Assemblée législative de l'Ontario

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

EAST SIDE MARIO'S

PORT ARTHUR BRASSERIE AND BREWPUB

NORTHERN TELETHEATRE NETWORK

CASEY'S GRILLHOUSE

ADDICTION RESEARCH FOUNDATION

ONTARIO METIS ABORIGINAL ASSOCIATION

JEAN MORRISON

KLONDIKE CASINO

RANDY VALOIS

WAYLAND HOTEL

BEST OF LUCK BINGO ASSOCIATION

PERSONS UNITED FOR SELF-HELP IN NORTHWESTERN ONTARIO

THUNDER BAY AND DISTRICT HOSPITALITY ASSOCIATION

CAMBRIAN PRESBYTERY, UNITED CHURCH OF CANADA

PRESBYTERY OF SUPERIOR, PRESBYTERIAN CHURCH IN CANADA

ONTARIO NATIVE WOMEN'S ASSOCIATION

BEST WESTERN NOR'WESTER RESORT HOTEL

NIPIGON DISTRICT MEMORIAL HOSPITAL

CONTENTS

Thursday 8 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

East Side Mario's

Mr Jon Essa, operating manager

Port Arthur Brasserie and Brewpub

Mr Don Caron, controller

Northern Teletheatre Network

Mr Ron Miron, director

Casey's Grillhouse

Mr Doug Fraser, general manager

Addiction Research Foundation

Mr Lyle Nicol, consultant

Ontario Metis Aboriginal Association

Mr Harry W. Daniels, member

Mr Michael McGuire, president

Mrs Jean Morrison

Klondike Casino

Mr Don Ohlgren, president

Mrs Anne Ohlgren, vice-president

Mr Randy Valois

Wayland Hotel

Mr Donald Johnson, owner

Best of Luck Bingo Association

Mr Phil Jarvis, project chairman

Persons United for Self-Help in Northwestern Ontario

Ms Marilyn Warf, regional director

Thunder Bay and District Hospitality Association

Mr Mike Meady, past president

Cambrian Presbytery, United Church of Canada

Mrs Eleanor McLean

Presbytery of Superior, Presbyterian Church in Canada

Rev Milton Fraser

Rev Jim Patterson

Ontario Native Women's Association

Ms Marlene Pierre, president and CEO

Best Western Nor'Wester Resort Hotel

Mr John Beals, president and general manager

Nipigon District Memorial Hospital

Ms Levina Collins, director of development

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 DouglasB. Ford (Etobicoke-Humber PC) for Mr Leadston

Mr Terence H. Young (Halton Centre / -Centre PC) for Mr Parker

Also taking part /Autres participants et participantes:

Mr MichaelGravelle (Port Arthur L)

Clerk / Greffière: Ms Donna Bryce

Staff / Personnel: Mr Andrew McNaught, research officer, Legislative Research Service

J-1001

The committee met at 0901 in the Airlane Motor Hotel, Thunder Bay.

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): Good morning, members of the committee and ladies and gentlemen. This is a continuation of the hearings of the standing committee on the administration of justice consideration of Bill 76. It certainly is a pleasure to once again be in Thunder Bay. This committee visited Thunder Bay some few months ago in our consideration of the Consent to Treatment Act. We enjoyed the hospitality of your fair city so much, we're back again.

I've been asked to summarize this bill. It's not a long bill but it is rather complicated. However, basically what it does is: Firstly, it establishes an Alcohol and Gaming Commission, which for the first time brings regulatory powers to one commission dealing with both liquor and gambling. Secondly, it legalizes video lottery terminals in a staged process. The first stage would be the introduction of these terminals in racetracks and licensed gaming premises. Secondly, it is envisioned, depending on the recommendations of this committee, that it be extended to licensed liquor premises.

On my left are members of the opposition and third party and on my right are members of the government. Each presenter has 20 minutes, including all questions. The reason for the shortness of time is so that we can hear everyone, because we had a number of requests from all over the province to make presentations. That being said, I think we should proceed.

EAST SIDE MARIO'S

The Chair: Our first presenter is Mr Jon Essa, president of East Side Mario's. Welcome, Mr Essa.

Mr Jon Essa: First of all, Mr Chairman, my name is Jon Essa, if anyone didn't hear it. I'm the operating manager of East Side Mario's located here in Thunder Bay. I want to thank you and the committee members for the opportunity to appear today and speak.

I want to begin today by stating up front that I'm very supportive of Bill 75 as it relates to video lottery terminals and urge the government to implement them in the hospitality sector as soon as possible. We as an industry are in a serious economic situation. I can tell you from a personal perspective the urgency of the situation. Our industry is in serious trouble. Sales are down 20% across the board. We've lost about 100,000 jobs and there have been about 1,400 bankruptcies in this industry since 1992.

I can tell you personally, from our perspective, that if video lottery terminals were allowed to be brought into the restaurant and bar sector of the industry, we would be able to hire another 35 or 40 more employees, expand our operation and generate tourist dollars. A lot of our local and tourist dollars are now going to local border towns or villages, you might say, with local gambling that is Stateside, which is 40 miles away. A town of 200 outside of Thunder Bay generates over $15 million to $16 million in revenue -- Thunder Bay dollars. We need an opportunity at this point to compete together with them and add value to our operations as individual operators.

The Minister of Finance, in his budget of May 8, said the government was going to allow VLTs to help our industry. Specifically, he said, "We believe that VLTs, if implemented within tight regulatory controls and in limited-access environments, can meet a legitimate entertainment demand and provide a significant stimulus to the hospitality industry." Minister Eves also referred to the 15,000 illegal machines that are out there today.

It's important that the implementation stage for our industry not be delayed and that the timing be as soon as possible following the racetrack and charitable casino schedule. From the government perspective, delaying implementation to our industry will mean the government will not be able to start receiving over $500 million annually from machines allocated to our sector. Conversely, the illegal, untaxed revenues from the grey machines continue to remain in the underground economy. Specifically, I can relate to at least 300 to 400 machines in this area alone.

From the perspective of a businessperson like me, it means that a delay could very well result in having an initiative that the government intended to help the hospitality industry hurt it. The reason is that during the first stage of implementation, to racetracks and charity casinos, it will create business dislocation. Customers will gravitate to where they can legally play VLTs. We cannot afford to lose any more business, even for a short time. As well, who knows if customers will ever come back and how often they will come back.

Those businesses close to the new casinos, such as Windsor, Orillia, Sault Ste Marie and now Niagara Falls, or the new charitable casinos, also need VLTs. The casino in Windsor, for example, has had a devastating negative impact on the local hospitality industry there. Further, VLTs will not negatively impact casinos. Dr Marfels from Dalhousie University in Nova Scotia -- I've provided you a copy of the study -- has proven that. This study was conducted on that issue in that province and has stated that it will not affect casinos. A delay will also mean, as I said earlier, the government will be delaying in moving in an offensive against illegal machines. It is very difficult to try and operate legally, especially in these tough economic times when the competitors are attracting new customers with illegal machines. We need this unfair competition to stop now with those illegal machines.

VLTs work as an attendance generator because they're an acceptable form of entertainment that the public wants. They play for the entertainment, not to gamble. They're part of an evening out. They give us an opportunity to allow consumers to stay longer in our establishments, make them full entertainment centres and have more repeat business.

Independent research confirms this, as I believe you're already aware. I refer to the work conducted in Manitoba by Dr Barbara Gfellner from the University of Brandon. Dr Gfellner found out that the average VLT player plays VLTs for about 30 minutes once or twice a week and spends only an average of $10. She also said that most people who play VLTs do so on a moderate budget basis and perceive VLTs to be a modest form of risk-taking in an entertainment-oriented social environment. Finally, the overwhelming majority of VLT players reported that the most important reason they went to a bar or lounge was to relax, to be with friends, socialize, meet with people. It's an affordable budget activity that is viewed as recreational on the consumer's part.

Ontario has already a full selection of legal and illegal gambling opportunities. I've already referred to some of these illegal opportunities this measure will help control, but one does not have to go any further than your corner store or bingo hall to find a gambling opportunity. However, just as with the consumption of alcohol, the vast majority of players gamble in moderation and experience no significant gambling problems. A new brand of alcohol does not increase the overall level of alcoholism. With all the existing forms of gambling today -- lotteries, sport pools, bingos, horse racing, casinos, break-open tickets -- an introduction of a new brand of video gaming will not significantly increase the potential for compulsive or problem gaming in Ontario. Research shows that less than 2% of the population are potential compulsive gamblers and another 3% to 5% may experience some problems.

Tibor Barsony, executive director of the Canadian Foundation on Compulsive Gambling, has said, "Prohibition is not the answer. Education and treatment are." Dr Durand Jacobs, vice-president, US National Council on Problem Gambling, said in an interview on Canadian television:

"The majority of the population has no problem with gambling. For most folks, gambling is just fun and games, but for a small minority who have a problem it can be devastating, and we have to develop programs to help them," which the government has already committed 2% of all funds towards.

0910

I would also like to take this opportunity to point out that the public supports the introduction of VLTs into our establishments. Our customers are telling us this continually. The traffic that the illegal machines generate at competing locations proves this alone. Independent surveys conducted by research confirm this and independent committees from police associations also confirm this.

On behalf of myself, the employees that I still have today and hopefully will keep tomorrow, and for those I would love to be able re-employ, I urge you and your committee to recommend to the government the quick passage of Bill 75. I would also suggest that your recommendations include to move the implementation of VLTS for industry on to the fast track. Our situation is desperate and we've all been hoping and praying the government would take this progressive step, and we'll be grateful that it has. We need the stimulus of this new form of entertainment. We don't have to speculate as to the outcome. The positive results are already amply demonstrated in Manitoba themselves.

The Chair: Thank you, Mr Essa. All members should have background material headed on the first page Enforcement and Experience in Other Provinces. We left off with the loyal opposition last time, so we'll start with Mr Kormos. You have approximately four minutes.

Mr Peter Kormos (Welland-Thorold): Thank you for the brief reference to the Gfellner report. I appreciate that. That's the Brandon University from Brandon, Manitoba. You read the report and extracted the portions that you did?

Mr Essa: Yes.

Mr Kormos: Where in the report did it indicate that Professor Gfellner suggested that VLTs are not addictive?

Mr Terence H. Young (Halton Centre): On a point of order, Mr Chairman: Will you ask Mr Kormos to treat our delegations with some common courtesy today?

Mr Kormos: Thank you, sir. Where in the report does Professor Gfellner indicate that VLTs are not addictive?

Mr Essa: It says, "Research shows that less than 2% of the population become compulsive gamblers."

Mr Kormos: That's not the Gfellner report. In fact the Gfellner report, on page 18, says that a --

Mr Essa: I'm sorry, sir, I don't have that in front of me to even compare that.

Mr Kormos: I do.

Mr Garry J. Guzzo (Ottawa-Rideau): Just page 18. Don't give him the whole report, Peter, just page 18.

Mr Kormos: The Gfellner report says, on page 18:

"As shown elsewhere, more people gamble when opportunities to gamble are more readily accessible. Thus the accessibility of VLTs places more people at risk for gambling addiction, and for some this will include involvement in criminal behaviour."

Further, Gfellner indicates that "9.3% of VLT players as adults are addictive players, pathological or problem gamblers." That's contained again in that same Gfellner report, indicating a far higher incidence of addictiveness, pathological and problem gambling among VLT players than among other forms of gambling. That certainly is at variance with the level of addictive gambling in the general population.

Mr Essa: Sir, unfortunately I don't have the opportunity or liberty to have that full report in front of me.

Mr Kormos: You've read the full report though.

Mr Essa: I've had excerpts from the full report and seen the full report. The information I've provided to you people as far as gaming goes and addictiveness, yes, I've handed out to you. If you're taking certain excerpts and --

Mr Kormos: No. I'm trying to indicate to you that Gfellner does not indicate what you said she indicates.

Mr Essa: It certainly does say that research shows that less than 2% of the population will become addicted to gambling.

Mr Kormos: And 9.3% of VLT players currently are pathological or problem gamblers, far higher than gamblers in other types of gambling activity, which is the very problem with VLT slots, and that is that they are highly addictive.

Read the Frisch report from the University of Windsor, where his study of adolescents in the city of Windsor indicates that some 8% were already problem gamblers, with an additional 9% -- with an aggregate of 17% -- having the potential to become problem gamblers. That's 17% of adolescents. We're talking about a generational phenomenon here for whom slots are highly attractive and highly addictive.

Read the Griffiths study out of the University of Exeter, which indicates the high level of problem gambling, addictive gambling, and the attractiveness of slot machines in the UK.

Read Yorke, the Nova Scotia psychologist, who agrees with Frisch and speaks of video gambling having the strongest attraction for potential young addicts, and believes that this should send a cautionary note for those who make public policy.

Read Jeffrey Deverensky from McGill University --

Mr Essa: Excuse me, sir, would you be able to provide information where I can get that information?

Mr Kormos: They're available at Dalhousie University, at Windsor University and at McGill University in Montreal.

Mr Essa: In my travels, in my business dealings throughout North America, I deal with Carlson Companies, which is a worldwide company, and TRC Restaurant Corp, which along with Carlson, from Thunder Bay right to Minneapolis alone there's three casinos which they condone. Every time I've driven down there I haven't seen any addicts or compulsive liars sitting on the side of the street and causing any problems because they went in there. We've also, in talking to these people when we've talked to casino owners, managers, the compulsive gamblers, it's not something that's learned, it's innate.

Mr Kormos: I'm talking about legitimate research and I'm observing that there is so much zeal and fervour to get into this highly profitable industry that the industry is prepared, just as the tobacco industry is in the United States and throughout North America, just as the liquor and beer industry is throughout North America and probably the world, to distort facts, prepared to misrepresent --

Mr Frank Klees (York-Mackenzie): On a point of order, Mr Chairman --

Mr Kormos: -- reality, because of big interest --

The Chair: Mr Kormos, we have a point of order before the committee and you've refused to cooperate. Mr Klees.

Mr Klees: Mr Chairman, I really ask you as the Chair to take control of these proceedings. We're here to discuss the relevancy of a bill that's before us. Mr Kormos, for the last couple of days, has gone on at length -- quite frankly, sir, to our boredom -- on very general issues.

Mr Kormos: You can be bored --

The Chair: Excuse me, Mr Klees. That is not a proper point of order.

Mr Klees: The point I want to make is that I believe that Mr Kormos is not treating the delegation with respect. This gentleman has come to give input on Bill 75. I believe we should keep the discussion to that point.

The Chair: Mr Klees, I'm sorry, we are now using the government caucus time on that because Mr Kormos's time was at an end. That is not a proper point of order, and we will now move to the government caucus.

Mr Jim Flaherty (Durham Centre): Good morning. Mr Kormos is in good form again today. Mr Kormos knows, if he was listening yesterday, that we had the benefit of the evidence of Mr Room from the Addiction Research Foundation; he also knows from the evidence accumulated not only in Canada but in the United States and Ontario over the last two years that 1% to 2% approximately of the population will develop addiction problems with respect to gambling regardless of the kind of gaming opportunities that are made available to them in the community.

As we know, because the NDP government of Mr Kormos chose to do it, we have casino gambling in the province of Ontario. Not only did they choose to introduce casino gambling, but they failed to set aside adequate funds to deal with the addiction problem of 1% to 2%. Yet we have now the audacity and hypocrisy of a member like Mr Kormos coming here and saying this sort of funding should not, I gather, be put aside when they didn't do it.

Mr Kormos: Oh, please, cite the facts correctly. I voted against casino gambling. I opposed it the same way Mike Harris did, the hypocrite who now wants to become the godfather of gambling in Ontario.

Mr Flaherty: The study by Professor Frisch of the University of Windsor and the Canadian Foundation on Compulsive Gambling indicated that the incidence of compulsive gambling in the population remains stable at between 1% and 2% and does not increase even when a major new form of gambling, such as casinos or video lotteries, is introduced. Those are the facts. Similarly, the study done in Windsor at the introduction of the Windsor casino found no change in that level of behaviour at 1% to 2%. I'm sure Mr Kormos knows that because he says he's read these studies.

Mr Kormos: Read Frisch. Read Griffiths. What's the matter with you people?

Mr Flaherty: I just did: Professor Ron Frisch. I'll read it again for the member for Welland who seems to have difficulty hearing.

Mr Kormos: Talk about the intergenerational phenomenon.

Mr Flaherty: "No change from 1% to 2% regardless of the introduction of the new form."

Mr Kormos: You're talking about putting slots --

Mr Flaherty: What I'd like to talk about, if I may --

The Chair: Mr Kormos, I don't think anybody interrupted you other than the point of order and I don't think it's fair to interrupt them. If we continue on this course of behaviour, it will be constant interruptions and neither one --

Mr Kormos: A little frankness from the government would be appreciated.

The Chair: Well, that's your opinion. Thank you, Mr Kormos.

Mr Flaherty: If I may direct you to a real problem in the real world dealing with real facts in this community of Thunder Bay, I want to talk about the fact that we have video lottery machines already and that people are using them, and I understand minors are using them.

Mr Essa: That's correct. You can access them in just about any form of business today. I was in the small community of Atikokan last weekend and it was in a florist shop, one of the grey machines. They're in corner stores, gas bars, various types of businesses today.

Mr Flaherty: So these machines are there now. They're not being regulated.

0920

The Chair: Excuse me, Mr Flaherty, your time is up. Mr Ramsay.

Mr David Ramsay (Timiskaming): Welcome to politics, Mr Essa; welcome to our committee hearings. I just want to ask you a couple of questions. I was very alarmed by the figure you gave this morning, that you believe there are up to 300 to 400 illegal machines in this Thunder Bay general area. Is it your belief that these machines hurt your business?

Mr Essa: Definitely.

Mr Ramsay: Have you made a formal complaint to the police about these machines?

Mr Essa: The police are well aware of what is going on with the machines. There has not been a charge laid against any of the operators as of yet.

Mr Ramsay: I want to pursue that just a little bit. Are other people like you, owners and managers of restaurants in this area, making complaints to the police?

Mr Essa: Yes. We did at a city council meeting not more than two to three weeks ago.

Mr Ramsay: So what you're saying is that they're aware of it but nothing seems to be happening.

Mr Essa: They're investigating it as we speak.

Mr Ramsay: They are investigating it, okay.

You were saying that you thought the introduction of VLTs would enable you to hire 35 to 40 additional people at your operation. Is that full-time?

Mr Essa: Divided up by the people it would be about full-time hours, yes.

Mr Ramsay: So they're full-time equivalents up to that. What's your total full-time payroll now, not in money but in people? What would be the full-time number of people you would have?

Mr Essa: Total employees would be near 80. We used to have over 100. Full-time, per se, there are only about 10.

Mr Ramsay: About 10. You're saying you would be able to hire four times the number.

Mr Essa: At least.

Mr Ramsay: That's a very substantial increase to your operation. Would you describe your restaurant? Is it a family restaurant? How would you describe it?

Mr Essa: A casual dining, full-service restaurant.

Mr Ramsay: Do families go?

Mr Essa: Yes.

Mr Ramsay: With the way the government wants to implement VLTs, it will not put them in areas where people under 19 years old would be.

Mr Essa: We'd have a room with a controlled environment. Our liquor laws in Ontario seem to be a lot more stringent than they are in Manitoba, and we have to abide by and worry about regulatory conditions to maintain our LCBO status. The operators have been forced, in Thunder Bay specifically, to abide by these rules. Very tight constraints have been imposed upon us.

The Chair: Mr Essa, the time is up. Thank you very much for your presentation here this morning.

PORT ARTHUR BRASSERIE AND BREWPUB

The Chair: The next presenter is Port Arthur Brasserie and Brewpub, Mr Don Caron, who's the controller of that organization. He has presented the committee with a written brief. You should all have a copy. Good morning and welcome. I ask you to proceed, please.

Mr Don Caron: Thank you, Mr Chair. Before I start I'd just like to comment that you will hear the odd statement that will be a repeat of what the last presenter said.

Thank you for the opportunity to address the committee on Bill 75. My name is Don Caron. I am the controller of 502065 Ontario Ltd, which operates as the Port Arthur Brasserie and Brewpub. We're located at 901 Red River Road in Thunder Bay.

I want to begin today by stating up front that I am supportive of Bill 75 as it relates to video lottery terminals and urge the government to implement them into the hospitality sector as soon as possible. As a member of the hospitality industry, we are in a serious economic situation, and I can tell you from a personal perspective the urgency of the situation. Since 1992, sales are down 20% across the industry and there have been significant job losses and bankruptcies. A brief background on the brewpub follows.

The brewpub has been in business since 1982 and is an operation which provides food, beverage, outdoor recreation, NTN Trivia entertainment and, commencing April 1995, Champions Telewagering. Our business at present is approximately 70% food and 30% beverages. During the past five years we have faced a continual increase in costs coupled with a decrease in sales and returns. The result has been a precipitous decline in profitability. More specifically, brewpub sales have fallen by 13% and our profitability has disappeared. In 1990 the return on sales was 9.65% and the return on assets was 22%. This eroded dramatically during the next five years, until returns for the year 1995 were only 0.09% on sales and 0.18% on assets employed. I'm sure you can appreciate that it is impossible to maintain an operation that returns significantly less than 1% on sales or assets employed.

What we are talking about is the survival of the hospitality industry, as it is at risk under the present environment and requires some form of additional stimulus to survive.

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

Here in a nutshell is the current gaming environment in Thunder Bay under the following issues: (1) illegal machines; (2) cross-border gaming; and (3) demand.

Minister Eves referred to the 15,000 illegal machines presently operating in Ontario, of which 40 are in operation in Thunder Bay, and that number comes from a report from the police chief of Thunder Bay. I'm not sure where he got that information.

Illegal machines are only part of the leakage problem. The scenario in the Thunder Bay area is such that currently a significant amount of activity and funds are committed to cross-border casino operations, VLTs and out-gambling. For instance, there exists a casino at Grand Portage that has been estimated, based on area -- a 15,628-square-foot casino and a 2,704-square-foot bingo hall; number of VLT machines, 400; and cross-border traffic -- to generate a minimum of $50 million per annum from the Thunder Bay community, and that's just one example. There are no less than eight gambling venues within a 250-mile radius, most of which are full-blown casinos. The number of easily accessible casinos is growing.

It was recently announced that Casino Express, located in Elco, Nevada, will be accessible by charter for US$199, including air fare and accommodation. While many individuals go for short stays to Las Vegas, this offer will surely increase the draw out of Thunder Bay. These external gaming venues offer a full gamut of highly sophisticated marketing plans, as Thunder Bay is presently experiencing with Elco, Nevada.

All told, the citizens of Thunder Bay are already spending a minimum of $100 million per annum on gaming. We contend that this will not materially change with the introduction of VLTs but would reduce the amount of money flowing out of the city. We know there are well-meaning objectors on these issues, and you will no doubt hear them. We do not subscribe to their thinking, and here's why.

(1) They are telling us VLTs will create gambling junkies or addicts. Established statistical information on VLTs disproves this point. The average VLT player spends approximately 30 minutes on the machines one to two times per week and spends a budgeted amount of $10 per occasion; 85% of VLT players go to the bar to relax and be with friends. The majority of players budget their VLT spending and consider the activity as a social event where they contact people. Research has shown that fewer than 2% have the potential of becoming gamblers versus 6% becoming alcoholics.

(2) Let us look at the fact that gambling activity already exists. The argument that the introduction of VLTs will have a potentially negative impact on society does not take into consideration the hard reality that they are already in the province on a broad basis and are accessible to Ontario residents within short driving distances in many other cases.

Just as with the consumption of alcohol, the vast majority of players gamble in moderation and experience no significant gambling problems. With all existing forms of gaming today -- lotteries, sport pools, bingo, horse racing, casinos, break-open tickets -- the introduction of VLTs will not significantly increase the potential for compulsive or problem gaming in Ontario.

0930

I would also like to take this opportunity to point out that the public and our patrons support the introduction of VLTs into the brewpub's controlled environment. We believe strongly that it is preferable to bring this activity within a controlled environment and to reap the provincial, charitable and institutional benefits involved.

Introduction of VLTs would not cause a real increase in money spent or social issues but would have a significant impact in dollars flowing out of the community across the US border.

We're not saying there are no problems, but we recommend that there is a way to implement with a minimum of problems if established in a controlled environment.

Implementation: To ensure the proper control of VLTs, to provide adequate inspection, to allow sufficient exposure and to control the access and environment for VLTs, due consideration should be given to the number of locations involved. As is the case in most issues, the more controlled the environment the easier to implement and maintain inspections. The installation of a small number of machines in every mom-and-pop operation in Ontario would create a very significant control problem. To minimize the potential for danger in controls, implementation in a limited number of controlled environments is recommended.

We also respectfully submit that there has to be a proper mix of venues where VLTs are located. For instance, if all VLTs were installed exclusively at charitable casinos, this would be extremely detrimental to the wishes of those who genuinely want to use VLTs as familiar environments for recreational entertainment and social outings. We have already proven with telewagering that we can provide in the same atmosphere a family restaurant environment and a teletheatre. Inclusion of VLTs will not change that situation. The combination of telewagering and VLTs will work as a more rounded form of entertainment. In the approximately one and a half years of telewagering, we have not experienced a problem gambler.

Northwestern Ontario is a unique geographic area that is dislocated from actual horse racing tracks. It would not be logical to expect a resident of northern Ontario to travel to southern Ontario to participate in live horse racing. The brewpub provides the opportunity and support to offer live teletheatre horse racing to the north. As we are an integral part of the northern environment, serious consideration should be given to encompassing the teletheatres in the northern part of the province in the initial VLT allotment to ensure equitable across-province horse racing venues and gaming opportunities.

In summary, Mr Chairman, I urge you and your committee to recommend to the government quick passage of Bill 75. I would also suggest that your recommendations include a request to move implementation of VLTs for the licensed gaming outlets on to the fast track. The longer-term solution to the continuation of horse racing tracks requires the installation of VLTs.

As a corollary to this, the teletheatre, such as that which is located at the brewpub, is also integral to the tracks' success as we provide the increased volume and revenue necessary for their survival. The teletheatre venue at the brewpub has been provided at no cost to the track and has proven to be successful to them. Implementation of VLTs in this venue will provide the well-rounded impetus necessary for the success of both venues, will stop the outflow of Thunder Bay moneys across the border to US venues and will also provide money that will then be available for other government purposes.

Just as Thunder Bay experienced a very real problem with out-shopping in the distant past until more commercial development was allowed to enter the Thunder Bay market, we presently are experiencing a significant outflow of gaming money or out-gaming to the US market. The introduction of gaming in a controlled environment will stem this tide.

We provide the best alternative, the best opportunity for the government to succeed in its revenue-generating goals and at the same time adapt a proven, controlled environment. Horse racing teletheatres are approved by the federal, provincial and municipal authorities and are regulated by the LLBO. It is our contention that a controlled implementation of a legalized system of VLTs will generate significant revenue for the Ontario government, energize the economy and create jobs and, as has been indicated by various experienced police officials, will help to curtail illegal gambling, divert illegal revenue to better purposes and at the same time free up scarce front-line police resources currently engaged in prosecuting illegal gaming activities to pursue other policing priorities. The positive financial, social interaction and charitable gains from the introduction of legal VLTs are extremely significant.

The growth of jobs and employment in Canada, it is said, is dependent upon the development, expansion and existence of more small businesses. I am suggesting to you today that VLTs are one of the areas of assistance necessary for continual small business survival and growth.

Thank you for listening today. I trust we have provided some support and information for your consideration.

The Chair: Thank you, Mr Caron. We have two minutes per caucus.

Mr Young: This is my third visit to Thunder Bay and every time I have enjoyed it so much. It really is a wonderful town. I heard something yesterday that really disturbed me about a bus service that goes several times a day to a casino in the United States and is taking a lot of your entertainment business and hospitality business out of town. Can you tell us about that?

Mr Caron: The Grand Portage establishment provides, free of cost, two busloads per day to their establishment for Thunder Bay residents to gamble. The estimated cost of that service to the best of our determination is approximately $300,000, and that's provided free by the gaming. So that gives you an indication of the magnitude of the money that's coming out of the Thunder Bay community. In addition to that, that's a small part of the cross-border individual traffic that is being monitored going specifically to that venue. A very large exodus of Thunder Bay people go on a daily basis.

Mr Klees: Mr Caron, thank you for your presentation. Over the last couple of days there has been some misleading information, I believe, that has been left with people who have been observing these proceedings by the opposition parties, and that is the sense that these video lottery terminals would end up on every street corner in the province of Ontario. You've indicated your support for what in fact the government policy would be, and that is a very controlled implementation within very restricted areas within the province.

I found interesting your reference to the fact that you are now doing a teletheatre type of entertainment. You felt that is now very much controlled and you would be able to extend the same type of control to the VLTs. Could you just elaborate for me --

The Chair: Thank you, Mr Klees. We must move on.

Mr Klees: We'll talk later.

Mr Michael Gravelle (Port Arthur): As you probably know, I'm a regular patron of the brewpub so I have a sense of the dimensions and certainly of the teletheatre in terms of the horse wagering and everything else. What I'm curious about are a couple of things. One, because I am familiar with the dimensions of the place, I'm curious as to how, if this went forward, you would implement it in terms of there being a need to basically have obviously a separate place in terms of where you would do it and how that would affect the customers, because I do see it as a family dining place.

Mr Essa mentioned it and you mentioned it as well in your brief that there was a sense that the patrons want this to happen. Have you done any kind of formal survey or anything at all that one could describe as a formal sense of what your patrons want and whether indeed they've been asked specifically about video lottery terminals and that kind of access?

Mr Caron: I have not done a formal one; I've done an informal one. As you may or may not be aware -- you see me there quite regularly -- I have done an informal one. I constantly ask the regular patrons. We had a study done by Lakehead University on our business and their answer was that we have 105% repeat business, so I guess if I ask the people who are there, they're the same people all the time. Externally, I've asked anybody who will listen to me and I have not to this date received one negative response.

We have proven that we can provide a number of different types of entertainment, and the other issue we will be doing to explain how we're going to control it -- there will be a ground/sod-breaking next week -- is that we will be adding a significant portion on to the brewpub for a controlled environment. We will move the teletheatre, if we are so awarded the VLTs, into that area, so we'll have a complete controlled environment.

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Mr Gravelle: Certainly one could argue that one thing with telewagering is that in most ways it does not take away from the ability of people to go back and forth, it doesn't change the access, whereas with the introduction of VLTs, it will change the access in a rather dramatic way, which one could argue will change the whole flavour of the restaurant.

Mr Caron: That's why we're adding a significant portion on to the restaurant, so that we will continue to have a proper restaurant environment, and the horse racing will be integrated into that, but the VLTs, if allowed, will be separated into a controlled environment.

Mr Kormos: Look, I understand why your understanding and the horse race industry and every bar and tavern in this province and the hotel-motel industry want slots, because there's a whole lot of money to be made. But I suggest to you, sir, that the placement of slots, 20,000 of them across the province in every place but a casino, because that's what the government is talking about, can take a very serious toll.

John Scarne, an expert on gambling, in his book Scarne's New Complete Guide to Gambling, in his chapter "Slot Machines, the One-Armed Bandits" -- and he's a proponent of gambling, a gambling advocate -- says:

"It is doubtful that any other form of gambling has the hypnotic fascination of the slot machine. It is difficult even for a person who believes gambling is morally wrong not to drop at least one coin in the slot and pull the handle, if only to watch the wheels spin."

Sir, at the rate of 20,000 machines in this province, we're talking about approximately one machine for every 550 population. That means some 235 machines in the city of Thunder Bay. If only $1,000 a week is taken in by each machine, and I'm very doubtful that it would be maintained at as low as $1,000 in view of the addictive quality of these machines -- and Gfellner says: "The introduction of VLTs has led to an increase in overall gambling activities and expenditures for these persons," VLT players. "The more machines there are, the more gambling there is." That's the nature of the beast.

Two hundred and thirty-five slots at 1,000 bucks a slot per week, and it's more likely to be $2,000 or $3,000, means $235,000 minimum that isn't being spent at supermarkets, that isn't being spent in shoe stores, that isn't being spent at small businesses in downtown Thunder Bay, that isn't being spent on household furniture, that isn't being spent on feeding people's kids. I tell you, there is great concern by a large number of people.

I appreciate that the lobby efforts are significant because of the great profit potential here. But just as the tobacco industry in North America has attempted to portray smoking as non-addictive and somehow a leisure activity, the gambling proponents want to somehow declare gambling as mere entertainment. Sorry, it don't work that way.

The Chair: Your time is up, Mr Kormos.

Mr Ron Johnson (Brantford): On a point of order, Mr Chairman: With all due respect, if Mr Kormos wants to continue to give a speech, he can do that in the Legislature. We came up here to listen to the people of Thunder Bay. I know I'm interested in what the delegates have to say. If he has a question, I'd appreciate it if he poses it, but he can certainly save his speeches for the Legislature.

The Chair: If Mr Kormos chooses to make a speech rather than asking questions, I believe he is entitled to do that. That is his choice.

Mr Caron, I'm sorry Mr Kormos did not permit you time to answer his question, if there was one. Your time is up, so we'll have to move to the next person, but I thank you very much for attending today.

Mr Klees: While the next speaker is coming up, Mr Chair, I had asked Mr Caron a question and he didn't have time to respond. I wonder if we could have an undertaking from the clerk to send Mr Caron a copy of the question so we can ask Mr Caron to respond in writing if he would care to so we would have that for the record.

The Chair: That's fine, Mr Klees. That will be done.

NORTHERN TELETHEATRE NETWORK

The Chair: The Northern Teletheatre Network, Mr Ron Miron. Welcome. Good morning.

Mr Ron Miron: My name is Ron Miron. I'm with the Northern Teletheatre Network, which is part of Sudbury Downs and the Ontario Jockey Club.

Let me begin by saying that we support the government's initiative to introduce VLTs into the province of Ontario. Gaming is a socially acceptable form of entertainment in Ontario. Legalized VLTs that support the government, charities, and legal, taxpaying and employment-generating businesses will provide a very real alternative to the grey market service that prevails in the province today. However, as I will detail later, it is critical to the citizens of this province and the racing industry of Ontario that VLTs be introduced in a very cautious and controlled manner and that mass expansion into non-wagering environments could create serious adverse results.

The Northern Teletheatre Network was formed in the fall of 1992 with its objective to pioneer offtrack wagering in Ontario. As Ontario's test market, a number of locations were opened, and currently we operate 13 offtrack wagering locations. All venues provide food and beverage service and are approved for this type of gaming activity through municipal, provincial and federal governments.

The NTN has as its main purpose to revitalize the horse racing industry in the north by expanding the market base of the only northern harness racing track, Sudbury Downs. This network has brought world-class harness and thoroughbred racing to remote communities throughout the north while maintaining the highest standards of regulated controls and service required by the CPMA and the ORC.

Teletheatres are legal, by regulations under the jurisdiction of the Criminal Code of Canada, only as extensions of existing racetrack facilities. All the NTN locations have an excellent track record of customer service and have demonstrated their ability to provide wagering service to a diverse clientele while ensuring compliance with the federal and provincial regulatory bodies.

The offtrack wagering format as operated by the NTN has exemplified that wagering can be brought to the northern communities with the utmost level of control while limiting the opportunities for abuse through the operation of restricted venues.

The horse racing industry had been the only legalized form of gaming available in Canada for many years. The economic benefits which this type of gaming has brought to our province are numerous. The facilities, employment and economic impact are all factors which have contributed to making this industry a very important business in Ontario.

There are currently 18 tracks offering live racing in Ontario. The facilities required for the presentation of live horse racing are geographically spaced in the province as to provide services to the majority of population bases which are deemed sufficient to support the high overheads created by this type of activity. Racetrack establishments are constructed to accommodate large numbers of people. Therefore, they are equipped with adequate floor space and parking for tourists, who primarily visit Ontario via automobile.

Teletheatre locations are selected to provide remote service to the public and are, by federal government regulations, an extension of operating racetracks. All the locations must meet the strict requirements of the CPMA and ORC prior to their approval in order to maintain the highest level of integrity, security and customer service possible for Ontario race fans.

The horse racing industry is one of the major employment and revenue sources for the Ontario government. An Ontario government study, the Dunning report, revealed that there were 47,000 jobs in the Ontario racing and breeding industry, which was further updated to 54,000. As of 1994, the industry generated $2.2 billion in economic activity for Ontario annually. Included in this is $1.17 billion paid to suppliers plus capital expenditures of $240 million annually. The government netted over $50 million in parimutuel taxes in 1990, plus $2.2 million in sales tax at the racetracks.

The employment created by the horse racing industry is quite extensive. In Ontario, this activity generates in the range of 54,000 jobs, which compares favourably to 20,000 jobs in the Canadian brewing industry, 55,000 in logging and forestry and 53,000 in mining and quarrying. The type of employment created by this industry involves, for the most part, the training, caring for and breeding of horses. This highly specialized, hands-on type of work requires specific skills which are not easily transferable in today's economy.

Video lottery terminals could be a serious threat to the viability of the province's horse racing industry. Montana and Manitoba case studies have demonstrated that the improper implementation and distribution of these machines have resulted in severe adverse effects for the horse racing industry.

In Montana, the legalization of video lottery terminals occurred in 1987. Montana had 10 racetracks in operation at the time of the introduction. In 1991, four of the tracks had closed down and two were in fragile health. The parimutuel handle had dropped by 43%. The horse racing industry in Montana, in its present form, has been devastated by the impact of improper implementation of VLTs.

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Assiniboia Downs in Manitoba was Manitoba's number one tourist attraction until the Crystal Casino in Winnipeg caused declines in attendance and wagering. The track was forced to cut its live horse racing schedule to half the year in 1991. In 1993, the losses incurred by the track forced it into receivership.

The track had developed an offtrack wagering network to try and offset the devastating effects of VLTs and casinos. Within one year of the introduction of VLTs the wagering at the teletheatres had dropped dramatically. The four busiest teletheatres, which had averaged $35,000 a day, fell to $8,000 a day while teletheatres in Brandon plummeted from around $10,000 daily to $1,300 daily. The loss of jobs from the reduction of business at the Manitoba racetrack in 1993 was tabulated at over 2,000.

It has been estimated, based on the case studies of other provinces and states, that improper distribution and implementation of VLTs will have an immediate impact of about a 25% drop in wagering, a 30% drop in horse prices and the closure of the more fragile tracks. By the third or fourth year, Ontario could expect to see 50% of its tracks out of business. Furthermore, there could be serious consequences if VLTs are allowed in such an invasive manner. The uncontrolled mass dissemination of VLTs in other jurisdictions has led to grave societal problems associated with compulsive gambling.

We believe that the positive results that would be produced by the introduction of VLTs into the province of Ontario can be realized without adversely affecting our industry and without creating the potential negative social consequences that have occurred elsewhere.

The NTN supports the introduction of VLTs into the province. In view of today's demanding society and the reality of this province's financial requirements, the significant revenue to accrue to the provincial treasury from the operation of VLTs cannot be ignored. Furthermore, the elimination of the illegal, grey market activity in favour of developing legitimate tax-paying and employment-generating business activity will benefit all the citizens of Ontario. Finally, gaming is an accepted form of entertainment in this province as evidenced by the current proliferation of legitimate gaming activities such as lotteries.

There's no doubt that VLTs, like any other form of entertainment, must be controlled to avoid serious adverse social consequences. As has been demonstrated in other jurisdictions, a too-invasive distribution of VLTs into the province may lead to serious problems of compulsive gambling and the negative activities associated with it.

The deployment of VLTs at racetracks and teletheatres would avoid this potential pitfall. Racetracks and teletheatres would provide only a limited number of venues for VLTs that are destination-oriented. People would make a conscious decision to visit the track and teletheatre to play the VLTs. They would make this decision consciously. There would be no impulsive gambling created simply because of the convenience of the machines.

We believe that to maintain the survival of the horse racing industry VLTs should, as originally allocated in the recent provincial budget, be distributed to the racetracks in the province. The concern that the government may have with reference to providing equal opportunity and access to communities throughout northern Ontario would be eliminated by the offtrack wagering network already established throughout the north. Sudbury Downs and its offtrack wagering locations have numerous unique features which factor into validating this position:

Racetracks and offtrack wagering locations are both legislated by the Canadian Parimutuel Agency of the federal government and the Ontario Racing Commission.

Municipalities currently hosting offtrack wagering locations have approved each site specifically through council consultation prior to our securing provincial and federal approvals.

Racetracks and teletheatres both offer a high and effective level of control of the wagering in each community by isolating the product in restricted environments.

The allocation of video lottery terminals to racetrack facilities would provide excellent support for the racing industry in its local surroundings, but this type of limited distribution may not provide effective coverage to locations outside the track community. This is what makes northern Ontario different from the rest of the province. There's only one racetrack in the north and geographic distances prohibit access to that track to the vast majority of northerners. Communities such as Thunder Bay, Kenora, North Bay, Parry Sound and numerous others would not benefit from the opportunity to play VLTs and the government would not benefit from effective provincial coverage. The distribution of the provincially allocated VLTs into the Northern Teletheatre Network in addition to the current northern racetrack would ensure that all communities benefit from this type of entertainment while maintaining gaming activities within limited and secure environments.

Customer demand could determine the volume of machines required per site as each teletheatre would be operated as an entertainment destination set up to service the needs of the specific communities. The novelty of playing the VLTs would remain as a highlight of each visit to a location offering a complete complement of horse racing and VLT action.

The northern teletheatres have been limited to specific communities in the province due to the high capital and variable costs involved in setting up and operating locations. The allocation of VLTs to offtrack wagering locations will provide the NTN with the revenues required to expand significantly to numerous locations throughout northern and northwestern Ontario. The fact that patrons wishing to play the VLTs would be required to attend the teletheatres would ensure that they are exposed to the horse racing and that gambling remain a form of entertainment in the province rather than imposed habit through massive distribution and exposure.

The Northern Teletheatre Network currently employs a complete staff in each community serviced by an offtrack wagering location specifically dedicated to the service of the wagering patrons. Sensitive to their needs, our employees are trained to respond to the customers' requirements without any distractions, such as bar service or foodservice. By maintaining and by simply expanding our current staff we could conveniently integrate these responsibilities of VLT customer service into our current duties, ensuring the utmost level of security and control of the patrons.

The racing industry would in turn benefit by having VLTs contribute positively by maintaining the currently estimated 54,000 jobs and tourism generated by the horse racing industry in Ontario in addition to generating additional government revenues.

Recognizing the impact VLTs can have on the industry, the NTN has taken the position that the implementation of video lottery terminals into racetracks and the offtrack wagering network would be beneficial to the future of the business. Our biggest concern relates not to the installation of VLTs at racetracks, but rather to their deployment on a massive scale at other sites. The horse racing industry could suffer irreparable harm if VLTs are introduced at too many venues, as documented in other jurisdictions. We suggest that it would be appropriate to review the potential expansion of VLTs to sites other than racetracks and their teletheatres after sufficient experience has been gained at the racetrack venues.

The mass distribution of VLTs to locations throughout the province would threaten the unique aspect of the horse racing business. As the most regulated form of gaming in Ontario, horse racing is required to conform to the highest levels of control and regulations to preserve the integrity of the sport and prevent abuse. The racing industry has demonstrated its ability to conform with the regulations required by the municipal, provincial and federal governing bodies. This has always been done to ensure that any wagering that is permitted by law in Ontario remain under strict controls to prevent abuse and limit wagering activity to restricted venues.

The NTN during the last three years has invested significant time and funds to developing effective offtrack wagering networks dedicated to bringing their regulated form of gaming to remote communities throughout northern and northwestern Ontario. Given an appropriate allocation of VLTs, the NTN could provide service to all communities currently serviced by offtrack wagering with the shortest of delays. The additional revenue generated by VLTs would contribute positively to the network and a large-scale expansion could be implemented to serve any other communities outlined as requiring service by the government. This would ensure that all the criteria, which are critical to all concerned regarding gaming activity, be effectively applied to maintain control and provide complete coverage throughout the province. This we believe to be critical for the NTN as the distances between the racetrack, Sudbury Downs, and the numerous markets in its approved area of operation for offtrack wagering are quite significant, which would leave northern and northwestern Ontario communities at a distinct disadvantage over larger southern communities.

Offtrack wagering, like racetracks, will offer the VLT wagering public an area to participate in this type of entertainment, a very controlled area which will prevent abuse and ensure that gambling remain a form of entertainment worthy of such an environment. Racetracks and their teletheatres would also give the government access to the financial strength required to ensure that locations offering wagering conform to specific standards of operations. Such issues as hours of operation, equipment ownership, days of operation, facility requirements, security, control, reporting and marketing would all be factors that could be standardized throughout the locations featuring wagering as the main form of entertainment.

Failure to limit distribution of VLTs in the province, as documented in other jurisdictions, will certainly reduce offtrack wagering activity, resulting in an immediate loss of jobs, reduction in tourism and jeopardizing the very important horse racing industry in Ontario. The lack of control resulting from the mass distribution of VLTs could lead to serious adverse social consequences and will reduce the effectiveness of VLTs to attract tourism by reducing the activity to a common habit rather than putting it on a pedestal and making it an attraction to visitors to our province.

Mr Bruce Crozier (Essex South): Good morning, Mr Miron. If the government had not announced earlier this spring that it was going to introduce VLTs to harness racing tracks, permanent casinos, charitable casinos and ultimately to licensed establishments, would you be here today or would you be lobbying the government to introduce VLTs at racetracks?

Mr Miron: We would be lobbying to introduce VLTs at racetracks.

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Mr Crozier: Prior to this announcement you had approached the government or those in the horse racing industry had approached the government to have VLTs at racetracks?

Mr Miron: Our approach had been on the local level through the Sudbury Regional Development Corp and we had already submitted a report very similar to the one that I have presented today over two years ago.

Mr Crozier: What did you estimate it would do to your handle on horse betting, on race betting, once VLTs were introduced?

Mr Miron: What it's done to offtrack wagering, much like it's done in the United States, offtrack wagering is the only reason that we are still in operation. We expected VLTs to be a Big Brother to that because of course the revenues go towards the racetrack.

Mr Crozier: What would it do at Sudbury Downs?

The Chair: Excuse me, Mr Crozier, we must move on.

Mr Kormos: Thank you kindly. I know where the horse race industry is. Mind you, you recall that they opposed casinos.

Mr Miron: Absolutely.

Mr Kormos: They thought that was bad. Mind you, it was self-interest, because they knew there was going to be what they call cannibalization of up to 30%, 40% we were told yesterday by a representative of the Ontario Jockey Club. Of course, some people call these VLTs. In as much as a video game is not a pinball machine because a pinball machine is mechanical and a video game reflects the electronics available to us, a VLT is a slot machine, a one-armed bandit; it's as simple as that. The concept hasn't changed, the principle hasn't changed, other than the spin doctoring. Somebody got paid a whole lot of money to call these video lottery terminals rather than slots, because somehow it sounds a little better.

In the States the payouts on slots are 70% to 95%. Once again I'm referring to Scarne for authority for this, but competition generally determines the percentage payout on most slots.

I read that over in --

The Chair: Thank you, Mr Kormos. We must move on.

Mr Kormos: The government needs the cash.

Mr Flaherty: He's on our time now.

The Chair: Mr Flaherty, you're using your time right now.

Mr Flaherty: Good morning. With respect to the racetrack industry, I gather that the view of the industry is that the introduction of video lotteries at the tracks will be a benefit to the industry. In fact, we heard some evidence yesterday from the Ontario Harness Horse Association that the racetrack of today has to be an entertainment centre in order to compete in the entertainment market. I take it you agree with that.

Mr Miron: Absolutely.

Mr Flaherty: We have the introduction of video lotteries at racetracks and then charitable gaming halls, which will be something separate from racetracks, at permanent sites, and that's something that has to be looked at in subsequent discussions about implementation.

The unusual situation here, I gather, is that there's not of course a racetrack in the north other than Sudbury Downs. Do you see the increase in purses at Sudbury Downs that would probably follow the video lotteries as being good for the offtrack betting business here that you operate at your locations?

Mr Miron: We're very concerned that offtrack wagering will suffer significantly due to the fact that there will be no racetrack service in Thunder Bay offering VLTs, and that's why our presentation is based on getting video lottery terminals.

Mr Flaherty: And if I understood you correctly --

The Chair: Thank you, Mr Flaherty. Our time has elapsed. I thank you very much for attending here today, sir.

CASEY'S GRILLHOUSE

The Chair: If we could proceed, Casey's Grillhouse is scheduled next. Please approach and take a seat. Welcome. Could you identify yourself for the purpose of Hansard.

Mr Doug Fraser: Good morning, Mr Chairman. My name is Doug Fraser. I'm the general manager of Casey's Grillhouse here in Thunder Bay. I'd just like to thank you and your committee members for the opportunity to appear before you today. I believe you have copies of the enforcement experiences in other provinces, a Brandon University study and a VLT fact sheet.

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

Our industry is in serious trouble. Sales are down approximately 20% across the board, we have lost about 100,000 jobs and there have been about 1,400 bankruptcies since 1992. I can tell you personally that the business I'm involved in right now is in that position, where it is down approximately 20%. We have three rooms, approximately 100-plus employees and we're trying to turn the business around right now. One of the rooms does have, three days a month, a charity casino operating in it. Just from the turnout for that on the three-day-a-month basis, I can definitely say it would help the revenues of the business, bring them back to where they should be.

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

The ministry also referred to 15,000 illegal machines in Ontario. It is important that the implementation stage for our industry not be delayed and that the timing be as soon as possible following the racetrack and charitable casino schedule.

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

From the businessperson's perspective, like me, it means that a delay could very well result in having an initiative that the government intended to help the hospitality industry hurt it. The reason is that during the first stage of implementation to the racetracks and charity casinos it will create business dislocation. Customers will gravitate to where they can legally play VLTs. We cannot afford to lose any more business, even for a short time. As well, who knows if the customer will ever come back, or how often.

Businesses close to the new casinos such as in Windsor, Orillia, Sault Ste Marie and now Niagara Falls, or the new charitable casinos, also need VLTs. The casino in Windsor, for example, has had a devastating negative impact on the local hospitality industry. Further, VLTs will not negatively impact the casinos. Dr Marfels from Dalhousie University in Nova Scotia has proven this in a study he has conducted on that issue in that province.

Delay will also mean, as I said earlier, that the government will be delaying moving on the offensive against illegal machines. It is very difficult to try to operate legally, especially in these tough economic times, when competitors are attracting your customer with illegal machines. We need this unfair competition stopped now.

VLTs work as an attendance generator because they are an acceptable form of entertainment. It's what the public wants. They play them for entertainment, not to gamble. They are part of an evening out.

Independent research confirms, as I believe you are aware -- I refer to the work conducted by Dr Barbara Gfellner from the Brandon University. She found that the average player plays the VLT for 30 minutes once or twice a week and spends an average of $10. She also said that most people who play VLTs do so on a moderate-budget basis and perceive VLTs to be a modest form of risk-taking in an entertainment-oriented social environment.

Finally, the overwhelming majority, 85% of VLT players, reported that the most important reason they went to the bar or lounge was to relax, be with friends, socialize and meet people. It is an affordable budgeted activity that is viewed as recreation or entertainment.

Ontario has already a full section of legal and illegal gambling opportunities. I already referenced some of the illegal opportunities this measure will help to control, but one does not have to go further than one's own corner store or bingo hall to find gambling opportunity. However, just as in the consumption of alcohol, the vast majority of gambling in moderate experiences has no significant gambling problems.

A new brand of alcohol does not increase the overall level of alcoholism. With all the existing forms of gaming today, lotteries, sport pools, bingos, horse racing, casinos, Nevada tickets, the introduction of the new brand of gaming, video gaming, will not significantly increase the potential for compulsive or problem gaming in Ontario. Research shows that less than 2% of the population are potentially compulsive gamblers, and another 3% to 5% may experience some problems.

The executive director of the Canadian Foundation on Compulsive Gambling has said, "Prohibition is not the answer. Education and treatment are." Dr Durand Jacobs, vice-president of the US National Council on Problem Gambling, said in an interview on Canadian television: "The majority of the population has no problem with gambling. For most folks, gambling is just fun and games, but for a small minority who have a problem it can be devastating, and we can develop programs to help them."

I would also like to take this opportunity to point out that the public supports the introduction of VLTs into our establishments. Our customers tell us continually that the traffic generated by illegal machines in competing locations proves this. Independent surveys conducted by Environics Research and Angus Reid confirm this as well.

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

Mr Kormos: In Alberta, with 5,700 slots, the government take was $365 million. Twenty million slots, as proposed by this government -- and I'm confident they'll have them -- constitute a take of over $1 billion by the government. As one commentator from Alberta put it, "If indeed a government, any government, were collecting the same amount of money from the seniors or other people through a tax, all hell would break loose." Would you agree with me in that regard?

Mr Fraser: No, I believe that would probably be a personal opinion of the commentator.

Mr Kormos: The government's going to draw over $1 billion in the province of Ontario in revenues, based on the Alberta experience. It's taking that money from the pockets from Ontarians. It's not imposing a direct tax, but it's putting slots out there.

You make reference to the concern about illegal slots, right? Because that's one of the arguments that the government spin doctors told them to use. But, you see, Dr Howard Schaffer of Harvard Medical School, an expert on gambling -- a described expert, and I'm sure there are people who will refute him -- disputes the argument that legalization of slots would attract those who now gamble illegally. He suggests that not only would there be a substantial increase in gambling, which is what Gfellner, among others, suggests, but many would probably turn to illegal gambling eventually because the payoffs are always higher.

The phenomenon of licensed establishments didn't eliminate after-hours clubs. The phenomenon of licensed establishments didn't eliminate bootleggers. The problem with an illegal slot is that the owner of the slot gets to keep all the money. That owner is highly motivated to keep that slot running. The fact that there are legal slots somewhere else isn't going to change the fact that an illegal operator wants to keep an illegal slot so he can collect all the revenues. The Ontario anti-rackets squad from the OPP have told us that it's policing that's needed. They haven't got the person-power, the police power, to target illegal slots.

We hear from one report that there are some 40 illegal slots here in the Thunder Bay area. We've heard that there were complaints made about them. One can only assume that the police force in Thunder Bay is as eager to eliminate this illegal activity as any and simply hasn't got the person-power. How do you contradict Dr Schaffer from Harvard Medical School and his refutation of the proposition that 20,000 slots is going to eliminate the illegals?

Mr Fraser: I don't have a copy of that report, but if you can give me a copy of that I'll get back to you and give you the information I can.

Mr Flaherty: Good morning. I gather that you've read the material indicating that most Canadians view playing VLs as an acceptable form of fun or entertainment.

Mr Fraser: Yes.

Mr Flaherty: We'll leave it to Mr Kormos and those who share his view to patronize Canadians who enjoy that type of entertainment and to look down their noses and be modern-day prohibitionists and tell them it's not good for them, in his view, and that therefore the government should prohibit the introduction of these machines.

Listening to your presentation, I take it that the distinction you're drawing is that the government's plan -- to phase in video lotteries to racetracks and charity gaming halls first and then to assess the situation and, having done that assessment, move forward to the hospitality/licensed industry -- is perhaps too slow.

Mr Fraser: I'd like to see it move a little bit quicker for allocation to the hospitality industry.

Mr Flaherty: All right. I'm going to stop there because I know one of my colleagues wants to talk.

Mr Klees: To this point, there has been unanimous support for the implementation of VLTs by all of the presentations today. The previous two presentations, however, were putting forward the proposal that implementation should be considered on a different level for northern Ontario than perhaps the rest of the province. Specific reference was made to the fact that there are fewer locations available in northern Ontario for the initial rollout. In your personal view, your opinion, should we be looking at northern Ontario as a unique area of the province for the purposes of implementing the VLTs?

Mr Fraser: Yes, for the fact is that there is that casino south of the border. To me, it would keep a lot of the revenue in Canada as opposed to sending it south. I'd definitely like to keep the money in Canada.

Mr Klees: For the purpose of economic development locally here in northern Ontario, you feel that there is definitely an advantage to us moving more quickly in terms of implementation here than in the rest of the province?

Mr Fraser: Yes.

Mr Ramsay: Doug, thanks very much for coming. This is interesting and why we travel to find out what the situation is in different localities. We've heard various reports today of how many grey market machines there might be in this area. Do you have a sense of how many you think there might be in this area?

Mr Fraser: I really couldn't tell you offhand.

Mr Ramsay: Do you think they have an impact on your business?

Mr Fraser: It definitely would be taking away from the business if there were those machines out there.

Mr Ramsay: Oh, you're not even sure they are there?

Mr Fraser: They are there, yes; sorry.

Mr Ramsay: Have you made any formal complaints to the police?

Mr Fraser: Not at all, no.

Mr Ramsay: I would just say that I would imagine if the police got enough complaints they would probably start to act on this. It's probably a good idea.

You mentioned you have one of those sort of roving charity casinos three days a week or a month?

Mr Fraser: Three days a month.

Mr Ramsay: Do you realize that in this bill you're going to lose that?

Mr Fraser: Yes, but at the same time -- the reason for trying to rush the implementation into the hospitality industry -- I believe we could hire some more people and get that revenue back very quickly.

Mr Ramsay: You concede that probably the permanent establishment of a charity casino in the short term, until you get some VLTs, would have a negative impact?

Mr Fraser: Just a short-term loss, but in the long term I can see it being a very beneficial thing to our establishment.

Mr Ramsay: So that when you get the VLTs in you figure you can counteract the effect of that?

Mr Fraser: Oh, by far.

Mr Gravelle: Good morning. How many VLTs do you think your establishment would need to make it viable? Because I see a problem developing here in the sense that there are a number of establishments that want them. There are only so many that would be allocated based on the formula right now, somewhere in the area of 230. But in terms of your establishment -- and certainly previous ones have made it clear they would be setting separate sections aside, blah, blah, blah -- it seems to me you'd need a certain number to make it a profitable or useful thing.

Mr Fraser: I'm sure any business, depending on its size, will take as many as it can get. In the operation we have, we have three separate rooms: We have Casey's, which is a franchise restaurant; Ringside, which is more of a sports bar; and a banquet hall upstairs.

Mr Gravelle: I'm sorry to rush you, to interrupt you, but if you only had five of them, you were allotted five, would that be useful to you? Would you accept that as being a number that you would --

Mr Fraser: I'm sure any number would be useful to the business; it would be beneficial.

Mr Gravelle: Because I think there is a problem developing in the sense of the fact that there are a number of establishments that say they want it. There are only so many that can do it. There's been a point made earlier that only certain places should have them. As the day wears on, we're going to be having more and more people. I'm not sure how that would be allocated in the first place.

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

Is Lil Belanger in, please? Lil Belanger doesn't appear to be here as of right now, so we'll move on to the Northern Lake Superior Aboriginal Association and Harry Daniels.

Mr Klees: Could I just get a clarification? A statement was made previously that with the introduction of this bill the charity casinos would no longer exist. That's not my understanding. Could we get clarification from Mr Flaherty on that, or from staff?

The Vice-Chair: Very briefly, Mr Flaherty, please.

Mr Flaherty: Under Bill 75 roving charities will still exist, but they'll only be one day, as part of an event such as a dance or a community event, something like that, rather than the three-day events that are happening now, which would be scaled back. There would be continued existence of the roving charities on a one-day basis.

1020

ADDICTION RESEARCH FOUNDATION

The Vice-Chair: In the absence of Harry Daniels as well, we'll now move to Lyle Nicol, the Addiction Research Foundation of Thunder Bay. Welcome.

Mr Lyle Nicol: Good morning, Mr Chair and members of the panel. My name is Lyle Nicol. I am a consultant in community programs with the Addiction Research Foundation, Thunder Bay. I would like to thank you for allowing me to speak before this committee this morning. I am a bit ahead of schedule here, so I just have to collect my thoughts for a moment, but I guess that's the nature of the game. I do have Dr Robin Room's comments and I was inclined to replicate what he said, but I think I'll just forge on on my own here.

The Addiction Research Foundation is an agency of the province of Ontario, and we are dedicated to the reduction of harm caused by alcohol, tobacco and other drugs in our communities in Ontario. We do this through research, treatment, education and appropriate programs. Also, in the last couple of years we have been involved with gambling issues. We have a gambling project. I am in contact with these people on a fairly regular basis. Because of the nature of my work and being a community consultant, I deal with any number of agencies, community groups, different people who are concerned about these problems. I am concerned about the overall impact of problem gambling, gaming and alcohol consumption.

I think this bill is much more wide-ranging than just VLTs. We have to look at the whole bill. The focus seems to be on VLTs, so I think most of my presentation will be in that area. These comments are coming directly from someone who is a front-line worker; I see what is happening.

I was once a consultant in Kenora. However, since moving to Thunder Bay two years ago, I have really noticed an increase in the number of calls around gambling issues, including problems around VLTs. The source of these calls has been from all areas. A lot of these people have been involved with casinos just over the border, the much-mentioned Grand Portage casino plus other jurisdictions. I get calls from people who are involved with gambling issues who are currently in crisis at any level, I get calls from other agencies who have people who are in for counselling but are presenting gambling problems, and lately I've been getting calls from various organizations in the city, various unions, that are concerned about the gaming activities of some of their employees.

There has been evidence presented this morning that it doesn't represent a wide range of the population. I would have to concur with that: For the majority of people, gambling and gaming is not a problem. But in any line of continuum when we're looking at addictions a wide range of people will not be affected, can in fact go out, spend very little, have a good evening, come home and not suffer any ill consequences. As we move further along in the continuum, there are those who spend more than they should and start to develop problems, but if they are taught and educated, then they can be pulled back and modify their gambling or drinking or drugging problems. However, as with all addictions, at the far end of the continuum there are those who are pathological, compulsive, chronic. That's where we get alcoholism, drug addiction and chronic compulsive gambling.

Depending on what screening program we use or what screening device we use, up to 1% -- some people say a bit higher, but normally 1% -- of the adult population will develop chronic, compulsive problems.

VLTs are considered by some to be the most addictive form of gambling. In several other jurisdictions and through some of my reading, I have learned that in areas where VLTs are available, GA groups, Gamblers Anonymous groups, have increased substantially. In Manitoba, for instance, 85% of clients being treated for compulsive gambling report problems with VLTs, while in Saskatchewan and Alberta the numbers are about 75% and 65% respectively. The city of Winnipeg reports that the number of GA meetings has doubled since VLTs were introduced to that province in 1993.

I probably don't have to go through this, but I'll just mention that some of the most compelling reasons for VLTs are: obviously, winning money; the lights, the sounds, the bright colours, the attraction; it's an avenue of escape from reality; the excitement; the promise of instant gratification; they're current, modern, and for some they appear to be a benign relative of personal computers -- they're electronic devices; they appear to be a game of skill and not luck.

However, as with other games of chance, there are a number of drawbacks. VLTs seem to be especially fraught with these issues. Some of the current literature suggests: There is an illusion of control; VLTs appear to be especially appealing to people who want to escape from life's problems; for certain high-risk groups they appear to be a quick fix to persistent money problems; and the compelling nature of the machine often makes it difficult for people to control their frequency of play and the amount they spend.

From my own experience and from people that have called my office whom I've talked to personally, there is that feeling of isolation: It's the person and the machine. There is no outside interaction with other people in the gaming industries. People tend to cocoon around the machine. Other human contact appears to be minimal or non-existent.

Verbal contacts with some of my colleagues in the field suggest that VLT players comprise the largest percentage of problem gamblers in treatment.

Also, if VLTs are in licensed establishments, there is the risk that there will be an increase in problems associated with alcohol and VLTs. I think too that we have to look at adolescents. Certainly, if they're in licensed premises, they will not be allowed to play. However, adolescents are especially vulnerable to addictive behaviour. Once again, as I referred to earlier on, because they appear to be sort of like your Sega Genesis, it's only a step into perhaps becoming addicted.

We're not so naïve as to not realize that in an area of reduced funding taxes and moneys raised from alcohol sales and gaming establishments are one source of revenue. However, because gambling is an issue and because it is recognized by many as an addiction, the Addiction Research Foundation is involved.

As I mentioned earlier, there are many similar lines of progression. When I talk to people who are right there right now having problems -- and they are devastating; they're just as devastating as problems experienced by people who are drinking or who are having drug problems. We get the same line of lying, stealing, cheating, conniving, back stabbing, selling off of property, all of the negative things we associate with alcoholism and drug addiction.

These people plead with me, "We need help." They call us because they see our name in the telephone book; we're right near the start of the book. It is not our mandate to keep a caseload of clients that we see on a regular basis, but because people are calling for help, I deal with them and then refer them on. I would have to say quite honestly that the calls I have been getting around gambling issues in the last several months have outnumbered people who are calling outright for help with alcohol and drug issues on a regular basis. I can't give you figures, but I often get calls; it's almost daily now. It is there, and as a front-line worker I have seen it.

If this bill is to progress, it's critical that steps are taken to ensure help will be available for those who are certain to experience difficulties. It's inevitable that as gambling opportunities proliferate the need for treatment will become more acute. If I just make reference to Kevin Costner in Field of Dreams, if you build it, they will come. People will come and they will spend money.

From my readings and from people I have talked to, both those who are addicted and people who have been involved with VLTs along the way, they are seen as a seductive form of gambling and can be very addictive. They tend to isolate people and promise instant gratification. The reality is that more people lose than win; that's the premise of gambling. If the house was to lose all the time, there would be no point.

As I mentioned earlier, VLT players represent the largest percentage of people who are actively seeking help for gambling addictions.

While the thrust of this presenter so far has focused in on VLTs, Bill 75 should be looked at in a broader way, and I don't think it should allow the controls that look after alcohol and gaming issues to erode. By using honest, effective legislation, revenue from these two sources probably will be there, but hopefully some of the negative consequences of these two activities will be minimized.

1030

We have to bring this to the attention of the panel because we are a public health agency. We have to bring it up. It's incumbent upon us, the Addiction Research Foundation, to mention this matter. I think we would be derelict in our duty if we did not talk about the problems with gambling. We talk about the wide range of people who are not affected; however, those people who are are a very real component, and we cannot neglect those people; they will be there. It is our responsibility to do what we can as an organization, as a foundation directed towards this problem, to reduce the harm caused that would be covered by some of the issues in Bill 75. Thank you.

Mr Flaherty: Good morning. I'll speak quickly, because my colleagues have questions as well. We've all looked at these studies -- there are many of them -- and I think we can all agree, and I'm sure you will too, that a certain small percentage of the population, 1% to 2% to 2.5%, when gambling is available in a society, will develop addiction-type problems. Of course we have gambling available in Ontario society and we have had it for some time. One issue that concerns me, though, is that we have video lottery machines in Ontario today that are not regulated, and we've heard evidence here that minors are using them. I take it that you would consider that to be unfortunate and inadvisable?

Mr Nicol: Yes.

Mr Flaherty: All right. One of the things this legislation does which perhaps hasn't been mentioned much at these hearings is with respect to putting the Alcohol and Gaming Commission together into one Alcohol and Gaming Commission, one regulatory authority. Licensed premises which had video lottery machines would be subject to that authority and would have their liquor licence at peril were they not to obey the legislation and the substantial fines in the legislation. I take it you think that's a step forward in terms of control.

Mr Nicol: Yes. I think all avenues of control are good.

Mr Flaherty: I appreciate that. Thank you.

Mr Tim Hudak (Niagara South): Thank you for your presentation. Earlier today we heard that up to $40 million a year leaves the Thunder Bay area into neighbouring Minnesota. Does the Grand Portage reserve or any other casino bring any money back here to help with addiction research and treatment and that sort of thing?

Mr Nicol: I have been approached by Grand Portage to see what they could do to address some of the problem gamblers in that --

Mr Hudak: And you're aware that this government is going to go even further than that and set aside 2% of the revenues generated to help out in addiction research and treatment?

Mr Nicol: Yes, I am aware of that and I hope it does happen.

Mr Hudak: I'm sure we will keep to that.

The other point I was going to make from the addiction research study itself -- the reading from Dr Jacobs -- is that it seems to me, from the research I've done, that pathological gamblers tend to choose a variety of games. They could be addicted to races, to VLTs possibly, to break-open tickets; a lot of them play the lotteries. Certainly this 2% will be used to treat not only people who play VLTs but people who play all kinds of games, to treat a wide array of different kinds of addictions.

Mr Nicol: I'd like to comment on that. As I said, a lot of the focus has been on VLTs, but the calls I have been receiving come from a wide range of problems and I would certainly hope that the money set aside would address all issues because they are very real. Sometimes I sense there's a dismissive sort of attitude, "Well, it's just 1% of the population," but that is a very substantial number when you look. If you look at 1% of the population in Thunder Bay, that's quite a few people.

Mr Ramsay: Lyle, thank you very much for your presentation. Could you give, for our understanding here, for us who don't deal with the people you deal with -- you said you're dealing with clients who are currently in crisis. In human terms, what is actually happening to people you deal with who are in crisis? What's happening to them and their lives and their families?

Mr Nicol: Family systems are breaking down, bank accounts are disappearing, properties are being sold. As I said, a lot of the same issues that face people who are facing alcohol or drug issues happen to people with gambling problems. The range of problems is very parallel to alcoholism and drug addiction. Just as anecdotal evidence, I had a woman call me a few weeks ago. She had received two calls from Visa, on her husband's card or on her card -- I'm sorry, I can't remember which -- but two cash advances, $500 and $600 in succession. They were calling her to wonder what was going on. This money was used for gambling issues.

Mr Ramsay: In your mind, why would a government purposely do this to its citizens? If we know that we're adding another way of gambling for people that's going to increase that activity, why would we do this on purpose to our citizens?

Mr Nicol: I don't know that the government is doing it on purpose to harm the citizens. Across North America there has been a growth in gambling problems, and if the government is going to go ahead with this bill -- and I can't sense that anything can possibly stop it -- it's critical to look at doing what we can to minimize problems for people.

Mr Ramsay: Would you support this bill?

Mr Nicol: I can't say that I would support it in principle, but if it is going ahead, I would hope they manage it in a way that all promises are lived up to.

Mr Kormos: Research is research. Obviously the gambling industry has commissioned research and relies on that. At the same time, the UK had developed some very strong research, especially as it relates to slots and adolescents. Interestingly, I'm reading from the Journal of Gambling Studies, a paper prepared by, among others, Dr Schaffer, whom I referred to earlier, of Harvard Medical School, and it indicates that between 1975 and 1985, the national per capita sale of lottery products alone increased in the United States from $20 to $97. That's a five-times increase over the course of one decade, and of course that doesn't go beyond 1985.

Another article by the same Dr Schaffer in the Journal of Gambling Studies indicates that the rates of problematic and pathological gambling among college students was four to eight times higher than the rates reported for adults. He does go on to say that research isn't available to indicate whether this is merely transitional, as it often is with drug use and drinking, or whether it's significant in terms of indicating pre-addictive, pre-pathological behaviour.

Those are, in some respects, very shocking statistics. Of course the figure of 2% of the nation being problematic or pathological gamblers is tossed about, but that's pre-20,000 VLT slots here in the province of Ontario. There seems to be universal acceptance -- Gfellner says so -- that increased accessibility indicates increased use, and that applies to liquor: Increased accessibility implies increased use.

Mr Nicol: And I do believe I did say that earlier on, that if you do build them, if you do establish them, they will be used. Absolutely.

Mr Kormos: The reference to crack cocaine I appreciate, because indeed I think we are talking about the crack cocaine of gambling.

The Chair: Thank you, Mr Nicol, for going out of order and making an excellent presentation.

Mr Nicol: Thank you.

1040

ONTARIO METIS ABORIGINAL ASSOCIATION

The Chair: We now go to the Northern Lake Superior Aboriginal Association, Mr Michael McGuire, and I understand he's accompanied by Mr Harry Daniels. Please take a seat, gentlemen. Welcome. Again, you're out of order, and I thank you for being here early. The committee appreciates that. Did I get the names right?

Mr Michael McGuire: Yes, I'm Michael McGuire.

Mr Harry W. Daniels: And I'm Harry W. Daniels.

Mr McGuire: Harry Daniels is our chief negotiator for our association. We have a written presentation and I would like to get Mr Daniels to read it.

Mr Daniels: Just one cosmetic change, Mr Chair. Mr McGuire is the president of the Ontario Metis Aboriginal Association, the provincial organization, and it's the provincial organization making this statement on behalf of and with the Northern Lake Superior Aboriginal Association. The parent body of all the five zones we have in the Northern Lake Superior is in zone 2 here.

Our presentation is going to be brief and then we will entertain questions and discussion. Let me get a glass of water. I'm suffering from a bout of the flu and I'm dehydrated.

Interjection: Making you work.

Mr Daniels: And they're making me work. I thought slavery was over with.

It is the position of the Ontario Metis Aboriginal Association that charity casinos should be exactly that: charity casinos. Operators who have been used in the past regarding bingo parlours only serve to siphon money away from charities. These moneys could be utilized by charities to benefit all those intended to be so benefited.

The degree of expertise required to run a charitable casino is not substantially different from that required to run and operate a business. Charities such as the United Way that would be located in many municipalities have a capable administration and indeed may choose to operate charitable casinos and service agencies that rely on the United Way.

In the case of the Ontario Metis Aboriginal Association, the administration and level of expertise that exists within the association is certainly sufficient to effectively operate a charity casino. In the operation of a charity casino it is assumed for this presentation that there are two levels available to operators. Initially, there would be an operator of the actual charity casino and a recipient, being a named charity.

It is the submission of the Ontario Metis Aboriginal Association that licensing charitable organizations such as the Ontario Metis Aboriginal Association and possibly the United Way and many other organizations to actually operate the casinos would provide revenue at two levels.

Using the Ontario Metis Aboriginal Association as an example, the operation of a charitable casino or charitable casinos would provide revenue to the organization as a whole. The day-to-day operations would be managed and tightly controlled by individuals whose credentials are approved by the licensing body. The Ontario Metis Aboriginal Association would then in turn provide access to its aboriginal communities regarding certain calendar dates with respect to the revenues generated by the casino. This two-tier approach being recommended by the Ontario Metis Aboriginal Association would allow organizations throughout the province to operate all 50 of the charitable casinos. This would ensure that the money generated by the operation would be a direct benefit to the named charitable operators.

The second tier would ensure that various and diverse charitable organizations are benefited by the actual revenue generated as a result of the charitable casino operation.

Undoubtedly, there will be suggestions from private operators that the level of expertise and accountability required must be met by deferring to the private market. Clearly, this submission must fail in that the level of expertise evidenced by many organizations as regarding charitable operations in the past has been acceptable to the province of Ontario.

If the province of Ontario sees fit to essentially license 50 private operations, then these profit-making organizations would be making a profit to the charitable organizations' detriment. The degree of supervision that could be afforded by any group, either private or charitable, is not changed or impacted by a decision to only allow charitable organizations to run the facilities.

There may be suggestions from various presenters that charitable organizations are not able to arrange financing to purchase sites and to equip sites. This is clearly not the case in that many charitable organizations operate from administrative offices owned by the charitable organization. As well, many charitable organizations own property and have substantial real estate holdings. An example comes to mind relevant to real estate holdings: any particular religious order. Clearly the ability to acquire property and a site of the location is within the reach of selected charitable organizations.

In the event that the particular charity chooses not to purchase property, then clearly property will be available on the open market and leases may be entered into by the particular charity with private-interest landlords.

The desire of the Ontario Metis Aboriginal Association is to ensure that all possible benefits to the charitable organizations are achieved. Utilization of this two-tier approach to provide full access to both tiers and to provide full access to charitable organizations to both tiers will ensure that the government meets the objectives of the program.

Regarding the charitable organizations that are allowed to benefit from the actual calendar date allocations, it is the position of the Ontario Metis Aboriginal Association that these privileges should be on a rotating basis. In the example of the Ontario Metis Aboriginal Association, there are member communities, locals and zones that would all seek to share in the benefits that are created by the charitable casino. It is suggested by the Ontario Metis Aboriginal Association that this benefit program should be designed to ensure equal access to all charitable organizations.

A program that permits flexibility relating to new charitable organizations and initiatives will ensure that the program is not restricted to those charities that are now in existence or will be in existence prior to the implementation of this policy.

That is our written presentation. One addendum, one supplementary note -- I should have told you about this, Mike. In the Globe and Mail on Wednesday, August 7, "Province Defends Video-Lottery Proposal" -- I'm assuming these will be in the casinos -- it says that on the front end the government is going to get $350 million to $400 million, $80 million to $90 million is going to the charities and $9 million a year is for the anticipated addiction and problems created thereby. In another article someone says that the government is expecting $260 million a year in net revenue from the first 8,500 -- I imagine those are VLTs -- as well as $100 million for charity and $9 million for addiction treatment and education. Those are conflicting numbers and they are only guesstimates.

The other point we'd like to make to your committee, Mr Chair, is that it seems that the government grabs the money on the front end, on the -- it doesn't say the gross, I'm assuming -- and at the back end we're getting it on the net. This is not an equitable share of funding. If this is really an honestly charitable venture, why is the government grabbing any money at all? What is the money, this $350 million to $400 million, being used for? If we are the people to be running these casinos, supposedly for charitable reasons, then why do we not benefit from that and why does the government benefit?

Are we dealing with a fait accompli? Is this the intent of the government, and will this find its way into enactment as a result of Bill 75 finding its way to the floor and through the necessary readings? If there's a preponderance on the proper side of the House, this very well could happen. Then what we are dealing with here, I suggest to you, is a fait accompli. This is a tax grab by the government -- not necessarily a tax grab; a money grab. It is heavily weighted -- I'll use more gentle words -- on the side of the government and it is more charitable to government than it is to the people it is designed to reach.

I ask that question of this assembly here, if anybody could answer it, and we're willing, in the time allotted, to entertain any questions that may be posed to us.

1050

Mr Crozier: Thank you, Mr Daniels and Mr McGuire. Mr Daniels, you've led right into the question I was going to ask you. In fact, I was going to make a statement and see how you responded to it. The title of this bill is to "regulate alcohol and gaming in the public interest," another part of it is "to amend certain statutes related to liquor and gaming," but it says also "to fund charities through the responsible management of video lotteries." Well, that's a scam. It's not to fund charities at all.

You've hit the nail on the head. This government needs money. I suggest, as you have, that the reason the introduction of VLTs surprised many of us was that only weeks before the budget was announced, those who are close to these kinds of activities were not expecting that VLTs would be introduced as part of the budget. I want your question to be answered by the government, of course, but we can only assume that what happened was that the finance boys came along and said: "Wait a minute, government. With the reduction in revenue that you're going to suffer through the tax cut, you're just going to need more money."

I agree with you, sir. If this were truly in the interest of funding charities, the government would be in the control business, in the regulation business, but they wouldn't be sharing it. They need the money, and I think you've answered the question in the question itself. I'm pleased that you brought this forward and I think that if the government were being honest and straightforward with us and really wanted to help charities, the answer to your question would be, "You're right, sir; we don't want any of the money." But they do. They need it. They can't survive without it.

Mr Kormos: I'll use some of my time to respond very briefly, because the Chair is only going to give me two minutes. He's going to cut me off so fast it'll make my eyes water.

Mr Daniels: Go for it.

Mr Kormos: Here you are, laying it out on the line, and one of the problems is that the minister was in front of this committee on Tuesday this week and we asked him all sorts of questions: "What's the take of the government going to be?" "I don't know"; "What's the return for the bettor going to be?" "I don't know"; "What's going to be the piece of the action?" because these are going to be privately owned slots; there are big bucks here. We know that. "What's going to be their take?" "I don't know."

We're dancing in a fog. The government hasn't got the slightest idea of what it's embarking on. Indeed, yesterday it was put to us that in view of the fact that the government is committing itself to 2% of the proceeds to addiction treatment, some $33 million, depending upon which data you rely on, the government either anticipates gross addiction problems, to be providing and committing itself to $33 million for treatment of addiction, or it anticipates an epidemic of addictions, or it intends to give these people a windfall, or it simply hasn't done any planning.

Quite frankly, I think it does anticipate addiction problems, but at the end of the day, not having done any planning, any meaningful consultation, the fact is that this is going to go through the Legislature like crap through a goose, without any of that planning ever having been achieved at that point yet. That's the sad reality of it. I hope they've taken heed. We'll undoubtedly be referring to some of your comments when this comes up for debate in the Legislature.

Mr Daniels: I don't know if I agree with your metaphor, but anything in terms of money at this point in time, Mr Chair, and the honourable member is speaking to this, is purely speculative. However, I think the question we have to ask here, and it should be answered by this committee before it goes to the House and before it is enacted, is, how do you define charities? Is the government now defined as a charity? That is the question to ask.

Mr Guzzo: Three more years of Bob Rae and we would have been.

Mr Daniels: Look, as an old-time NDPer, I don't like that. No, I'm just kidding.

The thing is, sir, that if this is to be for charitable reasons, how then do we define charities? I'd like the questions I've asked prior to this -- and they're pretty speculative at this point in time; I understand that. With respect, I would like to know two things: why the government is grabbing most of the money, I think about 60% of it or more, up front in this formula; secondly, how do we define charities and why is not all of this money going to the charities and to the people it's supposed to meet? That is a question that should be answered today, to me and to my president and our organization, and it has to be answered to the House and to the people of Ontario.

Mr Kormos: We concur.

Mr Flaherty: Mr Daniels, good morning. You strike me as a person who is in touch with the real world, and therefore I assume you're familiar with the reality in Ontario today that no legitimate sources, except criminal sources, are receiving any money from the 15,000 to 25,000 illegal video lotteries that are operating in the province of Ontario. You are aware of that?

Mr Daniels: That may be so.

Mr Flaherty: The point I want to make with you is that we're dealing here with Bill 75. You've raised a number of points that are quite important about implementation, but the attempt here by the government of Ontario is to take control of criminal illegal activity that's going on in the province of Ontario today: 15,000 to 25,000 illegal machines. You've referred to some of the figures, the staggering amount of money that is going to others, including outside the province of Ontario, to illegal sources.

The first step, I'd suggest to you, and I'd hope you support us in this, is to get control of the situation, to have enabling legislation, which Bill 75 is, so that the government can legalize, control, manage and phase in the introduction of VLs in the province of Ontario.

Of course, we then have to look at the definition of charities, which you've mentioned, which is absolutely important, and there will be further consultations on that. It's crucial but it's not something that's in Bill 75. I hope we would have your support in getting control of the situation initially and then moving to the implementation discussions.

Mr Daniels: Sir, I have no qualms about there being regulations -- may I, Mr Chair?

Mr Flaherty: I asked the question.

Mr Daniels: I have no qualms that there be a regulatory body, that there be the proper kinds of legislation and the controls and checks and balances and all those things that meet the situation in a planned and considered manner. I think the question that I asked here, and it is not being answered, is that -- there are a number of questions. How do we define charities? Is the government another charity for the purposes of this bill? Secondly, if they aren't, why are they grabbing in excess of -- in pretty speculative figures, of course -- $300 million a year up front?

Mr Flaherty: They are speculative figures.

Mr Daniels: Okay, that being said, whether it's $5 or $10 and we get 50 cents, why does the government get the lion's share?

Mr Flaherty: You appreciate that in terms of charities as presently defined, the benefits to charities from so-called Monte Carlo nights would be 10 times more under this legislation: 10 times more than presently, 10 times as much to the charities as presently defined in the province of Ontario. Would your group be one of the groups that would apply for a permanent charity gaming hall?

Mr Daniels: That's our intent, about 49 of them.

Mr Flaherty: That would benefit the charities that you benefit as well in your work.

Mr Daniels: At least five of them, because we have five zones and we have a large population of 250,000 people in the province of Ontario.

Mr Crozier: You did say you were an NDPer. You're not going to get one.

The Chair: Mr Daniels, Mr McGuire, I thank you very much for attending today.

Mr Daniels: That's the end of our presentation?

The Chair: That is the end of your presentation, yes. Time constraints. We'd like to hear from as many people as possible and I know 20 minutes is really not adequate, but it's the best we can do. We definitely wanted to be here in Thunder Bay to hear from individuals from the north.

Mr Daniels: We appreciate that, but for my edification and your edification, we may in other venues and other fora be appearing before your committee again, our zone members and so forth.

The Chair: We'll look forward to hearing from them.

Mr Daniels: This is going to be a protracted debate, I can tell -- prolonged.

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JEAN MORRISON

The Chair: If we can proceed to Ms Jean Morrison. Good morning. You are Jean Morrison, for the purposes of Hansard, and you are here as an individual?

Mrs Jean Morrison: That's right. I'm an individual.

The Chair: Good. Please proceed.

Mrs Morrison: I'm active in a number of community organizations, and the reason I'm here is that I'm gravely concerned that this government and all governments are promoting a culture of gambling as a solution to their economic woes. I accept that gambling is here to stay and I have even gambled myself on occasion, but I'm opposed to the deployment of VLTs in general for reasons which should become clear in my presentation.

Whether some of us like it or not, governments of all political stripes are in the gambling business. They say they are in it for the best possible motives: to create jobs, to stimulate tourism, to spur economic development, to generate revenue, and of course to stem the flow of Ontario gambling dollars flooding into the US. Governments argue that the worldwide proliferation of gambling proves that people want to gamble and that they're going to do it whether it's legal or not. They justify legalizing casinos and VLTs by saying they're only responding to the wishes of their electorates and if they don't get into the gambling business, they'll miss out on the gravy train.

You will be familiar with these arguments. They were used by the previous government in promoting the Windsor casino, and just this week consumer minister Norm Sterling used them again to justify the use of VLTs in Ontario. You will also recall the arguments used against the extension of gambling through casinos and VLTs. Here's one quote:

"Sure the income comes, the money comes, but there are some side-effects that aren't so wonderful: drug trafficking, increased petty crimes, increased prostitution, policing costs, policing needs, societal costs, gambling addiction."

These words should sound familiar to all the panellists here because these words by Donald Trump were read into the record by the present provincial Treasurer, Ernie Eves, when in opposition. Mr Eves also put forth many arguments of his own:

"Governments of all political stripes...seem to be becoming more and more addicted themselves to the revenue that's obtained from gambling; Nova Scotia, for example, with respect to its video machines.... That's a whole other issue I will deal with in due course," he said.

Unfortunately, I couldn't find what Mr Eves said about Nova Scotia's failed experiment with VLTs. It probably would be nice to see what he said in 1993. He also warned about the fallout from Casino Windsor on charity gambling. Mr Eves was right in 1993. He was right about the close ties between gambling and organized crime, prostitution and drug trafficking.

He was also right about the fallout on charity gambling. Charity bingos in Thunder Bay help keep my favourite cultural institutions alive, groups like the symphony, the historical museum, the art gallery and the community auditorium, all of which contribute mightily to making Thunder Bay a great place to live. Now that Mr Eves is in government, is he no longer concerned about the fate of charities dependent on bingo and Nevada tickets once their players get hooked on VLTs? When overmilked, the cow will run dry, and even the most ardent player has available only so much money to risk on a regular basis.

Over the past two decades or so, governments of all political parties have championed lotteries as a lucrative source of revenue. Now they're branching out into casinos and VLTs even though, as we heard several times from Mr Kormos today, VLTs are known as the crack cocaine of the gambling industry; even though playing them has been called an autistic, mindless, solitary and addictive activity with no redeeming social benefit whatsoever; even though they result in a sharp increase of impulse buying by local residents; even though the tourist spinoff effect of gambling has proven minimal in most communities except those towns built around gaming, like Vegas; even though the cash wasted can be spent more productively in the community; even though VLTs create social problems which require more policing, more treatment centres and bring about more suffering for families of reckless and compulsive gamblers.

It is really nice and thoughtful that 2% of VLT revenues will be used for addiction treatment, but wouldn't it be more rational not to encourage addiction and wasteful spending in the first place? Wouldn't it be rational not to foster false hope as the lottery ads do and as the VLT ads surely will? Wouldn't it be rational not to encourage the idea that instead of working for money you can get rich by doing nothing except investing a couple of bucks but which ends up being more and more bucks without any return for the vast majority? Is this rational from a government which not only says it believes in the work ethic but proves it by bringing in workfare so that welfare recipients will learn that you must work to earn your daily bread crust?

Yet this same government's policies of downsizing and cutbacks are creating massive unemployment in all public services, with devastating spinoff effects for the economy and for countless men, women and children. By its actions, the government seems to be saying that it does not believe in meaningful work after all. By its actions, more and more people will be driven to gambling through desperation, and the government is encouraging them to do so. They are making a former criminal activity seem respectable.

It is not original for me to say that lotteries, Nevada tickets, VLTs, casinos etc are a tax on the poor, that they're a form of taxation on those who can least afford it -- volunteer taxation, admittedly, but as someone else has said: "Only people with money to spare gamble for entertainment; the poor gamble to change their lives. The wealthy have more sophisticated ways of gambling for real, in the stock market," or in the gambling industry itself where the profits can be phenomenal.

I recognize that governments are faced with enormous debt incurred in large measure not by waste in the public service or by welfare fraud but by revolutionary changes in the global economy. John Ralston Saul states in The Unconscious Civilization that as corporations pay less and less of their share of taxes, with impunity, the middle class and the poor are taking the hit. But they can hardly make up the difference even with the GST and user fees and cuts to programs, especially when they're unemployed or on welfare and especially with the 30% tax cut. "The most disturbing consequence of government's loss of corporate tax revenues has been the rise of publicly organized gambling," Saul states.

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The hundreds of millions, in some countries billions, of dollars raised this way come in large part from the most discouraged part of the population. "It's their choice," the cynical will say. But it is the governments of those citizens, governments constantly going on about the need for hard work and initiative, who suddenly are calling on these same citizens via vast advertising to win instant millions for $5 or $1,000 for $1.

Each year billions of dollars are spent in gambling. Each day trillions of dollars are moved around the world by currency traders. The money is there for governments to fund all the things which make for a decent and fair society, but for that to happen, governments need to stop using gambling as a panacea for their economic woes. They need to stop promoting selfishness as symbolized by pernicious forms of gambling.

I therefore urge the government not to proceed with the installation of VLTs in Ontario.

Mr Kormos: Thank you kindly. One of the things that concerns me about the course of these hearings is that we've persistently heard the slots referred to as entertainment. It's peculiar, it's bizarre, that we have a government that's complicitous with a very profitable industry, the gambling industry, controlled as much, at least in the United States, by organized crime as by others; that's eager to create an illusion that playing the slots is entertainment.

The slots are all about losing, not winning. That's what it's about. Casino Rama, over the course of the last week, you'll note, down in Orillia there, has issued press releases about the winners, but the vast majority who leave that place are losers.

I took a look at the Grand Portage brochure you have here at the hotel promoting it, and they talk about winning. They talk about a return on your dollar. They talk about the big payoffs and they show pictures of happy, smiling faces. They don't show the faces of people leaving that joint with their pockets emptied, wondering whether they're going to have enough gas in the car to get home.

When I spoke with one of the advocates of gambling -- slots -- yesterday, he said, "You leave a movie without anything and they call movies entertainment." Well, maybe he doesn't go to plays either or engage in other bona fide forms of entertainment.

There's something awfully perverse and I think there's something, quite frankly, insidious about trying to create the illusion that this grab at the brass ring -- the Ontario Lottery Corp has done it for years. They send a little glossy flyer similar to the Grand Portage casino saying: "Here's a two-for-one ticket. You can go buy one and get a second one free." The whole business is about getting the people to spend the most amount of money and walk out with the least amount of winnings. That's how you make money in this business, and this government's a party to it.

Mrs Morrison: It seems to me that the VLTs particularly promote individualism; there's no social interaction whatsoever. Perhaps in some forms of gambling there is that, and you feel you're part of it, but this seems just to mesmerize people. There is some entertainment. I suppose it's exciting to think, "Perhaps I will win $250 when the coins all come out," but I gather they do something else in video machines. I really do believe they're addictive, though.

Mr Hudak: Thank you, Mrs Morrison, for your presentation. You don't seem to be gaining or losing directly from VLTs, so I appreciate your sincerity, your presentation. Your general theme is that it's low income that drives gaming, that people who are in low-income brackets tend to gamble more and be caught up in it pursuing dreams. But we've heard arguments that look at gambling addiction as a predisposition across income scales -- certainly the Addiction Research Foundation has shown this, Dr Jacobs and a number of other sources -- because it gives a high, it makes them feel good. They're the boss when they're throwing those dice; everybody looks up to them.

In fact, the Addiction Research Foundation paper I have in front of me looks at a couple of scores in terms of addiction. Interestingly, the people in the $60,000-to-$80,000 income bracket are the most susceptible to gambling, the higher-income. At the same time, the higher the education level, under addiction research, the more likely they are to have some sort of addiction problem. In fact, in the Gfellner study, 80% of those whom she found had addictions had a high school education or better.

So I don't go along with the class warfare sort of thing. With all due respect, I find that a bit of propaganda, because it's easy then to say that low-income people can't make the decisions on their own; in fact, that the government ought to step in and decide where they should spend their money.

But the better way of going about dealing with pathological gambling, the 1.5% or whatever who have these problems, I would think, is to realize the way it affects them, that it gives them a physiological high, a psychological high, and set aside money to treat them, because they have this predisposition. I think that's why this government, unlike previous governments and unlike other governments in other provinces or even states, as far as I know, is setting aside a substantial portion of revenue, 2%, to try to treat those individuals to find other ways of coping with that stress or that disposition, to make them more productive individuals for everybody across income scales. Those are some interesting stats.

Mr Klees has a question, so I'll pass the microphone.

The Chair: No, I believe it's Mr Young.

Mrs Morrison: Could I respond to that comment first?

The Chair: Unfortunately, it wasn't a question, it was a statement, just as Mr Kormos's was a statement rather than a question, and really it doesn't deserve any response.

Mr Young: We've heard some selected quotations out of the Gfellner report from Brandon University. I want to point out, in the executive summary, what the report actually said, and I think it will reassure you somewhat.

It said that, on the whole, VLT users gamble once or twice a week, an average of 32.5 minutes, that over 90% have a budget and stick to it whether they win or lose. The conclusion was: "Gambling is engaged in regularly by young adults in a social context. It is affordable activity that is budgeted." As well, when she refers to problem gamblers, she points out that problem gamblers engaged in nearly twice as many different gambling activities as non-problem gamblers, which would indicate to me that the problem is the person, not the VLTs. Do you have any comments on that?

Mrs Morrison: I think it's been proven that people who are poor will gamble a lot out of desperation, but I don't think that's the main issue. I think government shouldn't be promoting this gambling culture. There was a very interesting article in our paper today on the fact that for every dollar governments invest in cultural activities, they get $1.25 back. I would much rather see the government promoting more meaningful activities, putting its money into education where it'll get the money back, and into health care and so on. I really feel that promoting gambling the way the governments are and extending it and extending it the way they are is not promoting a healthy, creative kind of society.

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Mr Crozier: Thank you, Mrs Morrison. I compliment you for coming out and speaking to the committee, because I suspect that you represent the silent majority. We have a lineup of experts who are going to come before this committee over the next three weeks, and like economists, if you put all the experts in a row, what you have is a long row of experts -- nothing more, nothing less. As we go on and listen to these experts on both sides of the story, it's people like you I like to listen to because it's the feeling I get in my gut about this subject that starts to bother me.

It's headlines like this that bother me, from the Canadian Press, "Kids Left While Parents Gamble." That bothers me. That doesn't seem to bother the people who are going to benefit from this because that's something else. That's not going to bother them. They're going to make money off it. They're going to benefit from it. They're not compulsive gamblers, or most of them aren't, probably. So they're happy. But it's that kind of thing that bothers me. It's the feeling I get in my gut, and I appreciate people like you coming out to say this.

You did mention in your comments about what Mr Eves has had to say about this. I have 58 pages of Hansard, all of it objecting to this kind of thing, most of it said by Mr Eves and some of it said by Mr Harris. Mr Harris said on May 17, 1993, "I would offer you the other option, which many American city" -- and they love American cities -- "and state jurisdictions have used: by giving them a referendum before implementing this about-face in position before significantly changing the lifestyle of communities in Ontario," which is what this government is doing. Do you agree with that? Do you agree with Mr Harris in May 1993 that there should be a referendum?

Mrs Morrison: I'm not really thrilled with referenda as a means of determining social policy. I really feel that when we elect people to the Legislature we expect them to be responsible. I feel that at the municipal level there should be some way of determining what people think. My main concern is that the moneys that the gambling interests have would be far greater than what the ordinary people would have, so that their advertising campaigns could easily swamp those of ordinary citizens who are opposed to them. It's a very difficult issue. Our last experience with referenda in Canada was certainly a very divisive one in our society and we still haven't quite recovered from that one.

The Chair: Mrs Morrison, thank you for attending today. It was a very sincere presentation.

KLONDIKE CASINO

The Chair: Our next presentation is from the Klondike Casino, Don Ohlgren and Anne Ohlgren. Good morning and welcome.

Mr Don Ohlgren: Thank you for the opportunity to address your committee today. My name is Don Ohlgren. I'm the president of Ranpet Investments Ltd, operating as Klondike Casino. I am accompanied today by my wife, Anne, who's the vice-president of our company. Klondike Casino is a registered supplier of gaming equipment and services and a registered manufacturer of gaming equipment in the province of Ontario. We assist charities to raise funds throughout the northern part of the province, but most especially in Thunder Bay, Sudbury, North Bay and Timmins. I'm also the president of the Association of Registered Casino Operators of Ontario and for the past two years I've been part of an advisory committee meeting with the Gaming Control Commission on a regular basis to help improve the charitable gaming industry in this province.

It is our opinion that the government has moved in the right direction by introducing video lottery terminals in controlled environments. Their presence in the soon-to-be-established permanent charity casinos will greatly enhance the charities' ability to raise funds for their community endeavours. These measures will also ensure the survival of the industry itself.

Legalized gaming was first introduced in this province as a method for charities to raise funds. We applaud the decision by the government to allow for permanency of location for these events. We believe the charity casino industry is a worthwhile community-based endeavour which will find much more widespread acceptance among the general populace of Ontario than high-stakes commercial gaming such as is found at Windsor, Rama and soon-to-be Niagara Falls.

Generally speaking, the objections to VLTs are polarized around two factions. Some religious groups feel they are immoral; other opponents feel they are dangerous in terms of addiction, particularly of young people.

With regard to the first group, persons who feel gaming machines are immoral generally have that same view about all forms of gaming and wish to have that view imposed on the rest of the society in which they live. This may prove to be a dangerous precedent if we allow a relatively small group of people to dictate to us through the law what we should and should not do in terms of recreation based upon their religious convictions. While we respect their right to their views and convictions, we do not believe it is right for them to impose their religious views on the rest of society.

With regard to the question of addiction, there is no doubt that gambling addictions are a social problem. However, in a speech last February to the Ontario Charitable Gaming Congress in Niagara Falls, the head of the Canadian Foundation on Compulsive Gambling stated that it is not gambling itself which creates these problems, but rather an inherent propensity in the person to fall victim to the need to gamble. Almost every aspect of life can have adverse effects on certain people. We do not prohibit alcohol because a segment of the population is prone to alcoholism. Rather we try as a society to protect these people in a different way; that is, by allowing for the majority to enjoy these aspects of life while providing a controlled environment to protect those who might fall victim to addiction.

The decision to prohibit persons under the age of 19 to play or even have physical access to the machines is an example of a government trying to protect what it perceives to be a vulnerable segment of society from the possibility of addiction. Provision is to be made for a portion of the profits of VLTs to go towards research into gaming addictions, and we applaud this measure.

Mrs Anne Ohlgren: We wonder, if the whole gaming industry did not exist, would the 1% of people prone to compulsive problems be fine and have no problems? We believe that because a person enjoys doing something a lot does not necessarily mean they are addicted to it. Gambling is not inherently evil. It is a natural human trait to take risks, sometimes for money. If we were not risk-takers as a species, we would have ceased to exist. Recreational gaming is one aspect of this human trait; that's why it's so popular.

Recently, the annual Survey of Casino Entertainment commissioned by Harrah's found that the traditional gambler who visits casinos in Las Vegas or Atlantic City is a 48-year-old man or woman with a household income of $43,000. Gamblers who visit new destination casinos in Minnesota and Wisconsin, for example, are 46 years old with a household income of $37,000. These figures are in US dollars. The survey also shows that casino gamblers are slightly better educated and more of them have white-collar jobs, 43% versus 39% of the general working population in the US.

In 1992, Harrah's survey reported that 55% of Americans thought gambling was acceptable for anyone, while 10% said gambling was not acceptable for anyone. The remainder were personally opposed to gambling but said others should have the right to gamble if they wished. By 1995, these figures had changed to show that 61% were in favour of gambling for anyone. Those totally opposed fell to 9%. What is believed to be behind these changes is the spread of gaming opportunities in the US, where communities have discovered that gaming isn't quite the evil monster they thought it was going to be.

One thing we can tell you for sure about people who enjoy gaming is that they are sick and tired of being labelled as mindless addicts who will fall immediately under the spell of the wicked VLT wizard.

It is also our belief that some groups are expressing opposition to these machines simply because they have been proposed by a political party they themselves do not support.

What will these changes mean for charities in Thunder Bay? They will now have a chance to accomplish four things.

Firstly, they can increase their current profitability in charity casinos with the addition of these machines. This is especially important in these days of diminishing funds for organizations from government sources. Currently, with blackjack and poker, our northern charities average a profit per event of approximately $2,000. VLTs and permanent venues with more table games have the potential to increase this amount to $20,000 profit per event.

Secondly, they will be able to provide local residents and visitors with a popular form of entertainment. These machines are fun. They offer creative graphics, and people enjoy using them.

Thirdly, they can assist in stemming the flow of millions of dollars from this city into the American casino at Grand Portage. This casino, located only 45 minutes from the city, survives solely on revenues taken from this community, estimated conservatively at over $100 million annually. As proof of this, you have only to look at their massive advertising campaigns in this area. They know where their money comes from. Beyond Grand Portage, there are many other casinos in Minnesota at which residents of this city spend hundreds of millions of dollars annually. Ask them why they go there and do not attend Klondike Casino's local events and they will tell you it's because we do not have machines. It's imperative that we be able to offer VLTs to our playing public.

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Fourthly, the chief of Thunder Bay's police force recently stated at a council meeting that there are 40 illegal slot machines currently operating in this city. While we are not entirely sure where the chief obtained this number or why nothing is done about them if they are known to exist, it's likely that legalizing VLTs in charity casinos will dry up the clientele for these illegal operations. It's our belief that there are substantially more than 40 illegal machines currently operating in this city.

Another topic we would like to address is the matter of combining the liquor and gaming licensing into one commission. We would hope that this will mean substantial changes in the manner in which gaming events are licensed. Since its creation by the New Democrats, the Gaming Control Commission has struggled to keep up with the demands of a burgeoning industry because it has never had enough staff to cope with the demands of the system in place at the moment.

This system requires a charity to apply for a licence for every three-day event they conduct. This creates a steady stream of unnecessary paperwork. It entails our tying up two full-time staff just to help the charities keep track of the bureaucracy involved with running two events per week in our two principal cities. The combination of this requirement, their lack of adequate staff and the sometimes different expectations and interpretations of licensing officers has often resulted in charities not receiving licences in time to advertise or even operate in some cases.

Obviously, if permanent venues are to be a success, this cannot be allowed to happen. People are already dependent on this industry for their livelihood. The government cannot expect the charity casino industry to be a credible and successful industry if it cannot attract good personnel. This is very difficult when an employee's wage can suddenly be cut off because the casino did not operate for lack of a licence. For example, none of our 50 employees in Sudbury was able to work on August 5, 6 and 7 because of a charity's licensing difficulties with a particular licensing officer. We have to be able to offer our employees the same kind of security currently enjoyed by the commercial gaming sector. Otherwise, we will continue to be simply an inexpensive training ground for these commercial venues.

Our industry was decimated by the recent opening of Casino Rama. We provided that casino with a well-trained and experienced pool of potential employees. The same thing will happen with the opening of Niagara Falls. We do not know how the commission will select charities for the new permanent casinos. However, once selected, an alternative or improved method of licensing must be put into place.

The Gaming Control Commission was conceived by the Liberals, brought into being by the NDP and hopefully now will be reorganized properly by the Conservatives.

Sufficient manpower is also essential if the commission is to actually enforce the strict controls intended for VLTs. There are rules and regulations governing gaming in this province now, but unfortunately, the commission does not have sufficient personnel to enforce them properly and many police officers will tell you privately they do not consider illegal gaming a serious crime warranting their attention. With this in mind, we would suggest that a few locations with most of the machines would be easier to regulate than many locations with two or three. Charity casinos are tailor-made for this scenario.

Mr Ohlgren: Another topic we would like to address is advertising. Ontario's charity casino operators are heavily restricted in the advertising they are allowed to do for their events. Foreign operators suffer no such restrictions. Klondike locally is not allowed to advertise a specific event for a charity unless the licence number is issued. This can sometimes be as late as the day of the event. How can people attend and support the charity if they don't know where the event is? Yet the casino at Grand Portage can advertise whatever, whenever and wherever it likes. Please, while you're here, drive around this city, listen to all our radios, watch any TV, read the newspaper, go to a ball game, come to our winter carnival -- everywhere you will be bombarded by billboard advertising, radio, TV and newspaper commercials, on and on. Let's have a level playing field. It's our belief that foreign casinos should be governed by the same advertising regulations as Canadian casinos on our own airwaves and in our own advertising markets.

We are not allowed to mention anything in our advertising which might be deemed as an inducement to gamble. For example, we can't give free rides to our events. Yet Grand Portage openly advertises free transportation to their casino, as well as many other freebies and inducements, including a player club, free entertainment and refunds for playing. A tourist coming to this city could certainly be forgiven for believing that Grand Portage Lodge and Casino are actually part of this city. Why must we keep shooting ourselves in the foot? Even within our own country, the Ontario Lottery Corp is allowed to advertise the potential benefits of buying its tickets. If charity casino operators are to be working under the auspices of the Ontario Lottery Corp in the management of VLTs, we hope these advertising inconsistencies will be done away with and a more level playing field enacted.

As a northern company, we are concerned not only with Thunder Bay but with other cities such as Sault Ste Marie, Sudbury, North Bay and Timmins. The previous comments we made about the casino at Grand Portage and its impact in this city can be multiplied at least 100 times for the casino in Sault Ste Marie, Michigan, across from the Canadian Sault. Vegas Kewadin draws hundreds of millions of dollars from both the Canadian Sault and Sudbury. Its estimated earnings, profit after expenses, exceed $300 million a year. A charity casino with VLTs in Sault Ste Marie would be an excellent means of keeping dollars in Canada and benefiting local charity endeavours. Given this chance, Canadian entrepreneurs operating fund-raising casinos are ready and, I might add, able to earn substantial amounts of money for this province and for its charities.

There seems to be an underlying current of opinion that the Ontario charity casino operator does not really know what he's doing and that the major American operators are the only ones who can be profitable. There is not one American, Australian, European, aboriginal or any other casino company in the world that operates under the conditions that we do.

I attended the World Gaming Congress in Las Vegas last October. The American operators I spoke with could not believe that we operate (a) with only two games currently, one of which, blackjack, is the most volatile game there is; (b) a maximum $10 betting limit; (c) in a different venue every three days so no one knows where you are; (d) a limited three-day event so that any losses can't be spread over a longer period, thus have to be absorbed; (e) with no control over rents charged by the venues because we are roving and at their mercy. You can imagine how tired we get of these folks looking at us and our operations as oddities, because the simple fact is, while they would not even consider doing this, we not only do it, but we make money at it. Yes, we make money doing it, as well as providing profits for our charities.

Attached to the back of our presentation is a list of the groups we currently work for here in this city. Some of them will be speaking today. Others will not have the opportunity. Most northern charities are staffed by very small groups of dedicated volunteers who work at other jobs during the day. While we cannot presume to speak for them, we can tell you that they support the creation of permanent locations for charity gaming. They have concerns, but most of them centre on how the revenues will be shared, how numbers will be decided upon, how charities will be chosen and so on.

In closing therefore, we would like to add that we feel this industry should remain a community-based one. We do not believe the public wants to see glitzy, high-stakes casinos all across Ontario. While Las Vegas is fun to visit, it's not as much fun having it in your backyard. Our fear is that, following the tradition of the commercial sector, charity casinos will be given away to the Americans. We urge the government to bear in mind that Ontario's casino operators have been making money for charity in the worst operating conditions imaginable, conditions that also preclude proper enforcement. Where were the US operators when times were bad in this industry? Nowhere to be seen. Now they all sense a possibility of profit and they're suddenly expressing interest.

All we ask is that it not be assumed that we do not know what we are doing. Klondike Casino has consistently returned 25% of the casino hold to its charities as profits. Contrast this with the American company hired to manage the native casino at Rat Portage. Has the band there ever seen one penny of profit since they began operating two years ago? And anyone in this city will tell you that Klondike's customer service is far superior to that experienced at Grand Portage.

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Current regulations governing charity casinos, their games, their advertising, their availability, benefit only our foreign competition in this area. To all intents and purposes, Thunder Bay already has VLTs. The only problem is that their revenues do not go to charity but to a foreign native band just across the border. Klondike Casino and other registered operators need the government help outlined in Bill 75 to keep those millions of dollars in this community and in others like it across the northern part of Ontario.

Mrs Ohlgren: Klondike Casino is a small, family business run by northerners. We and our staff are proud of what we do and we make no apologies for it. The previous government was always reluctant to make changes in the imperfect structure they created for gaming in this province. Thanks to northern tenacity and a strong belief in what we do, we have survived in the face of government neglect and intense foreign competition. Our mission is to raise funds for Canadian charities by providing professional gaming entertainment and exceptional customer service. We are glad this government has seen fit to help us enhance our entertainment and fund-raising industry with these new opportunities. Thank you.

The Chair: I thank you both for your presentation. Your time has elapsed, so there is no time for questions.

The Chair: I welcome Mr Gravelle, the member for Port Arthur, to our meeting. As a courtesy -- we have 15 minutes due to a no-show -- he has one or two presenters he would like to use that 15 minutes. It cannot be done without the unanimous consent of this committee. Is there any objection to Mr Gravelle presenting one or two individuals during that 15 minute-period?

Mr Gravelle: I am sure the committee would be very glad to have them. They'd be quick presentations.

I have Mr Randy Valois, a representative of the 84 Air Cadet Squadron who wanted to speak.

The Chair: Is there any objection? If there's no objection by any member of the committee, I assume consent. Therefore, we would be pleased to hear from you, sir.

Mr Gravelle: Thank you very much. I'm going to go and check on the other group, Mr Chair.

RANDY VALOIS

Mr Randy Valois: My name is Randy Valois. I'm a representative of the sponsoring committee for the 84th Air Cadet Squadron, which uses Klondike Casino as the major fund-raiser for projects for young people in the area.

We are wholeheartedly in support of VLTs as we feel in the 1990s and the future we do not have the support base of public donations that existed in the past. It's necessary now to purport some type of entertainment or prize for any money given out and, in my opinion, people feel gambling provides both entertainment and the opportunity to win a prize for their money given.

The problem that exists for us is that we have some questions. What percentage of the funds from the VLTs will go to operations? What percentage goes to the government? A major question is, what percentage will go to charities? Will service clubs be allowed to have VLTs? If they're allowed to have these machines, how will it be decided how many? Will it be decided on the square footage of their building or by their membership? As everybody well knows, service clubs are a major, major contributor to charities. Every service club that exists in Ontario is a major contributor to many charities. These machines in service clubs will be maintained by whom? What will be the repercussions of service clubs, which are non-profit organizations, having these machines in conjunction with private establishments? What authority will private establishments have in deciding which, if any, service clubs can have VLTs and how many machines you can have? What percentage of the intake will be for rental, or will these service clubs be allowed to purchase these machines?

I heard lots of people here talking today about lots of things, and many people are very smart, talking about various things. You can read from lots of reports and everything else like this. Gambling exists. I can see Bill 75 trying to legalize it. Legalizing it is not going to get rid of the illegal stuff, but at least we're going to be able to get some things out in the open. Mostly, my concern is that if you're doing this for charities, what are we going to get? I don't mind working very hard a number of hours per day for a charity if I'm going to get something from it, but I would appreciate knowing, if these come in, what percentage are we going to get? I can understand the government wanting a certain percentage and I can understand businesses wanting a certain percentage, but what I'm concerned about is, what are charities going to get out of this? I know you can't give me facts and figures at this time, but I'd like to express to you some of the concerns, as one of the charities out there working very hard, that come to us.

Mr Gerard Kennedy (York South): I have a quick question. Just to make you aware, the estimates for the VLTs -- you heard the previous person talk about the gaming halls, which they're actually calling charity casinos. There are 50 small casinos going to be set up across the province, with no reference to the community about whether it wants them or not. The benefit of that will be shared with charities, but they'll be in direct competition with thousands of VLTs, of slot machines in bars and potentially in restaurants. But the legislation enables them to be in bars. This is the kind of thing that will compete with charities.

I don't know what the dependence is of the Air Cadets on gambling break-open tickets or other kinds of casino nights and so on right now, but there is 40% to 60% cannibalization -- and that's a word used yesterday by somebody from a racetrack -- by this form of gambling. A lot of charitable gambling enterprises have come before us objecting to this because of the impact it's likely to have. It's important to realize that this is not a controlled form of gambling for the benefit of charity. What the Treasurer said in the budget was 10% only of the VLT machines is going to charities and the much larger part is going to the government for revenue to fund their misaligned balance sheet.

Mr Valois: As we know, now we have break-open tickets, a major source for some organizations of raising money. A certain percentage of that has to go to charity; they're allowed to keep a certain portion. If you're going to allow VLTs to go into a bar, they may have to live under the same regulations as the break-open tickets, which most of them do sell now anyway. If you're going to bring in VLTs, let's have parameters, let's say: "Fine, you've got five machines. This is the percentage you're allowed to keep, and a certain percentage has to go to this." There are many organizations they could support or be told they have to support, or they may wish to do so themselves.

Mr Kennedy: While charities get the full benefit of the break-open tickets, the government would restrict it to 10% for the VLTs.

I want to pass to Mike.

Mr Gravelle: The point Gerard is making is that if you do rely on the break-open tickets, the Nevadas, the evidence is pretty clear that once the VLTs come in, the dropoff -- and that's the term "cannibalization," a dandy word; in essence it means they're sort of eating their own -- the dropoff in people deciding to go the break-open route drops off considerably as the VLT takes over.

I'm glad you had an opportunity, Randy, to express some of your concerns, because I think it's an example of a number of charities that are going to be in the same situation. In essence they're going to lose control of the opportunity to basically raise funds in the manner they have. Ultimately, the long and the short of it is that if all this goes forward as presently planned, 10% will be going back to charities, but it'll be a situation where you'll be lobbying to get your share of the charity dollar, and previous representatives have talked about what qualifies as a charity. I think there are going to be some really negative effects in terms of the charities, and Jean Morrison earlier made some reference to some of the other cultural activities that will be affected. I think the implications of that have not been well-thought-out. It came up quite frequently yesterday and I think it's worth people understanding that it's going to have a very negative impact on the charities.

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Mr Kormos: Your concerns have been raised over the course of this week since Tuesday. You've been here since people started this morning; you've seen the competing interests. The horse racing industry wants slots, but just at the racetrack because they know there's a whole lot of money to be made there. "To heck with the rest of them. We want slots. We're best capable of controlling slots." They want to reap the profits for themselves. We all understand that. The private sector sponsors of what is now charitable gaming by virtue of roving Monte Carlo nights, they want slots too and they're prepared to make an argument on behalf of their role. The problem is that with the proposal under way now in terms of fixed charitable operators, you're talking about private ownership and continuation of some very mixed interests. The hotel association, Days Inn, other hotels and places like that that have licensed premises, wants slots too.

You see, nobody's prepared to go so far as to say, "Why don't we give slots to corner stores then?" The argument is, "They can't control who uses them." Why not? If they're prepared to control who purchases tobacco, why aren't they capable of controlling who uses a slot. If they're prepared to control who purchases a 6/49 ticket --

I think you're seeing the beginning of a process -- and again, I'd be happy to come back in five years and say I was wrong -- where we're going to see a pervasiveness of slots across the province that is going to transcend even the proposal that's here now. There's just too much money to be made, and not by the little people; by the big people, the people who own the slots, and quite frankly, by the prospect of organized crime. I can't think of a slot jurisdiction over 10 years old that hasn't been corrupted, infiltrated by organized crime.

To get back to charities, though, the sad reality is that you're going to be at the end -- you're a rationalization for the slots.

Mr Valois: You're going to be listening to a whole lot of people who have a whole lot to say who are a whole lot smarter than I am --

Mr Kormos: Not likely.

Mr Valois: -- and they're going to tell you a whole lot of smart things. I can't argue with them. They probably went to a whole lot more school than I did and everything.

Mr Kormos: But they're not likely smarter.

Mr Valois: I'm interested in one thing: I have to work very hard to raise money for organizations I believe in and I don't want to get knifed in the back. I'm sick and tired of it. There are many people in this town who work very, very hard and work a lot harder than I do. If you're going to do this for charity and you're going to do something, then put the regulations in. I don't care how you do it. Yes, I'd like to get the government out of debt so my taxes can come down. I don't care what you're going to do. But buying 6/49 and getting Ontario out of debt are about the same amount of odds.

All I'm trying to tell you is that my charities -- this isn't the only one; there are other charities I work for -- we want to know, what are you going to do to us? That's all we want to know. You told us 10 times we're going to make money. You're going to cut us down to one-day casinos and now you're going to make 10 times the money? Come off it. I don't want that. I want to know. Tell me some numbers.

Mr Kormos: Right on.

The Chair: The last caucus has three minutes, and we have Flaherty, Johnson, Klees and Guzzo.

Mr Flaherty: How is it that we have three minutes when the Liberal caucus took eight minutes?

The Chair: I'm sorry, they did not have eight minutes. I recorded --

Mr Flaherty: The speech by the member from Port Arthur was three to four minutes.

The Chair: He did not have eight minutes; he had three minutes.

Mr Flaherty: I was surprised to hear the member for York South use an inappropriate expression such as "misaligned balance sheets." I would have thought he would have suffered some approbation from the comments of the putative leader of his party, the member for Windsor-Walkerville, who's quoted as saying, with respect to his comments about the crack cocaine of gambling yesterday, that, "Liberals have to get away from the cheap buzzwords of the past." I would hope the member for York South learns from the learned member for Windsor-Walkerville, quoted in the Windsor Star about these cheap buzzwords.

Interjection.

Mr Valois: If you two wanted to talk, we could get on to another question. Did you have a question?

Mr Flaherty: On the break-out tickets, you shouldn't be misled. The evidence that we had yesterday was not that break-out tickets declined in Alberta when VLs were introduced. In fact they declined when casinos were introduced, and that's the actual documentary evidence. When you look at the graphs, that's the reality of what has happened rather than the speculation we hear a lot of here.

With respect to charities, video lotteries in bars will not compete with charities. As you know, the charities will profit to the tune of 10% from those video machines in licensed premises. In fact, from the Monte Carlo perspective, those floating Monte Carlo games, the three-night things, with the permanent charity casinos the commitment is that charities will receive up to 10 times more money than they are receiving now in the province of Ontario. In addition, as you know, the charities receive money from the gaming tables in the charity casinos, so we're looking at up to $180 million more for the charities of the province.

I understand your concern about the service clubs and so on. I'm a member of the Rotary Club myself and I know how hard the club members of various Lions Clubs and so on work to raise money. That goes to the implementation stage, and I do hope you'll continue to participate in the consultation process when we get to dealing with implementing these matters beyond Bill 75.

Mr Ron Johnson: I wanted to make one brief comment with respect to the misinformation Mr Gravelle gave this committee about five minutes ago in telling you that with the new charity casinos, your charity in essence will simply be lobbying the government for funds, almost implying that all the other fund-raising initiatives your charity takes on, as do all the other charities, will cease to exist. Of course that's not the case at all. The charitable gaming and the VLTs are one small part of the fund-raising that charitable organizations such as the cadets will be going through. The break-open tickets, bingos, all of that, will continue, and if you're involved in that now as an organization, that will continue. Of course there's no lobbying the government to get funds for that; those are things you can do as an organization and are things you're doing now.

I think it's important to make that clear, that by no means does this bill, Bill 75, replace the fund-raising initiatives the charities across this province are doing now. In fact, it enhances it and gives you greater opportunity to raise even more money as a charity than you're able to do now.

Mr Valois: Oh, I absolutely hope so. I feel the government is strong behind charities. Although they cannot give us any financial help, they'll try and implement any program without trying to hinder us.

As I mentioned earlier, we really hope -- what makes people happy sometimes is numbers a little better than what we're going with right now. We're having a bit of problem sometimes with the numbers, which is bothering some people who are working very hard for the charities. That's all it is. I mean, is it going to be 25% of this that is going to go to charities? Fine, that's great. Then we know.

The Chair: I thank you very much for ending there today.

We are now adjourned to 1:20 this afternoon.

The committee recessed from 1159 to 1320.

The Chair: Good afternoon, ladies and gentlemen. I should remind you that we have a charter going to Kenora. Therefore, it can leave any time all of the members are assembled to leave; you don't have to wait till seven. I just remind you of that. I think some members have commitments in Kenora this evening and would like to get there as soon as possible.

Mr Guzzo: Therefore, it doesn't have to be non-stop; we can make a stop on the way.

WAYLAND HOTEL

The Chair: Our first presenter is Mr Donald Johnson of the Wayland Hotel. Welcome.

Mr Donald Johnson: I am Donald Johnson. I'm the director also for zone 25, which is Thunder Bay and District Hospitality Association. Hospitality is our name and it is our business. That's why we think Bill 75 is very important to us.

We as an industry are in serious economic trouble, and I can tell you from a personal perspective the urgency of the situation. Our industry's sales are down 20% right across the province. We have lost about 100,000 jobs, and we're one of the largest employers in the province. This is not right. We've had 1,400 bankruptcies since 1992. My own business is down and I've been in the industry for 30 years. I've been in the same location for 30 years. The business has been there for over 50 years.

In economic times slowdown is not really there in our industry; usually we speed up. But we're not bouncing back this time. Competition is a lot greater. What we've noticed, just on coming here -- all the statistics I have here are great, but in coming here today I have one friend of mine in the industry who's also down in his business and heard I was speaking and came down with a petition that all of us had done a year and a half ago. He photocopied his. I sent mine in and didn't photocopy it, but it was for video lottery machines. He had this petition out for just two hours and got almost 200 signatures for video lottery machines.

Coming here today on my route from beautiful downtown West Fort, where the most friendly people in the world exist, I passed by Happy Time Tours. All their buses are full and have already made two trips to the border, to Grand Portage Casino. Fifteen million dollars a year leaves Thunder Bay. We don't get any taxes or revenue off that because they're not spent in this country; they're spent 35 minutes away.

The Minister of Finance, in his budget of May 8, said the government was going to allow VLTs to help our industry. Specifically, he said, "We believe that VLTS, if implemented within tight regulatory controls and in limited-access environments, can meet a legitimate entertainment demand." Entertainment demand is the industry we're in -- to look after people, to entertain them. VLTs are in our entertainment. We need this stimulus; we need these machines to stimulate in our own personal recession we're having.

As we all know, there are a lot of grey machines out there. These grey machines are illegal VLTs. Our government is not making a dime off the revenue from these machines, but they're creating great revenue for people in Montreal who own these machines and have set them out. They're in corner stores, they're in some bars that operate not as well as 95% of us do, they're in bingo halls, they're everywhere. They have to be stopped. We want VLTs so that we can operate them legally, help make the province money and help stimulate our industry.

From the perspective of a businessperson like me, it means that a delay could very well result in having an initiative that the government intended to help the hospitality industry hurt it. The reason is that during the first stage of implementation to racetracks and charity casinos it will create business dislocation. Customers will gravitate to where they can legally play VLTs. We can't afford to lose that business, which may not come back to us. It's an everyday story. If a customer strays to another place, they don't always come back because you've improved. Just because we get VLTs, if they're already somewhere else, we may have lost a ship. While you're implementing them into charity casinos and bingos, you should move quickly to put them into our industry to help us.

Those businesses close to the casinos, such as Windsor, Orillia, Sault Ste Marie and now Niagara Falls, or the new charitable casinos, also need VLTs. The casino in Windsor, for example, has had a devastating negative impact on the local hospitality industry. Further, VLTs will not negatively impact casinos. Dr Marfels from Dalhousie University in Nova Scotia has proven this in a study that was conducted on an issue in that province.

Delay will also mean, as I said earlier, that the government will be delaying moving on the offensive against illegal machines. It is very difficult to try and operate legally, especially in these tough economic times, when competitors are attracting your customers with illegal machines. We need this unfair competition to stop now.

VLTs work as an attendance generator because they are an acceptable form of entertaining the public wants. They play them for entertainment, not to gamble. They are part of an evening out. Ontario has already a full selection of legal and illegal gambling opportunities. I have already referenced some of the illegal opportunities this measure will help control, but one does not have to go any further than your corner store or bingo hall to find a gambling opportunity. However, just as with the consumption of alcohol, the vast majority of players gamble in moderation and experience no significant gambling problems.

A new brand of alcohol -- a new beer, for example -- does not increase the overall level of alcoholism. With all the existing forms of gambling today -- lotteries, sport pools, bingos, horse racing, casinos, break-open tickets -- the introduction of a new brand of gaming, video gaming, will not significantly increase the potential for compulsive or problem gaming in Ontario. Research shows that less than 2% of the population are potential compulsive gamblers, and another 3% to 5% may experience some problems.

I would also like to take this opportunity to point out that the public supports the introduction of VLTs in our establishments. Our customers tell us this continually. The traffic the illegal machines generates at competing locations prove this. Independent surveys conducted by Environics Research and Angus Reid confirm this.

Mr Chairman, on behalf of myself, the employees I still have and those I would love to be able to re-employ, I urge you and your committee to recommend to the government quick passage of Bill 75. I would also suggest that your recommendation include a request to move implementation of VLTs for our industry on to the fast track. Thank you very much.

Mr Kormos: How many VLTs would you want in your establishment?

Mr Donald Johnson: I would probably want up to somewhere between seven and 10, something along the same lines as Alberta and Manitoba.

Mr Kormos: So seven to 10 in your hotel, and your beverage room is a part of the hotel. How much would you expect to generate in revenue, net, to the Wayland Hotel a week with seven to 10 units?

Mr Donald Johnson: I have a brother who lives in Edmonton. He owns a hotel there, in Stony Plain. His seven machines generate approximately $80,000 a year for him.

Mr Kormos: His take is 80 grand. Do you know what percentage of the gross amount bet is his take?

Mr Donald Johnson: Seven per cent. Do you know how much the government made? Do you know how much that money generated into the deficit?

Mr Kormos: At 7% of the total amount bet, he's grabbing 80 grand, right? That's his take only, at 7%. We don't know what the percentage is going to be for the government. What sort of payout would you expect on a machine in terms of the percentage of the amount bet?

Mr Donald Johnson: What sort of payout?

Mr Kormos: Yes. Down in Portage their pamphlet says, "Payouts of up to 95%" -- Grand Portage casino.

Mr Donald Johnson: We would also probably expect the same thing.

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Mr Kormos: Because you'd have to be competitive with Grand Portage?

Mr Donald Johnson: Yes.

Mr Kormos: If your machines weren't paying out the same amount on money bet as Grand Portage, you'd still be on a non-competitive base with Grand Portage, right?

Mr Donald Johnson: And the point is?

Mr Kormos: No, I'm asking you because these people have no idea what their payout is. They haven't even considered it. The minister has no idea.

Mr Donald Johnson: I'm sure when they get to the payout-solving part of it, they'll probably agree and come to a situation where we're looking at not just trying to make money for ourselves. But we are in business and that is the meaning of being in business, and $80,000 is $80,000 I didn't have to generate back into my business. The number of employees I would employ to look after this would be phenomenal. This summer alone -- I usually hire up to 30 people -- I haven't hired any students, period.

Mr Kormos: How many people would it take to monitor seven to 10 machines?

Mr Donald Johnson: How many people would it take? Let's face it: You have to count all the money. You have to have people watching the machines. You have to have someone able to fix the machines. You have to be monitoring them. You have to have somebody there who can make the payout.

Mr Kormos: Do you expect to purchase the machines so that they belong to you?

Mr Donald Johnson: From my understanding as to what they do in Alberta, the government puts them in and from there on in you're responsible.

Mr Kormos: Including collecting the money?

Mr Donald Johnson: The government there just takes the amount of money each machine makes. Each time a token or your dollar is put into that machine, it's registered. At the end of that period, the government automatically takes that amount of money out of your bank account set up for that. If it's not there, you're in trouble.

Mr Ron Johnson: Thank you for your presentation. We'll try and get about as far away from Mr Kormos's self-righteous rhetoric and start talking about what this is really all about.

I know that we have to understand, first of all -- and it was brought up earlier by one of the previous people who presented to us -- that of course gambling is here. It's alive and well in this community already and just 35 miles away. You can imagine, as you so rightly pointed out, the kind of negative impact that's having on your community here, the amount of money that's leaving.

But the argument we're getting from the opposition, and the only one that I'm sensing, quite frankly, which it seems to be repeating over and over again, is the fact that it's an attack by our government on those who are most vulnerable, that we're going to somehow create thousands of crack cocaine VLT addicts out there. Of course that's simply not the case. We heard already from my colleague Mr Young that the majority of people who are sort of predisposed to gambling addiction are not in the lower-income bracket. In fact, they are the upper-income bracket people who are most subjected to that kind of behaviour.

The argument is that by increasing access to gambling activities you therefore will increase the people who are addicted to gaming. That might have validity if we were increasing access to gaming. The bottom line is that gaming exists. I can make a very compelling argument that what we are doing is increasing access to VLTs; there's no question about that. But gaming is alive and well. It's alive and well in bingo, illegal VLTs, lotteries, break-open tickets, charitable casinos, racetracks, Sport Select, my argument being that those who are predisposed to gaming addiction already have the means to act on that predisposition. It's already there. What this is is allowing charities and other organizations to capitalize on a new venue, a new type of gaming, that of course is considered entertainment by many people.

My question to you is this. In lieu of the fact that we're sitting here with this argument, which I quite frankly don't buy for one second, is the 2% that we're putting away to help those who do become addicted to gaming and who are already there today as a result of the gaming activities they carry on now, in your estimation, a reasonable effort on behalf of this government to address those needs?

Mr Donald Johnson: Very much. That 2% is probably -- they'll have a lot of money left over. Like I said in my argument earlier, when there's a new brand of beer brought on to the market, the alcoholism rate does not go up one iota. By putting in gaming machines, VLTs, your potential gamblers are not going to increase. You already have bingos, charitable casinos, your Sport Selects, your lotteries, lottos. The city is doing it. The city has a committee to open a casino. You're not going to have any more potential for compulsive gamblers.

The Chair: Thank you, Mr Johnson. I'm sorry, Mr Klees, we're out of time.

Mr Crozier: Mr Johnson, you emphasized a couple of times in your presentation that VLTs are just entertainment. As a businessperson, then, what would you say to me if I suggested, well, just put an arcade in your restaurant and then those who are interested in the entertainment of VLTs will come in and play them and that'll give you more business? You'll be able to sell more booze; you'll be able to sell more food. What do you think of that?

Mr Donald Johnson: At this moment in time, I already have those machines. This is another form of entertainment. I have a pool table, I have an air hockey game, I have a shuffleboard, I have a basketball game. Those are the same things. But I always change them to create better and better entertainment for my customers.

Mr Crozier: So then my point is, why don't you get the latest VLTs with their various kinds of --

Mr Donald Johnson: The illegal ones?

Mr Crozier: No, no. The only thing that makes them --

Mr Donald Johnson: The ones that don't make sense.

Mr Crozier: I suggest the only thing that makes them illegal is if people bet on them. So it's gambling we're talking about, aren't we? We're not talking about entertainment. We're talking about gambling.

Mr Donald Johnson: Gambling is a form of entertainment.

Mr Crozier: But it's one that makes you some money.

Mr Donald Johnson: So is basketball.

Interjections.

Mr Crozier: That's a revelation. But you can bet on basketball.

Mr Donald Johnson: A form that might make me money? My God, let's not think of that. Wouldn't that be awful?

Mr Crozier: We are. Do you realize --

Mr Donald Johnson: A form of machinery that would make the government $500 million in a year? My God. Without having to put a tax? Let's not do that. That would be insanity.

Mr Crozier: I might be inclined to agree with you, but you also said, Mr Johnson -- I just want to get a feeling of how widespread your concern is. We know you're concerned about the government now because you think they should be able to make 70% of what comes in off these things. We know that you're concerned about addiction because you said that 2% is going to leave them money; they're going to have money left over. Addiction is just simply a cost of doing business, isn't it? I mean, the 2% is simply a cost of doing business when you're in the gambling trade, right?

Mr Donald Johnson: Is it illegal to sell alcohol in this province? There is an Addiction Research Foundation. It hasn't gone up a bit.

Mr Crozier: What's your point?

Mr Donald Johnson: Same as your point is about gambling, the 2%. I think that's --

Mr Crozier: You think that's adequate?

Mr Donald Johnson: That's adequate.

Mr Crozier: You don't think it should be 5% or that they should get 10%, just like you're going to get?

Mr Donald Johnson: No. I don't believe that their problem is going to grow.

Mr Crozier: You don't agree then either with the fact that those people who are in the horse racing business think they should get VLTs but you shouldn't?

Mr Donald Johnson: The people in the horse racing industry? I think they should have VLTs, but I also believe that I should have them at the same time.

Mr Crozier: Right. But you understand that they don't think you should.

Mr Flaherty: On a point of order, Mr Chair: That is not what we heard from the Ontario Jockey Club yesterday, and if Mr Crozier is going to put a suggestion to someone making a representation, I would ask that he do so accurately.

Mr Kormos: We heard it from a number of sources.

Mr Flaherty: We did not hear it from the Ontario Jockey Club, we did not hear it from the harness --

Mr Crozier: Do you want to start to debate the point of order?

The Chair: No. That's not a proper point of order.

Mr Flaherty: I'll tell you exactly what they said and I'll be accurate about it. I wish you would be too.

Mr Kormos: You touched a nerve.

Mr Crozier: I wish that you would keep quiet when I have the floor.

Mr Flaherty: I will if you would be accurate and show respect for the people who come before the committee.

Mr Crozier: Chair, if you're going to let this go on, let the questioning go on. These guys sit there --

The Chair: Your time, Mr Crozier --

Mr Crozier: You talked about us and I kept quiet.

The Chair: Mr Crozier, your time had elapsed in any event.

Mr Crozier: It's about time somebody called a spade a spade, Mr Chair.

The Chair: The point is taken, Mr Crozier, thank you. Mr Johnson, thank you very much.

Mr Donald Johnson: Thank you very much for having me.

BEST OF LUCK BINGO ASSOCIATION

The Chair: Our next presenter is the Best of Luck Bingo Association and the Metro Lions Club, Mr Phil Jarvis.

Mr Phil Jarvis: First of all, I'd like to take the opportunity to thank the committee for hearing me out. The Best of Luck Bingo Association was formed some two and a half years ago and is a loose-knit group of organizations whose main purpose and only purpose is to raise revenue for the local 16 or 17 charities involved in this organization. All revenues generated to this association are raised through bingo proceeds and revenues through break-open tickets. Break-open tickets are located in a variety of local liquor dispensing establishments, corner stores, service stations etc to be found throughout the municipality. I, as are many other volunteers, am involved in the bingo activities and obtaining break-open ticket sites to meet the needs of the charities involved.

Many local retailers of liquor and otherwise have been very supportive in our participating charities, so their interest in obtaining VLTs we can very much appreciate business-wise, and we could if the pending structure of revenue distribution to the charities was likewise laid out. But here we have a concern that we're going to address later on.

The government itself, I believe, has doubts in permitting this type of gambling to develop in Ontario. The consumer minister, Norman Sterling, seems to excuse the government moving into this field in his quote that the video cat is already out of the bag, so I guess I might excuse by allowing the other nine cats out of the bag at the same time.

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This act is in light of the fact that provinces like Alberta and Manitoba are asking for caps on VLT exposure and expressing a decreasing desire, to limit its exposure.

The effects of VLTs in a community will be felt in many ways. It can be easily anticipated that licensing fees from VLTs will decrease by about 50%, while fees set by the board of directors of the commission, will they be partially returned to the municipality or might we face a double fee structure, municipal, provincial, and perhaps a vending permit concept?

There is no actual measure of dollars removed from the community each year by each VLT directly to the government. Now these charitable dollars remain and are recirculated in the community through the organizations receiving them, thus creating a business infrastructure.

We do not have at our disposal an actual description or information on how this new gaming system will affect the local distribution of gaming supplies. Is it possible gaming supplies will be distributed through a central agency similar to the LCBO, notably the Ontario Lottery Corp, which seems to be the reverse of this government's move toward privatization? However, if it does mean the privatization of gambling, and there is some suggestion that it does if one looks at Bill 75, the very inclusion of gaming in an act to regulate alcohol does suggest that this might indeed achieve a common ending. Does this mean that the Ontario Lottery Corp inherits a monopoly on gaming in Ontario similar to that of the LCBO's structure in the past and whatever it will take in the future?

How much opportunity will a small association like ourselves have in out-marketing the likes of the Ontario Lottery Corp, even if we are allowed to try? What effect will this have on the fund-raising efforts in this community?

One might be even more concerned about another aspect of this bill. How does one access the government's revenues from VLTs? First of all, there seems to be in the bill no process for this to take place, and indeed the minister's statement seems to verify this when he says he would like to hold public hearings to decide which charities should benefit most from the bonanza. Thus, one must recognize there is public confusion and concern over accessibility.

This same situation seemed to prevail in Alberta prior to the implementation in that province, and it's hard to show funds returning to charities, my best guess being that all revenues flowed into central revenue. One would hope that doesn't happen in Ontario.

Again, what does this mean? The 1996 budget figures indicated that 10% of revenue is to go to the host site and 10% to charities. What does "charities" mean, and to be determined by whom: myself or the applicant to the host site? Are charities to be determined by the Ontario Lottery Corp or the government in some other form? I ask, how does my organization participate at this time?

In addition, I see no guidelines nor have I been able to obtain any as to the disposition of these funds. Again, once you have applied for these funds, will they be allowed only for capital projects or will we be able to access them for operating funds, like local museums or kids' camps, as revenues from gaming activities are allowed now?

I see the extension of the use of VLTs creating the following situations:

It will lead to a decrease in volunteers in the community working for the good of the community.

It will draw funds from existing like gaming programs to the government, and it will be the government board's decision as to who gets the funding charity sections.

It will create another level of government.

Who is to establish the policing effect? Will it be the host site or will it be the government agency? And do we want the fox-in-the-henhouse concept in policing?

Will it have a substantial effect on the gaming business supply, as mentioned, if the Ontario Lottery Corp becomes the supplier of gaming material through the shelving and supply control, as the LCBO has become the supplier and controller in the privatization of liquor distribution?

It will lead to a substantial decrease in revenues to municipalities, especially the smaller ones. As one sees in this report, there's no way of compensating for this. The Globe and Mail, a mildly small-c conservative newspaper, reports that a government investment of $6,000 will generate between $20,000 and $35,000 revenue from each machine, which will undoubtedly put remarkable stress on the charity revenues in this particular community.

Lastly, this representation does not comment on the vices of the community, each individual, rich or poor, whether he plays bingo, attends gambling casinos or acquires needless big toys. As Sterling comments, the government can do only so much to control human behaviour, but does it have to insist on expanding the behaviour many provinces deem undesirable in our struggle to put a bell on the VLT cat that's already out of the bag?

As a volunteer, I find it difficult to believe that any government of any persuasion would want to discourage volunteers from being active in local organizations by raising revenues through simple games of chance. This alone reduces commitment of the individual to his community and places greater responsibility on future government agencies. Government readily seems to admit this responsibility when it places a percentage to cure problems created by the actions that it takes.

Again, I take this opportunity to thank the table for hearing one volunteer hack from the community.

The Chair: Thank you very much, Mr Jarvis. Mr Flaherty, three minutes.

Mr Flaherty: Thank you, sir, for your presentation. You appreciate that right now we have 15,000 to 25,000 illegal, so-called grey video lottery machines in the province of Ontario and that the charities of Ontario are getting absolutely nothing from those machines?

Mr Jarvis: I'm aware of that.

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Mr Flaherty: As a volunteer, a number of the issues you've raised go to the implementation issue. This is Bill 75, which is enabling legislation.

Mr Jarvis: I realize that also.

Mr Flaherty: I appreciate your comments with respect to the issues about charities and how does one define charities and how does one allocate money between charities and those issues, which are very important and which will be the subject of consultations by our government as this matter progresses. I don't want you to think I'm avoiding discussing that with you; it's just not specifically part of the enabling legislation, which is Bill 75. But the government has committed to further consultations, of course, about those important matters.

I would mention to you, though, given your commitment as a volunteer and to charities, that the current three-day roaming Monte Carlo nights are producing about $10 million to $15 million per year for charities now and that the estimate here is that with the permanent charity gaming halls, this will increase 10 times, so the charities of the province of Ontario will have 10 times as much money from those sources. I'm sure you'll agree with me, as a fellow volunteer at bingos and other, different things, that's a remarkable plus factor.

Mr Jarvis: I would agree with that if the process is in place for accessing those particular dollars and if that is guaranteed in the processing or if that is made accessible to us in the processing.

Mr Flaherty: I appreciate your concerns.

Mr Klees: If I might, just to follow up on Mr Flaherty's comments, Mr Jarvis, you've raised a number of very important questions. We want to thank you for raising the points and putting them as questions; the purpose of this process is to get that kind of input because we also want to be sure that when this is implemented we do it the right way. It's through this process that we're able to get the kind of feedback we need from people like you so that we can do this right.

The bill we're talking about here today, as Mr Flaherty said, is enabling legislation. It provides a framework. It doesn't deal at all with the implementation. There are no guidelines yet, and there shouldn't be, because there won't be until we have had a chance to do some very broad consultation. This is very much part of that consultation. So again I thank you. Your comments will be taken into consideration as we draft those guidelines, and that consultation will continue to take place over the next number of months.

The Chair: Thank you, Mr Klees.

Mr Jarvis: Can I redress that for a minute, please?

The Chair: I'm sorry, we have to move to the next caucus, sir.

Mr Gravelle: Mr Jarvis, thank you very much for appearing. I think I just heard Mr Klees say there would be a commitment to further consultation once the bill is passed in terms of the implementation. I'm pleased to hear that commitment in terms of how the process will carry on beyond that. That's great.

Mr Guzzo: It will be up to the local member, won't it?

Mr Gravelle: The local member will be very happy to be a part of that process and to initiate it, for that matter.

Mr Jarvis, you did make a number of points that are absolutely valid, and some of them do seem almost ironic in the sense of the government on the one hand encouraging, if not emphasizing, the need for voluntarism and on the other hand setting up a system that will make it probably more difficult and less likely for volunteers to be able to be involved in the process of fund-raising.

The concern I have, and I think you were addressing it in general too, is that no matter what is said here and what has just been said, it would make an enormous amount of sense to actually understand more about the implication of this bill in a variety of areas before it reaches the stage it's reached right now; in other words, an impact study of some form and a serious study in terms of how the implementation would go through so that groups that are charitable organizations and rely on them do not need to come here and have the confusion that obviously is in place now. Would you agree that it would have been useful if the government had taken that approach?

Mr Jarvis: As a member of this association and of the general public, there is confusion as to how the process is going to work. That is the question which is on the mind. I'm not here to speak against VLTs; I'm here to speak against how the VLT processing is going to work. I realize there will be what we call enabling bills passed after, but at this particular stage the question that's in the minds of the people is how this bill is going to affect the very people who are on the ground now. That's the answer I wanted to reply to the previous gentleman.

Mr Kormos: Mr Jarvis, you're here on behalf of, among others, the Metro Lions Club, and I suspect that you folks up here, as they do in other parts of the province, do all sorts of fund-raising for any number of commitments that the Lions Club makes regionally and provincially and nationally and internationally on a regular basis.

A lot of people have told me that in the recent past, or not-so-recent past, it has become increasingly difficult, that the cash simply isn't out there. If you're doing a lottery or a raffle it's harder to push the tickets. People don't have the same surplus cash that they did, and fund-raising has become more and more difficult, notwithstanding anything else that's happening. Is that a fair assessment?

Mr Jarvis: That is my assessment. That would be my assessment also, but the question I have asked is, where are the guidelines, where is the enabling legislation to show a comfort level to me in how I obtain those funds from charities? I don't see that yet.

Mr Kormos: Those guidelines aren't there. You're quite right. What I'm getting to, though, is that my calculation, on 20,000 slots for the population of the province of Ontario, is one slot for every 550 population approximately. That would put 240 slots into the city of Thunder Bay alone.

Mr Jarvis: That's right.

Mr Kormos: I listened to Mr Johnson, and he uses the Alberta model. A 7% return on seven to 10 of those would be around $80,000 a year. That would be the establishment's take. You're talking about hundreds of thousands -- no, millions of dollars being pumped into these slots by Thunder Bay residents and passers-through, tourists. I'm worried about the fact that we've got people out there whose pockets are pretty bare as it is. I know what it's like to have to hit people up to buy a $1 raffle ticket or make a contribution to this event or that event.

Mr Guzzo: Leadership campaigns.

Mr Kormos: No, I never did any fund-raising for that, as a matter of fact, Mr Guzzo. I didn't do any fund-raising at all.

I know what it's like to have to do that and I know how it's become increasingly difficult in tough times. I wonder what it's going to be like in a community where 240 slot machines are going to take in literally millions of dollars of what were loonies, toonies and quarters in people's pockets, things they otherwise might have spent in buying raffle tickets or making contributions. Is that a perspective on this issue?

Mr Guzzo: Tell him how many are here now. Tell him how many illegal ones are here now.

Mr Jarvis: I don't know the answer to that question. Since there have been no legal charges laid in that respect, legally I suppose the response is zero, but rest assured that there are probably 40 to 50 in the community somewhere.

But to further a discrepancy here, we have municipal -- I'm not too sure if I can go provincially on this -- legislation that permits me only to have one BOT site in the municipality, and that's as a charity, which is a very soft type of gaming.

Mr Kormos: It's on the break-opens.

Mr Jarvis: On the break-opens.

Mr Kormos: That's right, and the government is saying that because they say the market isn't out there. Isn't that the reason they give you? That's what the Ministry of Consumer and Commercial Relations says.

Mr Guzzo: That was under the old administration.

Mr Jarvis: As I say, these are only comments from a community hack. Thanks a lot.

The Chair: I wouldn't call you a hack. You obviously have spent a lot of time in volunteer work and you are to be congratulated.

Mr Jarvis: That I've heard too.

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PERSONS UNITED FOR SELF-HELP IN NORTHWESTERN ONTARIO

The Chair: Our next presenter is Persons United for Self-Help in Northwestern Ontario, PUSH, Ms Marilyn Warf. Good afternoon. You have 20 minutes for your presentation, which includes any questions. I ask you to proceed.

Ms Marilyn Warf: Thank you very much for the opportunity to address this committee. My name is Marilyn Warf and I'm the regional director.

Persons United for Self-Help in Northwestern Ontario, or PUSH Northwest, through its regional resource centre in Thunder Bay, provides information and referral, regional consultations and advocacy on disability issues, resources for persons with a disability to enable them to work towards self-empowerment, control and responsibility for decisions in their own lives, skills development and leadership training for consumers, and assistance with community development in northwestern Ontario and the Nishnawbe-Aski Nation. PUSH Northwest has a regional consumer network at the grass-roots level through the Disabled Alliance Network groups in most communities in our geographic area, which represents three quarters of the size of the province. Our organization raises 48% of its own operating dollars through various fund-raising events, the largest of which are bingo and break-open tickets in Thunder Bay and break-open tickets in Manitouwadge.

There are two areas of concern regarding the introduction of VLT gambling. The first is the loss of revenue to community-based groups and organizations from bingo and the sale of break-open tickets due to VLTs and the second is the social impact from this type of gambling.

The revenue from bingo and break-open tickets supports charities as well as a variety of community, school and athletic organizations. At the hall where we hold biweekly bingos, charities range from large provincial ones to smaller regional ones like PUSH Northwest. Non-profit organizations without charitable status include women's, men's and minor hockey, parent-teacher associations, a judo club, a speed-skating club, nordic skiing, high school basketball, a volunteer fire department and an ethnic society. In Thunder Bay there are 160 organizations that have break-open ticket licences and 100 organizations that have licences for bingo. The proceeds from bingo and break-open tickets sustain the existence of these organizations.

In provinces that have introduced VLTs there was a steady decline in the revenue generated from bingo and break-open tickets until a time when both of these types of fund-raising activities all but disappeared. This has also been the trend in the United States after the introduction of VLTs. Acknowledging the fact that there is only so much money to be spent on gaming, the introduction of more types of gambling only spreads the dollars thinner. The current system of fund-raising through bingo and break-open tickets means that organizations that do the work earn the money. Will this be the case with the provincially run VLTs?

What will be the method of selection as to which charities operate in the permanent casinos? Will the charities currently earning substantial dollars from bingo and break-open tickets be able to access this same kind of revenue from VLT proceeds? Will charities that currently do business with casinos have priority or will all charities have equal access to the permanent casinos that introduce VLTs? Will revenue ceilings and/or time limits be placed on charities at each permanent casino so that a greater number of charities can access the proceeds? What criteria will be used for the distribution of the proceeds? Where are the written criteria for this system? Will distribution be done from Toronto and be limited to those charities that are able to put forth the biggest sell job or to those charities that are older and better known? Newer charities like PUSH Northwest located in Thunder Bay and many smaller regional communities will be hard-pressed to challenge for the provincial pot of VLT money against the rest of the province. Will consumer advocacy have a profile against the Canadian Cancer Society or the Heart and Stroke Foundation of Ontario or the United Way?

We have worked long and hard for our financial stability and we are in real danger of losing everything because the provincial government is looking only at a new form of income and not at the complexities which accompany the introduction of VLTs.

The provincial and municipal governments do not fund community or school sports, recreation, entertainment, school playground equipment, services or advocacy for persons with a disability, St John Ambulance or volunteer fire departments etc to the extent necessary for their existence. The quality of life for children, adults and the community provided by these organizations will be lost with the reduction of revenue from bingo and break-open tickets after the introduction of VLTs. Many of these groups and organizations are not registered charities and will not be eligible for proceeds from VLTs. Are the MPPs prepared to vote for Bill 75 at the expense of children's hockey or soccer or a volunteer fire department?

Is this the type of negative community impact that the government is sanctioning? Why would the government support Bill 75 knowing that it will eliminate many organizations that are currently helping themselves? Is the motive of Bill 75 new money at any expense? The government does not have the right to break down the fibre of our communities by forcing organizations to close that have been financially self-sufficient. It is guaranteed that the provincial and municipal governments are not going to assume the cost of operating these services or sports teams when they can no longer generate operating funds from bingo and break-open tickets or access VLT funds.

How can we be assured that the proceeds from VLTs will be returned to the community? The Alberta government promised to return the proceeds of the VLT operation to charities and has not given any money back in the last two years. In New Brunswick, the government also promised to share the profits with charities but the only money given back to the people of the province that I could find reference to was in the form of opening expanded services for persons with gambling addictions, as well as a 1-800 help line which was staffed by addiction counsellors. This overwhelming need for addiction counselling and rehabilitation was only evident after the introduction of VLTs.

Horror stories abound in provinces that run VLTs about the loss of homes, jobs, families and lives due to the individuals' gambling debts incurred after the introduction of VLTs.

In an August 6, 1996 article in the Chronicle-Journal by the Canadian Press, Consumer Minister Norm Sterling stated, "I have qualms about all of gaming, I have qualms about the use of alcohol, I have qualms about triple X videos. You can only do so much to control the actions of your people."

How can the Ontario government be looking at introducing VLTs which are determined by the experts to be the most addictive form of gambling and called gambling's crack cocaine? At this time when the economy is faltering and unemployment is escalating, people are very vulnerable to a get-rich-quick scheme such as VLTs offer.

The government proposal to introduce VLTs at racetracks may have the least added social or community impact due to the fact that the new machines will probably be used by those who already frequent the track and not entice a new target group to this type of gambling.

Prior to introducing VLTs in 50 permanent charity casinos, there must be more examination of potential social and community-group impact and written criteria as previously mentioned. After the 50, will there be 50 more? Perhaps the introduction of VLTs in only three to five major casinos would be more appropriate. VLTs in casinos in all communities will limit the number of charities that can access funds and eliminate the non-profit groups from accessing funds in their own community.

The hospitality industry will pressure the provincial and municipal governments to adopt the widespread introduction of VLTs in licensed establishments as a means of increasing their potential for revenue. Again, this will take away most local organizations' ability to be self-sufficient through community fund-raising.

The Ontario government needs to take lessons from the provinces and states that have widespread use of VLTs. They are dealing with increased social problems, and many community groups, services and events have disappeared. The government is proposing to release an animal and they don't know what colour it is, how big it will grow, what it will eat or what its potential is for destruction.

When VLTs were introduced in licensed establishments in New Brunswick there was great concern over the fact that alcohol was being consumed in greater quantities by the gamblers. Therefore the VLTs were moved to corner stores. On one side of the VLT is an instant cash machine and on the other is the 1-800 number for counselling services for gambling addictions. Now in New Brunswick instead of a bar scene for gambling, what you commonly see is a parent or person responsible for child care gambling in the corner store while the children play on the floor. Who will determine the impact of learned behaviour on these children?

Playing bingo and purchasing break-open tickets are gambling, but the average spent over the last three years as recorded on our gambling reports is between $20 and $23 per night per player. Statistics from Gambling and Problem Gambling in Alberta, November 1994, show that "problem gamblers also spend more money on average per month gambling on VLTs and they were also more likely to have spent large amounts (eg $100 to $999) gambling in one day." The same report states that early data -- that's from June, July and August 1994 -- from calls received on the province-wide problem gambling help line indicate that 60% of the calls related to a concern with VLTs. Considering that VLTs are a relatively new form of gambling, these statistics are alarming.

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Has the government done its homework by looking at other provinces and states that have introduced VLTs? The money spent on VLTs is not from those who are wealthy and are contributing voluntary dollars through gambling. Statistics from the Alberta Alcohol and Drug Abuse Commission, November 1994, profile a typical person who gambles on VLTs: somewhat more likely to be male, more likely to be under the age of 25, more likely to be single, somewhat more likely to have a yearly income of less than $15,000, significantly more likely to have a high school education or less and more likely to be unemployed. Is this really the target group that you want contributing to this new revenue scheme? We are not our brother's keeper, but it would be totally irresponsible of the government to put the tools of destruction into people's hands in the name of deficit reduction.

Has the government taken the time to evaluate the negative social impact from the introduction of VLTs? Does the government really anticipate that the increased revenue will offset the cost of related health and social issues? It seems as though the government is setting out to make money but has not fully developed a business plan.

Our recommendations are that the full impact to the community groups as well as the social impact be investigated thoroughly before any introduction of VLTs is made; that provincial policy and strategy be developed so that all groups and organizations have an equal opportunity to earn operating dollars through all types of gaming; that the government slow its headlong rush into the introduction of VLTs until the first two recommendations are completed.

We realize that the government is very anxious to create new means of generating revenue to offset the provincial deficit, but the hasty introduction of VLTs without weighing the complex repercussions associated with this type of gambling may leave this government a legacy it will not be proud of.

Thank you for the opportunity to present our perspective.

The Chair: The opposition.

Mr Gravelle: Good afternoon, Marilyn. Thank you very much for your truly excellent brief, because I think it touches on a lot of issues that have been mentioned by previous groups and, in the specific sense, the concern by various organizations and non-profit groups, particularly drawing reference to the non-profit groups that don't have charitable status, and having absolutely no sense as to what relationship they'll have in terms of being part of the benefits is an important point to make. I know you can probably go on and on in terms of all the groups. I think we're all aware of that in every community in Ontario, but certainly in Thunder Bay as well.

It seems to me that your recommendations that you make at the end make a great deal of sense. The government has clearly gone ahead with the desire that they want to have this go through so they can put themselves in a position to gather the revenue without clearly studying the full impact of what it's going to mean, certainly in terms of the social impact and the consequences of that, and as you point out in your brief as well, the fact that charitable organizations and various groups are very concerned that they're going to be left out in the cold, which could be a devastating situation for all of them. So I just want to tell you that I agree with that and ask you to even amplify on it in any way you can in terms of what the government should be doing.

Ms Warf: There are two things that I've heard during the presentations and one is the acknowledgement that there are illegal VLTs out there. "Oh, well, let's legalize VLTs and it will clean up the problem." Why don't we clean up the illegal VLTs out there and take the time to properly plan? If I presented a plan to any funder or development corporation and I didn't have a proper business plan, nobody would fund it. The government needs to take the time, do the research, find out what the impact is for the introduction of things like VLTs.

It is a monster and you don't even know what you've got. You can't implement something like that and say, "Let's put the guidelines in there after it's out there growing." You don't know what you've got out there growing. Take the time to find out what you're planning to introduce and develop a very comprehensive plan around the introduction of it. Introduce it in the racetracks like you've proposed, fine; introduce it in your major casinos like Windsor and Rama, fine, if that's what you want to do. But don't destroy communities and community organizations because you don't know what's going to happen after it's introduced. It's going to be too late.

The Chair: Thank you, Mr Gravelle. If we may move on to Mr Kormos. I'm sorry to interrupt you.

Mr Kormos: Ms Warf, again, I think you raise important issues and, quite frankly, I'm sure members of the opposition will be referring to this when we debate this further in committee and in the House. I do want to tell you a true story, and in the context of what's happening right now it might be of more interest. That was back, as you recall, in the spring of 1995, when an election was clearly in the air. Niagara Falls was anxious, because it still hadn't been made a casino city. Windsor had, and Niagara Falls was anxious. The mayor of Niagara Falls, knowing, as most people did, that the New Democrats weren't going to be re-elected, called Lyn McLeod and asked Lyn McLeod -- and this is true -- if she were committed to a casino in Niagara Falls or Niagara region. Lyn McLeod said, "Quite frankly, yes." The mayor of Niagara Falls then called Mike Harris, the leader of the Conservative Party, and similarly canvassed Mike Harris. Mike Harris said no, that his wasn't going to be that type of government. Wayne Thomson --

Mr Young: No, he said if there was a referendum.

Mr Kormos: -- in one of the most regrettable occasions in his life --

Ms Warf: I'm sorry, I can't hear Mr Kormos.

Mr Kormos: Wayne Thomson, the mayor, in one of the most regrettable occasions of his life, said, "I don't care what you say, because you're not going to be the next Premier anyway." Wayne Thomson clearly spoke to Mike Harris in those terms and, as I say, regretted it come June 1996. As it was, Mike Harris clearly forgave him and announced the casino in Niagara Falls.

Here you have Mike Harris in May 1993 saying in the Legislature, "As Donald Trump says, `Gaming doesn't come cheap.' I have to agree with a lot of the critics on that. It 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." That's May 1993, and here we are a few months after May in 1996 and we not only have the casinos -- I acknowledge, they were established by the former government and expanded upon by this government, but we've got 20,000 slot machines in every part of Ontario but casinos. That's what Bill 75 stands for.

The Chair: Thank you very much, Mr Kormos. We have two minutes for Mr Hudak and Mr Ford.

Mr Douglas B. Ford (Etobicoke-Humber): Mrs Warf, here's a little memorandum here, source, the LaFleur World Gambling Abstract, third edition, gambling revenues, Alberta:

"Although it is always difficult to determine the cause and effect, it would appear that the decline in charitable pull-tab revenues which began in 1991 closely mirrors the dramatic increase in revenues from charitable casino nights and has little to do with the introduction of VLTs, which did not occur until August 1992, eight months after the major decline. A decline in pull-tabs mirrors a dramatic rise in charity casinos."

These are facts. So to clarify some of the misunderstanding that goes on --

Ms Warf: I think you could find facts that would support what I'm saying and you can find facts that would refute what I'm saying. What I'm asking you to do is take all of those facts --

Mr Ford: This is a study of actual facts of revenues coming in, dollars coming in; dollars coming out. These are facts. You can't change them.

Ms Warf: It still doesn't eliminate the fact that you're going to kill small sports organizations and hockey clubs and stuff, because we're still only talking about charities able to access it. Is there a way that you can look at introducing these VLTs in a manner which limits them somehow in their scope so that you still can have access to community groups to be self-sufficient and buy the hockey uniforms and the soccer uniforms? You don't want to do one thing at the expense of something that's a community-based enrichment-quality-of-life issue like kids' hockey teams and sports clubs. That just doesn't make sense to me as a mother or a member of this community.

Mr Ford: This government is not debasing those facts.

Ms Warf: But it doesn't look like you've done your homework. I think you're running too fast into putting them in and then saying: "We'll look at what's going to happen. We'll see the fallout after."

Mr Ford: We're not even at that stage yet.

The Chair: Thank you, Mr Ford. I'm sorry, Mr Hudak, we do not have -- Ms Warf, thank you very much for your presentation here today.

Mr Klees: Mr Chairman, I wonder if in the interests of clarification I might just make a very brief statement, because I think it is important that people who are --

The Chair: There is no provision in the subcommittee direction to me for statements.

Mr Klees: Could I have unanimous consent of this committee, then --

The Chair: That's a different matter.

Mr Klees: -- that I might take about 60 seconds to make a clarification?

The Chair: Is there any objection to that suggestion? Sixty seconds.

Mr Kormos: The godfather needs a spokesperson. Let the spokesperson for the don speak.

The Chair: Mr Klees, you have unanimous consent.

Mr Klees: Thank you to my colleagues. I think it's important for those people who have come and taken the time to be before this committee that it's understood that the government has absolutely no intention of implementing VLTs until the guidelines are in place, until all of the research has been done. What this committee is doing is simply considering Bill 75, which provides enabling legislation. The implementation is not yet scheduled and will not be scheduled until all of the facts that -- for example, the previous witness brought forward and asked us to consider. I think it's important that the people of this province are under no misconceptions on that point.

Mr Kormos: You've already requested bids on the slots.

1420

THUNDER BAY AND DISTRICT HOSPITALITY ASSOCIATION

The Chair: Our next presenter is the Thunder Bay and District Hospitality Association, Mr Mike Meady.

Mr Mike Meady: Howdy.

The Chair: Hello there. You have 20 minutes, Mr Meady, if you'd proceed.

Mr Meady: Mr Chairman, members of the committee, my name is Mike Meady. I'm the past president of the Thunder Bay and District Hospitality Association.

Let me begin by congratulating the government for its commitment to introduce video lottery terminals in the province and specifically to our industry. It's interesting to note the misinformation being put forth by some to discredit the government on this issue and as a means to promote their own interests.

Ontario's hospitality industry is one of the province's larger and important industries. Unfortunately, the recession has hit us, with sales down 20% and no real turnaround in sight.

Collectively we directly employ 232,000 people, with another 85,000 employees indirectly, for a total of 357,000. That represents a decrease of more than 90,000 from pre-recession days. Our total sales are $10 billion annually, which equates to 3.8% of the province's GDP. We are also an important component of Ontario's tourism sector, which accounts for more than $3 billion to Ontario annually, and a major purchaser of Ontario's agricultural products and a primary source of off-farm income in rural Ontario.

As I indicated earlier, the recession has hit the industry very hard and shows no signs of easing up. Bankruptcies continue very high and continue to threaten jobs. Since 1992 there have been more than 1,400. Many businesses continue to struggle to survive, costs continue to escalate, with revenues still on the decline. However, on May 8 the government gave them all a hope for a better day ahead: video lottery terminals.

I'm here today not only to ask support for the commitment made by the Minister of Finance on May 8, but to also ask the government to commence implementation as soon as possible. I'm here today to put forward the facts on the information on VLTs, and not misinformation that I have seen and heard recently.

First off, the government really isn't introducing VLTs into the province; they're already here. In fact, just outside of this hotel property you could drive five minutes off the main road in either direction and I could clearly show you some illegal grey machines. That's just this community alone. According to Ontario Provincial Police estimates, the numbers range from a low of 15,000 to 20,000. These illegal grey machines are costing the government approximately $400 million annually in new non-tax revenue. Furthermore, by ignoring their presence, some businesses are forced to operate illegally just to try and remain competitive.

VLTs are an acceptable form of adult entertainment. They are not an insidious gaming device, nor more addictive than any other form of gaming available in Ontario now, as some of you will have me believe. Moreover, two thirds of Ontarians want them in adult licensed bars and restaurants, according to surveys.

Studies conducted by Brandon University, which I believe you have copies of now, indicate that video lottery players see video gaming as part of an evening's entertainment. It is a planned part of going out and hence a part of their budget planning process. VLT players do so one to two times per week and spend on average about $10. Dr Barbara Gfellner from Brandon University, who conducted the study, found that most people who played VLTs did so to socialize, not to gamble, and that it is viewed as a recreational activity. I draw your attention to the excerpts, as I said, that were handed out earlier.

I would also like to commend the government on its forethought of dedicating funds towards development of programs for those with gaming problems. There are in the marketplace today many forms of gaming. VLTs are, it should be noted, according to research, not any more addictive than any other forms, than horse racing, bingos or casinos. The data indicated that a small component of the population is susceptible to compulsive gaming. Compulsive gambling, like compulsive drinking, is not a cumulative problem which grows with the introduction of new brands or types. Gamblers transfer their attention from one form of gaming to another. For example, horse racing revenues have declined substantially from the days when they were the only legal game in town.

Tibor Barsony, the executive director of the Canadian Foundation on Compulsive Gambling, has said: "Prohibition is not the answer. Education and treatment are."

Dr Durand Jacobs, vice-president of the US National Council on Problem Gambling, said when he was here in Canada: "The majority of the population has no problem with gambling. For most folks, gambling is just fun and games, but for a small minority who have a problem it can be devastating, and we have to develop programs to help them."

It is interesting to note that research shows that less than 2% of the population, as has been stated earlier, exhibits the potential to become problem compulsive gamblers. This compares to 6% for alcohol use. However, we recognize that for some, no matter what the product, a problem can develop, and we commend the government in recognizing the fact and moving forward on it.

Despite what you may have heard or been led to believe, the introduction of VLTs in other provinces has proven to be a job creator, a major stimulus to the industry. Only in Nova Scotia, where originally they were allowed in corner stores -- where, I may add, the grey machines locally five minutes in either direction are located -- I lost my point. Now that they are only in restricted locations, as per Bill 75, we are not aware of any problems, contrary to what some may want you to believe. I also should point out that VLTs and the casinos in Nova Scotia are coexisting quite well. A study conducted by Professor Marfels at Dalhousie has concluded no negative impacts.

There are two different audiences: one, destination, the other, a drop-in. Based on the experience in those other provinces, VLTs will create thousands of new jobs in Ontario's hospitality industry, as well as providing a new source of funds for the industry and the government.

In Manitoba, for example, the introduction of VLTs resulted in the creation of almost one full-time and one part-time job per business location. Overlay those numbers into Ontario and you're looking at well over 10,000 jobs. These, it should be noted, are direct jobs.

Prior to the introduction of VLTs in Manitoba, the Manitoba Hotel Association reported that its members were going bankrupt at an average rate of 14 per year; with the introduction of VLTs, that number has dropped to two per year, a drop of over 85%. A recent survey conducted by the association revealed that 65% of its members credited VLTs as playing a crucial role in averting financial disaster. Another positive spinoff is that the local economy, as it relates to the purchase of capital improvements, construction projects and the purchase of goods and services relative to the operation of VLTs, resulted in a boost to the local economy. Each operator spent, on average, $20,000 to install these machines. That figure translates well into $100 million in capital expenditures all across this province.

In terms of an implementation schedule, we urge and recommend that the government move forward on getting the hospitality industry on line as soon as possible. The minister said on May 8 in the budget that VLTs were being introduced to help stimulate the hospitality industry. This measure is clearly intended to help the industry, but any undue delay could in fact exacerbate the shift in business that will accrue to those who will receive the VLTs in early implementation schedule. This will make an already serious economic situation even more urgent. It will also delay the fight against the illegal grey machine market, including bringing the $400 million-plus of new non-tax revenue into the government's accounts.

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VLTs are important to our industry for a number of reasons. Obviously, they provide an important new source of revenue for business. The proposed 10% commission fee is low in comparison to other jurisdictions, averaging 16% to 30%, but one we can live with. Because VLTs are viewed in the public as a desirable form of entertainment, they increase the traffic flow, they bring in customers. Customers eat and drink, which creates more economic activity. The byproduct of this new activity is our agricultural sector, as our industry is one of the largest purchasers of Ontario farm products, as well as off-farm employment.

It's also important to comment on the supposed impact on charitable gaming. Contrary to what you might have been told, VLTs have not had a negative impact on charitable gaming. For example, in Alberta the drop in charitable gaming occurred, as was previously mentioned, with the introduction of casinos, over one and one half years before VLTs were introduced into that province. The numbers in every province indicate no negative impact.

VLTs will help save our industry. I might note that our industry has a wonderful image of looking very prestigious and very rich to the public eye. As you walk into most of the hotels or restaurants or well-established places, you see gorgeous, well-polished lobbies and grand chandeliers, as we have in this room today, but if you look behind the scenes at the realistic numbers of the bankruptcies and the financing that's going on with banks -- since 1983, as was quoted by the president of the Hotel Association of Canada, 85% of properties opened are either being run by the banks now or are in full bankruptcy. But we appear to look very rich, that we have this little vault of money that we just roll around in afterwards behind the scenes, but really it's not the case.

This is the clear loud voice of myself and my peers from all across the province. The facts support this belief. I and my peers are licensed as proven, responsible professionals, trained thoroughly and familiar with all the results from the operations and activities for adults, including the liability. A healthier hospitality sector, through VLTs, means a healthier local economy. A strong, vibrant business reinvests in business, hires more people, purchases more goods and services, sponsors local charitable and sporting events and pays taxes.

Before closing, I'd like to comment on a number of other aspects contained in Bill 75. Combining the Liquor Licence Board of Ontario and the Ontario Gaming Commission into the Alcohol and Gaming Commission of Ontario appears to be a logical move. Combining their operations should not only provide efficiencies but it should also mean less confusion arising over the regulatory enforcement side once the hospitality industry begins to operate VLTs. It should assist the government in dealing with illegal grey machines.

I would also like to ensure that bad operators are not allowed the privilege of a licence. The provision to revoke a licence to a problem location on the outlined grounds of prostitution, drugs, illegal gaming or physical threats to persons is well-meaning and good, but before any final action is taken, it should require a public hearing to protect the rights of the owners. Interpretation is subjective, and we need to ensure that fairness to all parties is maintained.

We commend the government for taking this initiative. It will stimulate our industry without government funding. It will -- and I truly believe this -- eradicate at least the majority of the illegal machines from our province and bring untaxed revenues into the mainstream economy and, in the process, help the government reduce the deficit. Thank you.

Mr Kormos: I appreciate your comments. The Ontario hospitality association has addressed this in Toronto, with much of the same text, on a couple of occasions. That's fair enough; that happens in every one of these tours. I appreciate the interest of the hospitality association. I simply want you to consider that, among others, Dr Howard Schaffer of Harvard Medical School, an expert on gambling, disputes that legalization of slots would attract those who now gamble illegally. Dr Schaffer says that not only would there be a substantial increase in gambling, but many would also probably return to illegal gambling eventually because the payoffs are always higher.

The Ontario Provincial Police anti-rackets squad has disputed this government's claim that the legalization of slots is going to eliminate the illegal ones, because the Ontario Provincial Police anti-rackets squad says that what you need is police focusing on these illegal slots. The fact is that offtrack betting hasn't eliminated bookmakers. The fact is that increasingly liberal liquor licence laws haven't eliminated booze cans or after-hours joints or bootleggers. An illegal slot owner is getting all of the proceeds. The illegal slot owner has a huge incentive to keep it illegal because he doesn't have to share it with the government, with the owner of the machine etc.

Mr Ron Johnson: I want to thank you for your presentation. We've all of us sat on a number of committees, and I can tell you that's it's not very often that we have what appears to be, on the surface anyway on one side, such a consistent message from the local community. We've heard it from John Essa of East Side Mario's, Casey's Grillhouse, yourself. We've also heard it from Klondike Casino, Wayland Hotel and a number of others that are saying the same thing, that you're crying out for some sort of assistance as small businessmen and businesswomen.

I've got to tell you Mr Gravelle here is in a unique position right now. We're not really sure where the Liberals on this bill. We do know, though, that they voted against it on second reading. We know for sure where Mr Kormos stands. But we're hearing the small business community here hollering out for some help, and Mr Gravelle's in a unique position to take the leadership in his caucus and help support this bill, because I know that it means a great deal to the business community here in this town and will have a significant impact as millions of dollars flow south of the border. He's got a chance to help stop that. I know you'll be watching closely when we go to third reading.

Mr Kennedy: I just want to ask you about two aspects. The hospitality industry is synonymous with taking some kind of concern in the wellbeing of the community; many of them are family enterprises. I'm wondering how your industry and how you particularly here in Thunder Bay look at the prospect for increased criminality that is associated with these machines. I know there's debating things, but the police in Metropolitan Toronto -- the staff inspector in charge of the morality squad says that these are a nightmare, that these will lead to increased crime. Because that's obviously an association and the kind of thing that would detract from some of the other elements of the hospitality industry, isn't that a concern?

Secondly, the money that goes into VLTs, the studies that exist in the States, in South Dakota where they've existed for the longest time, say that it comes out of other parts of the hospitality industry in large measure, that the discretionary dollars don't materialize from nowhere. These actually weaken certain parts of the hospitality industry because it's the discretionary dollar spent on dining, on others that are going in there, and then of course it's tragically and unfortunately money that's spent on basic needs.

I wonder how those two concerns sit, because obviously this is a difficult thing. It looks like it could be beneficial from the straight dollar standpoint, but structurally and overall, as hospitality members are a part of the community and concerned about the quality of life for their community, how do they look at those two things?

The Chair: Thank you, Mr Kennedy. I'm sorry.

Mr Meady: Can I not --

The Chair: No, you cannot. You used your time by making your presentation, you see, and we only have 20 minutes per presentation. It's very important that we restrict it to be fair. We can't favour one over the other, Mr Meady. I would have liked to hear the answer to the question myself. We just don't have time. I thank you very much for attending today.

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CAMBRIAN PRESBYTERY, UNITED CHURCH OF CANADA

The Chair: Now I welcome Mrs Eleanor McLean, on behalf of the United Church of Canada, Cambrian Presbytery.

Mrs Eleanor McLean: Thank you for this opportunity to address this committee regarding the proposed expansion of video lottery terminals in Ontario from their present location in the established casinos of Windsor and Rama. I speak today in opposition to the expansion on behalf of Cambrian Presbytery, the United Church of Canada. Cambrian Presbytery is an area stretching from the Manitoba border on the west to Marathon in the east, including the northern areas of Red Lake, and to Fort Frances in the south. In this district there are 98 pastoral charges of the United Church of Canada.

In 1993, Cambrian Presbytery established a task force on gambling to address growing concerns about the increasing incidence of gambling and gambling addiction in our society. The extensive research done by that committee is documented in the Task Force on Gambling Report which is attached to your copy of my presentation today. As chair of that committee, I have read many papers, articles and books on the subject of gambling, and I have viewed two videos which I encourage you to view as well in this information-gathering process. The titles of those videos are listed in the resources for education and awareness sheet also attached to your copy of this presentation.

There are so many aspects to the problems arising from gambling which could be addressed. I have chosen to speak today primarily about the inappropriate action of government involvement in the promotion of gambling as a source of revenue.

British Columbia is the only province in Canada which does not have video lottery terminals at this time. In a report from the British Columbia Conference of the United Church of Canada is this statement:

"The United Church of Canada recognizes that gambling presents an almost irresistible avenue for governments seeking to stimulate economic development (especially in the form of jobs) and to generate increased taxation revenues.

"_et, we believe that the lure to expand gambling as a strategy for economic development must be resisted because:

"It is based on incorrect and incomplete evidence and projections;

"Decisions taken are not reversible; and

"Government becomes entrapped as it becomes increasingly dependent on involvement in activities that reduce the quality of individual and community life -- the very antithesis of its mandate. (This is known in economic terms as moral hazard -- a policy that encourages the event it was meant to protect against.)

"Addiction to gambling affects the employers, friends and family of the individual. Indeed, like drug or alcohol addiction, addiction to gambling can affect entire communities.

"Looking at the bigger picture, legalized gambling exploits human resources in the same destructive way that strip mining, forestry clear-cutting and overfishing can destroy the very ecosystem on which they depend.

"Gambling is not a sustainable economic activity. It erodes and weakens those on which it depends for its success -- the players, the employees, and the government."

The addictive nature of gambling may apply as much to governments as it does to individuals. Indeed, it has been said that governments are becoming the greatest addicts to this way of raising revenues.

In a paper presented to the Desjardin commission by the Conference of Manitoba and Northwestern Ontario of the United Church of Canada, of which Cambrian Presbytery is a part, the following statement is made:

"It is not right that governments should encourage gambling as a form of taxation since it is known that this activity is most addictive to those who can least afford to pay.

"Part of the tragedy of state involvement in and encouragement of gambling is the sign that even our government seems to have given up on the virtues of working to achieve your dreams.

"Part of the tragedy is that the poor, who have the greatest desire to escape from their current situation, are the easiest targets for messages which hold out hope based on luck rather than perseverance.

"Part of the tragedy is that the uneducated, who are less likely to be aware that the odds are heavily stacked so that the government always wins and the average gambler loses, are once again more vulnerable and more likely than the educated to be hurt.

"Part of the tragedy is that in our reliance on `the big prize' we are indicating a lack of hope in an equitable society.

"Part of the tragedy is that in our promotion of the `big prize' attitude we encourage the concept that in society some are winners and some are losers.

"These losses hurt us as healthy, sharing and caring communities."

The second point I wish to make today is that we can learn from the experiences of other states and provinces and we can act to prevent our government from making the same mistakes. Our neighbour to the west, the province of Manitoba, has extended video lottery terminals throughout the cities and towns of the province, not only into the casinos in Winnipeg, but also into bars and restaurants. In a series of articles published in the Winnipeg Free Press, April 16 and 17, 1995, video lottery terminals are blamed for numerous negative results, especially in small communities. Local charities are losing to government gambling operations. People are putting their money into VLTs rather than into community events.

In Minnesota, to the south of us, gambling has been a part of their society for a much longer time. Extensive research is being done by the Minnesota Council on Compulsive Gambling. This organization is recognized internationally for its up-to-date information about problem and compulsive gamblers in American society. In a publication entitled Public Policy Think Tank Report, published by the Minnesota Council on Compulsive Gambling, one of the potential threats identified which exists today in Minnesota is that increased access to gambling will indeed lead to more problems with compulsive gambling. Also identified as a weakness in the present situation is the addiction of the state government itself to gambling, while state officials remain in denial of the problems associated with it.

A recent article in the Duluth News Tribune, entitled "Many Are Losers as America Learns Gambling Doesn't Pay," states:

"The advertising that entices Americans to spend billions of dollars each year is deceitful and corrosive. The fact that it comes from the state, which ought to encourage people's strengths, not prey on their weaknesses, makes it worse. The state should not even allow gambling, much less conduct it."

Finally, I will touch briefly upon the particularly addictive nature of video lottery terminals. These machines give the player the illusion of being able to control the outcome of the game with skill. During the game there are many near wins which create an excitement in the player. This arousal, along with the illusion of skilful control, motivates the player to keep on playing. Some sources indicate that VLTs are especially attractive to women and are particularly addictive to youth. Researchers at the Harvard Medical School reviewed data from American and Canadian studies and concluded that between 10% and 14% of North American adolescents risk developing gambling problems. Even more chilling is that adolescents are at least twice as likely as their parents to become pathological gamblers.

The Thunder Bay office of the Addiction Research Foundation reports receiving an increasing number of calls related to gambling problems. Increased numbers of gambling addictions mean increased health care requirements to address the rehabilitation process. There are presently no trained gambling addiction counsellors in northwestern Ontario and there have been no announcements made about plans for funding these resources at the time of writing this report three weeks ago.

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In conclusion, we have a choice at this time to prevent the hazards that have plagued other states and provinces with the introduction of video lottery terminals. Why is the government of Ontario considering expansion of the number of VLTs? The Globe and Mail, June 14, 1996, reports: "The terminals will be opened first at racetracks and charity gaming halls. After evaluating the experience at these locations, the government plans to allow them in bars and restaurants."

Cambrian Presbytery of the United Church of Canada opposes this proposed escalation of a form of gambling which will be so destructive to the wellbeing of Ontarians, the very people the government is mandated to protect.

The Chair: Thank you very much, Mrs McLean. We have two minutes per caucus.

Mr Hudak: I'll be very quick. I wanted to thank Mrs McLean for her very sincere presentation, her objective observations and the fact that you obviously took a lot of time, you and your group, preparing this. There are some principles upon which I strongly agree with you, and I think members of this committee as well, in terms of the importance of community and encouraging individuals' self-help and independence. I think that's what attracted me to the Conservative Party, a view that the more government becomes involved in society, the weaker the local community bonds become. It's an issue we have to wrestle with at all times in government: what is going to improve the common weal and what is not.

Certainly so far in Thunder Bay today we've heard a lot of things about bringing back into the community the $40 million that goes across into Minnesota -- the argument would be more jobs and less despair -- and bringing some of that money to the charities to increase their good works and therefore enhance the common weal; at the same time, to set aside funds so we can hire some addiction counsellors, that 2% of the revenue we're guaranteeing; and finally, to take a bite out of organized crime, which is running the machines currently.

The argument becomes, do you do a prohibition on all types of gambling, or is a better way to improve the quality of life in Thunder Bay, to look at video lottery terminals responsibly? A lot of the issues, as you've heard from the committee today, we're open to in terms of where they should go and what locations. I agree completely, coming from a community very much like Thunder Bay in terms of the good works of the charities, that we need to reinforce the community bonds and make sure the community charities will have a great deal of control in terms of money coming to them and what they choose to do with it.

I would ask you if you would take the time with your group to make suggestions. If the government does decide to go ahead with video lottery terminals, what is the best way of promoting the common welfare for Thunder Bay? How do we reinforce the community bonds and what mechanism would ensure that the funds are supporting the kind of works you and I both want to see in Thunder Bay?

Mrs McLean: I believe your question is, if video lottery terminals are introduced into Thunder Bay, what would I like to see as precautionary measures. I would like to see a percentage greatly increased from 2% to address the problems. We're not just talking about treating one individual with a compulsive gambling problem; we're talking about dealing with a family situation where the mortgage money and the food money have been gambled away, so we're talking about the destruction of family life. We need way more than 2% of these proceeds to address all the spinoff problems that are going to occur if VLTs are introduced.

I'd like to pick up on another --

The Chair: Sorry, Mrs McLean. We're going to have to move on to the next caucus. You understand.

Mr Kennedy: I have to comment on the interest opposite in the common weal of Thunder Bay, coming from the government that's taken away hospital beds wantonly and not listened to this community and, further, that has put out requests for proposals already to install some of this. Our whole hearings are couched in some very relative interest on the part of this government in the common weal suggested opposite.

I'm very interested in what you said about a moral hazard, about a line which government either should not cross or at least should very much consider the impact of what it's doing. If you could, with the kind of consideration your committee has given previously or currently, talk about what kind of increased moral hazard the electronic slot machine revolution this government wants to do could itself represent, do you see it as a major step or just as a minor continuation of the gambling policy?

Mrs McLean: I do see it as a major step crossing the line of moral hazard, because it represents a step taken by government which will be detrimental to our society. As I said, the mandate of government is to protect the members of the community and to enhance their lifestyle, not to detract from it. If we're talking about common sense, as that government consistently speaks about, it is only common sense not to introduce video lottery terminals, which will be so destructive, particularly to youth and to the women who are the mothers of our children.

Mr Kennedy: Why do you think this government is going ahead then and is going to do it?

Mrs McLean: I think it's greed. They need the money. I think it's going ahead without considering the studies that have been done in other areas of North America, particularly in the United States and in the other provinces that have had very negative results and are wanting, in some cases, such as Manitoba, to withdraw the VLTs from small communities. Why are they considering making the same mistakes? Why do we make the same mistakes over and over again? We can surely learn from what has happened in other provinces in Canada.

Mr Kormos: Mrs McLean, I read your material when you first allowed it to be distributed and I read it again a second time. You raise points that, I have to tell you, I'm entirely in agreement with. What I find sad is that I think it illustrates the corrupting impact of these incredibly powerful monetary forces like gambling. What we've had is an industry which has some very powerful figures behind it. It's American-based; no two ways about it. There's a lot of money involved, not just millions, billions, at the end of the day.

My cousin came up from Mobile, Alabama, visiting a couple of weeks ago. I took her over the Burlington Skyway in the Hamilton area, down in southern Ontario, and she looked at those cars going across, she said, "By God, if I had a buck for every car that passed there, I'd be a millionaire." I said, "Then why don't you buy a slot machine?" In effect what's happening is that people are having a buck taken from each of them -- nothing in return. They're being told it's entertainment. It's like the guy who hit his hand with the hammer, and people said, "Why do you do it?" He said, "Because it feels so good when I stop."

Mrs McLean: I was in conversation with Mr Don Ward of the Addictions Foundation of Manitoba and I asked him last January what effect the video lottery terminals and the casinos in Winnipeg were having on the cross-border gambling. He said that no formal studies had been done but that it was obvious that the bus tours were continuing. They were not losing business to their cross-border gambling right across the border in North Dakota.

As he and I talked, we realized there is a certain attraction to an element in our population who look upon gambling as a day out of town, to get on a bus and go with their group across the border. He said that in Manitoba that business has not been stemmed, and I don't anticipate that that business will stop, Happy Time Tours and other groups going in free busloads across to Grand Portage. Some people just like getting on a bus and going somewhere, and that's what they're going to continue to do.

The Chair: Thank you very much, Mrs McLean, for your report, and thank you to the task force on our behalf.

PRESBYTERY OF SUPERIOR, PRESBYTERIAN CHURCH IN CANADA

The Chair: Our next presenter will be the Presbytery of Superior, Presbyterian Church in Canada, Reverend Milton Fraser. You have received a written brief from Reverend Fraser. Welcome.

Rev Milton Fraser: Thank you. With me this afternoon is Reverend Jim Patterson as well, who's a member of our presbytery. Our presbytery has congregations in Atikokan, Fort Frances, Geraldton and congregations here in Thunder Bay.

Thank you for giving our presbytery the opportunity to be heard this afternoon. To begin with, we acknowledge with concern the proliferation of gambling in our society. Charity casinos, lottery tickets and pull-tab tickets are everywhere. They give people a remarkably faint hope that one day they might strike it rich.

Historically, our denomination, the Presbyterian Church in Canada, has had grave concerns over gambling and lotteries. The General Assembly of the church has approved statements in 1954, 1976 and 1990. In 1954, the General Assembly stated:

"Gambling discourages thrift and encourages materialism. It exploits philanthropy and debases charity. It tends to replace trust in providence by dependence on chance. It dulls social responsibility and destroys domestic peace. It prevents us from being faithful stewards of Jesus Christ in the use of our time, ability and money. We are therefore unalterably opposed to gambling, whether it is carried on under governmental or religious or other auspices."

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Originally, the province operated lotteries to support locally based cultural and sporting events and not for essential services. Even under such limited conditions, the root sickness and the debilitating effects of gambling on families was more than evident. The proposed increase in readily available means of gambling will not remedy any already damaging component in our society.

We have some serious questions to ask: Is the government seriously urging our citizens to be less diligent in work, to spend less time with their families and to squander more of their income on gambling rather than in the consumer economy sector? Is the government serious about funding its operations and about caring for its less fortunate citizens by increasingly depending on vices? Do the ends really justify the means?

We recognize that we are being asked to address not gambling in general but whether VLTs should be placed by the government for its citizens to use. Should be the government be so ill-advised as to pass this legislation, we have some serious reservations about the effects these machines will likely have.

Does the government foresee who will be responsible for ensuring the counselling and monitoring of problem gamblers? Although a small percentage of the take is designated to be used for addicts, who will oversee this process and what if the amount set aside does not cover the actual needs of an addicted population?

Is it wise to increase the financial drain already being experienced by the families of those people already patronizing drinking establishments? Is it wise to provide further opportunities for financial loss to families in the middle and lower classes of our province? It is unlikely that the majority of the money realized from VLTs will come from the pockets of wealthy Ontarians.

We note that the focus of protection for the public for VLTs is an age restriction. In our society, reaching adulthood is marked by the participation in activities and purchases of products which are injurious to physical and emotional health, for example, the purchase of tobacco and the consumption of alcohol. Are we now to add to the list the use of VLTs? It appears from a recent newspaper article that the plan is for VLTs, if successful in gaming halls and racetracks, to be placed in bars and other licensed establishments. How healthy is it for our society when we mix alcohol and gaming? Are double addicts somehow better?

The age-of-19 limitation does not address the statistics of addictive gambling. These statistics state that addicts tend to start young, and the most serious gambling problem categories tend to be males and an average of 30 years old. Does the government envision the serious consequences of enabling a generation of 19-year-olds to get started on the road to wastefulness, idleness and possibly addiction?

Material from the Addiction Research Foundation shows that 85% of Manitoba residents who seek treatment for compulsive gambling report problems with VLTs.

The age limit certainly protects children from spending lunch money but not university students from spending book money or fathers and mothers from spending grocery money. In a province where jobs are still very scarce and welfare funds are becoming very scarce indeed, is the intended legislation wise?

Members of the standing committee, we are concerned and we trust that you are as aware as we are that most of the people who already gamble can ill afford to do so. We trust also that you are familiar with the maxim, "The ends do not justify the means." Is the government really serious in thinking that the proposed legislation will improve our province? Thank you for giving us this time.

The Vice-Chair: And thank you for the presentation. We are now going to take about three minutes per caucus for questions, starting with the Liberal caucus.

Mr Ramsay: Thank you very much for your presentation. You ask a series of very poignant questions in your presentation, and I think they really need to be asked. I want to ask you one too, since we have a little time. The government will not refute the fact that there are some people vulnerable to gambling, and in fact they're going to create a fund; a certain percentage is going to come from this. You've stated that.

I just wanted to ask you why any government would proceed with any sort of initiative that they know will put some -- I'd bet a small percentage, but some percentage of the population at risk? Why would you go ahead, knowing -- and nobody refutes this -- that you are putting some people at risk?

Rev Jim Patterson: Probably it's a philosophical oversight; that is, when you begin to create a program, you have to have a solid philosophical base that's based on helping the people or bettering the province. In this case, it simply looks like it's a ploy to gain more tax dollars. There are other schemes that could be used. We could legalize prostitution, for example, and that would bring in dollars, but the government wisely hasn't done that yet.

Mr Ramsay: Yet.

Mr Patterson: I hope they won't do this one either.

Mr Crozier: You mentioned, sirs, Manitoba in your presentation, and you alluded to the parents spending grocery money. It was disturbing to me, as reported in the newspaper recently, that more per capita is spent on gambling in the province of Ontario than on groceries. Do you think that says something about society today and gambling?

Mr Fraser: For sure. An article in this morning's paper here in Thunder Bay talks about Casino Rama and how parents left their children in the parking lots to spend the day while they went inside and gambled. That really spoke to me this morning as I opened up the paper, of parents' wisdom in caring for their children while they had some fun and entertainment with the gambling.

Mr Crozier: And not everybody does that, a very small number, but that article bothered me as well. We want to create an environment, we say, government -- and I don't think there's any disagreement on this -- where our province can grow and prosper; government wants to get out of the way so that environment can be created. But these machines will go into bars and restaurants if they get started into racetracks and casinos because the pressure will be immense on those people over there to allow that, and 70% of what's taken in will be kept by those over there who have said in the past that government can't spend money as well as private individuals. Like you, I can't quite understand the objective of all this except that it's revenue for government because it needs the money.

Mr Kormos: I'd like to follow up on some of the discussion. I appreciate the analogy to prostitution. I'll decline that because I have concerns about the way prostitution is illegal and the way it's usually prostitutes who get arrested. In my view, they tend to be the victim and it should be the other party who should be arrested.

Let's make this analogy and talk about an addictive substance: drugs. I don't care whether you want to talk about marijuana or hash or cocaine or crack cocaine or speed or heroin. The fact is that most Ontarians will never take it even if it's offered up to them, and there will be more than a few Ontarians, perhaps youngsters, who will smoke marijuana or hash or even do cocaine or speed, and they might do it once or twice and they won't become addicts. There's undoubtedly no bigger underground economy in this country, in North America, perhaps in the world, than the drug trade. By God, if governments could tax that you'd be talking about resolving deficits: boom -- one year -- no cutbacks.

Recognizing that only be a small portion of the community would use it and an even smaller portion would become addicted to it, it seems to me that would generate such great revenues by virtue of taxing the drug trafficker that, "Heck, why don't we Ford Pinto the problem?" That's what Mr Kennedy was talking about earlier. Remember Ford Pinto? They would rather pay off the lawsuits than change the design of their gas tank filler. Why don't we legalize cocaine and heroin? We can tax the drug traffickers a 2% tax and that will be enough to provide health care, drug treatment programs for every addict in North America. It strikes me as something of a parallel; I don't know about you gentlemen.

Mr Patterson: I think the logic is consistent; it's also abhorrent. The problem is that when you allow something legally, it gives the government stamp of approval, and part of the mechanism that keeps people from doing some things is taken away. Not everybody is going to do it but right now, for example, with alcohol use I know that the stats say around 70% of the population of this province use alcohol. They don't all abuse it and they're not all alcoholics, but I spend a lot of my time cleaning up after alcoholics and their families and their grandchildren. It's not a good deal. The government already makes a lot of money in that particular area. I don't think we need more.

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Mr Kormos: I guess it's a good thing that the drug mob doesn't have as much influence on these people as the gambling dons do.

Mr Patterson: Right.

Mr Flaherty: I thank you for your joint comments today. I want to speak with you for a moment about something that I think has to be discussed when we speak about issues such as this, generally, and that is the nature of Canadian society, our pluralism and multiculturalism, both of which are, I think you'll agree, realities in our country. When I hear Mr Ramsay put the suggestion, "Why would government promote legislation where some percentage of the population would be at risk?" of course, alcohol, we had Prohibition and then the governments made a decision 70 years ago, rightly or wrongly -- I don't know whether you think it was right or wrong -- that it's better to regulate it stringently than to let it go on unregulated in society. In making that decision, certainly all governments in North America and Europe and so on were putting a certain percentage of the population at risk, because we know a certain percentage will addict.

I say to you then, when we consider the reality we've heard from many witnesses here that many people in Canada and Ontario and in the world, for that matter, view gaming as an acceptable form of entertainment, is it for the government of the day, any particular government -- the NDP government bringing in casinos in Ontario, the Liberal members here, Mr Crozier, advocating VLTs in tracks and charity gaming halls but not in restaurants, and some in favour of break-open tickets and so on -- does it lie in the government's mouth to say that a certain part of society shall be denied a form of entertainment that they view to be acceptable and that has been practised by them in moderation? We know that also from the other eight provinces in Canada and from other jurisdictions.

I say this also in the context of the United Kingdom and Ireland and Northern Ireland, where I've been recently, where I saw racetrack gambling and turf accountants and legalized bookmakers and I did not see societies that are falling apart from any exterior point of view.

How do we deal with this issue of pluralism and tolerance in the Canadian context?

Mr Patterson: I think you have to be careful, when we're talking pluralism, that we don't decide that we therefore have to have what every culture thinks it needs. For example, there are cultures and religions that practise polygamy, and Canada hasn't yet gone that route. Maybe they should. However, we've decided that we're not going to do that because probably the hurtful aspects would outweigh the beneficial aspects. I think this is another case. There are cultures and there are religions that practise gambling. It's quite different, however, when the government says, "We run the gaming house," or "We run the VLT," in this case.

Mr Flaherty: Or, "We sell the alcohol."

Mr Patterson: Or, "We sell the alcohol."

Mr Flaherty: Are you in favour of the prohibition of alcohol?

Mr Patterson: I'm probably not in favour of prohibition, because it didn't work, but I'd like to see the government making a lot less money off alcohol and tobacco and all the other stuff.

Mr Young: Which brings me to my question. I remember when the only lottery ticket you could buy was the Irish Sweepstakes. That was a big one. Then it was the Olympic lottery in Montreal etc, and now it's available elsewhere.

If you wanted to have a government that got no revenues from gambling, how would you make it happen in Ontario? I really take your presentation to heart. If the province of Ontario got totally out of it, people would just buy lottery tickets and people would cross the border like they're doing from Thunder Bay now. How would you eradicate it?

Mr Patterson: We had this come up with cigarettes a while back, where we backed the price down because we were having an increase in cross-border smuggling, and I think you've got a point. I don't know whether the right solution was to simply lower the price in Ontario. I don't know whether in the long term that's going to be a wise solution. I see an increase in the sales of cigarettes again, so I'm not sure that was the solution. I think the hard solutions are public education at a foundational level: more money to help people know what good values are. I suspect we can do that through schools, we could do it through faith communities and we can do it through simply community groups.

The Vice-Chair: On behalf of the committee I would like to thank both of you for your presentation.

ONTARIO NATIVE WOMEN'S ASSOCIATION

The Vice-Chair: Our next presenter is Marlene Pierre, Ontario Native Women's Association. Ms Pierre, you'll have 20 minutes for your presentation and you may like to leave some time for questions at the end.

Ms Marlene Pierre: There are folks at this table who tend to make their own speeches, so I think I'll use up as much time as I need to, give or take 10 each way.

My name is Marlene Pierre. I'm the president and chief executive officer for the Ontario Native Women's Association. We are a grass-roots women's organization that has membership in both on- and off-reserve communities. Our organization has been in existence since 1971. We have over 83 volunteer organizations in those communities and we are the only provincially mandated organization of aboriginal women in Ontario.

Having said that, I'm very pleased to be here to speak on the issues and interests that affect our families' health and wellbeing. I don't know if we are the only aboriginal group in Ontario that has made an effort to come before this committee, but I want to say that I appreciate being here because this is a very important committee to aboriginal women in that you not only concern yourselves with the affairs of these types of bills that promote certain kinds of activities but overall the administration of justice in Ontario.

Some issues that we've dealt with as an organization are the advancement of the women's issue on equality; we've been involved in Indian Act revision and legislation policy development; we have tended to advocate on change for aboriginal women and their families. We do this because from research that we've conducted since 1980, we have found statistically that our families are the most vulnerable of all families in Ontario and in Canada, that over 50% of our families are single-parent and female-led. That says a lot in itself, that the needs in our families are the most acute financially, socially and in every other aspect of justice.

I come here with some information that I would like to leave. We have our information documented that may be of good use to the committee.

There are some other important statistics that I think you ought to know when you're advancing the cause of gambling and to raise revenues through that method for whatever your agenda may be. I'm told that this is to follow an election promise to reduce the deficit.

In Ontario there are approximately 60,000 aboriginal families. I take this information from a study that was done in northern Ontario. I want to provide you with a profile of what our families are like. Because of our social and economic condition we are forced in many instances, myself included at one time, to look after our families through social assistance. So I'm aware of what I'm talking about.

In 1993, where these statistics come from, this gives you an idea of how many families are on social assistance from our communities. Between the ages of 15 and 19 years we have 54.3% who are on some form of assistance, and it gets higher in the next category. Between the ages of 20 and 24 we have 66% of our families that are on some form of social assistance, and the figures go on. The average income of $20,000 and less was at 81.8%.

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This profile speaks to what we're dealing with directly today, and that is how our families survive. They survive on a very low income, usually an average-sized family with three children. Those statistics give you an idea of how the most vulnerable have to cope.

Our women have no access, only through this organization, to the types of decisions that are made by governments municipally, provincially and federally, so there's a lot of responsibility on our shoulders to make you, the decision-makers, the rule-makers in the province of Ontario -- what you do and what it does to our families. We're saying that we know these VLTs are going to go into effect no matter what the citizens of the province of Ontario say. The least that we can do at this point is to say how we want it done and how we want to see the benefits, so-called benefits, be spread among the citizens of Ontario.

I've listened to some of the comments on the televised sessions and I'm rather distraught, I suppose, at some of the attitudes, both of some of the folks who are sitting around this table and some of the folks who have spoken. We don't come here as someone who has a vested economic investor attitude. We're not business people who engage by and large in this kind of activity as an investor. We are usually the consumers, and those folks I talked about earlier are the ones who are the majority of participants in this kind of consummation.

Everyone in this room and everyone in Ontario and Canada and the world has a gambling instinct. All of us who are sitting around this table, myself included, wouldn't even be sitting here unless we felt that we could gamble on the good graces of the public to elect us to the positions that we're in. In our community we have an additional acute sense to survive, to put food on our table, to have a roof over our head, to put shoes on the children's feet, to make sure we've got a good place in the food bank's lineup. That's the condition that we're dealing with. I sense that you also have an acute sense of survival, or else you wouldn't be coming out to talk to the people of Ontario, that whatever you're doing must meet some of the demands of our own people other than deficit reduction.

I'm not here to defend the act or criticize it; I don't know enough about legislative lingo to make sure that all the i's are dotted and t's crossed in our favour. However, I do want to bring some sense of what the aboriginal community might feel about this new advent.

I hear the presentations from the arts groups and other kinds of groups that maybe do not have the same sense of survival that we have. We're not interested in singing and dancing and performing; we're more interested in eating. The urban aboriginal groups -- and some of the stories that I will tell you are true.

In a small northern community -- I won't name it -- west of Thunder Bay, we have food banks in those communities as well. There is a sign that is up at the food bank hall that if you're seen at bingo you are not eligible any longer to receive any assistance from the food bank.

Again, listening to the conversations around the table that this is a form of entertainment which we seem to enjoy a lot more than the rest of the public, I know that you can walk into any bingo hall and see at least 75% to 90% of the participants are our people. And why are they there? Because they have this sense of survival. If you've ever seen them win $1,000 or $1,800 and you hear what they say, I'm happy for them, because I go there too, and when I see somebody win I know they're winning some money so that they can put those extra -- they spend $10, $20, $15 so that they can have the chance to win $1,000. When they win that $1,000, do you know what you hear them say? They say, "Now I can buy some clothes for the children; I can pay that bill." Those people are relying on that money to survive. It's not an entertainment to Las Vegas to spend some expendable cash. Any cash that aboriginal families have goes right back into the community.

This is what I can't understand about the policy and the direction of this government. It doesn't make any sense to me that no matter whether your income is through social assistance or a job or whatever it is, our money from the Indian families in this province goes right back into the community. We don't have the opportunity to save, like everyone else. So our income is entirely spent on our survival, be it a break-open ticket or any of the other forms of gambling.

We have some recommendations that we would like to make, and these are based on the fact that all the other groups that have made presentations here who derive their funding directly from mainstream registered charitable organizations -- our groups don't belong. I know this. I've been an executive director in the city of Thunder Bay and I'm very familiar with the Friendship Centre and all the other organizations that are here. Very few, none of them maybe even, belong to the United Way or any of those other registered charitable organizations that I assume will be the main benefactors from any of these funds that are derived. We don't belong to those things. For some reason our folks don't feel comfortable. There always is an element of racism. We see it from the chamber of commerce right into the schools and into the streets, where racism exists a great deal in our community. Certainly reserve groups do not benefit from mainstream charitable groups; never, ever participate in those kinds of things.

So our recommendations are going to be fairly specific to the aboriginal community, yet somehow I think other Ontarians would like to see this as well, especially those who work with poverty groups, that there is a guaranteed access for the aboriginal community through legislation. Whether it's done through a separate crown corporation or whether it's done through a crown corporation that includes representatives from all sectors in Ontario that might benefit, what we want to make sure of is that aboriginal communities such as our organization or some other form of aboriginal registered charitable organization have access through legislation to these funds.

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We want to make sure that there is a guaranteed social support network system and that appropriate funding programs are set up to serve those people who are going to be damaged, whether we like it or not, by this kind of activity. We've seen it just in the recent opening of the Rama casino; children being left unattended in cars while the parents are off gambling inside the casino. Those are the kinds of dysfunctional social examples that I want you to face, as the Rama people have faced; they will no longer allow children to be on the property. Yet somehow I don't know if that's going to be an answer, because those kids are going to be left at home alone. I can give you many examples of children dying in their homes because their parents were off gambling. If this is what Ontario wants, then this is what Ontario is going to get.

So those are the main recommendations that I have, put forward to you on behalf of the aboriginal families in this community. I appreciate the presence of this committee which has travelled to this northern community, which I think is a positive step. We do not expect this government to do that in the way that the former governments have made sure that there was a presence in the northern part of Ontario. You all know that we felt for 20 or 30 years a movement among us that all the resources come out of the north, go to the south and get distributed all over the place, all over Canada, and very little comes back into our own northern areas. That's why I'm pleased to see you here. If you've come to listen, please hear us and what we're saying, in that the moneys that come out of this exercise will be turned back to help those people who are going to suffer eventually from this exercise. I welcome any questions.

The Vice-Chair: Thank you, Ms Pierre. We will do questions, about one minute per caucus, starting with Mr Kormos.

Mr Kormos: Ms Pierre, thank you very much for your comments. What I think I'm going to do is I'm going to give the government caucus my one minute. I'm sure they would want to exchange some views with you. I've heard carefully what you've had to say.

The Vice-Chair: Fair enough. Mr Flaherty, two minutes.

Mr Flaherty: Thank you, Mr Kormos, for that one minute.

Mr Kormos: Think nothing of it.

Mr Flaherty: I guess that means I have 14 minutes left in Andy Warhol's 15 minutes.

With respect to your submission, thank you, and I listened carefully to what you were saying. One of the primary concerns, as I listened to you, was an addiction problem, I take it, with gambling that some native persons have, just like many non-native persons, some difficulty dealing with gambling or gaming in moderation. You are aware, I trust, that in the plan for the legalization of VLs there is a commitment of 2% of the gross revenues, which is likely to be a substantial sum of money, to education and treatment and training of persons to treat those who suffer from gaming addictions generally. Not only is that commitment there, but also it is a commitment that has not been made in the past by governments like the former NDP government, which got Ontario into the casino business. Are you familiar with the 2% aspect of this?

Ms Pierre: Yes, I am. That's earmarked for gamblers. I'm talking about the other social requirements that are going to be needed, the effect of negligence on families, the lack of moneys to support families. It's not just the addiction part that I'm worried about; we're worried about the effect on crime, on the increase of violence in the home, the neglect of children.

The former government allocated millions of dollars to an aboriginal healing and wellness program. I would like to see that program continue. I have a feeling this government wants to get out of that program as well. If our people are going to suffer more from this kind of activity, I want to see more money put into those kinds of programs that are going to address --

Mr Flaherty: You're aware of the $200 million flowing from the Rama casino to the native peoples, $200 million from that casino?

Ms Pierre: There's no guaranteed access to us. The Metis had to go to court. That money is earmarked for first nations. You know what? If you really want to be real about the political scenery in Ontario, aboriginal women's groups are totally excluded from the first nations' criteria for service. We can't even access those dollars. We may have to end up going to court too.

The Vice-Chair: Ms Pierre, we are going to have to move on to the Liberal caucus for one moment. Mr Ramsay.

Ms Pierre: I would like to have continued discussion with Mr Flaherty on this issue.

Mr Ramsay: I'll give my minute up to Marlene.

The Vice-Chair: Go ahead. You have one minute.

Ms Pierre: Not today; we could continue this another time.

Mr Flaherty: I'll be happy to talk about it today.

Mr Ramsay: Marlene, I just wanted to thank you very much for your presentation. We just started yesterday in Toronto and now we have almost completed the second day. I haven't heard either of the rooms we've been in as quiet as it was when you made your presentation. I think that says a lot about what you said. Probably all of us are still absorbing what you had to say, and I want to thank you very much for your comments.

The Vice-Chair: Ms Pierre, on behalf of the committee, I want to thank you very much for your presentation.

BEST WESTERN NOR'WESTER RESORT HOTEL

The Vice-Chair: The next presenter is John Beals, president of Best Western Nor'Wester Resort Hotel. Welcome, sir. You'll have 20 minutes for your presentation. You can begin any time, and you may want to leave some time for questions at the end.

Mr John Beals: My name is John Beals. I am the president and general manager of the Best Western Nor'Wester Resort Hotel, which is a 113-room, hotel-motel complex, restaurant, lounge and meeting room facilities for upwards of 450 people. The hotel is located on 45 acres of land adjacent to the Nor'Wester Mountains, which is a mountain range just out that way from us. It's in the rural portion of the city of Thunder Bay on Highway 61, which is the highway going towards Duluth and the Grande Portage casino some 35 miles south of us.

I am also the owner of the Neebing Road House, which is one of Thunder Bay's long-standing -- I consider it one of the better places in Thunder Bay to enjoy a meal. It has a combined occupancy of 350 persons. It's located on the highway immediately across from the Nor'Wester Resort Hotel. I am also the president and managing partner of the Thunder Bay Tournament Centre, which just opened in the first part of January of this year. It's a dual ice surface hockey arena complex, and its prime use is for attracting tournaments to Thunder Bay and people from northwestern Ontario, across Canada and the middle United States. It is for tournaments, hockey camps, other sporting events and trade shows.

In saying all this, I appreciate the Ontario government's desire to obtain some grass-roots input into VLTs.

The economic environment we in the hospitality business are living in is, to say the least, not very healthy. Government cutbacks on personnel, meetings, conferences and travel, even though I feel it was necessary to do it, have impacted the hotel industry considerably. The Nor'Wester Resort Hotel's government business this year is down 40% over one year ago. We are projecting an additional 10% to 20% decrease in government business over the next 12-month period. Corporate travel and motor coach travel is stable, while leisure travel this particular year is down about 10%.

Between my three businesses, I employ approximately 175 people, with a payroll of approximately $75,000 every two weeks. I have mortgage payments of approximately $40,000 a month and taxes of approximately $200,000 a year.

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Lending institutes are less and less interested in lending money for expansion, new development and acquisitions. If they do, they require at least a 40% cash equity and the ability to maintain a debt service coverage ratio of not less than 1.7 to 1. Their tolerance for downturns in the economy affecting the hospitality industry, to say the least, is disheartening.

I'm neither a large employer nor a small employer in the hospitality business. I'm an entrepreneur who wants a healthy industry and I am the type of person who desires to expand my businesses. I take pride in employing people and I take pride in the contribution my employees and I as a group make to the fabric of this community.

Are we in difficult times? I believe we are. Can we continue on the same route we are going? I believe we can't.

"To gamble or not to gamble" I don't think is the question. Bingos, so-called charity roaming blackjack tables, Texas hold 'em games, the buying of lottery tickets, Nevada break-apart tickets, instant scratch and win tickets, illegal machines and cross-border casino gambling are all part of our lifestyle right now.

The challenge is to find a solution for a win-win situation for this province and for the hospitality industry. It is not just for the survival of this province and for the hospitality industry. It is the ability to be able to grow and expand and create more jobs and more development in a responsible manner.

If an example can be taken from other provinces on VLTs, how the VLTs have helped the province and the hospitality industry, then the answer whether VLTs should be allowed or not or how to implement them is clear.

I believe that VLTs, if implemented with tight regulatory controls and a limited access environment, can meet a legitimate entertainment demand and provide a significant stimulus to the hospitality industry.

The Chair: Thank you, Mr Beals. We have approximately three minutes per caucus. First the government caucus, Mr Flaherty.

Mr Flaherty: Speaking about the hospitality industry in northwestern Ontario, sir, we had some commentary yesterday from I think it was Mr Seiling on behalf of the Ontario Hotel and Motel Association, his estimate being, as I recall, as I noted, the creation, he thought, of about 10,000 jobs in the hospitality industry as a result of the phased introduction of video lotteries. Have you had an opportunity or have you looked into the likely job prospects, employment prospects, concerning that?

Mr Beals: Let me answer it this way: If we continue on the route we're going right now, we won't be able to maintain the jobs we have now in the industry. We have to have the ability to have an income to be able to supply our creditors, government taxes and be able to have enough bottom line that we can go to the bank and start the creation of new ways of development within our properties, and that in itself then creates more employment. But initially we've got to stop that bleeding or that potential of not being in business. I firmly believe there are a great number of persons in the hospitality industry who are hanging on.

Mr Flaherty: If I can just address one other subject, we know and we've heard representations here about the number of so-called grey machines being used by minors and being in corner stores and that sort of thing in Ontario now. Under Bill 75, ultimately some licensed premises would be the recipients of VLs. What steps would you envision being taken by licensed premises to ensure that persons under the age of 19, as would be required by Bill 75, would not have access to the area where the VLs were located?

Mr Beals: I have three licensed establishments on the corner and it is by no means a threat of losing my licence. That licence is very important to me, my staff all having taken a program. To me, that is a means to income. I believe that the VLTs should be regulated in controlled environments similar to the service of alcohol and that the onus would be put on the establishment that any person under the age of 19 being found in those areas would be in jeopardy of losing their licence as they would be for alcohol consumption or being in a place where alcohol is served.

Mr Guzzo: Sir, with regard to your situation here, we're talking about a payroll of $75,000 every two weeks.

Mr Beals: Yes.

Mr Guzzo: When you refer to the $200,000 a year in taxes, that's realty taxes?

Mr Beals: That's property taxes.

Mr Guzzo: That doesn't include your income tax, provincial and federal.

Mr Beals: We have a minimum income tax in Ontario right now that some government brought in and that's about the only income tax we pay because we don't have much of a profit at the end of the day.

Mr Guzzo: Just let me tell you, sir, that the principle behind the government's action herein has been with regard to employment, both with placing these in the horse racing industry and looking at the hospitality industry. We have a lot of support because in the Liberal government in Ottawa, Mr Chrétien and Mr Martin talk incessantly about doing something to increase employment and we know that we're on all fours with that government, and now I'll turn you over to the Liberal Party of Ontario.

Mr Kennedy: Thank you for your presentation. It certainly is an understanding of the curious nature of the hospitality industry, the risks that you're taking, but I'm wondering if you could direct some comments to the risk the province may be taking. You asserted in your statement that we have gambling. Would you agree that gambling and the degree of it is something for politicians to make the decision about, or do you think it's just a matter of course that it's regular business now in Ontario?

Mr Beals: No, I think it's very important that there be regulations. One of the problems that I see now, with the quasi-legitimate floating blackjack and Texas hold 'em games, is there is no real control of how those funds are coming in. They're supposed to go to charity, but you've got no way of controlling that. With the video lottery terminals, I believe it is very much controlled and I believe the controls that are being sought after here are correct.

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Mr Kennedy: That's what I'd really like to ask you. The scope of this is a potential to increase the amount of gambling in this province by 50% to 100%. The state lottery in South Dakota is now only one ninth the size. So VLTs are nine times as big as the state lottery there, where they've been the longest.

Two concerns: One is that a number of police forces in this province are concerned. They think that VLTs are a nightmare, that they bring increases in crime, and in the hospitality industry, the description that you gave of your business is it's very family oriented. I wonder if you might comment on that. Also, the studies that are coming from places like South Dakota that say that this large amount of money is coming from somewhere, and where it's coming from is other discretionary spending on the part of some of the people -- restaurants and hotels and so on -- and whether there's a concern that this might be a very short-term fix in terms of the kind of support the hospitality industry needs.

Mr Beals: I don't believe it's going to be a short-term fix. Some 40% of my client base in the hotel is corporate travel. We have a Happy Time tour bus that stops in front of our door to pick our clientele up and take them across the border to deposit their dollars in the United States. I don't think that's very wise.

Mr Kennedy: And the prospect of crime? How does that element --

Mr Beals: I think we've got a crime problem with or without gambling.

Mr Kennedy: But the idea that police forces out there are talking about VLTs specifically, the kind of compulsion they create among people, the opportunities they give for laundering money, those kinds of things, as being a grave concern to them: As a responsible member in your community, how do you think that concern is being addressed and how should it be addressed?

Mr Beals: I frankly haven't read that or heard that from the police force here.

Mr Guzzo: Those police officers only talk to the Liberals. We haven't heard it either. They dig it up when the leadership races come along.

Mr Beals: We have a number of problems within our community, and I think the social issues that we have and the problems that we have all have to be addressed. I would certainly hope the dollars that are coming out of these VLTs on the government's part are put back into some of the social programs, not just that are caused from gambling but from all of the other areas.

It's odd, when you have a business, how many phone calls you get from people from charities and small organizations asking for donations. When your bottom line is a little thicker and it's on the black side, you are your brother's keeper if you are a small business person. You look after those types of organizations and you pay. When you're in the red, you can't, and that's when you depend on government to help them out and you shirk the responsibility on to them. Give us the dollars, give us the bottom line; we'll provide the income and the jobs and we'll help pay the charities.

Mr Ron Johnson: You look confused now. Kennedy's confused.

Interjections.

Mr Kormos: Does my time start now, sir?

The Chair: Yes, please do.

Mr Kormos: You know that you and I might disagree on this whole proposition -- I suspect you do -- because, you see, I've got all the concerns that these people don't and it's based on the stuff I read and the experiences I've had and the things I've seen. I trust you don't fear the addictiveness of slots machines the way I do?

Mr Beals: I fear addictiveness completely. I fear addictiveness in alcohol. I run establishments that serve alcohol, and I fear that. I don't like to see anybody overindulging in anything.

Mr Kormos: But you don't agree with me that we should abandon this folly of 20,000 slot machines in Ontario because of my fear of that addictiveness?

Mr Beals: I don't consider it a folly.

Mr Kormos: Having said that, why would you stop at the hospitality industry? Why wouldn't you put them in corner stores too? They sell most of our lottery tickets right now. They do most of the provincial gaming as it is in terms of volume.

Mr Beals: I guess I would stop at the hospitality industry for a couple of reasons. One is that it is a natural location for them. Throughout the world, gambling, food and alcohol consumption tend to go hand in hand. Where people come from out of state as travellers and tourists, they are looking for recreation, and that is part of recreation.

The second one is that I don't see corner stores in trouble the way the hospitality industry is and I don't see corner stores having the potential to expand and create employment as I do the hospitality industry. So I would say don't put them in corner stores where it's not a controlled environment.

Mr Kormos: The racetrack industry by and large says, "Don't put them in hotels and motels, because it's okay for the racetracks to supervise them, but we don't want to share it with our brother and sister entrepreneurs in the hotel-motel," and now the hotel-motel is saying, "We don't want to share it with our brother and sister entrepreneurs." Because the corner store people tell me they're hurting too. Maybe they're misleading me.

Mr Beals: You've got a dilemma, haven't you, where to put them?

Mr Kormos: No. I'm asking you --

Interjection.

Mr Kormos: I know where to put them. One, two, three, four, five, six, seven, eight --

Mr Ford: Don't be rude now. You're being nasty.

Mr Beals: I think it's inevitable that VLTs will come. If it's not today and it's not next year, it will be at some appropriate time. We in the hospitality industry need support now.

Mr Kormos: You're going to get the machines. They've got the order in for them already. The committee hearings aren't even over. Honest, you're going to get the machines. Don't worry.

Mr Beals: Thank you.

Mr Kormos: You put that square footage up. You may not have enough political clout, because you've got other hotels that are going to compete, you know. We're going to have to see who's best connected, but there will be slots in hotels.

Mr Beals: I don't even know how to answer that one.

Mr Kormos: There'll be slots in hotels.

The Chair: Mr Beals, I thank you for attending here today and your presentation to the committee.

Mr Beals: Thank you very much for the opportunity.

NIPIGON DISTRICT MEMORIAL HOSPITAL

The Chair: Our next and last presenter for the day is the Nipigon District Memorial Hospital, Ms Levina Collins, director of development. Good afternoon, Ms Collins.

Mr Flaherty: Just before the next presenter, I would on a point of order want to make one quick comment for the record. That is that Mr Kormos just recently and previously a number of the members have stated on a number of occasions that RFPs have already gone out for the purchasing of video lotteries. This is not accurate. The requests for proposal have not gone out with respect to the purchasing of video lotteries. That is for the record.

Mr Crozier: That is not a point of order.

The Chair: That is not a point of order, Mr Flaherty. Mr Crozier's objection is well founded.

Mr Kormos: They're in the mail. They haven't been delivered yet.

The Chair: Please excuse the delay, and I'd ask you to proceed.

1600

Ms Levina Collins: I'd like to thank the standing committee for the opportunity to address the issue of the installation of video terminals in small communities. I am Levina Collins. I am the director of development at the Nipigon District Memorial Hospital. We are a registered non-profit organization. Our health care facility serves a catchment area of 5,500 people comprised of the townships of Nipigon, Red Rock, Dorion, Hurkett, Beardmore, Pays Platt, Macdiarmid and three first nation reserves.

Nipigon Hospital is a health care facility of the future. We are very vertically integrated, with a vision for the future. We are always looking for new ways to improve the quality of life for people in our communities and we offer one-stop shopping for health care.

Many organizations support us through the sale of Nevada tickets and bingos. Introducing video terminals into small communities will ruin us. Small community organizations will fold with the loss of volunteers. We truly believe that some gambling is needed, but the introduction of VLTs will ruin the small communities that depend on bingos and Nevada sales. At this time, I would like to ask the government to reconsider installation of VLTs in small communities.

Northern Ontario has the highest alcohol abuse in Ontario. For this reason alone, we are very concerned. For your information, I have enclosed in my presentation a section of the 1995 Community Health Status Report from the Thunder Bay district health unit. We believe that "health is a positive state of wellbeing to be achieved by individuals, families and communities for life." We believe the health status report is not just a collection of statistics and charts; it is a representation of the lives of our communities.

The incidence of alcohol abuse in the youth of our communities is of particular concern. As a community hospital, it is of major concern for us. We see the introduction of VLTs as a way to lure youth into bars and licensed facilities. It is not hard to figure out where this will lead. More youth will combine their drinking with gambling, and this leads to more crime.

We truly believe the government must use some common sense. Leave things the way they are. There are enough ways to gamble in our small communities now.

We believe the proposed changes in Bill 75 are being pushed through too fast. We want the government to take time to listen to the people. The government has to look at the big picture, especially in northern Ontario, where the abuse of alcohol is a major problem.

As a Rotarian, I often use the four-way test: Is it the truth, will it be fair to all concerned, will it build goodwill and better friendship and will it be beneficial to all? This Rotary motto can be used in all walks of life. If you can't say yes to all those questions, there is a problem. I suggest that we try the four-way test regarding Bill 75. I believe that it's not fair to all concerned, that installing VLTs will not build goodwill and friendship and that it will not be beneficial to the wellbeing of small northern communities.

I would like to add that we do not have the population base to have large fund-raising venues like gala balls and celebrity dinners. We really depend on our bingos and Nevadas to support all community ventures.

To sum up, our recommendations are: Use common sense and listen to the people; leave the VLTs in casinos and horse racing facilities; review the 1995 health status report on the problems of alcohol abuse in northern Ontario; be concerned with the quality of life, not the bottom-line dollars; look at the big picture, the whole forest and not just the trees; look at the human side of the issue: What will be the effects on people, volunteers and small community organizations that depend almost entirely on bingos and Nevada tickets?

As the government, you are promoting healthy lifestyles. My question to you is, does this contribute to healthy lifestyles and the quality of life in small northern Ontario towns? Let's get back to common sense.

Mr Kennedy: Thank you for your presentation. I understand there are a few members opposite who are fellow subscribers to the Rotary. I wonder if you could delve a little bit into why you don't think this meets that test, what you find about Bill 75 that isn't fair.

Ms Collins: I just think it's not fair to all the people of Ontario and it's not fair to the small communities that we live in. Small community organizations won't survive with the VLTs in these licensed facilities.

Mr Kennedy: You may be aware that the Break Open Ticket Program Management Alliance, indicated that they're fearful of 40% to 60% of revenue, being the experience of other provinces, of break-open tickets being lost. Is that the kind of apprehension that you have?

Ms Collins: Yes. I really believe that we probably will lose most of it, and it's different organizations. I deal with all the organizations in those communities as a hospital fund-raiser, and they do give of their funds to the hospital and many other things, community centres, all kinds of things, Boy Scouts, Girl Guides. We're running the handyman service right now. The government wouldn't start up any new programs. We run 200 trips a month, we run it three days a week, and it's all run with Nevada money, and we wouldn't be able to run it.

Mr Kennedy: Thank you. Mike.

Mr Gravelle: Good afternoon. I'm sorry I missed the bulk of your presentation. Nice to see you here, and I think it's probably an important point to make, despite what one of my colleagues across said earlier in terms of the bulk of the presentations all being absolutely in favour of going ahead with full speed. There's obviously been a very clear mix today in terms of this issue. It is a complicated issue, it's not a simple one, and I think we're very grateful to get the perspective of someone such as yourself also speaking from that perspective in terms of a Rotarian, which is not to say that you're in any way opposed to business or to helping business do better.

It's a question of really what is the overall picture, and I think that's what we need to look at more carefully with this bill, the overall picture and how it impacts on people and people's lives, how it does impact on the charitable groups and foundations and other groups that are doing that. I was just driving back from another meeting and I heard Mr Klees talked earlier about consultation taking place afterwards, and me saying I hope that would happen, and he's now been quoted on the radio as saying that, because I think it's important. I do think there's a sense of haste and rushing this forward because of the need for this revenue generation.

I think your comments today speak probably for an awful lot of people, and I'm very grateful that you've --

Ms Collins: I do represent a lot of organizations, not just Rotary and hospital, but the feeling is out there, and I tell you, I think we've got to go back and talk to some of those people.

Mr Gravelle: It's a plea that I hope the government members hear, and we're all very grateful that you've done so.

Mr Kormos: You've got a unique perspective. You're alone so far in the series of presenters, because you seem to be talking about, from a health care perspective, the need to build healthy communities and generate healthy living, this proactive prophylactic approach to health care rather than the old reactive approach. Am I fair in gleaning that from what you're saying?

Ms Collins: Yes, and we've been doing that for seven years now.

Mr Kormos: Oh, yes, and what you're saying is: "Let's look at this phenomenon that's being developed by the government in the context of that. Does this create healthy communities? Does it enhance the wellbeing of the community in a physical way, in a mental and emotional way, in a spiritual way, the whole nine yards?"

Ms Collins: Are you asking me, does it?

Mr Kormos: Yes.

Ms Collins: If you were to ask me if I was against gambling, I'm not.

Mr Kormos: I'm talking about 20,000 slots.

Ms Collins: I am definitely against that, because it's the ching, ching, ching, ching, ching that really gets people addicted to this. I don't know that the Nevada doesn't get --

Interjection.

Ms Collins: Maybe they don't. Maybe they all have buttons now, but I don't think the Nevadas are that addictive. I mean they are addictive, but they're not as much as the slot machines, because the slot machines, I think, will increase about 50%.

Mr Kormos: And there's big bucks to be made, billions, billions, and it's made a quarter and a dime and a nickel and a loonie and a toonie at a time.

Ms Collins: But how can I access the dollars?

Mr Kormos: No, because what's remarkable is that there are clearly big interests being served by the generation of incredible profits. What's sad is they're being extracted from people a buck at a time, 50 cents at a time, a quarter at a time, a dime at a time.

We've looked at the profile of one-armed bandit players from the east coast through to the rest. I read them on to the record yesterday, and they tend to be lower-income people, people with low-income employment or unemployment.

Ms Collins: That's right.

Mr Kormos: This is the game of last resort, and the government, of course, will be in the business, so they'll be promoting use of it. They'll have to, just like governments are now promoting the use of the casinos. Down at Casino Rama, they're issuing press releases about the $15,000 winners and the $20,000. They're not talking about the people who leave the casino broke and who go home having spent the paycheque. They're not talking about them.

Once there are these 20,000 slots, we're going to see press releases about Jane Doe up in Thunder Bay won $500, $1,000, $2,000 in a slot, but a whole lot of people fed their paycheques into that slot for Jane Doe to grab her two grand. That's entertainment? They talk about this as if it were Ginger Rogers and Fred Astaire. I mean, it's nuts.

Ms Collins: Yes, it is.

Mr Klees: What's the point, Peter?

Mr Kormos: You've missed it from day one, Frank. I don't expect you to get it now.

The Chair: You didn't use all your time, Mr Kormos.

Mr Kormos: That's okay. I've said what I've had to say. These guys haven't got it from day one. They're in the back pockets of the gambling industry. They're never going to get it.

Mr Klees: Mr Chair --

The Chair: I'm sorry, Mr Kormos, I think that's unparliamentary.

Mr Kormos: Was it?

The Chair: Yes. I honestly believe that.

Mr Guzzo: No, no. I want to defend Mr Kormos because he was talking about --

Mr Kormos: I've said this about previous governments and none of them ruled it out of order, Chair, so check precedents.

The Chair: You would not withdraw it then?

Mr Kormos: No.

Mr Guzzo: You were talking about the legal gambling. We're in the back pockets of the legal gambling. The Liberals --

The Chair: Ms Bassett. Excuse me, Mr Guzzo.

Ms Isabel Bassett (St Andrew-St Patrick): Don't interrupt my time.

The Chair: We have a meeting going on.

Mr Guzzo: The Liberals must be in the back pockets --

The Chair: Ms Bassett, please.

Ms Bassett: Ms Collins, as director of development obviously you're concerned, as you said, about access to dollars to help your hospital, and I wanted to make you aware of the fact that our government, recognizing the problems that all hospitals and charitable organizations and cultural organizations are having, we've brought in the Crown Foundations Act that will be very advantageous for large donations to hospitals. I ask you to be in touch with me following this and I can fill you in, because your hospital will certainly be able to benefit from that. It is one step towards not to recovering all that you might lose, but it is a step --

Ms Collins: I am familiar with the crown foundations, but you also have to have the big donors that are able to do that. In our small communities we only have a handful of huge donors, not like in big cities. We could never compete with Toronto on any level compared to small communities.

Ms Bassett: If I can, since I'm familiar with the act, people have been contacting me, people from across the province in small northern communities, waiting for this to go through so that they can make large donations -- believe me. So there are some. There may be not as many because the population isn't as much up here. Anyway, be in touch about that.

Ms Collins: Okay. I will.

Mr Ron Johnson: I want to again thank you for your presentation. My question stems from a couple of things you said. In particular you indicated you were concerned that a lot of the local organizations and charities now are using the bingos and of course the break-open tickets for their fund-raising initiatives and efforts, and you said you expected that to dry up and that a lot of the organizations would now see that funding disappear.

I really want to get rid of all the myths and misinformation that's out there about this, and a lot of it is coming from that side, quite frankly. What is it that causes you to believe that all of that money that is now being generated through break-open tickets and bingos will somehow disappear? How come you believe that?

Ms Collins: Because we feel that most of the people will be going to the licensed facilities to spend their money there and we feel that the Nevada tickets will dry up.

Mr Ron Johnson: To give you a bit of background just briefly, if you look at the experience that other jurisdictions have had, that's simply not the case. In fact if you look at the break-open ticket industry -- and you said you run one of your main programs from break-open tickets. If you look at Alberta, in fact there was absolutely no decline in break-open tickets as a result of VLTs. I think it's important, and you indicated as well, that we need to learn from other jurisdictions. I would suggest to you in this particular case we've done that, that we're looking at Alberta as an example of the break-open industry and what happened with them and their VLTs, and we saw that there was no impact. Therefore, we're confident that in fact the revenue that you now receive and your organizations receive from break-open tickets will not diminish; in fact it may not be affected at all.

Ms Collins: I would really like to see those figures --

Mr Ron Johnson: Absolutely.

Ms Collins: -- because I've talked to people from Manitoba and they've told me that the break-opens have literally disappeared in Manitoba. Mr Kormos: Maybe Mr Johnson will commit himself to making up the difference personally --

The Chair: Thank you, Mr Johnson. Basically all the time has been used.

Interjection.

Mr Ron Johnson: It's the wonderful town of Brantford.

The Chair: Speak to Mr Johnson, not myself. The time has been used by our caucus. Ms Collins, I thank you very much for your presentation here today.

I would ask members to remain so we could discuss the trip this evening, but I am adjourning this hearing to 8:20, you'll be pleased to hear, in the morning in Kenora.

The committee adjourned at 1615.