Evidence of meeting #21 for Justice and Human Rights in the 41st Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was gaming.
A recording is available from Parliament.
11:10 a.m.
Conservative
The Chair Conservative Dave MacKenzie
I call the meeting to order. This is meeting number 21 of the Standing Committee on Justice and Human Rights.
Today we're dealing with an order of reference of Tuesday, November 1, 2011, Bill C-290, An Act to amend the Criminal Code (sports betting).
We have some witnesses with us this morning. I'd like to welcome Mr. Comartin, the sponsor of the bill, Mr. Rutsey, and Mr. Burns.
If you have an opening address, go ahead.
11:10 a.m.
NDP
Joe Comartin NDP Windsor—Tecumseh, ON
Thank you, Mr. Chair. I do have an opening address, and then Mr. Rutsey will be picking it up from there. Mr. Burns is also here to help answer any questions the committee may have.
Again, I thank the committee for their consideration in allowing this bill to move ahead. As you all know, it has had fairly universal support from the House at second reading. And from all the discussions I've had with members of all parties, it continues to have that support.
Just a quick history in terms of the background of gaming legislation. This particular section can be traced back through England to about the 1600s. We had a king at that time—I think it was one of the Williams—whose military people were gambling too much. It was interfering with his ability to wage war, so he banned all gambling in England at the time.
Over the centuries we've whittled that away, including here in Canada, where there have been a number of amendments to this section. We imported it from England some time in the late 1800s.
I'll point out, for instance, that using dice in casinos used to be illegal. That one has been taken out. Roulette was not legal at one time. That has been taken out. This is a continuation of that pattern.
The effect of this proposed paragraph 207(4)(b) would be to take out a prohibition of gaming on single-event sports. As I'm sure most of you know, you can bet on multiple events, but you're not allowed to bet on single events in Canada, nor can you in any place in the United States, with the exception of Nevada. This would be a major plus to the gaming industry in Canada. A good deal of this gaming goes on at a distance, and this certainly attracts a number of people to Nevada.
The only other comment I'd like to make about the historical development—I'll come back to the economic side of this thing—is that in 1985 an accord was reached between the federal government and the provinces that, in effect, devolved all right to the provinces to carry on gaming activities. If this amendment goes through, although it has to be done at the federal level, the provinces will have the responsibility to implement it.
My motivation with regard to initiating this bill and pressing it forward was twofold. One was economic development. As you know, Windsor has one of the largest commercial casinos in the country. We're right on the border with the United States. Still, roughly 75% to 80% of the traffic coming through our casino—and Niagara has fairly similar numbers—is from the U.S. side of the border.
What's been happening since we opened almost 20 years ago is that the U.S., Michigan in particular, but now Ohio and Indiana, has begun to develop similarly large commercial casinos and has been taking away a significant amount of the trade that was coming to Windsor and Niagara. Buffalo has done the same in New York state.
A study has been done, commissioned by the Gaming Association. The senior executives are here with me today. They point out in the study that this will give us a significant advantage, assuming the system is based in the casinos. It will attract additional people to the casino who not only will be betting on games but will also be using the rest of the facilities at the casino, including staying overnight. It's a significant incentive for people to come to those casinos, let's say from Michigan, Ohio, or New York state.
I'm not going to get into a lot of the numbers. The one I would point out, because it's particular to my riding and my city, is the estimate that this will save and/or create at least 100 to 150 jobs in the Windsor casino, with similar numbers for the Niagara casino, because we are that close to the U.S. market.
The other major incentive I had for pushing this bill forward is that it's part of the overall struggle we continue to have to fight organized crime.
This gaming, which would now become legal, is in fact going on now, and, again, you'll hear huge numbers of the amount that goes on both in Canada and the United States. I'm talking about bets that exceed—the best idea we have in Canada—somewhere in the $8 billion to $10 billion per year range. Those are the amounts of the bets.
Almost all of that is organized by organized crime. They derive the revenue from that after the payouts are done. This is a way of striking a blow at that.
The amount we will take—Mr. Rutsey will probably be able to address any questions you might have in this regard—is really hard to estimate because it depends on how the province runs this out. Again, it's at the very least a shot at organized crime. I know you're still working on completing the organized crime study, but certainly a great deal of the evidence that we heard during that period of time was that one of the ways to undermine them is to take the money incentive away. This is a little part of that ongoing struggle and battle that governments have in order to do away with that kind of unlawful activity.
Mr. Chair, the support has been quite widespread. I want to particularly acknowledge the provinces of Ontario and British Columbia. They are both quite interested in moving this thing ahead. They've been doing planning to put it in place. The estimates I've been getting from my casino in Windsor is that it's a six- to twelve-month period of wind-up to get the process ready to go. They've been doing that work already. They will need, obviously, for the legislation to be changed before they complete that work, but they are very interested in moving ahead.
A number of the other provinces are studying it at this point, and the feedback we're getting from Saskatchewan, P.E.I., and Nova Scotia is that they are also very interested in pursuing this.
Inevitably, this is driven by the revenue it will generate for the provinces. I want to be clear. Depending on how this is rolled out, the amounts are not that significant, depending on whether they do it in a modest way, as opposed to, in particular, if they introduce electronic gaming over the Internet.
The figures vary quite dramatically. The bottom line, as far as we've been able to determine, is that none of the provinces are opposed to this. Most of them are in fact quite supportive. I'd also note that a number of municipalities—again, the two I know best are Windsor and Niagara, and both of those municipal governments have passed resolutions in support of this.
Let me finish, Mr. Chair, with the point that sometimes gets raised whenever we're talking about expanding our gaming services. That's the issue of compulsive gambling. How do we deal with that?
It is quite clear, for those of you who don't know, that I was fairly instrumental in getting the casino into Windsor. I was on the first public board that we had in Ontario for casinos. I've done a lot of study on this. Every study that I have seen that is a credible study shows very clearly that by legalizing one aspect of gaming, you do not increase the number of compulsive gamblers. They're already there.
Any number of longitudinal studies—and again, I think Mr. Rutsey can address this more specifically if you wish—show that in fact the rate of compulsive gambling doesn't change at all. There is a variance of very minor points. In fact, people who provide treatment tell me that it may even decrease somewhat, because if it's not illegal gaming that you're involved in, you're more likely to be willing to seek out help. You're also more likely to be identified by the province, the institute where you're using gambling facilities. You're more likely to be identified and encouraged to get help. I certainly know that's the case in the casino in Windsor, and in most of the commercial casinos in the country, if not all of them.
We are spending a significant amount of money on this. I have to say, I don't think enough. It was one of the issues that I pushed really hard when I was working on the casino in Windsor. The Province of Ontario has quite significantly stepped up their participation.
Quebec is the province that spends the most money on helping compulsive gamblers.
Although Ontario spends more money overall, the casinos in Quebec have more active treatment on-site than any other province. I believe other provinces should be spending more money, and I'm not sure that Ontario and Quebec shouldn't either. So I say to you that if this does go through, encourage your provincial counterparts to take a look at that and see if there are additional services that should be provided, much as we do for any number of other addictions—around drugs and alcohol, etc.
If I can conclude, Mr. Chair, there are two reasons for supporting this: economic development and the fight against organized crime. It has widespread support across the country, in particular at the provincial government level.
Thank you.
11:20 a.m.
Bill Rutsey President and Chief Executive Officer, Canadian Gaming Association
Thank you. Good morning, Mr. Chairman and honourable members. Thanks for inviting us here to appear before your committee.
I'm the CEO of the Canadian Gaming Association. With me is Paul Burns, our vice-president of public affairs.
Our association represents the major participants in Canadian gaming—facility operators, equipment manufacturers, and service providers. We sponsor research and speak out on important national and regional issues.
I have participated in gaming from both the private and public sector perspectives for more than 20 years, including assisting in the creation of gaming policy and casino development in Ontario, Nova Scotia, and New Brunswick.
As practice leader of the Coopers and Lybrand—now PricewaterhouseCoopers—Gaming Consulting Practice, I advise numerous private and public sector clients, including the Ontario government, and I authored the “Ontario Casino Market and Economic Impact Study”, the blueprint for the Ontario casino gaming industry.
As the CEO of private sector companies, I developed and managed gaming businesses in Ontario, Las Vegas, and internationally, and have been licensed by gaming regulators in Nevada and Ontario. I regularly comment on gaming issues in media and before government.
We're here today to speak in support of Bill C-290, an act to amend the Criminal Code that will allow wagering on the outcome of a single sporting event, and to answer any questions you may have.
As Joe pointed out, Canada has enjoyed legalized, parlay-style sports wagering for many decades, but the current restriction that prohibits wagering on a single sporting event does not reflect the modern reality for sports betters. With the passage of this bill, Canadians will have a legal and regulated product for wagering on the individual sporting events of their choice.
The Canadian Gaming Association has supported this initiative since it was raised by the Government of Ontario about three years ago and supported on the record by other provinces, including British Columbia, Alberta, and Saskatchewan. Since then we've met with numerous members of Parliament from all parties, as well as many senators, to discuss the merits.
The issue is seen by most as a tool of both law enforcement and economic development, as well as simply catching up with what Canadians are already doing. The reality is that Canadians are wagering on sports predominantly through illegal means, either with bookies or online. This bill will enable sports wagering to occur in safe, regulated environments, either in physical facilities or online.
A review of the annual reports of the Criminal Intelligence Service Canada indicates that illegal bookmaking exists in all regions of Canada, with organized crime ultimately profiting from the venture. While the size of the Canadian market is unknown, estimates suggest it is in excess of $10 billion annually. The growth in wagering on sports through the Internet has significantly increased over the past decade, with estimates showing that Canadians wager almost $4 billion annually through offshore sports books. Passage of this bill will allow: a legal and safe alternative for Canadians to do what they already are doing through illegal channels; for provincial agencies to compete online on a level playing field; for a product of competitive differentiation for gaming properties located at or near the U.S. border; and for the diversion of moneys from the underground economy. It's just good public policy to have the law catch up with what so many Canadians are doing and not simply treat them as miscreants.
For provinces that operate online, it can complete their offerings and eliminate the competitively disadvantageous environment in which they currently operate. Sports betting comprises approximately 40% of all online gaming activity, so right now Canadian provinces operating online just don't have a product for 40% of their potential clients.
It will be a potentially significant competitive factor for border and near-border properties. When people come to bet on sports, they often stay to watch the game. If so, they consume food and beverages, may play some blackjack or slots, and may stay overnight. If they bring their spouse, then even more ancillary revenues are generated.
A recent report we commissioned on the impact of sports wagering on Ontario border casinos highlights the benefits of offering a legal, regulated sports wagering product in the Ontario border casinos of Windsor and Niagara Falls. The potential benefits created by additional visits from U.S. patrons include up to 250 new jobs directly in the two casinos, as well as generating economic benefits in the broader community.
Right now the only beneficiaries of the existing situation are offshore operators, bookies, and organized crime. It makes eminent sense to turn off the tap to such a source of funds for the bad guys and to make it available to provincial governments to help fund programs and services for the general good.
From a tourism and economic development perspective, it's a no-brainer. With more than 100 million Americans within a six-hour drive of a Canadian casino and existing U.S. federal law explicitly prohibiting sports wagering where it doesn't already legally exist—which is essentially Nevada—single-event sports betting can be a significant attractor, especially during times and events like March Madness, the NFL and NBA playoffs, and the Super Bowl.
And remember, the revenues from single-event sports betting already exist and continue to grow. The interest in betting on sports is significant and pervasive. Ordinary people, our neighbours and friends, bet on sports every day. Under the existing law, this makes them complicit in illegal activities. These people aren't criminals, and what they are doing is legal in many other countries around the world.
It really is time to catch up with what Canadians are doing and, more importantly, take that money away from the bad guys and make it available for the public good. Not only does it make sense, it's just the right thing to do.
Thank you. I will be happy to answer any questions you might have.
11:25 a.m.
NDP
Jack Harris NDP St. John's East, NL
Thank you, Chair.
Thank you, Mr. Comartin and gentlemen, for your presentation.
The former justice critic is here before our august committee. We have indicated our support for the bill, but I have to say that instinctively as a New Democrat I'm looking for issues and concerns, particularly because of the experience we had, for example, in my province.
Going back to the early nineties in my province, similar arguments were used by the government, with the then Minister of Finance, I think it was, saying that we needed to get into the business of putting gambling machines in bars. There were several handfuls of poker machines on bar desks that were put in by various people, and the warning was that it was the Mafia, organized crime, that was doing this, and we had better get involved because we would do it better. Of course, within two years, there were 800 machines in bars across Newfoundland and Labrador. We had a history, following that, of the vulnerable....
Joe, you talked about problem gamblers, but what was really happening was that the vulnerable were being impoverished. There were suicides associated with this. Some people were spending all their time hanging around these machines.
The culprit here, of course, is the video lottery machine, the so-called crack cocaine of gambling. There has been tremendous debate in my province about it. In Nova Scotia, they had them in grocery stores and convenience stores until they were removed because of the scourge they were.
When you talk about this and say “Oh, this is going to be in a casino where people come and we have means to deal with this”, my understanding is—and Mr. Comartin, you can correct me if I'm wrong—that all gambling is illegal except when it isn't. Even three-card monte, whatever that is, is illegal.
So we're saying, okay, what's now going to be legal is betting on a single race. Now, I thought we could do that at a racetrack, that you could place a bet on race one, race two, or race five or something. I remember having done that myself once or twice.
This is not necessarily by this legislation...all it does is leave it to the provinces to license as they see fit. They could give a licence to a football association if they wished. But that's up to the provinces. What this legislation does is really free up single-event betting to allow the provinces to regulate when or where it would occur.
Obviously, Mr. Comartin—and you're speaking for your constituents and based on your history—as an economic development tool, it doesn't seem to me to be problematic. The real problem might be if the unintended consequences actually come forward. Perhaps you might want to comment on that, Mr. Comartin.
I'd like to hear from the Canadian Gaming Association, too, because you fellows are representing the operators. What responsibility do you take for the kinds of consequences I'm talking about?
I'm talking about serious consequences in my province. We have histories of individuals who lost their homes, who committed suicide...with nobody helping them out. You'd go to bars and see people lined up when the bar opened, sitting at the machines, and there was nobody going in and asking to help them out. They're not people who would gamble online. They're not people who.... They have access; that's the key difference, I think.
The number of people may not change, but what can change is access. With controlled access through a casino, I don't see any difficulty, but once the cat is out of the bag, it's pretty hard to get it back in.
11:30 a.m.
NDP
Joe Comartin NDP Windsor—Tecumseh, ON
You'd never guess that Mr. Harris is from Newfoundland and has the gift of the gab.
I can't respond to it all, but let me make this one point so we're clear. British Columbia is in fact considering going online with this, so it would certainly expand accessibility—as opposed to what Ontario is talking about, which is, at this point, restricting their going into the commercial casinos and maybe the charity ones.
You've hit the nail on the head, though, with regard to accessibility and what happened with the VLTs. Ontario, at that time—I know, I was part of the discussion during that time—opted not to. That still is the case in Ontario. The Province of Ontario does not allow VLTs in any place.
However, in other jurisdictions, after you get over that initial hump of the kind of problems you ran into, it tends to level off.
I don't know, but Mr. Rutsey or Mr. Burns might be able to comment more on that.
11:30 a.m.
President and Chief Executive Officer, Canadian Gaming Association
I'd be happy to talk about the VLT issue, separate and aside. The point to be considered here is that this betting is already occurring, and people are betting with bookies, or they're betting online themselves. All we're doing now is allowing the provinces to offer a safer, more secure alternative for people already doing this.
You're absolutely correct concerning some of the things you mentioned about VLTs and things of that nature. The way some of those programs were rolled out was probably not the most successful way to introduce gaming into communities. But we're not here to discuss VLTs; we're here to discuss Bill C-290 and legalizing betting on single sport events.
11:30 a.m.
Conservative
Robert Goguen Conservative Moncton—Riverview—Dieppe, NB
Thank you, Chair.
Thank you to the witnesses for coming.
My question deals with safeguards. We've talked about organized crime. Certainly organized crime benefits from single sport event betting, but there is always the prospect of an event being rigged. Certainly if it's mixed martial arts or if it's a boxing match, it's a little less complicated. Teams have been rigged before, as in 1919 with the Black Sox, and “Shoeless” Joe Jackson of the era.... What safeguards will be there to avoid this, and who would police it?
11:30 a.m.
President and Chief Executive Officer, Canadian Gaming Association
That's a great question. I think that once you bring an activity above ground, where it's being measured and monitored by legitimate organizations—provincial agencies or the operators they hire to operate these things—those kinds of anomalies are noticed. People have been trying to fix sporting events ever since people began betting on them. But when you bring the activity above ground, then people can actually see anomalies in betting patterns.
A famous example is associated with tennis professionals. A couple of years ago the Russian player, Nikolay Davydenko, was playing some bum and all of a sudden, during the course of the match, a huge amount of money was wagered on the bum. The betting companies noticed this right away. They froze all the bets and they launched an investigation in conjunction with the ATP, found the source of the funny betting patterns, turned the information over to law enforcement, and law enforcement proceeded.
That's a real advantage, as opposed to people just phoning up their bookie and saying they want to bet on this or that. By making it visible, it really does address your concerns, and then those kinds of anomalies are a lot easier to spot.
11:35 a.m.
Conservative
11:35 a.m.
NDP
Joe Comartin NDP Windsor—Tecumseh, ON
Mr. Chair, could I address that as well? I’d just like to expand on this a bit because we talked about this as we were preparing.
The other thing that happens here, which doesn't happen when it's illegal, is that because it's regulated and because the funds flow in a really different pattern, if organized crime were fixing an event, there would be no way we would know they were doing that, as it is now.
I know that Paul at one point said to me that he asked somebody in the NFL, “What are you doing now to watch the way of the betting?” Other than what they can get out of Nevada, they have no way of watching for it.
This will in fact allow provincial governments, in particular, and the people who are operating the single sporting events, the opportunity to be able to monitor that on an ongoing basis. In that particular circumstance, if a big influx of funds came in, their people would say there is no reason for that. They've done their analysis and the Montreal Canadiens are in fact going to win the Stanley Cup this year. Hope springs eternal.
11:35 a.m.
Voices
Oh, oh!
11:35 a.m.
NDP
Joe Comartin NDP Windsor—Tecumseh, ON
But if they saw a huge influx coming in to support the Canadiens to win the Cup, they would be talking to the police. At this point, we cannot identify it, so this would be part of the tools to fight that kind of corruption.
11:35 a.m.
Paul Burns Vice-President, Public Affairs, Canadian Gaming Association
One reason is because the sports books run on a very small profit margin, 5%, which means 95% of the money gets returned to the bettor. They have to be very accurate on how they set odds and watch the flow of money, because the odds would change if the money changes and so on. It's a continual monitoring of behaviour, because sports books only offer bets on sports that are widely known and widely accessible, so there is a knowledge base that everybody has access to in a lot of ways to make those bets. It is something that is very keenly watched, because if they don't get it right or money moves the wrong way, sports books can lose money, and that's happened in Nevada and Super Bowl games in the past. It does happen where the overall book would lose money on a game because they either didn't get it right or the money went the other way on the odds. So they are keenly aware of where money flows.
11:35 a.m.
Liberal
Sean Casey Liberal Charlottetown, PE
Thank you.
Welcome, gentlemen.
As you know, I spoke in support of this bill when it was initially introduced. I was almost immediately contacted by organizations within the industry—and forgive me, Mr. Burns and Mr. Rutsey, it may well have been yours—to say this is good, but it doesn't go far enough; we want this as well.
My question to you is if this is number one on your wish list, what's number 2? I want some anticipation for where we are going.
11:35 a.m.
President and Chief Executive Officer, Canadian Gaming Association
There is no hidden agenda with this. What we are talking about here is something the Province of Ontario was looking to get done almost three years ago. We believe it is the right thing to do. This isn't step one of a two- or three-step process. We have nothing ulterior or beyond what this bill is proposing.
It wasn't us that was talking to you about wanting this and this and this.
11:35 a.m.
Liberal
Sean Casey Liberal Charlottetown, PE
I'm sorry if I implied that you had a hidden agenda. That certainly wasn't what I meant to imply.
I guess what I'm trying to get at is this. Within your industry, obviously this is a significant issue, otherwise we wouldn't be here. What's the next one? The gambling laws and betting laws in this country are in need of modernization. They need to catch up with what is actually happening. This is one example.
11:35 a.m.
Vice-President, Public Affairs, Canadian Gaming Association
If I may, there are factions within the industry that would see different types of.... People have talked about a betting exchange or charities being able to offer sports betting. It's not an easy product for people to offer. It does require a strong knowledge base and it does require some sophistication and understanding of what you're offering bets on.
A betting exchange is a brokering of a bet between two people. In essence you are not the house making the book; you are facilitating two people placing a bet. There are online organizations that do that. It is a way of offering it.
I think the provinces could determine on their own if that's a product they wish for their provinces. The essence of this was that betting exchanges still couldn't occur if this change wasn't made either. Whether people want to do that in the future or not, I think the provinces have been indicating that they would simply like this opportunity. I don't think charitable gaming has the capacity to offer any kind of product on sports wagering in terms of where they are. It's all done under the purview of the Criminal Code and by the province, because charities cannot offer electronic gaming on their own; they must do it in conjunction with the provincial agencies.
11:40 a.m.
Liberal
Sean Casey Liberal Charlottetown, PE
That's what I was looking for. Thank you.
The gaming in my part of the world is pretty much all run through the Atlantic Lottery Corporation. Is that also how this would work? Is that what you envision?
11:40 a.m.
President and Chief Executive Officer, Canadian Gaming Association
The short answer is yes. If the bill passes, then each province will choose how it wants to offer the product. If they decide ALC would be the organization that would be mandated to deliver the product, then the product would be delivered in whatever format is determined by each one of the individual provinces that make up ALC.