Bill C-218 (Historical)

Safe and Regulated Sports Betting Act

An Act to amend the Criminal Code (sports betting)

This enactment repeals paragraph 207(4)‍(b) of the Criminal Code to make it lawful for the government of a province, or a person or entity licensed by the Lieutenant Governor in Council of that province, to conduct and manage a lottery scheme in the province that involves betting on a race or fight or on a single sport event or athletic contest.

[The Chair, Liberal, Iqra Khalid]

Thank you very much, Mr. Masse.

As I indicated earlier, we would need 10 minutes, as Mr. Fortin requested at our last meeting, to discuss his motions and some housekeeping items, so at this time I'd like to thank all of our witnesses for your very compelling testimonies today, for being here and for answering our questions. If there are further clarifications that you'd like to provide, please send them to our clerk in writing. We'd be happy to receive them.

Thank you again. You are now welcome to log off the meeting if you so desire.

Very quickly to members, we'll get to a couple of housekeeping items before we go to Monsieur Fortin's three motions.

First, you've all been emailed our budget for the study of Bill C-218 in the amount of $2,650. Can I have the consent of the committee to pass this budget? A thumbs-up would be great.

[Rhéal Fortin, Bloc, Rivière-du-Nord, QC]

In your opinion, if Bill C-218 were passed and the practice were legalized, couldn't the racetracks come to an agreement with Loto-Québec on revenue sharing? Ms. Leslie spoke earlier about the cost of maintaining horses, among other things. Couldn't some type of revenue sharing be arranged with Loto-Québec? Has this option been explored or discussed?

[Rhéal Fortin, Bloc, Rivière-du-Nord, QC]

Thank you, Madam Chair.

My question is for you, Ms. Thomassin. However, I want to start by greeting you on behalf of your member of Parliament, Ms. Charbonneau, who would have liked to be here.

Ms. Thomassin, I gather from your presentation that you're concerned about the financial impact of potentially legalizing single-event sports betting. You aren't the only person to make this point. I'm not an expert in the field. However, I gather that single-event sports betting is already taking place, but the black market is benefiting from it. This is done through criminal organizations. It has always been that way and it probably will be that way as long as single-event sports betting is prohibited.

Bill C-218 proposes to legalize single-event sports betting. This would mean, for example, that Loto-Québec could manage bets on events that take place at your place, at the Trois-Rivières Racetrack. You're concerned that this would cost you revenue. However, you're already losing revenue to the black market.

Have you estimated the market share that goes to criminal organizations for single-event sports betting?

[Élisabeth Brière, Liberal, Sherbrooke, QC]

In 2014, the Senate blocked Bill C-290, which was very similar to Bill C-218. The senators felt that there was too much potential for match fixing or for organized crime to infiltrate the world of legal betting by rigging sporting events, including horse racing. One concern was that horses would pay the price for this potential rigging with their health.

How would you respond to these allegations today?

[Sue Leslie, President, Horsemen’s Benevolent and Protective Association of Ontario]

Thank you very much, Madam Chair.

I've been in the horse-racing industry and community for more than 40 years, and I currently have the privilege of being the chair and president of the Horsemen's Benevolent and Protective Association. I've also held various other positions across the industry.

In 2012, I also had the privilege of being chair of the Ontario Horse Racing Industry Association when the industry faced a financial crisis due to the Government of Ontario's decision to end the slots at racetracks program, which at the time was the funding model used by government to support the horse-racing industry.

This one decision nearly killed the horse-racing industry. The industry seemed to be collapsing right before my eyes, and I won't go into the very sad details, including the welfare of the horses and the sheer worry of the thousands of families. Fortunately, we were able to show the government the devastation caused by this decision, and an alternative financial solution was provided.

I reference this time in our history only because while we support Bill C-218 and the legalization of sports betting, it reminds me of that devastation we faced and the potential devastation we could face again, with both horse racing and breeding, if the federal government does not include language to protect the industry, much as Bill C-13 did.

To further explain my significant concern regarding the unintended consequences the industry could face, it's important to understand that the costs associated with horse racing are substantial. This is true both for racetrack operators and for owners and breeders.

If it were permitted for an organization other than a racetrack operator to take legal, fixed-odds bets on horse racing without paying any of these substantial costs, then the business model the entire industry sits on would be completely broken.

Due to the investments made by horse owners and racetrack operators and support from the government, the horse-racing and breeding industry supports more than 50,000 jobs across the country. Many of these jobs are blue collar in rural Ontario. Most of these workers have spent their entire lives working on farms with horses and would have a difficult time finding another career should the industry be drastically reduced.

Our farmers, owners, trainers, breeders and caretakers are only a small part of the jobs and economic activity we create. We also employ veterinarians, blacksmiths, jockeys, contractors, trainers and physiotherapists. In addition, we build barns, arenas, fences and running sheds. We plough fields, we plant crops, and we buy tractors, vans and pickup trucks. We produce $5.7 billion annually in economic activity. I would say this is an industry more than worthy of protecting. I want to reiterate the $5.7 billion in economic activity and 50,000 jobs.

I've spent a fair amount of time speaking about the people and the families whose livelihoods depend on this industry. We must also consider the horses. The product is a living, breathing equine requiring 24-7 care, which is very labour intensive. If our people can't earn their living through horse racing, they will lose the income needed to take care of their livestock.

As an industry, we must do all we can to convince you that the language that protects the parimutuel bet must be reinserted into Bill C-218. If this wording is not reinstated in the bill, the horse-racing industry along with the 50,000 jobs it supports will be destroyed.

The horse-racing industry has a long and successful history of working with government and its agencies. We've established a good working relationship with the AGCO and the CPMA, which licenses racetracks and oversees the parimutuel betting. We are committed to continuing to work with both levels of government to maximize the return to government while doing the same for horse racing.

Horse racing has a proud worldwide history. Canada has produced some of the greatest race horses that have ever lived, including the great Northern Dancer.

I believe our government has a responsibility and a duty to the industry and the 50,000 Canadians who make their living in rural communities to include language in the bill to ensure a vibrant horse-racing industry alongside a brand new sports-betting industry that could become equally productive in generating jobs and economic activity.

Respectfully, this is the right thing to do.

Thank you, Madam Chair.

[Stewart Groumoutis, Director, eGaming, British Columbia Lottery Corporation]

Thank you.

Good afternoon, Madam Chair and members of the Standing Committee on Justice and Human Rights. Thank you for inviting the British Columbia Lottery Corporation to provide our perspective on Bill C-218, the safe and regulated sports betting act.

My name is Stewart Groumoutis and I'm BCLC's director of e-gaming operations. My colleague in virtual attendance is Dr. Jamie Wiebe, director of player health at BCLC.

We are pleased to speak to the committee today as you consider this bill to modernize the law in Canada so that sports bettors can finally legally access single-event betting in their own country, as well as the benefits and safeguards that come with that option.

To provide some background on BCLC, we conduct and manage commercial gambling in a socially responsible manner on behalf of the Province of British Columbia. This includes 16 casinos, 17 community gaming centres, 3,500 lottery retail and hospitality locations and PlayNow.com, B.C.'s only regulated gambling website, which currently captures approximately two-thirds of B.C.'s total online gambling market.

Since 1985, approximately $25 billion from BCLC's revenues has gone back to the Province of B.C. to support important investments like health care, education and community programs.

Like previous speakers, we believe single-event sports betting is long overdue. We believe we can offer this product while supporting the health and safety of our players and mitigating gambling-related harms.

We know that B.C. players already make these bets, either south of the border in State of Washington casinos or on unregulated offshore websites, neither of which provide revenue or jobs that support British Columbia. In fact, we estimate that more than $1 billion is wagered on sports annually in our province. The majority of the benefit of that wagering leaves B.C. as a result of the current laws.

We're asking for a level playing field. We're asking for the opportunity to offer single-event sports bets in a way that benefits our province and our players—through regulated player health, integrity and security safeguards.

In the short term, BCLC plans to first implement single-event betting on PlayNow.com and quickly create a new suite of sports betting opportunities for our customers. In the long term, at land-based casinos and community gaming centres, we're ready to work with our industry, regulator and government partners to introduce licensed sports books in key markets.

We'd also consider enhanced sports betting offerings at hospitality locations, providing a much needed economic boost to bars and pubs across B.C.

While this is a significant opportunity for our players and our province, we acknowledge that legalized single-event sports betting creates a responsibility to enhance the robust player health safeguards we already have in place.

We can tell you that providing the best player experience possible—while supporting the health and well-being of our players by reducing gambling-related harms—is at the forefront of how we work. In fact, our goal is that no one is harmed from gambling offered by BCLC. We're working towards this not only by encouraging healthy play but by making our products, environments and services safer for our players.

One way we do this is through player research to gain a deeper understanding of risks, current interventions and safeguards, as well as evidence of their effectiveness. Another way we do this is through our GameSense advisers. They are dedicated player health specialists available to support players with informed decision-making and healthy play—or to refer them to treatment and support when needed.

During the COVID-19 pandemic, and with B.C.'s casinos currently closed, we have enhanced these supports and have GameSense advisers available via telephone and online chat on PlayNow.com. In fact, PlayNow.com is the only online gambling website in North America, and it is one of the few in the world with dedicated player health specialists ready to support their customers.

You'll also recall from a previous speaker, Mr. Zane Hansen from SIGA, that our GameSense program is widely used by our provincial counterparts in Saskatchewan. It's also licensed in Alberta, Manitoba and several jurisdictions in the United States, including all MGM resort facilities.

For our commitment to continuous improvement and our evidence-based approach to player health, BCLC has received the highest level of certification—for the fourth time in a row—from the World Lottery Association. This certification is for excellence in responsible gambling programming.

If Bill C-218 is passed, BCLC and our Canadian regulated counterparts are well-positioned to offer single-event sports bets to players in a safe and responsible way.

As someone who has been with BCLC for more than 10 years, I know first-hand about the investments we have made in player health, the terrific player experience we offer and how much better it could be with single-event sports betting.

This is something our country is ready for. That's why we're urging you and your colleagues to work collaboratively to bring single-event sports betting to Canadian players and provinces.

Thank you.

[William Ford]

Yes.

I can't speak to the nuances of your House rules, but what we're very simply asking is this. Bill C-218 deleted a paragraph, and we're asking that this just be amended. It is paragraph 207(4)(b). We're asking that the language, as very specifically set out in Bill C-13, be adopted and dropped into Bill C-218.

[Brian Masse, NDP, Windsor West, ON]

It's ironic because it was a New Jersey court case, but to think we're here because basically Nevada got a special pass because organized crime set up there to create the whole system. It's bitter irony that we're at this point in time.

I'm going to move really quickly to Mr. Ford.

You mentioned Bill C-218 and Bill C-13. The government's position on that.... We were part of...with Mr. Comartin and Mr. Hall drafting this current bill. Thanks to Mr. Waugh for taking it up.

The government bill was different from ours. I actually fought, ironically, to keep both bills alive. The government's position was that they were different. Not only did I deny them two opportunities to drop it in the House, but I spoke against it to the Speaker. The ruling has been that the two bills are too similar.

Do you have a specific amendment that you would want to have, because I think you have to convince the government of that? Even on that, the parliamentary secretary appealed to the Speaker to dismiss even my intervention on the floor of the House of Commons.

Do you have a particular remedy that you're looking for with regard to the situation that you're in?

[William Ford]

Just to clarify, the number that is bet parimutuelly in Canada, legally through the CPMA, is $1.2 billion today. We believe that if Bill C-218 were to come in unamended, there could be fixed-odds wagering legal in Canada and perhaps as much as half of that parimutuel number, $600 million, could disappear and the industry would not benefit from that handle number.

You've asked me to also guesstimate what I think the offshore market on Canadian horse-racing products could be today, and I am saying I think it could be north of $200 million.

[Rhéal Fortin, Bloc, Rivière-du-Nord, QC]

Right now, single-event betting on horse racing is controlled by organized crime. Do you know what this means financially?

You said that, if Bill C-218 were to pass, about half of your $1.2 billion in revenue would be affected. That said, have you estimated how much of that money is currently going to the black market, to criminal organizations?

[William Ford]

Yes.

Today, the parimutuel model wagers about $1.2 billion that is legal and goes through the CPMA. We're aware that there is a significant grey market area offshore where wagers go.

We would be very concerned if Bill C-218 came in unamended and fixed-odds wagering on horse racing were allowed. We could see that $1.2 billion totally undermined and easily cut in half. Those people who have received the licences from the various provinces would be under no obligation to pay into the system. The whole entire system could therefore collapse upon itself.

We absolutely need these protections that were in the government bill, BillC-13. With that, I think we can maintain the parimutuel system going forward.

That said, one of the things that we are telling all of our members is that you must work with your local provincial regulator. You must understand how it is going to roll out in your province and ensure that horse racing and tracks can play a meaningful role.

[Rhéal Fortin, Bloc, Rivière-du-Nord, QC]

Thank you, Madam Chair.

I want to thank the witnesses for being here today.

My question for Mr. Ford pertains to what has already been discussed. The people in the racetrack industry are concerned that, if Bill C-218 were to pass, they would lose revenue. Mr. Lewis spoke—and he isn't the only one who has done so—about the single-event betting done through the criminal network.

Mr. Ford, do you think that legalization would really affect racetrack revenue?

[Jim Lawson]

Thank you.

Currently the only backbone for the horse industry's business is parimutuel wagering. The industry operates the only legal single-event sports betting in Canada today, and it allows racetracks to earn income from legal wagers that are used to cover the substantial costs to produce our content. The parimutuel wagering also allows for profits to be shared with horse people, horse associations, breeding programs and horse aftercare programs.

As you have heard from Bill Ford of Racetracks of Canada, parimutuel wagering is a betting system in which all bets of a particular type are placed together in a pool, with payouts determined by the sharing of the pool among the winning wagerers, while fixed-odds payouts are agreed at the time a bet is made. Fixed-odds betting has mass appeal to large wagerers. The new generation of wagerers and large wagerers have grown up betting on points spread, much like you see in the National Football League.

This distinction is at the heart of the gravest risk to the Canadian horse-racing industry as your committee considers sports betting legislation. If the private member's bill, Bill C-218, is passed with its current language, it will allow others to offer fixed-odds wagering on horse racing. The horse-racing market is a zero-sum game. Horse-racing wagerers who would access fixed-odds betting will move away from the Canadian parimutuel pools. This will dramatically cannibalize the Canadian horse-racing industry's market share, and these operators would earn the revenue without contributing to the substantial costs of producing our content.

In other major sports betting jurisdictions in the world, notably Australia, fixed-odds wagering on horse racing has surpassed parimutuel wagering. In both Australia, and more recently in New Jersey, one of the first to implement and coordinate horse racing with sports betting, the government has introduced frameworks to protect the horse-racing industry.

We are requesting that private member's bill, Bill C-218, adopt language to protect the horse-racing industry. To do otherwise will ultimately destroy our industry.

Bill C-13, recently introduced by the federal government, has language to protect the industry from this risk. It is now incumbent on the government to insert its own language in the private member's bill to save an industry and the livelihoods of more than 50,000 families across this country.

[William Ford, President, Racetracks of Canada Inc.]

Good morning, Madam Chair and members of the committee.

My name is Bill Ford, and I'm here today on behalf of Racetracks of Canada. I appreciate the opportunity to speak.

Racetracks of Canada is a national organization representing over 40 racetracks across the country. Some are large like Woodbine in Toronto, but the majority are smaller seasonal tracks that play vital roles in their respective communities, many of which are in rural Canada.

Before turning to my substantive comments, I would like to provide some key statistics from a 2019 Jockey Club of Canada report on the Canada-wide economic impact of horse racing and breeding: $2.9 billion in value-added GDP; 56,000 full-time equivalent jobs; $2.1 billion in wages and salaries; and $1.2 billion in tax revenues to all levels of government.

I'm not here today to speak out against the sports betting bill. Over the last several months, our industry has stated its support for the legalization of fixed odds, single-event sports wagering in Canada. The horse-racing industry is particularly well suited to speak to the benefits of legal and properly regulated wagering in Canada. Black and grey markets benefit nobody.

However, it is vitally important that the legislative process considers the unintended consequences should the horse-racing industry not be protected.

Today, the horse-racing industry's business model is supported by parimutuel wagering. Section 204 of the Criminal Code establishes the parimutuel wagering system on horse racing when regulated and approved by the Minister of Agriculture and Agri-Food. Under the ministry, the Canadian Pari-Mutuel Agency, commonly referred to as the CPMA, has been set up as the industry's regulator.

The parimutuel system works as the house takeout is used to sustain the industry through payments to participants. Further, to obtain a parimutuel betting permit from the CPMA, a racing association must show that it has an agreement in place with its local horse people's group. This ensures that all stakeholders are invested in the parimutuel model.

Private member's bill C-218 as currently drafted could allow provincial lottery schemes and other licensed organizations to offer fixed-odds betting on horse racing. This could be done without any contributions back to the industry.

Bill C-13, which was another bill recently introduced by the federal government to legalize fixed-odds single-event sports wagering, included language that would prohibit any organization from accepting a fixed-odds wager on horse racing, ultimately protecting the industry from the risk highlighted earlier. We are strongly asking for the same protection in Bill C-218. Our industry and stakeholders need it.

That said, we can see the writing on the wall. The legalization of single-event sports betting will see the influx of massive foreign companies and leagues entering the Canadian wagering market. Competition will be severe, and racing will see market share shrink over time. It could potentially result in the closure of some tracks, which are already on the brink of financial non-viability, and the loss of thousands of jobs.

To that end, we are also requesting that historical horse racing be legalized. Historical horse racing is a parimutuel gaming product where individuals can place a wager on the outcome of races that have occurred in the past. Historical horse racing is currently prohibited by the Criminal Code, despite its being a proven and legal product in many jurisdictions.

With a simple change to the Criminal Code to allow for bets to be taken on an event that has taken place in the past, historical horse racing could be quickly introduced into the market, and would provide the entire horse-racing industry with a substantial and much-needed new revenue stream. This stream would be particularly beneficial to the smaller tracks that only run seasonally for a few weeks a year.

The industry has been speaking to the CPMA for years about the possibility of introducing historical horse racing to Canada. The CPMA has stated it is prepared to regulate it as a parimutuel wagering should the Criminal Code be amended.

In conclusion, Madam Chair, the horse-racing industry and Racetracks of Canada are supportive of the legalization of sports betting in Canada. However, it cannot be at the expense of a well-established industry that supports thousands of jobs and is the lifeblood of many rural communities.

Done correctly, single-event sports betting can create new jobs for Canadians and generate new revenues for the government all while protecting another industry, the horse-racing industry.

Thank you.

[Chris D. Lewis, Retired Commissioner, Ontario Provincial Police, As an Individual]

Thank you, Madam Chair.

Good morning, ladies and gentlemen.

Thank you for inviting me here today to provide some commentary regarding Bill C-218. My name was put forward as a potential witness by the Canadian Gaming Association.

One of the arguments made in favour of decriminalizing cannabis in Canada similarly applies to the sports wagering issue. It's a product that millions of Canadians spend billions of dollars illegally to obtain. It is estimated that Canadians spend $10 billion annually through illegal sports betting operations controlled by organized crime.

In December 2019, the Ontario Provincial Police organized crime enforcement bureau broke up a Hells Angels-controlled illegal gambling ring in southwestern Ontario that earned $131 million over a five-year period. Based on the average profit margin of 5% to 6% for a sports book operation, this single organized crime operation would have accepted close to $2.5 billion in illegal wagers over that five-year period.

The OPP alleged that Hells Angels members controlled the illegal gambling ring through five websites. Many of the gamblers utilizing these sites would not understand that the sites were controlled by an organized crime group.

It is important to note that with the organized crime illegal gambling model come criminal turf wars, resulting in assorted violent crimes right up to and including murder. There have been a number of gangland murders in the greater Toronto area alone over the past several years related to the control of illegal gambling marketplaces, including shootings, arson and fire bombings.

There is a severe public safety risk related to that activity, as well as tremendous financial costs associated with responding to, investigating and prosecuting such acts of violence. In addition, investigating organized crime group activities is extremely resource-intensive from human, technology and operational funding perspectives.

According to a 2019 report from Criminal Intelligence Service Canada, or CISC, illegal bookmaking exists in every single region of Canada. While the exact size of the illegal sports book market is not known, it is believed to be significant. Some estimate it is in excess of $10 billion annually.

There are several examples of large-scale illegal betting operations run by organized crime having been broken up by law enforcement. These activities provide revenue to organized crime groups that allow them to fund a variety of other criminal activities.

The public report on organized crime in Canada highlights the use of illegal gaming operations by organized crime groups as a high-profit, low-risk market. It states on page eight:

[Outlaw motorcycle groups] collaborate with other [organized crime groups] in the importation of cocaine and other illicit drugs, and have networks stretching across Canada that facilitate their well-established distribution lines. They are criminally associated to groups that form the [traditional organized crime] network, and are involved with [organized crime groups] involved in illegal online gaming....

On page 12, the report says:

Gaming networks generate millions of dollars of revenue each year, and [organized crime groups] involved in this market use these illicit funds to finance other forms of criminality, such as drug importing and trafficking.

For individual bettors, dealing with organized crime in terms of sports betting brings additional personal risks. Organized crime groups will provide loansharking and allow individuals to far exceed their financial capacity at exorbitant criminal interest rates. Then they will hang the threat of physical violence and other forms of extortion over the borrowers' heads to ensure the repayment of accumulated debts in a timely way.

The Government of Canada has made it a priority to develop new policy and legislation to reduce organized crime activity. The Prime Minister's 2019 ministerial mandate letters for the Minister of Public Safety and Emergency Preparedness and the Minister of Justice and Attorney General of Canada included statements to that end.

The Government of Canada cited that one of its primary reasons for legalizing cannabis was to eliminate the criminal element and reduce organized crime's access to the large profits generated. It's time to apply that same logic to sports wagering and pass the amendment to the Criminal Code to permit single-event sports wagering.

The majority of Canadians who engage in sports betting believe they are engaging in a fun and harmless activity, as it is often presented as being legal and respectable. They are often unaware of the significant profits criminal organizations make as a result.

Bill C-218 will allow for greater regulation and oversight to ensure that Canadians are wagering in a safe and secure environment. A legal, regulated sports betting marketplace will provide the gambler with a safe and secure environment to bet in and the confidence that appropriate, responsible gambling measures are in place.

For more than three decades, Canadian provincial regulators have demonstrated an extremely strong track record in overseeing the development of industry-leading consumer protection safeguards, resulting in safe and responsible regulated gambling environments for Canadian players—