15,000 to 25,000 which have the capacity. In other words -- and you're not unfamiliar with this. I'm not saying you've ever done it, but paying off on the points or the credits rung up by a player.

Mrs Schweitzer: We've heard of that, yes.

Mr Kormos: As I say, that goes back to the 1950s because there used to be more than the rare establishment that used to do it with scores on the old pinball machines -- you don't remember those, but the old mechanical pinball machines. The police say that legalizing slots isn't going to get rid of the problem of the illegals. They say what they need is person power, police power out there to investigate these operations. The anti-rackets -- I was just taking a look at it -- has 11 people in the whole province to deal with illegal gambling, including the illegal slots.

And here you are. If you people -- and listen to what Mr Crozier has to say. If you folks, as small business people, can manage to get to the head of the line in front of the big operators and get yourself one or two slots, and the guy down the road is operating an illegal slot, he gets to keep all the money, right? If we don't get cops out there, funding them to bust these operations -- and they're not hard to bust. I've spoken with people who have been convicted. I've talked with the police who were involved in the investigations. They're not hard to bust, but unless we get funding out there -- and this government hasn't made any commitment to that -- for cops to bust the illegals, even when you've got a legal slot, if you manage to get one, you're still going to be at a disadvantage because the guy down the road gets to keep all this money, aren't you?

Mrs Schweitzer: I really don't think so, because if it's being government run and regulated, once everybody can have them, those illegals are done.

Mr Kormos: There's only 20,000 for the whole province, and when you've got an illegal, you get to keep all the money. There's still a big incentive. See, the fact that horse gambling is legal hasn't eliminated bookies.

Mrs Schweitzer: That's true, yes. It's difficult for me to look at it in those terms because I don't think in those terms.

Mr Kormos: Good luck to you. Have a safe trip back home to Simcoe.

Mr Flaherty: With respect to liquor inspections in Ontario, what we've heard is that there are a little bit more than 15,000 premises and the spot checks done per year number approximately 7,000, so close to but not half are being spot-checked each year.

You mentioned the enforcement of the act. Bill 75 is particularly new in this sense, and that is that it puts gaming with alcohol. So the LLBO, the regulator of the liquor business in Ontario, is going to be combined with the gaming commission to create something called the Alcohol and Gaming Commission.

Why that is significant when we're talking about video lotteries and licensed premises is that the situation will become this: If a licensed premise in Ontario has a video lottery machine, or more than one, and if they violate the law -- Bill 75 provides not only that someone under the age of 19 can't play the machine, but they can't even be in the area where the machine is in the licensed premise -- then the proprietor of that business would not only be exposed to the fines under Bill 75, which are very substantial, but also will be exposed to losing their liquor licence. We know from experience elsewhere -- and we can certainly learn from experience elsewhere and this government is anxious to and has been learning from experience elsewhere in Canada, because there are eight other provinces with video lotteries -- this is a very powerful tool. Would you agree, as a proprietor of such a business, that that is a big hammer?

Mrs Schweitzer: I definitely would agree. We would. In our bar, we've got a counter. You get 190 people in, that's it, nobody else. So we know about following the rules and the regulations already.

Mr Klees: I also want to thank you for taking the initiative to be here today and I assure you this is not an intimidating place; that's only the bricks and mortar. We are here to learn, and you've shared some very important information with us already.

We share your concern about the issue of enforcement. Quite frankly, a suggestion was made earlier by one of the committee members that enforcement is difficult or perhaps won't happen. The analogy was used that some waitresses or some establishments don't enforce, for example, the regulation on continuing to serve people who are inebriated.

I share your concern, because what I think I heard you say is, "Don't mix us in with the minority of tavern owners or people who don't enforce those regulations." I also hear you appeal to the government to put in place strict enforcement so that the bad players in your industry get dealt with in an appropriate way. Certainly what we don't want to do is reduce everything to the lowest common denominator. Just because there are bad players in the industry doesn't mean we should be creating legislation or introducing policies that reduce themselves to that lowest common denominator. So I appreciate that input.

Something else you indicated, and I appreciate your straightforwardness on that, is that you are interested in the bottom line. As a business owner you have to be, and there's some sense around this table sometimes that there's something wrong with the fact that the government also is interested in the bottom line. We admit to you gladly that, yes, the government will be taking substantial revenue income as a result of the introduction of VLTs. That's not a lie and we're certainly not ashamed of that. The fact of the matter is we have a financial crisis in this province, and this will be a source of revenue. But we see this as a win-win introduction of a policy, that not only will the government be able to generate some revenue, but also the private sector will be able to generate some profit, and that's not a bad word on this side of the committee. It is perhaps on the other side. But we feel it's appropriate that you as business owners should have a profit. Third, the other win in this is that the charities, through the introduction of video lotteries, will also benefit substantially to the tune of some $180 million more than previously.

So we see it as a win-win-win scenario. We're not hiding the fact that gaming is very much part of the entertainment value and, again, for the record, we're not suggesting that gaming doesn't create part of the enthusiasm for the entertainment. It's all part of the package. But we do believe that in the final analysis, controlled properly, enforced strictly, working with a mature industry, this can benefit the province. I think I hear you saying that and that you're in agreement with that.

Mrs Schweitzer: We are.

The Chair: I thank you very much for your presentation, and a safe journey in your long trip home.

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DELTA TORONTO AIRPORT HOTEL

The Chair: Our next presenter, we were advised early this morning, Mr Fernandez, was unable to attend. In his stead we have the Delta Toronto Airport Hotel, Mr Stuart Jolliffe, general manager. Welcome, sir. You have 20 minutes to make a presentation and answer questions. Please proceed.

Mr Stuart Jolliffe: Thank you, Mr Chairman. On the presenters before us, I guess I go into the category of that fat-cat, multimillion-dollar hotelier. If I do nothing else this afternoon, hopefully I'll at least clarify that myth.

Mr Klees: Mr Kormos said that.

Mr Jolliffe: Yes. Unfortunately, he's left the room.

My name is Stuart Jolliffe. I'm the general manager of the Delta Toronto Airport Hotel. I want to thank you and your committee members for the opportunity to appear before you today.

I want to begin today by stating up front that I'm very supportive of Bill 75 as it relates to video lottery terminals and urge the government to implement them into the hospitality sector as soon as possible. We as an industry are in serious economic crisis, and I can tell you from a personal perspective the urgency of the situation.

The hospitality industry has been locked in a severe recession for some time. Food and beverage sales, according to a Price Waterhouse industry survey, are off 29.5% and 47.6% respectively. Our own numbers mirror these dramatic declines. I don't believe I have to remind you what they mean towards profitability. My hotel, for the past five years, shows a bottom-line loss of $3.7 million even before capital costs in excess of $1 million during that same time frame. So as not to leave the committee with the wrong impression, the Delta Toronto Airport Hotel would be considered a mid-sized operation of 250 rooms on the airport strip. Furthermore, to re-emphasize that loss, we would be considered one of the more successful hotels on the airport strip.

The Minister of Finance, in his budget of May 8, said the government was going to allow VLTs to help our industry. Specifically, he said, "We believe that VLTs, if implemented within tight regulatory controls and in limited-access environments, can meet a legitimate entertainment demand and provide a significant stimulus to the hospitality industry."

The public wants and enjoys this new form of entertainment. How do I know? By talking to my customers. I want to stress they view VLTs as recreation, something to do as part of an evening out.

It is also unfair and difficult at best to expect me to try and compete with the illegal machines that are literally all over the place. I know they're supposed to be just for amusement, but I also know this is not the case.

From the government perspective, delaying the implementation to our industry will mean the government will not be able to start receiving over $500 million annually from machines allocated to our sector. Conversely, it means that illegal untaxed revenues from the grey machines will continue to remain in the underground economy.

I've spoken with our sister hotel in Manitoba about their experience with VLTs and they have nothing but positive results both from customers and financially. The 13 machines they have in their hotel lounge will generate over $850,000 in revenue this year, with the hotel's portion enabling them to embark on a modest capital upgrade to their property that simply would not have happened otherwise. This upgrade safeguards some degree of occupancy and definitely keeps people employed.

From a businessperson's perspective, a delay could very well result in having an initiative that the government intended to help the hospitality industry hurt it. The reason is that during the first stage of implementation, to racetracks and charity casinos, it will create business dislocation. Customers will gravitate to where they can legally play VLTs. We cannot afford to lose any more customers, even for a short period of time. As well, who knows when or how often those customers will return, if at all? Given our location on the airport strip and the relative short distance to Woodbine, this is an important issue facing us.

VLTs will also have an important positive impact on our ability to attract customers from other jurisdictions. Inasmuch as gaming has become an acceptable mainstream activity, tourists and conventioneers look at the total package that is available in the marketplace before deciding where they will visit. I can tell you it's very tough out there in the market today. Ontario is continuing to lose market share. For example, US travel has dropped 18.25% from 1986 to 1995; international travel is down as well. In our specific marketplace at the airport, business is down over 5% from 1995. It will give us an important product to offer our customers and a product they are definitely willing to buy.

Ontario has already a full selection of legal and illegal gambling opportunities. I have already referenced some of the illegal opportunities this measure will help to control, but one does not have to go any further than your corner store or bingo hall to find a gambling opportunity. However, just as with the consumption of alcohol, the vast majority of players gamble in moderation and experience no significant gambling problems.

With all the existing forms of gaming today -- lotteries, sports pools, bingo, horse racing, casinos, break-open tickets -- the introduction of a new brand of gaming, video gaming, will not significantly increase the potential for compulsive or problem gaming in Ontario.

I am aware of some of the information already presented to you. This includes research showing that less than 2% of the population are potential compulsive gamblers and another 3% to 5% may experience some problems. I want to congratulate the government on allocating funds to deal with this problem. The problem is already here, and it is important that something is done to deal with it. We know Prohibition did not work in stopping the sale of alcohol, nor will ignoring the fact that the public wants to use VLTs.

I am also aware that Tibor Barsony, executive director of the Canadian Foundation on Compulsive Gambling, has said; "Prohibition is not the answer, education and treatment is."

On behalf of myself, the employees I still have and those I would love to be able to re-employ, I urge you and your committee to recommend to the government quick passage of Bill 75. I would also suggest that your recommendation include a request to move implementation on VLTs for our industry on to the fast track. Our situation is desperate. We've all been hoping the government would take this progressive step and we are grateful that it has. We need the stimulus of this new form of entertainment, we don't have time to speculate as to the outcome and positive results are there already, as amply demonstrated in Manitoba. Mr Chairman and committee members, thank you for your time.

The Chair: Thank you very much, Mr Jolliffe. Just for the researcher's purpose, you give two statistics on the front page. You don't say what time period that is for.

Mr Jolliffe: That was 1988 to 1994; it was the Price Waterhouse study.

Mr Hudak: I'll be very quick. I'm just going to anticipate Mr Crozier's question, if I could, and see a reply, and then maybe he'll have a new one. Would you like it -- this is strictly hypothetical -- if you were the only site of VLTs in Ontario?

Interjection: In the world.

Mr Hudak: In the world. That would be very profitable for your business, if they were only there.

Mr Jolliffe: Certainly.

Mr Hudak: Okay, so that's out of the way. Businesses would like a monopoly; they'd like to have them all at your place or any other place.

Mr Jolliffe: No question; it's about profit.

Mr Hudak: The government has different groups that would say the same thing. The tracks would want them at their site, the charity event sites, obviously the hotels and motels. But what we want to do is create a win-win-win situation, right? We help out the tracks, we help out the charities and we help out the hospitality sector. If we proceed with this in a measured, reasonable way, is it possible to create that win-win-win scenario?

Mr Jolliffe: I believe it is. Was your question specifically about how they were going to allocate the available machines or do I see VLTs as a win-win-win?

Mr Hudak: Exactly. This is an effective tool, from what I hear. Video lottery terminals have worked in a number of jurisdictions for all those industries. Is it possible to create a win-win-win scenario for those industries I spoke of?

Mr Jolliffe: I certainly believe so, yes.

Mr Klees: You're in the entertainment industry, the hospitality industry. You see a lot of people in the course of a year, I suppose. I find it interesting, as we've had these committee hearings, various sectors coming forward and saying that we shouldn't be introducing VLTs into this sector but this sector is okay and so on. One of the tensions that's in the marketplace is that there are those who have bingo halls, for example, and the break-open tickets, and they're saying that this shouldn't be extended into the general milieu, it should not go to licensed establishments, because it's going to harm their business. There's also the argument on the other hand about addictiveness. In your opinion, what is the market focus that licensed establishments would have in terms of clientele? In your learned opinion, do you feel that it's a different stratum of clientele than would frequent bingo halls? I'd be interested in your opinion on that.

Mr Jolliffe: Within the confines of the structure that I manage, I have a 185-seat lounge with nine billiard tables right now, a dart area and seating for about 75 or 80. My current mix of clientele at the hotel is about 20% international, 25% US and 55% Canadian in terms of the people who occupy my rooms. They form about a 50% cross-section of all of the business I get in the bar. The balance is from local businesses, people after work, people going for an evening out. I don't necessarily see my customers as bingo players but more as business people travelling from various regions or, frankly, either local Etobicokans or local people from businesses within there who come by my establishment for a drink or for a meal.

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Mr Crozier: I want the record to note that Mr Hudak was wrong again. That was not the question I was going to ask.

Welcome, sir, now that we have that little bit out of the way. You quoted Tibor Barsony as saying, "Prohibition is not the answer but education is," so you must consider him to be somewhat of an authority.

Mr Jolliffe: I consider him to be quotable.

Mr Crozier: I'll rephrase my question. You don't consider him to be an authority? I mean, you quoted him.

Mr Jolliffe: I consider him to be quotable. Quite frankly, sir, I may quote you one day.

Mr Crozier: He's the Canadian Foundation on Compulsive Gambling.

Mr Jolliffe: He's certainly quotable. I don't know the man personally.

Mr Crozier: Okay. He also said that the VLT "is one of the most addictive forms of gambling: addictive because it's fast, addictive because it provides instant gratification and addictive because it's paced for the modern way of thinking of younger people."

In any event, you say there's a Price Waterhouse industry survey that says you're off 29.5% and 47.6% respectively in food and beverage sales. You may find that's even greater or less in your particular establishment, I suppose.

Mr Jolliffe: That's correct.

Mr Crozier: Yes. Why do you suppose that is?

Mr Jolliffe: I think that competition is fairly steep out there. There's no question that the decline during that time frame is from a recession point of view. Times are definitely tougher out there. I think people are staying home. I don't eat out as much as I used to.

Mr Crozier: Sure, but VLTs are going to make a difference?

Mr Jolliffe: VLTs are not going to save our industry. VLTs provide a legitimate option, just like my nine pool tables do, my five dartboards. Hopefully VLTs will provide yet another reason to say, "Honey, let's get a babysitter and go out for tonight."

Mr Crozier: Notwithstanding that the economy may prevent them from doing that. You see, I'm trying to get a handle on what makes VLTs make the difference. If you have discretionary money, obviously it presents an option. If you're staying home because you can't afford to, God help us if VLTs are going to make us go out and spend money when we can't afford to. You know what I'm trying to get at?

Mr Jolliffe: Right now certainly the moneys that are spent by people in this province, and I won't question whether they can or can't afford to, on Pro Line and 6/49 and every other lottery that's going, I wouldn't mind seeing a little bit of that get displaced into a VLT in my establishment.

Mr Crozier: Yes. Or you wouldn't mind seeing it displaced into a product that creates some wealth, some good, that not only employs people but adds to the economy.

Interjection: And pays down the deficit.

Mr Jolliffe: Yes, absolutely.

Mr Crozier: I think we all would want that. You see, where I'm having difficulty is in determining to what extent it's going to make your business more viable. Presumably the bar next door is going to get its complement of VLTs, therefore the competitive field is levelled between the two of you. When you started out with your first remarks you alluded to how we perhaps had suggested that the bigger players, depending on degree, are going to benefit more from something like this. Do you agree with some of the previous presenters?

The Chair: I'm sorry, Mr Crozier, we have to move on.

Mr Kormos: I like that question. I don't know if you were here, but there was an owner of Outsiders Roadhouse from the Kitchener-Stratford area and presenters prior to you, Billy D's Nightclub. They're little operators and they're concerned about getting a piece of the action.

Before I pose it, you're going to get the slots, okay? There's no problem. The fix is in. It's a done deal. Norm Sterling issued a letter today saying that the request for proposal for the supply of the machines wasn't issued, but he contradicts one of his most senior staff at the Ministry of Consumer and Commercial Relations and it's those people, the bureaucrats, who do that stuff. Norm Sterling doesn't sit there filling these out. He contradicts one of the leading spokespeople, part of the political bureaucracy in the ministry, saying that yes, the RFPs went out. That was reported -- when, August 5? -- in a northern Ontario newspaper, a direct quote. So the fix is in.

How do you guarantee that the little operators all over Ontario get a couple too? There are only 20,000 slots.

Mr Jolliffe: From a business perspective -- I recognize even sitting here that even though the fix may be in, I'm not guaranteed that I'm going to receive mine either -- I would suggest that a formula needs to be created. This is about money and the ability of these machines to make money and that where they are going to make money for the government, for charity and for the establishment is probably where they should go.

Mr Kormos: I don't think anybody's going to quarrel with that. That's a given; that's axiomatic. I'm not a big fan of the Ontario Lottery Corp, and one of the reasons why is because it's become ultrabig business. The little people who started OLC, before they even had the machines, when they were selling tickets out of envelopes, five bucks a package, those little mom-and-poppers -- that's what they tended to be -- built the Ontario Lottery Corp. Now they find themselves at the end of the list when it comes to getting a machine, when it comes to getting a franchise for selling because their volume isn't big enough. I think that's inherently unfair. Regardless of whether it's a Tory government, Liberal, New Democrat, what have you, surely the little business people have got to be guaranteed some piece of the action. I appreciate what you're saying about the need to generate revenues, but surely there are other factors that involve themselves too.

Mr Jolliffe: I think we've got to go forward with this thing and (1) not everybody is going to want one; (2) and I think to the people who presented before me, there are a number of people who from a licensing point of view don't deserve one; (3) after you've finished with that, decide on who wants one -- I would look at a formula that would generate money because this is about money -- and see where we're left at the end of that. This may work out. We may be arguing semantics here.

Mr Kormos: Again the hospitality industry, the hotel-motel industry: We were up in Thunder Bay, Kenora, and I've got to tell you there was an enthusiastic response by the hotel-motel owners who appeared in committee in those two locations, especially Kenora -- a big summer influx of non-Kenorans. I understand the desire to participate in this, but if you're getting into the casino business, the gambling business, the gaming business, shouldn't there be some universality of regulation, be you the Windsor casino, a charity casino, a bingo hall, a race track or a hotel-motel, and that is to ensure that the ownership of these respective hosts pass the most stringent of requirements, that all of the staff pass the most stringent of requirements? Shouldn't they be the same universal rules across the board?

The Chair: Thank you, Mr Kormos. Our time has elapsed. Mr Jolliffe, I thank you very much for your presentation here today.

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TOP TIER GAMES

The Chair: Our next presentation will be made by Top Tier Games, Bill Lapointe, general manager. Welcome, Mr Lapointe.

Mr Bill Lapointe: Good afternoon. Thank you, Mr Chairman and committee members, for this opportunity to talk on the bill. My name is Bill Lapointe and I'm here representing Top Tier Games and our position as a supplier of break-open tickets to all charities in Ontario and to speak on the effect of video lottery terminals and their unfair implementation on the break-open ticket industry and the charities involved in the use of break-open tickets as a source of fund-raising dollars in Ontario.

Approximately four years ago, the Gaming Services Act was passed to bring control and to help the charities in Ontario. It was specifically designed to allow for expanded use of break-open tickets and to control, licence and regulate their suppliers and users. Until this act, break-open tickets in Ontario were limited to one specific payout and only a variety of symbols. Otherwise, all games were exactly the same. Additionally, no vending machines are allowed to be used by the charities, yet the province now wants to use video lottery terminals.

Four years later, after many promises to remove the restrictions on ticket counts, one additional count and a limited payout was just recently approved by the ministry, to take effect October 1, 1996. We then discovered this approval was only a replacement and the charities and suppliers are still stuck with only one new payout at third-party locations -- still no variety in break-open ticket payouts or counts at this level.

Meanwhile, the spirit of the Gaming Services Act was observed on native land with the approval of non-standard break-open ticket standards. The approval of such variety of payouts and games for first nations is exactly what was promised to the charities of Ontario with the Gaming Services Act, but due to inside politics and stalling tactics, the charities are still waiting and still losing. Meanwhile, the Ontario lotteries are offering hundreds of payouts, games and themes on their instant scratch games and other paper-dispensed games.

Additional competition to deprive the charities of their fund-raising dollars through the sale of break-open tickets are full-scale casinos being licensed by the government, as well as plans now to implement the VLTs in Ontario, all of which puts the charities of Ontario at a distinct disadvantage when it comes to being able to compete.

We are all in the entertainment business, and the charities are being asked to compete for the same gaming dollar for their fund-raising purposes with antique methods of technology and equipment. The charities are destined to fail miserably. Today's technology in the sale of break-open tickets, which, by the way, is currently being used by most other gaming jurisdictions in North America, would allow the charities of Ontario to have the modern tools necessary to help them compete with no loss of security or integrity for their fund-raising dollars. It would allow them to compete and participate in the gaming business on a more level playing field than they are allowed to do today.

If the charities of Ontario are expected to survive, competing with Ontario Lottery Corp, casinos, first nations gaming and now video lottery terminals, they will need, at a minimum, authorization of the following:

(a) Immediate expanded ticket counts within the same limits and restrictions allowed under the non-standard break-open ticket standards. This would allow the charities to appeal to their players with a variety of payouts and game structures. It comes with no loss of security or integrity as all suppliers, games and manufacturing processes still have to be approved. There is simply no justification to limit a break-open ticket to one specific payout, as evidenced by the fact that Ontario is the only jurisdiction in North America where this is done.

(b) Allow charities to use vending machines and coin-operated break-open ticket dispensers. These devices are available by a variety of suppliers and are even designed to offer increased security and auditing capabilities. It is suggested that this technology should be embraced rather than ignored by the government.

I believe that no matter what we as suppliers to the charities do -- and to think we can put a stop to video lottery terminals is to be very naïve. The government is going to initiate the use of VLTs anyhow. There's just too much revenue in VLTs for the government to turn it down.

The government says it has learned from mistakes of other provinces with the introduction of VLTs. My question is, have they? I for one have not seen any type of business plan or strategy on the effect of break-open tickets done by the government stating the facts and figures of the effect of VLTs, and any of the charities I've spoken to have not seen any such report either. Has the government addressed the charities and told them how many fund-raising dollars they are about to lose from their break-open ticket fund-raising campaigns? Has the government put on paper what the percentage points are equal to in dollars and cents with regard to the loss of fund-raising dollars through the sales of break-open tickets, or better still, has anyone in government seen a report like this?

The VLTs will no doubt, as they have in other provinces, hurt the break-open ticket business in Ontario; in some cases in the other provinces up to 60%. Once again, who does this hurt? The charities, especially the little charities who now rely on that $20,000 or $30,000 in fund-raising that they make each year to make things happen, along with their volunteers, in small-town Ontario.

If the government is going to be fair to the charities, the government must lift the restrictions placed on the charities. The government must allow the charities the same working tools that the Ontario lottery is presently operating with, that is, lift the restrictions on the break-open tickets, as I mentioned before, and allow coin-operated break-open dispensers.

It is all too common a mistake for governments to focus most of their attention on gaming enterprises such as lotteries, casinos and video lotteries that contribute significantly and directly to their revenue base, usually at the expense of the charitable gaming, which typically does not contribute directly but does contribute a great deal indirectly.

We must not lose sight of the reason charities were given the privilege to use gaming as a fund-raising mechanism in the first place. These charities provide a much-needed service to those that the government used to or should provide for and no longer can afford to do so.

I'd like to end by saying that the government should slow down with its introduction of video lotteries and at the same time provide plans and strategies to the charities; and more so, lift the break-open ticket restrictions and adopt the coin-operated dispensers and give the charities some tools to work with. These charities need these tools to compete against their biggest competitor, the Ontario Lottery Corp, which we know is the government. Once again, thank you for your time.

The Vice-Chair: Thank you, Mr Lapointe. We are going to move to questions. We're looking at about four minutes per caucus, starting with the Conservatives.

Mr Flaherty: Thank you for coming, sir. We have had representatives from the industry that manufactures and distributes pull-tabs, break-open tickets. They're called pull-tabs in other provinces, I think.

Mr Lapointe: Pull-tabs, pop-ups.

Mr Flaherty: Yes. In fact we had a gentlemen here this morning who made a presentation. I'll mention to you what I mentioned to him, and that is, if one of the objects of this legislation is to benefit charities and if one of the objects of gaming revenue is to benefit charities, then this legislation is good for charities because charities will receive up to $180 million more money than they're receiving now. However, the mix will be different because the break-open tickets may not be as much a part of it as the revenue from gaming tables at permanent charity gaming halls or the revenue from video lotteries located at places other than racetracks. The mix may be different, but the overall effect is a very substantial increase in revenue for charities. I'm sure you'll agree with me, leaving aside business considerations, that is good for charities.

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Mr Lapointe: Yes, that is good for charities, provided the charities don't have any problem in applying for the dollars that are available.

Mr Flaherty: Right, and I take your point on that. I think that we on the government side can learn from your comments. We need to be very careful in the implementation stage that in this mix of revenue coming from various sources of gaming the charities do not get excluded or that there's a consultation failure. We need to make sure we build on the experience and knowledge that people like you have obtained in this business of raising money for charity. I thank you for coming this afternoon.

Mr Klees: I just want to get some clarification from you. You've made a request here, asked the government to consider what effectively I interpret as levelling the playing field for you, that if VLTs are going to come in, you for your industry would like to see some changes. Could you elaborate for me on those changes again and why you feel that would be helpful for you?

Mr Lapointe: In order for the break-open ticket third-party sites to compete and the charities to compete, when you go in to make a call on a third-party site, you say, "Would you care to sell these tickets on behalf of so-and-so charity?" and nine times out of 10 they'll say, "No, I don't want to sell them because I have staff who steal, I have people" -- there's no accountability. There is a dispenser on the market now that dispenses these paper tickets, but the government will not approve the coin mechanism that goes to these dispensers. Yet the Ontario Lottery Corp has approved coin-operated paper dispensers, so you're taking with one hand and you're not giving anything back to the industry or to the charities in order to fight that marketing or that type of program.

Mr Klees: When was that application made or a request made to the government to approve that?

Mr Lapointe: I'd have to say a couple of years ago at least. There will be another one going in very shortly.

Mr Klees: That was under Mr Kormos's government. They refused you?

Mr Lapointe: I'm not sure whose government it was under. Don't get me involved in that.

Mr Kormos: Bob Rae would be surprised if he could hear you call it my government.

Mr Klees: Thank you, Mr Lapointe. I hadn't heard that before, and it's certainly something we'll take --

Mr Lapointe: There are a lot of little things like that. The break-open ticket industry was originally designed for the charities, which they could operate within their own little community. In the past, it's given millions of dollars to the charities in Ontario.

Mr Crozier: Mr Lapointe, welcome. When I go to the Legion in Leamington or Kingsville or Harrow, Amherstburg, Essex, and I see those break-open tickets being used for their charitable causes, and when you go to other venues where they have break-open tickets, some in local stores in areas, I like the idea that I know where that money is going, going for a local community cause. When you come and tell us that video lottery terminals are going to drastically affect the sale of the break-open tickets, it bothers me, because we can listen to all the statistics and all the surveys we want, but my gut feeling is that you're absolutely right. There have been some suggestions that that's not the case, that it isn't going to affect break-open ticket sales, but I'll bet you, and I'm not much of a gambler, that that is going to happen.

Mr Lapointe: It definitely is.

Mr Crozier: I just want to be upfront with you and say that you didn't give us a lot of surveys and a lot of names of surveys, but I think you've hit it right on the button.

When it comes to ticket payouts and the variety of payouts that you've not been allowed to have, why do you suppose that is? Can you speculate at all about why whatever government it is that you've asked hasn't allowed some change in the type of ticket sales you have?

Mr Lapointe: Some of the reasons behind that come within the industry itself, within the people who manufacture and distribute break-open tickets. The other side of the fence on that one is, why is it that one sector in the province is allowed to sell for 50 cents a chance to win $5,000 and the other sector in the province can only win up to $125?

Mr Crozier: Could we speculate that it's competition and they want to limit their competition?

Mr Lapointe: No, I wouldn't even speculate that. That's just straightforward, "We're going to let you do this and we're going to let you do that."

Mr Crozier: No, what I'm saying is perhaps the Ontario Lottery Corp says, "Wait a minute, we don't want these break-open ticket guys to have the same advantages we have."

Mr Lapointe: Exactly, yes.

Mr Crozier: That's why I have the feeling that since VLTs are going to be such a cash cow for the government, it's going to want to limit the competition, so I don't see your chances as getting any better. Even though I think you should have the opportunity to compete more fairly, I don't see your chances as getting any better.

Mr Klees: Don't be so pessimistic.

Mr Lapointe: I would have to say that if the government does not allow the necessary tools, especially that dispensing tool, so that the store operator or the bar owner does not have to dish out these tickets at his most strategic dollar times for him, then you're going to see a real drop in the charities' fund-raising dollar at the --

Mr Crozier: Certainly I could see Mr Klees's interest in helping you, and I think that with his influence and support probably there are going to be some changes in that, because he's a man of action when it comes to that, notwithstanding the fact that we can't sell tobacco out of vending machines because it was literally uncontrollable.

Mr Kormos: If Mr Klees is appointed to the cabinet to displace one of those cabinet ministers who are being turfed, we'll lose him off the committee.

Mr Lapointe, I appreciate your comments. As Mr Flaherty pointed out, we've had a number of people from your industry come here. Look, yours is decades old. They used to be called punch boards back in the old days, and they acquired some notoriety because salespeople would sell punch boards in small-town Ontario and they'd tip off the person who purchased the board where the $100 hole was. Then the owner could poke that hole out and not have to pay out the hundred bucks. Again, you'll recall -- what was it, a decade, perhaps a decade and change ago? -- there was some concern about break-open tickets and the integrity of them, but I understand that's all been addressed in terms of there being no question about tinkering with the integrity of the ticket.

Mr Lapointe: No. They're all lab-tested and everything now.

Mr Kormos: Like Mr Crozier, and I'm sure these others, I don't go into the Welland County General Hospital without stopping by, because we've got volunteers, as often as not seniors, selling tickets. They've got to now, because the government is defunding health, so those volunteers and their fund-raising efforts are all that much more important.

I remember I was working with a group from the Ontario Head Injury Association. They were having a heck of a time getting licensing for their break-open tickets, because they were told, "Only one licence per municipality."

Mr Lapointe: Correct.

Mr Kormos: They said: "But you don't understand. We've got a strong team of volunteers who are eager to place these around. We've got retailers -- little corner stores, what have you, bars, taverns -- that are prepared to do it for us." The argument from the brains trust, the bureaucrats, was, "The market is saturated." Do you recall that argument being used?

Mr Lapointe: Yes, I do.

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Mr Kormos: The market was saturated. There wasn't any more capacity out there to buy break-open tickets. That's what they were saying, the bureaucrats, the brains trust. If the market was saturated -- because we had no choice but to accept that; that's what the brains trust, the bureaucracy was saying -- what the heck is going on now if they're introducing 20,000 slots? They were telling your industry the market was saturated. What's going on?

Mr Lapointe: Just one of the reasons why everybody thought the market was saturated was that some of the small mom-and-pop stores were only making $54.60 a deal on it. As of October 1, they'll be making $81.90. There had to be an influx of dollar profit to the third-party seller. The government recognized that and did it.

I could sit here and talk for a long time, but one of the problems that happened was the fact that you were talking one licence per municipality. Now the municipalities are thinking about amalgamating, what happens to those charities that, say, have three or four licenses and all come under the one municipality? What are they going to do? Lose three or four sites and sales? We don't know. I don't have an answer.

Mr Kormos: The other interesting thing is that your industry talks about municipal licensing and the revenues municipalities generate in the break-open ticket business. Twenty-three municipalities in Ontario have already said no to slots, and there are probably more in the works. I suspect there's going to be at least an amendment introduced, if not debated, and it may be passed, that will give municipal option, and one of the ways that it will be given effect is that municipalities will be given the power to license slot machines. Boy, oh boy. The municipalities in this province are so cash-starved right now, when they see a slot machine with the potential to generate $1,000, $2,000, $3,000 a week in gross revenues -- again, that's for the little people who are going to get whacked again, not the big hotels --

The Vice-Chair: Mr Kormos, we are out of time; I'm sorry. Mr Lapointe, on behalf of the committee I want to thank you for your presentation.

ASSOCIATION TO REDUCE ALCOHOL PROMOTION IN ONTARIO IROQUOIS RIDGE AGAINST DRINKING AND DRIVING

The Vice-Chair: The next group is the Association to Reduce Alcohol Promotion in Ontario. Good afternoon.

Ms Simone Cusenza: Mr Chair, members of the committee, my name is Simone Cusenza. I'm representing the Association to Reduce Alcohol Promotion in Ontario, ARAPO. I would like to briefly address Bill 75 in relation to the issue of the regulation of alcohol advertising in Ontario.

With me are two members of Iroquois Ridge Against Drinking and Driving, Mr James Hamilton and Ms Nadia Peric, who would then like to offer a youth perspective on alcohol advertising.

ARAPO members believe that responsible alcohol advertising allows people to make wiser choices about drinking, especially youth, and that the regulation of alcohol advertising is an important part of any provincial alcohol policy that aims to reduce the health and economic costs associated with alcohol misuse.

Currently, the Liquor Licence Board of Ontario plays a vital role in this respect. All alcohol advertising in Ontario, from billboard ads to TV commercials to contest sponsorships, must receive prior approval from the LLBO. The LLBO's advertising guidelines set out the criteria for approval and include some very important provisions such as -- and I'm sure you're aware of these -- alcohol advertising must not appeal to persons under the legal drinking age; it must not associate drinking in relation to driving a motor vehicle; it must be consistent with the principle of responsible use and service; it must not imply that consumption is required for social or personal success, and so on.

The LLBO and the Ministry of Consumer and Commercial Relations are currently reviewing the content of the advertising guidelines and how they are administered with an eye to cutting red tape and increasing administrative efficiency. While not directly addressed by Bill 75, the regulation of alcohol advertising will be effective.

Since there may not be another opportunity for public input, ARAPO would like to put forward its recommendations at this time. We recommend:

That the prior approval and enforcement of alcohol advertising continue to be a priority of the new Alcohol and Gaming Commission, and that both these functions be adequately staffed.

That self-regulation by the alcohol manufacturers not be considered an adequate replacement for the current pre-approval process. The approval process screens out many violations, saving time and money for everyone in the long run. Right now manufacturers are responsible for making sure that any billboards advertising their products are not within 200 metres of an elementary or secondary school. Prior approval of the ad itself is required but not the billboard location, so in a way this is an example of self-regulation.

ARAPO, my association, has recently complained to the LLBO about numerous infractions of this provision, a provision that we believe is very important for the protection of youth. Our concern is that overall violations will increase if the prior approval process is eliminated and that enforcement is too lengthy and slow a process to be relied on exclusively.

Two recent studies about alcohol advertising are included in the packages we have prepared for you: Alcohol Advertising: A Legal Primer, by Professors Hovius and Solomon of the faculty of law, University of Western Ontario; and The Effects of Television Alcohol Advertising on Adolescent Drinking, an American study that concludes alcohol advertising has a small but significant effect on increasing adolescent drinking.

I hope I have raised the profile today of this important issue. Thank you for the opportunity and for your attention. Now I would like to give James and Nadia an opportunity to speak to you.

Mr James Hamilton: Hi. My name is James Hamilton. I'm 18 years old and I live a drug-free lifestyle. Throughout my youth I've seen a lot of advertisements that have been very influential to youth drinking. One such advertisement carried out by a company was directed I think subliminally to youth. It involved a free giveaway for various CDs by various bands. I remember when I was about 13, I wanted my father to purchase a pack of 24 beers so that I could listen to one of the bands. I've also worn hats that have advertised certain companies when I was younger.

But living a drug-free lifestyle, I recognize that a lot of the advertising is directed towards youth or appealing to youth in some way. A lot of the social parties and things such as that are very appealing to youth, and I feel that with Bill 75 the LLBO will become too big to regulate and enforce things such as that. I think if alcohol companies are allowed to make their own decisions and regulate themselves, they will use profit over what they think about what the populace will want. I don't feel that Bill 75 is a very good resolution to this problem.

A lot of youth are involved in drinking who are younger than the legal drinking age and I think that gambling will also appeal to youth very much. A few people that I know do participate in gambling such as with Sport Select. I know they have lost hundreds of dollars playing this game just by getting almost everything right except for one team lost to the other team by two points, and they lost $10 when they could have won $500. So I feel that a lot of what is going on today is profit-directed instead of weighing the social costs of what it actually is.

Ms Nadia Peric: I'd just like to add that with the enforcement of the LLBO towards alcohol advertising, being a youth, I know many people who have been tempted by the ads and by the commercials on television, whether it makes them feel good about themselves, it just gives them a good feeling, or they just supposedly think that it'll bring out who they really are if they're drunker, if they are drinking alcohol. You know, that feeling that they feel, it brings on a lot more problems such as drugs, and I've seen it happen so many times. So I'm very supportive of what Simone and James are saying here. Through our school, Iroquois Ridge, we're trying so hard through IADD to make everyone in our school supportive of the same idea.

The Vice-Chair: Thank you very much for your presentation. We're going to move to some questions now starting with the Liberal caucus. About three and a half minutes, Mr Crozier.

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Mr Crozier: Thank you, ladies and gentlemen. I want to thank you for coming to the committee today. This is a little different than some of the issues of Bill 75 that we've been discussing. I don't quite know what to ask you, frankly. I was thinking, while you were talking, particularly while the two young people were talking here, or while the -- I've got to be careful -- three young people, but these two.

Ms Peric: It's okay.

Mr Crozier: I was thinking, you know, I'm pretty lucky. I made it through my youth not hurt too much by the problems that you speak of. I wonder to what extent not only are you talking about advertising, the big corporate advertisers -- because frankly, they know exactly what they're doing. You may object to the advertising, but you know full well that if subtly they can appeal to youth, then so be it; that's fine. They know; they're experts at it. But to what extent is peer pressure a problem? You haven't spoken too much of peer pressure. You're two young people who are working in your schools. Difficult?

Ms Peric: I find it very difficult. Peer pressure is a major problem in schools. We've done surveys over and over again and peer pressure is a large problem with youth, especially towards drinking, towards drugs, whatever the ads may portray. When one of your friends is doing something and you're pressured into it, it's very easy to fall into it. To get out of it, it's very hard.

Mr Hamilton: I personally have lost a few friends to alcohol and smoking and doing drugs. I don't hang around with them any more, because they just got so caught up with the idea of getting drunk or getting high that it wasn't fun to hang out with them. I have better things to do than drugs, like I'd rather spend my time playing basketball or hanging out with friends than going to a forest to smoke or do whatever. I feel that the advertising does affect youth, but it affects females a lot more than males. I've seen some friends become very affected by how alcohol is portrayed, and a lot of people see the good times there and they feel the dependency. When they want to feel better, they'll drink the alcohol, which is a depressant, and they'll become addicted to that sensation of having fun. I don't like how it is portrayed in the media, that alcohol is sort of an escape from your problems.

Mr Crozier: Okay. We are going to have to work with the federal government on this too, because to a great extent that's where the control is, as far as advertising. I just appreciate the fact that you've come today.

Mr Kormos: I'm darned impressed with the comments you make, because you raise a facet of this whole issue, be it gambling, booze or drugs, legal or non-legal, and the promotion of them, the advertising of them. One of the things I've got to tell you, and there are some people on the committee who disagree with me in some respects about a whole lot of things -- but one of the things that I've been repeating since day one is that it is my view, based on just the jobs I've done in my lifetime, that any one of us in this room is capable of becoming a drug addict, an alcoholic or a gambling addict. All of us like to think, "It's not me," which is what makes us believe we can smoke one joint or play one slot or have one night of a drunk. Again, whether it's ourselves or our families or our friends or our communities, none of us haven't been touched by those addictions. I challenge people who would refute that. As I say, there isn't a single one of us who can't become an alcoholic, a drug addict or a gambling addict.

So we've got two issues here: one, because I've seen -- the beer companies, boy, they don't show fat old guys with beer bellies drinking beer; it's young, cool, hip people, inevitably actors. I've met some of these actors and stuff, actors and models who don't drink beer, because if they did they couldn't be in their profession, and you can't do that type of acting and modelling if you're a beer drinker. They drink Evian water.

It's going to happen with casinos and slots too. Look how the Ontario Lottery Corp promotes and sells with glossy advertising $1 6/49 tickets, or Pro Line. You talk about Pro Line. Man, they spend billions, and they've got the audacity, in that one 6/49 ad, where they show the guy driving the -- they don't even have a North American car; they've got a Ferrari or something. At least they would show the dignity of using a North American car. Would you advocate a ban on advertising of -- and I appreciate what Mr Crozier is saying, because the Supreme Court of Canada just said something about that when it came to tobacco. But the province can control liquor advertising and casino advertising. Would you advocate a ban? If so, yes; if not, why not?

Ms Cusenza: ARAPO does not advocate a ban on alcohol advertising. What we're pushing for is strict enforcement and application of the current guidelines that are administered now by the Liquor Licence Board of Ontario. We feel that responsible alcohol advertising will make a tremendous difference, and it may not be reasonable or feasible to push for a ban. So no, we don't spend our energy working in that direction.

The CRTC right now regulates the advertising of alcohol on television only. We rely on the province to regulate advertising in so many more forums.

The Vice-Chair: Thank you, Mr Kormos. Time has expired. We move now to the Progressive Conservative caucus. I've got Mr Flaherty and Mr Klees.

Mr Flaherty: Thank you for coming today. As you can tell from the numbers, this is the government side and that's the opposition side, as a result of the election.

Mr Crozier: What's that got to do with it?

Mr Flaherty: I thought I'd just remind the opposition who won the election. We have to do that once in a while.

Mr Crozier: And they're older.

Mr Flaherty: That's it. We also know now that Mr Crozier survived his childhood. We learn something every day here.

Mr Crozier: When you have to live with guys like Klees, you had to work hard at it.

Mr Flaherty: I appreciate the recommendations that you've made, and quite seriously I undertake to you to pass them along to the minister responsible, the Minister of Consumer and Commercial Relations. I'm his parliamentary assistant. I'll make sure that happens, because I think they're very important.

I want to ask you about that. In my former professional life as a lawyer, I had the unfortunate experience from time to time of seeing some of the grave consequences of drinking and driving by adolescents and drug use. To see a 17-year-old brain-damaged young person rendered quadriplegic from drinking and driving and illegal drugs is one of the saddest human experiences one can imagine, and for their families. I feel somewhat reassured by what I hear from some young people today, at least in my own riding, that at least drinking and driving has become unacceptable to a large extent among high school students. Is that fair, I hope?

Ms Peric: It is somewhat, but I mean, there are people out there who will say it's fair and the same people go out and think they can handle it, and they can't. So it is right to some extent, but those same people will go out and drink and drive because they think they can handle it.

Mr Flaherty: Even that extent of change, you know, is a remarkable change from my generation, where those of us my age, most honest ones, will admit that there was not that social disapprobation about drinking and driving. It was still against the law, but people did it much more, regrettably, in those days. I think we have to acknowledge that laws can change behaviour, that advertising can change behaviour. We've seen it, for example, with seatbelts, where 20 years ago most people didn't wear seatbelts and there was a great foofaraw when governments proposed to bring in seatbelt legislation, but now it's commonly accepted and there's a compliance rate of over 90%. People realized through the law and through education, through advertising, that it's crucial.

I want to ask you, then, about the attitude towards alcohol among your peers these days and its relationship to advertising, that is, what sort of persuasive advertising approach do you think would work? I realize that lifestyle advertising, saying that you'll have more friends and more personal success if you drink brand X of beer, is a problem. Let me turn the question around. Can you help me and the government side about --

The Vice-Chair: Mr Flaherty, I'm sorry, time has expired.

On behalf of the committee, I would like to thank the three of you for your presentation to the committee.

If the committee members would look at their agenda, they would see that there's been a bit of a mixup here. If you look at the 3 o'clock time, it then jumps to 3:40, misses the 3:20, and then from 3:40 it jumps to 4:20, and our 4:40 has cancelled. We are left with three presenters, of which the first one arrives at 4:20, so we'll be recessed until then. None of them are here.

The committee recessed from 1540 to 1621.

TICKETIME

The Chair: I call the meeting to order. We are now proceeding with our next presentation: from TickeTime, Mr Craig Lilley. Welcome. I'd ask you to proceed. You have 20 minutes.

Mr Craig Lilley: Thank you very much. I'm Craig Lilley, as indicated, president of TickeTime, a third-party lottery retailer. I am adamantly opposed to Bill 75.

When I voted PC in the recent election it was because Premier Harris was opposed to VLTs. Additionally, three weeks prior to the last budget, Norm Sterling wrote to Charities First indicating that no VLTs would be introduced to the province without extensive research and consultation with the charities. In my opinion, they have both lied, and therefore the $180 million promised to charities through VLT revenues can't be trusted. In Alberta, charities were given a similar promise, and they're still waiting to see any money from VLT revenues after nearly two years.

In 1975, Marshall Pollock, the inaugural president of the OLC and I believe a presenter to this committee last week, made a strong statement that lottery products were not to be sold in any licensed establishment in order to ensure that individuals not be tempted into a bad decision of judgement brought on by the impairment of alcohol. In 1996, the government is presenting legislation to introduce VLTs only where alcohol is served. Does this make any logical sense, the change in 20 years of Tory government?

VLTs are going to be going initially only into restaurants, hotels and racetracks, which have been admittedly illegally bringing in grey VLT market machines for some time. They're going to be paid 10% for this particular situation, whereas the charitable gaming industry and third-party retailers continue to receive 5% for any online or break-open tickets. Is this fair?

What kind of studies have been done to predict the impact of VLTs? I suspect either none or very few, as this is a reversal of an election platform and promises made, as I indicated earlier, just three weeks prior to the budget. I demand a referendum before this bill becomes law. Already 23 of the province's 519 municipalities have carried bylaws prohibiting VLTs. Not insignificantly, on July 16, Parry Sound, the riding of the finance minister, the Honourable Ernie Eves, joined the ban. I've given Ms Bryce copies of that particular passing of the legislation from Parry Sound for each of you.

Let's now compare charitable gaming in Ontario to the OLC. For the past year, 1995, the OLC took in revenues of $1.9 billion. That took them 20 years to achieve. Break-open ticket business in Ontario was $1.3 billion, coupled with $2.3 billion from the roving casinos and $1.5 from the bingo halls; combined, $5.1 billion in revenues, over twice the size of the OLC. Yet charitable gaming operates on very low budgets, minimal to no advertising, and has grown to over $5 billion from insignificant levels in just five years. This level has been achieved through hard work and despite having our hands tied by all levels of government at every step.

We demand a level playing field: break-open prizes in excess of $100, where they've been at since their inception; equal payment from the OLC, as opposed to the 5% that is being offered to online retailers currently; and room to post the number of winners on break-open boxes. When we open a box of break-open tickets as a third-party retailer, we can guarantee by law 224 winning tickets in that box, $800 in prizes, over 73% of the actual gross revenues, and five $100 winners. But recent legislation prohibits us from advertising these facts on the basis of enticement advertising. The OLC's employees take great pride in policing this, although it's not their jurisdiction. But we continue to post OLC jackpot alert signs with guesstimated, not guaranteed, jackpots. Given the number of online terminals in the country, the odds of someone actually selling a jackpot at a given 6/49 terminal are one in 216 years.

On my way to work, I pass several jackpot alert signs on the Gardiner Expressway. They are interestingly left at old jackpots quite often, sometimes for a whole week, when the 6/49 is at $10 million or more, and yet we, third-party retailers, can be fined and could lose our licence if we post the number of winning break-open tickets that we know to be available and can guarantee. I have here a copy of a memo to "Store Manager" from the OLC, on no letterhead, indicating that a law is being passed currently allowing first-time offenders of third-party retailers selling lottery tickets to minors a fine of up to $250,000, even though it may be one transaction in the tens of thousands that the retailer processes, potentially for 50 cents. Through the use of this memo, the OLC, in this undated and illegibly signed memo, have washed their hands of any involvement or responsibility. But who is responsible to police the accuracy of the OLC jackpot sign I see on the Gardiner each day, and who pays the penalty there?

The gaming and charities industry is tired of playing with our hands tied behind our back while the OLC is given free rein to operate as they see fit. The OLC uses enticement advertising to double and triple sales when jackpots climb, but we are prohibited from competing. The OLC has never suffered sales declines in markets where break-opens have been successful, yet they continually try to lobby and pass bills which will wipe out the competition. Results in the other provinces with VLTs have shown that the big loser is break-open tickets, with sales often declining by about 50%. Without the flexibility to offer larger prizes and compete evenly, the charities of Ontario, which must rely heavily on the funding of third-party retailers, will suffer at a time when government funding is disappearing quickly.

The OLC repeatedly and openly badmouths break-open ticket sellers as taking advantage of those who can least afford to lose money gambling, but I've seen our customer is the same person who buys 6/49, instant and all other OLC products. Is it coincidence that the OLC brought in Garth Maness, who has considerable experience with VLTs in Manitoba, and that Clare Lewis has been airlifted from gaming services to chairman of the LLBO, or that John Major, once considered the god of break-open tickets, is now head of the racing commission? I think not. These are all carefully orchestrated moves to ensure the success of VLTs and the obliteration of any competition to the OLC.

While all the behind-the-scenes planning has been happening, who's been studying the socioeconomic impact of VLTs, the crack cocaine of gambling? Lottery retailers such as myself who have been in the business for 21 years don't only oppose VLTs for the competition; we oppose them in principle and we don't want them made available at any lottery or gambling establishment, let alone just in restaurants and bars.

In summary, I expect the elected government to make good on their election promise of reduced government spending and deficit elimination, a platform on which I voted them in, which I agree with, but by the means they outlined in their pre-election campaign, not by rampant VLTs and casinos on every corner. You don't have to leave your kids in the car while you come in to buy a break-open ticket, like they seem to be doing at Casino Rama.

The budget indicated a test period in which 20,000 VLTs will be tested before any decisions on expanding the program are made. I feel Bill 75 is simply the government's way of opening the door to unlimited VLTs, and comparing our population base to those other provinces that already have VLTs in existence, I'm sure by 2006, in 10 years, we'll have 60,000-plus VLTs operating in Ontario. I suggest the bill be amended to say no further VLTs can be added until extensive studies are taken to examine the ramifications of the first 20,000 that have been approved by a panel of unbiased experts.

On behalf of Ontario's 17,000 lottery retailers, who represent over 50,000 employees, I implore that Bill 75 be reworded and reviewed.

The Chair: Thank you, Mr Lilley. We have three minutes per caucus.

Mr Kormos: Boy, would I ever appreciate more than three minutes.

One of the things about break-opens is that when I go to the Welland County General Hospital and there are the volunteers in the lobby selling the break-opens, I know that's a contribution to the Welland County General Hospital at the end of the day.

Mr Lilley: Right.

Mr Kormos: The break-open tickets that are in Sammy's Variety, are they similarly identified as benefiting a particular organization or group?

Mr Lilley: Absolutely, and it's regulated and followed by licensing officers to death. We have more paperwork and red tape to follow on that than anything else.

Mr Kormos: So the purchaser knows where and to whom his donations go?

Mr Lilley: Absolutely. There are laws galore to ensure that we post a licence indicating which charity the money is going to and that every ticket has the name of the charity on the ticket.

Mr Kormos: One of the issues that's been raised -- you see, the racetrack industry, they want slots, but they don't think anybody else should have them. The hotel and motel association -- Day's Inn, Delta, what have you -- wants slots, knowing that they're second in line after the racetracks, but they don't want anybody else to have them, on and on down the road.

In the communities I represent, Welland and Thorold, I've spoken to retailers, variety store people almost inevitably, not necessarily, and it puts a few more bucks into their pocket and as often as not it was the result of some volunteer imposing these tickets on them, exhorting that person to carry that ticket. So there's a sense of involvement in the fund-raising process for that charity. Is that a universal experience or is that unique to Welland-Thorold?

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Mr Lilley: I'm not sure that I understand.

Mr Kormos: In that the retailer is making a couple of bucks, but he or she also knows that they're doing this on behalf of Big Brothers, on behalf of the Lions Club, on behalf of what have you.

Mr Lilley: Absolutely. They are fully involved all the way through, knowing who the charity is and supporting the charity they are representing, and usually it's a revolving change of charity to distribute the money evenly.

Mr Kormos: One of the concerns about OLC that I've raised -- because I consider them a corrupt bureaucracy, not in that anybody's stealing any money, but I've raised this in the House; I've raised this in correspondence to respective ministers. I have a case of a young man who was a technician for the company contracted to do the repair work for OLC. He identified a fault in the ticket delivery machines whereby a number could be entered and stored but no ticket was issued, and this is the random numbering. The retailer would simply issue another ticket, no problem. The problem is, that number is already entered but nobody has a receipt for it. This young man, very bright, identified this as a means of tinkering the odds, albeit slight, but Bugsy Seigel knew that even half a per cent extra point -- that's what shaved dice are all about -- can benefit the house. He was fired at the insistence of Ontario Lottery Corp for having raised that glitch.

Mr Lilley: Interestingly, the lottery corporation uses the same symbol on all losing tickets as they do on any prize over $500, which in a sense is a form of fraud, in that a player who receives the symbol immediately feels that's a losing ticket, whereas anything above $500 is identified by the same symbol as a losing ticket.

Mr Ron Johnson: Thank you, Mr Lilley, for your presentation. Just as a point of clarification, at the end of your presentation, you said on behalf of -- and I don't remember the number --

Mr Lilley: Seventeen thousand lottery retailers currently in the province.

Mr Ron Johnson: And the 50,000 employees associated with that?

Mr Lilley: Right.

Mr Ron Johnson: Are you speaking on their behalf?

Mr Lilley: I'm speaking on behalf of all those I have talked to and know, and I know many, many of them.

Mr Ron Johnson: You certainly haven't talked to 50,000, though, is that correct, or 17,000? The reason I say that is that I was just a little confused. We didn't have a written submission and it almost sounded like you were somehow appointed or speaking on all of their behalfs, and I just want to clarify who it is exactly you're speaking on behalf of.

Mr Lilley: Okay, I'm speaking on behalf of myself and all those individuals I've talked to in the business. In over 21 years, I know an awful of them, but not all 17,000.

Mr Ron Johnson: You didn't really indicate exactly what it is TickeTime does. I'm assuming it's a distributor of --

Mr Lilley: I said a third-party retailer.

Mr Ron Johnson: Okay, a third-party retailer of tickets. My question, I guess, is more on the lines of the consultation aspect of things, because you have to understand, there have not been any steadfast decisions made yet with respect to VLTs. You indicated that you were frustrated at what you call the lack of consultation. Do you feel that you've been consulted with respect to this piece of legislation?

Mr Lilley: I haven't been consulted at all.

Mr Ron Johnson: Do you feel that public hearings are a form of consultation?

Mr Lilley: I have a feeling that they're just a necessary step on the way to passing the legislation, and my colleagues seem to feel much the same way.

Mr Ron Johnson: It's unfortunate you feel that way because I know that we're very interested in hearing from a lot of people on all sides and we've been able to do that on these hearings. It's very important that we enter into these hearings in good faith and look at them as an opportunity to consult. I can assure that that's exactly what we've done in this case. The comments that you've made are going to be taken to heart by this government, I can assure you of that.

Mr Young: My concern is that we've heard some people who are in the business of promoting or selling or manufacturing Nevada tickets, and the message we're getting is that Nevada tickets are okay, VLTs are bad, that one form of wagering or gambling is superior to another. I've heard a story about Nevada tickets; you might have heard the same story. How much, if you bought a whole box, would they cost, about $1,300?

Mr Lilley: It's $1,091.50.

Mr Young: I've heard a story where somebody went in a store and bought the whole box of tickets, one by one, even though the absolute maximum they could win is $800. There are problem gamblers in all forms of gaming, I believe, and sitting on this committee for a week, I've learned this as well. We read in the Toronto Sun this morning that a speaker from one the universities in the States yesterday said they've identified a new form of addiction. There's a lady who is addicted to e-mail on the Internet and her marriage broke up because she couldn't get off the Internet; she was doing e-mail on the Internet all the time. When you have 1% to 2% of people --

The Chair: Thank you, Mr Young; your time has expired.

Mr Crozier: Mr Lilley, I'm not suspicious of any of your motives. I'll be most interested to review Hansard to re-hear some of the information you've given us this afternoon, particularly where the minister, Mr Sterling, wrote to Charities First -- I've also had a number of meetings with Charities First and was aware of that -- that as little as a few weeks before, there weren't going to be any VLTs. You can't blame these people here on the government side because they didn't know three weeks before either. We found out the same day they did, I suspect, unless the system has changed drastically, and I doubt it has.

I've created a little scenario -- it may not be right, but it's possible -- that in preparing the budget the finance boys and girls came in and said, "Look, government, you need the money, as simple as that, and we've got to find it someplace and VLTs are the biggest cash cow we can think of," notwithstanding the fact that -- and you're right, and please send us any kind of information surveys or background information you come across that will help us make these kinds of decisions -- that it's going to hurt all kinds of break-open ticket sales. That's my gut feeling.

Mr Lilley: Lottery across the board will be cannibalized, including other OLC products, but the great benefactor will be the Ontario government.

Mr Crozier: Because you've had experience in this area and you know.

Mr Lilley: Absolutely, and we've gone and checked out the other provinces to see exactly what happened there.

Mr Crozier: I don't doubt the sincerity of any member on this committee of wanting the government to take to heart that which you and others have given them. The problem is, we aren't the ones who are going to make the decision. There are going to be some folks in finance and some folks in the Premier's and the finance minister's office who will say, "Be damned." As the parliamentary assistant has said, "It's in the budget," although I take the view that the budget isn't worth the paper it's written on because it's only intent, it's not written in stone. You don't have to follow the budget, so it's not an obligation.

Whether you're speaking on behalf of yourself or whether you're speaking on behalf of 17,000 people, it matters little. What you said is true, and I appreciate it. If there's anything you want to add in my time -- do I have any time left?

The Chair: You have one minute left.

Mr Crozier: I've said all I want to say, so if you have anything else to say, please do.

Mr Lilley: I appreciate your support and I feel, unfortunately, despite what Mr Johnson has indicated, as you do, that's it's probably people beyond this room and beyond any of our control who will make that ultimate decision. But certainly if that decision is made they'd better go in with their eyes open. There will be huge repercussions from BOTMA and all the other individuals involved in lottery retail. We won't take this sitting down. We're prepared to go into the battlefield, per se, if we need to.

Mr Crozier: Don't give up here.

The Chair: Thank you very much, Mr Lilley. I thank you for your presentation.

Ladies and gentlemen of the committee, our 4:40 has cancelled and we are waiting for our 5 o'clock. What is your pleasure?

Mr Crozier: Is our 5:20 here?

The Chair: No, neither one is here.

Mr Kormos: If I may, could the Chair arrange to have Tom Long's home phone number distributed? That way people could talk directly to the policymaking people instead of wasting their time with this committee. They could call him at home and express their views on this bill.

The Chair: Tom who?

In any event, we're waiting for our 5 o'clock. I suggest we adjourn until five minutes to 5.

Mr Ford: Mr Chair, why aren't they here?

The Chair: Well, they're not scheduled until --

Mr Ford: That schedule makes me laugh. We're waiting for them. They should be here on time.

The Chair: No, Mr Ford. These two presenters are not scheduled until, the first one, at 5 o'clock. There was a cancellation at 4:40; we can't do anything about that. We're adjourned until 4:55.

The committee recessed from 1641 to 1654.

FULL SPECTRUM FUNDRAISING STRATEGIES

The Chair: I call the meeting to order. Full Spectrum Fundraising Strategies, Mr David Gibson, director. Welcome, Mr Gibson. You're here early. That's great. We'll start a bit early if we can.

Mr David Gibson: I could have started 10 minutes ago.

The Chair: Well, we didn't know that. Please proceed.

Mr Gibson: I am David Gibson. I am a partner in Full Spectrum Fundraising Strategies. Our firm is registered as a gaming service supplier with the Gaming Control Commission. We are primarily a supplier of break-open tickets; however, our charity clients consult with us on other matters related to fund-raising and charitable gaming. I have some personal experience with charity casinos also.

I'm not here to bemoan how VLTs will affect my livelihood as a break-open ticket supplier. The realities of politics and the huge revenues at stake dwarf any opposition I might have. I feel there is still a place for break-open tickets to coexist alongside video lottery terminals. Besides, it was inevitable that Ontario would become the ninth province to allow video gaming.

The committee has already heard of the addictive nature of the VLT. All gambling has the potential to become dangerous to some in this manner. VLTs may or may not create more problem gamblers. It is important to remember that a huge number of these machines are currently in use in Ontario in an unregulated manner. I think we've all seen them. Better to have all Ontarians benefit from these machines through taxation and charitable funding.

After hearing some previous presentations, it has become apparent that the most bewildering issue surrounding the implementation of video gaming is what to do with the funds. I understand that the government seriously intends to share the proceeds with charitable organizations on a roughly 50-50 split. This is a highly commendable move on the part of the government of Ontario.

As gaming service suppliers, our main function is to work on behalf of our charity clients. In fact, I'm here today on the recommendation of one of these organizations. My clients are expressing concerns that the revenues from break-open tickets and other forms of charitable gaming are bound to be affected by the introduction of VLTs. In these tough times of funding cutbacks, many charities cannot afford to have their gaming revenues eroded further. In addition, most gaming suppliers are currently having to turn away new charity clients. We're getting calls all the time. The marketplace is reaching saturation level. If VLTs are to bring a new form of funding to charities, then why the concern? Obviously, everybody wants a place at the trough.

Charities are people helping people. As such, they exist and perform at a grass-roots level. Even large charities have chapters which deal at the local level with people. The satisfying aspect of placing a break-open ticket program is that the seller, through his efforts, and the player, through his lottery purchase or losses, direct funds to a local charity.

Allow me to illustrate how effectively this relationship works by creating a little model. Let's say the management of a tavern in Woodstock wish to sell break-open tickets to support a local charity. This is not unusual, that they want to direct funds to a specific cause; in fact, it may be the only reason they want to deal with them. As a gaming service supplier, we would approach the charity and explain the regulations to them. We outline their responsibilities, at the same time detailing the services we and the sellers perform. This is a win-win-win situation. Even the player who loses knows where the money's going: to a charity they recognize, in this case. It's this kind of expertise that a gaming service supplier brings to charitable gaming. This is also what is lacking in the current approach to government lotteries. The money just seems to disappear into a big hole. Nobody knows where it goes.

Charitable gaming has intrigued the Ontario Lottery Corp. We have seen them sniffing around a fair bit with break-open tickets. We were the only competition there was, really.

Mr Kormos: Like a dog, eh?

Mr Gibson: They want to know numbers and everything, because they're dealing with the same stores. They want to know: "How much of this do you sell? How popular is it?" and so on.

We have been the only private sector competition to their virtual monopoly on lotteries. It does make sense for the OLC to conduct and manage the VLT program because of their experience with online lotteries and their vast telecommunications network. However, the OLC at present has very little coverage in age-controlled establishments like bars. They have pretty well eliminated all their sales representatives who used to call on all these sites too, more like the convenience stores, which are the bulk of their business.

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In this day and age, servicing customers is all-important. It's something that charities and gaming employees know, and we provide it. Charities are really good at recognizing who supports them; it's their business. Let the individual charities operate the VLTs, and give them the option of utilizing the services of a gaming service supplier. We work with them already. They either like us or they don't like us, but give them an option. The proposed 20,000 machines would give opportunities for many interested groups to get aboard, and experience has shown that charity involvement in gaming is more satisfying than just handing out funds or using the cumbersome grant application procedure.

I also see this as an efficient and cost-effective method of operating the program. If VLTs are to be a true fund-raising tool, let the charity recipients have control of the program and decide how it is to be administered. If they decide they want or need the assistance of a gaming service supplier, then so be it. This is how charitable gaming operates at the present time. They can operate without the gaming service supplier if they want. Some do; some don't. They have mixed success with it.

The Gaming Control Commission has control over all suppliers of equipment and services to the industry. They also determine the licensing eligibility at present and as such are capable of determining who can receive permission to participate. This is also done at the municipal level. If there are too many applicants, it may become necessary to employ a selection process similar to that to determine the charity participants at the CNE casino. It's a fair system; it rotates. Names are drawn from those who apply, to be fairest to all.

Of course, the government would receive its portion of the proceeds. It could be in such a way as a percentage of the gross, much in the way that the Gaming Control Commission receives licence fees.

In conclusion, if the government is sincere in its statements offering nearly half of the VLT revenue to charitable organizations in the province, then give these groups the power to operate the scheme themselves.

Mr Ron Johnson: Thank you, Mr Gibson, for your presentation. I'm somewhat encouraged to hear a lot of the comments that you made. I look at one thing you said here, that you "feel that there is still a place for BOTs to coexist alongside VLTs." That hasn't been the message that we've been getting from most suppliers of break-open tickets. I'm certainly encouraged to hear you say that. I want to ask you if you're aware of what's happened in Alberta with respect to break-open tickets, in that when VLTs were introduced into that province there was not at all a significant decline in sales of break-open tickets. Were you aware of that?

Mr Gibson: I heard an earlier presentation that said they'd dropped considerably, but I haven't really heard that. In a way, I'm not too surprised. I would expect a drop, maybe 10% to 20%.

Mr Ron Johnson: One of the concerns that we've got from people is that somehow they've been led to believe -- and I believe, quite frankly, by the members across in many ways -- that video lottery terminals are somehow going to replace all of the good work that charities do now through the break-open tickets, through their bingos, but of course all of that is going to continue to exist. You're still going to have all of these charities raising funds through those types of ways.

The other thing I want to point out quickly that you mentioned, and I tell you, it's very encouraging to hear you say, is that: "It is important to remember that a huge number of these machines are currently in use in Ontario in an unregulated manner. Better to have all Ontarians benefit from these machines through taxation and charitable funding." We concur with you on that. We know those machines exist and we feel one of the ways to address that is through helping charities and generating some revenue for them. We can also put a squeeze on the illegal gaming going on. How do you feel about that?

Mr Gibson: I've seen them there. It's interesting that you mention that running up against break-open tickets. I know a particular place -- of course, it will remain anonymous -- that has both. It's hard to say what difference it's going to have when that machine comes out of the back room, but they sell both and it seems to work. I don't expect to see that too much, though. I don't think they're going to take break-open tickets.

Mr Hudak: Thanks, Mr Gibson. Good to see you again. I know you've sat through a couple of meetings already so you're well aware that the government is going to consult further with charities to see how it's best to distribute the funds from the actions in the budget and Bill 75.

Let me follow up on that because you made some interesting points here. I'll give you an example: Where I come from, Fort Erie is in my riding. It's on the border with Buffalo and I think it stands to benefit greatly from the initiatives in Bill 75 and in the budget. Down Highway 3 is the town of Dunnville, about the same demographics, close to the same size. The charities in Fort Erie stand to benefit, I would think, extremely from these initiatives whereas Dunnville, not as close to the border, doesn't have the same advantage. What kind of mechanism do you use to try to address that situation, given that I think you make an excellent point, that if I see what charity my gaming is going to, maybe I'd feel a bit better about that, or if I know who I'm supporting, that's where my funds are going?

Mr Gibson: It all depends on who's going to decide who benefits the most. It just seems so logical to have money that's being generated in a municipality or an area stay there. With break-open tickets, for instance, you have a provincial licence that enables a large charity to go into various areas as opposed to just applying locally, but theoretically that money is supposed to stay in that community anyway. If the money's coming out of the pocket of a local person in a local municipality, try to get it to stay there somehow.

Mr Crozier: Good afternoon, Mr Gibson, and welcome. I appreciate the fact that several of the government members agree with what you say, and that's good, because if everybody came before this committee and said exactly the same thing, why, I guess there wouldn't be much point in having these hearings. You have your opinion and your feelings from your experience, and that's good.

One thing I'd like to clear up is where you say you are pleased. I think you used these words: "I understand that the government seriously intends to share the proceeds with charitable organizations on a roughly a 50-50 split. This is...commendable...." The split is more like 70-10.

Mr Gibson: The figures I heard were $185 million, $180 million, or something?

Mr Crozier: Yes, that's going to be generated, they say, in new funds. That's what I want to talk to you a bit about or get your opinion on. We've talked a bit about cannibalization, and as was noted by one of the government members, more have come before this committee concerned about the future of break-open tickets to a greater degree of concern than you have been. If I go into the Village Inn in Leamington and they have break-open tickets there now, and six months from now I go in and they have VLTs, which one do you think I will see being accessed and played the most?

Mr Gibson: The new one, the new game in town.

Mr Crozier: What we've said to the government is -- and I think it's a legitimate request -- that the government hasn't really any idea what effect it's going to have on break-open tickets in Ontario, and this is what we want determined, because once you've gone down this road and once you've made the change, it's very difficult to come back. That's part of what we're asking. Although I personally may not want to support video slot machines in every licensed establishment in Ontario, because I too like the local charitable emphasis that there has been up to now, my concern is -- and you may want to comment -- that charitable gaming as we know it is dead if we start into this kind of venue.

Mr Gibson: It's an unknown. You've answered your own question, I think. I would hope not. For instance, look at a bingo hall where they've got various types of gaming in the same place. The patrons seem to wait for the bingo caller to finish, and then the break-open tickets come out and they go crazy, a feeding frenzy over them. They also have lottery terminals in a lot of them too so they can bet on Pro Line. I don't know; we're going to see. But if there could be a way -- you talk about that bar where a VLT or VLTs are going to come in. Wouldn't it be nice if the same charity that might be losing from the break-open tickets would benefit from the new form?

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Mr Crozier: The government needs the money. That's our problem.

Mr Gibson: Break-open tickets fortunately are really strict as far as what percentages go to administration and everything. The charity gets the money, no ifs, ands, buts about it.

Mr Kormos: Back in the 1980s, in that BMW decade I recall -- maybe it still happens and I just don't get around to that kind of neighbourhood very much any more -- from time to time raffles would be a $100 ticket, any number of hospitals; you'd win a Porsche or a Jaguar and they used to raffle off luxury homes. Those seem to have gone by the wayside where I come from down in Welland-Thorold which, it seems to me just instinctively, is why break-open tickets are an attractive proposition for so many people. You're spending 50 cents a pop; you're not writing out a cheque for $100.

Mr Gibson: But people don't spend 50 cents; this is the thing.

Mr Kormos: We're told that the break-open ticket industry is $1.3 billion. Is that the number we got from one of the participants earlier today? Am I right on that one? Something like $1.3 billion. We've heard the number also, the government has been touting the number, of $180 million to go to charities from the slots, which they tell us is 10%. We don't know whether it's 10% of the gross take or 10% of the net revenues after the payout, but let's assume that it's 10% of the gross take. That means they anticipate $1.8 billion being played.

If the break-open ticket industry is $1.3 billion and we're talking about a new game in town that's going to draw $1.8 billion -- a quarter, a loonie, a toonie at a time -- out of people's pockets, I'm hard pressed to understand. Again, I hear what you said. They're not alchemists; there's not going to be money where there wasn't money before. How can you come up with $1.8 billion for people, coinage to put into the machines, without taking, I suggest to you, more than a modest amount from somewhere else? I say the logical source has got to be break-opens.

Mr Gibson: Yes, because it's the same thing, effectively.

Mr Kormos: Yes, same market, same coinage. Do you understand?

Mr Gibson: Sure.

Mr Kormos: We don't know these numbers. These aren't hard and fast numbers. There hasn't been a single study done by the government to talk about the potential share.

Mr Gibson: When I divided this number by 20,000, it came up real light. It didn't look right to me.

Mr Kormos: That's low-balling.

Mr Gibson: Yes, definitely this is low-balling.

Mr Kormos: I come from Welland, 48,000 people. One slot for 550 population is the ratio and that means 87 slots in the city of Welland. That's what they're entitled to, all things being equal. If each slot only brings in two grand a week, which again is low, you're talking about $170,000 a week from small-town Ontario. We're talking big bucks here coming out of people's pockets. Holy zonkers. These guys are shake-down artists like the mob has never been able to achieve. That's taking a lot of money out of people's pockets.

The Chair: Mr Gibson, thank you very much for attending and stimulating the questioning around this table.

UNITED CHURCH OF CANADA

The Chair: Our next presentation is Rev Susan Eagle, on behalf of the United Church of Canada. Welcome.

Rev Susan Eagle: Thank you.

The Chair: You're accompanied by?

Ms Eagle: John Asling.

The Chair: You are on behalf of the United Church of Canada. One particular branch?

Ms Eagle: We represent a group known as the Coordinating Committee of Ontario Conferences, which is an umbrella organization for all United Church conferences in Ontario.

The Chair: You have 20 minutes. Could you proceed with your presentation.

Mr John Asling: If I could, I will begin. As Susan said, my name is John Asling. I am a staff person with the Hamilton Conference of the United Church of Canada and I'm here representing approximately 68,000 United Church persons in my constituency area. Within the Coordinating Committee of Ontario Conferences we represent approximately 300,000 United Church people in that area.

Some of you will recognize the body that we represent today. We're a somewhat liberal church group that has a history of being involved in a number of social justice issues within the province. We attempt to walk with poor people in this province, and I would suggest that we are here today because the issue before you is one that is a social justice and an economic issue. That's our rationale for being here.

We're not here, I would say, unless my colleague corrects me, out of some sense of piety and that gambling is wrong in a pious sense; we're here because we want to talk about how money is distributed and how the poor are taken care of in this province. Susan and I are going to rotate our presentation, which was put together very quickly this afternoon, and I'd ask her to pick up from here.

Ms Eagle: John mentioned that it's a rather fast report put together. That's why we don't have copies for you. We got notified Friday afternoon that we could appear today, so we will provide notes from what we have to say to you today.

John said we're not here out of any sense of piety, but we do have Methodist roots in the United Church which has a long-standing tradition of concern for gambling, and I notice that when you combine gambling with alcohol, it really stirs the Methodist roots of those of us in the United Church.

The United Church has raised issues around the concern for gambling for a number of years. We're on record with the most comprehensive resolution passed by the general council of the United Church back in 1977, at a time that the church tried to really explore and understand what gambling was, what it does in not only the lives of individuals but what it does to the fabric of community. Out of that we identified some theological concerns. I'd like to share those with you today.

First of all, out of a belief that every person in God's eyes is of infinite worth and no person should ever be used, manipulated, exploited or hurt by another -- we take that from a passage of scripture that comes from Romans, which says: "Resolve never to put a hindrance or stumbling block in the way of another. If your brother or sister is injured by what you do...you are no longer walking in love." It is out of this concern that we raise an issue of who is vulnerable when we engage in gambling and gaming in Ontario.

Another theological perspective, that God's creation is good and that the material goods of this world are to be rightly used and justly divided amongst God's creatures, out of that comes a concern about whether or not we move to a more inequitable distribution of goods and services when we come to rely on gambling as a source of revenue for organizations and groups and even for the government to rely on for providing social programs.

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Another theological rationale is that Christian stewardship is accountability to God of all that one possesses, not only in how we possess it but in how we achieve it and how we gain it. Again, it raises issues for us about how people come by material goods as well.

As recently as May, 1996, the London Conference of the United Church passed a resolution in which it unequivocally opposed the introduction of VLTs. So it has continued to be a concern for us in the church.

I want to say that we also are not totally sure why this hearing is even being held and why the government is at this point of looking at the introduction of VLTs. We know that the Liberal Party, we know that the New Democratic Party, we know that members of the government, we know that the Premier himself have expressed reservations and uncertainties about the expansion of gaming activity in the province of Ontario. So it is against that backdrop that we want to ask perhaps the most critical question: Why is gaming activity being expanded in Ontario and what will be the social costs?

Perhaps we're not so much here today with answers, because we agree with all those concerns, as we are here to add our questions to those that are already being asked by those of you who hold elected office. You have heard it said, and I'm sure you've read it many times, that VLTs are the crack cocaine of gambling. If that is a given and if those of you on the committee agree with that analysis, as do many of the experts in gaming across North America, why would there be any attempt to proceed in this jurisdiction with that activity?

It's a little like saying we're being told there's 25,000-40,000 illegal VLTs in the province, therefore legal ones should be introduced. To follow that logic would be to say that if you are actually dealing with the drug crack cocaine, perhaps the government should become a merchant of it in order to deal with its illegality. Clearly something is not making logical sense.

So our remarks today are set against that background of raising questions about the social cost and even the logic, given those kinds of questions that are being raised by people in other jurisdictions. In fact, we have yet to find a jurisdiction that has VLTs that can say that it's the best thing they ever did, the introduction of VLTs into their jurisdiction.

We have some concerns specifically that we would like to raise around the vulnerability of those who become addicted. The government has said that 2% of proceeds will go to dealing with addiction. It's a concern to us in so far as we know that in environment, in health issues, in other ways we have moved to saying we need to be about preventive, not curative, kinds of strategies. Yet here again the government is talking about introducing something and then pouring some money into cleaning up the problem once it's created. Again, it does not seem very logical to us to proceed in that manner.

One of the foundations for us in doing social justice work in the United Church is our vision of community. A vision of community that is biblically based comes out of a belief that we are indeed our brother's and sister's keeper, that we are not called to simply look out for ourselves as individuals, but that we need to be concerned about the wellbeing of our neighbour and, indeed, the wellbeing of the whole community, or the shalom community, around us. Therefore, again we have concerns about anything that diminishes the life of anyone else in our community, even if we are then going to pour money into trying to deal with their addiction later.

We believe that the VLTs will move to a more deteriorated quality of life for us in the community and, therefore, we cannot support this theologically.

Mr Asling: As I said earlier, in my own mission and social justice work in the Hamilton conference of the United Church, we have a number of times been in conversation with members and with the Premier around issues such as workfare and the cuts in benefits to the poor in our province. So again I want to use that as the context in which we talk about VLTs.

We believe, as church people, that the government of Ontario has a better way of redistributing income within the province and raising revenue within the province than lotteries or VLTs, any of the kinds of gambling available, and that's the taxation system. So we would ask again that this government might look at taxation, progressive taxation, which allows those who can afford it to pay a little bit more, perhaps some of the larger and wealthier corporations and individuals to pay for more, rather than relying on VLTs and other gambling processes to raise revenue for this community.

As church people, we believe that we all ought to pay our fair share and that the tax system ought to be a progressive tax system. Some of the tax things that I've read in the last little while tell me that the percentage of taxation that the wealthy and larger corporations have been paying in the last 20 years has shrunk whereas individuals, particularly the middle class and lower-income people, their share has increased. We would like to see the tax question addressed, and it may take the pressure off the need for things like VLTs.

We also are very sensitive because some of our own agencies -- and I think of the Wesley Urban Ministries in downtown Hamilton, which recently had its opening of a new building -- find themselves in quite a pickle because, due to shrinking government grants, they're in a position where they have to look at lotteries and Wintario dollars, that kind of thing, in order to stay alive. So we see that as a continuing problem. While we're offering proceeds to charities, those charities are struggling to survive. It creates a serious dilemma for those organizations.

So, again, we would rather see, with a fair tax system, more money given to some of these downtown agencies which now end up relying on bingos and those kinds of things, which they know is not a community-building kind of activity. I think Susan is going to raise some other ethical issues at this point.

Ms Eagle: A concern we have is that the hearing seems to be premised on the issue of how VLTs will be introduced rather than whether or not they should be. That is a concern for us. We know that last year the now Premier in numerous pieces of correspondence indicated that there would be full consultation before there was any expansion in gambling. It seemed to us that if that was going to happen, one of the questions would be whether or not there should be an expansion, not just how it should take place.

I read too from Hansard Mr Sterling saying, "We will commit to being more careful about the introduction of VLTs in this province than any other of the...jurisdictions which have this kind of gaming in their provinces." A question I have today is, does being more careful include the option of not introducing VLTs? Is that an option before this committee? I would hope it is if indeed you are serious about a full consultation with people in the community.

Finally, we want to say that a concern we have is that we have not really seen any local-impact kinds of analysis that's been done about the cost of VLTs, the cost of any expansion in gaming. There is the issue we've seen raised about dealing with those with addictions, but we know from many other forms of addiction that there are all kinds of other costs to a community that are associated with those addictions. It would be helpful to us if this committee could call on the government to provide that kind of information to the public so there can be full public debate and participation before the government moves ahead.

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What we're really suggesting to you today is that as a church we do not support the introduction of VLTs. We would hope that you would not move forward on that, but we would also hope that should there be any further movement in that direction it would be delayed until there is full public consultation.

Mr Asling: I would just like to add that even in the dog days of summer, shall we say, I have already heard from a number of congregations in our area. Just in case you think we are not representative today, this is an issue which somehow is catching the imagination of some of the folks in our congregations. They are quite concerned about it. I talked to one minister in St Jacobs, Ontario, who had just returned from a trip down east and saw the VLTs on the ferry system and saw a lot of folks lined up, spending -- I want to say quarters, but I hesitate; I think it probably was loonies. It's already an issue that is disturbing a number of our people, so I ask you to hear our concerns today. Thank you for the time.

Mr Crozier: Welcome to the committee. Like you, I have here 58 pages of Hansard where the Premier and the now Minister of Finance I would describe as literally railing against gambling and the introduction of more gambling in the province. In fact, Mr Harris talked in May 1993 about United States jurisdictions that changed the status quo on gambling but only after they held a referendum. He went on to say that they gave the opportunity for the public to voice their opinion before government acted unilaterally and that this should either be done through an election, which he didn't think would be held at that time, nor do I at this time, or by a referendum. I say that to support your comments.

Earlier today we heard from some young people who belong to the Association to Reduce Alcohol Promotion in Ontario. I told them after, because I didn't have a chance to during the formal session, and I'll tell you now that the problem is that I agree with you, and when I say "problem," governments have not had the political guts to do anything about it. It's been easy. Gambling's a real trough of money. It's an easy source and that's what they're going after.

It leads me to this question: How can we rally those people who you represent? You say it's starting, but this just has to be the beginning. It has to be done literally over the next few weeks or it'll be too late. We have to hear from tens of thousands or hundreds of thousands of people how they feel or this is a fait accompli. How can we do that?

Ms Eagle: It's a problem when hearings are held in the summer and things are introduced in the summer, but I can say that in my work in the community and in a congregation I'm finding people more incensed about this than other issues. They have not in the past been motivated or gotten stirred up about some issues, but this really is touching some kind of moral fibre in the community that's saying, "Wait a minute, this is not what we want to be about."

Mr Crozier: We need petitions and letters and meetings so that they can't say we're being biased.

Mr Kormos: I appreciate your comments. A moral perspective oftentimes seems increasingly rare at Queen's Park. I suppose what concerns me as well, and I'm not sure you're going to have enough time to comment, is the spin that's being put on this quick fix -- gambling, governments as addicts to gambling across North America, gambling being marketed as entertainment. People are being told: "This isn't gambling; this is entertainment. By pumping the loonies into that machine you're having a good time, and if you don't think you are, we're going to convince you that you are."

The closest analogy, I've got to tell you, friends, is the tobacco marketing exercise in the United States where for decades, and even shamefully after it became clear that the substances were incredibly addictive and incredibly harmful to the individual using it, to the people around him or her or to the community, tobacco companies were still spending billions convincing people that it was a matter of choice, that nobody tells you to smoke two packs a day, and if you only smoke five cigarettes a day, you probably won't get cancer, and that it was still pleasurable, notwithstanding we knew, we read the material. There's some big money involved here and people are being told that it's fun, you're supposed to enjoy losing money, because it's all about losing and not about winning. I find that disturbing. I fear it speaks something about all of us.

Mr Asling: If I could respond very briefly to the comment, there is another quick-fix problem that the church is concerned about, and that is perhaps we're being hoodwinked a little into believing that you can get something for nothing. If this is the only kind of hope this community, which is the province of Ontario, offers, particularly to our lower-income people, it's not enough and it's very false.

Mr Guzzo: Reverend Eagle, thank you very much for your presentation. You give us an awful lot of food for thought. I have to tell you that I am one who supports this bill. As a practising lawyer, and indeed as a judge for 11 years, I have presided over many trials and have conducted trials that involve gambling, bookmaking charges where $300,000 or $400,000 was bet over a period of three or four hours on the wiretap. We're looking at moving into, in the first stages, operations that are now legal gambling -- racetracks and existing Monte Carlos -- which will be located in permanent locations.

I also have to tell you that one of the first cases I had as a young lawyer was trying to recover some money for a man who came home one night to find that his wife had stripped some bank accounts and sold some bonds and given the money to a church. I'm wondering, in light of that, whether I should have -- and I had trouble and was quite unsuccessful, with very limited success in recovering any of that money. It was over $130,000 in 1972. I'm wondering whether I should have taken a position about abolishing all religions because of that church, because of the behaviour of that particular operation? Would that make sense to you?

Ms Eagle: I think you're trivializing the issue and I would hope that you wouldn't do that on a matter that is as serious as the impact of gambling. When you talk about the illegal aspect of gaming and therefore legalizing it, I'm not sure that carries weight, as I said, in a number of other kinds of areas where we legalize things that are illegal so that somehow we have more control of them.

I look back to the United Church's statements from back in 1977. They listed all the kinds of common justifications given for gambling and lotteries, and nothing much has changed in 20 years in terms of people rationalizing something that they want to get on with doing. The Chair: Excuse me, Mr Guzzo, your time is up.

Ms Eagle: I think the time has come for --

The Chair: Ms Eagle, I'm sorry.

Ms Eagle: Can I just finish my sentence?

The Chair: No, no. Excuse me. It's my job to make sure that everyone before this committee is treated equally and has exactly 20 minutes.

Mr Young: On a point of order, Mr Chairman: I'd like to make a motion for unanimous consent to let Ms Eagle finish her statement.

The Chair: Is there any objection? Fine, you may proceed.

Ms Eagle: I guess my last comment is simply that I think we very much need MPPs who are prepared to take a principled stand on this. I think it's really critical that people vote in conscience on this. If governments can't at times take a principled stand, then I think it diminishes the quality of life in our community. We look to governments to give leadership and to give us leadership around what it is to be good citizens. That's why a principled stand on this issue is so critical. Thank you.

The Chair: Thank you very much for attending today and your presentation.

Mr Guzzo: I didn't really mean to trivialize your position. I respect very much the basis of it and I apologize if you feel that's what I'm doing. But there is an existing situation out there that we have to deal with. Thank you very much for coming.

The Chair: I have two questions for the committee. The bus leaves at 8 o'clock tomorrow morning. There are at least 10 of us going, I believe, on the bus. How many are going on the bus? That's number one.

Number two, there can be an arrangement made to fly directly from Ottawa to Sudbury. We will get there at exactly the same time. You'll remember the alternative was to fly to Toronto from Ottawa and then to Sudbury from Toronto, which means changing planes. It takes about four hours. We can do it on Bearskin directly, but we arrive at the same time because the plane leaves a little later. Which would you prefer?

Interjections: Direct.

Mr Flaherty: Monday night we go to Ottawa and Sudbury?

The Chair: Yes. Okay, we're taking the charter then. The costs are the same; there are no additional costs. We're adjourning until 11 am in Fort Erie.

The committee adjourned at 1742.