MINISTER OF CONSUMER AND COMMERCIAL RELATIONS
MINISTRY OF CONSUMER AND COMMERCIAL RELATIONS MINISTRY OF ECONOMIC DEVELOPMENT, TRADE AND TOURISM
CONTENTS
Tuesday 6 August 1996
Alcohol, Gaming and Charity Funding Public Interest Act, 1996, Bill 75, Mr Sterling /
Loi de 1996 régissant les alcools, les jeux et le financement des organismes de bienfaisance
dans l'intérêt public, projet de loi 75, M. Sterling
Minister of Consumer and Commercial Relations
Honourable Norman W. Sterling
Ministry of Consumer and Commercial Relations; Ministry of Economic Development,
Trade and Tourism
Ms Teri Kirk, legal director, legal services branch, MCCR
Mr Rob Harper, senior policy adviser, MCCR
Mr Neil McCallum, senior counsel, MEDTT
STANDING COMMITTEE ON ADMINISTRATION OF JUSTICE
Chair / Président: Mr Gerry Martiniuk (Cambridge PC)
Vice-Chair / Vice-Président: Mr Ron Johnson (Brantford PC)
Mrs MarionBoyd (London Centre / -Centre ND)
Mr RobertChiarelli (Ottawa West / -Ouest L)
Mr Sean G. Conway (Renfrew North / -Nord L)
Mr EdDoyle (Wentworth East / -Est PC)
*Mr Garry J. Guzzo (Ottawa-Rideau PC)
Mr HowardHampton (Rainy River ND)
*Mr TimHudak (Niagara South / -Sud PC)
*Mr RonJohnson (Brantford PC)
*Mr FrankKlees (York-Mackenzie PC)
Mr Gary L. Leadston (Kitchener-Wilmot PC)
*Mr GerryMartiniuk (Cambridge PC)
Mr John L. Parker (York East / -Est PC)
*Mr DavidRamsay (Timiskaming L)
Mr DavidTilson (Dufferin-Peel PC)
*In attendance /présents
Substitutions present /Membres remplaçants présents:
Ms IsabelBassett (St Andrew-St Patrick PC) for Mr Doyle
Mr BruceCrozier (Essex South / -Sud L) for Mr Chiarelli
Mr JimFlaherty (Durham Centre / -Centre PC) for Mr Tilson
Mr GerardKennedy (York South / -Sud L) for Mr Conway
Mr PeterKormos (Welland-Thorold ND) for Mr Hampton
Mr E. J. DouglasRollins (Quinte PC) for Mr Leadston
Mr Terence H. Young (Halton Centre / -Centre PC) for Mr Parker
Also taking part /Autres participants et participantes:
Douglas B. Ford (Etobicoke-Humber PC)
Clerk / Greffière: Ms Donna Bryce
Staff / Personnel: Mr Andrew McNaught, research officer, Legislative Research Service
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The committee met at 1302 in room 151.
ALCOHOL, GAMING AND CHARITY FUNDING PUBLIC INTEREST ACT, 1996 / LOI DE 1996 RÉGISSANT LES ALCOOLS, LES JEUX ET LE FINANCEMENT DES ORGANISMES DE BIENFAISANCE DANS L'INTÉRÊT PUBLIC
Consideration of Bill 75, An Act to regulate alcohol and gaming in the public interest, to fund charities through the responsible management of video lotteries and to amend certain statutes related to liquor and gaming / Projet de loi 75, Loi réglementant les alcools et les jeux dans l'intérêt public, prévoyant le financement des organismes de bienfaisance grâce à la gestion responsable des loteries vidéo et modifiant des lois en ce qui a trait aux alcools et aux jeux.
The Chair (Mr Gerry Martiniuk): This is the standing committee on the administration of justice consideration of the Alcohol, Gaming and Charity Funding Public Interest Act, 1996. We will initiate with a statement by the Honourable Norman Sterling, Minister of Consumer and Commercial Relations. Welcome, Mr Sterling. I would request that you proceed.
MINISTER OF CONSUMER AND COMMERCIAL RELATIONS
Hon Norman W. Sterling (Minister of Consumer and Commercial Relations): First of all, it's a pleasure to see you all back here at Queen's Park. I know you're all anxious to get back to work, as we all are. Nice to see all these cheery faces here that are going to support me so strongly in this endeavour.
We hope these public hearings will draw the people who are interested in all the aspects of Bill 75. I'm sure there will be various points of view with regard to several parts of the bill, but I guess more importantly, there will be a varying number of views with respect to how the bill will be implemented in its final stage.
Because the bill is in a lot of ways an enabling piece of legislation, it will lead to many, many questions as to how these things are going to work on the ground. Unfortunately, we will not be able to be in a position to answer all of your questions, but we will try to answer them to the best of our ability at this time as things are evolving over this summer period to come to a conclusion on some of those very important implementation questions.
I welcome all members of this committee who have given some time of their summer to be involved in the debate and I look forward to their suggestions on Bill 75. I'd particularly like to thank my colleague from Durham Centre, my parliamentary assistant, Jim Flaherty, who will be carrying the bill for the duration of the public hearings. I look forward to the results of hearing from the various parts of Ontario with regard to this bill. I know you are familiar with Mr Flaherty, and his ability is, I believe, superior in dealing with issues in my ministry. I think he can do the job better than I, and that's why I have delegated this to him. Besides which, he spent the last two weeks in Ireland.
On May 7 of this year, in our government's first budget, the Minister of Finance announced a number of initiatives that would break new ground in Ontario's gaming marketplace. He spoke about the situation currently facing the charitable organizations in our province, which depend upon revenues from charitable gaming to fund their activities. He said:
"Local charities often have limited financial resources that prevent them from doing all the things they would like to help their neighbours and others in need.
"Many charities depend on charitable gaming as a source of vital funding for their efforts. But under the current arrangements, too little of the revenue from these games actually flows to charities. In addition, many current charitable gaming activities are difficult to regulate and control, placing their integrity at risk."
Bill 75 sets the stage for the government's gaming initiatives announced on May 7. The first step in the process is to bring additional control to Ontario's gaming marketplace by providing a regulatory framework that will be able to properly address these new directions.
Consequently, the first part of Bill 75 -- a standalone act with the title the Alcohol and Gaming Regulation and Public Protection Act, 1996 -- deals with the establishment of the Alcohol and Gaming Commission of Ontario. The new organization is created by merging the present Liquor Licence Board of Ontario and the Gaming Control Commission. In addition, it takes on some regulatory functions of the Liquor Control Board of Ontario.
This will result in:
A single schedule 1 agency that will be able to focus more clearly on enforcement measures relating to gaming and beverage alcohol laws in general in Ontario and which will, as I have indicated, be structured to provide more efficient regulatory control over Ontario's new gaming initiatives announced in the May budget.
The restructuring will amalgamate licensing functions into one organization that should lead to greater efficiencies and better customer service.
The move will also support our government's continuing effort to cut red tape and eliminate duplication in our agencies, boards and commissions.
And, by transferring certain regulatory functions from the LCBO to the new Alcohol and Gaming Commission, we will ensure that the LCBO does not maintain potentially conflicting roles acting both as regulator and retailer.
Some of the activities that will be transferred from the LCBO to the new Alcohol and Gaming Commission include the regulation of private delivery services; authority over the establishment, location, hours and other conditions of operation of retail outlets; and the removal of LCBO control over the activities of other retailers. This move ensures that all regulatory measures concerning the sale and distribution of alcohol are centralized in one organization and in an organization other than the LCBO itself.
The merger will also lead to cost management benefits. As an example, some savings will be realized for the obvious reason that we will require only one chair, one board and one senior management team rather than two chairs, two boards and two management teams. Similarly, we will be able to have one enforcement officer attend a single licensed premise that also has video lotteries to ensure both gaming and liquor licence regulations are being followed instead of sending inspectors from two separate organizations.
I would like to point out that similar mergers such as the one I'm proposing in Bill 75 have taken place in a number of other provinces. Alberta, Saskatchewan, Quebec and Nova Scotia all have sought efficiencies through amalgamating their liquor boards and other regulatory bodies.
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Also in his remarks on budget day, the Minister of Finance said:
"To assist Ontario's hospitality industry, the Ontario Lottery Corp will develop a plan to introduce a limited number of video lottery terminals at selected locations across the province.
"In recent years, the gaming marketplace has expanded dramatically, with numerous new products and activities which have made control and regulation difficult."
He went on to say, "It is anticipated that the establishment of a tightly regulated, government-managed VLT network, along with other measures announced in this budget, will counter illegal gaming activity, and impose some needed discipline and control into Ontario's gaming marketplace."
He went on to say, "We believe that VLTs, if implemented within tight regulatory controls and in limited-access environments, can meet a legitimate entertainment demand and provide a significant stimulus to the hospitality industry."
The second part of Bill 75 amends several pieces of existing legislation, including the Gaming Control Act, the Ontario Lottery Corporation Act and the Ontario Casino Corporation Act.
The purpose of these amendments is twofold. First of all, there are the enabling amendments which will permit video lotteries to be legally introduced into Ontario. But alongside this, we are making other amendments to the Liquor Licence Act and the Liquor Control Act, as well as the Ontario Lottery Corporation Act, which will effectively place conditions at the very outset of their introduction upon the circumstances under which video lotteries will remain available to the public of Ontario.
Concern has been raised about the effect of video lotteries on our younger population. In this respect, we will amend the Liquor Licence Act to permit the revocation or suspension of a liquor licence when the licence holder or employee allows a person under the age of 19 years to play video lotteries or to be in areas where there are video lottery machines.
To meet the requirements of the Criminal Code and to ensure there is comprehensive government control over the network of video lotteries, the Ontario Lottery Corporation Act will be amended to make the Ontario Lottery Corp responsible for video lotteries under regulations of the Alcohol and Gaming Commission of Ontario. This amendment will also reinforce restricted access to areas designated for video lottery play and will prohibit play by persons under the age of 19 years.
To ensure that we have in place the strongest possible screening process for those who wish to become involved in video lotteries as suppliers of equipment and operators of charity gaming halls, the Gaming Control Act will be amended to require these individuals or organizations to be registered with the Alcohol and Gaming Commission of Ontario.
During the second reading debate in the Legislature, a view was expressed by the opposition party that the Gaming Control Commission would only play a generally passive role within the overall regulatory process. Let me assure you this is not the case.
Through the more efficient operations of the new Alcohol and Gaming Commission of Ontario, it will have responsibilities in the following areas: (1) registering the owners of the premises where video lotteries will be situated; (2) registering manufacturers and distributors of video lotteries; (3) registering individuals and companies which service video lotteries; (4) establishing the types of games permitted, rules of play and betting limits; (5) setting internal control standards on the handling and recording of moneys; (6) setting minimum standards for surveillance systems; (7) before any registrations are issued, background investigations of individuals and companies will be conducted to ensure they satisfy standards of honesty, integrity and financial responsibility; lastly, the Ontario Lottery Corp plans to maintain oversight of the video lottery network through central computer control, which will allow the constant monitoring of all games in addition to onsite inspection and maintenance functions.
Altogether, our proposals indicate very clearly that the introduction and operation of video lotteries by our government will be done in a more measured and tightly controlled fashion than any other jurisdiction in Canada. We are building in the necessary safeguards that we believe will help counter the illegal gaming activity in this province and that will bring a much-needed discipline and control to the Ontario gaming marketplace as a whole.
We will also direct that 2% of the gross revenues from video lotteries will be dedicated to support the problem of gambling and that a strategy of public awareness education and research and prevention will be undertaken.
As I mentioned during my second reading statement in the Legislature on June 24, Mr Tibor Barsony, executive director of the Canadian Foundation on Compulsive Gambling, issued a news release on May 8, following the budget, in which he said, "A light finally begins to shine at the end of the tunnel." He went on to say, "The government's setting aside of 2%, estimated to be some $9 million per year, represents a very important step in recognizing and beginning to deal with this problem."
Many further details with regard to how and when video lotteries will be introduced will be clarified when the Ontario Lottery Corp finalizes the implementation plan later this fall.
Mr Bruce Crozier (Essex South): A point of order, Mr Chairman: I've hesitated all along to interrupt the minister, but there was a pause. Does the minister plan to have a copy of the statement for the opposition?
Hon Mr Sterling: I can give you a copy, sure.
Mr Crozier: I'd appreciate it.
Hon Mr Sterling: I believe many of the presenters before this committee will be providing input towards that end, but let me assure you that these public hearings will not be the last consultation to be held on this issue. We intend to consult with charities, communities and stakeholders on this and the broader issues arising from gaming initiatives from the May 7 budget before any final decisions are made.
On a final but very positive note, Bill 75 includes an amendment that will give relief to communities that have been plagued by problem licensed establishments. This amendment to the Liquor Licence Act will limit further applications for liquor sales licences for up to a two-year period at premises where ongoing infractions or illegal activities have been chronic problems. I want to emphasize that this community interest based amendment to the Liquor Licence Act is intended to place more responsibility on property owners when leasing their property for use as licensed establishments, and takes into consideration the legitimate concerns of community groups and residents when ongoing problems occur.
This is welcome news to communities like Parkdale in Toronto that have been plagued by problem establishments that have showed little respect or concern for how the ongoing illegal activities they have harboured have impacted on the community at large. It will no longer be acceptable for the absentee landlords to duck all responsibility for the tenants they choose to enter into rental and leasing agreements with. However, if the landlord is sincerely unaware or has attempted to rectify the situation in their property, they will have the avenue of a hearing before the board before action is taken.
In summary, against the background of the commitments made in the May 7 budget of providing a significant economic stimulus to the hospitality industry and providing secure funding for community charities, the Ontario government is proceeding in a cautious and careful manner to implement video lotteries in Ontario under our tight regulatory control within a limited access environment. Our initiatives will provide an increasing flow of funds to community charities across the province and assist the horse racing industry and the province's hospitality industry to compete and grow.
At the same time, the setting up of the new Alcohol and Gaming Commission of Ontario, along with amendments to the Liquor Licence Act and the Ontario Lottery Corporation Act, will provide a more focused and efficient approach to the enforcement of our beverage alcohol and gaming laws.
Ontario is the ninth province to allow the operation of video lotteries and we have put great effort into learning from the experiences of the eight other provinces that have gone before us. Two weeks ago when I was visiting Dr Steven West, my counterpart in Alberta's provincial government, his comments served to affirm that the cautious and controlled approach that we have chosen is indeed the right course. From the very outset, we stated that Ontario will have fewer video lotteries on a per population basis than any other province. I am encouraged that even the professionals that deal with the very worst downside of gambling, the counsellors that help those who are compulsive gamblers in Ontario, have lauded this government's cautious approach to legalizing and controlling this form of gaming.
Finally, Bill 75 provides for a housekeeping amendment to the Ontario Casino Corporation Act that enables the payment of some of the moneys received from Casino Rama to be paid directly into the first nations fund instead of through the consolidated revenue fund.
I am very pleased that these public hearings provide the people of Ontario with an opportunity to make comments on this important legislation. I look forward, as do all members of our government, to hearing the comments and suggestions that will emerge over the next three weeks both from the general public and from members of this committee. Thank you very much, Mr Chairman.
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The Chair: Thank you very much, Mr Sterling. We now move to the loyal opposition.
Mr Crozier: Thank you, Mr Chair, Mr Minister, committee members and ladies and gentlemen. Today is the beginning of a watershed for gaming in the province of Ontario. Bill 75, if you will, is an omnibus gaming bill. Through the use of a few clauses, it has the power to exponentially increase the government of Ontario's dependence on gambling revenue.
Make no mistake, ladies and gentlemen, Bill 75, despite its brevity, is a reckless, fly-by-the-seat-of-your-pants document. It opens the door to a form of gambling that other jurisdictions have dared to adopt and some not at all. Yet, as we sit here today, this government has taken little heed of these warnings.
The government's motive is greed, plain and simple, the need for money. You won't hear the Minister of Consumer and Commercial Relations say that, nor will the Minister of Finance say that, although we know that finance officials are already counting the money. However, Ab Campion, director of communications for the Ministry of Consumer and Commercial Relations, conceded, "I don't think anybody would deny that revenue had a lot to do with it." He went on to admit, "Everybody's trying to do it as quickly as possible," under orders from on high.
What you will hear the minister say is that there is a burning need to control the legions of illegal slot machines in the province. Of course, the OPP is strangely silent or at least careful in their words on this issue, because they're not fools. Sergeant Larry Moodie of the OPP's illegal gambling division said that just because the government legalizes video gambling doesn't mean the illegal machines will disappear. "There's too much profit in it. It will take substantial enforcement to do that."
You will also hear what I will call the government's witnesses drone on about the need to give their business or industry a boost; about how we can attract tourists with these machines. The truth is, if your business is a restaurant or bar, you should be selling food and drink to the best of your competitive abilities. If video slot machines are to be the saviour, then that says a lot more about the problems within the food and hospitality industry than we may know. We have learned that licensed establishments in Alberta, the minister's favourite province, have become more dependent on video slots, and patrons have shifted spending from food and booze to the machines. The answers to the hospitality industry's problems lie more in consumer confidence than they do in draw poker.
You see, on the surface Bill 75 appears to be an exercise in modernization, in streamlining and control. We've already heard these words from the minister. But what Bill 75 really does is attempt to extract taxes on a voluntary basis. The government will be, in effect, bribing the province's charitable groups, the hospitality industry and the raceways along the way so that they will be able to mitigate their social concerns by getting a piece of the action.
It's clear that part of Bill 75 has a social-moral component. Having said that, I would also suggest that much of Bill 75 is workable. We have no interest in attempting to legislate morality, but we do strongly feel that something needs to be done in the area of gaming policy for the province of Ontario. Bill 75 does not do that. It completely ignores the fact that what has happened in gaming over the last three governments has been ad hoc.
Unfortunately for this committee, what could be a forum for hearing what the public thinks about issues such as the proper role of charity casinos and the desirability of video slot machines will not happen. The government has already made a value judgement about their existence. You heard the minister's comments today. It speaks in the affirmative: We are going to do this, we will do this. It's a foregone conclusion. This of course despite the promise of consultation on the issue before legislative action.
In fact, I challenge the government members here today that if you're truly going to listen to the witnesses I expect will appear before us in the next three weeks, that when it comes down to the clause-by-clause, I will be interested to see if it's much the same as the public hearings on Bill 26, and that was that not one clause from the opposition, not one amendment, was adopted. I would find it strange that throughout three weeks of hearings, of listening to the public, there isn't something in this bill that should be amended. We'll wait to see if that happens. Instead, we have a committee of the Legislature soliciting views on a bill that is likely to be pushed through the Legislature early in the fall so that the first video slot machines will appear in or around October or November.
In fact, we know that the ministry is already preparing requests for proposals for the equipment. Later this month they will be inviting companies to bid on the permanent charity sites. So one question we might ask is, are we consulting on the merits of Bill 75 or just the technicalities? Therefore, we have some concern regarding the legitimacy of what is about to take place over the next three weeks.
I'd like to speak for a few minutes about trends. First, what we know is this: Video slot machines are in eight other provinces as well as some US states. But what can we learn from them? We can learn that at the very least we must tread carefully. The Premier, it seemed, used to be of this view. In a letter from Mr Harris to Charities First Ontario on May 16, 1995, the now Premier said, "A Harris government will not move on VLTs until all sectors have been consulted, all impacts are assessed and an agreement is reached on the distribution of revenues."
We have heard the minister say today that there will be an implementation plan later this fall. So this committee won't even be given the opportunity, nor will the public be given the opportunity, to comment on the implementation plan. The minister has already told us they're coming, there's little doubt about that in his words. But the Premier's promise that the government would not move until all sectors had been consulted, all impacts assessed and agreements reached -- it seems to me, ladies and gentlemen, committee members, that the government is moving with great speed, notwithstanding that promise, and I want to emphasize, "until all sectors have been consulted, all impacts assessed and an agreement is reached on the distribution of revenues."
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We know that most evidence to date is either negative or incomplete. We must ask then, why Bill 75? This bill not only opens the door for the introduction of video slot machines to the gaming sector but creates a dangerous merger between the gaming and liquor commissions. I say dangerous because there will exist an easy licensing mechanism for video slot machines in licensed establishments. It's one simple amending sentence away from reality.
Efficiency arguments aside, this merger has far more implications than many of us can imagine.
First, we know that there aren't enough inspectors to uphold the existing liquor laws in our licensed establishments. This says nothing of the illegal ones operating in the province.
Second, how this supercommission, with its limited resources, is also to patrol 20,000-plus video slot machines is beyond comprehension. The short answer is, they can't do it.
Which brings me to another of the minister's justifications of Bill 75 and the legalization of these slot machines: the ability to control the grey market. I don't think I should even have to explain why this reasoning is so abjectly ridiculous.
First, if we take the minister's argument to its logical conclusion, it would result in the legalization of all formerly prohibited actions and vices. What we end up with then is anarchy. While I don't want to engage in too much hyperbole, I will say that, at the very least, the minister is on a slippery slope.
Let's look at cigarette vending machines, a proposal I believe the Tories supported. We took them out of licensed establishments because the sale of tobacco couldn't be adequately monitored and controlled. And now we're to believe that a bar full of video slot machines will be better monitored? I disagree.
Let me reiterate a few key points before concluding.
The trend is towards limiting these machines. Addiction studies have borne out the problems. Charities have questioned them versus other forms of gaming revenue.
Control: We want to control this type of gaming where it exists illegally. We should be enforcing the law, not watering down laws.
Choice: We understand it is a muddy issue for some. Many can control their use of gambling, and yet studies have shown that this form of gambling is particularly addictive, especially for the young and the less well-off. We all have heard that oft-used phrase that it's the crack cocaine of gambling.
Therefore, we need to choose whether we should pursue this type of gaming at all. Second, we should ensure that communities across this province have the right to choose whether to allow this form of gambling on every street corner. Over 20 municipalities have already passed resolutions opposing the introduction of video slot machines, and I suspect that more will come as this issue becomes more public. So let's keep in mind that we're affecting the nature of communities if and when Bill 75 becomes law.
Finally, this is an issue that raises a larger trend that I mentioned at the outset: the ability of the government to function without these gambling revenues. Having our health care and education funding levels dependent upon people gambling is an alarming prospect, yet we are headed down that road. I've come to the conclusion that the most addicted to gambling to date is the provincial government itself.
We have the opportunity to pause for thought, members of this committee. Very little planning has gone into gaming policy over the past 20 years. Ad hockery has been the norm. As new games are developed, they are just simply introduced, be it Scratch and Win, Pro Line, 6/49. We've continuously increased the slices from it.
However, like all good things, it must come to an end. The gaming pot is not bottomless. Even if we assume that government-sanctioned gambling is a good thing, likely we would all agree that government must control what is otherwise so tempting to abuse. We must ask, to what degree should gaming take place? We must also be asking tough questions like: Who should decide? Is it a local issue or a provincial one? That is one question that needs to be asked as we travel across the province to the communities that will feel the effects first hand and will be called upon to deal with the fallout from Bill 75.
As Eric Dowd wrote: "Premier Mike Harris has this strict principle on gambling -- he is against it unless it can make his government a lot of money."
Members of the committee, we have an opportunity, and in fact we have a responsibility, to look at this issue in more than just economic terms. We must look beyond solving the short-term cash crunch caused by tax cuts and large deficits. We must resist the easy way out. Above all, we must listen not only to those with vested interests but to those who will live with the consequences of the legislation should it pass as it stands today.
The Chair: There are five minutes left of the 20 minutes.
Mr Gerard Kennedy (York South): What we'd like to add is simply how the experience in other jurisdictions underlines the recklessness this present approach embodies. In British Columbia, video lottery terminals were turned down by that government. In Alberta, the oft-cited Alberta, that government has capped the number of these slot machines because of concerns arising in local communities. Studies there are showing more and more that the public is against the impact these are having. In Manitoba, they've withdrawn 10% of these machines, with plans to withdraw more. In Nova Scotia three years ago, they withdrew two thirds of these machines because of the deleterious effect they're having on neighbourhoods.
What this government has not done, as my colleague has already pointed out, is allowed us to address this issue in its most straightforward proportions. Later on, we'll ask the minister: "Tell us how much money you are planning to extract from this. To what kind of cost are you putting this province in order to raise that money? Have these studies been done?"
But ahead of that, people need to realize that they need to be part of this discussion, because the government has the audacity to put charities at the front of this bill as if somehow this is mainly about them and not about where 90%, or a huge percentage, of this revenue is going, which is to government coffers because this government's fiscal plan is so far off. We're going to take a huge step -- and we hope this government and this minister indeed will tell us how big a step -- in expanding gambling in this province for that simple reason: because this government can't add. We're going to take on the experience of US and Canadian jurisdictions where the crack cocaine of gambling, the slot machines, will be in every neighbourhood, exposing, really, this province to what should be seen as a symbol for this government, which is a machine that employs nobody, produces nothing and preys on vulnerable people.
I think when we are coming to terms with this as a committee, we have to look square in the face of the impact it's going to have in those communities and listen very, very closely to the 23 communities already, in anticipation, that have said they don't want this happening in their area. We look forward to the minister's comments further.
The Chair: Thank you very much, Mr Kennedy. If we could proceed, Mr Kormos.
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Mr Peter Kormos (Welland-Thorold): I'm not inclined to understatement, but with some great understatement I can tell you that neither I nor the other members of my caucus are very enthusiastic about this proposal. It would as well be an understatement to describe this as modest, because it indeed is overwhelming in its impact on communities and families and individuals across this province.
It's all about bucks; the bottom line is that this all about bucks. This is coming from a government whose leader, the Premier, said, "We don't have a revenue problem; we have a spending problem." Let me take issue a little bit with some of the other things that some of the leaders of this government, the Tories, have had to say.
Why, it was back in 1993 that Premier Harris acknowledged -- he said it here in the Legislature -- "As Donald Trump says, `Gaming doesn't come cheap.' I have to agree with a lot" of the things the critics are saying on that. Gambling "brings crime, it brings prostitution, it brings a lot of the things that maybe areas didn't have before. There is a big cost to pay." Mike Harris said that in 1993.
A little while before that, some six months, in 1992, again in the Legislature, Mike Harris was commenting on the last government's proposal to establish casino gambling here in the province of Ontario. I've got to acknowledge that I was more inclined to agree with Mike Harris then because I opposed that legislation, I voted against it, because I had great concerns about the effect of casino gambling -- still do -- and great doubts -- I remain cynical -- about the effect of casino gambling to provide positive economic impact on communities.
I think the jury is still out very much in that regard. Witness what the Ontario Restaurant Association had in its comments, in its assessment of the Windsor casino on prosperity for small businesses in the downtown Windsor area. Of course, now we have Orillia. Niagara Falls -- the construction crews are there ripping down walls and ready to accommodate any number of gamblers who will come to Niagara Falls.
Let's understand: Gambling is all about losing money; it's not about winning money. It's all about people having their pockets picked, about people being turned upside down and having every last nickel and dime shaken out of them. It's not about winning; it's about losing. What's repugnant about the proposal and the issues we'll be dealing with during the course of the next three weeks and what we've witnessed coming out of Orillia over the last few days are carefully sculpted, crafted press releases talking about the winners. Their names and smiling faces have appeared in newspapers across the province. But the reality is that there were far more losers. Gambling isn't about winning; it's about losing.
Mike Harris knew that at one point in his political career because back in 1992, when he was questioning the approach of the last government to developing casino gambling, he said: "Wouldn't it make more sense from a sound management point of view, something we haven't seen very much of, to do the social projections and economic studies before you announce the casino? Second, in the absence of having done that, when can we expect to see the economic and social projections and results of those impact studies, even though you've already made the announcement?"
The cynicism with which this government and the minister try to market this less-than-modest proposal -- I mean, "VLTs," what a sanitized, somewhat neutral way of talking about slot machines, one-armed bandits. They were slot machines, one-armed bandits when the south Chicago mob was running them in Illinois in the 1920s; they were slot machines, one-armed bandits when the mob was developing them in Las Vegas through the 1950s into the 1960s to the present; and they're slot machines and one-armed bandits here and now in the province of Ontario when this Conservative government is trying to put 20,000 of them in every place but casinos -- in every community, in every neighbourhood, in every single part of this province.
The finance minister said back in March of this year, "VLTs could create a lot of social problems in society.... Lots of other provinces have introduced VLTs" -- slot machines, please, one-armed bandits -- "and lots of other provinces have had social problems as a result of VLTs" -- slot machines, one-armed bandits.
Mike Harris, who wanted to speak oh so strongly back in 1992 and 1993 with concern for casino gambling, who expressed great caveats and concern about the impact on our communities and families and individuals, now becomes the godfather of gambling in Ontario. That goes beyond mere cynicism. It's the ultimate in hypocrisy and, quite frankly, there's something very dishonest about it -- extremely dishonest.
We're talking about big bucks, but big bucks that are going to be extracted from the pockets of little people least capable, least able to pay. Again, part of the packaging here. I realize that some people spend -- and please, Mr Sterling, tell your staff they've done a good job; they've done well. The proposal of 2% of gross revenues being provided to finance programs to deal with addictive gamblers, is that anything to be proud of? That's like rationalizing the legalization of heroin so that you can take 5% of the gross proceeds, of the revenues of heroin, smack, junk dealers, to fund drug treatment programs for sad, pathetic junkies and drug addicts. There's nothing proud about saying that 2% of gross revenues is going to be allocated to funding for gambling addictions when you're introducing the most addictive form of gambling and when you're introducing the very type of gambling most accessible, requiring the least amount of skill on the part of the player. We're not talking here about a card game where, if one's playing the game, one has to exercise some thought process in applying the rules and the logic. We're talking about a pure, 100% game of chance that just rattles on and on in machine-gun fire.
The government hasn't even done -- I shouldn't suggest that you haven't. But indeed if you have looked at some of the research about the addictiveness of slots and one-armed bandits, and the manner in which they draw young people into the devastating world of addictive gambling and the manner in which they draw previous non-gamblers into the devastating world of addictive gambling, if you have read it, then the proposal you're making today before this committee is even more repugnant.
Take a look at the 1990 publication Journal of Gambling Studies out of Britain. "Gambling activity most likely to lead to pathological gambling behaviour in adolescents is the playing of coin-in-the-slot machines." This is the activity that draws young people, and when one takes a look at gamblers across the board and where the problems come from in people of all ages, this is the type of gambling activity that draws these people into addictive gambling.
The Manitoba Lottery Policy Review Working Group report of December 1995 indicated that, "A large majority of Addictions Foundation of Manitoba problem gambling clients and Help Line callers report..." slots, slot machines "to be their primary form of gambling." This is where the addict goes. Similarly, the same working group report indicated that: "There is a striking correlation between age and" slot machine "usage. A significant majority of 18- to 24-year-olds (66%) have played" slots "within the past year. The frequency with which Manitobans play" slots "decreases with age."
The government at the same time, in some of its reviews, indeed relies upon the Brandon University study done by Professor Gfellner, A Profile of VLT Gamblers in Brandon, Manitoba. But the government doesn't relate all of what's contained in that report. The fact is that there are going to be some people in Ontario who are never going to gamble, who are never going to be lured by the foolishness of a thought that you can get something for nothing, who are never going to be lured by the essential con job that the slot machine provides, and that is that you have a chance in hell of winning. You haven't got a snowball's chance in hell of winning. That's the reality of it.
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The Gfellner study in Brandon indicates several things that are noteworthy that the government chooses to ignore when it quotes Gfellner. It says that slots "players indicated that their expenditures on gambling had increased since VLTs became available and they spend more money on VLTs than other forms of gambling. As apparent elsewhere, the introduction of" slots "has led to an increase in overall gambling activities and expenditures for these persons."
Once again the Gfellner study from Brandon University: "As shown elsewhere, more people gamble when opportunities to gamble are more readily available." There's nothing profound about that; people have been telling that about any number of addictive behaviours for a long time. "Thus, the accessibility" of slots "places more people at risk for gambling addiction and for some this will include involvement in criminal behaviour."
We've got a government here that is callously, cynically, uncaringly, and motivated by -- let's get down to the nitty-gritty. The fact is that this government was less than candid when the Premier said, "We don't have a revenue problem; we have a spending problem." The fact is that this government has created a revenue problem, because they sure as hell do have one now, because they've got to fund a massive tax break for the wealthiest in this province. This government is prepared to sacrifice young people, working people, the unemployed, those people who are lured into gambling at the prospect of grabbing the brass ring. It's prepared to sacrifice them to finance a tax break for the very richest in this province, "and for some, this will include involvement in criminal behaviour."
This is a government that wants to talk about law and order, that wants to talk about security in the community and safety for families in their homes, yet it's nurturing and promoting behaviour that's going to create higher rates of crime and contradict what we've seen in some recent trends.
Gfellner again says this: "The current increases in legalized gambling present the challenge of how to conceptualize problem gambling as a mental health concern. This focus had important implications for the development of new and innovative approaches to the intervention and prevention of gambling problems."
Let's listen to Dr Howard Schaffer of Harvard Medical School, who is an expert on gambling. He was addressing the proposition, and there was something rather silly, quite frankly, about it, that the government was getting involved in slot machines, putting 20,000 slots in every place but casinos across the province of Ontario to counteract and to attempt to address the issue of illegal slots. The two are totally separate issues. The fact is that the Ontario Provincial Police anti-racket squad has already told this government that if you want to end illegal slots and other illegal gaming activity, give the OPP the resources to investigate them and deal with them.
There are just too many bucks involved here. The reality is, and these same sources are going to indicate and have indicated, and this government knows it, that with the introduction of government-regulated slots -- owned, mind you, by the private sector -- there's going to be big money made here, but at great expense, at great cost to the most vulnerable people in our community, in our society.
This is what Dr Schaffer has to say about the argument that the legalization of slots would attract those who now gamble illegally. Dr Schaffer, an expert, Harvard University, says that not only would there be a substantial increase in gambling, but many would probably turn to illegal gambling eventually because the payoffs in illegal slots are always higher.
The minister and his staff and the Premier knew that. Every one of the references I have made are concepts that are familiar to this government. Notwithstanding that, they've gone ahead with this insane proposition of putting 20,000 slot machines in public places in every city and every neighbourhood in this province to lure those who are most desperate, again, for a crack at the brass ring. I tell you there's a logical correlation between the despair of unemployment and poverty which has persisted in the year-plus since this government's election, its failure to even begin to fulfil its promise to create the jobs that people relied upon when, I'll acknowledge, they elected the Tories; some say Reformer Tories because the fact is that they're Reformers more than any Tories anybody ever knew in this province. When people elected them they relied upon their promise to create jobs.
Slots ain't going to create jobs for the unemployed in the Niagara Peninsula or in northern Ontario or for young people. Slots are going to create a whole lot of wealth for the private owners of these slot machines; they're going to create a lot of wealth for a government that has become revenue-starved because it's made a commitment it intends to fulfil: to pad and line the pockets of the richest in this province at the expense of the unemployed, the poorest and poor working people.
I questioned the finance minister in the Legislature on this attempt by the government to somehow suggest that their proposal for 20,000 slot machines in every neighbourhood in this province -- that's the goal. It's part of the spin. People in the minister's office get paid a lot of money, and from time to time outside consultants are hired -- nothing's changed -- to try to put spin on otherwise unpleasant propositions. A lot of people are paid really well to look to other things, to tell the ministry, "Call them VLTs"; somehow this makes it something more akin to a Pacman machine than to slots.
Talk about the 2% commitment to programs for treating addictive gamblers; oh yes, get the data from the OPP about the extent of illegal slots here in Ontario and make the bold but totally dishonest assertion that the 20,000 slots of Mike Harris, the Godfather of gambling in Ontario, somehow are going to eliminate those illegal machines. Dr Schaffer from Harvard says that just isn't the case, the OPP has said it just isn't the case, the finance minister, Mr Eves, has already indicated that it isn't the case, so whom are we to believe, Mr Sterling or Mr Eves? The two contradict each other. One can't be telling the truth.
Mr Eves, in response to a question that I put to him in the Legislature in May earlier this year -- he did say that the member, and he was referring to me, was quite right; I appreciated that. I suspect that Mr Eves may be more dead-on with this reference than Mr Sterling has been, but Mr Eves said there definitely will have to be a larger force to enforce video lottery terminal gaming of all types in the province.
There has been no indication to date, from the point in time when Mr Sterling and the government acknowledged the high level of illegal gambling and acknowledged that it was going to require extra police resources, of a single new police officer, of a single hour of policing time being allocated to the anti-racket squad of the OPP. I'm looking forward to asking Mr Sterling to make a commitment on record about allocating resources to the Ontario Provincial Police and other police forces that are going to be called upon to attack illegal slots and other illegal gambling.
Of course Mr Sterling -- again the spin doctors, these little people, are writing away on their computer terminal keyboards a mile a minute -- talks about how this is going to sustain, in fact amplify, the hospitality industry. Once again I say horsefeathers. Please don't try that stuff on people in Ontario who know far better. Slot machines are going to suck money out of the pockets of people who are least able to afford the activity. Mr Sterling's and Mike Harris's proposal is going to make those slot machines available on every street corner in every city, town and village in this province. You see once again the spin: You try to turn it into, "Oh, it's entertainment."
I've talked to a lot of people, and I guess one person's version of entertainment isn't another's. The same could be said of any number of other types of addictive behaviour, but the bottom line is that they're extremely dangerous forms of activity which have a huge cost, which take a huge toll on communities, families and individuals.
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I wish I had more time, Chair, as you can well imagine. I want to speak to the attack on the workers of the Liquor Licence Board of Ontario and on the public sector workers, OPSEU members, of the current Gaming Control Commission. This so-called schedule 1 agency is nothing but a back door ruse to privatize the regulation of two very important activities here in the province of Ontario and to conduct, again, the most insidious attack on organized labour.
Mr Sterling has persisted in talking about the levels of consultation he's had with leadership from these two union groups, OLBEU and OPSEU. I tell you, once again it's a matter of not being able to believe both, because somebody ain't telling the truth. Because OLBEU and OPSEU again persist in indicating that, oh yes, they were told about it: A memorandum was laid on the table and Norm Sterling, the minister, walked away and said, "It's my way or the highway." That's the level of consultation.
We're embarking on a very dangerous course. We're looking at some pretty serious stuff here. We're looking at people's lives that are going to be destroyed by the government that simply doesn't give a tinker's dam. I'm not looking forward to the next three weeks but, by God, I'll be here.
The Chair: Thank you very much, Mr Kormos. All members of the committee should have received the remarks of Minister Sterling. If you haven't, speak to the clerk.
We now proceed to questions. Each caucus will have 15 minutes in questions, as a bloc. The committee would welcome Deputy Minister Lal, and I understand that also seated at the table with the minister are Teri Kirk, director of legal services branch, and Mr Rob Harper, senior policy adviser. Could we then proceed with the opposition?
Mr Kennedy: Mr Minister, I wonder if you could relate to us, as I alluded to in my earlier remarks, the dimensions of the rollout of video slot machines that are being planned for the province. In other words, what number, what amount of revenue or at least what range of revenue, are you looking forward to as a consequence of this bill?
Hon Mr Sterling: First of all, I'd like to get a popular notion which the opposition is trying to portray in this committee put forward, that there is something in this legislation talking about slot machines. There's nothing in this legislation that talks about slot machines. If they would refer to section 6 of the bill, they will find clearly that these are not slot machines. They are very different from video lottery machines. No other province has gone through this process and allowed slot machines in their jurisdictions, and there's no intention of Ontario to allow slot machines to be anyplace other than in a commercial casino, as we have now two in our province, one being at Rama and one being in Windsor. There are very significant differences in making that distinction put forward to you because there are people within the industry who would point out that there are very, very different draws to the different kinds of machines.
I believe the expectations of the province with regard to revenue were put forward by the Minister of Finance some time before at about $185 million out of these initiatives. I don't know what time frame he was talking about when he put forward that, whether that was the 1996-97 fiscal year or whether he was talking about a full year at that particular time. We've also said that we expect charities to benefit to the tune of $180 million in total out of the measures put forward in the May 7 budget.
Mr Kennedy: Minister, I wonder if we could rely perhaps on some of your staff here to tell us a little bit more clearly: What is a full year of these slot machines going to realize? When we look at 20,000 slot machines, when we look at the experience of other provinces, we look at a potential government revenue in the order of $400 million. When you talk about 2% going for gambling initiatives, that talks about at least $450 million. When the minister in the House, in his budget statement, talked about 10% going to charity and that being $100 million, it infers $1 billion. I'm just wondering if we could get this in a full-year, fully realized form, and if you could also include the number of machines which this government is planning to put out there among the various communities.
Hon Mr Sterling: I think we've talked about 20,000 machines and we've talked about having a number of machines less than any other jurisdiction of the eight other provinces that have them, on a population basis. The truth of the matter is that when you go into these particular predictions, you're not exactly sure of the final revenue picture until you get the plan on the floor or until the machines start operating. This has been proven with regard to the predictions on the Windsor casino under the last government. There were predictions that were exceeded in that particular case.
When you do the market studies with regard to these kinds of things, you can't really know what happens until you're fully implemented in terms of the outcome on the revenue side. We are confident that we can hit the $180 million for the charitable group in a full year of operation, when they're fully operating.
Mr Kennedy: A couple of figures for the minister. You may wish to know that there are less than 4,000 slot machines in Quebec and therefore you won't be able to meet the ratio of population to machines there by the figures that we have, and further, that --
Hon Mr Sterling: I believe they're going to 15,000.
Mr Kennedy: In terms of what exists now, Minister, I believe that's the case. Also, in terms of the charitable revenue, there are estimates from the charities that they're raising over $200 million now and they're worried about the adverse effect.
I really would like to ask you to address, if you wish, that figure, but also this question in terms of whether this government has at any level consulted with the Metropolitan Toronto Police Force, the Association of Police Chiefs, the Ontario Provincial Police or any police forces in Ontario about their feedback on VLTs. When our office spoke with Paul Gottschalk, the staff inspector at special investigations, which includes the morality squad, at Metro Toronto, he said VLTs are a nightmare. He said we could quote him and use his name, that crime is expected to rise significantly based on evidence in other jurisdictions. I'm wondering if your ministry is in possession of that kind of input or similar studies about the impact in terms of crime and what kind of result there has been so far from those discussions if they've taken place.
Hon Mr Sterling: I personally have not had discussions, but the Gaming Control Commission, which is part of the new Alcohol and Gaming Commission, is in constant touch with the OPP, with all of the police forces in the province of Ontario. They know what each other is doing about it. In fact, the gaming commission is largely staffed by former OPP officers in terms of their operation in Windsor and in terms of a lot of their people who are involved at Rama. I suspect they would be involved as well with regard to this. There's a very, very close tie between the Gaming Control Commission and the police forces in this province.
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Mr Kennedy: Minister, my question is, do they have an opinion about whether your introduction of VLTs, of what every other jurisdiction calls electronic slot machines, is going to increase the incidence of crime? With some of the concerns we've heard from police forces, have you heard those concerns, has this government sought out those opinions, and what do you say about those opinions? Am I to understand, just for the sake of clarity, that you have not got those opinions?
Hon Mr Sterling: Mr Kennedy, you persist in saying that every other jurisdiction calls them electronic slot machines. That is not true, so I wish you would quit putting forward that particular part of it. You know, we talk about spin doctors here. I guess you don't need spin doctors. But notwithstanding that --
Mr Crozier: Don't have to pay them.
Hon Mr Sterling: Anyway, I won't get into that particular part. At any rate, the gaming commission is quite aware of the risks associated with this because it's in constant contact with the other jurisdiction and the gaming commission believes that we can introduce these in a regulated fashion; we can do it in a more controlled fashion than any other jurisdiction in North America has done.
Mr Kennedy: But, Minister, can we do it without increasing crime?
Hon Mr Sterling: Yes, I believe we can.
Mr Kennedy: And on what basis do you form that opinion, is what I'm asking today.
Hon Mr Sterling: I was out in Alberta two weeks ago and I was talking to the Alberta lottery commission, which has a strict control over the video lottery machines they have in that province. I indicated in my opening statement that each machine will be monitored, not only from within, but from without so that the control over these machines is very, very substantial.
The other part of this bill which is very important is the ending of the Monte Carlo nights. There are 9,000 of these that are occurring over this province and are very difficult to monitor and regulate and ensure that people are acting in a fair and reasonable manner with the players. The whole idea of going to permanent charity halls was to get away from the difficulty in regulating that particular gaming activity.
Mr Kennedy: A final question: I'm wondering what your reaction is initially to the large number, the 23 municipalities, that have already said they do not want to have these machines in their towns. This government at one time talked about casinos, and "charity gaming halls" are the nice -- talk about spin doctoring. That's as nice a touch as it gets when we talk about what really are mini casinos: 50 gaming tables, 200 electronic slot machines, VLTs. To be courteous, what will your ministry do and what will this government do in terms of what that sets up in municipalities -- pitting them against each other. Will there be due regard for those requests and how will they be incorporated in terms of how you look at the framework of the legislation you're putting forward here today?
Hon Mr Sterling: I am, of course, interested in hearing what any municipality has to say about any issue. I believe some of them will take a very different view once they see how this is rolled out and how the implementation plan takes place. I understand that there are citizens within all our communities who are against gaming in any form and there are some who are against this particular form of gaming. They've had their voices and they've put forward their particular views at this time. That's what we're going through in this hearing as to how this should be controlled and we're interested in listening to people, what they have to say, to come out of them.
I would add, though, that your numbers with regard to the charity gaming halls are way out of whack.
Mr Kennedy: Which numbers are they, Minister?
Hon Mr Sterling: I think you said "200 gaming tables" at --
Mr Kennedy: So 50 gaming tables, 200 VLTs -- are those not the correct numbers for the charity gaming halls?
Hon Mr Sterling: I'm sorry. I think you're still high on the VLTs.
Mr Kennedy: Could perhaps some of your staff clarify that?
Hon Mr Sterling: Yes, they will be able to during the technical briefing.
Mr Kennedy: Those are the numbers we were provided, and that's a substantial, significant mini casino, in our estimation.
Hon Mr Sterling: It's my understanding the numbers are lower than that.
The Chair: Thank you, Mr Kennedy. Mr Crozier, you have four minutes.
Mr Crozier: Minister, can you provide us with some information as to the effect that the video lottery terminals will have on charitable gaming?
Hon Mr Sterling: I think they will have some effect on some of the other gaming activities in this province. Presently there is $10 billion a year gambled in this province. As one introduces another form of gaming, it normally affects the other forms of gaming. It depends how close the location of the alternative form of gaming is to the other one that it might affect, but notwithstanding that, there will be a significant increase in terms of the outcome for charities in Ontario with the introduction of these machines.
Mr Crozier: That didn't exactly answer my question. I think I asked if you could provide some data. It might surprise you to know -- I'm looking at some information that was prepared by legislative research -- that there are no hard data on what impacts VLTs may have on charitable gaming in Ontario. In fact, the CFO, Charities First Ontario, says, "There is a staggering lack of information available to guide the examination of VLTs." So I take your words for what they are, but I'm concerned that they're not backed up by anything substantial.
You've made quite a point, Minister, that these are not slot machines, and by definition you may be right, but frankly I think they're worse than slot machines. At least with slot machines you have to take time to drop money in them. At least that's my understanding; I've only been in one gambling casino in my life, but I understand you have to take time to drop money in a slot machine. You sure don't with these. Just as fast as you can pound the keys, it'll build up your credits and take away your money as quickly as can be done. So in that respect, sir, I suggest they're more hideous than slot machines, but we'll all use our own definition.
I wonder if you might make a comparison for me, for example, with break-open tickets, which you're no doubt familiar with. In charities in Ontario this past year: profits to charities in Ontario, $197 million; prizes paid out to customers, $961 million. So the prize payout is about 73%; profits to charities are 15%. How does that compare to video slot machines and the way the province of Ontario is going to share with charities and winners and take away from losers? How do those statistics compare?
Hon Mr Sterling: I think the gross figure you have -- I'd have to ask the gaming commission, but I believe it's somewhat less than $190 million that charities get out of break-open tickets. I think it's around $110 million or $111 million. But notwithstanding that --
Mr Crozier: I'm provided with information that says $197 million, but we won't argue about a million here or there.
Hon Mr Sterling: You may have to take out the cost of the operation.
Mr Crozier: My point is, with break-open tickets the manufacturers get 4%, the retailers get 5%, the licensing cities, towns, get 2%, the charities get 15% and the prizes paid to customers get 73%. You'll notice there's nothing in there for the government. Wouldn't you say then that the distribution of those break-open tickets is fairer to those who are involved than a government that's going to come in and take what percentage of video lottery terminals?
Hon Mr Sterling: First of all, in a video lottery terminal the customer gets a lot more than 73% back; they get somewhere between 85% and 96% back. So the customer is far better off in terms of the payback they may or may not receive from playing --
Mr Crozier: Does that mean charities get less then?
Hon Mr Sterling: No, it doesn't mean that, because it depends on -- you have to talk about the gross figures that you're involved in. You can't half talk about the percentage breakouts of the transaction that takes place and then talk about the gross figures at the same time. The bottom line of all this is that charities will be getting about $80 million to $90 million, I think was our original estimate, over and above the $110 million they're receiving from break-open tickets on a full-year basis. Those were our estimates of the revenue coming out.
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Mr Kormos: Mr Sterling, when I was making my brief comments, I made reference to the University of Exeter, Professor Griffiths's article from the Journal of Gambling Studies, which concluded that the gambling activity most likely to lead to pathological gambling behaviour in adolescents is the playing of slot machines. Is that consistent with the information you've obtained over the course of your study of this matter?
Hon Mr Sterling: Pathological or addictive gamblers, in the studies I've read, run somewhere between 1% and 1.5% of the population. As I indicated before, we presently have $10 billion of gaming going on in the province of Ontario. I don't know whether break-open tickets, horse racing, video lottery machines or going to the Windsor casino is more addictive than the other. When you have an addictive gambler, quite frankly, I guess it doesn't matter what form of gaming you're involved in. They have a serious problem and you've got to try to face that problem the best you can.
Mr Kormos: In the Edmonton Journal in January 1996, in an article about slots in Alberta, a volunteer coordinator with Gamblers Anonymous was quoted. That person said:
"I'd say about 90% are calling to Gamblers Anonymous because of trouble with video lottery terminals" -- slot machines. "They're the crack cocaine of gambling. They take people down very quickly and they're more addictive than anything else."
Again, is that consistent with the sort of research and information you've had access to during the course of preparing Bill 75?
Hon Mr Sterling: As I said before, one of the reasons we're putting the 2% aside for addictive gambling is to deal with these people, as well as to gain some very, very good research into areas like video lottery machines. The problem is that there hasn't been enough research done to deal with some of the addictive behaviours and the programs associated with them. All I can say, Mr Kormos, is that we are, as I said before, introducing these in the most evenhanded, tightly regulated package that we can imagine doing.
Mr Kormos: But do you understand why any number of sources speak of VLTs, as you want to call them, or slots, as the crack cocaine of gambling? Do you understand why they're referred to in that way?
Hon Mr Sterling: I don't know why they use that phrase, but I guess the reason is that the more frequently a game can be played the more attraction it has to this 1% to 1.5% of our population.
Mr Kormos: I appreciate, there it is, but you speak of gambling as entertainment or part of the entertainment industry.
Hon Mr Sterling: Very much so.
Mr Kormos: Have you ever played a slot machine?
Hon Mr Sterling: Yes, I've played a slot machine, sure.
Mr Kormos: From a very subjective viewpoint, do you find that at all entertaining?
Hon Mr Sterling: Not very.
Mr Garry J. Guzzo (Ottawa-Rideau): Ask him about the track. Go ahead.
Mr Kormos: Because I'm telling you, Mr Sterling, I'm having a difficult time. Quite frankly, Mr Guzzo, I understand how the sport of horse racing, combining elements of animal agility and skill and human skill, can be regarded as entertainment; I understand how a pool game could be entertaining, regarding a degree of skill and agility. I'm inclined to agree with you that I don't see anything about playing a slot machine that qualifies as entertainment. What sources do you have that permit you to identify it as entertainment when you yourself don't find it very entertaining?
Hon Mr Sterling: When I've travelled to the Windsor casino or when I've travelled to other jurisdictions where I've gone into a casino, I've seen thousands and thousands of people playing these machines and finding them a great source of entertainment. I'm not here to judge what people find as entertainment or not entertainment. As Mr Guzzo alludes to, I'd much rather go to the horse races, quite frankly. I find that entertainment, but some other people would not find that as such. I guess the proof is in the pudding. In the Windsor casino, when I was there, there were as many people playing the machines as there were playing the card games at the table. So who gets what entertainment from what is a personal choice.
Mr Kormos: Oh, I see. You talk about the entertainment industry and you talk about the hospitality industry. What type of impact -- surely you've studied this -- will introduction of slots in every community in this province -- when we're talking about 20,000, that's what we're talking about -- have on forms of bona fide, legitimate entertainment like movie theatres, amusement machine owners, bowling alleys, things like that, in view of the fact that you're counting on literally millions of dollars being taken out of people's pockets that they would otherwise be spending somewhere else and being pumped into the slots? Have you looked at the impact on other forms of community entertainment as a result of the introduction of slots?
Hon Mr Sterling: I don't think that anybody could predict what the outcome is with regard to introducing a new form of gaming to us with a great deal of accuracy as to where those consumer dollars would or would not go. There's no question that when you introduce a new activity into your society there's a chance that some other activity is going to suffer to some degree. That's the way it is. But as I said before, I suspect that some of the $10 billion which is now in gaming will be diverted into this form of gaming in Ontario.
Mr Kormos: But surely you've got to understand that slots are the entry level for neophyte gamblers. You don't have to know how to read a racing form, you don't have to know the rules of the game of poker, you don't have to know the basics of the game of 21, you don't have to know about the various odds schemes in a game of craps, even though that's an American phenomenon, not Canadian. Surely you understand that slots are the entry point, that you don't have to know nothing about the game, that there are no rules to understand, that you pop the coin in. Is that not a fair assessment of it?
Hon Mr Sterling: First of all, I thought the entry level was a lottery ticket, which we've all bought around the corner or at the local charity or whatever. God knows I've bought enough in the last 20 years that I've been in politics. That, I presume, is the entry level with regard to people involved in gaming. Whether this is the entry level to another level of gaming, I don't necessarily buy that.
Mr Kormos: How do you rationalize the observation by researchers -- that's what the data indicate -- that as people age their likelihood to play the slots diminishes; that it's basically the younger person, the neophyte, who's attracted to the slot, notwithstanding that I'm sure people of all ages play them? But the research shows that it's the neophyte, the beginner, the person who doesn't know a damn thing about the rules of gaming, who is attracted to the slots. How do you explain that observation?
Hon Mr Sterling: I think number one is that the young people play a lot of computer games, have been introduced to pinball machines in video parlours and that there's a natural progression to there. I guess some of the research shows as well that older people like to have slower games. Maybe that's why I like horse racing, where there's 20 minutes between each race.
Mr Kormos: You speak of the $10 billion currently gambled here in Ontario. This proposition is looking not simply to relocate that $10 billion but for new money, isn't it?
Hon Mr Sterling: I don't know whether this will be new money or what was previously gambled in other areas.
Mr Kormos: But surely your proposition isn't designed to attack or assault the horse race industry, is it?
Hon Mr Sterling: Absolutely not.
Mr Kormos: Your proposition, Bill 75, isn't designed to attack or diminish revenues for 6/49 tickets?
Hon Mr Sterling: With regard to the horse racing industry, if the horse racing industry chooses to have video machines at its tracks, it will reduce, in all likelihood, some of the betting on the races there. They will have to make that business decision as to whether they want them there or don't want them there in terms of what they're doing.
It will be another form of entertainment, so there will be some new gaming dollars probably in this area unless we have now reached the peak in terms of the gaming appetite of the people of Ontario at $10 billion. No one really knows where that ceiling will be reached. As I understand it, in northern Europe they're on the down slope in terms of gaming activities in their countries, where they've had all sorts of gaming types for the last 25 or 30 years.
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Mr Kormos: Who is going to own these slot machines?
Hon Mr Sterling: That has not been determined.
Mr Kormos: What are the plans under consideration? You've had option A, B, C given to you. What are some of the considerations? Who's going to own the slots? The government is not going to own them. We know that, right?
Hon Mr Sterling: No, you don't know that.
Mr Kormos: So that's one of the considerations as well?
Hon Mr Sterling: That's right. The Ontario Lottery Corp may own these machines.
Mr Kormos: No private sector --
Hon Mr Sterling: The Ontario Lottery Corp will be in control of these machines under any circumstances. They have to be.
Mr Kormos: So on the table still is the possibility of no private sector involvement?
Hon Mr Sterling: That's a possibility, yes.
Mr Kormos: Do you support that proposition?
Hon Mr Sterling: The cabinet hasn't made a decision on that particular item, and I haven't had --
Mr Kormos: I know, but what do you support?
Hon Mr Sterling: I haven't had my chance to have input on that particular matter.
Mr Kormos: If they're not owned by the government, who is going to own them?
Hon Mr Sterling: I presume that they would have to go through some kind of tendering system which would buy them or buy the services of somebody outside the government.
Mr Kormos: Would you break the province up into regions and tender out regions for the provision of slots for respective regions?
Hon Mr Sterling: I have no idea with regard to that, but I wouldn't imagine that would be the case. There are different kinds of machines. There may be different suppliers of different machines or different people involved on whatever subsections you might draw up.
Mr Kormos: Is it conceivable that each tavern owner might be able to purchase their own machine?
Hon Mr Sterling: I don't think that's possible.
Mr Kormos: Why?
Hon Mr Sterling: I'm into areas where it probably would be best to ask the technical people later, from the Ministry of Economic Development and Trade, as to whether that's a possibility.
Mr Kormos: You're talking about 20,000 slot machines. What's a slot machine worth?
Hon Mr Sterling: From $8,000 to $10,000.
Mr Kormos: These are manufactured where?
Hon Mr Sterling: They're manufactured all over North America, I believe.
Mr Kormos: What are the Canadian manufacturing locations?
Hon Mr Sterling: I think there's a manufacturer in Quebec now. I don't think there are any manufactured in Ontario.
Mr Kormos: Who is going to collect the moneys from these machines?
Hon Mr Sterling: Again, if you want to ask these questions in the technical briefing, that's fine; those people could answer them as well as I. Basically what happens under the systems is that it's all centrally controlled so that the central control can tell every quarter that's put into the machine and every quarter that's paid out of the machine or paid as a result of a credit to the machine, and there is an absolute tracking of those particular moneys which then flow to the Ontario Lottery Corp.
Mr Kormos: You see, I'm asking these questions because I'm concerned. I'm not aware of a slot machine jurisdiction over 10 years old, with more than 10 years' maturity, that hasn't become infiltrated by corruption, by in some cases various types of mobs, by a total lack of integrity in the system. I'm concerned about how you propose to maintain integrity in a system of slots, 20,000 across the province, if there is indeed private ownership, about how you intend to protect the integrity of that in view of the fact that the history is that every single jurisdiction with slots over 10 years of age has been infiltrated and totally infected by criminal activity.
Hon Mr Sterling: I don't know that. Notwithstanding that, the whole role of the Gaming Control Commission is to ensure that doesn't happen here.
Mr Kormos: What's the expertise you've obtained to give you advice on the things we've been talking about, the best mode of implementation of this system? What's the source of that?
Hon Mr Sterling: The gaming commission people. The Alberta government experience is that their machines are all owned and run by the Alberta Lottery Corp, and their gaming commission of course is very much involved in regulating the Alberta Lottery Corp as well.
Mr Kormos: Surely a decision has to be made at some point, and it's pretty difficult for this committee to be doing with Bill 75 without understanding how the government proposes to implement it. Can you commit yourself to this committee that this committee will have an opportunity to consider and review the proposal as to ownership and implementation once that decision has been reached? Surely it's an important enough consideration that this committee ought to have an opportunity to review it.
Hon Mr Sterling: You have the opportunity, I'm sure, in the Legislature to ask whatever questions you might want to with regard to the implementation of these proposals as decisions are made. Time is of the essence in terms of making some of these decisions, and we will carry on as any other normal government does when they're doing this.
The Chair: We now move to the Conservative caucus.
Mr Tim Hudak (Niagara South): Minister, the first part of this bill, in fact all of part I, is dedicated to the formation of the Alcohol and Gaming Commission of Ontario. Could you describe to the committee what that commission means, what its duties are going to be and basically what that means for inspection and enforcement issues?
Hon Mr Sterling: The gaming commission presently, and I'll speak in rough numbers here now, has about 110 employees and the LLBO has a similar number. It may be off by 20% or 30%, but there are somewhere around 120 to 140 employees at the LLBO. We believe that by putting these two agencies together, the ability of inspectors to be out there in the field and watch what's going on will be greatly enhanced because in some cases they will be able to have a mixed role. In other words, they not only will be liquor inspectors, they will be gaming inspectors in some cases as well. Therefore, the utilization of these inspectors will be greater and more efficient.
The other part is that when you amalgamate two agencies like this, there are significant management savings with regard to how you conduct your business overall, so we will be gaining some efficiencies there as well. Notwithstanding the fact that we're joining these two bodies -- I've used figures like 120 and 100 or something of that nature -- the actual agency, the joint agency of the Alcohol and Gaming Commission, will be growing in size. Part of that has to do with the Rama casino, because there are about 20 people hired by the gaming commission to deal with that particular facility and a similar number will be needed in Niagara Falls when that is up and running as well.
When we get into the charity gaming halls we will again need an inspector or a number of inspectors in each and every one of those gaming halls located in the province, so it will be much better organized in terms of our ability to deal with the inspection part.
The second part is that we will be able to enforce the laws, I believe, in a much more evenhanded and better manner in terms of the hearing processes that are being developed for this joint commission, and the expertise of the board will be enhanced in terms of hearings that will be undertaken.
Our plan is to make things like an application for a liquor licence more of an administrative process. Only when there is a problem will we go to board hearings and those kinds of things.
In addition, we're modernizing the whole administration regulatory process of the joint commission.
I'm looking forward to that; as well, I might add, as I've mentioned in my opening remarks, about stripping away from the LCBO any of their regulatory functions which have long been a thorn to competing retailers. The Brewers Retail system is not very happy that another retailer of beer is in fact controlling their activities and their decisions, and I don't blame them for that.
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It's my hope, too, that the new Alcohol and Gaming Commission will be more vigilant in terms of actually what's happening in the LCBO stores. It's always been strange to me that there have been so few prosecutions under the LCBO system for people selling to minors. I'm not saying they are cavalier about it, but you would think that with the number of stores we have -- 600 -- and the number of years this institution has existed, there would have been a lot more prosecutions in that area. I suspect the LCBO will be under greater scrutiny as well in terms of its retail sales.
That host of reasons is why we're creating this new agency. I believe it's a great step forward and that we will have better quality and more efficient services.
Mr Terence H. Young (Halton Centre): Minister, what impact will this merger have on the employees of the two agencies involved?
Hon Mr Sterling: We have two unions. The two distinct entities are both schedule 1 agencies. Together they will be schedule 1. We had hoped that the two unions could have decided on one bargaining agent as between them, but unfortunately we were not able to get either one of them to bow out. Therefore the new agency will be hiring its employees, and under the contracts they have with these two unions, they will be making every reasonable effort to hire former employees of both boards. Then I guess it's the full expectation that the new employees will choose whatever bargaining representative they would like. It will be done in a democratic way and they will make their choice as they proceed down the path.
As I say, we had hoped there could have been some negotiation between them and one would bow away, but that did not happen and we are now in a position where we will be hiring the employees and keeping within our bargaining agreement to make every reasonable effort to hire each and every one of those former employees, and in an expanding commission, which I explained before, I expect that most will be offered those employment opportunities.
Mr Douglas B. Ford (Etobicoke-Humber): I've got one other question, Minister. How will the amalgamation benefit the taxpayer and provide better service?
Hon Mr Sterling: I think, Mr Ford, I sort of alluded to that previously. One thing is that as early as six or eight months ago anyone who is watching, I am sure, within those boards could have seen that part of our business plan of our ministry was to do this. I appointed Clare Lewis, who was then the chairman of the gaming commission, to become also the chair of the LLBO. We will have, of course, one board instead of two boards and we will have one chairman instead of two chairmen. We will have people who will be fulfilling the dual function, especially under this legislation, whereby a person who is running a licensed establishment and allows a person who is underage to play a video lottery machine is under the dual penalty, I guess, of not only having a fine but could lose their licence as well. By combining the two, it helps us control to a greater degree the video lottery machines and regulate those video lottery machines in licensed establishments when this takes place.
Ms Isabel Bassett (St Andrew-St Patrick): Following up on that, Minister, why has the government introduced an amendment to the Liquor Licence Act that could mean up to a two-year suspension for property owners on any further applications for licences on problem premises?
Hon Mr Sterling: We've had trouble in certain parts of our province, not in very many of them. This amendment is a very stiff sanction against a property owner. Unfortunately, what seems to have happened is, notwithstanding the fact that you would have a prosecution being undertaken under the Liquor Licence Act and you would be in the stages of prosecuting individuals for just flouting the laws in terms of the liquor establishment, this problem would persist and persist. A community would get together and take on the landlord and the lessee in terms of saying it's not in the community interest to have a licence issued to this lessee. No sooner had they walked through that process than all of a sudden there's another lessee who appears on the scene and continues on as they have in the past. They were using the process to drag these particular hearings out and the community would never get any relief from these very bad places.
We're not just talking about somebody who had an intoxicated person in their premises on one occasion or had even served an underaged person or not asked for the age of majority card, but we're talking about situations where there are drugs, prostitution etc; very bad places. We're just saying: "Landlords, you can't just walk away from these things. You have to take some responsibility to act in a reasonable manner to ensure that your lessee is not going to go flout the laws."
We've had a problem in Scarborough with absentee landlords who basically don't care to whom they lease and it has resulted in the disruption of some neighbourhoods immensely. When you can't have your kids walk by and down a certain street because of the activity going on inside and outside the restaurant -- I'm talking about drugs and prostitution -- then there's something wrong in our system. It was thought that this would address that. It's very strongly supported by our colleague Derwyn Shea, who is close to one of those areas where they have a lot of trouble.
The Chair: There are three minutes left. Are there any further questions?
Mr Frank Klees (York-Mackenzie): There were suggestions made earlier in comments from the opposition members. The implication that was left was that these video lottery terminals would be on every street corner and in every location across the province. I wonder, could you clarify for the record where these VLTs would be placed initially and then what the process would be to extend them to other places in the province?
Hon Mr Sterling: No matter where these video lottery machines are located, they will be located in areas where it will require some expense on the part of the proprietors to house or host them. First of all, they will be at racetracks where people go to wager under any circumstance and that kind of thing. But the area where they would have video lottery machines will have to be an area which is segregated from the rest of the racetrack because you won't be able to allow children or anybody under the age of 19 into those particular areas. That in itself will be contained tightly.
They won't be allowing anybody under the age of 19 into the charity gaming halls because there will be video lottery machines. The norm for the charity gaming hall will be 40 table games and 100 of these machines. I asked for a clarification on that because of what was said before. That's our first stage in terms of putting them into those two areas.
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Then our second stage will be to put them into licensed premises where that particular area of the bar would have to be segregated off and away from the other part of the bar or restaurant or wherever anybody under the age of 19 was permitted to be.
There will be a demarcation between stages 1 and 2, and the actual process for going from stage 1 to stage 2 will involve some consultation with the members of the Legislature as well as with the outside world.
The Chair: Thank you very much, Mr Klees. Our time is up.
Mr Kennedy: On a small point of order, Mr Chairman: There was a reference during the minister's comments to information that could be supplied by staff. Is it a general understanding that we would have the information specifically concerning the scope and full-year revenue projection? Is that agreed?
Hon Mr Sterling: The 100 machines and the 40 tables?
Mr Kennedy: I appreciate that clarification. There was another to do with the full-year revenue projections. There was some question when you made your remarks whether they were part-year or full-year projections. I'm wondering if we can have that supplied afterwards by staff.
Hon Mr Sterling: I have to refer to Mr Eves's statement, because I'm promising something that I don't know.
Mr Kennedy: There is no projection of full-year --
Hon Mr Sterling: I'm sure there is, but I can't promise for him. I will ask him what he meant by the $185 million.
The Chair: Thank you, Mr Sterling and Deputy Minister Lal.
MINISTRY OF CONSUMER AND COMMERCIAL RELATIONS MINISTRY OF ECONOMIC DEVELOPMENT, TRADE AND TOURISM
The Chair: Two hours have been set aside for the technical briefing. Ms Kirk and Mr Harper, you are on first. How long will your briefing take, without questions, approximately?
Ms Teri Kirk: Although two hours has been allowed, we'd thought about 45 minutes would be sufficient.
The Chair: Yes. There's someone here from the Ministry of Economic Development, Trade and Tourism. How long will your briefing take?
Ms Kirk: That's included in the 45 minutes.
The Chair: It would not seem to be a problem.
I should mention, before I lose members of the committee, that the taxis will be leaving here from Queen's Park directly after the hearings tomorrow to take us to the airport so that we can proceed to Thunder Bay. I suggest that you might bring your baggage tomorrow if you are proceeding to Thunder Bay and Kenora, as I know Mr Guzzo is looking forward to.
In addition, Mr Crozier, will you be attending the subcommittee meeting? We need one at the end of today.
Mr Crozier: I'll be right back, sir.
The Chair: Okay. Thank you. If you will proceed then.
Ms Kirk: I'll just take a moment to introduce the individuals. My name is Teri Kirk, director of legal services with the Ministry of Consumer and Commercial Relations. Rob Harper is our policy analyst with responsibility for gaming and alcohol regulation in the province. Neil McCallum, from MEDTT, is legal counsel with that ministry.
As the Minister of Consumer and Commercial Relations has indicated, the bill has two broad purposes. The first is to provide for the regulation of video lotteries in the province and the second is to introduce a number of measures that will increase the efficiency by which alcohol and gaming regulations are administered.
What I propose to do is take approximately 15 to 20 minutes to highlight the purposes of the bill and the way in which the bill is organized to achieve those purposes, to make members familiar with the language of the bill on a section-by-section basis. Mr McCallum will then clarify the video lottery aspects of the bill, which will be administered by the Ontario Lottery Corp, which is the responsibility of the Ministry of Economic Development, Trade and Tourism. Then Mr Harper will highlight the aspects relating to the new commission and alcohol and gaming regulation.
The bill, as was indicated by some honourable members, is very short. It consists of only eight sections which are divided into three broad parts. The purposes of the bill are firstly to establish the new commission which you heard the minister make reference to, the Alcohol and Gaming Commission. The purpose of that commission will be to be responsible for all liquor and gaming regulation in the province. It will supersede the role of the existing Liquor Licence Board of Ontario as well as the Gaming Control Commission.
In addition, the bill facilitates the eventual transfer of regulatory functions which are now carried out by the LCBO to the new Alcohol and Gaming Commission. The reason for doing that, again as indicated by the minister, is really twofold. One is to put all responsibility for liquor regulation under one house. Currently it's divided between the LCBO and the LLBO. The second is to alleviate an age-old perception of a conflict of interest on the part of the LCBO, which serves both as a regulator of liquor as well as a retailer of liquor in the province.
The third broad purpose of Bill 75 is to introduce the regulation of video lotteries. I won't say to introduce video lotteries -- that activity is already going on in the province -- but to introduce a regulatory scheme for dealing with video lotteries. The management of video lotteries will be carried out by the OLC, the Ontario Lottery Corp, and the regulation of video lotteries will be carried out by the Gaming Control Commission, so you will not get into the position that the LCBO is currently in, where it's both a regulator and a service provider. The regulatory aspect will be carried out by the new commission and the operational aspects will be carried out by the Ontario Lottery Corp.
The fourth broad purpose is to provide for an orderly distribution system for revenues from the Rama casino. As we know, Casino Rama is now operational and this bill, if passed, will ensure that the proceeds from gaming at Casino Rama are distributed in an orderly fashion.
The fifth provision: The minister did respond to questions from Mrs Bassett on the establishment of a public interest provision. This is really an extension of existing public interest provisions that grant discretion to the board in circumstances where an application has been refused on the basis of public interest. The board will now have authority to put in place a similar two-year moratorium or freeze where a licence has been revoked on the basis of public interest. The purpose of that section is to give a community greater input not only into the initial applications by applicants but in circumstances where licences are being revoked.
I think it's important to note that where there has been a significant change in circumstances during a two-year period, the board will have discretion to waive the two-year freeze, to lift that ban and to allow an applicant to come forward and indicate that the impact on the community of a licence would no longer be detrimental.
Finally, and this probably accounts for most of the bill, is to make to a number of acts some complementary amendments that are really very minor and housekeeping in nature to facilitate the establishment of the new regime.
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I'd like to very briefly turn to the act and walk through it with you on a section-by-section basis. As indicated, it's only eight sections long and it's divided into three broad parts.
Part I of the bill introduces the new Alcohol and Gaming Commission, and to do that it enacts a statute which will be known as the Alcohol and Gaming Regulation and Public Protection Act. The provisions of that act are set out in a schedule to Bill 75, and that schedule consists of 17 sections.
Section 1 of the act, again, establishes the new commission, sets out a schedule to the act; the schedule has 17 sections and in those 17 sections the new commission is established. Those 17 sections provide for very straightforward, statutory-type provisions and definitions.
Section 2 of the schedule indicates that there will be a new commission that shall be known as the Alcohol and Gaming Commission of Ontario, provides for a board of directors and for order-in-council appointments of members of that board.
Section 3 sets out the broad duties of the commission, which will be to be responsible for the administration of regulations under the Liquor Licence Act, the Wine Content Act, the Gaming Control Act and, in future, the Liquor Control Act.
Section 4 sets out the broad powers of the commission and gives them authority to establish guidelines that will govern their day-to-day operating procedures.
Section 5 allows the board to delegate some of its duties to its employees, which is typical of a corporate organization or a government agency.
Section 6 establishes a registrar of alcohol and gaming as a statutory official under this new regime. Sometimes these officials are called directors under the act, sometimes registrar. The word selected here has been the registrar of alcohol and gaming, and they will be the sole statutory official. That person may in turn, of course, delegate duties to other employees of the organization.
Section 7 allows the organization to hire its own employees, as indicated. Therefore, they will not be hired under the Ontario Public Service Act but will be hired directly under this act. Therefore, their status will be as crown employees.
Section 8 provides for the revenue for the new organization. Moneys will come out of consolidated revenue up until the end of this fiscal year, and then the Legislature will appropriate funds directly to the organization.
Section 9 will require that the board shall file an annual report, which would be submitted to the Lieutenant Governor in Council.
The next four sections really consolidate proceedings that exist under both the current liquor licensing regime and the gaming regime, and there are some differences in the way those two existing boards carry out their hearings, whether appeals are available to the Divisional Court and so on. Sections 10, 11, 12 and 13 set out the process for hearings, appeals to the Divisional Court, for service of documents and for the granting of certificates by the registrar.
Section 14 allows the organization to put in place fees and charges. This is consistent with the government's efforts to eliminate red tape and to not require a regulation-making process in order for an organization to change its forms or put forward forms. Its fees will require ministerial approval, but the organization will be able to design its own forms without needing to go through the regulation-making process.
Section 16 is the standard regulation-making power. One thing I would draw to your attention is that because the scheme of the act preserves the two existing acts -- the Liquor Licence Act and the Gaming Control Act -- rather than going through on a section-by-section basis and amending those acts to say who in the new organization will carry out each of those duties, instead a broad regulation-making power has been established that will allow the Lieutenant Governor in Council to determine which of the regulatory functions now carried out in either one of the existing organizations will be carried out either by the board or by the registrar of the new organization. So it's clear that the new organization will carry out those duties that are now carried out by the two other organizations, and the regulations will stipulate whether it's an adjudicative-type duty to be carried out by the board or an administrative, management-type duty to be carried out by staff.
The next part of the act includes section 2 to section 6 of the act, and each section sets out some complementary amendments to the statutes being amended by this act. Section 2 sets out some complementary amendments to the Liquor Control Act, section 3 to the Liquor Licence Act, section 4 to the Gaming Control Act, section 5 to the Ontario Casino Corporation Act, and section 6 sets out some amendments to the Ontario Lottery Corporation Act. As indicated, those amendments are largely housekeeping in nature. If reference is made to one statutory official and a name is changed or section numbering is changed and so on, those sorts of amendments are made.
I will draw to your attention, though, the amendments that are more substantive in nature. In section 3, the Liquor Licence Act is amended and there are two substantive amendments. The first is to set up some complementary support for the notion that video lotteries are not to be participated in by children under the age of 19. If one is operating a licensed establishment with video lotteries and one is allowing minors to participate in video lotteries, there are sanctions under the Liquor Licence Act for doing so. The other substantive amendment is the two-year moratorium when there has been a revocation on the grounds of the public interest, which we've already discussed.
The substantive amendments to the Gaming Control Act are to expand the definition of "game of chance" to include video lottery. In addition, the Gaming Control Act will now require that suppliers of goods and services for prescribed lottery schemes be registered under the Gaming Control Act. That becomes the means by which suppliers to video lotteries are subject to the regulatory authority of the new liquor and gaming commission.
Sections 5 and 6 amend the Ontario Casino Corporation Act and the Ontario Lottery Corporation Act, and Neil will return and highlight those for you.
I would just mention in finishing off, in our review of the bill, that the last sections are found in part III of the act. They are section 7 and section 8, which simply set out the provisions for proclaiming this act in force and the title of the act, which is the Alcohol, Gaming and Charity Funding Public Interest Act, 1996.
Thank you very much, and I'll turn to Mr McCallum.
Mr Neil McCallum: As the minister and Teri have said, this is very much enabling legislation. The amendments proposed for the Ontario Casino Corporation Act and the Ontario Lottery Corporation Act are permissive in nature and designed to allow the dovetailing of the Ontario Casino Corporation Act and the Ontario Lottery Corporation Act into the scheme of the bill before the House.
To turn first, then, to the Ontario Casino Corporation Act, there are two amendments being made, and I believe you have in your materials copies of the current Ontario Casino Corporation Act. Basically, what's being done there are amendments to subsection 15(1) to effect the order of payout. Paragraph 4 is a required amendment to permit the payout to be made under subsection 8(2) of the Alcohol and Gaming Regulation and Public Protection Act. The payments referred to in paragraph 5 are payments made under agreements which may be entered into between the corporation and the people who are involved with the Rama casino.
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You'll notice there that those are subject to the approval of the Minister of Finance, so there is an intended balance between the ability to make negotiations between the corporation and those who are interested in it and the ability to supervise those contracts from a government perspective.
The Ontario Lottery Corporation Act will be amended by the addition firstly of two new definitions in section 1. These definitions are "video lottery" and "video lottery terminal." They are necessary amendments so that the game can be discretely identified for the purposes of both the controls that the bill requires and also for the dissemination of revenues that are gained from the video lottery schemes.
You would see, for example, that the bill introduces controls in section 8.1, beginning at subsection (2). The first parts, clauses (a) and (b) of subsection 8.1(2), introduce prohibitions on the proprietors of premises, those in control of premises where there are video lottery terminals. Essentially, those are directed to prohibiting people in control of the premises from allowing persons under the age of 19 years to have access to any area that's been set aside for video lottery terminals or in any way to let a person under the age of 19 play the games.
Subsection 8.1(3) introduces prohibitions on individuals under the age of 19 from attempting to gain access to the controlled areas where video lottery terminals are located or to attempt to play a video lottery game.
There are a couple of saving provisions. The onus on the production of documentation rests, of course, with the person who is in control of the premises where the lotteries are carried out. If you look at subsection 8.1(5), you'll see that where someone is in good faith relying on documentation proposed to sell a lottery ticket or to permit someone to operate a video lottery game, that person has not committed an offence. So that's one important saving provision for those who are in charge or in control of the premises.
Where the sections are contravened, I think you should note that the penalties are very severe. In the case of an individual who permits a minor to play the games, the offence created on the prohibition is $50,000 in the case of an individual and $250,000 in the case of a corporation. A minor who enters a restricted area containing video lottery terminals or attempts to play the games would also be committing an offence and would be subject to a fine, as I understand it, of up to $10,000. Those you can find in subsection 8.2(1).
To turn back to the act, you'll note that section 8 of the act has been substantially changed, basically to broaden the regulation-making power and to set out the power to prescribe the kinds of documentation that are necessary for a minor to have. I guess I put that a little badly -- that it's necessary for a person to have to prove that he is not a minor for the purposes of gambling.
The next section I'd like to draw your attention to is section 8.3, where the Lieutenant Governor in Council could appoint a person to undertake a comprehensive review of the provisions of the act relating to video lotteries five years after the implementation of video lotteries in Ontario. This is a reasonably common provision. It's often mandatory. In this particular case, the government is proposing that the Lieutenant Governor have the capacity to appoint someone to review the results of this initiative. As I say, that is becoming more and more common in legislation.
Section 9 of the Ontario Lottery Corporation Act is similarly being amended by the addition of a new subsection, subsection (2), and here the amendment is quite important. It permits the distribution of the discrete moneys associated with video lotteries to be directed by the Lieutenant Governor. They are therefore within the control of the government, as the minister has indicated.
I don't believe there are any other pertinent pieces of the bill that affect either the Ontario Lottery Corp or the Ontario Casino Corp.
Ms Kirk: Thanks very much, Neil. We'll hear from Rob, then, on the establishment of the new commission.
Mr Rob Harper: There are just a couple of points I'll add to what Teri has said in terms of the legal structure in part I of the bill that creates the new Alcohol and Gaming Commission of Ontario, just to try to outline for people how the commission administratively is supposed to function and what changes may occur in the transition from the administration of the two statutes, the Liquor Licence Act and the Gaming Control Act, by the current boards and commissions.
Part I of the act creates the commission and its board and the registrar and basically sets out a structure in which the registrar, who is an administrative official, shall have carriage of all the enforcement- and licensing-related powers and decisions on a first-case basis. So the registrar will be the official who makes decisions on licence applications, on whether to freeze trust accounts that may have moneys in connection with gaming activities and so forth, the various powers created under the Liquor Licence Act and Gaming Control Act.
Where there is a right of appeal or hearing from such a decision, that hearing will be conducted by the board of the new commission. That is a structure similar to what is currently in place under the Liquor Licence Act at present.
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In carrying out the various amendments in order to create this hearing structure, it's been our objective neither to take away from nor add to anyone's current hearing or appeal rights in the sense that if someone had an appeal of a decision under the previous statutes, they would have an appeal under this statute. If someone did not have an appeal under the previous statutes, they wouldn't have an appeal under this statute. It's simply a question of creating a single process. Previously, appeals of decisions in the gaming sector were made to a separate panel of the Commercial Registration Appeal Tribunal and it was felt, for efficiency purposes, it was best to consolidate this process into one procedure, but also to create a distinction between the role of the board as an adjudicative body and the registrar as a licensing and enforcement official.
As Teri pointed out, the regulation-enabling sections of the statute deal substantively with assigning the powers that will be assigned to the board under the registrar in order to carry out this distribution of powers and also deal with the transition of designated powers from the Liquor Control Board of Ontario under the Liquor Control Act to the new commission. As the minister outlined, it is intended to use that enabling authority to designate powers of the Liquor Control Board of Ontario that are deemed to be regulatory and which would be better consolidated with the new Alcohol and Gaming Commission of Ontario.
The other point I would like to make in terms of substantive amendments, which in the grand scheme of things is perhaps not that significant, but it is a substantive amendment and it creates a new offence and it should be drawn to your attention, is under the Gaming Control Act. I believe it's section 19 of the bill which amends subsection 42(6) of the Gaming Control Act. A new offence has been created for failing to abide by a term and condition of registration under the Gaming Control Act.
As with many licensing schemes, it's very common for quite a few of the requirements that are placed on a regulated party to be placed on them through terms and conditions on their registration or licence. At present, it is only possible where someone fails to abide by such a term and condition to simply revoke their registration and it was felt in particular, given the expansion of gaming opportunities to include video lotteries, that we wanted to ensure that a stronger sanction was available where someone had failed to abide by a term and condition, so a new offence has been created giving the possibility of prosecution as well as suspension or revocation of a licence where someone fails to abide by such a term or condition.
I think Teri has mentioned -- certainly I know it was mentioned, perhaps by the minister in answer to a question -- the fact that the new commission will appoint its employees under a provision in the statute that will make them crown employees as opposed to public servants appointed under the Public Service Act. In part, what that will do is it will allow the new commission to extend offers of employment to employees of both existing agencies, and the government certainly expects that the employees of the new commission will likely organize and be represented by one or more bargaining agents at the end of the day.
I think that pretty much summarizes what we have to say in terms of the legal structure of the bill and how it's attempting to amend the various statutes concerned with liquor and gaming to implement the initiatives carried out under the May budget.
There is perhaps one final point I would make just for clarification. I find it's come up a couple of times since the announcements of the budget and the release of the bill. People frequently wonder where in the bill do we see charity gaming halls, since they are spoken to in the budget initiatives and in connection with video lotteries and so forth. The bill does not directly speak to charity gaming halls. Those are regulated under an OIC, an order in council, under the authority of the Criminal Code and the move from roving Monte Carlo events to the establishment of permanent charity gaming hall sites will be carried out by an amendment to that OIC. Where the bill is relevant to the halls is in fact in creating the operational, in terms of the Ontario Lottery Corp, and regulatory, in terms of the Alcohol and Gaming Commission, structure that will oversee the video lottery machines that the halls will be eligible to host. I think that concludes our comments.
The Vice-Chair (Mr Ron Johnson): I thank all three of you for your information. We're now going to turn to questions, starting with the third party, in 15-minute blocks. Mr Kormos, you'll be first.
Mr Kormos: Thank you kindly. First to the staff person from the Ministry of Economic Development, Trade and Tourism: The minister has spoken of slot machine gambling as entertainment and speaks of it as a complement to the entertainment industry in Ontario. In the area of policy development, is it the understanding of the ministry, particularly yours, economic development, that this is a true complement in that it will draw new money that isn't currently being spent on entertainment, or will expenditures, as spoken of by the minister, on slot machines detract from expenditures in other areas of entertainment?
Mr McCallum: Mr Kormos, I must say I really don't have any firm information on that myself, nor am I sure that the department has any firm information, but certainly intuitively one would anticipate that the introduction of a new game of this sort would tend to expand the market somewhat. I take your point very well that there probably would be cross-elastic effects and that indeed some diminution in the playing of other games would occur, other forms of entertainment perhaps. I simply don't know. Those are my own intuitive thoughts.
Mr Kormos: But no examination of that at a formal level within the ministry?
Mr McCallum: I'll undertake to review that matter with the department. If there is anything we'll certainly provide it to you.
Mr Kormos: Please. Thank you, sir.
Mr Harper, the minister, as you know, spoke of one of the rationales for introducing 20,000 slot machines into communities as a response to the phenomenon of illegal slots across the province. What type of interministerial work has been done with the Ministry of the Solicitor General in terms of that observation and justification by the minister between the Ministry of Consumer and Commercial Relations and the Ministry of the Solicitor General?
Mr Harper: I'm not aware of any specific work undertaken between our ministries although, as you may know, the enforcement wing of the Gaming Control Commission actually consists of about 42 to 44 OPP officers who were seconded from the Ministry of the Solicitor General. It's expected that would continue with the new agency.
From our perspective, where we see in particular this initiative helping to deal with those issues is that by merging the two existing regulatory bodies into one agency and giving that agency responsibility for both liquor and gaming regulation administratively as well as then the legislative provisions that are introduced to strengthen the ability to deal administratively with people who have committed violations and basically put people in a dual-jeopardy situation, we feel that this will give us a better ability to deal with problems at licensed premises.
Furthermore, in creating opportunities for people who are interested in playing these sorts of games to do so at racetracks and at charitable gaming halls and eventually at licensed premises, that will give them an opportunity to play machines that they have some assurance are meeting standards that have been set by the Ontario Lottery Corp and where the funds from those machines are being used to assist charities and other public purposes. We think that will help divert funds away from the illegal market.
Mr Kormos: What prototype of slot machine is proposed to be used in the 20,000 locations?
Mr Harper: I think there are a number of varieties of electronic video lottery machines available in the marketplace, and the question of ascertaining what particular type of machine should be used is an operational decision that the Ontario Lottery Corp will be making as part of developing the implementation plan. As far as I'm aware at this point, we're still some way from deciding upon particular models of machines.
Mr Kormos: Do you consider slot machines to be entertaining?
Mr Harper: Personally, I don't consider lottery tickets to be entertaining, but --
Mr Kormos: That's not fair. I just threw that in. That has nothing to do with policy development.
The comment by the minister that 2% of revenues are going to be dedicated towards treatment of gambling addictions, again from your viewpoint as a senior policy adviser for the Ministry of Consumer and Commercial Relations, clearly that's an acknowledgement of the fact that slot machines are going to create enhanced levels of addictive gambling, isn't it?
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Mr Harper: I think, as the minister pointed out, we have at the moment close to $10 billion -- I think the latest figure I've seen is about $9.6 billion -- of legal wagering in Ontario presently, and also a very substantial amount of illegal wagering, as the current problem with illegal video lottery terminals demonstrates, and this exists whether or not we have this new initiative. Obviously, intuitively, as you make new gaming opportunities available to people, that creates new opportunities for people who are predisposed towards problem gambling to have problems with those opportunities.
I think from the government's perspective that allocating these revenues deals with issues in respect of this particular initiative, but will also help to deal with problem gaming issues that have arisen as a result of casino gambling, bingo halls, horse racing, lottery tickets and the variety of legal gambling initiatives that is already in place in Ontario, and also deals with people who have problem gambling, issues dealing with illegal gambling.
Mr Kormos: As a senior policy adviser, you were here when we spoke with the minister about these studies that indicate that as age increases, one is less likely to use a slot. I'm not suggesting that one is less likely to gamble, but the data show one is less likely to be attracted to the slots. The slots have a compulsive attraction to young people, and you heard, albeit anecdotally, the information provided by the Gamblers Anonymous organization in Alberta indicating that the vast majority, up into the 90-plus percentile, of callers complaining about gambling problems are people who play the slots. The minister did ask you for information and data about the enhanced addictiveness of slot machines over other types of gambling, didn't he?
Mr Harper: These sorts of issues are being looked at primarily by the Ministry of Health in developing the problem gaming strategy. Actually, I've lost my train of thought in terms of one of the points you had made that I wanted to respond to.
Mr Kormos: Let me help. Surely you as a policy adviser for the Ministry of Consumer and Commercial Relations -- which has the lead on this program, doesn't it?
Mr Harper: We have the lead in terms of the regulatory component dealing with the creation of the new Alcohol and Gaming Commission and establishing the regulatory framework that suppliers for charity gaming halls and video lottery machines have to comply with.
Mr Kormos: Which is what it's all about, is it?
Mr Harper: From our perspective it's what it's all about.
Mr Kormos: That's what it's all about. That's the guts of it, the viscera of it, isn't it? There's little left to be added on, isn't there?
Mr Harper: There are also operational issues and a substantial part, I think, of what people are going to be interested in in the hearings is going to be operational issues about how they obtain business opportunities, how particular charities or organizations obtain opportunities to revenues, how they are going to be allocated, regional questions which are more operational issues.
Mr Kormos: I'll take your direction in this. I'll go back to the Ministry of Economic Development, Trade and Tourism.
Mr Harper: I'm not trying to shuffle things off till I consult the ministry. I'm just trying to deal with what I can.
Mr Kormos: I appreciate your candour. From the Ministry of Economy Development, Trade and Tourism's perspective, are slot machines being perceived as a phenomenon or as a tool to achieve economic development?
Mr McCallum: In all candour again, Mr Kormos, I'm a lawyer; I'm not involved in that aspect of policy development. Certainly from what the government has stated one would draw the conclusion that in a tourism sense, for example -- I've heard your comments and the comments of others -- if people are making a decision to travel to a jurisdiction and they're looking at a panoply of attractions that are available and gambling is there, perhaps that does enhance the destination. Those are my own views, based on what I've been able to garner from public sources. But certainly one would have to conclude that it doesn't detract from Ontario as a tourist destination. In fact, it enhances it. That would be an intuitive conclusion, I think.
Mr Kormos: Okay. Then again, from the point of view of your role in policy development, what is the anticipated mode of distributing slot machines? Is it going to be per capita? Are there going to be models of that type that indicate that there are going to be X number of slot machines per 1,000 population?
Mr McCallum: My understanding from the government's statement is that it intends to have the lowest number of machines per capita of the jurisdictions in Canada certainly. Where they would be located --
Mr Kormos: Twenty thousand slots?
Mr McCallum: That is my understanding, that there would be 20,000 slot machines, and that on a per-capita basis that would represent the lowest number in Canada. Am I correct?
Ms Kirk: Yes.
Mr McCallum: Apparently I'm correct -- a rare thing.
On a distributional analysis -- where they will go -- that's very much an implementation consideration, Mr Kormos. That would be based on business decisions, certainly things that I know very little about, and I don't think those decisions have been made at all. My friends from CCR may be --
Mr Klees: On a point of order, Mr Chairman: With all respect to Mr Kormos's questions, I believe staff are here to answer technical questions. These are questions relating to policy to which these staff should not be responding.
Mr Kormos: Chair, let me respond.
The Vice-Chair: Well, Mr Kormos --
Mr Kormos: No, let me respond. A point of order has been made. What could be more technical than to talk about the design or the model for distribution of this machinery? What could be more technical than talking to a manager of policy development from the Ministry of Economic Development about the model for economic development that's being used when you're placing slots across the province?
The Vice-Chair: Mr Kormos, I will remind you that these individuals are staff, and if in fact they deem a question to be inappropriate then they will indicate that in the answer. Continue to ask your questions. You've got about five minutes left. If staff feel uncomfortable answering a specific question, they should indicate so to the Chair.
Mr Kormos: I like these people.
Mr Klees: Perhaps I could rephrase my point of order then, if I might, and that is that I would ask that staff keep themselves to responding to technical matters and that if there is a question relating to policy, they defer on that.
Mr Kormos: Chair, I've got to make an observation. Mr Klees is a lawyer. One would have thought he was a dentist because he's sure familiar with the practice of applying some Novocaine once the drilling starts hitting the nerve. What we're witnessing here --
The Vice-Chair: Just a minute here.
Mr Kormos: What we're witnessing here --
The Vice-Chair: Mr Kormos, sorry, I'm going to interrupt.
Mr Klees: With respect, I am not a lawyer, for the record.
The Vice-Chair: Mr Klees. Mr Kormos, I'm going to ask you to continue with your questioning. If staff feel uncomfortable answering a particular question, they should just indicate to the Chair that they are. Mr Kormos, your next question, please.
Mr Kormos: I'll use my time as I deem appropriate. I want the Chair and the committee to consider that Mr Klees just winked and nodded to the staff people, as much as indicating to them that they'd be best advised to clam up, to zip up, so to speak. I think that's a really offensive sort of exercise. Surely it could have been done more subtly. As the parliamentary assistant, Mr Flaherty could have passed a note to him saying, "We're skating on thin ice here." Clearly the government is as embarrassed as the minister should be about the total lack of preparedness of the government and the inability of these people, who have been very candid, to indicate that there has been any specific addressing of any number of issues that have been posed to them.
I think what we're witnessing here is an illustration again -- no criticism of these staff people, but what we're witnessing here is we heard the minister earlier skate around and dance around and avoid questions and shrug his shoulders and say: "Gosh, I don't know. Beats me. Never been done before. We're going to have to try it before we find out." Now we find staff people who are being admonished by a government committee member to clam up, to zip up.
The Vice-Chair: Mr Kormos, I'm going to have to stop you there; your time has expired. We're going to continue now to the government side for 15 minutes of questions.
Mr Kormos: It's called damage control. It's going to be difficult in the circumstances.
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Mr Klees: I'd like to address my question to the staff member from economic development. It relates to your -- I believe you were dealing with the Ontario Lottery Corporation Act, where you referred to definitions that were being used in this act.
Mr McCallum: That's correct.
Mr Klees: In subsection 6(1) there are two specific definitions, and I'm assuming that those definitions are in this act for a reason. One under 6(1) is "video lottery," and the other is "video lottery terminal." I'd like to ask you specifically, in your learned, technical opinion, if this act were dealing with slot machines, would this definition be different?
Mr McCallum: With respect to the definition of "video lottery terminal," certainly any slot machine I've played doesn't operate that way.
Mr Klees: Thank you very much. With that in mind, Mr Chairman, I might strongly suggest that if this is to be a meaningful series of meetings that we have, members of this committee keep their references to the terminology that is being used in this act. Repeatedly, members are referring to slot machines. There is nothing in this act that relates to slot machines.
Mr Kormos: Of course not, Chair.
Mr Klees: Would you agree?
Mr McCallum: There is no reference to slot machines in this act.
Mr Klees: In fact, this act does not relate to slot machines. Isn't that true?
Mr McCallum: Yes, that's correct.
Mr Klees: That is correct? If that is correct, then I would strongly suggest that from this point forward, in the interests of not misleading the public and ensuring that these hearings are credible, members of this committee continue to refer to video lottery terminals so that we all know what the debate is about and what we're trying to clarify. If we could have agreement from members of this committee that from this point forward that is the terminology we use, I think it would be helpful for everyone.
The Vice-Chair: Are there any more questions from the government side? At this time, we'll now move to the official opposition for 15 minutes.
Mr Kennedy: I'd like to ask about the definition as well. I won't waste the time talking to the honourable member's suggestion. We'd like to know more about why it was necessary to make a special reference to video lotteries -- in other words, obviously they're not lotteries ipso facto -- and particularly what compliance is required with the Criminal Code in the definition that is made here. I'm wondering if we could get a little bit more information about that.
Mr McCallum: Sure. "Video lottery," as defined, is a subset of a lottery scheme for the purposes of the Ontario Lottery Corporation Act. It is necessary in the scheme of legislation that's put forward in Bill 75 to define that so that when you turn over to subsection 9(2), a new subsection proposed to the Ontario Lottery Corporation Act, you'll note that, "The Lieutenant Governor in Council may direct that the corporation pay part or all of the proceeds from the video lotteries at specified times," and it goes on.
The lotteries have been earmarked, as I understand it, to pay for various things, including some resources devoted to dealing with problem gambling. There is a requirement that charities receive some sort of sum as well. In order to define the realm of revenues from which that's to be drawn, you have to define the video lottery. Certainly, the same is true with respect to the video lottery terminal. They have to be defined in order to create the offence. You have the terminals segregated. You have to know what you're having segregated. So when you look at subsection 8.1(2) where it states, "No person in control of premises where there are video lottery terminals," you have to define the term in order to create the offence.
Mr Kennedy: Yes. So the technical part of it is that in a sense. The other part though in terms of the definitional part that specifically says "compliance with the Criminal Code of Canada." What does that mean in this context?
Mr McCallum: Section 207 of the Criminal Code sets out an exception to the general rule governing gambling in Canada, and it says, "Notwithstanding any of the provisions of this part relating to gaming and betting, it is lawful (a) for the government of a province, either alone or in conjunction with" other provinces "to conduct and manage a lottery scheme."
Mr Kennedy: In effect, if the province of Ontario did not so designate these electronic slot machines as a lottery scheme, they would not be legal under the Criminal Code?
Mr McCallum: I guess the further advantage, the government of Ontario is permitted to conduct video lottery schemes. It would not be, it would appear, within the competency of a charity, which also has the capacity under section 207 of the Criminal Code to conduct and manage a lottery scheme, to carry that out. I certainly invite you to examine that part of the Criminal Code. It is a little complicated to deal with without sort of having -- I don't know if you have it -- do you have it in front of you?
Mr Kennedy: I don't at this moment, no.
Mr McCallum: It would certainly be worth looking at in order to get that level --
Mr Kennedy: Is there sort of a simple way to reference? This is an enabling clause, a definitional clause. If it wasn't there the video lottery terminals would have no legal basis, is that correct? In terms of the powers prescribed under the Criminal Code, the exception clause you referred to under the Criminal Code -- is that correct essentially?
Ms Kirk: I think it's fair to say that the purpose of Bill 75 is to authorize this form of gaming in the province, and if Bill 75 were not passed then this form of gaming would not be legal in Ontario.
Mr Kennedy: Is part of that related though to its definition as a lottery scheme, because that is what --
Ms Kirk: Yes, exactly.
Mr Kennedy: Okay. Also, is there meaning in terms of the information provided around the definition that talks to it as a freestanding unit?
Ms Kirk: The terminals, are you referring to?
Mr Kennedy: Yes.
Ms Kirk: Yes, there is a definition of the terminals as well.
Mr Kennedy: And in terms of the standalone -- when you say in the explanation, "Because the nature of the game, standalone pay as you play, it's necessary to identify it to comply." Those features of the game make it distinctive, is that correct?
Ms Kirk: The definition of video lottery terminal, the aspect that makes it distinctive, and was pointed out earlier distinguishes it in particular from slot machines, is that the play may result in the receipt of a credit that can be redeemed for further play. That's really the distinctive aspect of video lottery terminals. It's a system of credits and that there is no cash or money that the terminal itself makes available.
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Mr Kennedy: Do you call a slot machine a lottery scheme as well?
Ms Kirk: Slot machines are not something that are administered in Ontario. Video lottery terminals would be available under Bill 75 through this credit system.
Mr Kennedy: Under the acts regulating casinos there, is there not reference to the use of slot machines?
Ms Kirk: The slot machines are something that can be run by casinos but will not be within the jurisdiction of charitable gaming halls. Blackjack, roulette, what are now operated through the roving Monte Carlo evenings would be the sort of gaming activities that would be permissible in the charitable gaming halls as well as video lottery terminals.
Mr Kennedy: This will be established by order in council? Is that correct?
Ms Kirk: The order in council will be amended to establish the charitable gaming halls, and then Bill 75 will authorize the establishment of video lottery terminals in the province, including those located in charitable gaming halls.
Mr Kennedy: I wonder if the representative from economic development could comment on the legalities of requests for proposals, if they've already been made in respect of some of the operations of this act, and if so, what kind of status those would assume. We appreciate that the requests for proposals for different parts of this have been made or are about to be made. Is that usual practice? Could you comment on that.
Ms Kirk: I'm not sure that we're in a position to comment on that. I'm not sure whether that is something in the public domain or not. I'd want to clarify that. Again I think it's important to clarify what our role is here today, which is in support of Bill 75 and this legislation, to provide committee members with advice and information in respect of the bill. The operational decisions will be made by cabinet once the legal framework is in place to allow such decisions to be made.
Mr Kennedy: That really is the nature of my question so I apologize for making it sound broader. Is the legal framework in place for requests for proposals to be made at this time?
Ms Kirk: No. Bill 75 is the legal framework by which video lotteries will become permissible, will become part of the law of Ontario. If Bill 75 is passed in the Legislature then the legal framework for making operational decisions about how video lotteries will be carried out will be in place. That's not to say governments aren't able to and don't frequently move forward with policy- and operational-type planning in advance of third reading or proclamation of a bill. Therefore, as the minister has indicated, some operational planning is going on, but Bill 75 will be the legal framework under which those operational decisions --
Mr Kennedy: By convention then that does happen, but the strict legality of it, the framework has yet to be provided. Is that correct?
Ms Kirk: Bill 75, if passed by the Legislature, will provide the legal framework to allow video lottery terminals and video lotteries in the province.
Mr Kennedy: There was reference by the minister and I think repeated by staff around the limits that this government is undertaking. Is there any mechanism for those limits anywhere in the legislation?
Ms Kirk: No. The legislation again provides a legal framework by which video lotteries can be carried out in the province. Operational and financial decisions about how many terminals, how many charitable gaming halls, what types of terminals, what types of gaming activities will be carried on in gaming halls are operational and policy and political decisions.
Mr Kennedy: So there's nothing in the legislation that proscribes that in any way.
Ms Kirk: No.
Mr Kennedy: This is an enabling bill. In fact, in terms of how we should consider the bill's potential, the government can introduce as many video lottery terminals as it wishes once this is in place.
Ms Kirk: Like not only enabling legislation but legislation in general, it sets up a legal framework by which decisions can be made. Legislation is generally by definition flexible enough to allow for a variety of decisions to be made over a number of years, understanding that the legislation will likely endure over a fairly prolonged period of time.
Mr Crozier: I'm not sure who can answer this question for me, so I'll just ask it and then perhaps you can help me, because I want, like Mr Klees, to make sure that over the next three weeks there's no misunderstanding as to what we're talking about.
I've admitted on other occasions that I've only been to Las Vegas once in my life. I can't recall when I was there that I played any kind of machine. I recall that I played blackjack. I have yet to gamble in any casino in Ontario, so I'm not even sure what's allowed and what isn't allowed in the province of Ontario.
There seems to be a great deal of concern over what we refer to as a slot machine and what the act says is a video lottery terminal. One part of my confusion is that the minister, if not earlier today at the hearing then at least out in the scrum, said they weren't sure yet whether these machines will take bills, which I assume is money of the crown. And it's been mentioned here that it would be a credit system where I assume you buy something from a cashier and it somehow activates the machine with the amount of money I have in it. Where does that difference lie? Are we looking at machines that will actually take either coins or paper bills?
Ms Kirk: The terminals that are ultimately selected -- and there may be a variety of types that are ultimately selected -- will have to fit within the definition of video lottery terminals that is in Bill 75. It's important then to read that definition carefully. It has two components. It talks about a scheme upon payment of money -- and as we know, money can be in a variety of forms: It could be a bill, it could be a coin, it could be a credit -- but that the play may result in the receipt of a credit. It doesn't use the word "money" in the receipt aspect. As indicated, that is what distinguishes a video lottery terminal from what's commonly called a slot machine. Slot machines result in the payment of money to the player; video lottery terminals result in the payment of credit, and the credit can ultimately be redeemed.
Mr Crozier: So you put money in a slot machine and you either win or lose.
Ms Kirk: Yes.
Mr Crozier: In a video lottery terminal, can I not only build up a credit, but build up a debit?
Ms Kirk: I would imagine that would be possible. I really am not an expert in that field except that the definition in the statute talks about resulting in --
Mr Jim Flaherty (Durham Centre): No. The answer is no.
Interjections.
Mr Crozier: Sorry, but I'm asking the expert.
Mr David Ramsay (Timiskaming): You wouldn't want a debit, would you?
Ms Kirk: Again, we're not here to provide expertise on gaming machinery; we are here and we're happy to elaborate on the definition in the act, and the definition talks about receipt of a credit.
Mr Crozier: But it doesn't talk about a debit.
Ms Kirk: It doesn't talk about a debit.
Mr Crozier: So it wouldn't be allowed?
Ms Kirk: I would have to consider whether a debit would come within the definition of a credit. I think the distinction in the definition is between receipt of a credit as opposed to receipt of money.
Mr Crozier: In your expert opinion -- and this is a technical briefing; therefore I would have expected that some of these things could have been answered -- would that be something that you think this committee should consider amending in the legislation so that is more clear?
Ms Kirk: I think, personally, the definition is quite clear, and operational decisions will have to be made that are in keeping with the legal definition, the statutory definition.
Mr Crozier: As I said earlier today, to me these machines are more terrible than slot machines then, because at least a slot machine, if I put a dollar in it, that's all I can lose at that point. If this allows for not only building up a credit that I can gamble away almost instantly but allows that I can go into debt and have to settle before I leave the place --
Mr Flaherty: It doesn't.
Mr Crozier: Well, you may sit there and say that it doesn't allow it. I would prefer that somebody with the legal expertise will tell me that it does not allow it. If it doesn't allow it, that's fine. If there is a grey area, all I'm suggesting is that this is something we perhaps should look at.
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Ms Kirk: I think the answer to your question is that the statutory definition says very clearly that the playing will result in the receipt of a credit. I think other members who have more experience with the machinery are putting forward their views that it cannot be a deficit.
Mr Crozier: But there's no guarantee that it will result in a credit.
Ms Kirk: Again, those are operational decisions that will be for others to make.
Mr Crozier: But the point is that, like slot machines, you can lose money. There's no question about that, is there?
Ms Kirk: I really do not know the answer to that question.
Mr McCallum: The nature of the undertaking is to play a game and you have an opportunity to win and an opportunity to lose, so certainly, yes, in that sense.
Mr Crozier: And because there's quite a sensitivity about comparing video lottery terminals to slot machines, are you able to offer a technical difference as to whether you can gamble at a greater speed on a video lottery terminal than you can on a slot machine?
Ms Kirk: No, I think the speed at which a game is played would depend very much on the player.
Mr Crozier: Well, perhaps that's something we may be able to get from some witnesses who will appear before us.
Mr Kennedy: In the same vein, is there anything that prevents a slot machine from being designated as a lottery scheme?
Ms Kirk: A slot machine would not come within the definition of video lottery terminal, so --
Mr Kennedy: No. What I'm asking is, the video lottery terminal in this act is proposed to be designated "a lottery scheme." Is there anything that would prevent a slot machine from being also so designated if the government chose?
Ms Kirk: No, video lottery terminals are the instruments by which video lotteries are carried out.
Mr Kennedy: I'm sorry. I really need an answer to the question. If I understand correctly, and please correct me if I don't, the video lottery terminals are being designated, by definition, as a lottery scheme so that they are in compliance with the Criminal Code. Is that correct?
Mr McCallum: They are a subset. "Lottery scheme" is already defined in the Ontario Lottery Corporation Act, defined as follows: "includes a lottery, a game of chance and a game of mixed chance and skill."
Mr Kennedy: So would a slot machine fit under that definition if the government so chose?
Mr McCallum: Just let me think about it, because I've never thought about whether a slot machine fit the definition of lottery scheme.
Ms Kirk: With due respect, it's really a hypothetical question. Bill 75 introduces video lotteries as a means of gaming in the province, and the means by which one would participate in a video lottery is through a video lottery terminal. That's what Bill 75 addresses. I think your question is really hypothetical in nature, which is, could video lotteries be carried out by some other form of machinery which is not included in Bill 75? I think the answer is that Bill 75 does not address that, and that's a hypothetical question.
Mr Kennedy: I'm sorry, but with respect, the question was: Could slot machines, under a different act --
Interjection.
Mr Flaherty: On a point of order, Mr Chair: Bill 75 is the bill we're studying here. It's not some other bill that might be brought some day by some government about something else.
Mr Kennedy: Mr Chair, my point is technical in nature, and it --
Mr Flaherty: Your point is irrelevant to the matter before the committee.
Mr Kennedy: Well, Mr Chairman, is it the advice --
The Chair: Are you asking simply whether or not the government under Bill 75 could introduce slot machines? Is that the question? That's quite relevant.
Mr Kennedy: Mr Chair, for definitional purposes only and for the technical staff we have in the room currently, I'm asking whether this particular clause which defines video lottery terminals as a lottery scheme could, so that we know the scope of the provision that exists, also include something like a slot machine.
Ms Kirk: The answer is clearly no. If you read the definition of "video lottery," you'll see that it is a lottery scheme that is "operated on or through a video lottery terminal," period.
Mr Kennedy: But if the operative part is designated as a lottery scheme -- that is the only part I'm asking, Mr Chair. The definition of a lottery scheme as was read out, if I understand correctly, includes any gaming device and therefore could include -- could I have that definition read again? Just a single point, Mr Chair.
The Chair: That may be, but your time is up. We can deal with it that way. However, the subcommittee has allocated an additional 55 minutes today, and if you wish to take advantage of it, you can so choose. Next in rotation would be Mr Kormos.
Mr Kormos: Chair, I am prepared to move that we terminate this stage of the hearing process. Again, not to in any way diminish these people in their capacity, but clearly they have had exposure and involvement in such a narrow part of this development. You'll note that the minister earlier said, "Ask the technical questions to the staff, the ones I can't answer." It's not their fault, but they weren't armed with the information either. Clearly, nobody knows, so I have no more questions to ask of these people.
The Chair: Thank you, Mr Kormos. I assume there are no questions there. Is it in order to adjourn the deliberations today?
Mr Kennedy: Mr Chair, I don't wish to belabour this, but I would like, with your concurrence, to rephrase the single question I asked before and use just that amount of time.
The Chair: Okay. I have to hear the question first.
Mr Kennedy: The question on which I would like your technical opinion only is the nature of the definition in the legislation which designates and defines a video lottery terminal and a video lottery as a "lottery scheme." We are asked at different points here to consider whether there is a true distinction between a video lottery terminal and a slot machine, and what I'm asking is, should the government in its wisdom have chosen other gaming devices, could they also be designated as lottery schemes? I'm just asking for your technical definition of that.
Mr Flaherty: On a point of order, Chair, if I may: Again it's a hypothetical question. It's asking whether any government, this government, some day, some time, could bring forward another piece of legislation dealing with another subject. It's not a matter before the committee, and I ask that you rule the question out of order.
The Chair: I don't think that was the question. As I understand the question of Mr Kennedy, it's simply, if the government chose, could it designate other gaming machines, including slot machines, a lottery scheme? The question is for a legal opinion, because obviously the government could designate anything, could designate any scheme. The question is whether that would be legal under the terms of the Criminal Code.
Ms Kirk: I can provide the committee with our legal opinion on that. You'll note that it's -- and pardon the legal vernacular -- what we call a conjunctive definition. There's an "and" in the middle of it, which means there are two components in the definition that have to be met. The first is that it's a lottery scheme, and second, it shall be "operated on or through a video lottery terminal." With respect, you're focusing on the first aspect of the definition only, the lottery scheme, and assuming that brings you into the broader definition under the Ontario Lottery Corporation Act. You're right, it does, but you've forgotten the second half of the equation, which is the conjunctive part, the second requirement, that it shall be operated by a VLT, and a VLT is defined in the act in the way we've talked about.
Mr Kennedy: But it's not my inference that the government would move to define a slot machine as a VLT, simply that for the purposes of these hearings and us discussing the subject with the public, a gaming device is a gaming device, a slot machine and a VLT are in effect very similar things, and what we're looking at is that a legal distinction is made here for the purposes of enabling --
The Chair: Excuse me, Mr Kennedy. Now we're getting into argument. I think the staff have answered the question you've posed to the best of their ability. If there is no objection, I declare this meeting adjourned until tomorrow morning at 9:20. Don't forget to bring your bags tomorrow if you're leaving for Thunder Bay. I need the subcommittee, Mr Flaherty, Mr Ramsay and Mr Kormos, to remain.
The committee adjourned at 1610.