Legislative Assembly of Ontario

ONTARIO CASINO CORPORATION ACT, 1993 / LOI DE 1993 SUR LA SOCIÉTÉ DES CASINOS DE L'ONTARIO

COUNCIL OF CHRISTIAN REFORMED CHURCHES IN CANADA

STANDARDBRED BREEDERS AND OWNERS ASSOCIATION

DR MICHAEL COLTERJOHN AND ASSOCIATES EQUINE VETERINARY CLINIC

B'NAI BRITH CANADA (DISTRICT 22)

MENNONITE CONFERENCE OF EASTERN CANADA

CANADIAN THOROUGHBRED HORSE SOCIETY (ONTARIO DIVISION)

ASSOCIATION OF CASINO GAMING SUPPLIERS OF ONTARIO

CONTENTS

Wednesday 25 August 1993

Ontario Casino Corporation Act, 1993, Bill 8

Council of Christian Reformed Churches in Canada

Rev Arie VanEek, executive secretary

Reinder Klein, research and communications associate

Standardbred Breeders and Owners Association

Brian Shannon, board member

Jim Gillies, president

Dr Michael Colterjohn and Associates Equine Veterinary Clinic

Dr Michael Colterjohn, principal

B'nai Brith Canada (District 22)

David Colodny, chair, financial management committee

Morri Behrmann, director, fundraising development

Mennonite Conference of Eastern Canada

Fred Redekop, chair, peace, justice and social concerns committee

Michael Bauman, member, peace, justice and social concerns committee

Canadian Thoroughbred Horse Society (Ontario Division)

Dr John Brown, president

Glenn Sikura, vice-president

Nigel Wallace, general manager

Association of Casino Gaming Suppliers of Ontario

Daniel Acks, president

Aubrey Zidenberg, executive spokesperson

STANDING COMMITTEE ON FINANCE AND ECONOMIC AFFAIRS

*Chair / Président: Johnson, Paul R. (Prince Edward-Lennox-South Hastings/

Prince Edward-Lennox-Hastings-Sud ND)

Vice-Chair / Vice-Président: Wiseman, Jim (Durham West/-Ouest ND)

*Caplan, Elinor (Oriole L)

*Carr, Gary (Oakville South/-Sud PC)

Cousens, W. Donald (Markham PC)

Jamison, Norm (Norfolk ND)

*Kwinter, Monte (Wilson Heights L)

*Lessard, Wayne (Windsor-Walkerville ND)

*Mathyssen, Irene (Middlesex ND)

North, Peter (Elgin ND)

Phillips, Gerry (Scarborough-Agincourt L)

*Sutherland, Kimble (Oxford ND)

*In attendance / présents

Substitutions present / Membres remplaçants présents:

Dadamo, George (Windsor-Sandwich ND) for Mr Jamison

Duignan, Noel (Halton North/-Nord ND) for Mr North

Eves, Ernie L. (Parry Sound PC) for Mr Cousens

Martin, Tony (Sault Ste Marie ND) for Mr Wiseman

McClelland, Carman (Brampton North/-Nord L) for Mr Phillips

Clerk / Greffière: Grannum, Tonia

Staff / Personnel:

Luksi, Lorraine, research officer, Legislative Research Service

Murray, Paul, research officer, Legislative Research Service

The committee met at 1007 in the Huron Room, Macdonald Block, Toronto.

ONTARIO CASINO CORPORATION ACT, 1993 / LOI DE 1993 SUR LA SOCIÉTÉ DES CASINOS DE L'ONTARIO

Consideration of Bill 8, An Act to provide for the control of casinos through the establishment of the Ontario Casino Corporation and to provide for certain other matters related to casinos / Loi prévoyant la réglementation des casinos par la création de la Société des casinos de l'Ontario et traitant de certaines autres questions relatives aux casinos.

COUNCIL OF CHRISTIAN REFORMED CHURCHES IN CANADA

The Chair (Mr Paul Johnson): Welcome, everyone. Our first presenter today is the Council of Christian Reformed Churches in Canada, Arie VanEek and Reinder Klein, research and communications associate. You have 30 minutes to make your presentation, a portion of which you may choose to leave for questions from the committee members.

Rev Arie VanEek: Mr Chairman and members of the panel, the Council of Christian Reformed Churches in Canada represents some 150 churches in the province of Ontario, and we thank you for granting us, albeit on fairly brief notice, an opportunity for publicly expressing our views on the controversial matter of casinos. Our brief is being presented, as was just indicated by the Chairman, by yours truly and Mr Reinder Klein, our council's research and communications associate.

The council, referred to hereafter as the CCRCC, wishes to go on record as being strongly opposed to the passage of Bill 8. We understand it would facilitate the granting of licences for the establishment of gambling casinos in the province and for operating the same. We oppose the passage of this bill because we consider the proposed legislation it contains to be morally unconscionable, ethically reprehensible, philosophically indefensible and economically irresponsible. If any of you smoke a pipe, put it there.

The CCRCC develops its views regarding major issues of public concern on the basis of its study and understanding of the Christian scriptures. In other words, our starting point is the great, good news that the huge moral deficit of humanity has been erased, that people have been set free from the bondage of guilt and evil. Concretely, this means that women and men no longer need to measure a person's worth in terms of goods, bank accounts, success, prestige or popularity. It means that there are views and values, indeed realities, greater than those narrow and confining ones on which so many people, governments included, are basing their strategies, hopes and trusts.

We make this clear assertion of bias at the outset because we believe that no position on this or any other issue can possibly be neutral in terms of values, and the issue of public, government-supported gambling we believe to be so replete with negative values, so pregnant with promises of future pain and misery for many people that as a national council of Canada's Christian Reformed community, we would be remiss if we did not express our strong views on the matter, particularly when the opportunity to do so has been given to us by your committee.

Mr Reinder Klein: We believe that passage of Bill 8 is unconscionable, morally. The appeal of gambling, which we define as "that kind of activity in which money or things of monetary value are distributed through artificially created chance," lies primarily in the remote possibility of great monetary gain against a minuscule investment of time, energy, creativity, compassion, social consciousness and of course money itself. It is the appeal of gaining much for little, of becoming rich in a flash, of having all problems resolved with the receipt of a cheque. It is the appeal of longed-for happiness by luck and lots of dough, of gaining esteem and stature through the sudden abundance of unmerited possessions. It is the empty appeal of salvation by material prosperity, a false appeal rooted in the warped values of a society that places its confidence no longer in God or princes, nor even in politicians, but in money and money alone.

Gambling, be it by way of lottery or casino, we consider to be an increasing blight in society, a celebration of a way of life that ultimately leads to death, morally and spiritually. This growing preoccupation with gambling we see as symptomatic of the sterile materialism that fuels the rapacious consumerism of our day. For a government blatantly to exploit the common delusion of the quick fix, to base major fiscal policies on a distortion of the truth and to give in to the special-interest groups' selfish demands for a further broadening of the unproductive gambling industry is, in our view, a cynical miscarriage of public justice. For that reason, we hold that to introduce, support and pass legislation allowing the establishment of casinos in Ontario is morally unconscionable and therefore unacceptable.

Rev Mr VanEek: A further consideration is that government support of casino gambling is reprehensible from an ethical perspective. By proposing to grant legislative approval for the licensing of gambling casinos, the government is in effect supporting such ventures and the mindset or world view upon which they are based. In practical terms, this means that the government, mandated to rule for the people's good, instead embraces, encourages and reinforces a bleak mindset that leads from emptiness to yet greater emptiness, all ostensibly to gain the necessary revenues to reduce a crushing deficit which is itself a product of the government's own fiscal mismanagement and past profligate spending habits.

Nor is the deficit the only purported beneficiary of the government's new pot of gold. We understand that noble purposes will also be served. The arts will get a cut, sports programs probably too. Other worthy programs will no doubt be trotted out as likely beneficiaries, and it would be no surprise to us at all if, in time, governments will give in to the temptation of funding key and costly social programs with the lucrative winnings of the gambling industry.

But once decisions and policies of this nature are put into place, governments themselves will have become inextricably tied to the proceeds of gambling, causing this and future administrations to become hopelessly dependent upon the people's willingness to throw away good money. Governments then have no choice but to promote gambling, and to do that with increasing vigour, to urge people more and more to spend their moneys on lotteries and in casinos, to lead the people, in other words, further and further into harmful patterns of destructive behaviour.

Carried to its logical conclusion, this approach leads to the very real and frightening prospect of governments using the proceeds of gambling to fund social programs aimed at repairing the damage done by gambling. It could readily lead to governments themselves becoming addicted to gambling, that is, dependent on their cut of its huge profits. Such governments would then, in effect, be addicted to the addiction of a society for whom the big win, the quick fix, is the only perceived way out of gnawing discontent and misery. A government to so bind itself, its policies and its programs to the financial losses that the people must sustain in order for the gambling industry to win big, as it invariably does, rigged as it is, the CCRCC considers ethically reprehensible.

Mr Klein: Philosophically, we believe that government support for casinos is also indefensible. The CCRCC is of the opinion that the state has no other business in business than to establish such regulations as may be necessary for the public good. For a state or province to be involved in the business of gambling we consider a serious departure from a government's proper role.

More seriously, the government of Ontario's rationale for being in the lottery business and for supporting gambling casinos is clear evidence that it believes the end to justify the means. We need not recite the various public statements made in the past by members of the present administration about the evils of gambling, yet today, squeezed by a persistent economic recession and burdened by a crushing deficit, the government appears ready to gain new revenues at almost any price. The ubiquitous lotteries have proven themselves a lucrative source of income. The government now wants to skim, and "rake" is perhaps a more appropriate term, its cut from the top of the casino industry's huge profit margin.

To be sure, benefits of all kinds are mentioned as indications of gambling's great benefits to the people. There is the promise of thousands of jobs, an attractive prospect to mention in a time of high unemployment, and the anticipated boon to the economy, that demanding and unforgiving taskmaster of Western societies, is regularly trooped out to convince hard-pressed voters that casinos will usher in an exciting new era of great prosperity.

Yet the end does not justify the means, and no amount of gambling money made available to noble causes will remove the cancerous roots and contagious nature of gambling generally and of casino gambling in particular. Machiavellian inclinations indicate a commitment to cynical political theory. They signal a measure of despair and a mindset bereft of principles. For a government to so conduct the affairs of state, the CCRCC considers to be philosophically indefensible and wholly unacceptable.

We also believe that support for casino gambling is irresponsible economically. It would of course be silly to deny that casinos generate impressive returns on investment. Equally pointless would be to deny their beneficial spinoffs to related industries, and they certainly do create jobs. But big-time crime is also profitable, as is drug trafficking and sex tourism, yet none of Canada's governments condone or support those lucrative industries. Clearly, not all financially advantageous activities are also socially affordable. There is a point at which the real cost of human misery and moral degradation becomes unacceptable. That's the point at which the pursuit of such financial activity makes little sense and becomes, therefore, economically irresponsible.

Such is the case, in our view, with casino gambling. It unquestionably will lead to new or greater misery for many hapless people who either become addicts or who, in a short span of time, manage to squander fortunes and devastate personal relationships through monetary losses they can neither recover nor afford. The subsequent havoc this causes in individual persons, in their families, their place of work and their broader communities is enormous.

One of the great imponderables in the complex issue of gambling is the ultimate damage it does to a people, to a society, to a culture. Not only air, water and land are subject to fatal levels of pollution; minds and spirits are too. Those who dream only of financial gain or who salivate at the prospect of great and easy affluence usually have little time for those who caution restraint, and to those whose fears of dire results compels them to voice objections, the prophets of profit generally pay little or no attention.

Yet history is filled with examples of governments, organizations and individuals implementing sure-fire money-making schemes and programs without giving much thought to the eventual and often predictable fallout. Blinded by visions of dollar-spewing dupes who will buy, buy, buy, they plot and build and spend and legislate, only to have others, usually later, pay dearly for their shortsightedness. The present provincial deficit is a case in point; Drapeau's folly in Montreal, derisively known today as the Big Owe, is another.

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It is our contention that the ultimate price the people of Ontario, indeed of Canada, will have to pay for the blindness of those who now preach salvation through casino gambling will far outweigh its benefits. Gambling produces nothing of value. It neither creates, adds or enriches. Quite the opposite is true: It lures, deceives, intoxicates and ultimately destroys. It is a deadend activity based on the lie, the cruel hoax, that the one big win which may be so close, so close, will remove all anxiety and restore the soul.

The council fears that when a government resorts to economic measures intended by any other name to fleece the people, it undermines its own authority, debases its programs, demeans government and politics itself and shows contempt for the people it is called to govern. Sound economics, in our view, includes a careful and compassionate husbanding of the available human resources. Casinos do the very opposite. For that reason, we feel that the measures called for in Bill 8 are economically irresponsible.

Rev Mr VanEek: We recognize that we've expressed ourselves in uncompromising terms. That's because we believe that people must not live by what our culture calls bread alone but by every word spoken by the Lord of life, and that Lord has granted authority to governments in order for them to rule for the people's good, not to lead them astray. We also hold that, contrary to current beliefs, reducing deficits, maximizing wealth and raising standards of living, so-called, are not the principal responsibility of government. While these may be considerations of some legitimacy in certain circumstances, we believe that justice and justice alone is the basic and proper concern of government.

We feel strongly that it's the irrevocable obligation of governments, then, to rule with justice for all, with prejudice towards none and with charity towards the weak and the powerless. The role of government is essentially a protective one, a caring, a helping one. Governments ought therefore never to encourage or participate in activities that lead to addictive or injurious lifestyles. Instead, governments should promote societal structures and patterns that recognize the worth of individuals, that strengthen families and that enhance community. Since gambling undermines all of those, we consider it immoral for governments to support casinos, reprehensible to depend on their revenues, unconscionable to be involved in them and irresponsible to promote them.

Governments should restrain evil, not encourage it. They should restrict gambling, not participate in it. Governments should have the courage to be the leaders for the people's good, not lead them astray. They should be honest in dealing with people and not deceptive. Finally, our governments should themselves practise good and responsible stewardship, thus setting an example citizens would want to emulate.

All of which is respectfully submitted by the council and the people it represents.

I might, Mr Chairman, with your indulgence, indicate that we've been advocating against gambling for a lot longer time. We appeared in the office of the Honourable Jean Chrétien, then the Minister of Justice, in the hopes of convincing the minister and the federal government against decriminalization of all forms of gambling in the day when only the Irish sweepstakes were the kind of thing people played with, anonymously, as you remember, from the notices of winnings in the paper. At that time the honourable gentleman warned us that we had lost that round but that we should go all out against "cass-inos," and when we figured out what "cass-inos" were, we knew we had to be honourable and truthful to the then Minister of Justice and the party loyally in opposition.

We've also appeared before two successive treasurers of the province of Ontario, one of whom made it very clear that although we needed the discretionary revenue as a province, it would never be put into the budget. You know the subsequent history of where the revenues have gone: They are now solidly within the budget of the province. He also made clear that he would not want his sons to become involved in any lottery activity.

The point being made is very simple to us all. We don't want personally to be involved, and what hurts this character before you this morning is the awareness that most of us can safely stay away from any such temptation as will be exploited the government, if Bill 8 goes through, for a great number of people who are at a dead end.

Repeatedly, furthermore, the committee for contact with the government, whose research and communications associate Mr Klein is, has written a number of letters to the Premier about this particular issue before us today and prior issues dealing with the same broader issue of government dependency on this kind of illicit income.

Mr Monte Kwinter (Wilson Heights): Gentlemen, I'm not going to comment on the moral, ethical or philosophical points you put out because I think they were very well done and you are in a far better position to look after that area of the general society than I am, but I would like to talk about the economic irresponsibility and some of the points that you make.

Some of the proponents of casino gambling have made it a religion and there's almost a Messianic fervour when they talk about it, that it's mainstream and it's going to do all these wonderful things.

But the basic economics, other than the short hit, which is really -- you hit the nail on the head that the basis behind gambling has infected the government and that it is looking at this big hit that is going to solve a lot of its problems, which is exactly what the average gambler is looking to do. He feels that, "If I can just hit that right number or pull that right sequence on the machines, all of my problems are going to be resolved."

But let's take a look at the economics of it, the broad economics, which is an area I pride myself in having some knowledge of.

By the government's own admission, it is saying that it is going to take 20% of the net profit of the casino and that that figure is going to be somewhere between $110 million and $140 million. The exact figure hasn't been determined, but that is their estimate. That is what they expect to earn out of the casino in Windsor.

Mr Klein: Per year.

Mr Kwinter: Per year. Now, by simple mathematics, that means that the net profit is going to be somewhere in the neighbourhood of a half a billion dollars. That is a half a billion dollars that is going to be extracted out of our economy and is going to go somewhere. Some of it, they may argue, is going to get reinvested in all sorts of things, but some of it may disappear. It may disappear because the proponents may be offshore owners. They may be whatever they are. But there is a half a billion dollars that is going to be extracted out of the economy, and the same rationale that the government has used for reducing the deficit because too much of the servicing of that debt is going offshore and we are not getting the benefits is going to pertain to this particular casino.

And that's only one. If you take a look at the articles, and I was referred yesterday to an article in International Gaming and Wagering Business, Windsor is just putting the camel's nose into the tent and what these people are really looking for is Metro Toronto and the area where they can really make the bucks. I've maintained all along that this is not a one-casino proposal. They're already talking at least six, and if you multiply that figure --

The Chair: Mr Kwinter, I just want to let you know that your time has run out, so if you could be very brief.

Mr Kwinter: You can just answer yes or no.

When that is finished, they are talking potentially of extracting $3 billion to $5 billion out of the economy of Ontario, with no value added and no benefit. Do you feel that's a reasonable statement?

Mr Klein: You present it so well, sir, I could hardly disagree with it.

Mr Noel Duignan (Halton North): That comes from a Liberal.

Mr Klein: I think many of the arguments, the so-called economic arguments, that have been presented are self-serving and simply misleading, and I certainly take your point that there is very much to be lost in these enormous profits that indeed will go somewhere and much of it will leave Canada.

Mr Gary Carr (Oakville South): Thank you very much for your presentation. I appreciate that you've given us some of the religious reasons, and you were very clear about that. I wondered, though, in terms of the differences between some of the churches, of course the Catholic church -- and I'm not Catholic -- is not as opposed to gambling. Why the difference in terms of religious differences between the churches? Why does the Catholic church, for example, not see a problem with gambling and of course the bingos and so on? On religious grounds, why the difference between the various churches?

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Mr Klein: Before we get into that, I would like to point out to you that increasingly the Roman Catholic community is taking a closer look at bingos, and this is what you are referring to, and several parish priests have already decided this is not an acceptable activity for the Christian community. So it isn't as if the Roman Catholic community holus bolus is behind bingos.

Rev Mr VanEek: I must also say that it is precisely at that level where a community plays bingo and keeps all the winnings and the proceeds within that same community to sponsor such things as their schools, for example, that it seems to be relatively a gamesy and innocent thing compared to this kind of broadened-out activity, to which no Roman Catholic that I know, at least in the Roman Catholic hierarchy, has given an affirmative. I have not seen anyone coming out in support of the casinos now. So the argument, by extension, that you use, sir, has to be limited. Casinos, no; bingo, probably, if it stays within our family.

Mr Carr: I take it too that you would like to see the lotteries removed as well, and also the people following you are the horse racing people. How do we balance the horse racing and the lotteries? Would you like to see them removed as well, or where are we at with those forms of gambling?

Rev Mr VanEek: My own feeling is that horse racing is not everybody's fancy and therefore the sport appeals to a limited public. But what the government is trying to do with the casinos, if Manitoba and Alberta are an example, at least, is to appeal to the broad masses of the population. The horse racing fanciers perhaps have discretionary income where many of the average citizens do not.

If I may expatiate, in Nova Scotia the mom-and-pop store association, within six weeks of putting in the game tables, went to the government saying, "Hey, people are spending their money that they used to spend with us for groceries; they're now spending it at the game table." One doesn't need a vast imagination to think of what is happening back home in these families.

Another instance: Manitoba, $20-million take on its casino there on Broadway, but it's already setting aside a half a million to help those people who are hooked. I submit to you that for every one who comes in for treatment under that half-a-million-dollar provision, there may be five to 10 people who really don't come in to be treated in any form but whose misery may be commensurate.

Mr Duignan: Thank you for presenting your brief here this morning. We have no questions at this time.

The Chair: Mr VanEek, Mr Klein, thank you very much for presenting before the committee this morning.

Rev Mr VanEek: Thank you for the courtesy, sir.

STANDARDBRED BREEDERS AND OWNERS ASSOCIATION

The Chair: The next presenters this morning are the Standardbred Breeders and Owners Association. Please identify yourselves and proceed.

Mr Jim Gillies: I'm Jim Gillies, president of the Standardbred Breeders and Owners Association of Ontario.

Mr Brian Shannon: I'm Brian Shannon, a director of the Standardbred Breeders and Owners Association.

Since 1969, the Standardbred Breeders and Owners Association has represented the interests of owners and breeders of standardbred horses. In 1992, there were 5,824 owners in 804 multiple-ownership stables licensed by the Ontario Racing Commission. There are also an estimated 1,600 breeders. We are dedicated to improving the breeding and racing of standardbred horses and ensuring that the interests of owners are strongly considered. Last year, over 500 Ontario-bred yearlings were sold in Ontario and the United States and close to 1,000 Ontario-owned horses are racing in Ontario today.

All of our directors are volunteers who are active in Ontario's horse racing community and endeavour to play a leadership role in the betterment of horse racing in Ontario. We maintain a continuing interest in all aspects of racing and constantly represent the owner and breeder viewpoint.

On behalf of the standardbred breeders and owners in Ontario, I want to thank the members of the assembly for providing our industry with an opportunity to comment on the casino initiative of the government and this particular legislation. It was our hope that extensive consultation would have occurred with the people of Ontario regarding casinos and their impact on industries and communities before the point of legislation had been reached.

Today, I will talk about our opposition to this legislation, its negative impact on industry and its implications for municipalities. If I may, I would like to offer some specific comments on the bill and, most importantly, recommend some proactive actions that the members should implement to develop our industry rather than destroy it.

We oppose Bill 8. The SBOA is totally and unequivocally opposed to the implementation of provincial casinos or the further proliferation of native and charity casinos. It is virtually impossible for the government to allow casinos to operate without serious destruction to horse racing and the extensive agricultural activities associated with it. The government has not studied in a meaningful way the potential impact of casino gaming on the horse racing industry in Ontario.

The concerns expressed by the Ontario Agricultural and Horse Racing Coalition are not selfish. They are based on the practical realities of gaming behaviour and experience in other jurisdictions.

The government's cavalier attitude to the 50,000 people employed in this industry is a major issue and the impact of the gaming initiatives planned on the agricultural infrastructure of the province cannot be ignored. Surely it is not unreasonable for us to ask that the government think through the implications of its plans, document its case and consult openly with the communities affected. The people who will be economically devastated by this bill deserve to be told why they are not important to the members of this assembly and to this government.

Our industry, in its entirety, is not afraid of competition or risk. We compete every day and we take more risks in six months than most people in this room take in a lifetime. We must, however, be treated with some sense of equity. We are regulated in our activities to ensure that we treat each other fairly and, most importantly, to ensure that the public is treated fairly.

The government's proposed gaming policy is not fair to this industry. Firstly, they've allowed the Ontario Lottery Corp to expand without any sense of control or public accountability. It is virtually impossible for us to spend the tens of millions of dollars they do on marketing programs; the government has already taken the money from us.

Secondly, stop the uncontrolled approval of "charity" casinos; the "charity" is in quotes. Surely, someone can analyse this area of activity and make some judgements about the appropriate number of charity casinos required and their impact. It might be helpful for this committee to receive a report on where all the revenue from this industry is going or has gone.

Lastly is taxation. The present fiscal policy of the government, combined with the above two influences, has taken any opportunity for growth out of our industry. We must be treated fairly. Even the government of Canada did not apply the GST to our handle. No GST and no PST: I will return to this point later in my remarks.

We know we must change, that major adjustments to our industry and indeed the size of it must take place, but let those changes be as a result of natural economic forces rather than inequitable taxation and the government's casino policy.

Industry impact: Mr Chairman, I have found it a bit amusing to hear and read about the studies on this issue. If I had access to Dr Hosios's study and the Coopers and Lybrand report, I would have commented on them for you in some detail. I did get a copy of the executive summary of that last Friday. For some reason, they're a bit hard to get.

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When discussing the impact of this bill on Ontario, I feel we must look at the experience of others and the studies that have been done. I am not in a position to comment on Dr Hosios's figure of 18,000 employed in racing, but I have noted that it is about 3,300 less than the number of persons licensed by the commission last year and ignores the estimated 6,500 people employed by owners. Why these people are not important to the study and the government's deliberations, I don't know. I will offer that the figure is closer to 30,000 and, just as importantly, there are up to 50,000 people altogether who derive some direct income from this industry. That is critical.

Coopers and Lybrand suggests that casinos will only reduce our industry by 5% to 10%. Factual experience in other jurisdictions dictates that that figure is laughable and, in my view, insulting and misleading to the members here. The assumptions made and conclusions they draw cannot be substantiated. They are projecting. The factual experience is that it's 30% to 35%. If you assume, as the Coopers and Lybrand report wants you to, that mismanagement caused 10% of this then that leaves you with a 20% reduction in our industry because of the casinos or halfway between Dr Hosios's estimate and actual experience. How many industries anywhere can survive a 20% reduction in gross revenue? How many politicians would survive a 20% reduction in popular support? I suspect we'll find out.

A loss of this nature represents at least 6,000 jobs or $110 million in personal incomes, $70 million in agricultural purchases, $24 million in taxation revenue -- in short, economic destruction.

My question to you, simply put, is, why would you purposely cause this devastation, especially in this macroeconomic environment? What have you got against the horse racing industry and the agricultural communities that support it?

Mr Chairman, last fall, Eugene Christiansen, a renowned gaming consultant, conducted a study for the Ministry of Agriculture and Food on the impact of casinos on our industry. He stated, and I repeat, "Let there be no mistake: Casinos would have a substantial adverse impact on Ontario racetracks and therefore on Ontario breeding and therefore on racing and breeding industry jobs and tax revenue." He documented his case and he urged the government to be very careful.

He also referred to the fiscal realities of the taxation of gambling activities. The first point he made was that only monopolies can sustain very high tax rates. There has not been a monopoly on gaming in Ontario for 20 years.

The second comment he made is that you cannot maximize the economic contribution of gaming and at the same time increase direct tax revenue from it; you pick one or the other. Taxing racing the way you have is killing the industry. The introduction of casinos must be accompanied by adjustments to your fiscal approach to our industry.

Apparently, Coopers and Lybrand was silent on the issue of taxation. They recommend that we broaden our market base, expand teletheatre wagering, broadcast into other jurisdictions and work jointly with casinos.

We have done some of these things and last year told the casino project team that we wanted a symbiotic relationship with casinos. However, to date, we've been ignored.

If you want to mitigate the impact of casinos on horse racing, address the inequity of the present taxation.

Implications for municipalities: I cannot think of one racetrack in Ontario that has had a negative social or economic impact on the municipality in which it resides. To the contrary, harness racing specifically is and has been a part of the social fabric of rural Ontario for decades.

The minister has stated that municipalities will not get any revenue from casinos; they will get short-term assistance for the increased policing required. What a comment: "The good news is that we're going to give you a casino. The bad news is that you need a bigger police force." Prostitution, crime: Those are the municipal impacts.

Let me quote Donald Trump: "It brings a lot of things that maybe areas didn't have before...There's a big cost to pay...Most jurisdictions have considered gaming and most jurisdictions, even though right now it seems to be the craze...have rejected it. And the ones that have accepted it, many of them, if you gave them their choice again, they would have turned it down."

Why is it that communities with casinos have high poverty rates, low wage rates and no economic growth? Why do we want our communities to undergo this transformation?

Historically, a southern Ontario town has a feed mill, two or three churches, a public school, a fair grounds with a racetrack, a clean retail district and a municipal building close to a park. The town of the future will have a bingo hall, a casino, variety stores with lottery terminals and tickets, television for Sports Line betting and a larger police station in the low-rent poverty district. Not my sense of community.

What will happen to all the farm land that we will not need, marginal farm land that has been put to good use by our industry? These are the social and economic implications that should be considered prior to racing off in this simple-minded revenue search. Will the provincial government make up the $70 million in reduced municipal revenue from race track taxes? The benefits to municipalities are far from clear.

The legislation: I would like to address two areas of concern in this legislation. The first is political accountability and the second is control.

The province's experience with the Ontario Lottery Corp has taught us that mechanisms are necessary to ensure that agencies, boards and commissions are accountable to the members of the assembly. In the late 1970s the government was forced to restrict that corporation's expansion program by ministerial intervention because the legislation was too permissive.

How many casinos and their location is a decision that the assembly should be involved in, not a group of individuals who may or may not respect community and political concerns. How will this organization relate to the activities and marketing initiatives of the lottery corporation? Will the minister and the civil service referee those conflicts or will there be a plan presented to Parliament in the budget papers to ensure that members can see exactly what is proposed?

What mechanism or processes will be put in place to ensure that these casinos are profitable? Have you looked at the profitability of the casinos south of here? It will be interesting to see if government can do a better job. How will the members of the assembly know, and when, if operations are not as efficient as expected or projected?

Concerns have been expressed about organized crime and its potential interest or involvement. What does the government know that no one else does about preventing this from occurring? I think this is an issue that the members of this committee should feel comfortable with prior to going much further. Don't be cavalier about control.

The Ontario Racing Commission is one of if not the most effective regulatory bodies in racing anywhere, but it too must be vigilant in monitoring our industry. I hope a regulatory mechanism is in place that ensures there is political accountability and effective ministerial control.

Proactive development versus destruction: The issues facing the government and this committee at this time are (1) what impact will casinos have on the size of the gaming market and existing gaming activities, and (2) what will you do to protect horse racing and indeed provide for its development?

An analysis of the data available to the government and a survey of all previous studies and experiences confirm beyond any doubt that it is not possible to open casinos in Ontario without a severely negative impact on horse racing, and it is not possible to initiate any off-track wagering schemes that could replace the substantial amounts of wagering revenue that will be lost. We propose a series of actions that can be taken to develop our industry rather than destroy it.

Taxation: The provincial taxation of horse racing is self-defeating and unfair. The only gaming revenue taxed is horse racing. You don't tax General Motors or Ford products differently than you tax Chrysler products so why tax horse racing more severely than other gaming activities? The government of Canada does not apply the general sales tax to our handle because it realized the devastation it would cause. The OAHRC has given you documentation as to the taxing of racing in other jurisdictions; read that document and follow Eugene Christiansen's advice. No other action could turn around the economic state of our industry more quickly. Dr Brown pointed out that Ontario taxes us 10 times as much as New Jersey, where tracks and casinos coexist. By the way, Ontario's taxation is higher than anywhere else in North America. Don't reduce the tax on our industry; eliminate it.

Casinos and race tracks: The Standardbred Breeders and Owners Association proposed to the casino project team last June that rather than destroy our industry, we would work together in a symbiotic relationship. Specifically, we said, "If you're dumb enough to go ahead with casinos, put them on race tracks." We must work together or a revenue-sharing arrangement must be found to protect our industry. This will provide a mechanism for profits to maintain and indeed enhance our industry.

Ontario sires stakes: The 1992 annual report of the Ontario Racing Commission states that roughly $5.8 million is provided for our sires stakes program: $4.9 million for purses, $500,000 for breeder awards and $390,000 for publicity and promotion. The $390,000 pairs with the tens of millions of dollars spent on advertising by the lottery corporation. The $5.8 million represents 1% of standardbred wagering.

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The Coopers and Lybrand report claims that the province will get $866 million from casinos. I propose that the government reinvest a mere one half of 1% of that in the sires stakes programs. Purses would become $8 million, breeders' awards $775,000 and publicity and promotion $1.25 million. At this point, we might be able to begin to compete as effectively as Coopers and Lybrand recommend.

Capital improvements: They also recommend we extend out to new audiences via teletheatres. We're trying to do this. Capital funding provided by our government programs could make this happen throughout our industry. Various ministries have funding programs for capital improvements, feasibility studies and marketing programs. The horse racing tracks could benefit from such a program. Enclosing grandstands, upgrading kitchen and banquet facilities, computers, large screens, simulcasting equipment and fundamental track improvements could be funded. Feasibility studies for all of these projects should be in place and funded through the government grants, as is the case in the cultural and recreational sectors.

In conclusion, we remain opposed to this legislation simply because of its devastating impact on our industry and the agricultural sector. Casinos cannot be implemented without a severe contraction of our industry. To suggest that it will only be reduced by 5% to 10% is simply misleading. The municipal benefits are minor compared to the social and judicial costs. We request that you take a proactive, developmental approach to our industry and not a destructive one. Thank you.

The Chair: Thank you very much. We have about four minutes per caucus. We'll start with Mr Carr.

Mr Carr: Thank you very much. I appreciate the information. You obviously weren't interviewed for the Coopers and Lybrand study then, your association.

Mr Shannon: The Standardbred Breeders and Owners Association was asked if it wanted to meet with Mr Rutsey, who developed that. We referred that request to the Ontario Agriculture and Horse Racing Coalition, and the coalition met with Mr Rutsey, and I was at that meeting.

Mr Carr: The Coopers and Lybrand study says that it will only reduce the industry by 5% to 10%. You go on to say it's misleading. Why would a firm that's very reputable be doing this, in your mind? Why are they so wrong and misleading as to what will happen to your industry?

Mr Shannon: I think I could answer better if I saw the penultimate draft or maybe the third-to-last draft. I don't know; they didn't definitively say that it would be 5% to 10%. My point very simply is, if you look at the facts, if you look at actual experience, the 5% to 10%, in my view, is misleading. I would hate to have to document it. I could document for you very easily 39%, 37%, 33% in New Jersey; I can document Minnesota and Connecticut; I can document Manitoba. Why they said to you 5% to 10%, I don't know, and I'd like to have seen the penultimate draft.

Mr Carr: What will the total job losses be, in your estimation, when they get the casinos up and running that are listed in here right across the province?

Mr Shannon: My view is that at a minimum, you're looking at a 20% contraction of our industry, at a minimum.

Mr Carr: And that would be how many jobs?

Mr Shannon: That's got to be, at a minimum, I would think, close to 10,000 incomes and I think the incomes are important. A lot of people derive income from this industry who aren't necessarily employed in it. Some of us don't have employment but derive income from this industry. But at a minimum, I would say you're looking at 9,000 jobs.

Mr Carr: Now, what the government has said, if you followed some of the other presentations, is basically that your industry's dying anyways. Do you think that's the case? I know there have been problems with the lotteries and so on. It's been almost like they've added another nail to the coffin. Do you think these casinos are going to be the final nail?

Mr Shannon: Well, it certainly will be if they implement it. I'm passing judgement on the effectiveness of it, but if it is effective, sure, it will kill the industry. But let me make a point here.

There are a lot of industries in trouble in the world. Our industry's in trouble, okay? The development in this industry is in trouble. At the same time, we're world leaders. The best drivers in the world come from southern Ontario. The best trainers in the world are from southern Ontario. They go to the States, all right? If you look at a list of the top 10 drivers in the United States, six of them, at a minimum, are Canadians, five of them would be from southern Ontario and one of them from Quebec. We're the best, at this business, in the world.

There has been an absence in growth in our industry for a number of reasons. In southern Ontario particularly I'll argue it's lotteries. I was directly involved in lotteries about 15 years ago. They have taken a lot of the growth out of our industry. This industry is not famous for its marketing initiatives. There's no question of that. Those adjustments, natural economic adjustments are going to take place in our industry. Let them be natural economic forces like everyone else's industry, not government policy. I mean, your regulator is trying to destroy you. I simply say, why?

Mr Kimble Sutherland (Oxford): I guess listening to the presenters from the different aspects of the horse racing industry over the last few days, I'm a little puzzled about some of the scenarios presented. I have a hard time fathoming that the people who go to the track in Woodstock, in my riding, or to Western Fair raceway a few times a week are, every week, going to get in their cars, drive two and a half hours, two and a quarter hours to Windsor to go to a casino and then they are going to drive two and a half hours back afterwards rather than going to the track, particularly when in Woodstock, I think they race Tuesday and Saturday nights. Tuesday night's been the most popular night, when people have got to get up and go to work the next day. I think in Western Fair they race Monday, Wednesday, Friday, that type of thing. I mean, to me it just doesn't seem that people are going to make that kind of trip on a weekly basis.

So if people aren't going to do that, it seems to me some of the arguments being made about what the impact is going to be on the racing industry would seem a little overstated. So I guess what I'd like to know is, where do you draw on the basis that all these people are going to the track, say, in Woodstock and London are going to make this two-and-a-half-hour trek to Windsor every week and not go to the racetrack?

Mr Shannon: You have to look at the breakdown of who bets on racetracks and how much. I think Mr Rutsey did some research on that kind of thing, some focus groups or whatever, "Just what is the draw of going to Windsor to bet on this kind of thing?"

If a thousand people bet at the racetrack, a lot bet $2, a lot bet $10, there's a lot who bet $1,000, one bet. So if you take the cream off our industry, if you take the people who participate in our industry most effectively, you'll kill it.

Let me make another point. About 70% of our industry is at the Ontario Jockey Club, okay? That's at Mohawk and Toronto. That is probably the most effective racing organization in the world. Those people, the people who really bet a lot there, are the people who probably will go to casinos. If you want to do two things to kill an industry, one is you hurt the Ontario Jockey Club's handle, and this will do it. The other one is that you destroy the sire stakes program because that just destroys all the racing in all the tracks throughout the province. It's a really effective program.

But if you take the high rollers out of our industry and send them down the highway to casino -- and they'll go. They're opportunity-oriented; they're always looking for the best opportunity. They'll go down there. You're taking all the turnover right out of it. Yes, there'll still be people like myself betting $2 and $10 and that kind of thing. But rather than going like this, it's going to go like this. That's where you just kill it.

So maybe you're right. Maybe the thing isn't viable in Windsor and you should look at it. I don't know, but my sense is you'll destroy our industry.

Mr Gillies: If I could just touch on this, there are documented facts that when the sports lottery was introduced, it immediately affected the handle on the Ontario Jockey Club.

Mr Shannon: Seven per cent in one week.

Mr Gillies: Seven per cent in one week.

Mr Shannon: Greenwood Racetrack, last December. In fact, you can go to the commission. They'll give you the figures.

Mr Sutherland: That hasn't been ongoing.

Mrs Irene Mathyssen (Middlesex): Okay, just a quick question: I need some clarification too, because yesterday Mr Ted Smith from the Canadian Standardbred Horse Society was here. He told us that New Jersey had just sponsored a quite prestigious event and that $5 million was bet at this single event. I've checked since and have been told that New Jersey is catering to customers in such a way that it's making a rebound. You've said the opposite. I just wondered which is true, and if New Jersey is making a comeback, how has it effected this comeback? What have they specifically done to improve the industry there?

My second question is about the drivers. I know that Ontario produces incredibly skilful drivers. Knowing that, how can you capitalize on that in order to help the industry here?

Mr Shannon: Firstly, if you manage a racetrack in New Jersey, your cash flow, your working capital, is substantially different than it is in Ontario. I mean, 0.5% taken off, as opposed to 7%, is a lot.

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Mrs Mathyssen: But you said they were failing there; they were desperate, they were having problems.

Mr Shannon: What I said was the documented evidence is that their handle went down by 30% because casinos came in.

Mrs Mathyssen: But that contradicts what we heard, that New Jersey is making a comeback.

Mr Shannon: No, it doesn't contradict it. They may still be operating, but what would they have been operating like and how big would the racing program be and how effective would the industry be if the casinos weren't there? It might be quite good. The number of horses racing in New Jersey is really down.

If you look at 1993, Armbro Keepsake was born and raised about 40 miles from here. It's one of the best trotting horses in the world. Dr Brown came to see you; he bred that horse. That horse couldn't find a place to race in the United States of America. You know why? There's no opportunity for it, so he put it over in Europe. Yes, there's a racing program there; it's doing a little better than it was, but it's not doing anywhere near as well as it could be because of casinos. There's contraction there too, and they have cash flow to reinvest in their track; we don't.

Mrs Mathyssen: But the reality is that there is not a monopoly in the United States and they have to manage and make their business work in that business environment.

Mr Shannon: And they're doing a little better maybe than they were before, but they're not doing as well as they could be if there weren't casinos.

Mrs Mathyssen: Okay. So if they're doing better, what are they doing?

Mr Shannon: As I said to you, their cash flow -- they don't get 7% taken off the top; they get 0.5% taken off the top.

Mr Carman McClelland (Brampton North): In that light, sir, I guess I have this question that I have to ask, and I put it to you very bluntly and plainly and wonder if you could perhaps use it, I suppose -- let's be candid -- to maybe re-emphasize your case: In the event of a 20% turndown concurrent with the possibility -- and I hope it's forthcoming, but I would suggest that, given the response to date, it may be remote at this time -- of a reduction or an elimination of taxing on your revenues, to what degree do you think you can sustain the industry and for how long? You indicate that the industry would be in serious peril with the advent of casino gambling, that a mitigation of the impact falling from that would be the reduction or elimination of the tax. Is that merely buying time or, in that context, can you survive?

Mr Shannon: I don't think there's any question that we can survive.

Mr McClelland: With what impact, I might add?

Mr Shannon: I think if you implement this casino idea to the extent that it's envisioned, you literally will destroy the industry, okay? You're going to see 20% in probably the first year and then it'll just wind it down.

If you can do something meaningful on the fiscal side and maintain and enhance the sires stake program, then there's no question in my mind that this industry will weather very effectively the macroeconomic storm that we're in and we will survive and be strong. You still will see thousands of racetracks in rural Ontario where right now, this morning, there are hundreds of people jogging horses, and you're still going to see that.

Will we grow? I think we're going to have trouble in the Metropolitan Toronto market area just because of the nature of this market. Ten years ago there was no Dome and no Blue Jays -- well, there was 10 years ago. But if you think about it, 81 nights a year there are 50,000 at that facility; 40 nights a year there are 16,000 people in Maple Leaf Gardens. We're in an intensely competitive situation and we've got to be more effective at it. I believe we can be more effective. Whether we're going to grow at 12% a year, we'll survive the macroeconomic storm. I think you're going to see some meaningful growth in our industry. There still will be some adjustments. I don't think Orangeville will or should reopen. There are small tracks like it that just maybe won't make it.

Lotteries have changed our buying behaviour in terms of gaming. Young kids, people, just instantly go to that. They don't come to our industry like they used to and it's going to be very difficult for us to change that. Will we survive? Yes, we'll survive.

Mr McClelland: Given that fallback position -- and I think Mr Carr alluded to it -- I wonder if you could reiterate the numbers. Let's be optimistic and presume an adjustment in the tax structure that allows you to survive and continue. What would be the net job loss, in your estimation, in light of that scenario?

Mr Shannon: If we don't?

Mr McClelland: Given a tax adjustment that allows you to maintain viability, albeit at a reduced level, could you reiterate the numbers that you would see?

Mr Shannon: It's a hard question, but assuming casinos and assuming you take away the tax, then I think you'd see growth rates or reduction in growth rates consistent with the GNP. I think we probably then would be tied into the general macroeconomic activity in the province.

Mr McClelland: So that would pretty much, to use an overworked cliché, level out the field?

Mr Shannon: I think it would, yes. I was hoping you would ask that economic question.

The Chair: Thank you, Mr Shannon and Mr Gillies, for presenting before the committee today.

DR MICHAEL COLTERJOHN AND ASSOCIATES EQUINE VETERINARY CLINIC

The Chair: The next presenter is Dr Michael Colterjohn and Associates Equine Veterinary Clinic. Dr Colterjohn, you have 30 minutes within which to make your presentation and field some questions. Whenever you're comfortable, you may proceed.

Dr Michael Colterjohn: As a veterinarian I am voicing my opposition to the introduction of casinos in Ontario. Casinos would have a dramatic and devastating effect on the racehorse industry in Ontario, just as we have witnessed in all other jurisdictions where racing has gone into competition with land-based casinos or riverboats. I'm not here to defend or argue this eventuality. The concerns I will voice are those of the support industry, those widely varied occupations that depend for their living, in part or entirely, on the services they provide to the racing industry.

Racing revolves around two distinct principals, one being the owner and the other the racetrack and its wagering patrons, while everyone else can be recognized as the support structure to either principal or both. Both principals represent the only source of funds for the maintenance of the industry, an industry which is incredibly labour-intensive and which feeds off itself with ultimately the dollar spilling beyond the peripheral service groups, where the moneys eventually purchase manufactured or produced goods.

An owner is principally involved for the pleasure of the sport, a sport well named as the sport of kings, as very few owners will ever make a profit on their investment. Each owner knows how much they can commit to what is their pleasurable pastime and will only spend to that limit, with whatever revenues that are achieved through their racing endeavours being reinvested back into the industry. In my time of involvement with this industry, I cannot recall a situation where an owner has departed the industry and taken out more than he has put into it.

This owner brings into the industry an initial lump sum investment, much like an initiation at a country club, and then annually continues to pay their pre-determined dues, which in reality represents the amount they are willing to continue to pay for their involvement in racing. Any purses achieved through winnings generally go back into the industry to increase the horse owner's involvement.

With this scenario, the total amount of moneys being used in the industry becomes a function of the amount of purses that are available to be awarded. One can recognize that the degree to which an owner becomes involved will depend on the amount that is available to supplement his annual dues.

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An example that illustrates this point is that when you look at the types of horse farms around any racing jurisdiction, you will quickly recognize that with a good purse structure you will find many attractive and well-maintained facilities such as in southern Ontario. These facilities contrast dramatically with the farms to be seen in the Winnipeg area or southeastern Quebec. Also, you will see many more nicer facilities associated with a stronger purse structure due to a greater number of people who become involved within these jurisdictions.

The other principal within racing is the racetrack and its wagering patrons. This is the most important variable, as the health of this group will determine the size and strength of the owner pool competing within its jurisdiction. The racetrack exists solely as the venue for wagering on horse races for essentially recreational purposes. The size and success of any racetrack will reflect the wagering capacity of its patrons. The daily mutuel pool or handle for any track is the source of funds for the purse structure, track operations and the government's share of the take. Any changes that detrimentally affect a track's daily handle will decrease the amount of money available for these three areas.

The amount of purses available to the horseman is entirely related to how successfully the track management and marketing people operate, how much the government decides to take and, most importantly, how much the daily patron will wager. A track with a good purse structure will also see a viable horse industry develop within its jurisdiction, as owners will become more committed to invest and more owners will become involved. From this, we see a strong breeding industry develop within the area and more decentralization of the breeding industry from the strongholds, like Lexington, as a new regional market develops.

Here in Ontario we have a good and solid purse structure which has allowed the industry to develop to the point that we have good racing facilities. We have a large standardbred and thoroughbred regional breeding program. We have provided an estimated 55,000 jobs within the industry. We also have the visual proof of the success of the horse industry throughout this racing jurisdiction, as our rural area is covered with many showplace horse farms that are immaculately maintained. This reflects on satisfied owners who enjoy the sport of kings, and are happy to finance their involvement, and also a base of racing fans who are capable of supporting the racetrack and its purse structure.

What jobs are created by the racing industry? Firstly, the racetrack itself. Other than management personnel, it directly employs a wide range of people including maintenance staff, parking attendants, starting gate crews, licensing personnel, mutuel clerks, concession operators, waitresses and waiters, busboys, cooks, judges and stewards, race office personnel, jockey agents, jockeys and valets, outriders and the riders and horses that accompany the horses to the starting gate.

The number of people employed in any of these areas is directly related to how successfully the track is being operated and the daily handle. This implies that any action that directly affects the daily handle will naturally decrease the amount of employment at the track in many of these areas.

Secondly, what jobs exist due to racing from a horseman's point of view? Each trainer represents his own small business and employs, beyond secretaries and accountants, the staff he requires for daily operations, which includes an assistant, grooms, hot walkers, exercise riders and occasionally a night watchman.

Once again, the number of people employed by any trainer will be a reflection of the daily handle and purse distribution. In the poorer racing jurisdictions, the trainer will quickly decrease services in an attempt to make ends meet; namely, a groom will attend to more horses, he may not have an assistant, or exercise riders may also substitute with other positions.

A trainer at the track will also utilize the services of many other people; namely, veterinarians, blacksmiths, staking agents, horse transport companies, feed agents, tack repair, blanket repair, barn supply outlets and equipment sales.

Once again, the degree to which any of the above groups will provide its services will be directly related to the general health of the industry.

The third level of jobs created by the industry is the farm level. This is the area with the largest variation and includes the small turnout operation and the huge breeding farms, but they are all very labour-intensive. Many owners will have their own farms. Usually these are the showplace operations, where their interest in the industry has caused them to develop a facility where they can enjoy a more intimate involvement, whether it also becomes their home or maybe a weekend retreat. The number of these properties is entirely related to the quality of racing in the area. Once again, I refer to the comparison of the properties in the Toronto area to Winnipeg.

All these farms have a common bond in that, again, they are all operated as small businesses, with their secretaries and accountants, and also their grooms, riders, managers and maintenance staff. But they are also private facilities that have been built and paid for by a principal in this industry, the owner. All this privately motivated construction that is continually ongoing has provided countless jobs for construction workers, backhoe operators, electricians, plumbers, roofers, painters and fencing contractors, many of whom may never have touched a horse.

All these facilities also employ directly many other people on a contract or service basis. This list includes veterinarians, blacksmiths, nutritionalists, gardeners, road graders for their driveways and tracks, fertilizer outlets for their paddocks, asphalt companies and driveway sealers. There are also ground and paddock maintenance, fence repairs, building and roofing repairs, which are also contracted out.

These facilities all routinely purchase farm equipment like tractors, snowblowers, paddock mowers etc. They also have pickup trucks and horse trailers, and all of these need to be maintained by an outside mechanic.

Most of the horse industry does not grow any of its feedstuffs. All of this is produced by the local farmer or sold through a local mill. This is also extremely labour-intensive, as it also employs, beyond the farmer, the truckers, the nutritionalists, the feed salesmen and the mill workers.

Then there are the byproducts from the racing industry: the manure that goes for mushrooms or garden soil, which again employs a trucking agent, or the retired racehorse that has marginal remaining value and so is now affordable for the pleasure-riding industry, again continuing to maintain employment.

The other side of the farm level is the breeding industry, which in Ontario can be considered a regional market, as it has developed in response to our racing industry. Once again, we need a healthy, viable market for this division to exist, as its level will entirely reflect what is happening to the two principals; namely, if the daily handle decreases and the owners reduce their involvement, then they will buy fewer young horses and will pay less for them, which will cause the breeding industry to cut back. We will have fewer locally bred horses and a larger proportion of the breeding will come from the United States.

The reason for this is that younger horses have more projected value than older, proven horses. As owners start to cut expenses, they do not breed horses but will start to claim horses that have already proven themselves and are worth less. Since our regional breeding industry would produce fewer in this scenario, a large proportion of the horses will be American-bred. In effect, we will see the loss of a large number of jobs to the US and convert more of our buying of horses from our own domestic market to the US market.

The breeding industry in Ontario is very labour-intensive and employs a wide variety of occupations, from veterinarians to grooms. It also has cause for development of the many farms and gives rise to a tremendous investment in breeding stock, which is basically successful racing stock that has retired. A downturn in the breeding industry would reflect as a decrease in demand for the racing stock being forced to retire due to injuries, once again decreasing the movement of the moneys between owners who keep the system moving.

For example, the owner of a successful racehorse may see a large amount of money for him if he retires to stud, money that the owner would turn back into more racehorses, which would require the purchase of more market yearlings and maintain the demand for production in the breeding business. Thus the use of the newly retired stallion. This would contribute over and beyond what the horse had already contributed through purse earnings.

If casinos are introduced into Ontario, the purse structure will weaken dramatically, as it has in any other part of North America when this competition has occurred. For example, just limiting this scenario to the thoroughbreds at the Ontario Jockey Club, if the purse decrease due to declining handle resulted in one less horse per race, how far does this affect the people involved? The jockeys will see approximately $75,000 less money, with 223 fewer horses starting. But this also means 56 fewer grooms required, 27 fewer exercise riders and 37 fewer hot walkers, not to say how many less trainers will exist.

But the biggest effect is on the peripheral areas in the industry. To produce regionally this number of horses requires 333 mares to be bred, mostly by the small breeder. This means that approximately 60 small private farms will cease to have a purpose. How much construction will not occur? Fencing, driveways and paddocks will not be maintained. How many fewer pickup trucks and tractors will be sold? These are the showplace farms that dot the landscape of rural Ontario and add a quality of life that cannot be replaced.

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But the largest effect is even more peripheral to the racetracks and is at the farming level. The feedstuffs utilized by just this decrease in horse numbers in this scenario are quite incredible. They will require 1,460 tonnes less concentrate, 7,000 tonnes less hay and 5,000 tonnes less bedding. How many farmers, feed sales agents and truckers are not going to have a market for their products or are going to find themselves unemployed? This example only represents a minor effect on a small segment of the industry and doesn't take into consideration stallion fees, loss on investment in breeding stock, trucking, farriers or many other support personnel in the industry.

How do I expect casinos to affect me as a veterinarian? With casinos, we could expect an immediate drop in the racetrack handle and a reduction in purses. The owner at this time will probably try to hang on with his investment because to sell requires taking a loss, as horse values will decrease as demand goes down. The peripheral services will continue for a while until finally the owner recognizes that their involvement is costing far more than they can afford. At this time, almost every owner will adjust their involvement; some will just cut back in numbers, but many will be forced out of the industry due to the load of outstanding debt, and others will fail completely and declare bankruptcy. At this time, as a veterinarian I will see a cutback in required services as costs are evaluated, loss of clients who cease to be involved and a large increase in uncollectible accounts.

Being a veterinarian in this industry could well be considered a specialty due to the years of experience required beyond formal schooling, but it is also very competitive. My colleagues and I are going to find ourselves in a more competitive situation, and many of us are going to be overwhelmed by our expenses and uncollectible debt and will fail. Unfortunately, due to our defined specialty we are hardly prepared to enter other equally competitive areas of this profession.

If I was to fail in this scenario, I would take with me other jobs. I employ two other full-time vets and a secretary, but peripheral services will also be affected. We spent over $125,000 last year on drugs and supplies, lab services expect to pick up from us on a daily basis, we have three vehicles on the road for business purposes and have spent approximately $22,000 so far this year on fuel and vehicle maintenance. We refer approximately $100,000 worth of surgery a year to other veterinarians or institutions. We have students with us during the summer months and find most of our equipment has a lifespan of only a few years before requiring replacement. Equipment like ultrasounds which sell for $15,000 to $50,000 or X-ray machines are a necessity in our specialty.

In closing, I would like to note that in Ontario racing has seen lotteries and Pro Select enter the competition for the wagering dollar. We have survived but also recognized a decrease in the daily handle, like every other racing jurisdiction. If this government brings in casinos, that wagering dollar cannot support all the available gambling venues, and racing will pay the biggest price. Can you allow the loss of so many established jobs by introducing casinos? Many of these jobs are strictly manual labour, but many of them require many years of university education. How many failed small businesses will result and bankruptcies occur? How many farmers will see the market for their product cease to exist? How many people are going to be forced on welfare and how many veterinarians are going to find they cannot stay in business?

I ask you, can we afford to devastate a totally self-sustaining industry that provides so much widespread employment and adds so much to the quality of life in our rural areas by introducing casinos into Ontario?

The Chair: Thank you very much. We have less than four minutes per caucus.

Mr Sutherland: Thank you very much for your presentation. I don't believe we've had any veterinarians in yet to the committee. We might have had one last week, but I think you're the first to come here, and we appreciate you providing your perspective on the situation as a different perspective.

I know you're not directly involved in terms of the type of work you do and the marketing of it, but we certainly heard from presenters talking about some of the issues affecting the industry already, in terms of increased competition outside of casinos but also the fact that the demographics are changing, that they haven't attracted as many new people into supporting the industry in terms of coming out to the tracks. Do you have any observations on what strategies may be done to improve the industry?

Dr Colterjohn: Personally, as almost a casual observer who's not so casual, in that you overhear and become involved in so many discussions on the shed row just because you're involved, it seems so often the lack of funds to be able to reinvest in advertising, to be able to upgrade the facility, to be able to make the advancements that they can do to become competitive, as Brian Shannon says, with the guy who's heading off to the Blue Jays game.

Unfortunately, the amount of money that is taken out of the purse or handle in Ontario by the government, in comparison to a place like New Jersey, doesn't allow them the same type of money to invest back in the industry to make the upgrades, to update the track, to implement the computer equipment that allows the 1990s people, the gadget-crazy people, to be able to bet easily, enjoy the game at their level and meet them on the same terms as anywhere else.

Mr Kwinter: Thank you, Dr Colterjohn. I really enjoyed following your presentation. You obviously put a lot of work into it in analysing the implications of this particular initiative.

One of the things that's been disturbing me since I've been involved in these hearings for the last couple of weeks is that independent or maybe even people with vested interests have come forward and have stated things such as that organized crime is going to be a factor. Every single representative, whether they are, as you say, a casual but not-so-casual observer, to those who are intimately involved in the racing industry has come forward and said that there is no question that the introduction of casinos is going to have a devastating effect on the racing industry.

Notwithstanding that, the Minister of Consumer and Commercial Relations said even though organized crime is everywhere else, it's not going to be in Ontario, because we can handle it, and there seems to be another feeling among the government members, and particularly we heard about the Windsor Raceway, that it's not a problem, that your concerns may be overexaggerated, that the effect of casinos on racing is going to be minimal. We just heard from one of the members saying, "My constituents are not going to drive two and a half hours to go to a casino when they can race," these kinds of things.

Why is it that we seem to be getting this feeling from the industry that without question there is going to be a severe impact on the racing industry, yet there are others, Coopers and Lybrand and others, who are saying, "Well, we don't think it's going to be that great"? Do you have any comments on that?

Dr Colterjohn: I guess history tends to repeat itself, and I think in Mr Sutherland's question that he asked Mr Shannon in regard to, are people going to drive two and a half hours from London to Windsor to partake in casinos, if you ask that same question to the racetrack at Canterbury Downs prior to the opening of the Indian gaming, they would have said there was no way they were going to drive three hours. All of a sudden they noticed the buses being diverted away from their track and they saw an immediate 35% drop in their daily handle, and that's with a casino three hours away.

But beyond that, rather than just repeating history, we all know there's so much competition for the recreational dollar at this point in time. I'm sure the racetrack would love to be able to make the upgrades necessary to be able to compete, as I've said to the prior question, with the Blue Jays, but at the same time it's not just the recreational dollar; it's the wagering dollar, whether it be bingo, whether it be lotteries, Pro Select, whatever. There are only so many dollars to spread around, and we all know there are only so many dollars out there. To bring in somebody to compete with us, obviously it's going to see a decrease. We know the average person does not walk out of a casino as a winner, and he's not going to take those non-winnings and head over to the racetrack to improve on them. The competition and history.

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Mr Carr: It was very helpful to get a good perspective of the spinoff jobs. I think you did a very good job, some of which I knew and some of which I didn't, but you laid it out very clearly. Some of the other horse racing people who have been in have talked about the direct jobs; I think you did an excellent job outlining some of the spinoff jobs for everyone to hear.

I think the government is probably going to still proceed. I've given up predicting what this government will do. I sat on the Sunday shopping committee when they said they weren't going to have it, and a year later we did. I watched while the market value assessment committee sat on the weekend and the minister said, "We're not going to change anything." By Tuesday the bill was thrown out. So I've given up predicting this government, but I think it will probably proceed, from what we understand in here.

So what I would like to do is see if we can help the industry along the way. As you know, other industries, whether it's de Havilland or Algoma, when they were in trouble, got a tremendous amount of money in terms of bailout: $250 million to de Havilland, and Mr Martin will tell me how much Algoma is, but it was millions and millions of dollars.

Mr Tony Martin (Sault Ste Marie): It's all loan guarantees, though.

Mr Carr: With de Havilland it isn't; it was a direct investment, total amount to be spent there. They are bailing out other industries. Your industry, they have decided not to.

But I'd like to talk about the tax issue, because I think, in all fairness to this government, it doesn't want to see the jobs lost if it can be avoided. Do you think that reducing the tax on your industry, like was asked for by some of the other people, will allow you to be able to survive, and will that, in effect, protect some of these jobs that you've done an excellent job of outlining? The best case is not to have casinos, but if not, do you think that's the next best thing that the government could do for you?

Dr Colterjohn: In face of a worst-case scenario, anything is an improvement, but to say whether or not it's going to allow the industry to stay as it is today and be able to compete in the face of casinos, we'll have to find out. But it'll be a big improvement on going it alone. I just wish that the government had reduced further the takeout on the handle a couple of years ago which would have allowed them to increase the amount of money that they could put into upgrading the facilities, marketing, and going after -- my age group, we're the lost generation to the race track. They admit themselves that they got a little sloppy. They were the only game in town 15, 20 years ago. Our fathers and our grandfathers, they are the guys who went. Now, unfortunately, we're losing them and there are not too many of our generation going to the race track. Now they realize that, that all of a sudden now we're in an age group where we've actually got some real pocket money, they'd love to see us there, but they don't have the money to go and chase us.

It's too bad we didn't get that incentive prior to ever considering casinos. We might have allowed them to establish their market share of our generation. If they lose that completely and we do turn to casinos instead, it's nothing for you and me to jump in the car on a Friday night and head down to Windsor. Heck, we'll play golf halfway down and then we'll spend the next day at the casino. Unfortunately, that's our generation.

Mr Carr: It also seems to be a real urban-rural split and the people who are going to be affected most is rural Ontario, which is suffering as it is, and some of the people from farming communities will know that better. This is going to be a real devastation to the farming community, then, as you see it.

Dr Colterjohn: Definitely, but it's not just the farming community. It's the guy who works for J&H Construction and he spends half his summer doing barn roofs. They've got 16 men on the job. They fix barn roofs right, left and centre. How about the Purolator guy who drops by my office, leaves my office, goes over to Park Stud, leaves Park Stud, drops by Heather Sheehan's farm, on his way back through Gardner Farms? I mean, all of a sudden his route doesn't exist any more. The mechanic at the bottom of the hill who services my trucks: I'm not going to say I'm a big guy. I'm not; I'm a little guy. But we've sent him $22,000 worth of cheques so far this year. All we have to do is see two or three more people involved in the horse industry quit sending their $22,000 so far this year in his direction and we've changed his lifestyle in a hurry.

The Chair: Dr Colterjohn, thank you very much for presenting before the committee today.

B'NAI BRITH CANADA (DISTRICT 22)

The Chair: Our next presenter is the B'nai Brith Foundation, district 22: Mr Morri Behrmann, director of fund-raising development, and Mr David Colodny. You have 30 minutes to make your presentation and field questions from the committee. Identify yourselves to us so we know who is who.

Mr David Colodny: My name is David Colodny. First I'd like to thank the committee for allowing B'nai Brith and ourselves to come here this morning to make our presentation to you. I am here as the chair of the financial management committee of B'nai Brith Canada, and I'm here as well to introduce Mr Morri Behrmann, to my right, who will make the presentation.

I would like to tell you something about B'nai Brith Canada. B'nai Brith has been active in Canada for over 100 years and represents Canadian Jewry's senior service and advocacy organization. We have in B'nai Brith approximately 20,000 members across Canada with the national headquarters in North York.

B'nai Brith is committed to the basic principle of people helping people and engages in charitable work and community volunteer services on behalf of all Canadians across Canada. B'nai Brith is primarily a volunteer organization and defends human rights and fights racism, bigotry and anti-Semitism through its League for Human Rights. The league of B'nai Brith is one of Canada's most respected human rights agencies, and the objects include human rights for all Canadians, improved intercommunity relations and the elimination of racial discrimination and anti-Semitism. The national headquarters includes many employees, including a full-time executive director.

I'd like to introduce Morri Behrmann. Morri came to B'nai Brith in 1991 as a full-time gaming coordinator and director of fund-raising development. His responsibilities include working with the entertainment standards branch of the provincial government, and include putting into place various cash controls and audit trails for large gaming charities and now serves as a model for use with other charities throughout the province.

We work, primarily with Morri, closely with all levels of government to ensure that all the proper controls and audit guidelines are in place. Morri has just recently become a member of the newly formed provincial advisory committee on charitable gaming. I'd like to have him present our presentation.

Mr Morri Behrmann: The report that we present is in as full detail as we could for the time period. What I'm going to do is go over the highlights of the report, go over the executive summary and also the introduction, and then I will go through selected sections which we believe ought to be highlighted. Then if there are any questions, I'd be happy to take them.

Charity gaming in the form of bingo has been an accepted part of Ontario culture for many, many years now. We understand that more than $1 billion is wagered annually. Charity casinos, in an evolutionary form, have been part of our culture for the past 23 years. Both forms of charitable gaming are now a traditional method of raising funds in Ontario.

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The public has accepted the concept of the charity casino. It has voted in favour of them by their continued support. In Metro Toronto, the public has a daily choice of up to eight casinos and to date, at our casino alone, has wagered $1.7 million. Annualized for the first year of operation, it's probably going to be in the region of $4 million. As I've said, we're only one of the numerous number of charities that are operating right now.

Needless to say, we and other charities have become dependent on the funds raised through charity casinos, especially in today's economic climate where to a large extent traditional fund-raising programs have diminished and it's harder and harder to put together a direct mail campaign that doesn't cost you more than you receive, or to get a corporation to take two or three tables at $500 or $750 a plate. Those things don't happen any more. On the other hand, the public has supported us in terms of our bingos and our charity casino.

It's also important to note that the charitable gaming industry did not happen by accident. Over the years, there's been a concerted effort by many charities, as well as the entertainment standards branch, to allow charities to develop this industry. There's been a formal recognition in the bingo area of the commercial sector. They are now licensed. The province draws fees from these people and the problems that were existent in the beginning of the bingo industry have, to a large extent, been completely eliminated. The industry runs very, very well. We're part of the bingo industry. We have been for 35 years in this province. We own our own bingo hall and control it up at Jane Street and Highway 7, and so we've formed part of charitable gaming for a long time in this province.

The recent recognition by the province of the commercial sector in charitable gaming has created what is probably the fastest-growing industry in this province, and no charity has made a greater contribution to the evolution of the charity casino than the B'nai Brith Foundation. It has done this by working closely and in good faith with the province for many years now, since 1970, and especially since the Gaming Services Act was passed at the end of last year, to design, develop and promote a safe and regulated environment that is acceptable to the public. But not only charities, but also the workers and operators who have invested millions of dollars in establishing themselves in industry, have grown dependent on the charity casino for their livelihood. The province has accepted hundreds of thousands of dollars from these individuals in licensing fees. It would be cruel to merely dismiss the charity casino and create a new class of unemployed people in Ontario.

Eighteen months ago I put a two-line advert in the classified section of the Toronto Star calling for people who were interested in learning to become dealers; 489 people applied. We had 50 tables in our auditorium set up to start training dealers for working our casino alone. Right now, we draw on a pool of about 1,500 dealers who are mostly part-time. Because we've been operating three days every single week since the beginning of February, some of these people have moved into full-time positions. Our casino manager, for example, is someone who will work only our casino and he'll work for the maximum number of hours that we can work. There are supervisors, there are people who carry the equipment from one place to another.

Not only that, but because we're forced to move from one location to another, one benefit to the industry is that hotels and banquet hall owners derive a tremendous benefit in rents from us. There are many waitresses and people of the hotel industry, who are hurting quite badly, who have benefited from the charity casino.

And so charities like us have invested heavily in the emerging industry, have earned the right to continue operating free from interference and unfair competition. We believe that formal discussions should be held which ought to be inclusive of the charities, as well as the commercial licensed operators, and also the natives. I've had occasion to read a copy of the report that was submitted by Coopers and Lybrand and significant in their omission to talk to people were charities, such as us, for example, and also the natives. For that reason alone, at least in our opinion, that report is fundamentally flawed.

If the province decides to establish a commercial casino in Metro Toronto, we believe it should grandfather in those charities, like the B'nai Brith Foundation, which have pioneered gaming events in this city and allow them to continue to operate in a competitive way to ensure their viability and to maintain their community volunteer service programs.

One of the misconceptions that people have is that charity casinos are a brand-new part of the landscape. In fact, we began operating a form of charity casino in 1970, when the first order in council was passed allowing us to do so. At that stage these were done as small charity fund-raisers, usually as part of a much larger event, until several years later, where we assisted charities like Juvenile Diabetes Foundation Canada to run its annual larger 60-table casino.

Over the last 20 years, of course, things have become a lot more sophisticated. In 1992 we pioneered the concept of the three-day casino. We ran a pilot project at the Skyline Hotel. We ran five events. That proved to be extremely successful. It was successful from a revenue-generating point of view and it was successful because the hotel derived lots of benefit. In the initial events, we had upwards of 5,000 people passing through the hotel on a single weekend.

What was amazing is that in the entire time that we've run -- and I can't begin to count how many thousands of people have come through our charity casino alone -- there's been not a single incident where the police have been called in to charge anyone and to somehow assist us with matters that couldn't be dealt with at the table itself. We have always had a policy that we have fully trained security personnel at all our casinos and also we have paid duty policemen at all our casinos. Right now, off the top of my head, I think that to off-duty policemen we alone have paid more than $45,000.

The other point I want to make at this stage is that certain charities such as B'nai Brith Foundation have worked together in good faith with the provincial government over the years to develop the industry and to make the charity casino a place where the Ontario public feels comfortable, and they do. If any one of you has ever come to any one of our charity casinos, you will see that people come there, they don't drink, as much as we try to sell them beer, and they don't eat, as much as the hotel industry would like them to eat; they come, they sit at the tables, they gamble quietly and they go home, even if we have to kick them out at 6 o'clock in the morning, or now 4 o'clock in the morning. The fact of the matter is, they come there, they gamble, and, without being paternalistic in any way, they are well behaved and the thing works.

Most importantly, though, all funds raised are immediately circulated back into the community. Whether they come to us directly and are used for programming, whether we spend them on salaries for the various dealers, whether it goes to the hotel or the cleaners or the waiters or even the people who pick up the spinoff traffic in some of the areas in which we work, that money immediately goes back into the community. It isn't hived off to some account where the public doesn't have any control.

On page 10, I'd like just to speak a little bit about charity casinos and the way in which they've developed. In 1970, in terms of an order in council, we began Monte Carlo evenings. Then, as I mentioned earlier, various of our lodges began conducting the annual juvenile diabetes casino, which was very successful.

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When it came time for the CNE to run its casino and it wasn't going to work, it was through the lobbying of B'nai Brith that the CNE casino, which has turned out to be extremely successful, was achieved.

Then in 1991, we entered into a working arrangement with the entertainment standards branch, where the go-ahead was given to B'nai Brith to run the three-day events that we talked about. Now, as I said earlier, we believe them to be the fastest-growing industry in the province.

It gives us some element of pride to see how many people are employed. I remember when, 18 months ago, I spoke to some of the members of this department who are in this room today, and I said that we could employ so many people and we could do so many things. I'm sure they thought that was a lot of hype and salesmanship. The fact of the matter is, it's turned out to be better even than we expected.

So we ran the pilot project in 1992, and that was deemed to be successful. It was successful because we made money, and it was also successful because it showed us and showed the province that certain things have to be done in order to regulate the industry properly. So since then, we've worked together with them to determine cash control procedures, which we believe are today the finest that you'll find anywhere in the province.

In 1992, I, with a delegation from B'nai Brith, met with the Honourable Marilyn Churley. We explained all of this and told her what we hoped to do, and she gave us permission to run the three-day events in various cities across Ontario. We decided to be more prudent and concentrate our efforts in Metro Toronto. That has proved to be beneficial to us and it has worked for us. We've consolidated our position and we do well here.

Eventually, in 1992, the Gaming Services Act was passed, and as everyone knows, that legitimized the commercial sector and allowed them to participate as licensed operators. Then, of course, the limit was raised to $10 etc.

Since that time, we've worked very hard to train personnel to run cash control systems. We, unlike some of the charities that operate at present, control all the cash facilities. There is no one who is not part of B'nai Brith who touches the cash in our casino. We ensure that we keep full control from the time the money hits the table -- in fact, it doesn't even hit the table because it goes to a chip seller -- to the time it hits our bank, until the time it's deposited and then reported, in terms of the working arrangement that I talked to you about earlier, on a quarterly basis with the province, and then that account is audited. We account for every single cent, and we believe that others ought to have to account too.

On page 13, I talk very briefly about our financial results. As you can see, the gross win has been $1.7 million. The industry is very expensive to operate. It's labour-intensive, and we've paid out $1.4 million in salaries, costs of equipment, moving from locations and things like that.

One of the reasons we've had to pay such a large amount in expenses is that we're forced to move every single week from one location to another location. It's a setup; it's a tear-down. I think someone might have designed it to create the impossibility of a permanent charity casino. Well, I think that we have the first floating charity casino, and it works, but it's expensive. So at the end I'm going to argue that really we should be allowed to run a charity casino in a permanent location, not differently than the model used for bingo halls. They work there and there's no reason why it can't work here.

The other point I mentioned in introduction, and I won't belabour it here, is that there's been a formal recognition of the role of charities in gaming by this government since 1970. In 1990, the province undertook that "charities will receive full benefit from any future changes." Then, in terms of the Gaming Services Act, we were entitled to rely on the fact that we would be allowed to exist as an entity. We were entitled to rely on the fact that we could invest in expanding the casinos. We were entitled to rely on the fact that we'd offered people who were unemployed jobs.

I can tell you now that when I go into our casino -- and I stop by every single week -- and I see all these people, they come in as if this was just their regular job. The security person knows he has to stand at the door, and he just takes that as a given. The chip seller runs around and collects chips, and she takes that as a given. They don't know how tenuous is the thread by which their jobs are held. It's very difficult to take away from people that which they already have. These are people who pay $50 a month, and a lot of them in the beginning couldn't even afford that. There are a lot of single parents, a lot of people who find it very difficult to make ends meet, and these are people who rely on the part-time jobs and some of the full-time jobs that I mentioned earlier from our casino alone.

I think any decisions that are made have to take into account -- and it's very difficult for me to know exactly what the number of people is, but it's now in the thousands of people who rely on charity casinos for their livelihood. That's not to mention the hotels and convention centres etc.

I'd like to conclude by saying that charity casinos are part of Ontario culture and have been accepted as such by the public, as well as local and provincial politicians. Our recommendation is that charities and operators have invested heavily in this emerging industry and they've earned the right to continue operating free from interference and unfair competition.

The inability of gaming charities like the foundation to operate out of one permanent location restricts them to providing limited amenities. This further restricts the charity casino to low-stake gamblers and increases the cost of holding such events. We believe that charities with demonstrated ability should be allowed to operate out of one location on a basis similar to the way in which bingo halls are operated.

Many charities have invested large amounts of money in resources and personnel to develop their charitable gaming fund-raising programs. In the event that the province proceeds with the creation of a commercial casino in Metro Toronto, those charities which have pioneered gaming events in the city should be grandfathered into a situation that would allow them to continue to operate in a competitive way, to ensure their viability and to maintain their community volunteer service programs.

The Chair: Thank you. Two minutes per caucus.

Mr Kwinter: I just want to welcome you. I have a vested interest in your presentation. First of all, your headquarters is located in my riding. Secondly, it's no secret that I was the founding president of the Toronto regional council of B'nai Brith, so I have more than a 30-year involvement with your organization and I commend you for the work that you're doing.

I can't quite understand one particular point that you make. I understand under the Gaming Services Act, you're happy with that; you've been given sort of the legitimacy to do what you're doing and everything else. I have not heard any suggestion that with the advent of casinos, that is going to stop, that somehow or other you're going to be legislated out of business. I get the feeling in some of the comments you made that you'll continue to be allowed to do that.

It may be a de facto putting you out of business if they open up a casino as a competitive situation, but then you're in exactly the same position as the racetracks, which have exactly the same complaint. Could you explain that? Do you feel there's going to be a change in the legislation that will put you out?

Mr Behrmann: I don't believe there's going to be any specific legislation -- I may be wrong -- but I believe that if we're not allowed to compete in some way with the commercial casino, that will de facto put us out of business. I think that situation shouldn't be allowed.

Mrs Elinor Caplan (Oriole): I have a supplementary to that because the concern that you've raised is not only your ability to compete, but the protection for the charity casino organizations that rely on the charity gaming dollars for the purposes of their primarily volunteer organizations. How would you suggest protecting that in the legislation? What kind of protection are you looking for?

Mr Behrmann: In a word? Don't open a provincial commercial casino in Metro Toronto.

Mrs Caplan: Can you say that again?

Mr Behrmann: Not to have a commercial casino in Metro Toronto.

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Mr Ernie L. Eves (Parry Sound): Basically, I wanted to touch on exactly the same issues that both Elinor and Monte have touched on. Is it your greatest fear, then, that you will unable to compete with a province-owned casino in the city of Toronto?

Mr Behrmann: There's no doubt that we would not be able to compete. I've seen, as I said, the Coopers and Lybrand report and it talks about if we can provide some kind of auxiliary entertainment -- which we do, by the way -- and if we can somehow dress it up and since we're allowed to sell beer and other alcohol in our casino, that may be some edge. I don't agree with that. If the charities don't have the same kind of limit that the province has, if we don't have the same kind of games it has, the high rollers will definitely go there and not come to our casino.

Mr Eves: What do you think the effect of a province-owned casino is going to be on charitable organizations such as yours, for example, in the Windsor area?

Mr Behrmann: I can't speak for the Windsor area. The way I understand the Coopers and Lybrand report is that they've set up certain areas and so the catchment area from Windsor includes the United States, as does, say, Niagara, Sault Ste Marie and the various other places they've listed. Niagara would take care of a vast section of the Metro people. It's an hour's drive and it's very easy for people who are committed gamblers to do. In Metro, we have a huge charitable gaming industry and so the people who are the marginal gamblers, if I can put it like that, won't travel merely to go for whatever the marginal difference is. There's going to be obviously a cutoff point.

It's very hard for me to make any kind of recommendations because I don't know. All I can say is that, whatever happens, consideration ought to be taken of the industry as it now exists so that some way can be found for us to coexist. So that's not mutually exclusive. There's room for both of us, although from our point of view, obviously, we would prefer not to have a commercial casino in Metro Toronto.

Mr Duignan: Thank you for appearing in front of the committee. You made a very intelligent presentation on behalf of the charitable casinos to the committee. I just want to touch on a couple of topics. First, we're only talking about one casino and that's a pilot project in Windsor. No decision has been made to place casinos in Toronto or anywhere else in this province.

Also, I think you're aware that the ministry has formed a Charitable Gaming Advisory Committee as well. I'd like to know, are you a part of that committee? The purpose of that committee is to advise regulators on the licensing policies. I think this committee will ensure that charitable gaming will continue to flourish in this province. The members of the committee include everybody from charities, from service clubs, from the municipalities, as well as the commercial operators.

Also, on the question of permanently run charitable casinos, as you are well aware, the Windsor casino project is a pilot project for this kind of gaming activity here in this province. Given that is a pilot project that has really not yet opened its doors, I think it would be really premature to make a comment one way or the other on the possibility of a permanent venue for charitable gaming. You can rest assured the idea has not been either considered or dismissed at this time.

Mr Behrmann: I am very assured by what you said, but would you be prepared to make a commitment on behalf of the government that you will not open a casino here in Metro Toronto?

Mrs Mathyssen: I'd like to thank you for coming, too. I found your presentation quite succinct. One thing intrigued me: You talked about the security and the kinds of safety mechanisms that you have at your casino. We've had people come to the committee and say this is the beginning of the end of Windsor, that it's going to become a den of iniquity and all kinds of horrendous crimes will be perpetrated all over. In your experience, in terms of your facility, what has been successful? You said you'd had no problems. Could you explain what you've done in terms of making sure this horror that is predicted for Windsor doesn't happen; your experience.

Mr Behrmann: I can tell you that when we opened the three-day event in February of last year, we had prepared ourselves for almost every eventuality. Not only did we have, I think, 20 private security personnel trained in casinos, but we had six paid policemen on duty at any one time. What was amazing to us is that even in terms of crowd control we never had a problem with opening. Subsequently, we went through the pilot project last year and this year we've been doing it every week. We're now down to one paid police person who stays and just watches. He's there really as a presence and we have, depending on the size of the event, three to five security personnel checking the integrity of the games from our point of view.

It reminds me of when I was studying and you're given an exam paper; you go through it and there are no trick questions and you begin to really wonder. We're sort of in the second phase where now we're looking a lot more closely at the integrity of the games, the kind of people, and so far in our experience we have not had any problem.

The representative of the police -- not a single problem has been determined at our casino. There was one case where some chips that were lying around were stolen, but that was basically the fault of a particular person. But in terms of money being stolen, we haven't detected any. That's not to say we're complacent. We've worked together, as I mentioned earlier, with the province to design, develop and implement cash control forms designed specifically for charitable gaming which controls every single cent in the casino. So from that point of view we're satisfied that the money goes from the player directly to us. We're happy that's happening. We haven't had a problem in that respect.

In terms of auxiliary problems, if I can put it that way, we haven't noticed any connection with prostitution, people hanging around. We haven't had anyone being mugged. To the best of my knowledge, we haven't had cars broken into and we can have, much like a bingo hall, 200 to 300 cars in the parking lot at any of our games.

One can read into all those things whatever one wants to read into them, but in our experience, at least, we're comfortable that we've been able to handle the situation. As I said earlier, a lot has to do with the demeanour of the Canadian public.

The Chair: Thank you, Mr Behrmann and Mr Colodny, for presenting before the committee today.

The committee recessed from 1208 to 1404.

MENNONITE CONFERENCE OF EASTERN CANADA

The Chair: Our first presenters this afternoon are Fred Redekop and Michael Bauman, representing the Mennonite Conference of Eastern Canada. Welcome to the standing committee on finance and economic affairs. You have 30 minutes within which to make your presentation and field questions from committee members. You may begin.

Mr Fred Redekop: Thank you very much. We are grateful for the opportunity to contribute to this discussion about casino gambling in Ontario. We do not come with expertise but with deep conviction as followers of Jesus Christ that increased gambling will damage the social and economic welfare of this province. We have submitted a longer brief to the committee written by our staff person, Doug Pritchard, and encourage that you read it and reflect upon it as you make your decision on Bill 8. The brief details the reasons why we do not want casino gambling in Ontario. In my oral presentation I want to focus on three issues: jobs, taxation and addiction.

Jobs: We understand Windsor has been hard hit by the economic recession and by cross-border shopping, as other border communities have been. It is tempting for Windsor and other communities to see casino gambling as a way out of these tough economic times.

The government study says the Windsor casino will employ 2,500 people and there were will 5,500 other persons employed indirectly because of the casino there.

Who will get these jobs? In an Atlantic City study, a high percentage of casino jobs have gone to outsiders. If the statistics prove similar in Windsor or other communities, and Windsor specifically, there will be only 600 new jobs filled by Windsor residents, and those jobs will not be high-paying ones. Peel Regional Police Chief Robert Lunney, experienced in policing gambling in Edmonton and Winnipeg in his career as a police officer, says:

"The good jobs will go to trained outsiders. Local jobs will be, perhaps, maintenance people, people hired to push brooms, people on garbage trucks, people who move food in and out of hospitality centres -- waitresses, bus boys.... You are not going to get high-paying middle-class jobs."

For example, at the Winnipeg casino, the majority of the workers earn between $14,000 and $24,000 per year, well below Manitoba's average employment earnings of $25,500.

In addition, casinos are also not a windfall for local businesses. Windsor casino adviser Nelson Rose says that, "Gamblers tend to gamble and leave." They don't tend to come early to shop outside the casino but they take the favours that are within the casino. They don't shop outside the casino after they leave either.

In Atlantic City, after gambling was introduced, manufacturing in that city dropped by 54% and other businesses by 28%. As this statistic indicates, not only will a casino in Windsor not help local businesses but could easily lower the consumer spending in longstanding small businesses. The casino will not have positive spinoffs but will have many negative impacts to the economic and industrial base of the community where casinos will be set up.

Finally on the issue of jobs, the Ontario government promised to present an industrial strategy for economic development in early 1992. Where is this document and where is the policy? Has the government resorted to gambling as a source of jobs and economic growth? We believe that the overall economic growth will not be served by allowing casino gambling in Windsor.

My second major point, on taxation: Governments have a responsibility to raise revenue in a fair and equitable way. The present government has shown a particular concern in innovation in setting up the Fair Tax Commission and through various progressive taxation measures introduced in the provincial budgets. It is therefore astounding to us to see the casino gambling as a revenue-raising measure.

The New Democrats have viewed gambling in the past as an unstable base for government finances. J.S. Woodsworth, leader of the CCF, a predecessor to the NDP, said in 1934, when a government proposal wanted to establish a hospital sweepstakes, "If any man should be taxed, it is the man of wealth who ought to look after the poor and the sick."

Casinos and other forms of gambling have shown that those of low income are the most frequent users. Therefore, this proposal to have casino gambling in Windsor acts as another form of tax on those least able to afford it, completely conflicting with the long-standing fair tax NDP principle.

Dave Barrett, former NDP Premier in British Columbia, commented on the issue of gambling by saying:

"It is simply a regressive and unfair form of taxation that lower-income people pay. We hadn't intended it that way, but that is the way it worked out. The poor are the biggest buyers, and the wealthy rarely, if ever, participate at all."

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Even the current Ontario Treasurer, Floyd Laughren, believes it is not ethical to use gambling profits for essential services. In 1990 he said:

"I think most people felt from the beginning that essential services in Ontario should not depend on lottery profits.... When it comes to health care, education and, I would argue, the environment as well, it is not the same. Those are absolutely essential services which we must provide. That is not something that should be dependent on games of chance.... It should not be a form of voluntary tax. Those essential services should be funded by the tax system of this province, not through games of chance."

In summary on taxation, the low-income person will bear the brunt of this regressive tax. In promoting casino gambling as a revenue measure, the government is abandoning its own principles of fairness in taxation.

Thirdly, addiction and compulsive gambling: Compulsive gambling is defined as:

"An addictive illness in which the individual is driven by an overwhelming, uncontrollable impulse to gamble. The impulse progresses in intensity and urgency, consuming more and more of the individual's time, energy and emotional and material resources. Ultimately, it invades, undermines and often destroys everything that is meaningful in his/her life."

Gambling addiction is well known to community and social workers. Persons gamble away their winnings, and when they lose they do not learn but continue to gamble. They borrow so that they may continue to gamble and often in the end resort to theft or fraud to fulfil their addiction. The most distressing aspect of this gambling problem is the impact it has not only on the gambler but also on his or her family, friends, colleagues and employers.

As casino gambling enables more people to gamble, it will fuel the problem of compulsive gambling and the multitude of dysfunctions it causes. In Ontario, there are no treatment programs for compulsive gamblers, but I do not want to ask the government to set one up to combat the problem exacerbated by allowing casino gambling in Windsor. That, to me, would seem to be a paradox. Recently, the government threatened to cut off the $75,000 grant to the Canadian Foundation on Compulsive Gambling because of lack of money.

We believe it is irresponsible to allow casino gambling because of the damage it causes to the social, medical, psychological and economic lives of people who are compulsive gamblers.

I would invite you now to turn to page 11 of our brief, where you can see the recommendations we want to give to you. It's the final page of the brief.

Recommendations: Based on our submission, we make the following recommendations:

(a) The social and financial costs in the casino proposal are real, high and well documented. The job and revenue benefits are illusory. We therefore recommend that the government abandon its casino proposal.

(b) We recommend that the government severely restrict the promotional activities of its gambling agencies, such as the Ontario Lottery Corp, and that such agencies be required to advertise the health risks of gambling and the true odds against winning.

(c) We recommend that the government acknowledge the extent of the damage caused by compulsive gambling and that it establish adequate facilities in Ontario for the treatment of compulsive gamblers.

The Chair: We have seven minutes per caucus.

Mr Eves: I've skimmed through your brief and I think it's a pretty well-thought-out submission. I'm looking at your second set of recommendations on page 11, which say, "However, if the Ontario government decides to establish a casino in Windsor, we would make the following recommendations." In those recommendations I think you probably are dealing with reality, because I think it is probably a foregone conclusion that the Ontario government is going to proceed with the casino in Windsor.

I'm interested in recommendation (e): "Based on the experience in Nova Scotia, we recommend that the government ban the use of video lottery terminals anywhere in Ontario."

We had a presenter yesterday who made a submission to the committee indicating that indeed her association would like to see VLTs in every licensed establishment in the province of Ontario, virtually. Some of us asked her questions about the experience in Nova Scotia and the difficulty they were having, and she differentiated between the experience in the maritime provinces and the experience in some of the western provinces where she thinks they have been very successful and haven't created many problems. I just wondered if you could further expand on your recommendation (e).

Mr Michael Bauman: On page 7 of the larger brief, we talk a little bit more about that. In the fourth paragraph we mention the video lottery terminals. The Nova Scotia government immediately began to reap huge benefits and large profits. However, suddenly they decided, because it became so addictive, and so easily addictive, that they had better do something about it, so they started restricting it. There were some economic benefits to the local business establishments that had those terminals. The abuse of those machines was just too great for them to bear, so they had to cut back. So despite this revenue bonanza, the paradox for the government was that it had to cut back.

We're very concerned about that possibly happening here, that more and more people will become addicted to gambling because of the easy access to these machines, underage people etc. There's a lot of underage gambling now because lottery outlets do not ask for identification. If they have unmonitored machines, people can go up and get lottery tickets or whatever or gamble in other ways. We're asking for a lot of young people getting involved in something that's quite dangerous.

Mr Eves: Several people who appeared before the committee in Windsor, including the mayor of Windsor, suggested they might want to have an age restriction of 21 years of age on a casino there. I believe the current proposal is for 19, which is the legal age of majority in Ontario. What are your thoughts on that matter?

Mr Bauman: Our thoughts are that we don't want any of it but, obviously, the higher the age, the better for sure. If we can say 21, how about 71, maybe?

Mr Eves: That would eliminate a lot of people.

Mr Redekop: In response to your question about VLTs, also it is a quick fix with a small amount of money, and that would again target low-income people. We would also be distressed about that.

Mr Eves: It's a very regressive form of taxation.

I'd also be interested in hearing your thoughts on your recommendation (d) about prohibiting gambling based on credit, because it has been the subject of some discussion in the Ontario Legislature as well.

Mr Bauman: I'm not sure where, but somewhere in this there are more details, but basically I thought: Credit encourages the black market, allowing people to ring up a tab, so to speak, and having that unrestricted, you get into thousands of dollars, you don't have the money to pay and you're going to get all kinds of bargains from the wonderful black market.

According to studies that are highlighted in the document in terms of organized crime, every place where there's been gambling, Atlantic City, Britain, Australia, you name it, every city shows that organized crime is a major part of its establishment. To think they're not going to come into Windsor or anywhere else in Canada where a casino is I think is pretty naïve. That easy access to money to pay off the credit would only get them, obviously, into more trouble with organized crime.

Mr Redekop: Also, we mentioned addiction and compulsive gambling. This would also be a detriment to the compulsive gambler because they would be able accrue even larger debts more quickly, and the social aspects of that to families is very destructive.

Mr Duignan: I want to return to the question of casino credit. With respect to casinos, the term "credit" is a misnomer, really. It would be more accurate to describe credit in casinos as pre-approved chequing. Credit is allowed in most jurisdictions which permit casinos, which have stressed the importance of using credit in order to discourage crime, since a paper trail left by the granting of credit discourages the laundering of money. That's another important aspect of allowing what we call pre-approved chequing within the casino.

Patrons do not buy casino chips with their credit cards; that is not allowed. It has to be pre-approved, and it is something that's arranged prior to a patron actually going to the casino. Six or eight weeks, I believe, are required; it could be a longer period of time. Only pre-arranged lines of credit will be allowed in Windsor casino after a patron's creditworthiness has been investigated. That's a more thorough check, for example, than is done in the banking industry today.

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Mr Bauman: How much of that is different from what has been happening in other casinos? Why are there such large problems with that in other casinos, and what is being done for the Windsor proposal to make this not a problem?

Mr Duignan: Again, as I stress, it'll take about six to eight weeks, it's pre-authorized and there's a thorough check on the individual's creditworthiness first -- for example, has the guy got money to back up his application for credit? -- and I think there's a limit of $10,000. And as far as I know, it's not a problem in other jurisdictions.

Mr Redekop: In a way, that would maybe exacerbate the problem of crime. If people have to wait six or eight weeks to get pre-approved chequing and they really want to gamble, they might go somewhere else.

Mr Duignan: Well, anything is possible.

Mr Redekop: Yes, and that's why we do not want casino gambling, because of the many possibilities. In our brief, Doug Pritchard mentions that there are many risks and we see few benefits to the people of Ontario.

Mr Duignan: Let me again underscore that credit is a service which provides safety as well as convenience to patrons who will not have to carry large sums of money when visiting the casino, and the person who doesn't have a good credit history is not going to get a line of credit, and it has to be pre-approved.

Mr Sutherland: I wanted to just explore with you a little the theory that casino gambling is a tax on the poor. I know there are people who have said that, and you've repeated those comments. I just want to know how you see that that ties in with empowerment theories, that if you allow people to make their own decisions in most cases they will make the right decisions, but in those cases where they don't, it's still letting people make their own choice. I don't quite follow this argument about a tax on the poor and that the poor are going to be so hard done by. It implies a degree of paternalism. Could you comment on that?

Mr Bauman: Your concern about patronizing low-income people in the province is well taken, but I think we have to look at reality. We have to look at the figures on who actually gambles and we also have to look at the fact that people of low income usually are of less education. Less education means that people are less able to realize their chances of winning and are probably also unaware of the possibility of addiction.

Credit and that whole convenience idea is pretty neat to everybody. I think we all know people who maybe are of low income, medium income or high income who get into credit problems because they like going shopping and they get a huge bill the next month and they realize that they kind of overspent their limit and they get into trouble. Those people who are of middle and upper incomes don't have much of a problem with that. The people of low income will suddenly have to not eat for a month or not pay rent for a month and get kicked out of their building or whatever, while of course the rich person can just write a cheque; they were going to go on a trip for three weeks and now they can go for only two and a half or whatever. I think that's one reality that needs to be taken.

My personal experience in areas where there have been lotteries -- I lived in Chicago several years ago and I lived in a poor section. In the poor section, there were signs all over the place, "Go from 66th Street to Easy Street." There were signs everywhere. When you'd get to the higher-income levels of town, the nicer parts, there were no signs at all. The reason is that they knew the people of lower income were the people who were gambling and the people who were more susceptible to it.

If the Ontario government would actually use its advertising on lotteries to share the truth about gambling as well as giving them the choice, saying, "It's available, but here are the risks," like you do with cigarettes and as you do with alcohol at some level, with warnings about drunk driving, then at least it would be giving everyone a fairer chance of not getting involved in this area.

Mr Redekop: Studies have shown that low-income people do gamble more than other people. Since the establishment of the Ontario Lottery Corp, the government has moved away from control to revenue maximization. If you find that your market is low-income and your philosophy is to have revenue maximization, I think the advertising of the Ontario Lottery Corp will move in that direction, and I think that's a bad move, to target low-income people.

Mr Kwinter: I was interested in a couple of items in your report. One was a quote from Howard Hampton and Margaret Beare in a report they wrote for the government of Canada, in which they said:

"Wherever casinos are found, they are inseparable from organized criminal activities. Virtually every study undertaken in the United States, Britain, Australia and elsewhere points out that casino gaming, whether illegal or legal, encourages organized criminal activity. If a jurisdiction is not willing to accept this involvement, it should not get involved in legalized gaming."

Yet in Windsor, we had the Minister of Consumer and Commercial Relations state that this will not apply to Ontario. It doesn't matter if it appears virtually everywhere else in the world; Ontario is going to resolve it and organized crime will not be here.

We've had deputants appear before us from the horse racing industry saying that every single report has shown that if casino gambling comes into a jurisdiction, it has a negative impact on the horse racing industry, to various levels; people are talking about how much effect, but it has it. The government is saying: "No, no, no, that's not a problem. It may be very minimal, but it's more your fault than our fault, because you're not marketing it properly."

We have people involved in charity gaming who are concerned that their operations are going to close down and that they will not be able to compete. The government is saying: "No, no, they are two separate things. You're going to do your thing and this is going to do this, and one has got nothing to do with the other, because the people who go to you are not going there."

That is a problem that I think is basic, in that the government, almost with blinkers on, is saying: "Damn the torpedoes; full speed ahead. This is what we're doing, and don't confuse us with the facts. We've made up our minds on this thing and let's do it." Do you have that feeling about it?

Mr Bauman: Unfortunately, we do.

Mr Duignan: The Liberals have changed their minds again. They were all in favour of it in Windsor and now they've changed their minds.

Mr Bauman: This is not a partisan delegation we've brought here. We are very much in support of the NDP's policies in terms of the Fair Tax Commission it set up. We think that's a wonderful idea and a wonderful thing that they should be encouraging more of. This is why it's so astounding to us that some of the NDP principles are being violated if this bill goes through. So we agree with you on this point.

Mr Kwinter: One other quote that really caught my attention is at the bottom of page 7. It says: "Government has a responsibility to control and minimize the harmful impact of gambling on society. This responsibility cannot be fulfilled while simultaneously maximizing gambling revenues."

Just to answer the parliamentary assistant, I have not changed my mind. I don't have a problem per se with a casino, even though I may not support it on a personal basis. Where I do have a problem is the feeling on the part of the government that these proponents are all Mother Teresa, that every one of them has the common interest at heart and that they are going to go out and do all of these wonderful things for everybody, when in fact this statement I think is closer to the truth, that there's going to be one driving goal, and that is both on the part of the government and on the part of the proponent who is going to get it: to maximize the take out of it. Otherwise, why are we here?

I think there is a naïveté, and you've stated that you think this proposal is naïve, and that is my concern. Not necessarily casinos, but casinos if necessary, but at least, if you're going to do it, don't wear these blinkers to think that everything is going to be great and that all these wonderful things that are going to accrue to us are going to accrue without any cost. That is my concern and I gather from you that you're obviously opposed to it, but then you say in your recommendations, "If you're going to do it, then at least address some of these concerns." That is my concern, that these concerns are not being addressed.

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Mr Redekop: In Winnipeg, I think they still have a restriction on the largeness of the casino. Partly, that is in order to minimize organized crime and crime around the casino, and we know that in the Windsor proposal there is no restriction on the size, so again that's something we want to say: that you will do that when setting up the casino, which we are still opposed to.

Mrs Caplan: I think it's a fair statement Mr Kwinter made, that the government is proceeding. One of the other concerns I have, having been on this committee over the last week and listening to the deputations that have been made, is that not only are they closing their eyes to the problems that everyone has identified and that they're candidly ignoring, but there's also the concern about what will happen when Detroit competes and all the safeguards that the government has said it has put in place will make it impossible for Windsor and all the businesses that were hoping this would be a stimulus to the economy.

There will be only two choices. I think once the infrastructure is in place and the jobs are in place, the temptation will be to wipe out all of the safeguards and to compete with Detroit, or we will see Windsor once again in a state of distress because its hopes have been built up and everybody was expecting economic prosperity as a result of this.

I would ask you to comment on what you think will happen when Detroit responds by opening casinos that will allow for all those things that the government of Ontario says it's not going to allow in Windsor across the border.

Mr Bauman: There has been an ongoing problem, I believe, as a kind of a personal opinion, of trying to maximize profits in many areas and becoming very Americanized in many ways. I've lived in the States for most of the last 10 years of my life. I love Canada and I love Ontario very much and hope that a lot of the things we've set up in terms of safeguards would stay, including those that I hope are put in if this does go through, but I'm certainly scared that they would drop them. Anyone who's been to Windsor and Detroit definitely can see a difference at this point, and I hope and pray that this government, which has been a huge proponent against becoming Americanized in many issues, which I generally support, continues on this and does take its primary responsibility as a government to be the welfare of its citizens and not the maximization of profit. I do realize that the profits obviously are used for the people as well, but the problems we've identified are much greater than the money this might bring.

The Chair: Thank you, Mr Bauman and Mr Redekop, for presenting before the committee today.

CANADIAN THOROUGHBRED HORSE SOCIETY (ONTARIO DIVISION)

The Chair: The next presenters are Dr John Brown, Glenn Sikura and Nigel Wallace, representing the Canadian Thoroughbred Horse Society. Please identify yourselves so the members of the committee and Hansard will know who's speaking.

Dr John Brown: I'm Dr John Brown.

Mr Glenn Sikura: My name's Glenn Sikura.

Mr Nigel Wallace: My name's Nigel Wallace.

The Chair: You have 30 minutes to make your presentation and field questions from the members.

Dr John Brown: I believe you all got handouts, so you can follow on if you want.

First of all, as a representative of the CTHS, we'd like to thank you for the opportunity to present our views on this controversial item. It's got a second advantage for me today: If I weren't in here with the air-conditioning I'd probably be in the hayfield, and this is a good day to be out of the hayfield.

The Chair: That's for sure.

Dr John Brown: We could maybe have had the meeting in the hayfield and you could have all joined us there.

The Chair: Having been one who's done a lot of hay in my life, I can sure appreciate what you mean.

Dr John Brown: I think you present us with a formidable task here. The government is obviously intent on raising dollars by any means possible. I think we all realize their plight and sympathize with them. I'm sure most Ontario citizens are now convinced of the deficit situation and most are willing to help.

The destruction of one of Ontario's major industries, namely, the horse racing and breeding industry, is not the way to achieve the solution the government seeks.

The Canadian Thoroughbred Horse Society represents 600 members in Ontario. There are six provincial divisions of the society across Canada, so we're just one segment of it, the largest segment of the Canadian Thoroughbred Horse Society.

The function of the Canadian Thoroughbred Horse Society is to register thoroughbred horses in this country, market those horses and represent the membership in matters that pertain to the wellbeing of the industry. In other words, the breeding industry produces the product that fuels the industry to keep it going, and we look after all the matters that pertain to the production of that product.

Our membership encompasses from owners of one mare, to full-time small farmers with five or six mares on an acreage, to multimillion-dollar enterprises that have produced world-class, world-famous racehorses. The breeder is the engine that drives the racing industry. Without our product, there is no business.

We are convinced that the introduction of casino gambling to Ontario will destroy or severely damage Ontario's horse racing industry, and in so doing deal yet another crippling blow to Ontario agriculture.

The Ontario Federation of Agriculture, a member of the Ontario Agriculture and Horse Racing Coalition, has voiced its concern about a further erosion of the agricultural base. Not only is horse breeding an agricultural business in its own right, but our industry also purchases over $350 million worth of hay, straw and grain from Ontario farmers annually, as reported in the Dunning report of 1987. It's probably in excess of that now. In addition, the industry supports dwindling farm machinery dealers and automobile dealerships.

Many of our farms are located in small rural towns and are often a major, if not the biggest, source of employment and purchasing power within that community. These farms employ local labour, buy from local farmers and feed mills, purchase building supplies, buy and service farm vehicles and machinery, hire summer students and utilize the services of local veterinarians and blacksmiths. They make a significant contribution in property and business taxes.

In my situation alone, my economic budget annually is in the neighbourhood of $500,000 to $600,000, and a very large percentage of that goes directly to the small town of Lucan, from which I hail, and the surrounding area. Glenn can maybe give you an idea of what his impact is as one farm.

Mr Sikura: I am involved in a family farm. We have my brother, my father and myself and about a half a dozen full-time employees. I broke our estimates down a little. I estimate probably in the neighbourhood of $150,000 in staff wages to the local community. We order about $1,200 of feed per month from the feed company. Our trainer at the racetrack receives monthly dividends of about $9,900 to train our horses that are presently at the track. Our farm vet receives approximately $1,500 monthly, the track vet $400 monthly, the farm blacksmith $500 monthly etc. Last year we spent $105,000 on stud fees to local farm owners who stand breeding stallions. Hay and straw we estimate at around $1,500 per month, and there are all kinds of other costs: sales staff, signage, advertising, office supplies, hydro, phone and various capital expenditures that we make on the farm.

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Dr John Brown: So you can see that from just two average farms, or a little larger than average, the impact is significant on this community.

As the wagering handle drops at the racetrack, the purses, or prize money, also drop accordingly. Woodbine has already seen a 14% decrease in purses in 1993. This decline in wagering is attributed to (1) the economy and (2) the plethora of alternate gambling options. As the purses drop, so does the margin of profit for the owner. As owners leave the business, the need for our product declines, which in turn lowers the quality of racing and subsequently the volume of wagering.

The trickle-down effect of the dollar bet at the racetrack can be followed through the purse money into the hands of the owner and subsequently to the trainer, employees, service suppliers and eventually the breeders.

The government has continually stated that it is "fully committed to the horse racing industry remaining a full and active player in the gaming industry." The government has further said that when the province asked private sector companies to submit their bids for the Windsor casino, everyone was clearly asked to outline what proposals they had to boost business at the Windsor Raceway. It is unrealistic for the government to believe that a casino operator is going to look after the interests of racing.

We believe that the new gaming policy has been driven by the economic crisis with resulting haste. The decision to introduce casinos was made by the government prior to any studies being initiated within the province by the ministry concerned. Since that time, the only study that has been commissioned by the government, Coopers and Lybrand, states that "it is expected that the racing industry may also be vulnerable to the introduction of casino" gambling.

Horse racing is unique and stands alone as the most expensive gaming vehicle. It is expensive because it is truly an industry. Its product, the horse, has to be bred, raised, sold, trained and showcased in Ontario. Over the years, the sale of horses to foreign markets has been a considerable agricultural export for the province. There are no exact figures, but I know that within the last few years we have reached levels in excess of $20 million in exports from auctions alone, and there are several private transactions as well.

The attendant expenses, costs and investment are the reason for its huge $2.2-billion annual contribution to Ontario's economy and employment over and above its tax revenue.

We have continually emphasized that racing does not have a level playing field. The government takeout from racing is based on a monopoly that no longer exists. At one time, racing enjoyed 100% of legalized wagering in Ontario. It now represents only 27% of legal gambling in Ontario, yet racetracks will be forced, with declining betting and attendance, to try and match the promotional budgets of lotteries and Pro Line. The latter two gambling alternatives pay nothing for supply of product and no tax.

In one sense, it's amazing that the horse racing industry has survived as well as it has when you consider the fact of these figures. At one time we had 100% of the legalized wagering in Ontario; now we're down to 27%. So we have a very resilient industry, and with any help at all we'll survive and flourish.

In effect, the government is both our legislator and our competitor. Not only is the tax takeout from racing higher than lotteries and higher than the tax proposed for casinos, but it is also one of the highest in North America. The current rate is twice the North American average.

In a report on gambling in Ontario prepared by Christiansen/Cummings Associates (1992) for the Ontario Ministry of Agriculture and Food, the consultants state that "Ontario parimutuel tax policy is way behind the times in that the Ontario government is still trying to extract monopoly tax rates from a horse racing industry that no longer enjoys a gambling monopoly."

The report went on to say: "Ontario needs to re-evaluate its taxation of horse racing in the light of contemporary market conditions. If Ontario doesn't do this it is going to lose its horse racing industry."

A review of published studies brings us to several conclusions with regard to the impact of casinos in Ontario:

(1) Somewhere between 9,000 and 18,000 jobs will be lost in the first two years.

(2) Tracks will close. Many Ontario tracks are presently only marginal operations. Fort Erie is already a well-documented case. It is estimated that the closure of Fort Erie racetrack would mean a loss of 4,500 jobs and a loss of payroll, for an already devastated community, of $38 million.

In a recent article in the Windsor Star, August 17, the owner of Windsor Raceway, Mr Tom Joy, says that in the last three and a half years he has lost $10.5 million and that the track may be forced to close before the end of the 1994 racing season next March. Mr Joy is quoted as saying, "The way the economics are now, despite all my best efforts, despite everything I tried to do...unless there is some relief I'm simply not going to be able to continue operating."

(3) Other tracks are known to be having similar difficulties. These tracks create local employment and economic benefits.

(4) The immediate reduction in wagering on horse racing is likely to be 30% or approximately $330 million based on the experiences of other racing jurisdictions where casinos have been introduced.

The results speak for themselves. Statistics show the following results when casinos were introduced into a horse racing environment:

Manitoba: 40% decrease in wagering at Assiniboia Downs at Winnipeg; forced closure of the winter harness racing meet; 30% decrease in wagering in summer thoroughbred meet. Assiniboia Downs is now in severe peril and may not continue to operate.

Minnesota: The thoroughbred track was unable to survive after the introduction of casinos, and closed.

Wisconsin: 50% decrease in wagering.

New Jersey: 33% decrease in wagering; 27% decrease in attendance.

Deloitte and Touche, chartered accountants, estimated in a report concerning a proposed casino facility in Chicago that such a facility would cause a decline of 20% or more in revenues at Illinois racetracks.

The Coopers and Lybrand report suggests that the city of Toronto could accommodate up to three casinos. The Ontario Jockey Club operates the two thoroughbred racetracks in Toronto. The downtown track, Greenwood, posted a decline of 22.7% in the average daily handle at the 1993 spring meeting. Woodbine figures through Sunday, August 8, show an average daily wagering decline of 7.2%. This decline is despite intertrack wagering for the first time between Greenwood and Woodbine during the months of June and July.

The advent of teletheatre wagering in Ontario provides a tool for racing to penetrate new markets. However, those markets where tracks do not already exist are comparatively small and will not make up the difference in handle lost through the introduction of casinos to the larger centres.

In the report on gambling in Connecticut, Christiansen/Cummings Associates stated that between 16% and 35% of the respondents to their surveys of parimutuel betting customers indicated that they would spend less at each parimutuel facility if a casino were located within a one-hour drive. The Coopers and Lybrand report indicates under the heading "Ontario Residents Estimated Change in Wagering Habits Caused by Casino Gaming" that, in the category of high stakes casino gamblers, 23% will spend less at the track. It is well known at racetracks that the high-stakes gamblers bet an inordinate proportion of the daily handle. If high- stakes casino gamblers were to spend 23% less at the track, it would have a serious impact on the wagering.

In the OMAF report Christiansen/Cummings Associates stated, "Let there be no mistake: Casinos would make a substantial adverse effect on Ontario tracks, and therefore on Ontario breeding, and therefore on racing and breeding industry jobs and tax revenue."

Why does the government insist on introducing an additional forum of gambling, casinos, when an existing one, horse racing, if fairly taxed and nurtured, could increase employment, have a greater economic impact and produce greater revenues for the government?

We urge the government to stop its present casino initiatives.

Present parimutuel taxes, established during racing's days as a monopoly, must be eliminated or reduced to a net of 0.5% to government as in New Jersey in light of the existing government-sponsored competition for racing from lotteries, sports lines etc. Racing is viable and produces substantial revenues. Our problem is how the pie is being cut.

The government is giving a competitive advantage to its casinos over our industry, which it also regulates.

There must be consideration given to the balance between live racing and simulcasting to protect the live product and hence the breeding industry.

In summary, I'd like you to ask yourselves three direct questions and answer them personally and honestly:

(1) Do you honestly believe that gambling casinos are for the overall good of the province and its citizens?

(2) Do you believe casinos will significantly harm the horse racing and breeding industry?

(3) Has the government, by being in direct competition, made it increasingly difficult for the horse industry to compete with the other forms of gambling?

(4) Has the government done enough of an economic feasibility study to determine whether the financial benefits of casinos will outweigh the losses to our industry? That's our presentation.

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Mr Sutherland: If I read your presentation correctly, I'm left with the impression that you're implying that the Fort Erie racetrack could close because we're opening a casino in Windsor.

Neil Campbell, the respected sports writer who covers horse racing for the Globe and Mail, has a column today talking about industry infighting. He seems to blame some of the problems of the difficulty the racing industry is facing on the industry itself. He is quoted as saying in one paragraph here: "It's typical of what is going on in the industry these days, though. Everyone is fighting for their own piece of turf and the turf is getting pretty worn." He goes on to say: "Many thousands of jobs are going to be lost in racing in Ontario during the next few years. It's going to happen one of two ways. Either tracks will do the sensible thing and cut back live racing on their own, or the fans are going to continue to desert the sport in droves, fed up with inane repetition."

There's increased competition whether there are casinos or not. What is the industry doing to respond to that increased competition? We've heard testimony about the demographics for horse racing in terms of the people coming out that it's an older population, it hasn't been attracting a lot of new numbers. He talks about a small crowd at Woodbine for the stakes on Sunday. What is the industry doing to deal with real competition? Mr Campbell seems to be implying that job losses are going to occur whether there's a casino or not.

Mr Wallace: The second part is a very long, very complicated question. But racing is going through right now a similar turmoil that most businesses are going through, where we're having to cut costs and get rid of things on the exterior parts of racing that are not money-producing and are in fact costing for survival. That is certainly not something that's different than any other business is going through. I think you'll all agree that when businesses or industries are going through change, there's going to be a lot of turmoil within the industry and people are going to worry about job security and so on. Social contract talks have certainly demonstrated that recently. It's the same in our industry.

What we are trying to do is make ourselves stronger by cutting back in some of the weak areas, hence Greenwood being sold so that things can be concentrated at Woodbine, have a teletheatre at Greenwood where you can bet on Woodbine so you can still get the betting from downtown but not have to run two facilities. Certainly that is going to change the job picture in that situation.

Smaller tracks are in serious trouble because of the levels of competition and how expensive racing is to run. Those smaller tracks are very much on the edge. What we're saying is, though, that racing is labour-intensive, it is agricultural-based, it is viable. It's going through difficult times and it doesn't need the straw that's going to break the camel's back, which the introduction of casinos will do. It doesn't need anything else that's going to help it slide further down the hill.

What we're asking the government is to consider, will the bringing in of casinos be good for the province? Will it create all the jobs and not create a great deal of difficulties in other areas? As far as our own industry is concerned, we believe it will. So what we're asking is, why don't you take into consideration a labour-intensive industry where you can see where the $2 wager goes, how it trickles down through all the different people's hands and creates employment as opposed to just going into a machine or on to a table?

Mr Sikura: You mentioned infighting. That's certainly true, and as Nigel said, because the industry is in some peril at present, everybody is maybe fighting for their own turf. But no matter which association, which horse group you talk to, they're pretty unified as to their distaste for casino gambling.

With regard to what we're doing for ourselves, I can speak on behalf of the Canadian Thoroughbred Horse Society, which has seen its budget reduced greatly. We do everything we can to get sponsorship. We do our best to get local people, horse breeders, people who do what we do for a living, to support the industry. We had a program on TSN that we supplied a great deal of information and finance to. They found it more profitable to move on. As the money got tighter, it was more difficult for them to produce their program.

We have tried to create other markets. We went out and created a sport and leisure program, so we're showing that racetrack horses can do more than just run around an oval. We've tried to produce another outlet for the distribution of these horses, the show jump people, hunters, jumpers etc.

We have advertised in publications, including Chinese publications, thinking that that might be a way to get some of the new Canadians involved in our sport and our business. We have dedicated all the income raised from our dinner/dance over the past several years to the CTHS advertising and marketing budget.

The Ontario Racing Commission, which is now in charge of a great deal of our marketing budget, does what it can. They spend $50,000 or $60,000 to promote our local sale to Americans and locals alike with the idea being to get more people involved in our business.

So that's the little bit we can do. We can't do so without money, though.

Mrs Caplan: That's a very impressive list of initiatives and also I think an important recognition of the changes that are going on within your industry, but I take it the bottom line for you is that, notwithstanding everything that you're doing and the recognition of the changes, you feel this initiative of the government is going to make matters somewhere between worse and impossible for you to work through at this time.

We've heard a number of organizations from the racing industry express their dissatisfaction with the level of not only consultation but of real assistance that has been coming. We've heard from the parliamentary assistant and others that the response that you've received is, "Don't worry; we'll look after you." The request for proposal contained a clause saying the way they were going to look after you is by having the proponent of the new casino look after you.

I guess it's been a general theme that we've heard, but given the reality that this government is going ahead with the casino in Windsor, one of the things we've heard and I will acknowledge that you were really clear on was the lowering of taxes. Is there anything else that this government could do to facilitate this difficult time for your industry since it seems to be determined to go ahead with the Windsor casino? One we know is the reduction of the tax rate that you pay so that it would be the same as New Jersey's. Is there anything else that you would recommend that would be an assist to your industry? Now is your chance to get it on the record.

Dr John Brown: I've never had that question posed before, so really I haven't put much thought into it. The reduction of the tax is the main thing, and with that added income we can then take the initiatives we would have to to enhance the industry. There's a multitude of things that could be done to make horse racing more of an entertainment business, I think, within the province to compete with the lotteries and gaming and baseball and hockey etc. In the last few years our being strapped for cash is probably one of our major problems as far as promotion, but how the government can help --

Mrs Caplan: Let's say the government were to agree to reduce the tax so that the resources were available. Do you think it has a role in getting everybody to the table, where you have this kind of infighting, as an acknowledgement of the stresses and pressures on the industry and maybe help with the development of a strategic plan that might help the industry?

Dr John Brown: If they were reducing the tax I think they would be welcomed at the table and --

Mrs Caplan: But you don't want them at the table unless they are going to reduce the taxes first?

Dr John Brown: Basically, yes.

Mrs Caplan: That's fair. I appreciate that. Mostly what they've been doing in the last little while is putting up barriers for you.

Mr Sikura: What drives our industry, like anything else, is the ability to make some profit. If we can do so with purses at the racetrack it filters down. If the racehorses are racing for less and less money, people who own horses are either going to get fed up and not participate or they're going to be prepared to pay us less for our end product, and that hurts us.

It still costs us the same amount of money to raise a product. Outside of declining stud fees, which has occurred over the past few years, we still have staff to pay, we still have hay, we still have feed. These things don't go down along with the purses. These things continue to go up while purses are going down. Yearling prices have been absolutely obliterated in the past few years. We used to average in the vicinity of $60,000 at our select sale here at Woodbine; we're down to $27,000. There are not too many horses we can produce at a profit for $27,000.

Mrs Caplan: I know how frustrating it must be for you. We've heard the parliamentary assistant and members of the government caucus on a few occasions take the attitude that the problems are there without the casino and that --

Mr Duignan: It's your interpretation, Elinor. It's certainly not ours.

Mrs Caplan: What you said, Noel, was that it's their own fault.

Mr Duignan: No, I didn't say that.

Mrs Caplan: It's on the record in Hansard and you've been quoted as saying that. I understand their frustration.

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Mr Duignan: That's not true, and you know it.

Mrs Caplan: That is exactly what he said.

Mr George Dadamo (Windsor-Sandwich): That's not true.

Mrs Caplan: Check the Hansard; it's exactly there. I understand their frustration.

Mr Duignan: You did a great amount for the horse racing industry when you were in power.

Mrs Caplan: Yes, we did.

Mr Duignan: You did nothing, as usual.

The Chair: Order. Mr Eves has a question.

Mr Eves: On page 3 of your submission, your two bold-type statements really say it all: "We have continually emphasized that racing does not have a level playing field," and "In effect the government is both our legislator and our competitor." Isn't that the crux of the problem here?

Mr Wallace: Yes, it is.

Mr Eves: At one time the horse racing industry, in terms of gaming, had a monopoly in the province of Ontario. Now that monopoly has been reduced to 27% of the gaming dollar and is about to be reduced, in reality, even further. Government is in effect using taxpayers' money, some of which is your taxpayer money as well as everybody else's in society, to subsidize other forms of gaming, be it a lottery, be it Sport Select, be it government-owned casinos. They're taking your tax dollar and turning around and using it to compete against you. I understand your frustration. I definitely think the province has to address the issue of your parimutuel tax, because I couldn't agree more: It is very unfair in its current state, given today's reality and the reality of the introduction of casino gambling into the province of Ontario.

I would also like to ask you about some fairly large discrepancies. We've had many people from your industry appear, and this morning the Standardbred Breeders and Owners Association was here. The government is using, in part, a submission it gave to the committee when we started our hearings in Windsor last week, a study from a professor at the University of Toronto. He indicates that in his opinion the number of full-time jobs in the industry does not exceed 25,000 and may in fact be less than 18,000. You say that somewhere between 9,000 and 18,000 jobs will be lost in the first two years. He claims there may not even be that many in your entire industry. He says, "The effect of casino gambling on the horse racing industry will be decreases in wage in the order of 5% to 10% at a maximum."

Every other experience in North America that I have read has shown somewhere between 27% and 40%. How do you explain these huge discrepancies? He's saying that possibly there are not even 18,000 people in your entire industry and you're saying that 18,000 may be laid off. How can you lay off 18,000 if you don't have that many? He's saying that, at the very most, it will affect your industry 5% to 10%, and every other experience is 27% to 40%. How do you explain those discrepancies?

Mr Wallace: The first figure of 45,000 jobs came from the Dunning report, which was a report done in 1987 for the government. At that time the job figure he came up with was: "The horse breeding and racing industry is viewed as a resource industry and is labour-intensive. Salaries and wages of $500 million represents 45,000 jobs. This figure puts the industry well ahead of many major industries in this province." That was from a government study done by Roland Dunning.

The figure of how many jobs would be lost comes from a report done by Price Waterhouse for the Ontario Jockey Club on the effect casinos would have on the horse racing industry in Ontario. Quoting from that report: "With a potential negative impact of 19% to 37% on total horse race wagering in Ontario on the introduction of casino gambling, a proportional loss of between 9,500 and 18,500 industry jobs would likely occur over the medium term." That's a quote from the Price Waterhouse study for the Ontario Jockey Club.

That's where those figures come from. I don't know where other figures came from that were quoted elsewhere, but that's where our figures come from.

Dr John Brown: In terms of the 5% to 10% decrease in parimutuel, I don't know where you came up with those figures. In actual fact, when casinos were in direct competition with racing, which seems to be more legitimate, what actually did happen was closer to 30% or more. That should carry more weight than somebody's estimate from whatever sources. There is more than one scenario where we know it dropped in the neighbourhood of 30%; it wasn't a single instance.

The Chair: Messrs Brown, Sikura and Wallace, I thank you for presenting before the committee today.

Mr Sutherland: Mr Chair, while this group is going off and the next group is coming on: The member for Oriole implied that the government has done nothing to support the racing industry and the thoroughbred racing industry. I think it is important to note that the government, certainly the minister herself, in conjunction with the Ontario Jockey Club did go, in terms of the bid for the Breeders' Cup, to bring the Breeders' Cup to Ontario and has provided some very clear support in that activity. I think it needs to be stated for the record that the government has made efforts to support both thoroughbred and standardbred.

The Chair: Thank you, Mr Sutherland. Through our deliberations from time to time, all members get an opportunity to put their opinions on the record.

Mrs Caplan: On a point of order, Mr Chair: I was going to say to the delegation, do you have a response?

Mr McClelland: Maybe they would like to respond.

The Chair: We have one more presenter and we don't want to unduly delay them, but, as the Chair allowed Mr Sutherland 30 seconds to make a statement, if you would like to respond, you're certainly welcome to. I wouldn't want to disallow you that opportunity.

Mr Wallace: I just wanted to say that we commend the government's support in bringing the Breeders' Cup to Canada, but I would also like to add that the Breed-ers' Cup is the richest sporting event in the world. Its $10 million in purse money for one day of racing will bring to Toronto not only four hours of live television on NBC but a tremendous boon: It will be the biggest attendance we've ever had in Toronto. Our biggest attendance to this point is about 28,000, I think, at Woodbine, and it will probably be about 56,000, so it behooves the government to bring a major tourist attraction. It's helping racing, but it's also helping the province dramatically.

Mr McClelland: Does that make Bill 8 okay?

Mr Wallace: No.

The Chair: Thank you, gentlemen.

ASSOCIATION OF CASINO GAMING SUPPLIERS OF ONTARIO

The Chair: Our next presenter is the Association of Casino Gaming Suppliers of Ontario: Mr Daniel Acks and Aubrey Zidenberg.

Mr Daniel Acks: As president of the Ontario Association of Casino Gaming Suppliers, I thank you for the opportunity to express the concerns and views of the association within this forum. It is my intention to convey to you the implications, repercussions and possible enhancements of Ontario's charitable casino gaming industry, which my association represents.

Charitable casino gaming, Monte Carlo nights, if you will, has been in existence within this province for nearly 20 years. For a good many of those years, more or less up until February 1993, our business has been, for lack of a better description, essentially a hardware rental. Charities rented gaming tables and wheels and, with little in the way of governmentally enforced controls, conducted their fund-raising events with varying degrees of financial success.

Professionalism, or the mandate for professionalism, in the conduct of these latter events was virtually non-existent. Further to that, our industry's role under the terms and conditions of the charities gaming licence prohibited us from becoming involved in these fund-raising efforts any further than simply the rental of this equipment.

Over the years, the public's market demand on our industry compelled those in the business to increase their level of sophistication with respect to the manner in which these events were conducted. Financial controls, professional staff, specific advertising formats: All these elements started to present themselves as integral to the continuing viability of these fund-raising efforts.

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In February 1993, the Ontario government recognized officially what our industry has known for quite a while: that the public was ready for a more sophisticated series of terms and conditions reflective of current gaming trends within this province. Our association, in conjunction with the entertainment standards branch of MCCR, has been working diligently to devise a comprehensive series of regulations that administrate and govern our industry fairly and with integrity.

To that end, a great deal of time and effort has been expended on both sides, both in the commercial and governmental sectors, to develop guidelines that make sense. We have complied sincerely and enthusiastically with the entertainment standards branch's solicitations in all aspects of our industry. As a matter of fact, the financial documents devised by the government to be used as reporting tools onsite by the charity are a blending of the paperwork already utilized by some companies within our association.

The point is, we have freely shared information with the government office responsible for licensing our industry in a spirit of mutual cooperation. We are very sensitive to the fact that without such compliance our business may evaporate overnight. Demonstration of competence and integrity in the eyes of any regulatory body is vital to our survival.

As an industry, we welcome wholeheartedly the opportunity to legitimately provide a service and product to our charity clients that would capitalize upon the enthusiasm for what we recognize as a growth industry. As a consequence, the evolution of our services and products since February 1993 has been astronomical in such a short time. Although the terms and conditions upon which we still operate confine us to very stringent specifics, nevertheless the level of our industry's expertise, which addresses every aspect of a gaming event, financial, staffing, marketing and the like, is considerable.

The results of these latter efforts are also considerable. Specifically, we have made our industry a vehicle for charity self-sufficiency and we have developed and currently employ a vast workforce, over 5,000 registered gaming assistants, within the province of Ontario who depend on companies within our association for employment.

The mandate upon which all charities now operate incorporates financial independence as much as possible. These latter groups, recognizing the reality of cutbacks both in the corporate and governmental sectors, are desperate for avenues of revenue that will ensure their continued existence. To that end, these latter groups have embraced our industry. It has been a partnership with considerable momentum. As the demands of fiscal accountability and profitability increase, we as an industry have had to provide a product that meets these pressures.

Within the confines of the current terms and conditions, we have done so quite well. The current gross dollars generated by these charitable casino events have surpassed anyone's expectations. Such generation of revenue does not happen by accident. It is the result of carefully orchestrated events respective of the aforementioned partnership between our industry and the charities.

This is a province-wide partnership involving charities from a grass-roots level to those on the national level. To some degree, almost all charities in this province have looked at, thought about and are now implementing a fund-raising program with gaming as its foundation. The self-sufficiency I referred to earlier is therefore widespread and runs quite deep throughout all communities. Casino fund-raising is now, more than ever, an integral part of a charity's game plan.

In addition to the obvious financial benefits to charities of these events are some benefits that are not as prominent and yet just as vital. I'm referring to the growing income-generating workforce that now services our industry. Companies such as those within our association are the sole source of income for individuals who a few months ago were on the unemployment rolls. Had it not been for the development of our industry, these people would simply not be working. They would be collecting government benefits, welfare, whatever you want to call it.

The point is, members of the committee, that these are hourly-waged individuals representing a viable, skilled workforce that cannot be ignored, and it is our industry which employs over 5,000 of them, and their numbers are growing. Each of these individuals has paid a licensing fee to the government. They assume and fully expect that job security constitutes an integral portion of this fee. We can only provide employment if the government maintains our viability.

The expectation, therefore, from which we as an industry as well as the charities operated in February of this year was that the government would protect and ensure the continued growth of charitable gaming within this province. To that end, and in good faith, licensing fees governing the conduct of our business were levied and paid for.

We are concerned that this viability is in jeopardy. In order for our industry to survive as a vehicle for the financial self-sufficiency of charities within this province and the continued source of employment for thousands, we need the ability to compete. The introduction of new games and betting limits is required, along with more opportunities for the charitable gaming industry to exchange views and dialogue with committees such as we find here today. Anything less than providing this latter opportunity would be more than a mistake. It would jeopardize an industry that exists here and now and upon which a large sector of the Ontario public depends.

Mr McClelland: In terms of your comments near the conclusion of your presentation with respect to the ability to compete, if I understand correctly in the context of your presentation, you are speaking in terms of competing with a casino, competing with institutionalized gambling per se.

Mr Acks: That's correct.

Mr McClelland: I'd also be interested in hearing your comments with respect to your ability to compete in terms of providing a service. Presuming, I think reasonably accurately, that we'll have one casino in Windsor, I think it fairly self-evident that the plans are, at least in a preliminary stage, to move to six or seven other locations in the province. To what extent do you see the possibility or any opportunity for your business to compete in terms of providing services for -- I use this word loosely -- the institutionalised casino, the permit casino? Are you being given that opportunity? Has there been any discussion with a view to accommodating the resources that you have currently available in terms of the personnel and the expertise you could bring, a made-in-Ontario supply to the user in Windsor and potentially elsewhere?

That would be one point. There are a couple more, but I'll let you deal with that and, time permitting, I'd like to pursue another.

Mr Acks: By virtue of our business, we're classified -- I'll use the quotation marks -- as "gypsies." Under the terms and conditions, we have to move every three days from location to location. In the industry we accept those constraints, accept those as part of the conditions upon which we operate, but given those constraints, we find it imperative that the product we offer within those three days be able to compete with anything that's offered on a more permanent basis.

I'm referring specifically, with the opportunity of different games beyond just the blackjack tables and wheels of fortune that we have right now, to increased betting limits. The product we have right now is not a far stretch from the product that existed 20 years ago, but the market demands have obviously exceeded the product that we have to work with. So what we are requesting is the ability to provide a product, for those three days, that will entice people to patronize our casinos in addition to the permanent facilities that might or might not exist in any cities we're operating in.

It's imperative that these constraints are removed from our ability to operate, not only from a business point of view as business people but also so it will not impinge on the charity's ability to make revenue or to exact revenue from the casinos we operate.

What we're referring to specifically is the introduction of new games and introduction of higher betting limits. Basically what we're asking is that the product that we have is similar to the product that would exist in any permanent facility. If we receive anything less than that, then I guess I would imagine that our ability to compete is severely impinged upon.

Mr Aubrey Zidenberg: We've got an industry that within a short period, with the growth potential that has been allowed us by our government of the day, has created an industry that is going to do, unquestionably, approximately $500 million in gross drop, cash buy-ins, in the gaming facilities in the one year to February 1, 1994, the anniversary of the passing of the Gaming Services Act. That would reflect an approximate gross win of $100 million to $125 million.

Through those charitable gaming sites currently in the province, you would have approximately 10,000 people per day, citizens in the province of Ontario who are attracted to this new form of entertainment that the members of the association, in association with the charities in the province of Ontario, have created as a viable method of fund-raising. That becomes approximately 70,000 people per week who are moving through those sites.

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To focus in a little more closely on your question about whether there was a question period prior, a process, I find, after the number of years in this industry, that the placing of a casino project team to monitor gaming, both domestically and internationally, that could find the time to travel the face of this earth to understand gaming and bring it back home -- I'm not saying they have not done a wonderful job in doing so, in addressing gaming and understanding the concept of gaming. However, we as an industry that exists here in the province, from what I understand as a spokesperson for the association and speaking with the other members of the association, have not at any time been asked to come forward by that project team and we were never visited by that project team.

As far as I'm concerned, we represent, as far as we have been able to spread our wings and grow within this province, a fairly substantial industry. If any of you were able to come down to the Canadian National Exhibition at this time, you'd see an operation by one of the gaming operators in the province of Ontario that reflects nearly 1,200 staff in place in approximately 40,000 square feet of gaming space with 185 table games in operation that is addressing nearly 10,000 people per day. That's a member of the Association of Casino Gaming Suppliers of Ontario. That site is fully automated, fully computerized; it has total controls relative to international standard; it's monitored by full security teams; we have security rooms. Everything is in place relative to the degree to which we have been able to operate.

I can't understand, if that industry exists in the province, how we could get to this late stage in the game and not even have been addressed by our government of the day. We have taken the initiative to create that portion of the industry. It may not meet that international standard, that level to which the government of the day is hoping to bring the gaming project in the province of Ontario, but there certainly is a nucleus of gaming intelligence in the province of Ontario and an industry that exists in the province of Ontario. I can't understand how we have not been addressed earlier in the game than here, after second reading and prior to a third and assent.

Mr Eves: We heard from the B'nai Brith Foundation late this morning, which expressed many concerns similar to yours. Is your concern that the province may legislate you or regulate you out of the charity casino or the casino business in the province, or is your concern more that you will not be competitive if you don't have access to the same games and activities that the province's own casino would have?

Mr Acks: I think one's tied in with the other.

Mr Zidenberg: A combination of both. I still have not seen anything in writing to date, unless there's something that I unfortunately do not have, that confirms that the related duties and jurisdictions of the entertainment standards branch of the Ministry of Consumer and Commercial Relations will be rolled into the Ontario Casino Corp.

If we look at the verbiage used in the bill, we will see on its first page, under the definition, "`casino' means a place which is kept for the purpose of playing games of chance," and "`game of chance' means a lottery scheme conducted and managed by the Ontario Casino Corporation on behalf of the government of Ontario." There may be room for clarification there, whether we, as gaming operators currently operating on behalf of charities that are licensed -- or, if that is in fact being rolled in, whether our licensing with the province of Ontario is going to give us some type of umbrella there and protection for the charities for which we operate and ourselves as operators.

Mrs Mathyssen: Very briefly, I heard you allude to the Gaming Services Act and you mentioned that you would like there to be more games available. I know there have been changes and that those changes began to come into effect in February 1993. I was wondering what those changes have meant to you and your clients and what you see in the future as those changes to the act come more and more into effect.

Mr Acks: In an overall sense, what the current terms and conditions accomplish is recognizing our industry. We're able to offer a much more sophisticated product to our client charity than we have in the past, specifically the levying of payroll expenses against an event, paid professional croupiers, an increased betting limit. Obviously, with the licensing of our role in this business, we now have the ability to provide our services as recognized by the government. We paid for these fees. There's an assumption, under the licensing of any individual in this business, that there has been a certain amount of scrutiny conducted by the government so that anybody now in this business is competent, is fiscally responsible, all the elements of such scrutiny.

The level of sophistication that the terms and conditions have allowed us to now perform have moved from this level up to this level, and that's fine. We're very grateful for it and we're operating quite well under those current terms and conditions. What we're afraid of, though, is that we will not move from this middle level up to the final level, reflective of what a permanent facility might stand for, and we would like the ability to make that final jump up to that level of competence.

Mr Duignan: Thank you very much for appearing in front of the committee here this afternoon. I have just a couple of quick questions, because I know a colleague of mine also wants to ask a question.

You're familiar with the fact that the ministry has formed a Charitable Gaming Advisory Committee. Have you brought your concerns to that committee?

Mr Acks: I sit on that committee, and at the last meeting we had we were left with the formation of various subcommittees, one of which is a Monte Carlo subcommittee. The points of view I expressed to you will be placed on an agenda that I hope the subcommittee will address. As of yet, though, there has been no date set for subsequent meetings for this charitable advisory committee to meet again. We did have one meeting, a very general policy formation meeting. No minutes were received from that meeting to give us any further direction, outside of the fact that we are to submit items for agenda relating to this subcommittee. But there was nothing further said to that committee.

Mr Duignan: But the process in fact has begun and, hopefully, through that process your concerns you raised here today will be addressed by that committee.

You mentioned the fact you've got several thousands of people -- I think you used the figure 5,000 -- working in your particular industry. What is the average hourly wage in the industry?

Mr Acks: It's $10 an hour.

Mr Duignan: Does that include tips?

Mr Acks: It's $10 an hour excluding tips.

Mr Wayne Lessard (Windsor-Walkerville): You indicated in your presentation that you had some fear that there may be some job losses if there were increased restrictions or loss of opportunities for your business. That's a concern that I share as well. I don't want to see any job losses take place. But I want to ask whether you provide any training for the people who are employed by you, and don't you think that the training you offer and the experience you offer to people would be an advantage to those people to obtain employment in a permanent casino in Windsor?

Mr Acks: In answer to your first question, we do provide training. I'd like to think that the level of training, the level of proficiency that any of our staff exhibit on site would be equivalent to anything you'd find south of the border. As far as the mobility of this workforce, realistically, when you're talking 5,000 applications or 5,000 people who are working, it's debatable how many are going to find work in one permanent facility. There's the other question of mobility: Will these people travel from Toronto to Windsor to find work? There's only a certain amount of jobs available.

My point is that the viability of the industry and of these people working exists right now. It's currently taking place. There are people who are building incomes and careers around what we do in the industry. This is not something that's down the road, this is happening right now, and these people are relying on companies in the association, companies like mine and Mr Zidenberg's, to employ them. If we can't compete and obviously our business is curtailed, we strongly feel the ability for these people to find work will be curtailed.

The Chair: Mr Acks, Mr Zidenberg, thank you very much for presenting before the committee today.

This committee is adjourned until 10 am tomorrow.

The committee adjourned at 1531.