Committee Transcript 1996-Aug-19 | Legislative Assembly of 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

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, ladies and gentlemen and members of the committee. This is a hearing of the standing committee on administration of justice. We are considering 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.

My name is Gerry Martiniuk; I'm the Chairman of this committee and the member for Cambridge. I'd like to welcome Garry Guzzo who represents Ottawa-Rideau, Bob Chiarelli -- he's not here yet but he will be here, I understand -- from Ottawa West, and Mr Richard Patten, Ottawa Centre.

Mr Richard Patten (Ottawa Centre): I'd like to welcome everyone to the fine riding of Ottawa Centre this morning. It's a riding distinguished by a very strong business community, a residential community, Parliament bills -- Parliament Hill, rather; Parliament bills, that's probably right -- the Canadian government and the experimental farm, so I have a very large agricultural farm in my riding, for all those who come from the rural areas. Thank you, Mr Chair, for the opportunity.

ONTARIO RESTAURANT ASSOCIATION, OTTAWA REGION

The Chair: Our first presentation is by the Ottawa region of the Ontario Restaurant Association represented by Mr John Myers and Mr Phil Waserman. Good morning and welcome, gentlemen. The procedure is that there is 20 minutes set aside for your presentation including questions, and I'd ask you to proceed.

Mr John Myers: Good morning, Mr Chair and members of the committee. I am John Myers. I'm the president of the Ottawa region of the Ontario Restaurant Association. I'm joined by Phil Waserman who is the past chair of the Ontario Restaurant Association and also the owner of the Courtyard Restaurant here in Ottawa. I'd first like to thank the committee members for permitting us the opportunity to speak before you this morning on the issue of video lottery terminals.

Let me begin by stating that the Ontario Restaurant Association, and particularly the Ottawa region, strongly supports the government's initiative to introduce video lottery terminals in Ontario's licensed hospitality establishments. We believe it will provide the hospitality industry with some renewed hope for growth in the future and will help stimulate job creation.

As I'm sure you are aware, the hospitality industry is one of the province's largest and most important industries. However, in the past few years the Ontario labour market has undergone major changes, with unemployment almost doubling from 5.1% in 1989 to 9.6% in 1991 and since holding at about 9%. Particularly vulnerable to these jobs losses and prolonged unemployment have been workers with limited skills and qualifications. Included in this group are young workers just entering the job market.

During that time the foodservice employment contribution has been significant. In 1995, foodservice occupations provided jobs for 252,000 people in Ontario. This accounted for 46% of the persons employed in the low-skill, entry level segment of the Ontario economy.

Foodservice employment is also an accessible and important point of re-entry into the labour market for the unemployed, particularly those displaced from other occupations. Studies show that about 13% of those hired into the Ontario foodservice industry are displaced workers.

These various dimensions of Ontario foodservice employment clearly demonstrate our vital contribution to the low-skill, entry level market and our significant contribution to the labour market performance in the Ontario economy overall.

Unfortunately, in recent years the industry has been hit hard not only by the recession but by cumbersome and burdensome red tape. The hardship is apparent when examining the decline of the foodservice dollar share in Ontario. In 1989 the foodservice dollar share was 43%; in 1995 it had declined drastically to 36%. This is contrasted in the United States in the same period of time, where in 1989 the foodservice dollar share was 44% and it increased in 1995 to 45%.

We are now just beginning to see some of the damage being undone with such initiatives as the elimination of the employer health tax on the first $400,000 of payroll, the elimination of the corporate filing fee and the extended hours for restaurants and bars. Again, let me state that we are in full support of the government's initiatives, but these are only the beginning, and we do need more.

As I indicated earlier, the hospitality industry has been hit hard by the recession. In Ottawa, we have also had to deal with the millions of dollars of discretionary income travelling across the Ottawa River into the Hull casino. This has done tremendous damage to an awful lot of restaurants in the Ottawa area. As a result, our Ontario foodservice industry must find new and inventive ways to attract customers back into their establishments.

The introduction of VLTs is an important tool in attracting customers back into Ontario's hospitality establishments and keeping them there. VLTs will also assist operators in attracting new customers into their operations. To be competitive today, the marketplace demands added entertainment value. As operators of hospitality establishments, we should be able to meet that request legally.

As we are all well aware, there is somewhere in the vicinity of 15,000 to 20,000 illegal VLTs, or grey machines, currently in the Ontario marketplace. The existence of these machines creates a great disadvantage for those of us who wish to maintain a legal operation. We believe that through the introduction of VLTs in licensed establishments, the government can assist in creating a level playing field for all licensed establishments.

It is all too often the case where operators are placed under undue pressure to buy these machines, not realizing that they are illegal or that the people they are dealing with are not of the utmost legitimate nature. The hospitality operator is promised a very profitable return from these machines. However, the return is often skewed by the organization that sold the operator the machine.

Furthermore, the proprietors of these machines are often from outside the province of Ontario, from such places as Montreal or Buffalo. As a result, the revenue from the sales of these machines is also going outside the province of Ontario. We believe the introduction of VLTs will bring the revenues that are already in existence from these machines out of the underground economy and into the legitimate and legal marketplace.

As mentioned previously, we also believe that with the introduction of VLTs into licensed establishments there will be entry job creation since there will be an increase in customer flow and the time a customer remains within the establishment will also increase. With both of these increases, food and beverage sales will definitely increase, and this will result in more jobs and job creation.

The Chair: Thank you very much. We have approximately four minutes per caucus. Mr Flaherty.

Mr Jim Flaherty (Durham Centre): Good morning. Nice to see you this morning; nice to be here. On behalf of the government, we're pleased to be in Ottawa today. We've been in northwestern Ontario in Thunder Bay and Kenora and southwestern Ontario in Sarnia, and we've also been in Fort Erie and in Toronto of course. It's a pleasure to be here.

With respect to the grey machines you mentioned in your presentation, we have heard around the province that they are a real problem, and of course they're illegal. They're making money, and they're making money not for charities and not for the taxpayers; the money is going to Buffalo and Montreal and other places, as you've mentioned. We learned last week from the Quebec lottery corporation that they have seized about 8,000 illegal machines since they legalized video lotteries in the province of Quebec. So we can look forward, I hope, to that sort of development in the province of Ontario.

The government's view is that the majority of persons who engage in gaming in Ontario are mature and reasonable in the way they approach it. They're moderate in their habits, whether it's bingo or break-out tickets or Monte Carlo nights.

0950

We have the experience of the other eight provinces that have video lotteries and we know from their experience that the profile of the average video lottery player in Canada is that they play once or twice a week for about 30 minutes at a time, that they spend about $10 each time and that they play with a prearranged budget. Once their dollars are exhausted, or they win or whatever, then they stop playing, which is evidence of mature behaviour with respect to gaming.

But we don't sweep under the rug the problem of the 1% to 2% of persons who engage in gaming who will become addicted. We already have readily available gaming in Ontario, so that is not a new problem being introduced by video lotteries, but what is new is a government for the first time dedicating millions of dollars to address treatment, therapy and education with respect to addictive behaviour in gambling. It is our government's commitment to commit 2% of the gross revenues of the funds coming from video lotteries, except for those at racetracks, to address that problem.

The idea is that we proceed with a measured, controlled, phased introduction, first at racetracks and permanent charity gaming sites and then gradually to licensed premises, which brings me to licensed premises, which is what you're here about. I want to ask you about something that is raised with us and is a matter of some concern, and that is access by minors to video lotteries. The legislation itself, the draft Bill 75, says that not only are minors not permitted to play the machines, but also licensed premises must set aside an area specifically for the machines and minors are not even permitted in that area. Is that realistic in terms of your industry?

Mr Myers: I believe it is. We're dealing with an industry that already deals with alcohol service. We also are not allowed to serve alcohol to minors. These will be segregated in areas, I'm sure, where there will be alcohol service in the majority of the cases. Of any group that would be able to handle this situation, I think you would find licensed operators are the best trained in the province right now.

Mr Flaherty: With respect to the hospitality industry, we've heard this legislation will create approximately 10,000 jobs in the hospitality and tourism sector, particularly in some of the rural areas of the province. What has been your employment experience in recent years in your area?

Mr Myers: Certainly we have seen a decline in employment in the hospitality industry. As I say, the numbers I quoted as far as foodservice dollar share is concerned totally reflect back to profits in restaurants, the number of bankruptcies and that there has been a drastic decline. The exact number I do not know. I don't know if Phil does. It has been a dramatic decrease in the number of employees. As I say, we're just starting to get going in the right direction again where we're able to look at job creation in the industry. It should be a major area of job creation for the whole province.

The Chair: Thank you, Mr Flaherty. Your time is up. I'm sorry, Mr Guzzo, there is no time. Mr Patten.

Mr Patten: Welcome this morning to the meeting. Good to see you, Phil. I must tell you that Mr Waserman's restaurant is a very good one; I've eaten there many times.

Mr Myers: And I agree.

Mr Patten: You may have gathered some of the concerns of our caucus, particularly on the social ramifications of it. There's no doubt that we have tremendous empathy for your situation and the relative hard times you've gone through and the difficulties and some of the competitions. I can see where there would be a strong interest to look at any possibility that might add to and ameliorate the attractiveness of new clients.

Before I ask you one other question, I'd like to ask you, are there areas you think the government can do to strengthen your capacity to operate more cost-effectively or to be able to attract more customers into your businesses other than VLTs?

Mr Myers: There are numerous other ways that our association would like to see to make our establishments more cost-effective. I think wholesale pricing of liquor is probably our number one priority at this point. There are a number of other issues. As far as added entertainment value within the establishments is concerned, I don't think there is very much more, certainly not that I can think of, that the government would be interested in doing.

Mr Patten: A quick question: Are you aware of where there are these grey machines?

Mr Myers: I've seen them. In fact, I was starting to do some consulting for a restaurant. I just got their income statements yesterday and I noticed slot machines were part of their revenue, and that's in Ontario.

Mr Garry J. Guzzo (Ottawa-Rideau): Not in Ottawa Centre though.

Mr Myers: No, it wasn't in Ottawa Centre.

Mr Guzzo: You'd never find one in Ottawa Centre.

Mr Patten: Knowing the vigilance and the enthusiasm of the Solicitor General, who is also the Minister of Correctional Services, I find it surprising that somehow we can't clamp down. We can clamp down on certain things; we can't clamp down on illegal operators of VLTs, especially when I hear they're in the thousands. When someone gives me a quote that there are 15,396, I say: "How do you know so specifically that there are these? Where are they? How come for some reason we can't put a stop to a machine that" -- unless it's on rollers and you can kind of wheel it in and wheel it out. I find it strange that that can't be dealt with and I think maybe the committee should look at it.

In reference to your Manitoba studies, we're led to believe that both Manitoba and Alberta have put a cap on VLTs and in fact Manitoba now has begun to cut back on the numbers that they have and the context in which they are using them. Do you have any information on that research?

Mr Myers: I do not, but I'd be happy to get that information to you if it's available to me.

Mr Patten: Okay, fine, thank you very much.

Mr Myers: Can I add -- when we talked about the illegal machines, just to make it clear, as I said in my presentation, most of the time the operators are not aware that they're illegal. They are being presented as legal machines. They see them in other establishments and that is how they're being sold. I just want to make it clear that we're not dealing with a rogue pack of restaurant people here.

Mr Bruce Crozier (Essex South): Good morning. I am interested in any presentation that says that these VLT machines are entertainment. As a matter of fact, in your presentation you've said that Barbara Gfellner from Brandon University has conducted a study that says most people play these to socialize and not to gamble and it's viewed as a recreational activity. Do you agree with that?

Mr Myers: Yes. Actually, I just was in Winnipeg, in Gimli in fact, and was in a couple of these places and experienced it with my family there. That is my personal experience and that is what that study also shows, that people are not going to these bars for the VLTs. It is an added entertainment value that may keep the people in the establishments a few minutes longer and will increase food and beverage sales. I definitely agree with that, yes.

Mr Crozier: Are you aware that in Alberta they have found that the money they receive on food and beverage is lessened, that it seems to have been cannibalized over to the VLTs?

Mr Myers: My experience once again, from Gimli and Winnipeg, was very much the opposite. In fact I was in two establishments that had been saved by VLTs. They would have gone bankrupt if the VLTs had not been implemented. I didn't get the actual breakdowns on where the sales came from. Certainly they get some revenues from the machines, but they felt that their food and beverage sales had been increased enough that they were able to stay in business.

Mr Crozier: They're amazing little machines then, aren't they?

Mr Myers: They are.

Mr Peter Kormos (Welland-Thorold): Thank you, gentlemen. Again, you're telling us today what restaurateurs and hotel-motel people across the province have been telling the government: You want slots. No two ways about it. There's a whole lot of money to be made. I don't quarrel with that. It's no accident that the government isn't saying, "We'll let you run blackjack tables," or "We'll let you run poker tables," because those are labour-intensive. They don't have the same allure or speed of a slot machine -- one and a half seconds between plays -- and the technology is such that they're becoming more and more attractive, more and more alluring. We're on the cusp of virtual reality.

Laughter.

Mr Kormos: No, it's true. The manager of the Windsor racetrack was in front of us talking about the technology of a video machine where you bet your horse, you put it on "picture on picture," just like your RCA at home, watch your horse race, and then you play the slots in that minute and five seconds or however long the horse is running. You just go "picture on picture." You swap it.

1000

Again, I have no quarrel with the proposition that this is going to make a whole lot of money. I appreciate your reference to Gfellner -- here it is; I've referred to it many times -- but the fact is that, among other things, Gfellner notes that 9.1% of men and 9.3% of women who play the slots are pathological gamblers. Incidence of pathological gambling is far higher in slots than is the national average here to date of albeit 2% to 3%.

Frisch, University of Windsor, talks about 17% of adolescents either being pathological gamblers or high-risk gamblers. Derevensky at McGill University has found some of the same results in his research among university students and CEGEP students. Schaffer, Harvard University medical school, similarly found incredibly high risk.

We're looking at a phenomenon of a generation of young people who have been nurtured on video games and this high-tech stuff who are ripe for the pickings.

I have no quarrel with you. Why shouldn't you want to get in on the action? But there's a whole lot of money to be made and I, quite frankly, am concerned about the social costs because this is a far different kind of game than shooting craps, than playing the horses, than playing blackjack and playing poker. It's been called, and for good reason, the crack cocaine of gambling.

Heck, the government's got ARF, the Addiction Research Foundation, on side. It's got Dr Room, vice-president at ARF, saying, "Oh well, slots are no more addictive than any other form of gambling." Incredible. His own colleagues disagreed with him in Thunder Bay and Kenora, but that illustrates to me how corrupting this can be. If I were the vice-president of an agency like ARF that receives all of its funding from the government and I was at risk of being cut, I might be lured into saying, "Oh, no, I was wrong all my professional life about what I and other scientists say about slots, because I want a piece of the pie too," just like you want a piece of the pie.

But it's a done deal, I'm convinced, because the sort of people this government has to deal with to purchase 20,000 slots don't permit reneging on deals. You end up with your legs broken if you break contracts with those people.

And Jim Flaherty --

Mr Flaherty: Not today, Peter.

Mr Kormos: Oh, Jim Flaherty has acknowledged -- look, there isn't a gaming jurisdiction with slots in the world over 10 years old that hasn't been infiltrated and corrupted by the mob. The fact is that the slot industry in the United States -- Las Vegas, Baton Rouge, Atlantic City -- is notorious for historical mob involvement. These guys want to be sleeping with the mob. God bless them.

The Chair: Gentlemen, I thank you very much for your presentation. I'm sorry, the time has elapsed.

Before we proceed to the next presenter, Mr Guzzo has a point of privilege he'd like to raise.

Mr Guzzo: For the record, Mr Chairman -- and I should have done it before the first operation -- I want it to go on record that five of the seven presenters this morning are individuals or groups with which I have had a relationship, primarily as a lawyer, and have acted for some of them. I don't think I have a conflict of interest in that no one here is receiving treatment any different from that of any of their competitors. But I make that comment for the record, and it applies to the restaurant association -- some of their members have been and are clients of mine -- as well as to the Canadian Standardbred Horse Society, the Ottawa Valley horsemen, the Kuiken family and Golden Lake Tavern and Rideau Carleton Raceway. I also just indicate that many of those relationships go back to a time when I was a partner with Bob Chiarelli, the member for Ottawa West, and the same situation --

Mr Patten: That's why you're here.

Mr Guzzo: Yes. Anyway, I just thank you for the opportunity of putting it on the record.

The Chair: Thank you, Mr Guzzo.

RIDEAU CARLETON RACEWAY

The Chair: Our next presentation is by the Rideau Carleton Raceway, Mr Glen Pearson, president. Welcome, Mr Pearson. Once you're set up there, I'd ask you to proceed.

Mr Glen Pearson: Mr Chairman and members of the committee, we welcome the opportunity to make our presentation before you today. Rideau Carleton Raceway would like to thank the committee for the opportunity to appear and present this report today. We would also like to thank the government for recognizing the needs of the horse racing industry and the significant benefits it offers Ontario.

We have repeatedly attempted to interest successive governments in our industry's needs. We believe the horse racing industry warrants the government's attention and this committee's full consideration. Therefore, we salute and support Bill 75. We believe it will support the horse racing industry and sustain Rideau Carleton Raceway now and in the future.

Rideau Carleton Raceway is a long-standing institution in eastern Ontario, operating and contributing to the local and provincial economies for over 30 years. The raceway has a history of generating local jobs and significant tax revenue for government. Rideau Carleton Raceway annually employs over 400 people.

In addition to the 400 personnel in the stands and in the front of the house, we have a small town in the barn area, with an equal number of grooms, trainers, blacksmiths and service personnel. Myself and our staff are the non-elected mayors, police chiefs, planners, recreation directors for these 200 people who live in tack rooms at the racetrack. We supply showers, rooms. We serve turkey dinner for Thanksgiving. Imagine the interest that would be created if the government stepped forward in this small town, a plant was to open and 200 additional jobs were to be created. It no doubt would create a lot of interest locally and across the province. Bill 75 will help Rideau Carleton Raceway make that change.

The racetrack is part of the horse racing industry, which contributes $2 billion to the Ontario economy annually. Specifically, the industry generates $350 million in feed, hay, straw and local services; employment for more than 40,000 full- and part-time workers in the province; $1.17 billion from suppliers, both direct and indirect; $240 million of capital expenditures annually; and $240 million of spectator expenditures, not including $889 million in wagering.

The horse racing and breeding industry is labour-intensive, directly and indirectly supporting over 6,000 jobs in eastern Ontario. The employment base is primarily composed of unskilled, low-paying jobs on farms and at the track. Due to the lack of skills and the relatively low levels of education of the industry employees, social assistance could be their only alternative.

Over the past decade, Ontario horse racing has experienced significant declines in attendance and wagering. The trend is also true for Rideau Carleton Raceway. Like many of our friends in retail and housing, automotive, other industry sectors, racetracks have also been hurt. The Deloitte and Touche study, The Economic Impact of Horse Racing and Breeding in Ontario, 1995, which I have here with me, attributes the downward trend to consumer taste, the state of the economy and the increased competition for the entertainment dollar.

Due to our special circumstance and border location, Rideau Carleton Raceway requires the new video lotteries at racetracks and the charity casino programming venue to ensure the racetrack's continued viability.

The new Hull casino is enjoying about 10,000-plus patrons daily, many of them coming from the Ontario side. I hope the committee will have the opportunity today to visit the Hull casino. It's a beautiful gaming place and it proves that gaming is alive and well to the residents of Ottawa-Carleton, as you will see by the number of Ontario licence plates that'll be in the parking lot. A resident who lives near the Parliament Buildings can visit the casino in Hull in the same time it takes to drive to the track. The only difference is that there'll be a number of grey market slots on the way to the track. The Hull casino, of course, is fully authorized by the Quebec government.

Legal video lotteries are allowed in all the Quebec bars that border Ottawa. They're available at the hippodrome d'Aylmer. Rideau Carleton is also bordered by US gaming facilities on the St Regis reserve near Cornwall and the expanded Montreal casino in Quebec. Rideau Carleton would only be able to surmount the new competition and seasonality limitations of our racing operation with a year-round entertainment program, with more options to develop customer loyalty and a long-term business franchise.

1010

Recently at Rideau Carleton Raceway, as mentioned earlier, attendance has declined and with it the financial resources necessary to maintain a modern, attractive entertainment facility. Rideau Carleton is not unique among racetracks and entertainment facilities. We are on record in this community and with the provincial government demonstrating the need to ensure that the racing industry is maintained and offered a competitive share in any new gaming initiative to foster renewal, investment and growth in the agriculture and tourism sectors. Racetracks across North America have been able to turn the corner and compete profitably with various forms of casinos and video lottery programming as part of their entertainment offering. Rideau Carleton Raceway offers the same opportunity.

The May 7, 1996, provincial budget tabled by Minister Ernie Eves included positive and bold steps to support the horse racing industry and the related agriculture business communities in Ontario. The introduction of video lotteries and the reduction of the racetrack tax-sharing arrangement will not only assist racetracks in maintaining the industry but for the first time in years potentially foster growth. Rideau Carleton Raceway is making this presentation today to ensure that the government's interest in assisting the horse racing industry is acknowledged as a welcome, needed action and that the execution of the government's intention serves as a real net gain to Rideau Carleton since our location is impacted by border gaming. Rideau Carleton needs video lotteries and interim charity gaming programming to remain competitive.

Las Vegas represents an interesting comparison where the tourism destinations have been enormously successful in attracting new visitors. New programs were offered since visitors are gambling less, an average of $114 per visitor per day compared to $120 per day in 1989. At the same time, spending has tripled on entertainment activities other than gambling, increasing upwards to $97 per day. This shift represents the reprogramming that the gaming capital of the world had to undergo to maintain its tourism numbers. They are offering other than gaming venues, new attractions to maintain tourist interest.

Although operating on a different scale, Rideau Carleton Raceway and other racetracks can grow with increased patronage by bringing in new entertainment programming as well to increase and renew interest in racetracks. Las Vegas required programming other than gaming whereas racetracks need gaming. The formula has worked in many tracks across Canada and the United States. New gaming and entertainment opportunities will also be highly successful at Rideau Carleton Raceway. Racetracks require other gaming options to be competitive and maintain consumer interest and a share of the gaming dollar.

The introduction of video lotteries in Ontario through racetracks is a positive and responsible method of launching and administering video lottery gaming in the province. With the appropriate number of video lotteries and charity gaming tables at Rideau Carleton, new capital investment would be available to accommodate the new programming and directly benefit racing. In essence, the investment would revitalize the racetrack through significant upgrades to the existing facility; enhance the benefits to the horse racing and agriculture sectors through a new purse stabilization fund to foster a higher level of interest and participation in the racing venue; sustain and build on the current employment at the racetrack itself while also creating substantial incremental employment in the local economy, both direct and indirect; and generate substantial incremental tax benefits to all levels of government.

The strategic vision developed by Deloitte and Touche for the future is "to provide an improved gaming/entertainment product at our racetracks and provide greater convenience to our customers by way of improved...and other forms of wagering." A key element in this vision is to make a racetrack "a fun place to be with a variety of entertainment and gaming options."

The selection of Rideau Carleton Raceway as a proposed charity casino site in addition to the announced video lottery program would mean agriculture benefits and job creation; the potential of upwards of $20 million in revitalization to accommodate the entertainment plan and horse racing; a positive introduction of video lotteries and charity gaming; a controlled environment through professional, proven management and continued stewardship; a fall 1996 opening; instant reporting and continuation of practices already adhered to in computer wagering presently available at racetracks.

In some respects computer video terminal gaming already exists at racetracks, as we have touch totes that are available where people self-serve themselves with betting and vouchers. Many of the racetracks, including Rideau Carleton, across the province presently have these in place on track in many of our offtrack locations. Managing VLTs will only require the expansion of our existing capabilities.

Other benefits in selecting Rideau Carleton Raceway: We would provide a turnkey, self-funding option, no government funds required; expansion available for future growth; and public and private partnering to maximize the government's return/tax generation through joint programming and management.

In addition, Rideau Carleton Raceway would not only provide a controlled environment for video lotteries; the location itself is a proven controlled environment. Patrons must purposely visit the site to place or make a wager. We do not impact on our neighbourhoods nor do we upset the delicate balance or nature of the local communities with gaming. Rideau Carleton Raceway holds an unprecedented record of performance in the industry and is proud of its local community accomplishments.

In your package you'll see there's a letter from the mayor of Gloucester, Claudette Cain. I'd like to read from that letter:

"Bill 75, which includes provisions for the introduction of video lottery terminals in Ontario, is the opportunity you have been waiting for to enable you to revitalize Rideau Carleton Raceway.

"As mayor, I fully support your initiatives to make the raceway site a family entertainment complex. I also support your application for VLTs at Rideau Carleton Raceway because the organization has been an excellent corporate citizen for many years; has earned the respect of our community; has the ideal site and infrastructure already in place; will not be infringing on a residential community; will create many new jobs; will create a new source of revenue within the municipality; will have the potential to contribute to the vitality of local charitable organizations.

"Let me assure you of Gloucester's full cooperation as you begin to implement your exciting plans for our community. Our staff are well equipped to assist you in the process.

"I congratulate Rideau Carleton Raceway for recognizing the potential for making the site a year-round family entertainment complex."

In the companion study aimed at improving the competitive position and the financial viability of the industry within the entertainment sector, once again Deloitte and Touche stated that the economic benefits of horse racing in Ontario were significant:

"Against the persistent slack in the Ontario economy and the declining economic base in agriculture, horse racing and breeding assume a critical function in shoring up both the provincial economy and particularly the local economies where horses are raced and bred."

Also in your package you'll see that there's a letter there from a local blacksmith, Doug Forgie. Mr Forgie states that he's a horseman who races at Rideau Carleton Raceway. This is a typical letter from somebody who's really not a statistic but a person who makes his living at racing. He's a professional blacksmith by trade. He's been involved in horse racing for over 30 years. His entire family is also active. Two of his sons are trainers and drivers, his daughter is a trainer and his eldest son is the starter-patrol judge at our racetrack. He's also a blacksmith. In his letter he states that video lotteries and the tax reduction will enable the horsemen and women to maintain a living and stay in Ontario instead of going to different jurisdictions.

1020

There's also a letter there from Ottawa Feed and Hardware, which was formerly known as the co-op store:

"Rideau Carleton has dealt with this location for over 25 years, first when it was known as United Co-op and for the past couple of years under our new name, Country Depot (Ottawa Feed and Hardware). They" -- talking about us -- "and their horse people are excellent customers who presently are struggling to make ends meet. They need the financial boost that VLTs would give their industry and, in turn, the local retailers would also benefit."

To successfully implement the strategic plan and to maintain and create agriculturally based jobs and foster growth and renewal, we require the government's continued support. We need an optimal number of video lottery terminals and charity gaming tables in a controlled, not saturated, market which will afford the track a real net gain and ensure a prosperous future. We ask for this committee's attention and thank the government for its interest in supporting horse racing in Ontario.

Mr Patten: Glen, good to see you. I know you run a good operation and also contribute a lot to the community, there's no doubt about that, and I know you are in competition with many other areas.

One thing I'd like to pursue with you, not now but at another time, would be the strength of the conversion of Las Vegas and where they began to look at families as being the source of attracting people to Las Vegas, which went against the grain of more and more gambling. They looked at other forms of entertainment participation to enable them to bring people back into the hotels and into their restaurants and whatever endeavours. Based on that, my hope is, frankly, that you will not be disappointed. My understanding is that there will be about 500 of these machines in some of the "major" -- I don't know if you're considered one of the big four in the province or not.

Mr Pearson: I'm big, but I don't know if I'd be in the top four.

Mr Patten: Not you; I meant your track.

Mr Kormos: Mr Pearson, thank you. You've said what other racetrack operators and the horse race industry have said across the province. I've got to tell I was more inclined to agree with Ernie Eves in March of this year when he said: "VLTs could create a lot of social problems in society. Lots of other provinces have introduced VLTs and lots of other provinces have had social problems as a result of VLTs."

I was more inclined to agree with Mike Harris back in May 1993 when Mike Harris said: "`Gaming doesn't come cheap.'....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."

I feel somewhat saddened that Mike Harris and Ernie Eves have gone full circle. I guess they've haven't gone 360 degrees; they've certainly gone 180. But don't worry. It appears that everything's A-OK because Jim Flaherty -- he's the person here closest to the top dogs -- told the Buffalo News last week that all that remains to determine is how fast the 20,000 slot machines will be installed. That's the only thing that's left to decide: how fast those 20,000 slots are going to get out there.

Mr Ron Johnson (Brantford): Mr Pearson, thank you for your presentation. I just want to take one second to correct what Mr Patten alluded to a minute ago. There have been absolutely no decisions whatsoever, nor any discussion, as to the number of machines that would be going into racetracks or which particular racetracks, just for the record, so you understand that completely.

Give me a quick estimation. How many jobs do you think you'll be able to create, or save rather, in the declining horse racing industry if VLTs are put into the racetrack?

Mr Pearson: Presently, as mentioned in the report, there are about 6,000 people who are employed in eastern Ontario. First of all, we'd obviously like to maintain the present jobs we have and then expand from there. The comment that I'd like to make is that the speculation on behalf of myself to be in front of this committee and then of course be in front of the government when the committee finishes the report to see the splits in the formulas with regard to video lottery and charity casino gaming and all those things, but --

The Chair: I'm sorry, Mr Pearson; our time for this presentation has elapsed. I certainly thank you for taking the trouble to attend today before the committee.

GOLDEN LAKE TAVERN

The Chair: Our next presentation is the Golden Lake Tavern, Mrs Grace Kuiken. Welcome.

Mrs Grace Kuiken: Good morning. I'm not quite as polished as all the people who are here. I don't know that much. All I can tell you is what I feel. I'm going to be speaking as if it's my own concern and my own business, but there are hundreds of us who are out in rural Ontario. We are the very small family-owned businesses. We generally own and operate our own establishments and we do it all, the bookkeeping, the bartending, the cooking, the serving, the maintenance etc.

For years now we have seen our business declining, not through poor business practices but because of changing times. If we are conscientious licensees, we pay attention to our customers. In blunt words, we serve them a lot less than what we used to. Without going into details, I'm sure that you all as business people would understand what that means. The general public have also changed their lifestyles and in two examples I would like to explain what I mean by that. This happened in our establishment so I speak from experience.

First, a group of about 30 people came to watch the Olympic opening on our big screen. We served these people on average about one and a half times during the four hours they were there. If this had been about 10 years ago we would have been asked to serve about four times during four hours.

The second example is a couple that we've known for 22 years -- we've been in our establishment 23 years now -- who came to the laundromat that's on our premises. Twenty years ago, while they waited for their laundry to be finished they would have been inside having a beverage, something to eat, but waiting their time out inside. This year, in order to have a conversation with them, we went outside to talk to them and ask them how things were going.

That's how things have changed. It's not a complaint. It's just the way that it is. As that news anchorperson always used to say, "That is what real life is like," it's reality.

What we're asking you is to give us an opportunity with these video games to utilize our establishments. We've got empty seats. The good licensee operator operates within the guidelines and the rules and generally a rural operator -- I'm talking about what I mentioned earlier, the people who are there all the time -- does a good job because his customers are also his friends. We pay attention, and because we do that we need an alternative way to keep our businesses viable. We already have control over the age group -- we know them all -- and we do know what we're doing.

As for the group that charges that these machines will cause problems, definitely, but those problems are already out there. They're just going to be different problems, and we're just going to have to learn to deal with them. Thank you. That's all I really have to say.

The Chair: Thank you very much. It's traditional that we ask questions. You have no objection to answering some questions here today?

Mrs Kuiken: No, if I can answer them.

The Chair: Excellent. Mr Kormos is first.

Mr Kormos: No, thank you, Chair.

The Chair: Thank you. Mr Guzzo.

Mr Guzzo: Mrs Kuiken, welcome, and thank you very much for coming in. I think it would be helpful if you just explained something about the area in which your establishment is located and the neighbourhood around it.

Mrs Kuiken: We're in a very rural area. The little village I live in has a population of about 300 people of whom about 75% are retired senior citizens. In the summertime we have a big area of cottages around Golden Lake, Round Lake, Lake Doré. We're all surrounded by lakes. The closest town to us is Eganville, which is 11 miles, or Killaloe, which is another 13 miles either way. Pembroke is the big city where everybody goes shopping, which is about 30 miles.

There's very little to do except enjoy the cottages, go fishing, camping. We do well in snowmobile season because we're right on the snowmobile trail. That's what I'm referring to about rural areas. There are a lot of us out there. The big businesses can talk about the employees they employ. I think we employ more people than the big businesses, because we keep ourselves employed, plus the part-time staff and our families.

1030

Mr Guzzo: Are there other questions? Just for the record, on a Sunday afternoon in winter in the snowmobile season, 50% or 75% of your customers would be tourists, people from outside the province even?

Mrs Kuiken: Yes.

Mr Guzzo: Similarly, this Sunday, in cottage season, the same story.

Mrs Kuiken: That's right.

Mr Guzzo: You're a tourist attraction.

Mrs Kuiken: Yes, we are.

Mr Douglas B. Ford (Etobicoke-Humber): Mrs Kuiken, you don't have to take a back seat to anybody with your presentation, I might as well tell you that now. You present yourself very well. Do you think the availability of VLs would contribute to the attractiveness of premises such as yours as a destination for travellers, to increase spending by tourists?

Mrs Kuiken: I think it would be if they've used them before. If they've been somewhere where they are, yes, I think they would spend half an hour or an hour longer. I don't think the people who are our local people -- I shouldn't say, "I don't think"; I don't know -- but, yes, some will create problems, and they will spend some. I do think that the people who use our cottages, who come in the surrounding area, the snowmobilers, may spend some money. But they all go with a certain amount of cash. We have no more to give them once they've spent whatever they want to spend.

Mr Ford: So they would contribute, other than your establishment, around the community also.

Mrs Kuiken: Yes, they probably would. They would stay longer maybe or make a point of stopping. They would need gas or they would need cigarettes or they would need something -- they would need accommodations for overnight. It would help our whole community. We're not talking about 15 or 20 machines; we're talking about one or two in a little corner.

Mr Doug Galt (Northumberland): Thank you, Mrs Kuiken, for an excellent presentation. Coming from an individual, it means a lot more to me than coming from a big provincial organization that has a position and they just trot it out for us.

Ontario decided back in the early 1970s to get into gambling and make it legal. This is just a fine-tuning, a minor change in it. Certainly with our youth, addiction occurs more easily than with people that are older. It depends on what addiction you're looking at. You made reference to your youth and knowing them. Do you see any problem down the road with controlling youth involved with these machines?

Mrs Kuiken: You mean keeping them away from there?

Mr Galt: Yes, controlling them.

Mrs Kuiken: We already control our under-aged. We know all our young people, that we can't serve them. If the rules and regulations stipulate that they have to be in a separate room, as I said earlier, most of the small licensees stay within their guidelines and their rules because that is their livelihood. They know what they're doing. They make it available according to what they are told they have to do. If it says they have to be in a separate room, a separate room is made and they don't go in there. That's all there is to it. Those are the rules of the house.

Mr Galt: You don't see a particular, special problem with having teenagers.

Mrs Kuiken: Well, considering if you've paid attention to what young people look like, a 22-year-old looks like a 16-year-old and a 16-year-old looks like a 25-year-old, so we have our jobs cut out for us. But, yes, we do manage to get along.

Mr David Ramsay (Timiskaming): Thank you, Mrs Kuiken, for making a presentation today. I just wanted to ask you, I would take it you've probably thought about how you would enter into the VLT business. Do you have a sense of how many machines a business your size could entertain and what that would do to your business?

Mrs Kuiken: No, I don't think -- the subject of the VLTs has been around, like you said, for a long time. How many we would be allowed to have? No, we haven't thought about it. Would they be helping us? Yes, they would. There are lots of evenings that there are no vehicles in our yard. If somebody came and played one machine for half an hour, it would mean there's a car in the yard. I'm sure if you're a businessman and there are no vehicles in your yard, what does the car do that comes through the yard? He drives through. I don't want to go there. The only people there I've talked to a million times. I don't want to spend time with them.

For us it would be to fill up a seat, as I said, because when you put one person in your establishment, it creates the enticement for one more person to come. Whether they play the machine or not, they will have a conversation. Yes, I do think they will help us stay in business and eventually hire some staff back again.

The Chair: Mrs Kuiken, I really appreciate your attending this morning. Your eloquence on behalf of small enterprises and small business in Ontario is well taken by this committee.

ASSOCIATION OF CANADIAN DISTILLERS

The Chair: Our next presentation is by the Association of Canadian Distillers. There is a written brief from the association. Please proceed, Mr Veileux.

Mr Ron Veileux: Good morning. My name is Ron Veileux. I am the president and chief executive officer of the association. It's a pleasure to be here today to discuss the association's and the distilled spirits industry's views on Bill 75, the Alcohol and Gaming Regulation and Public Protection Act, 1996.

A few words about our association in Ontario: We have an economic activity of about $900 million in this province and we employ about 5,000 people. This study was performed by the Conference Board of Canada six months ago, giving these numbers.

Let me begin by saying that our association believes that the amalgamation of the LLBO with the Ontario Gaming Control Commission into the new Alcohol and Gaming Commission of Ontario is a very positive step towards streamlining regulations and licensing in Ontario.

We expect that this move will realize cost saving for Ontario taxpayers and we further expect that the new commission's ability to enforce the regulations controlling gaming and beverage alcohol will become more efficient.

We also applaud the elimination of the conflict-of-interest element of the retailing and regulatory roles of the Liquor Control Board of Ontario.

Our association, however, does have a few concerns regarding Bill 75. For members of the distilled spirits industry the reference to alcohol in the new act is troublesome. It is a sad fact today that the great majority of Ontarians and Canadians consider alcohol to be synonymous with spirits but not beer and wine. You've probably come across that yourselves. I come across it at every party I go to.

The following comment from John Bates, the director of policy and founder of Mothers Against Drunk Driving, regarding the 1995 Federal Court decision on advertising, illustrates this point:

"We are very happy about the recent (Federal) Court decision allowing distilled spirits to advertise on TV. This is largely because the present situation gives the impression to the public that somehow wine and beer are `nice little drinks' and friendly and that spirits are evil stuff, and this is absolutely not true. We have too many people coming into courts saying, `We didn't drink, we just had beer,' and what this (decision) does is level the playing field and let people know once and for all that a drink is a drink is a drink. We have been pushing for this for many years and now we have been vindicated."

1040

Members of the committee, I want to remind you that the Addiction Research Foundation of Ontario, Health Canada and many other public health organizations are on record stating the relative benefits and costs of consuming alcohol products. These public health groups recognize that ethyl alcohol is the key ingredient in all beverage alcohol products, whether in the form of spirits, beer or wine, and that standard servings of each contain identical amounts. To a breathalyser, they're all the same.

Our association and each of its member companies continue to actively promote a more positive public perception of distilled spirits. However, this is an enormous battle which must be waged for the long term. You have an opportunity here to accept a change which will assist in promoting a responsible attitude towards the consumption of all beverage alcohol products. May we recommend that the title accommodate the following slight change: from "Alcohol and Gaming Commission of Ontario" to "Beverage Alcohol and Gaming Commission of Ontario."

Another of our concerns regards the elimination of the conflict-of-interest element of the retailing and regulatory roles of the LCBO. After a careful reading of Bill 75, it is not entirely clear what regulatory roles of the LCBO will be transferred to the alcohol and gaming regulation commission. It is our reading of the bill that regulation of off-sale retail operations like Brewers Retail, winery retail stores, agency stores, duty-free stores and the two distillery retail stores will no longer be regulated by the LCBO. But how will pricing be affected? Will the LCBO continue in its role as price setter for all beverage alcohol products? Will there be separate pricing for the LCBO and the alcohol and gaming regulatory commission? Will the single province-wide price system be eliminated? How will prices be set? I am sure you appreciate our concern regarding this very important issue.

How will distilled spirits be treated under the new structure, given the current imbalance in consumer accessibility? There are today 1,141 retail outlets for beer in Ontario. There are 998 retail outlets for wine. There are only 674 retail outlets for spirits. Will there be an opportunity to address this imbalance and bring about a more equitable solution?

We also have a considerable concern regarding product listings under the new system. How will this operate? Which organization will have control? Will it be fragmented? Today, requests are made to the LCBO for product listings. Many producers, suppliers and agents maintain a diverse product portfolio consisting of spirits, wine and beer. We anticipate that the new structure will not add additional red tape to this already complex task. To do so would add considerable cost to managing our business.

We also have a keen interest to know how advertising, promotion and sponsorship will be treated. With the transfer of responsibilities from the LLBO, how will these very important issues be dealt with? This becomes especially important given the recent regulatory changes by the CRTC. We trust there will be a process allowing approval at manufacturers', retailers' and licensees' option. It is also imperative that there be the opportunity to seek counsel on the advisability of launching an initiative prior to its execution.

My last point is the delegation of powers of the commission. It is not clear to us the degree of latitude the commission will have in the event that illegal activities are taking place in a licensed establishment. Will the commission be responsible for enforcement? If so, how will it differ from current LLBO practices? As an example, what powers will be exercised when illegal alcohol is being dispensed or when illegal video lottery terminals are discovered? When caught, what will be the penalties?

For infractions of this nature we suggest that there be zero tolerance. Furthermore, if convicted, the guilty parties, smugglers in particular, should have goods seized: cars, boats, homes etc.

We did not see a reference to how the new commission will deal with regulatory review, and this is very important to us. As we are doing today, it is imperative that the process be instituted whereby stakeholders have the ability to comment on regulatory changes prior to implementation.

Thank you for the opportunity to present the Association of Canadian Distillers' views on Bill 75. I will be happy to answer questions, Mr Chairman.

The Chair: Thank you, sir. We have four minutes per caucus.

Mr Flaherty: Good morning. Nice to see you this morning.

Perhaps I can address a couple of the points you raised at least, sir, with respect to the transfer of powers. As you know but everyone here may not know, we have a Liquor Licence Board of Ontario and we have a Liquor Control Board of Ontario. One of the repeated concerns about the Liquor Control Board of Ontario, the LCBO, over the years has been that they are both a retailer and a regulator of the product they sell, which is inherently a position of conflict according to many, including, I'm sure, many here. So one of the purposes of Bill 75 -- and it's nice to get away from video lotteries for a brief moment -- is to create the Alcohol and Gaming Commission, which will have the current Gaming Commission of Ontario and will also have the LLBO and the regulatory functions of the LCBO. So that conflict situation hopefully will be resolved.

I agree, of course, with your comments that a drink is a drink is a drink, whether we're talking about beer or wine or distilled spirits. Certainly I think that's been driven home with people in terms of drinking and driving and with young people, that they realize distilled spirits are distilled spirits no matter how they're consumed.

You made a very important point with respect to the transfer of powers and how the stakeholders would have input concerning distilled spirits and so on. You can be assured, on behalf of the government, that we are happy to have your comments concerning the transfer and that if you send them to me at the ministry or to the minister we'd be happy to have them. As you know, the statute provides that those powers will be set out in the regulations. So we look forward to hearing from you about that.

With respect to your concerns about zero tolerance and so on, with which I agree, one of the advantages of the new Alcohol and Gaming Commission will be with respect to enforcement. Currently, the Liquor Licence Board of Ontario has about 33 inspectors who work very hard and who conduct about 7,000 spot checks a year of licensed premises in the province of Ontario, of which there are something in excess of 15,000. So almost half of the licensed premises in Ontario are being spot-checked now. With the amalgamation of the inspectors from the LLBO and the gaming commission by the end of the month there will be more than 100 inspectors available. Of course, their duties will relate not only to alcohol inspections, but to the inspection of video lotteries at licensed premises when that happens.

I thank you for your comments, sir, and I look forward to hearing more from your organization.

Mr Crozier: Good morning, Mr Veileux. It's good to see you again. It's nice to see you in your territory rather than down in my territory.

As part of the overall discussion about some of the issues facing your industry in particular, I'd like you, while you have the opportunity to have some of us around the table, to comment on the issue of taxation, although we did meet with the finance people last fall, if you will recall, and to some extent consumer and commercial relations deferred to the finance department. But it's an opportunity to raise the issue about taxation and its effect on smuggling illegal spirits in bars and so forth, if you would.

1050

Mr Veileux: Thank you, Mr Crozier and Mr Chairman. I would like to make some comments on taxation. This is why in my presentation there is a sentence there which states that we hope the new system will streamline the organization so that additional costs are not imposed on the industry. Hopefully there will be less cost.

The taxation of our products is as follows: If we combine federal and provincial taxation, a bottle of spirits that you purchase at the LCBO today has 83% tax on that. So if you pay $20 for your favourite drink, $17 is tax. For wine, the average tax is about 65%. So if you pay $10 for your favourite bottle of wine, $6.50 is tax, federal and provincial. If you buy your favourite case of beer at the LCBO or the BRI and you pay $20 or $30, 50% is tax.

There might not be anything wrong with that tax, but due to the fact that the tax is 83% on our products and it is only at 43% south of the border, it creates a significant opportunity for smugglers, for entrepreneurs, to make millions of dollars. This is what has been occurring in Ontario in particular, in Quebec and in British Columbia to a greater extent in the last four or five years. It is a tax revolt. The taxpayers are refusing to pay $20 today for a product they can purchase illegally on the street in this city here in Ottawa, in Toronto, on many streets, for about half the price. Because of this, the Ontario taxpayers, according to the LCBO, are losing on a yearly basic about $600 million in tax revenue to the underground economy.

Our industry, because of that, obviously is losing thousands of jobs and is closing down plants. We have closed 10 plants in this province in the last decade. It's not totally due to the underground economy. Lifestyles have changed, and this is good and we applaud that. But lifestyle only accounts for the closure of two or three plants, not 10.

Mr Crozier: The reason I wanted that pointed out is because much has been said in the lead-up to these hearings and in the budget this spring that the government would receive about $180 million, I believe it is, in net revenue on VLTs. We happen to think that's just a drop in the bucket as to what the eventual income will be. But for you to bring out the fact that $600 million is being lost just because of our unfair taxation I think is something that we all should be aware of. With a change there, both the government, the industry and all of us can benefit, because we know we're going to lose jobs in the distilled spirits industry if we carry on much longer. I appreciate the fact that you've been able to bring that to our attention.

I just want to say too that I take your last point, you wanting to be included in the regulatory process, as one that we should pay particular attention to, because as we know, this is barebones enabling legislation. It really doesn't say much. The real nuts and bolts of what's going to happen in your industry and the hospitality industry and the racetrack industry is in what regulations follow.

Mr Veileux: That's right.

Mr Crozier: I appreciate your comments this morning. You're always a great spokesman for your industry. It's good to see you.

The Chair: Thank you very much for your presentation here today.

REED LAWSON

The Chair: Our next presentation is the Ottawa Valley harness horsemen, Mr Reed Lawson. Welcome, sir. Please be seated and proceed when you're comfortable.

Mr Reed Lawson: Good morning. Mr Chairman, ladies and gentlemen, thank you very much for allowing me the opportunity to appear before the standing committee on Bill 75. As horsemen, we recognize the importance of the public consultation process and we certainly appreciate having an opportunity to be here this morning.

My name is Reed Lawson and I'm here this morning representing the Ottawa Valley horsemen and horsewomen. I also have the support of the horsemen from Peterborough, Belleville and Kingston, who also on occasion race here in Ottawa. With your approval, my remarks and comments could be on behalf of the 1,500 to 1,800 active horse people east of Durham county.

The horsemen and horsewomen of Ottawa and eastern Ontario are supportive of VLs being introduced on our raceway properties. In fact, if they are implemented with a sound and good provincial strategy, we are confident they will complement live racing. Live racing is our lifeblood and is the engine that drives the industry. Live racing creates employment, it promotes our world-renowned breeding industry and it generates hundreds of millions of dollars in spinoff benefits. These spinoff benefits are felt from the local grain grower in Arnprior to the Big Three auto makers in this province. So we do contribute significantly.

If any of you have ever had an opportunity to see the backstretch parking lot on a race night, as I know most of you have, you'll know what I'm saying is true. The backstretch is a world of its own, and it provides a comfortable and healthy place of employment for thousands of hardworking, hands-on individuals. Most of these jobs are low-profile, low-paying positions, and the majority of these people, I can assure you, are proud. They would have great difficulties retraining or learning new job skills outside of racing. I feel the industry has an obligation to protect these people and that is why it is imperative VLs are introduced in a manner or fashion that will promote and enhance live racing.

In Ottawa specifically, the horsemen believe that VLs will allow us to better compete with other gaming options. These include the Hull casino, which is only 20 minutes away, Loto-Québec slots and video poker -- they're just across the river, also the Montreal casino -- it's an hour and a half away -- and Indian gaming in upper New York state is just hours away.

We envision Rideau Carleton Raceway and other Ontario tracks as entertainment destinations for sports, gaming and other charitable activities. We need the raceways to become more diverse because their success or failure is directly connected to the horsemen's future. The horsemen are confident VLs will be introduced to raceways in Ontario to ensure the long-term viability of our agricultural roots.

In closing, although the horsemen and raceways have had a history of differences in the past, we seem to be in agreement on the introduction of VLs on raceway properties. Raceways have the gaming experience, the integrity, the security, the parking and customer amenities. The horsemen of eastern Ontario have the skill, the desire and the racing stock, and we look forward to demonstrating and introducing our exciting sport to a new audience of men and women.

Those are my comments. I appreciate the opportunity to be here today. I'd be pleased to answer any questions you might have of my remarks.

1100

Mr Crozier: Good morning, Mr Lawson. From our hearings over the last couple of weeks, I not only think you speak on behalf of horsemen and horsewomen in eastern Ontario, but we've heard this message from southwestern Ontario through central Ontario and the northwest and here as well.

We too support the horsemen and horsewomen, the racetracks and appreciate what they have contributed to the agricultural industry and to the economy in general over the years. As a matter of fact, I often raise in some of the presentations that they say these VLTs are recreational and that people don't play them because they can win money from them, which I think is a load of hay, frankly.

But harness racing or racing in general, both harness and thoroughbred, to me is the one recreational form of gaming. There are generally eight or 10 races. I can go to those races. I'm not much of a gambler, but I can choose whether I gamble or not. I can at least sit there and pick the winners and the losers, have dinner and have some fun, and I don't even have to put any money in to have that kind of fun other than perhaps my admission and price of dinner. So I see racing as both recreational and gaming, unlike VLTs.

We had a presentation this morning where one of the comments made was that these VLTs should be put in controlled and not saturated markets. I assume you support them of course in raceways. Are there any other venues in which you support VLTs being put in, do you have some concern about them being put in other venues?

Mr Lawson: Thank you for the question. I don't know if I would be able to say if I'd support any other venue than raceways. I think with the province having 15 standardbred racetracks, that's ample opportunity for most communities to get on a trial period at least to the raceways. I'm fully supportive of them being in the raceways. I haven't given it a whole lot of thought in all honesty whether they should be anywhere else.

Mr Crozier: That's a fair answer. I appreciate your bringing your thoughts to us. I haven't had the opportunity throughout these hearings to say one thing about harness racing: I've run four heats myself in charitable events and I have yet, I think, to find anything so exciting as to -- there were only four horses in each heat -- be behind that horse when it starts to push on a starting gate and the pace starts to pick up. You've got an exciting industry. I don't think I'll ever find a second career in driving, but you never know.

Mr Lawson: I appreciate those kind words because it is an exciting industry for sure.

Mr Kormos: Thank you, Mr Lawson. Your views have echoed the views of horse race and breeder and industry people across the province, no two ways about it. I suppose you and your industry have an argument to be made -- you know my position on slots. I'm not a slots supporter, so be it, but you have an argument to be made that yours already is a highly regulated gambling venue, hence the logic of putting slots in that milieu as compared to, let's say, restaurants, taverns, what have you, because there have been a couple of arguments -- and again I appreciate you spoke very articulately on behalf of your industry, its needs and the complementary nature of parimutuel betting with slot betting. Of course, much has been made of the 15,000, 25,000 so-called grey machines, the bartop poker machines and so on, which in themselves are not illegal. They only become illegal when the tavern owner pays off for the accumulated points.

An interesting observation was made by a submitter in Sarnia, by the president of Gaming Services and Support Corp, pointing out that most of those 20,000 illegal VLTs are currently in hotels, motels and taverns. He pointed out these are the people who are running illegal machines and now they come to the government saying, "Let us have slots; trust us now," when they've been the ones with the grey slots. It was just an observation by Mr Hurst which I found extremely interesting.

The other issue is about jobs. We learned from the Quebec supervision of some 14,500 slot machines that they could identify 300 jobs that were created as a result of that. Those are the technicians, the service people roaming who are on call and presumably on contract. One of the attractivenesses about the slots is that it's low labour. It's not like personing a gaming table. It's not like running a crap table, even though the federal government hasn't permitted those in Canada. It's not like running a blackjack table. These machines are beautiful. They stand alone. They're impervious to attack for all intents and purposes, and they're self-service.

Ivan Sack, the editor of Canadian Casino News, was critical of these numbers that are being tossed around, how many jobs they're going to be create, because he points out that most places, including the racetrack, that are going to seek to have them already have cashiers, already have the infrastructure, if you will, to take care of the machines to accommodate the players on those machines. The argument from the track isn't that it's going to create new jobs; it's that at the track by and large you need the extra revenue to sustain what you've got now. I don't quarrel with that, but the track has been cannibalized by casinos. I've read several comments about how it's lost some of its appeal intergenerationally for whatever reason, and I know the track does a whole lot of promotion to try to restore that.

You've been very candid, but the arguments of illegal slots and how they're going to be overwhelmed by legalizing slots is frivolous to me because, as I say, the same people from the hotel-restaurant industry who want slots now are the people who've been host to the illegal slots, and if they haven't been able to be a boon to their industry, how would legal slots where they'd get an even smaller piece of the action to help them out? I know there isn't a racetrack in this province that has illegal slots. You guys are far smarter than that.

Similarly in terms of the jobs, in the Quebec experience it's 14,500 slots, 300 jobs servicing them. We asked if there was any data on new employment in the bar-tavern industry -- I appreciate casinos provide employment -- new jobs in the bar-tavern industry, and the people from the Quebec slot supervision regime wouldn't speculate.

You're going to get them, though. The commitment has been made. The slots will be in the racetracks. But you notice everybody wants a piece of the action. The racetrack wants their share, the hotel-motel association wants theirs, the Ontario Restaurant Association wants theirs, the people who run the bingo parlours want theirs. The people who run the Nevada tickets, the break-open tickets, are saying: "No, you're killing our industry. We want ours." Instead of a chicken in every pot, we've got a slot on every corner. By God, we were promised 725,000 jobs and what does Mike Harris give us? Twenty thousand slots. Down where I come from it doesn't add up, but good luck to you and your industry.

Mr Lawson: Thank you, Mr Kormos.

Mr Guzzo: Mr Lawson, thank you for coming and good to see you here. It's good to see you anywhere but on a golf course. I can't help but comment that Ontario has been very kind to former golf professionals in recent months. I'd just like for the benefit of Mr Kormos, because we're on an educational process with this man and we're trying to help him along here --

Mr Kormos: And I'm so indebted to you, Mr Guzzo.

Mr Guzzo: Well, you will be when this is finished, Peter.

Mr Kormos: Oh, I've got a feeling, Mr Guzzo, I'm not going to enjoy this experience. As long as it's you and not the Speaker, I'm well comfortable.

Mr Guzzo: I think it's important to put into perspective the role you play here with regard to the horsemen of eastern Ontario. I don't think it would be unfair, first of all, to say that everybody who races in Ontario in the harness industry and in the thoroughbred industry and puts on the show, be they a blacksmith, a caretaker, an owner, a trainer, a driver, a jockey in the thoroughbreds, has some form of what we would call in industry a collective agreement with the management of the tracks that host the show. Is that fair?

Mr Lawson: That's fair to say.

Mr Guzzo: In your role you negotiate on behalf of those horsemen?

Mr Lawson: Yes, I do.

Mr Guzzo: To put it in Mr Kormos's language, you're really a shop steward. If the United Auto Workers or the Steelworkers of Canada had organized the horsemen instead of the horsemen organizing themselves, organized labour, we might have a convert here. Once he understands you're representing people in low-paying jobs in small-town Ontario --

Mr Kormos: Garry, I didn't see you on the picket line with the jockey club workers who were locked out.

Mr Guzzo: No, but I'll tell you what, you'd be there with these people if you understood just the type of --

Mr Kormos: Did you cross that line?

Mr Guzzo: I know where your heart is. This man voted against casinos when his own party brought them in. He voted against the casinos. When Bob Rae was taking those 700,000 jobs and moving them from Ontario to Buffalo, he didn't always vote against those, but some of them he did.

In any event, these people you represent live in small-town Ontario. They live on the farms surrounding Smiths Falls, Cornwall, Ingleside and up through the Belleville area, correct?

Mr Lawson: Absolutely. This area especially has produced a number of great horsemen in the industry worldwide, not just in Ontario.

1110

Mr Guzzo: That's true. The people who are doing these jobs, whether they're rubbing the horses, cleaning the stalls, working on the books for the small training centres, doing that type of thing, their ability to get other types of employment in their own area is very limited.

Mr Lawson: It's totally limited because the majority of these people are hands-on type of people. They choose to do what they do for a living. I mentioned briefly that it's imperative that we bring in these things in a careful manner to protect these people, because I don't know if a number of them would be eligible for retraining or be able to be retrained.

Mr Ford: Mr Lawson, I believe that you should have a level playing field with the competition we face from Stateside and Quebec. Also, do you think availability of VLTs would contribute to the attractiveness of premises such as yours as destinations for travellers and increased spending by tourists in the surrounding area?

Interjections.

Mr Lawson: I'm sorry; I heard the first part of the question but --

Mr Ford: We have a problem here of conflict.

Interjections.

The Chair: Could we listen to our guest? We have a guest who is trying to make a point.

Mr Ford: I'll repeat it. Do you think the availability of VLTs would contribute to the attractiveness of premises such as yours as a destination for travellers and increased spending by tourists in the surrounding area of your premises?

Mr Lawson: Yes.

Mr Ford: Also, the level playing field I mentioned Stateside and Quebec.

Mr Lawson: Yes.

Mr Ford: This will give you a better competitive stance in your particular business?

Mr Lawson: I believe it will, absolutely.

The Chair: Thank you, Mr Lawson, for your presentation here this morning.

UNITED WAY OF OSHAWA/WHITBY/CLARINGTON

The Chair: Our next presentation, Mr Bob Howard, campaign director of the United Way of Oshawa/Whitby/Clarington. Welcome, Mr Howard.

Mr Bob Howard: I would like to thank Donna Bryce, who I'm told is not here; she's had the bad taste to miss my thanking her. She did a wonderful job and I'm sure you people are appreciative of her efforts. I called her very late in the week and said that I had an issue and I had spoken to our local MPP, Mr Flaherty. They said, "Why don't you try and come to the committee?" Donna was able to put that together and I'm very grateful for that and I'm very grateful for you gentlemen taking the opportunity to hear what I have to say.

Because you people are probably inundated with paper and are sick of it, what I would do is suggest that on the first page of this brief basically it's the middle paragraph and the last sentence of the second paragraph and underlining the word "now" in the fourth paragraph.

I'm speaking on behalf of our United Way, which operates in Oshawa, Whitby and Clarington, but I can assure you that I've had conversations with other members of the United Way movement across Ontario. I can't speak for all the United Ways, but I can assure you that what I'm saying here has a great deal of support from my colleagues in the United Way movement across Ontario.

Essentially, the United Way is about helping people at the community level help each other. It occurred to me, when I heard that the VLT issue was on the table and was coming to the fore and that eventually, give or take whether the legislation passes or not, there would be the notion of charitable support in the community, revenues for charitable support in the community, I thought it would be an appropriate time to put on the table the idea that there is an organization in existence already which does a great deal of the things many levels of government have said they're interested in doing, which is solving problems at the local community level with volunteer input, with peer review, and that it's not necessary to create any additional, secondary or parallel structures, and that indeed supporting the United Way at this time would, in my opinion, lend a great deal of momentum to the cause because there are some pressures elsewhere.

Is that Donna? Hi, Donna. I thanked you profusely before I started. I told them what a marvellous job you did of helping me get here. I'm grateful for that.

Mr Ramsay: She's one of our favourites too.

Mr Howard: The United Way was already there. It is a way in which entrepreneurs and big business -- in our community, it's from General Motors to the person who runs Tailgate Charlie's. It's organized labour and it's senior citizens and it's school teachers and it's administrators and middle managers in corporations. It's a great partnership. Anything that the government could do to reinforce and lend momentum to that partnership would, in my opinion, be a very productive endeavour.

I know that there's an issue vis-à-vis the availability of funds in terms of the social costs and the issues of gambling. One of the advantages the United Way would bring to the table is that we work with all of those agencies that would be eventually delivering those services. It would not be a question where a decision had to be made in isolation in Toronto; it could be made in local communities all across the province. In our community, for example, we know that alcoholism and substance abuse are an issue where that may not be as significant an issue in Thunder Bay or London or Hamilton. Therefore, our agency operation review directs funds in that direction.

Our suggestion is that if Bill 75 were to become law and if there's a revenue stream that's available for charitable good works, I would like to put on the table the idea that one institution is already in place and willing to help the government immediately. That's why I underlined the word "now" in the fourth paragraph on the front page. Given our current structure and operations, the United Way is ideally suited to provide such a contribution in this service area now.

We have in our community about $700,000 worth of requests that our allocations review process identified as priorities. We cannot fund them. It ranges all the way from a program which last year provided 292 youngsters with the opportunity either to go back to school or to find employment training or locations in Oshawa, Whitby and Clarington. Of the 292 kids in that program, 280 of them had success, success being defined as going back to school or getting into an employment training program. The funding for that program has been cut. We would like to put that back on our agenda.

That's why I say that if there's an availability of revenue source, we can put those funds to use immediately. We don't have to invent things, we don't have to create new programs, we don't have to study things or do all kinds of -- I don't want to get into it. The programs are there. We had a $40,000 pressure from a women's wellness program which we would like to have been able to fund this year; we're not able to do that. That's why the operative word there on the front page is the word "now."

1120

If there are any questions or if I'm taking you somewhere you don't want to go, please interrupt me, or if I say something and somebody has a thought, I don't mind that at all. Please just interrupt me.

The proposal on the top of the second page is that the ministry consider using the United Way as a resource in the distribution of funds designated for charitable distribution from the proceeds. That's the proposal that I would make.

The advantages of that are direct and local involvement, coupled with local review of needs and agency operations. I think those two things are often overlooked as issues the United Way gets involved with. Not only do we review the operations of the agencies; our covenant with the funders is that those agencies operate as efficiently as they possibly can. I can assure you that in our community we have 30 people with a background in the financial services sector and the banking community who go and visit our agencies, who look at our agencies, and I can say with a straight face to any donor of $25 or $5,000 in our community that I think their funds are being well spent. They do a wonderful job in terms of agency review.

In terms of needs assessment, we have a very broad reach into all areas of the community. Talking about care for seniors or talking about Headstart programs for kids, talking about whether or not it's more important to fund a Meals on Wheels program because a senior can't get out, or whether or not it's important to give a kid a breakfast before school -- I don't think that decision has to be made in Toronto or has to be made somewhere remotely; I think those decision can be made at the community level. That's one of the things the partnership would bring to the table: We can make those decisions at the community level. The vast majority of them have tremendous volunteer input, which I think is an important part of the legacy of voluntarism in Canada, which has made this country a very wealthy country.

On to advantages: I give what I think are the five great advantages.

We have an established review process.

The United Way has a process in place to review agency operation as well as community needs.

Utilizing the United Way as a partner in distribution would be an opportunity to closely match the relationship between funds generated and expended in a community. I think that's an important consideration. What that would enable you to do is that somewhere there would be a linkage between the generation of funds in the community and the expenditure of funds in the community. For example, if there were a tremendous amount of lottery revenue generated in a community, somewhere along the line you could probably make the case with some degree of rational thought that there should be a correlation to the expenditure of those funds in that community as opposed to any other community. I think there are some advantages to that, socially and politically.

The United Way would effectively be able to address those gambling-related issues which may occur and do so in a fashion which takes into account the broad issues affecting more than a single agency or group. We deal with John Howard, with the YWCA, with the ACL, with two women's shelters in our community. It's not a question of somebody in the government having to choose one over the other; it's a question of the government saying, "We help to empower and support an organization which is already in existence."

Support of the United Way is an investment in human capital and communities. Helping people become more self-reliant is by any rational standard an investment we can all be proud of. Giving a hand to those who require it is an important component of what has defined us as a nation since Confederation. Bricks and mortar, cultural and athletic pursuits are certainly strong parts of what makes Ontario and Canada a wonderful and proud place to live, but people are what this country is all about and helping them is what we're all about.

The reason I wrote that is because I speak it a great deal when I go out and speak about the United Way, and I believe it. I've worked for the University of Toronto, I've worked for the Royal Ontario Museum, I've worked for Special Olympics, and one of the reasons I enjoy immensely doing what I do with the United Way is that we're helping people. It's an investment in the human capital, and frequently that's taken for granted and not understood.

If there's anything that comes out of my presence and the opportunity to present to this committee, it is, I hope, that there will be an opportunity for revenue if this bill becomes legislation, and if there is revenue, I hope that revenue will somehow be expended in a fashion in terms of the human experiences in our province. I think it's crucial. As I say, I've raised money; I've sent expeditions to Egypt; I've sent kids to Special Olympics in Washington for Mrs Kennedy. I can honestly say that I have had no more meaningful and satisfactory experience as raising the dough that we raise to help people and invest in human capital in our community, and that's one thing I hope I would be able to put on the table here.

I summarize it in five points. Some of them are redundant, but I like to put them in a five-point summary so that people have an opportunity to say, "What is this guy talking about?" That's what I'm talking about.

I think it would be a tremendous boost and a reinforcement to a movement which has been productive and successful for 55 years in our community. I think there is one time in our community when I can be most proud, when I sit down and I see John Kovacs, who was formerly the head of CAW 222 in our community, and I see Maureen Kempston Darkes. They can fight with each other, but about the United Way there is no fight. They're talking about investing in people in their community.

When I see lawyers and I see professionals, and I see a guy who works in a shop who is making minimum wage and he gives me a $50 pledge on payroll deduction, he can sit at the same table as the other people involved in that campaign. I really think it's a wonderful thing that brings communities together. The opportunity to have a boost from the revenue that would be available in an already existing program with no duplicity is why I'm here today and why I decided I would phone Donna. She said, "Come and speak to the committee," and I'm grateful for that opportunity. Thank you. I would be happy to answer any questions.

Mr Kormos: This has been brought to the committee primarily by charitable organizations that want to know how they're going to access this pot that the government is creating for them. United Way has been referred to only briefly by way of illustrating one model, so your comments today are particularly interesting.

United Way now is totally community-based in that what the United Way of Oshawa/Whitby/Clarington raises within Ottawa-Whitby-Clarington is what it has to distribute to its member agencies.

Mr Howard: Correct.

Mr Kormos: What's happening here with the prospect of 50 charity casinos in various locations throughout the province is that there are going to be concentrations of generation of revenues regionally more so than municipally because there are simply far more municipalities than there are going to be charity casinos, especially in the north, where you're going to have geographically far bigger chunks because you have smaller communities.

In terms of the traditional United Way model of distributing locally raised funds, and in view of the fact of, "Here I am with the Welland United Way drive and there's Fort Erie with its slot machines and its enhanced revenue from the slots," how does a neighbouring jurisdiction share the proceeds from its neighbour that may have a higher concentration of gaming activity and greater revenues?

Mr Howard: I would think there'd be some opportunity. I haven't seen what the projection is in terms of the regionalization of the thing.

Mr Kormos: Nobody knows.

Mr Howard: Okay, the concept would be that if that's deemed to be an important concept -- and I think there's a great deal of validity to this, that there's a correlation between generated funds and expended funds -- it would be a reasonably simple matter, for example, in our community for Oshawa, Whitby, Ajax, Pickering, Lindsay, Cobourg, Peterborough, if they were a region and there was an availability of funds, that those United Ways could talk about the distribution of those funds maybe by size of campaign -- if you had a $3-million campaign and a $1-million and a $2-million campaign and you've decided three, two, one and you said, "Okay, there's a rational region."

Mr Kormos: Based on a historical experience.

Mr Howard: Yes, in theory. That's one off the top of my head that I could suggest.

Mr Kormos: Then you have non-United Way types of participants. I realize you're not imposing the United Way membership in this model. What does one say to the Hungarian cultural society? What does one say to the Knez Branimir folk group, to the Rose City Snow Seekers, which are not charitable organizations for the purpose of income tax but none the less use Nevada tickets and bingos as primary fund-raising? How do we bring those people into the fold? They're going to be impacted, cannibalized by this as well. That has been acknowledged.

Mr Howard: I think one of the problems we face in Canada is 79,000 registered charities. I know those numbers are handed out by Mr Martin's office, not necessarily within the province of Ontario. It's a problem. One thing the United Way has done to help deal with that problem and not diffuse the value that the organization contributes in the community was, when it was created: "Let's create one campaign. There are a lot of efficiencies. We can bring all kinds of resources to bear."

We had a letter from 1941 or so from Mr McLaughlin, who was one of the founders of General Motors. Mr McLaughlin wrote this letter; we could almost have taken the letter and used it as a campaign piece today. The reality is that through donor choice we let organizations that are not necessarily United Way agencies receive United Way funds; 30% of some funds from United Way campaigns go to non-United Way organizations. So there's a mechanism in place for that, but essentially it would be the government saying, "This is a structure that we believe in, it's a force that we believe in and we have to ride with it.

1130

Mr Flaherty: Thanks, Bob Howard. The dedication that you show to the United Way of Oshawa/Whitby/-Clarington is evident from the fact that you've travelled all the way to eastern Ontario today to make the presentation on behalf of that United Way, and I appreciate it. A lot of people aren't quite sure where Whitby is, but we know that it is in the centre of Ontario. The proof of it is that if you travel Highway 401 from the Ontario-Quebec border to the Michigan-Ontario border, when you get to the midpoint of Highway 401 you're at exit 410, which is Highway 12 in Whitby, the centre of Ontario.

Despite Mr Kormos's talk about regions he would know, if he travelled to Durham region more often, that there are in Oshawa, Whitby and Clarington well over 200,000 people, one of the fastest-growing areas in Canada. But that's not really why you're here.

The Canadian Book of Charities is about 188 pages.

Mr Howard: That's right.

Mr Flaherty: I dug it out last week because one of the major concerns we have, which you're addressing, and I appreciate it, is how one chooses between charities or, perhaps more important, how one gives priorities between charities because of the demands, and that goes to the implementation stage certainly of video lotteries and permanent charity gaming halls in the province of Ontario.

The one assurance the government can give is that the revenues to charities in Ontario will increase by up to $180 million -- that commitment was made by the Minister of Finance -- which in terms of, for example, Monte Carlo nights now in the province, and there are some 9,000 nights per year, because more than one goes on every night, produce $10 million to $15 million per year, so the anticipated increase in the revenues is well over 10 times what that is generating now.

I appreciate your input about the role the United Way can play based on the tremendous experience it has and the capacity it has, specifically going to that implementation question. I will certainly pass on your proposal to the minister and make sure that I discuss it with him, then I hope that the United Way -- you're showing the lead here for all United Ways -- will participate in the further consultation that the government is committed to about implementation. Thank you very much for coming to Ottawa.

Mr Howard: Thank you very much for having me.

Mr Ramsay: Thank you, Mr Howard, for coming today. I certainly appreciate your attempt to do almost what your organizations do: When you see adversity there, you come in with a solution. I salute for you that, being positive.

I would say that what you're trying to do, which is a creative way of managing, is to make lemonade when you see a lemon. I'm very concerned about VLTs and the introduction of them into Ontario because I see them as a big lemon for sure. In fact, they're going to hurt all the little lemons on those Nevada tickets that a lot of little groups, some groups that you complained about there being too many of in this country, depend upon to raise money to help children have recreation in their communities, and other very good organizations that don't come under umbrella groups but which scurry around and have their volunteers work very hard and diligently, whether it be in malls or bingo parlours, to run the charity bingos, to try to get enough money to keep a ball team together or a minor hockey league going.

That's the whole problem with this introduction. It takes the tools away from the people who work very hard in their communities to try to support organizations they believe in, that they feel will be of benefit to the community. To give it to one umbrella group, whether it be the Ontario government or a very good organization such as yours, really runs the risk of exclusion of many groups that are out there raising money today.

I'm particularly incensed about the introduction of VLTs in that it is really going to impact upon a lot of those groups, yours included, I suppose, in the way you go out to raise money. This system is going to suck a lot of dollars out of the community, and yes, some of it is certainly going to come back, but it means charities are going to have to go, like in the good old days, to government with cap in hand asking for that grant, where today they've got the tools in hand to go and get that money.

I appreciate what you're trying to do and if there is to be some distribution of these revenues, they should be done locally for sure, but I'd want to insist and hope that a group such as yours could then be inclusive to all groups that are out there in your community.

Mr Howard: I don't mean to say, about the 79,000 charities out there -- I didn't want to create the impression that this is too many, because I don't know what's too many and what's too few; I just know what is. I think that as we strive in the 1990s for a re-engineering job, in a lot of areas efficiency is of paramount importance. There's no question about that. We have to do everything we're going to do more efficiently. What I sense from three different levels of government is a desire to do more things at the community level: community empowerment, community level and efficiency, and that's almost the first page of our campaign brochure.

There are going to be some organizations which will lose a revenue source, not the least of which is a lot of United Way agencies. Of the 40 agencies in our community I could probably guarantee you that 50% currently have revenue from Nevada tickets. So it's a rationalization. If somebody says: "Why United Way? This is going to impact on Nevada" -- correct, 50% of our agencies have Nevada proceeds; it's probably higher than that and I should have done that before I came here -- you'd be saying, "Why United Way?" Because if Nevada is bleeding, United Way is going to be given a pool of money and maybe one of the criteria could be to assist those organizations specifically which lost proceeds related to shrinkages in other areas.

Mr Patten: Mr Howard, thank you. I can appreciate, having worked for decades in the field in which you work, fund-raising and the voluntary sector, the pressure to always find resources.

However, I must express my disappointment that even in an oblique manner there was no comment from you in terms of any cautions at all related to gambling, VLTs in particular, that have impact on young people, any reference to any literature, any reference to any of your own organizations that are members of the United Way, because if you guys aren't going to make some of those points you come in the same manner in which the restaurant associations would be looking for ways to increase their revenues, for a business purpose, which is justifiable and fair.

I'm caught in a way, because I do appreciate and I know that the organizations you support and the organizations you're not able to support need more resources. My fear as a legislator is that I see this insidious -- I think the government is becoming addicted to gambling revenues. I see more and more of our social programs becoming dependent upon revenues from gambling. When that starts to fade or die out, as I hope it might in many ways, where are we going to be with new revenues? I just share that one comment with you, Mr Howard.

The Chair: Our time for this presentation has elapsed and we must move on. Thank you very much, Mr Howard, for taking the trouble to share your concerns with us today.

CANADIAN STANDARDBRED HORSE SOCIETY

The Chair: The next presentation will be the Canadian Standardbred Horse Society, Mr Ted Smith, general manager and registrar, and Donald Booth, director from eastern Ontario. Welcome, gentlemen. Please proceed as soon as you're able to.

Mr Ted Smith: Good morning to you, Mr Chairman, members of the committee and all the honoured ladies and gentlemen in attendance in the audience.

First of all, you'll note that I didn't hand out any paperwork today because I think you've had many presentations from the racing industry across the venues of this massive province of ours. As Mr Kormos has said, you've heard it all before. I know you have the very strict facts in your hands or you've had them many times in your hands and I thought we'd take a different approach here today on behalf of the Canadian Standardbred Horse Society.

We're basically your grass-roots people. We're the breeders in the province of Ontario. Across Canada, we have 8,500 members of the Canadian Standardbred Horse Society, and you'll probably be impressed to know that in the province of Ontario there are over 5,000 breeders, many of them being very small-time breeders. We're here to represent those people from the rural areas who have an investment in agricultural land, in horses, and certainly employ those low-skilled people who have the love of the horse.

1140

To my immediate left is Donald Booth. Donald Booth has been a breeder for probably 50 years or so and a director of the Canadian Standardbred Horse Society, representing eastern Ontario, for the last 31 consecutive years.

Mr Patten: He doesn't look that old.

Mr Don Booth: Thank you.

Mr Smith: Don has played a very strong and active role on behalf of the breeders and grass-roots breeding industry in Ontario, and rightly so. Don and I are very, very proud of the results we have been able to have in Ontario. The breed of horse that's being raised and bred in Ontario has been able to compete internationally now. We're not restricted to the province of Ontario nor the continent of North America. These horses go across and compete and win in Europe. So you from Ontario have a right to be proud of the breeding of the standardbred horse that's been developed in our fair province.

What I'd like to do today is to tell you some of the different approaches that are involved in the breeding industry. You'll say, "How does that relate to supporting Bill 75 and the legalization of VLs?" Well, VLs in Ontario are obviously something that, as Mr Kormos believes, are going to come. We believe they should come at the venue of racetracks, which is a very strictly regulated, strictly enforced, supervised and secure area for them to be implemented.

Mr Lawson, representing the horsemen of Ontario, touched on the fact that the dollars wagered are the engine that drives our industry. Let me just explain that again for a moment, and I know he did quite capably. But for us as breeders, how do we gain our revenue? We gain it through the sale of our horses at public auction. Don is raising yearlings and he's going to sell them in our public auction, the Canadian classic sale, September 11 and 12. That's primarily their source of revenue, other than if they stand a stallion, they collect service fees.

Over the years the gaming industry in Ontario has changed. Horse racing has been the oldest gaming sector in the province, and as times have changed, with the lotteries coming in and the implementation, hopefully, of VLs and charity casinos and so forth, our amount of that gaming industry has slipped from almost having it all to 11%. You can see there's been a huge slide, down to a very marginal amount of revenue.

We, the horse racing industry -- and this is a combination of racetracks, horsemen and breeders, because as Mr Kormos said before, you've heard it all around the province -- unitedly agree that VLs can increase the dollars wagered at a racetrack and that we could hopefully get the cross-pollination of people attending a racetrack to visit and use VLTs and perhaps be introduced to racing and feeling, "That's not a bad sport to be involved in."

We feel that dollars wagered drive our industry, and if we get any overflow or cross-fertilization from VLs, that will help increase our product and the performance that our horsemen put on at a racetrack. The ultimate winners would be the fans, who get a superior product to wager their dollars on.

Saying that dollars wagered is the engine that drives our industry relates to the three segments of our industry. I see racetracks as being the first segment, where they give you the location to put on the show. In fact, they're the host. The horsemen, on the other hand, are the people who display the show. They own the horses, they race the horses, they perform the whole show for you and allow you to wager on them. Last but not least are the breeders. Somebody has to produce the horse that's going to race at that racetrack. The breeder often gets left out of the whole equation but probably is the most important part of it, because if there isn't a supplier of the product, there certainly won't be any horses, nor will there be any show. So the breeders are a very important part of our industry today.

Working for the Canadian Standardbred Horse Society, I can tell you that we run horse sales in Ontario and the Canadian Classic yearling sale is the biggest yearling sale in Canada and is probably number five in North America, hopefully number four this year. From early April to early June, I spend two months driving around the province of Ontario inspecting all of the yearlings that are nominated for the Canadian Classic yearling sale. This year alone I put 8,000 miles on my car in two months. I personally go to inspect over 600 horses and hopefully pick the best 300, on pedigree and confirmation, to sell for the public. So we'll supply the product.

I was visiting a farm called Killean Acres in Ingersoll and it was just one of those spots in time that really sticks in my mind. Jack usually sells 10 or 12 yearlings at my sale and he also stands the most successful sire in Ontario called Run the Table. I had actually inspected the yearlings and Jack was very busy and he had stopped in the barnyard to ask me my comments. Just at that point in time, six of his grooms were leading six brood mares with their foals across the barnyard. Jack's sort of a different guy and he just turned and said, "Stop." Everybody looked around and he said: "Stop. Where are you taking those brood mares?"

The girls who were taking them said, "We're taking them to turn them into their various paddocks," and so forth. "Who told you to do that?" "So-and-so." "Who owns this farm, me or he?" "Well, you do, Jack." "Well, just stay right there." So nobody moved.

I looked around and there were six grooms holding six brood mares; Jack and his brother, who are the owners of the farm; I'm there inspecting yearlings. A blacksmith drove in, who was there to trim all of their feet. The veterinarian drove in at the same time, and over in the side field were two or three young lads repairing a fence. Lo and behold, then the feed van drove in. I'm thinking, "Boy, this industry really is heavily populated with different sources of employment," and is one that perhaps all of us around this table don't see from day to day, because I'm in an office a lot of the time too. It just made me appreciate the depth of the breeding industry and the horse racing industry in the province of Ontario. It started with those grooms leading the brood mares to the veterinarian who came to palpate the mares and collect the stallion and inseminate them.

We really do involve a lot of ancillary types of employment, ones that may not necessarily be known to everyone around this table and that get forgotten from time to time but are very important employers of the breeding and racing industry. I think it's an important equation that breeders get recognized as part of that three-way equation with racetracks, horsemen and breeders.

Breeders, as I said, basically get their source of revenue at one point in time in the year, and that's in the fall when they sell their yearlings at the sale. What dictates the price of those yearlings? It's supply and demand. Is the demand high? The demand will be high if the purses that they race for are high. How do the purses that they race for get high? It relates to dollars wagered. Where do you get the dollars wagered? From the fans. If you don't have fans and you don't have a part of the gaming industry today, then all of that starts to go down to a lesser amount. As I said at the beginning of my presentation, we started with almost a lock on the gaming industry and we're down to 11% now.

We, the breeding and racing industry in Ontario, feel that VLs at racetracks, in a very secure and controlled area, could complement our industry and that we can get the cross-fertilization hopefully to increase our wagering, hopefully that the purses would go up, hopefully there would be bigger demand for the horses, and that the breeders would get well paid for their horses. What those breeders then do is they buy more land, they build more fences, they employ more low-skilled, low-level people, and the whole cycle starts again. I foresee that there could be a possible beginning of a slight boom if we can increase these purses and I really believe that VLs can help us do that. Not only do I; I'm sure the Ontario Harness Horsemen's Association believes that, and you've heard from various racetracks across the province telling you that.

1150

In essence, we feel that VLs could complement racing. Sure, there may be some downsides to it too, there could be some cannibalization, but we believe that if we get a fair and equitable deal, that would work to our benefit.

I would just like to leave you with the fact -- and I'll leave it open for any questions that you may ask me or Don -- that people in this industry don't seem to put their money back in the bank; they reinvest it. Money that gets wagered at racetracks or money that gets given for horses that are sold at public auctions goes back into the pockets of breeders, and they in turn buy more trucks, they buy more brood mares, they buy more farms, they build more barns, they build more fences, and that generates the economic activity in this province that we so greatly need.

With that, I would like to thank the committee for taking time to listen to my presentation and would be very, very willing to answer any questions.

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

Mr E.J. Douglas Rollins (Quinte): Thanks for your presentation, and it's a pleasure, Mr Booth, to see you once again. Ontario sires stakes is something the Ontario horsemen, along with the cooperation of the government, put together. Has that been successful? Is that a process in the rest of Canada?

Mr Smith: The Ontario sires stakes has actually been revamped in the last five years and we've gone to what we call a gold series and a grass-roots series. It's not that we got an infusion of new dollars, we just revamped the format for it. That, in my opinion, has encouraged the breeders, encouraged the buyers and resulted in the prices of yearlings starting to climb again. So yes, it's a model of success and has been implemented in other provinces and actually it's now started to filter down into various states in the United States because of the success in Ontario.

Mr Crozier: Welcome. As you pointed out, your position has been stated by a number of presenters across the province, and certainly it's been helpful to recognize what harness and horse racing does in general for the economy in the province of Ontario, and particularly agriculture. I've got a first-rate training facility in my own home town and we have Windsor Raceway that's in an adjoining riding, so we appreciate the benefits in that part of Ontario that I come from and we appreciate your comments today. There aren't any real questions that I could ask other than to make the statement that we support your position, and I suspect that with some innovation we can bring racing back to more of the prominence that it's had in the past.

The Chair: Do I have unanimous consent for Mr Guzzo to ask a question?

Mr Guzzo: I have Mr Kormos's time.

The Chair: Unfortunately it doesn't work that way, Mr Guzzo. Do I hear any objection?

Mr Crozier: As long as it's not a partisan question.

Mr Guzzo: It's mostly educational.

The Chair: Okay. You have two minutes, Mr Guzzo.

Mr Guzzo: I want to make a statement. I think, in fairness, Mr Smith has done himself a bit of a disservice. I think he's done an excellent job of outlining the employment strategy, but this organization does much more. This is the pedigree registry of the horses in Canada.

Let me just explain something. As a result of the work that was done on parentage through blood work in attempting to identify the parentage of horses, we have had breakthroughs in other areas. Today we have DNA testing in the criminal courts. We expanded it into human parentage and things that I was involved with for a few years, but they have taken it one step further through work done at the University of Guelph and Cornell University in New York state. What we're doing today -- and I go back to the acquittal of young Mr Morin in the murder situation in Streetsville -- he was acquitted on DNA evidence -- and an arrest that was made just recently on a 10-year-old murder in Toronto based on DNA evidence.

That fingerprint blood work, as we call it today, is a direct result of work done by this organization, with the help of the University of Guelph and Cornell University, in attempting to identify the parentage of horses, a byproduct of it that is a very valuable asset and it comes directly as a result of this organization. For that you should be commended, and I thank you for coming today.

The Chair: Gentlemen, I thank you very much for your presentation here today.

There will be a subcommittee after our adjournment this evening, either here or at the airport, where we can discuss the timing of proposed amendments. We are adjourning to 1:20, but I'd ask the members to stay very shortly so we can discuss a matter Mr Ramsay has given me. We are adjourned.

The committee recessed from 1156 to 1321.

CITY OF OTTAWA

The Chair: Good afternoon, ladies and gentlemen, members of the committee. We will proceed with our afternoon sittings. Our first presentation will be made by the city of Ottawa, Jim Sevigny, commissioner of planning and economic development. Welcome, Mr Sevigny. I apologize for our slight delay, but you have 20 minutes for your presentation, starting right now.

Mr Jim Sevigny: Thank you very much. I will not require that much time. I appreciate the opportunity to appear before the standing committee on administration of justice on this important piece of legislation. I should point out at the outset that I am expressing the views of Mayor Jacquelin Holzman of the city of Ottawa, who regrets that she is unavailable to be here today personally. She is participating in the Association of Municipalities of Ontario conference in Toronto.

The city of Ottawa has taken a keen interest in the expansion of gaming activities in Ontario and in the health of Ontario's hospitality sector. On October 4, 1995, city council approved a resolution in support of a casino gaming complex in Ottawa. During the discussion of the resolution, city council approved the following amendment: "And therefore be it resolved that, if successful, the city of Ottawa negotiate with the province of Ontario an amendment to the Ontario Casino Corporation Act to ensure that substantially more of casino revenues are retained in the local economy."

I would like to reinforce city council's concerns about keeping gaming revenues in our local economy, where they are needed to help local charities and to provide services needed in our community. I am quite concerned about revenues flowing into Quebec to the Hull casino because in Ottawa we have no competitive venue.

In the 1996 budget speech, the Minister of Finance, the Honourable Ernie Eves, suggested that the proceeds from video lottery terminals would be distributed as follows: 10% to the operator, 10% to Ontario charities, to be distributed by the government, 2% special fund for people with gaming problems and 78% for the Ontario government.

I am pleased that the government has made a commitment to charities. I would, however, suggest that the 10% figure is too low. This percentage should be increased to 15% or 20% and this money should remain in the community from which it was generated rather than being distributed by the government to Ontario charities. Ensuring that a portion of VLT revenues remains in the local community where they are derived will assist in generating support from the community at large for this legislation.

VLTs clearly provide the province with an opportunity to generate revenues in order to meet its fiscal objectives and to fund useful provincial and local services. A portion of these revenues going to the province should be made available to host municipalities to assist in funding important services within their local community. As you are no doubt aware, arrangements have been made in other provinces in Canada to provide a share of such revenues to local municipalities.

I support the position taken by the Association of Municipalities of Ontario that 10% of VLT revenues now targeted for the province should be returned directly to the host municipality. In other words, I would urge you to consider the following breakdown: 10% to the operator, 20% to local community charities, 2% special fund for people with gaming problems, 10% to the host municipality and 58% to the Ontario government. Further, I would support the recommendation put forward by AMO that the percentages to be allocated to local charities, problem gaming and municipalities be expressed explicitly in the act.

The 1996 budget provided for a two-stage process for the establishment of VLTs. They would first be established in racetracks and permanent charity event sites, of which the Minister of Consumer and Commercial Relations announced 50 sites.

I am pleased that the minister indicated that at least one site would be located in the Ottawa-Carleton region. I would, however, ask you to consider establishing additional sites within this region. This region needs to use every available means to counteract the effects of the Hull casino. We need to keep these entertainment dollars in our own local economy and in Ontario. The Hull casino is within close proximity to Ottawa, a 10-minute drive from the Parliament Buildings. On any given day, over 50% of the licence plates in the casino parking lot are from Ontario. In addition to keeping entertainment dollars in Ottawa, a gaming site in the downtown would support tourism by providing additional activities in an area that is trying to survive despite the impacts of federal government restructuring and downsizing.

I understand also that the establishment of permanent charity event sites in this region would not preclude the city of Ottawa from taking further action in support of the establishment of a casino in the city.

Finally, I would like to commend the government for including in the legislation stronger powers to control problem areas such as under-aged drinking and gambling and powers to revoke licences for chronic offenders. The government has shown a very responsible approach to this issue by tackling potential problems head-on.

On behalf of Mayor Jacquelin Holzman, I thank you for the opportunity to present her views on this important public policy issue.

Mr Patten: How are you doing, Jim?

Mr Sevigny: Just fine, thank you, Mr Patten.

Mr Patten: Good. I like the direction in which you're going in terms of some of the money staying locally. This, as you know, is a reversal of the government's cut of casinos in Ontario, which is 20%. In terms of Rama, I'm not sure where that is right now, whether that agreement has been concluded, but the provincial government will receive about 20% of it and the rest would be redistributed.

This is all the money going to the Ontario government, which shows you how desperate they are for money. I think they're becoming addicted with gambling.

Mr Flaherty: The way your government spent money, no wonder the province went broke.

Mr Patten: We're the only government that had a balanced budget in 1989, my friend. The only government that had a balanced budget was in 1989.

Mr Flaherty: By whose numbers?

Mr Patten: It was.

Mr Flaherty: Come on. That's so ridiculous.

Mr Ron Johnson: Anybody can balance the budget if you want to play with the numbers.

Mr Patten: It's Ernie Eves's numbers, by the way.

My question is the choice of local municipalities. You didn't address that, whether you felt municipalities should have a choice on whether they would like to be hosts of VLTs or not.

Mr Sevigny: All I could do is express a personal opinion on this, which I think might be inappropriate. I am aware that AMO has requested that it be dealt with in that fashion. Let me contradict myself: I think, personally, that is a reasonable position to put forward.

Mr Patten: Thank you for the presentation. I agree with the intent of keeping more money in the community, because if indeed there are more problems than there are perceived to be, a 2% factor from the government's point of view, which I suspect there probably will be, it's going to be the community that's going to have to contend with those difficulties, problems or offshoots that were not foreseen. So I like what you're saying. Thanks very much, Jim.

1330

Mr Kormos: Obviously, here in Ottawa, with the Hull casino across the river, as in other communities we've been in where in those instances there are either Manitoba casinos, in northwestern Ontario, or Stateside -- we went over to the Hull casino. I hadn't been there before. We drove over there at lunchtime and it's everything people say it is. I didn't do a survey of the licence tags in the parking lot, but I've got no reason to suspect the figure of 50% is inaccurate.

Of course, during the course of today we heard from business people in the community, tavern owners, restaurant owners, people in the racetrack business, their sense that their piece of the tourist dollar has been cannibalized by the presence of the Hull casino. Mayor Don Cousens from Markham was before the committee in Toronto last week presenting some similar views, very much views that were reflective of the position AMO took.

I'm confident there will be amendments put to this bill giving municipalities the power. I appreciate you're focusing on charity casinos in your submission, but the thrust of the bill really is 20,000 slot machines, again called the crack cocaine of gambling for good reason, a highly addictive form of gambling, and the data show it's far more so than any other form of gaming.

In your breakdown -- and again I have no quarrel with the numbers -- there is 10% for operator, charities, funding for gambling, host municipality, Ontario government. There also has to be a piece there for the host site. Again, the government hasn't stated clearly, but one's left with the impression that there are people, Marshall Pollock and people like that, who are more than eager to invest the money to buy these -- some people have called them vulgar little thieves instead of VLTs, but to buy these vulgar little thieves, and the owners of the machines are then going to need a piece of the action too.

What about the prospect of licensing, the power to license machines so that a municipality can use this in several ways: one, to help the community keep these machines out of places where the most vulnerable people will be confronted by them, and two, to give them a piece of the action? Would licensing be a preferable option both in terms of getting a piece of the action with this enhanced power to let you control where they're going to be, accompanied by zoning powers? Would that be preferable to a straight 10% of the action?

Mr Sevigny: Once again, my personal opinion is I would not be anxious to see the city get into the business of licensing VLTs. I think we're licensing too many things already. Besides, I would not publicly disagree with the position the mayor's putting forward in asking for a 10% cut.

Mr Kormos: Fair enough. But as a follow-up to that, what happens if the government, for whatever reasons -- because it will be the ultimate determinant of where machines are placed. Here we have the city of Ottawa, part of a regional municipality. What if the government decides that a neighbouring municipality is going to be the host to the charity casino? The adjoining municipality is going to say: "But our people are victims of these slot machines too. Our people spend their paycheques in them too and then they're not to share in the proceeds." Because they have to suffer the same social problems. They've got the same spousal abuse problems that are going to flow from this, the same problems of children suffering. How does a community adjoining the charity casino location, just as Ottawa-Carleton adjoins Hull now, get their share of the action?

Mr Sevigny: I would think it would be reasonable to undergo a consultation process with all the municipalities. I think one way of avoiding the problem you're suggesting is to act on the suggestion that the mayor is making in this brief to assign more than one charity casino to this metropolitan region. If a charity casino was to be placed in downtown Ottawa, and that is very much where the city would like to see a charity casino for economic development reasons, I would think it would be perfectly reasonable to place another casino or two in the adjacent municipalities of Gloucester, Nepean etc.

Mr Kormos: Thank you, sir. There's only going to be 50 of them.

Mr Guzzo: Mr Sevigny, nice to see you here. I've got to tell you that if you have to be here and your boss is in Toronto dealing with Mr Leach and AMO, you're the winner because you're going to get more here than she's going to get up there. You understand, Jim? Also, if you're heading back -- we just came back from the casino by bus and there's a lot of construction on Sussex Drive -- I would recommend you not try and get back to your office, just continue heading south. You know what I mean?

A couple of things. First of all, with regard to the percentages, and we've had this discussion in the past and I don't think it's been made clear, but look, let's acknowledge something. Somewhere around 90% --

Mr Crozier: Tell the mayor how you feel about her, really. Tell her it's not an intelligent question.

Mr Guzzo: Around 90% of the money that's bet is going to be returned to the players. So on the first day, if they're approved and $1 million is bet, $900,000 goes back in winnings.

Mr Kormos: Where do you get that number?

Mr Guzzo: I suggest 90%. It might be 88%, it might be 92%. But the competition is returning someplace between 92% --

Mr Kormos: Up to 95%.

Mr Guzzo: In our case we're taking 2% off the top, off the gross, for that special fund for people with addictions. So we now have 8% left, if you accept my figures. But accept this. The competition in Quebec returns 92% and the competition, if it's competition, in Alberta is returning between 92% and 94%. For the sake of argument we're returning -- it is then from the remaining 8% that we're talking about divvying up between local charities, the operator, the host municipality. You understand that? That's what we're talking about. A couple of the figures are gross and a couple of the remaining figures are net.

Mr Kormos: The position is very gross.

Mr Guzzo: Let's say we give back 85%, whatever, but someplace along the line and in order to compete with across the river where they're giving between 90% and 92% back, we're going to have to be in the same ballpark. You understand that? Let's not get fooled by the magnitude of the numbers, and I think that's what scares people from time to time. We're talking gross, 2% of the gross coming off the top for the addiction fund and everything else is based on the remaining 8%. Are we clear on that?

Mr Sevigny: Yes, I'll take your word for that.

Mr Guzzo: Whatever the number is. But some percentage is going to have to go back to the player. Are you prepared to acknowledge that, Mr Kormos, or do you think it's going to be like the grey machines now? We don't know if anything goes back in those grey machines the Liberals want to keep.

Mr Kormos: Garry, at the end of the day, the players lose. Let's get it straight.

Mr Guzzo: They may lose. They're going to lose 10% or 8% off the top.

Mr Kormos: They lose. They lose all of it. That's the name of the game.

The Chair: Thank you, Mr Sevigny, for attending here today on behalf of the city of Ottawa.

Mr Sevigny: Thank you very much. Good luck.

The Chair: We'll need it.

CHRISTIAN COUNCIL OF THE CAPITAL AREA

The Chair: Our next presentation will be from the Christian Council of the Capital Area, Monsignor Peter Schonenbach. Welcome, Monsignor. The monsignor has filed a written presentation and now has 20 minutes to make his presentation and answer any questions the committee may have.

Monsignor Peter Schonenbach: First of all, I want to thank the standing committee for allowing us this opportunity to put some of our ideas before you.

I'd like to say something about the Christian Council of the Capital Area. The council celebrates 25 years of existence this year. It was indeed established in 1971, in the words of its constitution, "to give visible expression to the unity of all Christian believers and congregations of whatever tradition or denomination." I think we're kind of proud that in the capital city we've been able to keep this type of understanding going.

Member churches of the council are the Anglican Diocese of Ottawa, the Ottawa Baptist Association, the Greek Orthodox Diocese, the Ottawa Mennonite Council, the Ottawa Presbytery of the Presbyterian Church, the Ottawa Presbytery of the United Church of Canada, the Roman Catholic Archdiocese of Ottawa, the Salvation Army, the Society of Friends and the Women's Inter-Church Council of Canada. Our membership comprises over 500 congregations.

1340

Now, what does our council say about Bill 75? First of all, we acknowledge that there's a lot of legislative housekeeping taking place and obviously the council does not in any way object to that. Our concern has to do with the prospect of widespread availability of video terminals for gaming purposes throughout the province.

We contend that a part of the business of living is having the possibility of discretionary spending. Some of us have a great deal of resources to allow generous discretionary spending, while others have not. Existing lottery outlets provide extensive opportunity for individuals to use some of their discretionary dollars in this manner. Maybe I'll just add a little point here. There's no doubt that in the Ottawa area we have a real problem on the other side of the river. On the other hand, do you fight a fire with gasoline? I wonder.

Bill 75 increases greatly the availability of outlets gathering in lottery and other game-generated dollars. It is our contention that this will lead many people to go beyond the discretionary spending for such activities, and as a result, lead to more poverty among citizens of our province. We feel it is most ironic this measure is being put forward precisely in the year set aside by the United Nations for the eradication of poverty. We're starting to become really ridiculous here.

The title of Bill 75 speaks of the wish to fund charities. The council suggests that the open-door policy on video terminals envisaged by the bill will undermine in a serious fashion the fund-raising projects of social agencies and churches. This is a great concern, especially now when governments are downloading many social responsibilities to local charities.

In conclusion, the Christian Council of the Capital Area is opposed to the widespread use of video terminals for gaming purposes. It has been contended that in using the powers afforded by this bill, the government of Ontario would avoid excesses that have occurred in other provinces. We believe legislation should reflect our values in the first place, and regulations can then follow suit.

To the argument that claims this legislation is but an inevitable move in a pluralistic society, we say that government is there for the common good. Legislative measures must reflect the values of Ontarians and we contend that these values are not apparent in the consecration of materialism so evident in some parts of Bill 75.

I realize that perhaps this is taking a rather tough point on this, but we also have the experience of dealing in so many of our congregations with the people who are the victims. Right now, I've had several pastors from various congregations telling me of people coming to them, saying: "Well, we got our cheque yesterday, but we weren't lucky at the casino. Help us out."

This is not just some little bit of fringe business. There are a lot of people involved, real people. Then you say, "All right, we're going to put 2% to help the addicts." Does that help the actual families, the families that will be suffering? Poverty, you know, is a cancer, and if we don't really look at it, look at these points, I think we're deluding ourselves.

Thank you very much, ladies and gentlemen. I'm open to any questions.

Mr Kormos: Thank you, Monsignor. I appreciate your comments. You know that the view you're expressing, which has been expressed by the church community in other parts of the province, has not been the prevailing view at these hearings. I suppose the government could respond by pointing out that we have these 20,000 or so illegal or potentially illegal slot machines in the province. I understand there was just a raid done in London. The police, once they apply resources to them, can clean up on those, and they raided a London location a couple of weeks ago and seized a bunch of them.

As I told the previous presenter, we were just over at the Hull casino. One of the things I have found objectionable during the course of this is the portrayal of slot machines as entertainment. People don't want to call them slots; they want to call them video lottery terminals. It sort of makes them akin to Pac-Man games or whatever it is, the kind of games that especially young people play.

When you mention the narration of somebody's parishioner saying, "We got our paycheque, but we just weren't lucky," that one phrase spoke volumes, and again Mr Guzzo's numbers are correct, you see, that they pay back 95 cents on the dollar, as if to imply that every dollar you put in there you get at least 95 cents back out, but the problem is that at the end of the day nobody wins other than the people who own the machines. Do you have concerns about what this says, especially to young people, in what are admittedly very difficult times and very frustrating times for young people?

Monsignor Schonenbach: All I can do is agree with you. We're caught with a problem and people who are in government are supposed to deal with problems, and it's a problem. How do you manage in a complex society? Obviously, you've got illegal machines. Well, do something about the illegal machines. Start working on this. It's fine and dandy to say: "Oh, we can't do -- we're caught. We have to do this." You really don't have to.

Mr Kormos: Thank you, sir. I'll relinquish the balance of my time to the government, not that I'm not in need of moral guidance, but on this particular issue I suspect the government members would do better with it.

Mr Flaherty: Thank you, Monsignor, for your presentation on behalf of the Christian Council of the Capital Area.

With respect to the availability issue, I think this needs to be addressed because some people make the assumption -- I don't know whether the Christian Council of the Capital Area does make this assumption or not, but some make the assumption that if one introduces a new form of legal gaming in the province, therefore, the number of persons who will have problem gaming addiction or whatever will increase. The studies say that is not so. The reason they say it's not so is that if one already has access to gaming in a jurisdiction, as we do in Ontario because of the Liberals who brought in Monte Carlo nights and because of the NDP who brought in casinos, then you don't increase the level of addiction by adding another form of gaming.

I use for a specific example -- we can use Canadian examples; I don't need foreign research for this -- the University of Windsor. The Canadian Foundation on Compulsive Gambling did a study released April 4, 1996, this year, which indicates that the incidence of compulsive gambling in the population remains stable at between 1% to 2% and does not increase even when a major new form of gambling such as casinos or video lotteries is introduced. This is based on exactly what happened in Windsor, Ontario, Canada, in the 1990s. It's not based on something in the United States; it's something that happened here.

This is not to say that government shouldn't face up to its responsibility to deal with those who develop addiction problems, and for the first time in the history of Canada, we have a government, our government, that's going to commit substantial resources, 2% of the gross revenues, to that problem.

But let me come back to a more general issue, and that is the role of gaming in our society. How do we in a pluralistic society -- I'm going to ask you about this because I find it very difficult and I'm sure many of the members do -- deal with the reality of break-open tickets and Nevada tickets and lotteries, ever since the lottery for the Olympics in Montreal in 1976, and bingo halls and Monte Carlo nights, all these various forms? I can go back to when I was a boy and Irish Sweepstake tickets. Everybody had them, but they were illegal and nobody knew where they came from, apparently. We've had that history throughout the last 50 years in Canada -- racetrack gambling. Is the concern of the Christian Council of the Capital Area that gaming itself ought to be avoided in the public good, in addressing the common good, and I agree with you on that, or are we talking about a specific form of gaming?

Monsignor Schonenbach: I think what we're saying here is that really we feel that, as you have actually nicely described, what is available right now is quite rich in opportunities, and we feel the problem is that you extend all sorts of powers. Even if you say, "Oh, we're not going to use those powers," the powers are there and they consecrate, they make this normative, that indeed that's the way life is, that you have all sorts of opportunities for gaming.

We're talking about the addicts. Certainly, we commiserate with the addicts. But we also are talking about a lot of relatively poor people who are just on the fringe, and the more opportunities you give them, the more they feel this is going to be the way to get out of the crap. It never happens; they just get deeper into it. What we're saying is, regulate the stuff, yes, but do you really need these extra, these new video terminals? It's on that point that we feel it's a real crusher.

1350

Mr Galt: Congratulations on your presentation; most interesting. I am not a gambler myself. I find no interest in it whatsoever and it totally turns me off. That may explain where I'm coming from with my question. I look at the different churches that you have listed here. Some of them are totally against gambling, as well as alcohol, and preach it. Others do sell lottery tickets, run bingos, run dances and a bar. With your presentation, I think of the stories about $1 million for a prostitute or $5, that kind of thing; you're still into that business. I think the same way in gambling. If some of these churches are running bingos and draws of other types, rolling dice etc, in your presentation how can you separate that from VLTs?

Monsignor Schonenbach: Because all of these things have a great redeeming thing, and that is a social factor. I was pastor of a parish at one point where we had a weekly bingo and it became a wonderful social occasion. The guys who were calling the numbers recognized the birthdays of some of the people and so on. A lot of the little people came and they got more enjoyment out of this, even if they knew that the money was going directly to one particular spot or somebody would get a nice little special, but nobody really made a lot of money. Here, you're talking about impersonal machines, the money being sucked into a central spot. When it comes down to it, sure, we're going to help the charities. Who's going to help the charities? Who are the charities going to be? Is it some of the major, big concerns? What about the local people?

There is so much wrong with this. It shows you the wonderful cooperation we have among the churches. We've got people on here who would like to say, "Kill it, it's the work of the Devil." There are other people who say, "No, let's live." We're able to come up and say, "Oh yes, we allow you to do basically what you're doing, but don't extend it."

Mr Crozier: Good afternoon, Monsignor. It's been said prior to your being here today, in these committee meetings that we've had over the past couple of weeks -- I'm surprised it wasn't used by the government today -- that just because you introduce another beer doesn't mean there's going to be more drinking. But the point that you have raised on the proliferation of gambling is that we do have evidence that this is the case, that more people gamble when opportunities to gamble are more prevalent. A Mr Goodman, in a study in 1994, suggests: "Organized crime as well remains an active provider of gambling products in its own market niche. Expanding legalization increases the number of people who gamble and provides organized crime with access to a larger consumer pool." That's an additional concern, where organized crime will come into this as well.

Your position and that of the church organizations you represent is fighting a difficult uphill battle, because I feel, I'm willing to bet -- and I'm like Mr Galt; I'm not a gambler -- that there won't be a government member who stands opposed to this bill, notwithstanding the way some of them feel. Is there a way that we can not only hear from you but hear from your parishioners? Do you think your parishioners are willing to let members of the provincial Parliament know -- petitions from churches, letters from members of churches, that kind of thing?

Monsignor Schonenbach: I consider this a very serious forum. I wouldn't want to say that what we're doing here today is just a farce. We've taken the opportunity during the summer, by the way -- it's rather interesting. I've been before some of your Ontario hearings now over the last few years; it becomes the rite of August. With all due respect here, we had to get all sorts of people together, getting them back from cottages and so on, to try to come up with what is a common policy. You're hearing from people who are touching the grass roots. Now you're telling me, "No, all we need now is a whole bunch of letter campaigns again." What is government supposed to be? Let's try to be efficient about these things. We're not telling you how to do your job. We're simply saying: Beware. Look at the implications. Don't let all these fancy reports fool you.

The Chair: Thank you, Monsignor, for your very thoughtful presentation.

I just wanted to clear up a misapprehension. If one caucus chooses not to use all its time, I do not add that to the other caucuses. That time is lost.

Mr Crozier: Not even if we direct it?

The Chair: If there's unanimous consent, I assume.

Mr Kormos: Or if one wants to relinquish one's time.

The Chair: If that's your desire, but I don't usually do it; that's all I'm saying. You don't have to use all your time, Mr Kormos; that's the point.

OTTAWA-CARLETON BOARD OF TRADE

The Chair: The next presentation will be the Ottawa-Carleton Board of Trade, Willy Bagnell, president. Mr Bagnell, welcome.

Mr Willy Bagnell: Thank you very much. I understand you've had a wonderful lunch-hour break and seen the tens of millions of dollars we're exporting to our friends and neighbours in the Outaouais. I understand one of the honourable members is a little richer today for their cultural exchange; I congratulate you.

It's a pleasure for us to be here today and to talk about the topic. The Ottawa-Carleton Board of Trade is the oldest and largest business organization in our region, representing over 1,400 business people. As the metropolitan Ottawa chamber of commerce, we have long pursued the goal of improving our community and improving the efficiency and effectiveness of government. We realize that pursuing these goals is a long-term endeavour. The recent opening of the first section of Highway 416 is a fine example of this long-term vision. It was in 1948 when the then Ottawa Board of Trade requested a four-lane highway connecting the St Lawrence Seaway to the national capital. Almost 48 years later we begin to realize our dream.

The legislation you are reviewing deals with a multitude of issues and policies. We commend the government, and in particular the Honourable Norm Sterling, for their diligence and foresight in crafting this bill.

The board of trade believes that the amalgamation of the Liquor Licence Board of Ontario and the Ontario Gaming Control Commission into one entity is a wise and prudent action in that it represents maximum financial impact and better management for the taxpayers. We have long called on the province to maximize the efficiency of its operations and we see this as concrete evidence of this fact.

We also believe it to be a most pragmatic move, given the introduction of the video lottery terminals to our province on a legal basis. As you are no doubt aware, estimates from various organizations say there are between 20,000 and 25,000 illegal machines moving around the province. By moving into this area, the government serves notice to the taxpayers in Ontario that it will control the problem with tight regulations, proper distribution and more discipline.

With the introduction of this legislation the government has demonstrated that it will deal with the issue of problem gambling. The allocation of the 2% of gross revenues from video lotteries to help in this area is a tremendous step which has garnered wide support from all areas of our community. As evidence of this, the executive director of the Canadian Foundation on Compulsive Gambling has stated that he views the allocation of funds from the video lotteries to help solve problem gambling as a "very important step."

1400

Bill 75 will also aid communities with problem licensed establishments. It will restrict further applications for premises where chronic problems occur for up to two years. This will place more responsibility in the hands of the property owner to ensure that tenants are abiding by all laws and regulations concerning the sale of alcoholic beverages and gaming.

We are pleased to see the establishment of charity gaming halls across the province. It is our belief that this organized and professional approach to charity gaming will provide more financial return for charities in Ontario and fewer problems for communities in general.

We would also like to place on the record our support for a casino in Ottawa-Carleton. We believe it is long overdue and will be a popular attraction for eastern Ontarians. The present Casino de Hull in Quebec is setting profit records and providing tremendous economic benefits for our Quebec neighbours in the Outaouais, but not for Ontarians.

The Alcohol, Gaming and Charity Funding Public Interest Act sets the stage for Ontario to move into the next century as a leader in this area. The legislation positions our province as a progressive but caring society which understands that gaming is a huge industry and a tourism asset, that illegal activities will no longer be tolerated, that problem gaming will be addressed. We believe this to be a positive sign.

Mr Flaherty: I'll be fairly brief. Thank you for being here today on behalf of the board of trade. You mentioned casinos, so I will comment on that on behalf of the government. Permanent charity gaming halls are created by Bill 75, the bill we're here about today. Charity gaming halls are not considered to be commercial casinos. The government maintains its intention to hold a referendum on casinos in the 1997 municipal elections. That has not changed and that commitment is there. We're a government that keeps its commitments, so that's to happen in 1997.

With respect to charity gaming halls, it's anticipated that there will be a number of them around the province. One of the things that's happened with these roving Monte Carlo nights, which started off as a night here and a night there, is that over the years it's got to the point where we have 9,000 Monte Carlo days a year in the province of Ontario, 3,000 events and 240 operators operating these events around the province. One of the enforcement regulatory tools here is to get these events into permanent sites in Ottawa, and elsewhere I'm sure, to not only provide regulation but to make sure they're run properly and the money that's supposed to go to charities goes to charities. It's very difficult to regulate a roving gaming activity that's moving from place to place, and we've heard about that during the course of this hearing.

Have you had any concerns expressed to you in terms of tourism and gaming in the Ottawa-Carleton area?

Mr Bagnell: The concerns that we've had expressed have been predominantly from the tourism and hospitality sector relevant to the amount of money that's going to Quebec with the opening of the Casino de Hull and not staying in the province. On the other side of the coin, in my life as a regular member of the community, I have the pleasure of serving as chairman of the Variety Club for Ottawa and have found that the new act will be a tremendous benefit for what we call legitimate charities that serve the community. It's not roving gambling houses that are the ones we're talking about, but charities like United Way, Variety Club, Children's Wish Foundation, that can really benefit from this. We're taking a step in the right direction.

Mr Guzzo: Thank you for your presentation. I wonder if you wouldn't just elaborate a bit on the economic situation in Ottawa with the federal government cutback in the number of jobs and what the city of Ottawa, and particularly the business community, has been going through in recent years.

Mr Bagnell: I think it's appropriate to mention that the economy of Ottawa-Carleton has been hit to date with over 14,500 lost jobs from the public sector at the federal, and there no doubt will be lost jobs at the provincial level as we go through balancing the budget. The board of trade has not opposed this. We have supported it because we realize that we can no longer spend money that we don't have. That being said, the tremendous impact that gaming has had on this region from the Casino de Hull we would like to see balanced off, and we think that the charity gaming house that would be built here, or used here, will provide a step in the right direction.

There's no question that our economy here is moving from where it was in the 1960s, with 81% of our employment at the federal level, to now about 19% at the federal level in the national capital, and we anticipate that will move forward, but anything we can do to help it would be a good thing.

Mr Guzzo: Thank you, sir. I just want to know -- maybe I should have raised it with the representative of the city of Ottawa -- are you aware of a piece of property within the city, or for that matter within the region, that is properly zoned to hold a casino?

Mr Bagnell: How many would like to know about?

Mr Guzzo: I'm serious.

Mr Bagnell: I am serious too. One of my roles within the board of trade was to be a co-chair of our casino task force, and we had isolated I think between nine and 10 properties that would hold a casino.

Mr Guzzo: I said "properly zoned."

Mr Bagnell: Oh.

Mr Guzzo: Under the municipal zoning bylaws of any of the municipalities in question, particularly Ottawa, do you know of a piece of land that's zoned to hold a casino?

Mr Bagnell: Just one, I believe, presently.

Mr Guzzo: Which one?

Mr Bagnell: Lansdowne Park.

Mr Guzzo: I question that but --

Mr Bagnell: I believe that's the only one.

Mr Guzzo: -- I hope you're right about that. That's the only one I can think of.

Mr Bagnell: That's the only one I can think of too.

Mr Patten: St Anthony's.

Mr Guzzo: St Anthony's Church.

The Chair: Thank you, Mr Guzzo. Mr Crozier.

Mr Crozier: Welcome to the committee meeting, Mr Bagnell. I was interested by your quote of the executive director of the Canadian Foundation on Compulsive Gambling when you said he stated his views on the allocation of funds from video lotteries to help solve problem gambling as a -- there's a three-word quote -- "very important step." I suggest that Tibor Barsony, whom you were quoting, has had many more quotes. It would be a little like if I quoted Ernie Eves when he challenged the NDP on its introduction of casino gambling. There's a quote that I could use, "The Royal Canadian Mounted Police and the Ontario Provincial Police would be in favour of introducing casino gambling in Ontario." It means nothing unless you contain the whole quote, which says, "Are you suggesting," and put a question mark after it.

I just wanted to say that three words out of a quote of Mr Barsony is unfair to the position that he holds. The addiction research people have to be very careful about being critical of something the government does when they're going to receive $9 million from them. They're very thankful for the $9 million. It may be only a drop in the bucket, it's suggested that it's 2% at this stage of the game but I suggest it'll be far less than that as a percentage if they hold to just the $9 million.

Mr Barsony has said he "sees North America, particularly its young people, as perfectly suited -- and susceptible -- to the fast, computer-driven pace of video lottery terminals. The VLT is one of the most addictive forms of gambling -- addictive because it is fast, addictive because it provides instant gratification, addictive because it is paced for the modern way of thinking of younger people, of computerized gambling instead of dealing cards or throwing the dice."

Do you have any comment with respect to that? Does that concern you?

Mr Bagnell: No. We are not concerned about that because there's already the level of machines in Ontario, but they're running illegally and underground. The fact is that the government is going to put into place a circuit and legislation and enforcement that will control these, bring it above ground where the problem can be dealt, with and address some of the financial issues by allocating 2% of the revenues towards solving the problem. This is not a problem that Canada, Ontario, Metro Toronto, Queen's Park are going to solve. It's an international problem, and I think if we all work together we'll get a lot more from it.

1410

Mr Patten: Mr Bagnell, it's good to see you again. There's been a fair debate -- you've introduced it and other members have introduced it -- about this so-called tremendous wash of resources that goes to the other side of the river because of the casino. However, in discussions with some of your colleagues and members of the board it's not totally one way; there are some benefits to the region, there are some benefits to Ottawa that I have not heard identified at these particular hearings. My question is: While there is a loss, yes, and maybe it is overwhelming, what are some of the positive aspects for Ottawa of the casino being at least in the region?

Mr Bagnell: I think the hotel night situation has been improved for the most part, especially in the downtown core. As a spinoff of that, obviously when you have people staying in the hotels, the hospitality industry and the restaurant industry tend to grow in those direct areas within the hotels or within, say, a block or so of that situation. That being said, we also know there is a problem in terms of language barrier that is existent and we feel very strongly, in all the research we have done in this region, that we could attract a heck of a lot more American tourists and Americans who wish to participate in gaming to Ottawa-Carleton because English is the first language. We could provide a better service for them, therefore attract the American dollars which, as we all know, is the basis of the North American economy.

Mr Kormos: Your position is consistent with similar organizations to yours across the province. I've never been to the Hull casino. You talk about the economic benefits. I was there --

Mr Patten: Before today.

Mr Kormos: Before today. I've been to other casinos. I've been to the casino development and watched it not blossom but just explode over the years along the Biloxi strip in the gulf in Mississippi. I've seen the developments in Louisiana and northern Mississippi. Seeing the Hull casino today, and you talk about the economic benefits -- again I haven't seen any of the data -- it strikes me as being in a very similar position to the city of Hull as the Windsor casino is to the city of Windsor. That's no dispute with the fact that casinos provide X number of jobs -- I agree they have to staff them -- but at the end of the day, just as for downtown Windsor, one report by the Ontario Restaurant Association and yet one more by one of the consulting firms indicate that the economic impact on the community has been, to say the least, disappointing. I question the same about Hull, Quebec.

I understand, and I can see staff working in there, so obviously there are people with jobs in there, but just noting its location, and I'm not overly familiar with the city of Hull, I didn't see where downtown Hull was in relationship to the casino. There wasn't anything about the casino that would say, "Now you're at the casino. In the next hour we want to see you in downtown Hull buying food," because, and I didn't see it, apparently the casino has restaurants; it's got the whole nine yards. What's the economic development factor? As I say, I really question -- casinos, by the advocates of them, are being painted as a panacea for the economic ills of all of Ontario, certainly for Windsor. Tell me about Hull and what impact it's had on the community.

Mr Bagnell: I'm sorry, I can't do that. I'm not the president of the chambre de commerce et d'industrie de l'Outaouais, but I can tell you from countless amounts of research we have done in Louisiana and New Jersey, more specifically in Windsor. I think the best way to illustrate the economic benefit is by a member of the Windsor Chamber of Commerce who had his story published in their monthly newsletter. He ran a shoe repair shop about 600 feet from the front door of the Windsor casino and didn't realize how he would benefit from that and thought it was going to hurt his business. One day he said, "I walked through the parking lot of the Windsor casino and took note of all the licence plates that were there from Ohio." He found out where they were from and took out newspaper ads in the county papers from that area saying, "Get your shoes repaired while you wait and I'll provide you with a free set of slippers while you go to the Windsor casino." He's tripled his business. He now employs six people.

Mr Kormos: That lends something to the old crap shooter's lament: "Baby needs new shoes. Roll me a seven."

Mr Bagnell: I've never heard that one.

Mr Kormos: You've never heard that one? You're too young. I question that because I appreciate what you're telling us about the shoemaker and his innovativeness, but the Ontario Restaurant Association expressed real concern.

Mr Bagnell: If the entrepreneurs involved in businesses that are within the walking and catchment area for any casino take advantage of it, as they have done in certain episodes in Windsor, to enhance their operations, they will do very well as the fruits of the casino. We anticipate in this region that when the referendum the honourable member has talked about next November is overwhelmingly passed in Ottawa-Carleton and we start on a casino, we will be bringing a lot of US$1.38 up here, which will stay in our economy and provide benefits for Ottawa-Carleton and the rest of Ontario.

Mr Kormos: With the grey slots, some 20,000 to 25,000 of them -- they're in the very locations, hotels, restaurants, beverage rooms, licensed places that now want to be hosts of slot machines -- if they've been there, all 20,000 of them, and people have been playing them and in those cases the host gets, I'm told, 40% to 50% of the gross amount bet rather than a mere 10% or whatever is proposed in this scheme, why haven't those illegals already provided the economic boost that the hotel-motel-tavern industry says it needs, to wit, justifying the demand for legal slots? If you've got 20,000 illegal ones, they're getting an even bigger piece of the action. They say they need the slots to give them the economic boost, but they're only going to get a tiny piece of the gross amount bet, so why aren't they enjoying the benefits from the illegal slots? I don't understand that.

Mr Bagnell: First of all by definition, if they're illegal, they probably have something to do with certain portions of our society which we don't want to have anything to do with. Those of us who are law-abiding citizens would rather see it controlled by our elected government and the net revenues more appropriately distributed in the province in the way that our government, which is the representative of the people, deems necessary, not by an underground industry.

Mr Kormos: It still doesn't address the issue that they're there. These restaurateurs say: "We don't want to run illegal slots. We need legitimate slots for the economic boost." But then why weren't the illegal slots the economic boost that they say they haven't enjoyed yet?

Mr Bagnell: Perhaps because the apportionment of the revenues from it was not appropriate.

Mr Kormos: I'm told it's 50-50, which is far more than the government is going to give people on the legals.

Mr Bagnell: That's what I said: Perhaps it wasn't appropriate.

Mr Kormos: Which is far more than they're going to get.

Mr Bagnell: Perhaps it wasn't appropriate.

Mr Kormos: They should be flourishing.

The Chair: Mr Bagnell, thank you very much for attending and making an excellent presentation on behalf of the board of trade.

IRON HORSE SALOON WHISKEY WILLY'S RESTAURANT

The Chair: Our next presentation is the Iron Horse Saloon, John Patrick, president. Good afternoon, Mr Patrick. I see you're accompanied by someone. I'd ask you to identify that person for the purposes of Hansard.

Mr John Patrick: Yes, I'll do that. With me is Mr Brian Coghlan, who has operated restaurants and bar facilities in the Kingston area for several years. He is a past president, I believe, of the Ontario Restaurant Association as well. He will start off the presentation if that's okay, Mr Chairman.

The Chair: That's fine. Please proceed.

Mr Brian Coghlan: Good afternoon, Mr Chair and members of the committee. My name is Brian Coghlan. I'm with the Ontario Restaurant Association and I own and operate a hospitality location in Kingston called Whiskey Willy's Restaurant. I'd like to take this opportunity to thank the committee members for permitting us the opportunity to appear today.

Our operation in Kingston is a 276, family-style operation. We've been in business now three years. So far we've been keeping our heads above water and are hoping that this will continue for the next five to 10 years anyway. We employ over 48 people in our industry, of which probably 10% are part-time employees. We're located in the west end of Kingston. As you know, Kingston is a very tourist-oriented city, and we rely on a lot of the tourism dollars that come into the city.

Let me begin by saying that we are in full support of the government's initiative to introduce video lottery terminals in Ontario's licensed hospitality establishments, as we believe that it will provide the hospitality industry with some renewed hope for growth in the future. As I am sure you are well aware, Ontario's hospitality industry is one of the province's largest and most important industries. However, in recent years the industry has been hit hard not only by the recession but also by cumbersome and burdensome regulatory red tape. We are now just beginning to see some of the damage being undone with such initiatives as the elimination of the employer health tax on the first $400,000 of payroll, the elimination of the corporate filing fee and the introduction of extended hours for restaurants and bars. Again, let me state that we are in full support of these government initiatives, but they are only the beginning; more are required.

1420

As I indicated earlier, the hospitality industry has been hard hit by the recession, and as a result the hospitality industry must now find new and inventive ways to attract customers back into our establishments. The introduction of the VLTs is an important tool in attracting customers back into our industry and keeping them there.

It is no secret that restaurant operators are in the business to make money. This is not a crime. In recent years, many restaurants have not been as profitable as they could be. The introduction of the terminals in licensed establishments is essential in assisting operators in attracting new and old customers. The marketplace is demanding added entertainment value, and as operators of hospitality establishments, we should be able to meet that request legally.

With the introduction of video lottery terminals into licensed and age-controlled establishments, our customer base will undoubtedly grow, with people being attracted to our locations because of the terminals and people remaining longer in our establishments to play the VLTs.

We are confident that while these customers are in our establishment, our food and beverage sales will grow, as these customers will purchase more alcoholic and non-alcoholic beverages as well as food. Eventually, this increase in traffic flow and sales will undoubtedly translate into additional job creation within the hospitality industry.

On a recent trip out to Alberta, I visited a couple of establishments that reported that the VLTs in their operations added anywhere as much as a 25% increase in food sales, which we would love to see in our operations.

VLTs have become an acceptable form of our adult entertainment. Studies conducted by Brandon University, indicate that video lottery terminals and players see video gaming as part of an evening's entertainment. It is often planned as part of going out and enhances part of their budget planning process. In our operations, we have people who travel to Quebec quite often and ask us why we haven't been able to bring VLTs into our operations.

I'll let John speak about the grey machines.

Mr Patrick: From the conversation that had started when we came through the room doors, I believe the grey machines were probably talked about to some extent. With all due respect to the committee, I don't wish to tie up your time repeating matters that have already been suggested. It is, however, a concern of ours that some illegal situations are arising. It is putting pressure on the rest of us, because between the illegal operations and the adjoining provinces which are already licensed, we feel we are somewhat at a disadvantage. The playing field is certainly not level at this point.

In my operation in Kingston, I employ about 50 people. It's called the Iron Horse Saloon. We see the increase to be probably five to six people if this is introduced. It will keep people around. It's not strictly the amount that will be spent gambling but rather the effect the spinoff will have with people staying for food and drinks, as Brian has mentioned.

The city of Kingston, if any of you are familiar with it, is a fairly active tourist area. We survive mainly, in some months of the year, on tourists. We feel also that the tourists coming through would stay longer if we had something that would entertain them. It may help us increase our tourism as a destination point and not just as a meal place. In having it as a destination point, there are all kinds of spinoffs which I'm sure you're aware of. It is in this area that we would like to increase our volume.

We've also found that from an employment standpoint, we feel if there are VLTs coming in, it will increase our employment, but it will also increase the employment of several other businesses in the area due to the spinoff effect.

Speaking for myself, I was involved in the industry for eight years with another establishment. Some of the years were quite successful. I got out of the field for two years and re-entered it recently, approximately 14 months ago. Right now the dollars seem to be much harder to come by than they were between 1984 and 1990. With the government cutbacks and the job situation, Kingston has a fairly large government payroll and we're feeling it quite extensively there right now, more so than we ever have.

I'd ask the committee that you please consider the facts presented by Brian and myself. We definitely feel there would be significant benefits in the granting of VLTs for the Kingston area and the province of Ontario.

Mr Crozier: Good afternoon, gentlemen. I probably won't take five minutes trying to convince you that I don't feel video lottery terminals are the answer to your concerns, although I acknowledge you have legitimate concerns because others in your business across this province have relayed the same sentiment. I was interested, though, Mr Coghlan: You said you have a family restaurant, with how many places?

Mr Coghlan: Two hundred and seventy-six seats.

Mr Crozier: It's a family restaurant, so you've built your business on the family atmosphere.

Mr Coghlan: I have.

Mr Crozier: How will VLTs be introduced to your business, if you're one of the selected places to receive them? How will it affect your business, being a family business?

Mr Coghlan: I believe that coming to our place is part of an evening's entertainment package. I've noticed a couple of places out west that the family situation fit in quite well. Mom and dad went over to the slot machines. There was a small games room set up for the children which was separate from it. We have a separate bar from the rest of our restaurant operation.

Mr Crozier: That's the way to treat the family, you put mom and pop in the big gambling area and you provide some sort of supervision for the kids in another area?

Mr Coghlan: That would be their choice.

Mr Crozier: I realize it's their choice, but you've built your business on being a family restaurant. I just wonder, if my children were small, whether I would be encouraged to attend your restaurant any more or not. I'm trying to get a sense of that.

Mr Coghlan: We've had several customers of our restaurant approach us about the VLTs, and I don't think that would interfere with the operation as far as the family-style operation goes at all.

Mr Crozier: Okay. I appreciate that point of view. I have difficulty combining the words "family" and "gambling," that's all. Have you also heard from the experience in Alberta -- we hear a variety of stories; many of them are anecdotal -- that they have found that there's less money spent on food and beverage and more on gambling?

Mr Coghlan: Not to the operators I've talked to.

Mr Crozier: That's good, because there are published reports in the newspaper -- when I say "anecdotal," because it's in the media doesn't mean it's always right, but there are certainly some in Alberta who have found there is this cannibalization from their food and beverage side over to the VLT side and I think that's something we should all consider as well.

1430

Mr Tim Hudak (Niagara South): Thank you, gentlemen, for your presentation. Let's follow up on Mr Crozier's questions. I presume that you've done some inquiries into this issue, that you've investigated the impact of video lotteries on your types of business. What has been the experience, then, could you reinforce that, in Alberta or from your own information? Is this going to create jobs in the Ottawa area or is it just this going to be money split up in your restaurant?

Mr Coghlan: I personally feel it would create jobs.

Mr Hudak: How does it do that? Mr Crozier's argument probably would be that instead of spending $10 on a meal, they'd spend $8 on a meal and $2 on a machine. Would you argue that they would spend more money in the restaurant in total?

Mr Coghlan: I think it offers the consumer out there a choice of a different venue. It's going to give us more dollars, hopefully, coming into our operation to afford the food end of it. We think we would increase our sales.

Mr Hudak: What does that mean if you increase your sales, gentlemen, because of video lotteries, in terms of employment, in terms of investment in your business or in this sector in general?

Mr Coghlan: At today's bottom-line rates, it means we might stay in business a little longer.

Mr Hudak: In terms of the other things the government has helped out with in your sector, like the corporate filing fee, like the employer health tax and scrapping that, all part of a package to help out small businesses, as part of the package is this going to help out your business, do you think, in the long run?

Mr Coghlan: Yes.

Mr Hudak: Let me ask you this too: In terms of job creation, you certainly seem to feel strongly that jobs will be created from the video lottery bill, Bill 75. What kinds of jobs are created?

Mr Coghlan: I think they'll create jobs as our sales increase in the different areas. We'll be able to hire more staff.

Mr Hudak: When we were in Toronto, they spoke about port of entry type jobs. What does that term mean, or what kind of individuals will be helped out through this bill?

Mr Coghlan: We hire part-time students who are just job-entry people -- waiters and waitresses.

Mr Hudak: In terms of people who are unemployed, maybe, or people coming out of school, this is a hand up to help them get up the ladder of success.

Mr Coghlan: Yes.

Mr Hudak: Then, with experience, perhaps move on to even better jobs in the future.

Mr Coghlan: Right.

Mr Hudak: Perhaps you could answer this question too, in terms of the type of customer you expect. Is there a different kind of customer in terms of the video lottery at the racetrack or the casino customer and the kind of customer who would frequent your establishment and play the terminal a few bucks here and there? Do you expect the hard-core gamblers to come into your restaurant and gamble?

Mr Coghlan: I would not think so.

Mr Hudak: So video lotteries are more of a social environment played among friends?

Mr Coghlan: Right.

Mr Hudak: I think that's been the experience in Alberta. We mentioned the Gfellner study, where it was usually played in a social environment among friends. I think the average age was 25 to 44, middle income and up.

Mr Coghlan: I would agree with that.

Mr Hudak: I'll pass my time to Mr Guzzo.

Mr Guzzo: I want to touch on the grey machines in the Kingston area. In Ottawa, we know they're supplied from the province of Quebec and we know the money goes over there. We don't know how they're programmed; we don't know what percentage they pay out. In Toronto, it seems they come from Buffalo. In the north, we were told that some Americans and foreign reserves supplied some of them. In Kingston, where are they coming from and where is the money going?

Mr Patrick: You'd have to speak to the Ontario Restaurant Association or some people who are more informed than myself. I have a hard enough time trying to keep my own operation going.

Mr Guzzo: You mean nobody's tried to have you put one or two of those grey machines in your operation on Princess Street?

Mr Patrick: At this point, no, but we've only been open a year.

The Chair: Gentlemen, I thank you very much for your presentation.

DIAMOND GAMING SERVICES INC

The Chair: Our next presentation will be made by Diamond Gaming Services Inc, Mr Jack Edmondson, president. Good afternoon, Mr Edmondson.

Mr Jack Edmondson: Good afternoon. I am accompanied by two people today. Rob Hewitt is representing some of the Ottawa-Carleton charities. He is at present forming a new association of charity casino participants in the Ottawa area. Matt Sagle is a vice-president of Diamond Casino and a lawyer with some background in gaming law.

In 1993 Diamond Casino made a presentation to another standing committee. It was the committee, I believe, on Bill 8, which at that time was collecting viewpoints on commercial casinos for Ontario and the Ontario Casino Corporation Act. Our position at that time was that permanent charity gaming halls were the way to go. It is gratifying to us that this government has seen the value of this approach. We welcome the evolution of charity gaming.

In October 1995 we made a strong presentation to a subcommittee of Ottawa city council on the potential catastrophic economic impact of another commercial casino given the existence of the Hull casino. We pointed out the necessity of recycling local dollars through the casino and back to the local economy when the casinos cannot obtain their gaming win from across a border. Ottawa council recognized the care that must be exercised in selecting gaming options by passing a unique pro-casino resolution that emphasized the need to maximize the local recycling of gaming dollars. The exact wording is attached as appendix B to this presentation.

We have been a major roving charity casino fund-raiser in eastern Ontario since the passing of the Ontario Gaming Control Act and we have developed some points of view that we want to share with this committee. The decisions on gaming that will be made in the next several months will have a profound economic and social impact on the citizens of Ontario for years to come.

In the last few weeks we've have watched several hours of proceedings of this committee on television. Just about everything that can be said about VLTs has been said, in many cases several times. Our presentation will therefore focus on gaming and charities in the local context. Our position on a rational criteria for locating VLTs is included as appendix A to this presentation.

In the May 7 budget speech the government promised that charitable organizations would receive up to $180 million more a year. Further, the government would replace three-day roving charity events. This measure is expected to result in up to $80 million in extra revenue being made available to Ontario's local and community charities each year. While this may not be quite enough for charity representatives to kiss Mike Harris's feet the next time they see him, it comes close; it's a good move. Given the difficult public sector financial climate, for a government to voluntarily divert this much money to the private sector is an act that earns our respect and admiration.

Our key concern is that the promise of additional revenues may not be met. There are many different forms of legal gaming, existing and proposed. We have bingos, break-open tickets, various lotteries, government bookmaking, horse racing, commercial casinos, permanent charity gaming halls and VLTs proposed in various different locations.

There are very strong substitution effects among these gaming alternatives. We believe that VLTs and charity gaming halls and the new commercial casinos in Niagara Falls and Orillia will all significantly reduce bingo and break-open ticket revenues, the traditional mainstays of the charities and community support groups. The trouble is that no one, as far as we know, has seen fit to contract for the construction of an econometric model which can predict the financial cross-impacts of all these various forms of gaming. There is therefore considerable danger that promised increases in charitable funding may not occur. Many of the answers this committee seeks can only be determined by quantitative management science techniques, and funds need to be budgeted for this purpose.

Currently, Diamond Casino runs two three-day roving charity casino events in the Ottawa area. This means that our ability to provide service to all charities that want casino fund-raising is extremely limited. We are booked six months in advance, and it would be further if we accepted requests. In western Canada, charities can participate only one day per year, with participation depending on a lottery for a time slot. As you can see, there is a potential problem in providing equitable, democratic access to charity gaming hall revenues by the thousands of Ontario charities and community groups that want access to these funds. This access problem needs to be addressed before the first charity gaming hall door is opened.

1440

What do we want in Ottawa-Carleton? There are politically and economically powerful people who are still pushing behind the scenes for a commercial casino for Ottawa. This is a bad idea and it's kept alive by ignoring the existence of the Hull casino, misconceptions of gaming economics and a lack of awareness of the potential role of permanent charity gaming halls in the Ottawa region.

One of the primary policy objectives of the previous government for casinos in Ontario was tourism development. There is no doubt that this objective is being well met by the Hull casino, which has been strategically located for easy access from downtown Ottawa. The other major policy objectives for casinos were job creation, economic development and taxes for the province. These have not been met locally, primarily because these benefits have been retained on the Quebec side of the provincial border, which is a completely reasonable result that one would expect.

The Ottawa Market and Economic Impact Analysis, a consultants' report that was prepared in June 1995, indicates that for practical purposes the Hull casino meets all the market demand in this area. The Hull casino is currently experiencing visitation, according to the papers, of 9,700 per day versus the rate predicted in the study of 8,000 per day, and it will no doubt produce annual gaming revenues around $300 million in this first year of operation. For various reasons beyond the scope of this paper, we expect this to stabilize in a few years at around $200 million per year. About 70% of this money originates in Ontario and could be recaptured by the strategic location of either three permanent charity gaming halls or a large commercial casino in the area.

What is the difference between a permanent charity gaming hall and a commercial casino? To the gambler, absolutely nothing. To the citizens and charities of Ontario, the difference is huge. The difference is in who gets the money. Instead of all the profits in win taxes, which we estimate to be about $20 million a year, going to Queen's Park, the lion's share of this pre-tax profit, if it's done through charity gaming halls, will be distributed in the local community where the money was taken from in the first place. This is very significant when you compare this amount to the $12.5 million that our Ottawa-Carleton United Way campaign raised last year.

There's another major difference that has to be considered, and that is the risk to taxpayers. While companies like Carnival and Hollywood tempt us with $100-million casinos, the fact is that only the taxpayer, through the Ontario Casino Corp, may own a commercial casino in Ontario. If the casino is not successful, the burden of keeping the white elephant alive falls on -- guess who -- the taxpayer. The smaller, much less expensive charity gaming hall, with the bricks and mortar owned by the private sector, presents the taxpayer with significantly less risk and more money recycled locally. Lest anyone think that insolvency is rare, take a walk down the Las Vegas strip, where one in three casinos has been in bankruptcy at one time or another. That's the reality.

They say that those who do not know history are doomed to repeat the past. Back in the 1800s, a syndicate out of Monte Carlo established a casino in Bavaria; I think it was near Bad Homburg. It was very successful, and in a matter of months it vacuumed up just about all the local money that was available. It came very close to bankrupting the kingdom, so the king, Franz Josef, I guess it was at the time, passed a law saying only foreigners would be allowed access to the casino from then on.

In a market like Ottawa-Carleton, the impact of a casino is huge. Unlike Windsor, we do not have a seven-million-strong Detroit market to generate our win here. Instead, across our border we have a province with its own commercial casino standing right on our doorstep. This is the major reason that what suits Windsor does not suit the Ottawa region well. Our choice is that we can have up to three charity gaming halls or we can have one commercial casino. The market will not support both.

Our alternative scenario of charity gaming halls in Ottawa and Nepean and Gloucester will create the same number of jobs as a commercial casino. In terms of economic development policy objectives, the retention of a much larger share of gaming win in the Ottawa region is clearly superior to a commercial casino. Charity gaming halls are much better suited to maintaining the economic health of our community, and in fact any community in Ontario that doesn't border up on a major metropolitan American population.

This government has said, "Promoting and encouraging both the spirit and commitment of volunteers is a high priority for our government." For all these reasons we strongly support Bill 75 and the permanent charity gaming halls they represent.

In closing, we would like to publicly thank the Ottawa city council for having the intestinal fortitude and the foresight to tell the province that yes, we want casinos, but we want casinos that match the economic realities of the Ottawa region. Diamond Gaming too wants to see this committee recommend charity gaming halls for the Ottawa region.

Mr Flaherty: Thank you, gentlemen, for your presentation. I'll start at the end of it where you indicate that you'd like to see this committee recommend charity gaming halls for the Ottawa region. That's not one of our functions under Bill 75, but I appreciate the input, and certainly that'll be noted because we're moving to the implementation phase after this legislation likely becomes law, amended or unamended, however it goes. One of the very important points that needs to be addressed around the province, of course, is how many charity gaming halls, where are they to be located, and then which charities and all the ancillary questions that go with that. Thank you for your presentation in that regard.

With respect to the Hull casino and the Windsor comparison that you were drawing, I have heard people advocate for a casino in eastern Ontario. I gather you don't share that point of view.

Mr Edmondson: No, I think the economic impact study said it all. The Hull casino, if you look at it in isolation, is big enough all by its little lonesome to satisfy all the economic demand for casinos in this area.

Mr Flaherty: One of the presenters before you mentioned that a casino might have some tourism attraction here for American tourists. Has that been looked at also?

Mr Edmondson: I think the Hull casino is doing a very good job of that for the Ottawa region. The major tourist and convention-type hotels and restaurants in downtown Ottawa, as Mr Bagnell before me said, are getting the benefits directly from the Hull casino.

Mr Flaherty: We have your points. Thank you very much for the submission.

Mr Patten: Thank you, Mr Edmondson, for your presentation. It's an interesting one. It diverts a little bit from some of the other presentations that have been made so far today.

I'm curious; I gather what you're really saying is that with a giant casino in the area, the risk of trying to set up another huge casino of that size is that you could destroy both or significantly compete. Would you see any ways in this region where we could strengthen the benefits? If we didn't have Ontario and Quebec and we had, let's say, a national capital region -- I'm not proposing this, by the way, but some people would, and it's a logical region -- and we said: "We're concerned about this whole area. There's some interfacing between the two. We heard some benefits on this side of the river by the Hull casino, but obviously there's a lot of money from Ontario going across the river," if I understand you correctly, you're saying there probably is some room for some smaller versions, charity casino possibilities, organizations. I think that's the term you used, is it?

Mr Edmondson: Mm-hmm.

Mr Patten: That this can retain an element of, say, tourists who are here already and that you may not be directly competing, but able to retain some of that tourist flow. Do I have the spirit of what you're suggesting?

Mr Edmondson: My concern is that, as I pointed out, the tourism component of the policy objectives was met, but I've talked to some economic research firms in town and the rule of thumb they have is that each $50,000 of casino win represents one job. I think it's simple arithmetic to say 70% of $200 million is $140 million. That means the equivalent of 2,800 jobs are missing from Ottawa-Carleton; they're going across the river. That's huge in comparison to the net return to the few hotels and restaurants that benefit from the Hull casino. Does that answer your question?

The Vice-Chair (Mr Ron Johnson): Thank you. I'm sorry, we are out of time. On behalf of the committee, I would like to thank the three of you for the presentation.

1450

ROYAL BROCK HOTEL, SPA AND SPORTS CLUB

The Vice-Chair: The next presenter will be Mr Garry Becker, president of the Royal Brock Hotel, Spa and Sports Club. Good afternoon, Mr Becker. You have 20 minutes for your presentation and you may wish to leave some time for questions from committee members at the end. You can begin any time.

Mr Garry Becker: Owning a small hotel in eastern Ontario, we don't get into these type of formal surroundings too often. We might have a tendency to all sit around a small table and talk about things up in Merrickville or somewhere like that.

My name is Garry Becker. I am the owner-manager of the Royal Brock Hotel, Spa and Sports Club in Brockville. We are a multifaceted hotel encompassing four acres with a 96,000-square-foot building, 72 bedrooms, one of Canada's finest and most award-winning restaurants plus coffee shop and six meeting and banquet rooms. We have one small live entertainment lounge, a large discotheque, we have a 15,000-square-foot spa and sports club with 800 local members, and a gift shop. We are the last full-service hotel between Montreal and Toronto on the 401. We're the only hotel today where you can get bellmen at your door, doormen and that type of thing, just like in downtown Toronto or in downtown Ottawa.

Additionally I've been involved with tourism in Ontario for over 25 years, initially in Brantford as a founding member of the Brantford and District Visitor and Convention Bureau, and a member of Festival Country on their board of directors. In 1984 I purchased a very run-down Skyline Hotel in Brockville and rebuilt it. As well, at that time the OTAP for eastern Ontario -- which was named EOTA at the time, Eastern Ontario Travel Association -- was on the verge of bankruptcy, and even our city of Brockville's tourism marketing board's budget at that time was $1,200. I was very heavily involved with rebuilding that, and I was chairman of EOTA for a number of years as well as chairman of the Brockville tourism board, which now has a budget of about $180,000.

This afternoon I'm not going to speak about national or provincial matters. I believe others will do that much better than I. I'm not the type of person who can sit down and come up to you with masses of statistics and studies and everything else, but I'd like to focus on some reality for us. This is the type of thing when the bank manager calls and says, "By the way, you'd better transfer some money, otherwise your payroll isn't covered."

In 1990 I employed 137 people with 90 full-time. Today I employ 120 people with fewer than 60 full-time. Of course, everybody immediately assumes all this was due to the recession and its effects. Although the effects of the recession have been horrendous, they do not tell the whole story. Many of the problems small hotels like mine are dealing with have as much to do with the terrible decisions of the last two governments and not allowing us to keep up with the times.

Ontario for many years had different classifications of liquor licences, with various privileges and restrictions attached to each. Only hotels and taverns could have lounges that did not serve food, a distinction and privilege given to assist the small hospitality operators in areas like eastern and northern Ontario to survive the winter months with their lack of room revenue. All restaurants etc in Ontario had to maintain food sales equal at least to their beverage alcohol sales. The Liberal government removed that distinction. In our particular case our discotheque, which was providing us with $600,000 in revenues over the winter, saw revenues reduced by very unfair competition, now that restaurants all got into it with much lower overheads and taxation to less than $150,000. This was very real money. Today, because of this and poor planning in the liquor areas of the last two governments, we have a major mess in our liquor industry. We have power hours -- that's a new word for happy hour -- and every other kind of thing. You can buy beer in our area on many nights for 95 cents per bottle, which is below the cost with taxes.

This decision, with the recession in our area, led to three bankruptcies among my five competitors. We are severely wounded as an industry. If anybody wants the statistics of bankruptcies of hotels in Ontario, you won't believe them. We don't have money for renovations; we don't have money to properly market our property on the international markets. Additionally, there is absolutely no financing money available for hotels in Ontario. If you phone any bank, any trust company, any insurance company, anything that gives out mortgages and say the word "hotel," you have no idea how quickly they get rid of you. It's just an absolute no.

You have to compare this to out west, which has VLTs, and they're booming. They have all kinds of dollars for renovations; they have dollars for marketing. They have some of the most active tourism marketing programs going. This revenue stream, with every operator I've talked to out west, comes from VLTs. I believe they get an average of about 20% per machine, but this has provided those real funds for them and the programs are strong.

Out of interest, our program, our tourism marketing in Ontario over the last few years has gone down to below Bermuda's, and this is in a province that was one of the largest tourist destinations in the world 25 years ago. We're now down to below Bermuda for the whole province; the Prairies are beating us. VLTs are today's style of entertainment. This has also been proven in the Prairies. VLTs have brought local people back into the hospitality establishments, enhancing food and beverage revenues.

Experience across the country has shown that when the location of the machines has been controlled, there have been very few problems. In the case of hotel lounges we have the ability to control access, and you would help restore the lodging sector and make it viable again. I do not believe there should be caps on the number of units per lounge. Instead, limits should be based on the provider's square footage, with some flexibility for the design of the facility. For example, my Caroline's Lounge or my discotheque downstairs would be ideal opportunities or locations for 30 to 40 machines, yet my Pirates Cove Lounge or my dining room would not be opportune for any of them because of different styles of clientele.

I get really upset with the doom-sayers proclaiming that VLTs are going to create massive problems. For the last 12 years I've made presentations to various Liberal and NDP cabinet ministers concerning later closing hours for bars. I stated it would decrease problems because today's youth begin partying later. Many clubs around the world do not even open until 11 pm or midnight and in many centres close at 3 or 4 am. With our 1 am closing we saw patrons drink and drive either to a house party, or in many cases across the Ontario-Quebec border to Hull, or in my case across the Ontario-New York state border to Ogdensburg.

Finally a government listened, and I believe I and our industry have been proven correct. Late-night cross-border traffic has been virtually eliminated. There is no longer a big rush for last call. People come and go. Drinking and driving has been reduced. There's no longer a perceived need to carry an extra case of beer in the car for a later house party. People can finish the social part of the evening in a supervised environment and take a cab home or use a designated driver. Even my parking lot is much quieter. The 2 am closing has worked, and I believe it will be the same with VLTs. When you give people what they want provided with the environment, it's a lot easier. At 1 o'clock in the morning up until the change, on Thursday, Friday and Saturday nights my parking lot used to be a zoo because everybody came out of the bar together, and then you had the problems of the noise and everything else. With the new 2 o'clock closing that's all gone now. People leave when they feel with it; there's no pressure and there are no great crowds and it's really neat.

I realize that the people objecting to this new form of entertainment are well-intentioned. However, this decision is not going to lead to increased gambling addiction problems. There is a great deal of gambling in Ontario already, there are casinos just across the border as well as thousands of illegal VLTs and that type of thing. We're not talking about something new. I've been offered by several different people to put these grey machines into my lounge and I've refused, because I won't break the law. We're just not about that. What we are talking about is modern entertainment that the public wants rather than gambling.

I can remember 24 years ago applying for my first liquor licence for a Chinese restaurant in southern Ontario. I had to deal with numerous objections from various groups indicating that the granting of my liquor licence would lead to increased lewd and lascivious living, and that was one of the objections 25 years ago to a liquor licence. Obviously the objectors were proven totally wrong, and I am confident we are dealing with the same scenario here. I believe time will prove that this will be a very wise decision that will restore jobs in Ontario's hospitality sector. In my case the installation of VLTs could well add 30 jobs to my establishment, and across the province I've heard numbers of up to 100,000 jobs; more importantly, lower-skilled jobs that address the unemployment problem for some of our youth and welfare recipients.

1500

Mr Chairman, I thank you for the opportunity to speak today. I believe strongly in what your government is doing. Clearly your government is putting Ontario on the correct path, a path which will again make us Canada's financial powerhouse, returning us to the Ontario of the past when everyone believed that this province was the province of opportunity for all. I urge that this legislation be passed and video terminals installed as soon as possible.

Mr Hudak: Thank you, Mr Becker, for your presentation. I regret that I haven't seen your establishment, but by the history you give in your first couple of paragraphs it sounds like an excellent place that you built up, and then, through what you term misguided government policies, you've seen pieces taken away.

Mr Becker: We've been hurt badly. We were hurt very badly by some of the policy changes in the last number of years. But that's not just me; our whole industry was hurt. We survived but our whole industry was hurt with some of those changes, some of those policies. Of course, the west had the same situation, their taverns, their hotels in the smaller areas. This doesn't affect downtown Toronto or downtown Ottawa, but the small regions of their province were badly hurt, especially in Manitoba, and they were hurt very badly.

Mr Hudak: Manitoba, Saskatchewan and Alberta -- eight other provinces have tried video lottery terminals as a route to bring some more customers, some more money back into your establishments and your business.

Mr Becker: That's correct.

Mr Hudak: Do you think that will be successful in Ontario?

Mr Becker: Yes, very. As I said, only one province got into problems, and that was because they put them everywhere. The people who kept them in lounges and kept good restrictions on them have been tremendously successful. I've talked to a number of operators in western Canada over the last few months and they just say, "Thank God."

Mr Hudak: There are two problems you present here. You said your employees went down from 137 to 120 and down to 60 full-time. You said that it's next to impossible to get any kind of financing when the bank manager calls.

Mr Becker: Totally impossible. There is no major lending institute in Ontario that currently will give a mortgage for a hotel with any sort of financial stability.

Mr Hudak: How do you see video lottery terminals addressing those two problems?

Mr Becker: Cash flow and bringing back normal gross profits to the industry so the industry doesn't have its horrendous rate. We forget that over 30% of our hotels in Ontario, including the big ones in downtown Toronto, although the public doesn't see it because the name doesn't change -- I could name at least four hotels in downtown Toronto that went into receivership in the last three years. In Brockville alone half our hotel-motel stock in the last three or four years has gone into receivership.

Mr Hudak: Your establishment looks like a destination in itself: a spa, a sports club, you have fantastic facilities. So obviously your competitors aren't just in the Brockville area. People will be choosing your establishment and comparing it to other ones in the States.

Mr Becker: We compete against Lake Placid. We compete against Lake George. We compete against Montreal, against Quebec.

Mr Hudak: So in terms of keeping Ontario dollars in Ontario and attracting American dollars or Quebec dollars to Ontario, how helpful is it?

Mr Becker: Some 40% of my business is US. This is a tremendous help because this will give me the cash flow to market again and for the renovations.

Mr Hudak: How can parents, for example, be assured that youth will not be operating these machines at your establishment?

Mr Becker: It's very simple. For 25 years this was never a problem. Taverns and hotels in Ontario had separate lounges, separate entrances, right across the province. They're easy to control. We do it to this day. We have tremendous responsibilities under the liquor act to control the amount of drinking, whether somebody drinks and drives, everything. If anything, this is simply a control of making sure nobody is under age. We have to do that by law.

Mr Kormos: I read your submission. Again, what you've told us is what a whole lot of other similar establishments have told us, people in your business. You're in a unique location because of your proximity to the States and to resort areas in the United States and because of your proximity to Quebec. So you've got a double cross-border phenomenon into Quebec and into New York state.

You know where I stand on the slots, that I'm opposed to them.

Mr Becker: I've heard that.

Mr Kormos: Everything you heard is true. Well, there's one part, but we'll talk about that later. But I don't buy into them.

Mr Becker: You're very wrong, Mr Kormos.

Mr Kormos: I appreciate you saying that, but you and I disagree on the dangers, about the addictiveness of it.

Mr Becker: But, Mr Kormos, that's one thing I've said. I went through that 25 years ago. Applying for a liquor licence, I was accused that I was going to increase lewd and lascivious living. I went through this with the 2 o'clock. I went through with three of your co-workers with a 1 o'clock closing -- your ministers. All the things were being said, it was going to increase drunk driving and everything. It doesn't. It's just great actually, because it actually doesn't increase sales very much but it allows people to do their own thing.

When you take away from the public something they want, they get it anyway. Right now we have probably 20,000 grey machines in Ontario. We'll get rid of all those.

Mr Kormos: Which leads me to that, the 20,000 grey machines.

Mr Becker: Or whatever, I don't know. I've never seen a grey machine. I've been offered them but I said no.

Mr Kormos: Because they're not illegal until people pay out. They're perfectly legitimate machines until the bartender or bar owner --

Mr Becker: But you have to pay out for anybody to play them.

Mr Kormos: But if there's 20,000 of them out there --

Mr Becker: Whatever, I don't know.

Mr Kormos: The police tell us 15,000 to 25,000, so 20,000 seems to be cutting it pretty fairly down the middle.

Mr Becker: I've never personally seen one.

Mr Kormos: That's the other remarkable thing, because for there to be 20,000, in some respects, they seem awfully invisible.

Mr Becker: With this recession, I've had two weeks off in five years and I work seven days a week, about 80 hours a week, so --

Mr Kormos: You aren't out looking for grey slots.

Mr Becker: That's right. I'm not out looking for them.

Mr Kormos: But if there are 20,000 out there and people are playing them, they've surely been pumping a whole of money into them, and yet we haven't heard anybody suggest that this money's going to be missed. Yet we have been told that by and large these machines -- they're not in your place, I'm not suggesting that -- but these machines are by and large in licensed premises. That's where they tend to be.

Mr Becker: We have two very, very major areas which the liquor board's working -- yes, I believe that's correct. People came to me and they said, "We'd like to put these machines in." But for them to be successful, for me to make all kinds of money on them, I have to pay out. I said, "No dice." It's just the same, we have a tremendous amount of illegal liquor right now being sold in the province of Ontario in establishments and --

The Vice-Chair: Sorry, Mr Kormos, we have run out of time.

Mr Becker: Could I just finish this answer, please?

The Vice-Chair: Unfortunately, no, you can't.

Mr Becker: That's fine, no problem.

The Vice-Chair: We do have to move on. We have a very busy agenda. On behalf of the committee, Mr Becker, I'd like to thank you for your presentation.

Mr Becker: Thank you very much.

OTTAWA-CARLETON BINGO CHARITY SPONSORS ASSOCIATION

The Vice-Chair: The next presenter will be the Ottawa-Carleton Bingo Charity Sponsors Association, J. Donald Riopelle. Good afternoon, sir. You'll have 20 minutes for your presentation and you may wish to leave some time for questions for the members at the end. You can begin any time.

Mr Donald Riopelle: Mr Chairman and committee members, on behalf of the Ottawa-Carleton Bingo Charity Sponsors Association, greetings. We are approximately 300 municipal bingo licensees in Ottawa-Carleton and we appreciate the opportunity to take part in these hearings.

In my associations across the province I have read various briefs already presented and watched presentations on CPaC. Some are supportable and others are not. I would suggest, therefore, that the racetracks and charity casinos be joined by bingo halls as the first venues for video lottery terminals and the experience gained at those venues would dictate any further expansion into neighbourhood bars etc.

As far as the hospitality industry being licensed for VLTs, the industry is very broad and you would have to become more specific and use the experience gained, as previously stated, before licensing.

I guess the crux of my appearance today is contained in the next few lines. A provincial plan is required and the implementation process must be speedily developed and closely supervised when licensing becomes a reality in the matter of who gets what and specifically what the charities get and how is it delivered.

If I may, I'll take a look at how bingo dollars are used. Typically, a charity is licensed for one bingo event per week and thus proceeds are available for disbursement on a weekly basis. Rest assured, those funds are needed on a weekly basis. Gone, with a few exceptions, are the days when lottery moneys could be allowed to build up for long-term, big-ticket items. On the subject of the Trillium fund concept, it would not be in the best interests of municipally licensed or program-type charities which typically lack the clerical and administrative resources of the larger provincial and national charities, to put together grant programs and to go through all of the bureaucratic process that is necessary when dealing with Trillium.

1510

Don't get me wrong; I am not knocking it. Trillium has been very, very good to many, many charities in Ottawa-Carleton. Gateway House is my charity, and my association of alcohol and drug recovery associations has been very well served by Trillium. We're simply saying that large granting agencies won't do what we need them to do, which was to keep the ability to maintain our cash flows as they were over the last few years.

As has been said before and will obviously be said many times in the future, there are social problems resulting from VLT licensing, particularly in a neighbourhood environment. It is obviously part of this government's concern in that you've earmarked certain moneys to help alleviate any problems that occur. My question: Who alleviates the problem and when do they alleviate the problem?

Being a believer in early intervention and recognizing the problem before it becomes a problem, I wonder what in fact is in your minds when it comes to problem gambling and its treatment. This particular thought might be considered as a random effort, but it is based on my experience with alcohol and other drug addictions. Prevention is always much better than after-the-fact treatment.

The next remarks are a direct result of the experiences of the Ottawa-Carleton Bingo Charity Sponsors Association over the past two or three years. They've also been formulated since I drew out my first bingo licence in the city of Ottawa in 1975. I and staff members of our facility, board members, friends, alumni, have every weekend since that time taken part in running a bingo somewhere in the region, and there are many more people like me who put that effort into weekly fund-raising. This capability allowed our facility to ask for and receive no more than one third of our program requirements from government, the balance being raised through gaming -- bingo -- and through donations and fee for service. I'm sure there are many others like us whose revenue sources are greatly tied into the gaming industry, maybe even from before it was called an industry. What has been in the past few years an unbelievable increase in the number of bingo halls and bingo events in Ottawa-Carleton -- and I'd like to address this, because it has happened and it is happening in other regions of the province.

A particular part of this presentation is tied into regulation or the lack of it, which has created a situation in Ottawa-Carleton which is untenable, to say the least, and is diametrically opposed to the philosophy inherent in the law that states that gaming is illegal unless for the benefit of charitable activities of all types.

Having said that, the terms and conditions do the job and the lottery licensing policy manual covers the philosophy of licensing various organizations very well. What I would like to bring to your attention is the fact that there are many who wish, after allowing too many bingos in too many bingo halls to have licences, to bring into the equation of charitable gaming in the private enterprise system market forces dictating the success or failure of the various bingo halls. We now have 100 charities at risk of losing their bingo revenues because of a situation in Ottawa-Carleton.

The philosophy of marketplace has no place in the charitable gaming industry. This is a unique combination of stakeholders. It is apparent in Ottawa-Carleton now that serious problems have occurred, and at the end of 1995 charity revenues were down by 50% or more across the region. Since that time, they have dropped again significantly. A complete and total picture is very well detailed in the regional market study released in February of this year and it is, in my opinion, the definitive study of what not to do to the bingo industry. Copies of those market studies are available to all of you, should you so desire.

Having said all of this, VLTs will create a drop in revenue from break-open ticket sales which now occur in bingo halls under the auspices of the sponsor associations. The downturn in popularity of BOTs is predicted and the VLTs and the bingo halls would make up for this, again another potential loss in revenue to the charities.

We would suggest that you, as a provincial body, as the lawmakers, as legislators, consider a uniform set of regulations applied evenly across the province by a provincial licensing authority and that that authority be placed outside the purview of the municipalities. If this cannot be done, then at the very least regional licensing bodies must be established. This would be particularly important in regional municipalities such as Ottawa-Carleton, and simple to do since a regional level of government already exists.

It is of the utmost importance to all charities, especially local charities, that you ensure that our experiences in the bingo industry do not occur elsewhere in the gaming industry. Please ensure that regulation is central and common across the province. Local councils should not be involved in the licensing process of the gaming industry in any way, shape or form. They may not be capable of ensuring fairness towards the charities in their own communities. They simply do not know enough about the gaming business to be able to ensure fairness across the board.

I would like to read to you the end page of the market study on the recommendations by the people who put it together. It says:

"The focus for the industry as individual organizations through pertinent associations or through the leadership of the region-wide stakeholders' organization should be to pursue greater charity profitability as the primary goal. All stakeholders will benefit if charities are making money.

"In the broadest terms this focus should incorporate the following considerations:

"Attempt to adjust factors which have a potential negative impact for the industry on the distribution of revenue ratios." That's a very long way of saying have a variable prize board.

"Recognize that protection of the player is the second regulatory priority behind the protection of the charities.

"Provide greater flexibility and encourage opportunities for the development of bingo-related experiences which will attract more players," as in the case of super jackpot, VLTs and all the games that are coming down the pike over the next few years in this burgeoning gaming industry.

Ladies and gentlemen, that's my presentation and I thank you very much for hearing it.

The Vice-Chair: Thank you, sir. Moving to questions now, we have three minutes per caucus, starting with the Liberal caucus.

Mr Patten: Mr Riopelle, a well-known, famous name in these parts, I found your presentation quite interesting in a couple of aspects. One is it seems you are unequivocal in terms of recommending that the municipality, especially in the regional context like yours, should get out of it; either you have a regional structure or one which is probably superseded by some degree of provincial consistency. I would support you on that because I've seen the favouritism of some small municipalities in the area -- they shall be nameless for the moment -- that will ignore a regional service. I used to work for the Children's Hospital foundation, as you know, and they would not permit any funds from certain bingos to go to the Children's Hospital because it wasn't located in their municipality. Can you imagine that? Pretty small-minded, it seems to me. So I support you on that.

1520

The other area is, are you suggesting that with the VLTs -- I'll be very quick on this because I only have three minutes. Mr Edmondson from Diamond Gaming Services talked about, "We believe that VLTs and charity gaming halls and the new commercial casinos...will all significantly reduce bingo and break-open ticket revenues." You've just said that without these, unless there's such an impact from the so-called grey VLTs that it's taking away revenue, there already is a decline in revenue for the operators and of course for the charities themselves. How do you see this all working together organizationally?

Mr Riopelle: First of all, what I'm saying is that VLTs in the bingo hall would make up, I would suspect, for any loss in revenues in an ordinary break-open ticket. Most of us also have third-party, break-open ticket outlets. As far as the revenues in bingo halls are concerned as they exist now in Ottawa-Carleton, we can't make money at a $3,500 prize board and there are those who want to jam it to $5,500. I don't really understand that kind of rationale.

What the VLT providers or manufacturers or whatever organizations say about their operations, it's all conjecture. I think it's a fait accompli that they're coming and to prevent the horror stories that are coming out that this is going to be the crack cocaine of the gaming industry and stuff like that, if you want to prevent that from happening, and I'm speaking as an addictions services person, regulate it. Regulate it properly. Keep it out of the neighbourhoods. Keep it away from the kids. It isn't hard. It's when you get tied up with -- as somebody asked me recently, "I'm between a rock and a hard place." Can you imagine somebody who's in the addictions business running an operation that's based one third -- 33% or 40% of its revenue base comes out of bingos.

If you look at those of us who are in this business since 1975, that's literally, ladies and gentlemen, every Friday night or Saturday night or every week since 1975, or on a Sunday night, somewhere in the regional municipality of Ottawa-Carleton, Riopelle or one of his staff or friends or alumnus or family was out running a bingo for Gateway House. This goes on all the time. This is what makes the charity concept of gaming so unique, and it works.

The Vice-Chair: Mr Riopelle, I'm sorry, I'm going to have to stop you there and move on to the Conservative caucus.

Mr Riopelle: I'm just getting wound up.

Mr Hudak: Thank you for your presentation, sir. Actually, we got into an interesting topic there talking about the addiction aspect of video lottery terminals, and there are two different views on how to address that. Certainly from the opposition, the NDP, Mr Kormos, and from the Liberal leadership, they've reacted to that and said, "We don't want VLTs anywhere aside from casinos." I disagree.

I come from an area not too different from Ottawa in that we have a very successful gaming industry in bingo. It's the Fort Erie-Port Colborne area, Niagara Peninsula. You might agree with somebody I heard there from the New Port Centre addiction research and treatment facility. They said, "Enough of the hyperbole; let's cut through the alarmist views and deal with the issue." In fact addiction does exist, but it exists for all kinds of gambling and all kinds of other vices or behaviours, so set aside that 2% and let's try to deal with the addiction. Addictive behaviour means you may play VLTs, you may play dice.

Mr Riopelle: You may licence numbers on cars going by.

Mr Hudak: So any kind of behaviour.

Mr Riopelle: Yes.

Mr Hudak: Setting aside the 2%, which works out to several million dollars increase in this kind of funding, is a good direction of the government.

Mr Riopelle: Yes, it is, and quite frankly, as I said in my presentation, I'd like to know the whens and the wheres and the hows. If you're going to make charities the stakeholders, then do it properly and let's have 20% of the take.

Mr Hudak: This pulls me in because the actions in Bill 75, the actions we declared in the budget last May, will result in an estimated $180-million increase to the charities of Ontario. You bring us some interesting points in terms of the mechanism you use to distribute those funds. I'm a little bit ignorant of the local issues in terms of municipalities playing favourites -- I'm not aware of that -- but we heard the opposite, that maybe the municipality should play a large role because the community itself should decide where the funds go that are raised in that particular community.

You talk about the Trillium a little. I'm trying to get a feel for your recommendation, sir, on the best method of distributing these funds. Is it a Trillium-type thing or a provincial-type thing?

Mr Riopelle: Trillium is a granting process and does a very good job. If I were to suggest anything -- and you might know, or I guess you do, that the Trillium Foundation is flat-lined at $17 million a year and it has been for many years. Well, give them some more money. This is a place where you can move those dollars. But the municipalities -- and this is what a lot of people forget. You get concerned with the large charities, the ones that can make an issue by running a picture or something like that. Most of the charities are very small. Most of the charities can be easily described as neighbourhood charities, well under $500,000 a year for a 14- or 15-bed residence in addictions, for instance, a cost factor of $100 a day or less versus $400, $500 or $600 in hospital.

If we can draw one third of our budget out of the gaming industry, this does great things for the neighbourhood, but the things other than monetary -- we have a whole raft of people working with us to provide this service. So you bring your neighbourhoods back together. How are you going to keep this kind of a feeling going if you don't get the neighbourhoods involved? That's the crux of putting the stakeholders at the table to determine who gets what and how you get it. It's very simple. There are those of us --

The Vice-Chair: Mr Riopelle, I'm sorry, we are going to have to stop you there. We've run out of time. Twice you got warmed up and twice you got -- on behalf of the committee, we would like to thank you for your presentation.

HILLSBORO HOTEL

The Vice-Chair: We'll move to Shirley White, Hillsboro Hotel in Pembroke. Welcome, Ms White. You'll have 20 minutes for your presentation, of which you may wish to leave some time for questions from the members. You can begin any time.

Mrs Shirley White: My name is Shirley White. I'm the owner of the Hillsboro Hotel, located in Pembroke, Ontario. I want to thank you and your committee members for the opportunity to appear before you today.

I want to begin 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 20% across the industry. We have lost 100,000 jobs and there have been about 1,400 bankruptcies since 1992. I can tell you personally of at least 10 in my area alone.

My husband and I operate a small hotel with 30 rooms, a dining room and a bar. My son and daughter operate a sports bar in the same town. We do everything possible to increase business but we need a competitive edge. The public wants and demands entertainment and VLTs have proven to be the answer in Manitoba.

The Minister of Finance 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." He also referred to the 15,000 illegal grey machines that are already operating throughout the province, from which the government is receiving no revenue.

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. The longer the delay to our industry will mean government will not be able to start receiving over $500 million annually from machines allocated to our sector and the illegal, untaxed revenue from the grey machines will continue to remain in the underground economy.

My own town is located three miles from the Quebec bridge. VLTs are legal in Quebec and people from Pembroke use the VLTs regularly. There are bus tours to the casino in Hull, Quebec, operating on a regular basis. These tax dollars are leaking out of Ontario and into Quebec coffers.

1530

From the perspective of a businessperson like me, it means that a delay could well result in having an initiative the government intended to help our industry hurt it. During the first stage of implementation to racetracks and charity casinos it will create business dislocation. Customers will go where they can legally play VLTs. We cannot afford to lose any more business, even for a short time. As well, who knows if that customer will come back at all.

I have personally had to lay off 10 employees in the last year. I'd love to be able to re-employ these people and maybe more. I would suggest that your recommendation include a request to move implementation of VLTs for our industry on to the fast track.

Delay will mean, as I said earlier, that the government will be delayed in moving on the offensive against the illegal machines. It is very difficult to try to operate legally, especially in these tough economic times, when competitors are attracting your customers with illegal machines. I refuse to allow illegal machines on my premises. However, I need this unfair competition to stop. VLTs work as an attendance generator because they are an acceptable form of entertainment. The public wants them. They play for entertainment, not to gamble. They are part of an evening out.

Independent research conducted by Dr Barbara Gfellner of Brandon University in Manitoba has demonstrated that electronic gaming is viewed by the public as a desirable social activity. It is a budgeted event with the average player going out one or two times per week and spending about $10. People play for the fun of it. It is a form of risk-taking, like a lottery ticket, not viewed as gambling to win money. Independent research has demonstrated VLTs are not addictive. I would never support anything that would create more social problems.

This form of gaming has proven successful in eight other provinces in raising new non-tax revenues for government and restoring economic stability to the industry. A survey by Angus Reid shows that 63% of the public supports VLTs. This survey contacted 800 people and is accurate within 3.5%.

Ontario already has a full selection of legal and illegal gambling opportunities. I have already referred to the grey machines. However, one does not have to go any further than your local corner store or bingo hall to find a gambling opportunity. I believe just as with the consumption of alcohol, the vast majority of players gamble in moderation and experience no gambling problems. With all the existing forms of gaming today -- lotteries, sports pools, bingos, horse racing, casino, Nevada tickets -- the introduction of VLTs will not increase the potential for compulsive gambling in this province. My customers support the introduction of VLTs into my establishment. As one of them said to me, "I don't mind making a donation to the Ontario government if I have some fun doing it." It is time the government raised some revenue in a way other than tax increases.

On behalf of myself, my family and the employees I still have, I urge 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 as quickly as possible. Our industry is in desperate condition, as I can personally attest. We need this new form of entertainment to survive.

The Vice-Chair: Thank you, Mrs White. We're going to move now to questions. We have about four minutes per caucus. Mr Kormos has stepped out. We'll move to the Conservative caucus.

Mr Hudak: I appreciate the time. Thank you very much for your presentation, ma'am. You have an interesting perspective considering the proximity of your location to the Quebec border, which as you know is one of the other eight provinces that have VLTs.

Have you taken the time to go over there -- you talk about your husband helps you run the business, or your son and daughter -- to see how the VLTs work in Quebec and what kind of customers they attract?

Mrs White: They are a business generator. People will come in and have a drink or have something to eat and they will walk over and play the machine, as they do Nevada tickets in the bars now.

Mr Hudak: Maybe it just makes good headlines or whatever, but sometimes people portray these machines in a different light. Basically the image that you'd get from listening to these critics is that people are practically chained to the machines. Is that accurate or is it more a part of the social setting?

Mrs White: I have not seen that. I believe VLTs are similar to any other -- alcohol, cigarettes, whatever it is; you name it. Some people have a compulsive personality and they will have a problem. I'm not saying this will not happen. I believe it will happen, but I also believe that the percentage that is put aside from the gaming that is done will be able to treat those people.

Mr Hudak: That percentage can be used to help people with addictions to gambling.

Mrs White: Of all kinds.

Mr Hudak: Of all kinds. Maybe there's even a coincidence, that somebody who has an alcohol addiction may have a gambling addiction if it comes from the same sort of psychological vein.

Mrs White: That's right. That's possible.

Mr Hudak: What is this is going to do -- this is a good question, I think -- in your opinion as a businesswoman, to your sales of food and beverages? If I go in there with $10, am I going to spend $8 on food now and $2 on the VLTs, or will it increase the spending?

Mrs White: I believe you will still come in and have something to eat and drink. That was why you came into my place in the first place. You may or may not use the machine. But the idea that I have a machine as well as someone down the street who has grey machines, at least that gives me the same competitive edge. Then if they're going to his place, they're going because they like his food, they like his service and his atmosphere.

Mr Hudak: In terms of bringing some dollars from Quebec back into Pembroke, this will be a very important tool.

Mrs White: Of course, absolutely.

Mr Hudak: I think Mr Ford had a question.

Mr Ford: Yes. Do you think the availability of VLTs would contribute to the attractiveness of premises such as yours as destinations for customers? Do you think the VLTs are similar to the Quebec side, or does the Quebec side have actual slot machines or VLTs?

Mrs White: They have VLTs. They are played and when they cash out they get a slip of paper which they cash in at the bar.

Mr Ford: Say they started to introduce actual slot machines. This would be still another attraction for the customer, would it not?

Mrs White: I don't think so. It's all the same thing. They can still check out and get their money, so I don't perceive that as being any competition to VLTs.

Mr Ford: So they just get a receipt anyways and they can cash the receipt.

Mrs White: That's right. I don't feel that has any --

Mr Ford: So they wouldn't have to have the cash in their hands.

Mrs White: No, because they'll have it when they leave. I think people prefer to have the slip, because when they leave they're leaving with something. If they have the money, they may put it back in.

Mr Patten: Mrs White, thank you for coming today. I know your area and I know your establishment. I think it's a fine one and obviously has a good future. It does worry me, it disturbs me that somehow I see reputable organizations and companies and businesses trying to be more viable by virtue of gambling. It must disturb you somewhat too.

Mrs White: No.

1540

Mr Patten: Maybe it doesn't. But you did mention Manitoba, and I've got some references to Manitoba. Manitoba, the jurisdiction where these machines have been the longest, has recommended an immediate cap: "A commission has recommended an immediate cap on the number of machines and a gradual reduction of the machines to begin." I have the results of a similar study in Alberta, which recommended capping the number of slot machines in that province for a different reason.

In Manitoba the research suggested that 25% of identified gamblers started under the age of 18; a further 30% between and 18 and 24. They uncovered a striking correlation between age and slot machine usage. For example, 66% of 18- to 24-year-olds have played slot machines within the past year. The frequency played decreased with age.

Then it was recently reported, and I thought this was astounding, that Manitoba spent more money on gambling than on basic needs such as bread, milk, eggs and vegetables. In other words, $130 million was spent on lotteries, casinos and slot machines in Manitoba last year, compared to the province's basic grocery bill of $312 million. Where is this leading us? I'm trying to address both your situation, which I think I would rather see in other areas, of limiting business tax or whatever it may be --

Mrs White: If I could, you would realize what I'm suggesting is that we have a level playing field, which we don't have now. Unless the government can look at controlling the grey machines, and they do not, there is no level playing field. It doesn't matter to me if no one has VLTs. Then I don't have any and the guy down the street doesn't either, so I don't have to compete unfairly with him. But as it is now I do, and there is no way they can control them. The only way you have to do is regulate them and control them; if the government controls them, it's even --

Mr Patten: Why couldn't they be controlled?

Mrs White: It's like every other crime. It's like marijuana or whatever. You don't control it.

Mr Patten: They have investigators who go around and bug stores about cigarettes, and illegal booze in bars. I hear astounding figures. These phantom 20,000 machines, I don't know how many there are and I don't even know where they are and I've never seen them but --

Mrs White: I've been approached if I wanted to put them in my place and I've said no. I won't break the law to do that.

Mr Patten: A lot of people have said that. If the OPP approached you, would you say who approached you?

Mrs White: No.

Mr Patten: You see? There you go.

Mrs White: No, I won't.

Mr Patten: You won't say who approached you. You know they're illegal.

Mrs White: That's right, they are.

Mr Patten: But you want something to be on a fair ground with someone who is in an illegal operation?

Mrs White: When you walk away and when the police walk away, I have to deal with those people later. That's my problem.

Mr Patten: There can be ways in which people can provide information in terms of illegal activities without it necessarily having --

Mrs White: In a small town, I beg to differ.

Mr Patten: We have a lot of small towns in Ontario.

Mrs White: That's right, we have, and I can tell you that it wouldn't be the end of the situation for me if that happened. I know that and anybody who lives in a small town knows it as well.

Mr Patten: I understand that dynamic.

The Vice-Chair: Mrs White, on behalf of the committee I'd like to thank you very much for your presentation this afternoon.

PROVINCIAL COUNCIL OF WOMEN OF ONTARIO

The Vice-Chair: Next will be Ms Shirley Browne, the Provincial Council of Women of Ontario. Good afternoon. Thank you for coming. You'll have 20 minutes for your presentation.

Ms Shirley Browne: Good afternoon. Thank you for allowing me to give this presentation. It's short because I assumed there would be a lot of people here who had more resources than I had for research, but it's to the point, I think. Do you wish to know what the council is, or don't you want to bother about that?

The Vice-Chair: That's up to you. I'd like to know. I don't know about the committee.

Ms Browne: The Provincial Council of Women of Ontario is a volunteer, non-sectarian, non-partisan organization. It's a federation of provincially organized societies representing approximately 500,000 women and men, their families and communities. While members come from different backgrounds of experience, they have a common purpose in monitoring and researching social equity injustice in Ontario. Their strength lies in their mutual support for resolutions which have been presented to the provincial government in the form of an annual brief for the last 73 years. Over those years our concern has emphasized the need for advocacy on behalf of the most vulnerable citizens. Historically, women and children have borne the brunt of poverty and addiction, whether to drugs, alcohol or gambling, all of which have contributed greatly to poverty.

PCWO doesn't have any specific policy on VLTs, or video lotteries, but has presented many resolutions pertaining to alcohol and drug addiction, with recommendations for curtailment and rehabilitation programs.

While we applaud the Premier's statement of July 18 that there should be a zero tolerance policy towards organized crime in the casino business and we also commend the recognition of the need to regulate other forms of gambling such as VLTs, the very fact that the government has stated its intention to contribute -- albeit a small percentage of the estimated, I don't know, $185 million is what I read but I don't know how much they're hoping to collect annually from legalized gambling -- this amounts to an admission that gambling creates problems, and that's something we've known for many years.

Then we have the loss of autonomy of the charities that depend upon bingo and break-open lottery tickets for revenue. They feel that their revenue is going to be jeopardized. If 20,000 legalized VLTs are introduced, they will then become dependent on government discretion for their funds and, as I said, lose their autonomy.

Accessibility is a problem. The more accessible alcohol, drugs or VLT machines, whatever, gambling of any form, the more accessible it is, the more it's going to be used and the more problems will arise from it. The many thousands of illegal VLTs now in Ontario have introduced many people, young and adult, who can ill afford to lose money. They've been introduced to a form of escapism which can ultimately lead to addiction and depression, among other things. Machines must be off limits to young, vulnerable and bored teenagers, which means not in corner stores and malls and other places that teenagers frequent.

Regulations are only as good as their implementation. Up to date, the 38 government liquor licence inspectors have been unable to stop illegal sale of cigarettes and liquor to minors. With the recent reduction in their numbers, it will be impossible to supervise all proposed VLT outlets as well. I would like to know how the government proposes to do this to regulate them. You can have a law, but you've got to implement the law, and you've got to have some way of doing that.

Manipulation: There have been allegations of machines fixed to give winning returns at the beginning of the week and losses at the end of the workweek. Families have reported the loss of wages from this deceit, and it's mostly women and small children in families who suffer if the wage earner loses the money on these machines. There has to be some way, and I'm not saying it's just male people who lose their wages on them -- whoever is the breadwinner in the family.

If the government of Ontario continues to pursue revenue through the proceeds of gambling, we strongly urge them not only to set in place strict regulations as to placement of the VLTs and the age of customers but to make sure there are enough trained inspectors to implement the regulations on a constant and regular basis. There should be strict penalties, such as the withdrawal of liquor licences for infractions. Fines are never a sufficient deterrent. People pay the fines and go back and do what they did before. It's been seen over and over again.

Once legalized, the machines must be safeguarded against manipulative fixing. I don't know another way of expressing that, but I think you must know what I mean. With the erosion of much-needed social services, provision must be made for assistance to the families of compulsive gamblers.

If the government is going to encourage gambling, and I really don't think they should, they must help people who suffer from it, and they are very often the innocent people. Thank you.

Mr Rollins: Thank you very much for your presentation. You've certainly put a different light on it from some other perspectives. Your concerns with the government putting back in a portion of the winnings to address the addiction problem some of those people are going to have -- I don't believe that all those people are going to be treated. A lot of them have that problem at the present time. They could be betting at the racetrack now; they can be betting on football and ball games and all the rest of it. At the present time they're using even the grey machines and getting addicted.

Talking with quite a few racetrack people, they seem to think that if we were to put those machines in, we should put them in a restricted area where they have to be 19 years old to get in. A lot of ladies play those machines. Are you aware of the figures that they portray also?

Ms Browne: Yes. I'm sorry, I wasn't meaning to imply that only men played on them. Oh boy, that wasn't my meaning at all.

Mr Rollins: No, but there's a goodly number there. There are certainly some concerns in society with the gaming industries or the VLT per se. But with grey machines being as large as they were, a previous presenter had a question from the opposition whether we can remove those, but the grey machines under the present law, the way they are, they're in these places strictly as entertainment. Unless there's proof of payoff, they're not illegal. So those were some of the concerns, but I want to thank you for your presentation.

Ms Browne: Thank you. I still think, though, that even if there is gambling still on racetracks and in other places, the government shouldn't be encouraging more gambling just in order to get revenue.

1550

Mr Hudak: Thank you, ma'am, for your presentation. You made some mention too about the province proceeding cautiously and reasonably towards this, and I think we are learning from the other provinces' experiences. For example, Nova Scotia has withdrawn -- you'll hear this often -- a number of VLTs and the reason they did that was because they had it in corner stores. I certainly don't think that's a good idea and I don't think you'll see this government proceeding with the corner stores because of the issues that you talked about in terms of age restrictions and on every block and that sort of thing. That's why the government's going to approach this very conservatively, if you will, especially if they're liquor- licensed establishments. We've talked about an evaluation period for the tracks.

I guess there's a tradeoff then. You question why the government would be getting into another area of gaming. We're already in gaming in all sorts of other areas. Especially coming from a riding that has a racetrack employing about 5,000 people directly and indirectly throughout the riding, the feeling there at the track seems to be that this is a tool to maintain those jobs and hopefully to enhance them and bring more capital to the track, and then in terms of charities, increase the total revenue to charities in the community. I think that people there would acknowledge there may be some tradeoffs with different charities, but the overall pie, if you will, they anticipate is going to increase from these changes in Bill 75.

I guess that's the tradeoff and that maybe answers your question to an extent that in terms, especially in my riding, of job creation and bringing money to charities and maintaining what's already a successful charitable gaming industry across the border from Buffalo, New York, those are the tradeoffs that I wrestle with in terms of creating jobs in the racing industry and the hospitality industry and helping out the charities. I think that's why we're making that sort of tradeoff.

I appreciate your comments too on the setting aside of revenues to treat people who are addicted to gambling, whatever kind of gambling it is. That was just a comment and I just wanted to address one of the questions that you brought forward.

Ms Browne: What riding are you from? I can't see.

Mr Hudak: Niagara South. It's the southern part of Niagara Peninsula. Port Colborne.

The Vice-Chair: Thank you, Mr Hudak. We do have to move on.

Mr Patten: I suspect that we share your perspective, our caucus, and I gather your message really is, well, if you must, then do it with strict supervision and in confined and controlled areas and pay attention to those who may be the most vulnerable, which tends to happen in many areas and that the government has said that they would place some resource in this area of gambling addiction.

My own experience in the whole field of recovery and the organizations that I've seen deal in that area will tell you that the figures that are put out, you can usually double them. So if we're talking a 2% figure for those who have a gambling addiction, at least double them. We know it breaks down differently. One of the disturbing things that I discovered in some of my research was that particularly the younger group of people, the 18 to 24s, had the highest level of addiction. You got the 2% when you averaged it out, 2% to 5%, but in that particular category, and those are the youngsters who are introduced, from looking at the research across the country, that greatest area of introduction to gambling has been the VLTs and that's the youngest and I think the most vulnerable because of first-time experience, and the highest level of unemployment. So the probability of some destructive social interaction in there, in my opinion, is very high. If we're going to proceed, we must proceed with great caution. What would be your reaction to that?

Ms Browne: I agree with what you're saying. I had some information I got from the Addiction Research Foundation and from the Canadian Foundation on Compulsive Gambling, and something from Alberta and something from Nova Scotia, but it all arrived this morning, so I didn't have time to incorporate anything. I had just time to read through it and I did notice that the young people are the ones who are most vulnerable to this. If we set the age limit at 18, that's not going to be low enough, is it, because obviously the people who are familiar with computer technology like to do this sort of thing; there's an air of something for nothing, and all sorts of things that attract these young people.

Therefore, the accessibility is important. They have to be restricted very, very severely into places where not so many young people go. I don't know how many young people go to racetracks. When I was younger I wasn't aware that lots of young people went to racetracks. I knew a lot of older people who did, but I never knew any young ones who could afford to go to racetracks. Maybe they can now. Do they?

Mr Hudak: The customer for racetracks tends to be an older customer.

Ms Browne: Right. That's what I think.

Mr Patten: The older you get the older the younger ones become, though, I find.

Ms Browne: Right, second childhood. But I do maintain that you have a law. Is it 19 years of age where people are not supposed to buy alcohol?

Mr Patten: Yes.

Ms Browne: And they still do. You can't stop it, it seems. So how are you going to regulate these things?

Mr Ford: You can't govern morality.

Ms Browne: No, but you can regulate access.

Mr Ford: You can regulate, but it's very hard to carry it out now.

Ms Browne: That is my whole point. How are you going to implement the regulations? Just having them on the books is not enough if young people become compulsive gamblers. I know there are always going to be some people -- there are some now -- but why encourage more? This is what I feel the government is doing. It is exploiting this tendency.

The Vice-Chair: Thank you, Ms Browne. We're going to move on to the NDP caucus now.

Mr Kormos: Thank you, ma'am. I appreciate very much the perspective you bring. You might be interested in knowing that we were in northern Ontario when the Ontario Native Women's Association, Marlene Pierre, made an excellent submission, speaking for her constituency and acknowledging that the government has committed itself to 2% of -- a whole lot of money it comes out to; it'd be 2% of net or gross, whatever, a whole lot of money to funding gambling addiction and doing research. But Ms Pierre said: "Okay, fair and good enough. But who's going to pay the rent when the rent cheque has been pumped into the slot? Who's going to pay for the children whose lives are destroyed because of a parent or parents who acquire addictions?" -- in this case, gambling. "Who's going to pay for the trauma to families of" -- just the horrible stuff, the spousal abuse, the whole nine yards. I don't think anybody had any answers for her.

The need for research is profound and I appreciate that you've gone to lengths to try to track it down and we've certainly tracked it down. I spoke with Professor Derevensky at McGill University -- he's one of the Canadian leaders -- who acknowledges that among the general population the level of pathological gambling, gambling addiction, has been 2%, 3%, 4%, somewhere in there, and we use the number in here of 2%, and there really appears to be little dispute with that.

But he also shockingly notes in studies done in the CEGEPs, in the community colleges and in the universities, university students, double-digit levels of gambling addiction and high-risk personalities, and I can't be concrete about the source of that, but his research -- and he knows Doctor Ron Frisch whom I spoke with at the University of Windsor who, in working with adolescents, shows 17% of adolescents approximately half of whom have pathological gambling traits and the other half he identifies as being high-risk -- far higher than the general population and far higher than what it was historically.

The interesting thing from your organization's point of view is that the slots are, in some respects, incredibly democratic. You don't need a lot of money to play them. As compared to other forms of gambling where women tend to have been underrepresented in traditional casino gambling, with the slots women are equally represented. In fact, again, in contrast to this general 2%, perhaps 3% or 4%, but let's say 2% level of gambling problems among slot players, 9.1% of male slot players and 9.3% of female slot players were identified by Gfellner as pathological and problem gamblers.

1600

The problem is the research isn't complete yet. My view, and I think you've addressed this, is that this is uncharted territory with some red flags sticking up there, and why we aren't being more cautious beats me. It's interesting, because I know there are people in the hotel, motel and restaurant industry who say they need a shot in the arm, and I can't dispute that. We went over to the Hull casino at lunch time to see what was there. We did, and it's a grand, I presume, Las Vegas-style place and people in Ottawa are concerned that folks are over there spending their money rather than here in Ottawa. But I note that it isn't the restaurant and hotel and motel industry saying, "Let us run crap tables" -- they're illegal in Canada -- or "Let us run blackjack tables." They're not saying, "Let us run poker tables." They're saying, "Let us have slots." There's a whole lot of money there, a whole lot of money -- none for the player.

Ms Browne: Which answers itself, doesn't it? Where's the money coming from? Out of the pockets of families, and very often families who can't afford it.

Mr Kormos: I appreciate your comments. I'm sure the opposition parties, of course, my Liberal colleagues and myself, will be presenting amendments to try to address some of your concerns. But let's all be very careful.

Mr Browne: Thank you. I hope you'll proceed with caution, and I don't really think it's an issue of morality. I think it's common sense.

The Vice-Chair: Thank you very much for your presentation.

Mr Kormos: Chair, may I please address an issue? Earlier today, Brian Whitman spoke with the clerk, the Chair, Mr Martiniuk and myself. He represents the arcade machine industry. They requested that if there were a position made available -- they're from Ottawa here -- they would very much appreciate the chance. They came back this afternoon on the chance, because they gambled that there would be a slot open for them --

The Vice-Chair: I like the way you coin that phrase.

Mr Ramsay: He's such a card.

Mr Kormos: -- and I'd ask, if there is time available, for unanimous consent --

Mr Rollins: Do you want us to deal with it?

Mr Kormos: No, unfortunately, I've played with bottom dealers before -- for unanimous consent for these people to speak to the committee, if there is time, please.

The Vice-Chair: Absolutely. Is there any objection to that? We are running about 40 minutes ahead of schedule. We have to wait for the next presenter anyway, so it would be an ideal time if nobody objects. You're up next.

COIN OPERATORS LOTTERY ASSOCIATION

The Vice-Chair: This is the Coin Operators Lottery Association. For the purpose of Hansard, if you could individually identify yourselves. You have 20 minutes for your presentation and you may wish to leave some time for questions.

Mr Brian Whitman: Thank you, Chair. I'd like to introduce, on my left, Mr Gus Ragland. He's a coin operator and actually the coordinator of the Coin Operators Lottery Association. He's been in the business for about 20 years. I would like to also introduce, on his left, Mr Ron Henry. He's an operator and a member of COLA here in Ottawa. His family's been in the business for approximately 50 years. I've been in the business myself with House Amusements for the past 20 years.

The Vice-Chair: Would you please identify yourself?

Mr Whitman: Brian Whitman. I'd like to thank the committee and Mr Kormos for hearing us on short notice. We have a submission that has been mailed to the committee. We put it together this afternoon so we all had something to look at. At this time I'd like to turn it over to Mr Ragland and let him bring you up to speed on our submission.

Mr Gus Ragland: Basically, in our written submission, our opposition to the proposed introduction of these machines into licensed establishments is based upon the following four reasons.

The first reason, obviously, and the one I think is the reason we're here, is that we feel it will devastate our industry. Our industry has been hit very hard over the past five years. We had a real problem with the GST because we were unable to collect the GST from the consumer. On the quarter, we couldn't take the 7% out. As a result of that, we were paying it out of our pocket; as well, with video moving into the home, with the increased cost of equipment. These are mostly small, family-run businesses. We haven't been able to keep up with it. The real area we have left is pool tables, jukeboxes, games and bars. That's the main area we derive our revenue from.

In Ontario, and just talking with fellow operators across the country from other provinces that have already been through the introduction of VLTs and the experience with it, our feeling is it would be devastating for our industry. It could virtually wipe us out of the business completely. That's the primary reason. One of the big things that happened there was the government came in and took away the cigarette machines from the industry back a few years ago because the argument was that they couldn't control minors buying cigarettes in the bars and the restaurants, so that entire industry was wiped out because of that. We question if it wouldn't possibly be the same thing with video lottery machines. How are they going to totally control people who are using these machines if they couldn't control the cigarette machines? We feel that's an issue.

Another area is that we feel there exists strong public opposition to the expansion of video gaming in Ontario. Back in January, we sent a letter off to most of the mayors of municipalities and towns right across Ontario and we got back a reaction that many of them were opposed to the introduction of video lottery terminals in the province. At the time, they said it wasn't an issue, to contact them again when it became an issue, but several of them came back in opposition. The reason we wrote them was that we realized that last year in the province of British Columbia, this was one area where the municipalities were very successful in preventing the introduction of video lottery terminals because of their opposition to it on moral grounds.

I went with this information and met the person in charge of Charities First Ontario. We were discussing this. They were concerned at the time about the issue because they had done some studies and they felt that maybe this would interfere with their revenues and cause their revenues to go down. As a result of what I said I had done, the individual wrote to most of the mayors of Ontario. From what we can put together here, this seemed to have an effect and a lot of letters went back from the mayors of Ontario to the provincial government asking the government to wait on this issue, to try to develop an overall policy for gambling in Ontario before they rushed into the VLTs.

In the meantime, I was talking with this individual and discussing this. He told me what he had done, and then all of a sudden he wouldn't answer my telephone calls. I put in about 20 telephone calls. I sent faxes. I didn't hear from him any more. He wouldn't answer me. Then all of a sudden I turn around and I find out that the charities are getting 20% -- actually, I don't know for sure 20%, but they're getting a percentage of the revenues from it.

It looked like, from what we could put together, that this was sort of a hastily drawn conclusion, because we wrote letters to Mr Harris, and we have a letter back coming from Mr Harris as of April 29 that said: "As you are probably aware, no decision has been made on the legalization of video lottery terminals. Any expansion of gambling in Ontario will be given full and careful consideration." Then all of a sudden in the budget a few weeks later, we find that video lottery terminals are being introduced. We sort of got the feeling it was rushed into without really giving due consideration to the people of Ontario who would be concerned about this.

Another issue: We feel the province is over-reaching in its objective of increasing revenue through gaming activity as the gaming market in Ontario has reached a saturation point with casino gambling, charitable casino gambling and conventional lotteries run by the Ontario Lottery Corp.

We question if really the government will get out of the video lottery terminals the revenues they're looking to get in the localized restaurants and bars. In other provinces, where you can do comparisons, you find they don't have as much casino gambling as we do in Ontario. Ontario already seems to have a sufficient amount of gambling and we just question if it really is necessary to expand into this area.

Our fourth area of concern is to the effect of whether the government really has a valid right to expand and has really given consideration that the government's proposed expansion of video gaming may run afoul of current Criminal Code prohibitions. We question whether enough thought has gone into the actual regulation of this, the suppliers, whether the government really has a total control of this issue of video lottery terminals in the province.

1610

In conclusion to our report, for all these reasons stated above we stand firmly opposed to any proposal which would introduce video lottery machines into licensed establishments. Beyond inflated projections of profitability, this government has suggested that video lottery machines must be introduced to fight the burgeoning presence of illegal machines in licensed establishments. There's no question illegal video gaming machines are present throughout the province. However, it's simply irrational to suggest the proliferation of illegal machines provides a justification for the government to introduce its own legal machines. Surely the proliferation of prostitution and drug consumption could not be used to justify the creation of provincially sanctioned brothels and opium dens.

If this government is concerned about the growth of illegal gaming machine activity, then it must work on stronger enforcement strategies. Gaming machines are illegal because they have the potential to injure the public and impair the quality of life in this province. The fact that people choose to violate the Criminal Code prohibitions on gaming machines should not lead a government to ignore the social harm created by these machines. Like an impatient child, the government seems to be saying, "If we can't beat them, let's join them." Sound social policy cannot be developed by mimicking the actions of criminals.

We feel this whole issue should be put aside and the whole concept of introducing video lottery terminals into the province should be re-examined and more thought given to this issue before it's done.

The Vice-Chair: Thank you very much, gentlemen, for your presentation. We are going to move to some questions now. We've got about three, four minutes per caucus, starting with the Liberal caucus.

Mr Ramsay: Thank you very much, gentlemen, for your presentation. I concur with your conclusion. We in the Liberal caucus have some big concerns about the introduction of VLTs in Ontario. You've highlighted many of the points. I think one of the points that needs to be repeated is that this government in its zeal to grab revenue has not really done the impact study that would give us a sense of comfort as to what would be the impact on your industry, which you're obviously very interested in, what would be the impact on charities and their ability using the tools they have available to them today to raise money, and the whole thing really is driven from the government's need to find revenue.

Then they look at it and say, "It would be good that we give some money to charities so we're going to do that," and, "I guess some people will be afflicted by this so we'll put 2% aside for those folks." That's really what's driving this.

Yet you're a business that's been around for a very long time and struggling like a lot of other businesses. I know you're striving to keep up and provide entertainment. That's the other kind of fallacy about this because this is being sold also as, "When we get this in the restaurants and the bars what we're really doing is providing entertainment for people." You truly do provide entertainment through your machines because there's no financial payout. You're just actually providing, for the 25 cents, the 50 cents you put in or the $1 to play some pool, just fun and that's it. There's no other material reward that's going to accrue from this; it's just to have a little bit of fun.

I would say to the government and the restaurants, if that's what they want to do, why don't they put in more of your machines and give people some more entertainment. I'm sure if the demand increased, there could be other forms of it and more money could be invested in that, and with today's technology, in even more interesting machines than might exist today.

What we're seeing is it's gambling; it's a revenue grab. I feel badly for an industry like yours because I think also you are going to be hard hit by this. I agree with you. There should be an impact study done on what would be the impact on other industries, on society as a whole and on charities in this province. I salute your presentation.

If you had any other comments you wanted to make, that's fine, but I just wanted to tell you I support you.

Mr Kormos: This is probably the single most dramatic submission that's been made to this committee and I want to underscore what this report says, please. It's authored by Professor Alan Young, who is one of the leading legal minds in this province, indeed in this country, who issues far more than a mere caveat, but who suggests strongly that what the provincial government is doing is going to be in direct violation of the Criminal Code of Canada.

Professor Young raises yet a greater spectre when he notes the high level of secrecy, or at least non-disclosure or lack of candour, on the part of the government in addressing the very issue he raises.

I urge you, Chair, and this committee, to not take this lightly. I appreciate that Professor Young is counsel for the association, but he's a person whose professional integrity is unquestionable. I think he has put the government, in this instance at no cost to the government, on notice that there may be some serious, serious shortcomings in this whole scheme. I beg the committee to focus on page 6 through to page 7, which warns this committee that what the government may well be doing could be a violation of the Criminal Code.

I know that government members are going to say, "Well, it's been done in Alberta and Saskatchewan and every other place but BC." God bless, that may well be the case. I think this is the most dramatic submission we've heard and I thank the association for presenting it. But I tell you, Chair, if you just want to dismiss this with -- we've been put on notice here. You can bet your boots this is notice that there's going to be some serious public questioning of the legality of this scheme. I'm not in a position to adjudge that, but we've been put on notice and it certainly warrants some major investigation. I think this is shocking information; this committee should act on it.

I quite frankly think this committee should defer any clause-by-clause consideration until this very important issue has been addressed. I would ask the parliamentary assistant to report back to the ministry and to legal staff there promptly and to get at least some response to Professor Young's concerns before we proceed any further. I'm not sure any of us want to be a party this, having been warned, as we have, by Professor Young. We may want to ask him about the law as it applies to criminal conspiracy, because I suspect he'd have some interesting things to tell the members of this committee, who don't raise their voices in protest, in view of the caution he's raised.

Mr Hudak: Thank you, gentlemen, for an interesting perspective. I'm glad you had a chance to come before the committee today. It's the first presentation of its kind we've had the pleasure of listening to.

My understanding, to address Mr Kormos's concern, is that section 6 of the bill places video lotteries under the conduct and management of the Ontario Lottery Corp to meet the requirements of the Criminal Code, so I believe that satisfies it, as is the case for all other lotteries.

An interesting thing, too, your presentation is ringing some bells, because I remember not too long ago, maybe 10 or 15 years ago, the same sort of arguments were being made about the kinds of products your association puts into establishments. I remember an arcade in my home town that I was forbidden to go into because of the kind of element that would be surrounding coin-operated machines, or that teenagers and pre-teenagers would be forced into the kind of activity like taking money from the parents or even other sources to fulfil the habit of playing video games.

I think the same arguments were made even in my father's generation about pool tables and pinball machines. It's always interesting when you have somebody -- an established business in the entertainment industry would have protested the pinballs and would have protested the pool tables, and when they got in, they probably protested the implementation of videos and these kinds of arguments about addictions to Pac-Man and Space Invaders. The same arguments were had about video lottery terminals. You know the government's way of addressing this is acknowledging that addiction does exist.

I don't remember if part of the funds were set aside from video machine revenues or other coin-operated machines to treat the resulting addiction among young people; I'm not sure. But this government is setting aside 2% of revenues from VLTs to address addictions across the board, obviously not just VLTs but addictions in all other types of gaming or even other addictions, hopefully to get at the psychological root. So it's interesting to see the same arguments come about.

1620

I wonder, too, out of curiosity, about the people in the industry. Since the technology, and I've a very rudimentary understanding, is not that much different for a video lottery terminal over what already exists in the coin-operated machines, the non-gambling machines, is there anything preventing the suppliers, the manufacturers of these machines getting into this business as well, or in fact do they do both sides?

Mr Ragland: The manufacturers like Bally and some of the major manufacturers are the major manufacturers of gambling equipment as well, and they have been for years. So they are in it, in effect. Major manufacturers, but we really aren't manufacturers. We're the people on the small end of the totem pole; we're the operators.

I did a lot of research at one point and I actually forget it because this was an issue of concern back in the early 1980s, like the addiction of kids to video. I remember going back and looking for articles on that and I found several articles that did cover that, then I found converse articles that covered that the games were good for eye coordination and kids picked up skills from it. The research on this, however -- what I did, I went through the same thing. I went back to a library and I went through all the periodicals and I searched out information on gambling. I found an unbelievable plethora of information on the adverse effects of it and of the adverse effects of the video lottery terminals but I didn't find anything in all of that literature that really was positive about it.

I know that the moral issue and all of that has really been driven into the ground, and we were going through, obviously, because we're pursuing our interests, but from that aspect of it, there were just tons of information where it really created a lot of damage. Now, we're not experts and we're not people who -- you can twist statistics from any side, we're aware of that, but the gut feeling I got from all of this and seeing what had happened in the States and everywhere was, this has a real negative effect.

Our industry can be accused of being part of the problem by virtue of the fact that there are people who do operate these grey-area machines, these poker machines, but the amount of that -- like, people who walk into a bar and see that machine, they won't even necessarily realize that it's a payoff on it. The average person I don't think would even be playing it, but then, what this seems to do, when you put it out there in the public where it's government-sanctioned, you get a lot more people who never really were aware that they had a problem with gambling who get into that and get to play on these machines.

That was one thing that just impressed me, that when I was going through trying to do research on it I didn't find very much on the positive side at all. That could be the media, just the way the media does things --

Mr Hudak: In the --

The Vice-Chair: Mr Hudak, I'm sorry, we're out of time. Gentlemen, on behalf of the committee, I want to thank you very much for your presentation.

OTTAWA PRESBYTERY, UNITED CHURCH OF CANADA

The Vice-Chair: Our next and final presenter of the day is the United Church of Canada, Rev William Jay, Rev David Spivey and Rev Sue Taylor. Good afternoon. For the purposes of Hansard, if you could identify yourselves, we'd appreciate that. You'll have 20 minutes for your presentation. You may wish to leave some time at the end for questions.

Rev Bill Jay: Thank you, Chair and members of the legislative committee. My name is Rev Bill Jay, the chair of the church in society committee of the Ottawa Presbytery. To my right, first, is Rev Sue Taylor, a diaconal minister serving the Carlington community chaplaincy, and Rev David Spivey, who is national staff person working with our Montreal and Ottawa conference, one of the 13 regional areas of the United Church of Canada.

I appreciate that this has been a long day for you. Someone tipped us off that you started somewhere around 6 this morning, on the road, or something to that effect.

The Vice-Chair: I wish that were true.

Mr Jay: You wish that were true. It's a long day and it's a beautiful day outside.

We won't read the entire brief other than to highlight what we're attempting to get at. You have copies of the brief and we trust that, after supper, you'll dutifully read every brief you've received today.

It is broken into three sections. One is to identify who we are and with what mandate we come before you. Secondly, to speak of our concerns, broadly represented in areas of concern for victims; wanting to, in the second instance, look at the impact on communities, and finally to look at the moral questions, the ethical questions and dilemmas that are posed. The final section is our conclusions and our recommendations to your committee.

Very briefly by way of introduction, the United Church of Canada is no stranger to issues around gambling and organized forms of gambling in all of their instances throughout our church's history, and we're pleased with the background of having grappled with those issues to bring our concerns before you. We do represent, in the Ottawa area, through the Ottawa Presbytery, some 85 congregations, as well as three community ministries which are very much involved with people who are often described as victims of gambling. Sue Taylor, a community chaplain in the Carlington area, is very much acquainted with the impact. Then in the Seaway Valley area, which extends east to the Quebec border, are another 40 congregations.

We want to underline that when we speak we're not here out of any particular vested interest. We're not here, as perhaps other groups have been, to advocate for or against the introduction of video lottery terminals because of what they may do to benefit our organization, our constituency. To the contrary, historically the United Church of Canada has always insisted that its congregations refuse to accept any proceeds from forms of organized gambling. Its General Council, again in 1980 and 1986, specifically said church courts and formally constituted groups are to abstain from applying for grants from lottery-generated funds, feeling that if we are to raise funds for our own work we should do it by our own efforts and not on the backs of others.

So we come with no particular vested interest. We have nothing to gain other than to speak on behalf of the concerns of the people who are most affected. Certainly one of the areas of concern is the victims of gambling, and David is going to speak with passion and conviction about the impact on victims.

Rev David Spivey: Thank you very much for this opportunity to share some of the concerns, not just personal concerns but concerns of the entire portfolio that I represent, which is representing the division of the mission in Canada of the United Church. My primary concern, when it comes down to the bottom line, is the trickle-down effect of addictive gambling on communities, and particularly on families and ultimately on children. A lot of my work right throughout my ministry has been working with children and with parents in terms of helping parents and helping churches work on issues relating to children's rights.

Within the brief you'll find several stories that were gathered from various newspaper articles and magazine articles which focus beyond those who have become addicted themselves to the effect that gambling has, particularly the increasing accessibility of such things as video lottery terminals have for those with limited means which encourage certainly greater addiction, but beyond them to the silent victims. There are several stories that you'll find in this brief which relate to children being left in cars, parents trying to hide the fact that they're taking children to places where they themselves are gambling. It's the victims almost beyond the victims that, for me, are an incredible passion, because I think they are defenceless victims. More and more, as this kind of gambling becomes increasingly accessible, this silent group of victims is going to increase and the repercussions and the long-term repercussions, I think, are quite horrendous to envision.

I'm going to suggest that Sue Taylor pick up at this point and talk about the immediate impact that the kind of ministry in which she is involved is very much aware of. She's very much what we call front-line personnel in terms of meeting crises day to day and face to face.

1630

Rev Sue Taylor: I think what David has said is very real and very true. When people live on the edge of survival day after day and have difficulty getting themselves through a month, being able to feed themselves, we certainly during this last year have found a tremendous increase in the use of food banks. In terms of my own chaplaincy work and the team of us who work with the chaplaincy, we have literally been spending most of our time on crises, and most of these are hooked into a shortage of money and unable to get through and then the various other depressions and anxieties that arise from that.

The other thing that happens when people have very little is -- right now, of course, the bingos and lottery tickets and all of these kinds of things that are accessible to them -- there is always the hope that tomorrow will be better and their numbers will come in and they will get the kind of money they need to bring their dreams to fruition. Of course, in the meantime, they're losing money, food money, in some cases housing, and so one thing after the other becomes lost.

If the video lottery terminals were to come in, the accessibility and the directness of those terminals would just make the whole issue even more horrendous. Children in poverty and families, as David said, the cost is tremendous, there's no doubt about it. There's great lure in being able to play these lottery games. They're easily accessible, and they think it's only going to cost them a little and the great hope is that they will earn the money that way, and it just doesn't happen that way -- or very rarely.

Mr Jay: There are two other areas of concern we'd lift up before your committee. One is the myth of community development, improvement of community fortunes. Evidence is very much to the contrary. Reports from the Ford Foundation in the States, for instance, suggest that there are very dim prospects for long-term economic gain. Money that is spent by customers on video lottery terminals is diverted from other forms of entertainment, as the previous group already pointed out, and as well, the social costs continue to mount as more people fall victim. An estimated 11% to 12% of gamblers become addicted.

The question is, as revenues begin to decline in communities when the short-term cash cow runs dry, who then picks up the social costs? Certainly government has demonstrated in Ontario in the last year that it is unable to even maintain its responsibility for present social costs, let alone the long-term costs with the introduction of these terminals.

Finally, of course, values. What do you expect from a church group but to speak of moral values, the question of theological underpinning. We believe in a God who is orderly and dependable, that creation yields results as people work as co-creators with our Creator. If we think we're going to get something for nothing out of life, we've got it all wrong. Certainly the present government of Ontario has suggested very strongly that we ought to return to traditional values, that we need to involve families in caring for their own, whether it's providing for day care needs or for seniors' needs; calling on the churches to pick up more responsibility as governments download their responsibilities. We don't pick only on the provincial governments; we know that some of this was generated by the federal, but it's even being felt by the regional municipal governments.

We find ourselves in a peculiar quandary: We're being asked to return to a stronger role than we perhaps have been afforded by society in recent years of underlining the importance of moral values, of hard work and of personal responsibility, and yet the government, which tells us to do that, is about to introduce something which destroys traditional family units and poses a grave danger to thousands of Ontarians.

We are very concerned, obviously, so we ask in a very straightforward fashion three things. We state first that we're unequivocally opposed to the introduction and placement of VLTs anywhere in Ontario under whatever umbrella they might be put in, under charitable organizations direct government organizations or we're just simply saying no. No means no.

Secondly, we feel there needs to be a full impact study, especially of the social cost on victims and the disruption and destruction of community life, and then, once those results have been obtained through a very thorough study, to have a full public discussion about the moral shape of where Ontario is going.

Finally, we ask that this bill be withdrawn immediately. We thank you and invite your questions.

Mr Kormos: People, thank you kindly. You know that Monsignor was here earlier today -- you may not -- speaking on behalf of an organization of churches here in the Ottawa area, and the United Church in particular has addressed this committee in a number of regions across the province. Your submission today reveals some research, some interesting stuff, especially about the failure of casino gambling to be the economic boost that its advocates portray.

The arguments are that we've grown into this new era where the lottery ticket has become all-pervasive. I'm a baby-boomer. I grew up in the 1950s, Eisenhower and Diefenbaker, and I remember when, as has been cited, when the Irish Sweepstake ticket was somewhat clandestine and a naughty little thing. We certainly have come a long way. I appreciate when you say that if we're not prepared to draw the line, then we're just going to go on on that continuum.

I suppose that's my fear, that government now talks about a tightly controlled regime, but there's always tomorrow and the next group of people who have an interest and want to get involved. Will it just be this government? No. Any successive government. Obviously New Democrats in government -- the lure of profits from casinos was so strong that a group of politicians who traditionally had resisted and opposed governments using gambling, be they lotteries or what have you, as a fund-raising measure, succumbed to the lure of it. They said no to VLTs. Had they been re-elected, would they have succumbed? Obviously as capably as any other government. I say that without hesitation.

I think this is very dangerous turf. The powerful interests in this business, big money, incredibly big money, I think have an incredibly corrupting capacity. I'm not necessarily talking about breaking legs to get one location over another, but we've witnessed, for instance, the vice-president of the Addiction Research Foundation decline to acknowledge the research that says slots, the VLTs, are the most addictive form of gambling. I understand that. He is dependent upon funding from the government which has indicated its intention to pull back, claw back on that type of funding, and here he is a major player in a fully government-funded organization. I see that as part of the corrupting quality of it, that this gentleman -- and he's entitled to his view as a doctor -- appears to have abandoned his traditional position because obviously 2% is going to be dedicated to organizations like his: $9 million to $33 million.

1640

I appreciate your comments. I of course don't take quarrel with them. I think we are playing with real fire here, and the modest research indicates that already -- selling video lotteries as entertainment, convincing us that it's fun, and that's what's happened. We've had to be convinced that it's fun. Ontario Lottery Corp does it with lottery tickets: the windswept hair and the Ferrari down the winding road. Freedom, that's what you get. That's one of the lines they use, "Freedom." What an appeal to a wonderful concept, something very innate in all of us. It's the great myth. This is troubling stuff.

You might have heard the recent submission where Professor Alan Young, a law professor, suggested that this whole exercise may still be contrary to the Criminal Code of Canada. It's going to be interesting. I appreciate your focus on this.

Mr Flaherty: Thank you for your presentation today. I appreciate, as I'm sure you do, the position that Mr Kormos takes: contrary to gaming. The Liberal Party does not oppose the introduction of video lotteries in Ontario. They would restrict them somewhat, not to bars and restaurants but to racetracks and permanent charity gaming halls, but they're not opposed to them.

One of the realities that we have to deal with, and I want to ask you about this, is the degree of acceptance of gaming, broadly defined, as a form of amusement by the people of Canada, not just Ontario. We have these video lotteries in eight Canadian provinces now. They've been in several provinces for several years. There's widespread acceptance of them. The history of gaming in Ontario goes from the Irish Sweepstake tickets through legalized racetrack betting through the lottery, starting with the Olympics lottery in Montreal in 1976, and through the expansion of lotteries, then Monte Carlo nights and so on, introduced by the Liberals in the 1980s in Ontario, and then casinos introduced by the NDP in Ontario.

Rather than deal with it piecemeal, is it fair to say that the position you would advocate, in the best interests of the people of Ontario, would be that our society move away from gaming?

Mr Jay: Yes. In answer to the question, very definitely our General Councils in 1980 and 1986 have said governments should withdraw their support of organized gambling and oppose it within Canada -- pretty unequivocal right across the board, whether it's casinos, VLTs that are being proposed or any other forms, because what we have said about the effects of VLTs is true, in our experience, and again, we keep coming from the pastoral point of view. We see the victims far sooner than government or opposition parties do.

The other is to ask, is it the role of government simply to acquiesce to opinion polls? I think we're seeing a very cynical level of political life in general around the world now, that governments are really being ruled. We saw the example of the Premier of Prince Edward Island who decided to call off an election and drop out of the leadership because the polls told her to. We're looking for moral leadership, and consistently all the opinion polls say that Canadians want leadership from government. Don't go with the majority opinion.

In the same breath, I find it difficult to say that just because the others are going along with something which the evidence suggests is very dangerous, very addictive -- video lottery terminals, and government's willing to go along with that -- there's been a lot of public opinion in favour of something far less addicting, and that is marijuana. So is this government about to legalize marijuana?

Mr Flaherty: The level of addiction to alcohol is significantly higher than the level of addiction to gambling. In Canada it's 5% or 6%, rather than 1% or 2%, looking at all the studies. But governments attempted to outlaw gambling in the 1920s, as you know, across North America, with a definite lack of success, if I may put it that way. I'm not playing semantics with you. I am trying to address a problem with you of how best to approach what some perceive as a social ill, from a collective point of view, in a pluralistic society.

Mr Jay: Alcohol is regulated by government and very strictly controlled in terms of the quality and so forth. It's not the rot-gut that was being sold during the Prohibition days. When all the evidence says that VLTs are one of the most destructive forms of gambling known to humankind and the social costs are there and government is going to have to somehow or other find new resources to deal with it, I think part of the answer is to say that some governments, in controlling the alcohol trade, didn't entirely walk away from the restrictions of the 1920s, the Prohibition era.

Mr Flaherty: If someone addicted to alcohol wants to get alcohol in Ontario they can go to a government store and buy it legally.

Mr Jay: If they're under --

Mr Flaherty: If they're of age. If someone wants to go to a casino in the province of Ontario, they can do that. If someone wants to go to a Monte Carlo night, if someone wants to play bingo -- if someone wants to buy break-open tickets they can buy them in a corner store. That's why I think, as I understand your position, we really would have to move way back from where we are today as a society. I'm not saying that's a backward step either -- my language is awkward -- but we would have to reverse a trend.

Mr Ramsay: Thank you very much for your presentation. For a lot of us this is a very difficult issue. For those of us who have been dealing with government for a number of years, gambling is something that government kind of slid into. I guess it started with the Olympics in this country. I think that's where it started. "We just need to have a little lottery there to pay off that debt and that will probably be it," and we see where we are today.

I have a lot of difficulty with it and I think our position tries to balance -- I know it's certainly not your position because you'd like to really draw it back, and I have great sympathy with that, but our position is that we'd like to see some control. We'd like to see some sort of separation if there is to be gambling so that any gambling activity that goes on is legal, or that most of it is, that the majority of the revenues therefore would go to, let's say, the common good by going to the government, that we at least have this separation. If gambling is going to be here, and that's a reality, we'd like to see it restricted to casinos and racetracks because they are already gambling facilities in Ontario. But for us the further proliferation of video slots to restaurants really starts to cross a line.

As a prime example, my colleague Bruce Crozier was questioning a presenter this afternoon who said he was very proud of the family restaurant he had developed over the last two and a half years but was really looking forward to the introduction of VLTs in his family restaurant. My colleague had the same reaction you just gave and asked: "Well, where would you be putting this? What do you see the kids doing?" He was thinking the kids will have what maybe one of the hamburger chains does: sort of a kids' play area over here so parents can go into this little private room because it can't be out in the general area of the family restaurant; it has to be in a restricted area. Boy, for us that's really crossing the line. It's not like the evening out where the couple goes over to Hull if they're here or down to Windsor or up to Rama. When the government does get organized with its charitable casinos in a permanent location -- those have been around and a lot of that money does go to some good in each locality -- now we're talking about having them in any restaurant where you're in for lunch or dinner and you're with children. I think we need to draw the line. That's crossing that.

I'd just like to hear your comments about that again because that's where we're at. In one way I wish people didn't gamble, but they do, and this bill just pushes it I think way over the line. That's what we're concerned about. Mr Spivey: I've heard several times during just the short time I've been in the promise that 2% of revenue will be given to addiction research. I have real problems with the whole notion of encouraging a disease and then promising to give money to researching that disease. I agree with you. I think any proliferation of this type of gambling is the encouragement of a disease and stepping over a very clear line, for me.

Mr Ramsay: In fact one would have to ask, why would a government purposely bring in an activity, encourage the proliferation of an activity that it knows is harmful to the population? You really have to ask that question, why they're doing that. I think we know why. They've got some fiscal pressures they have to address, but that's a pretty sad commentary on government today.

Mr Spivey: My primary concern is the victims who are already there. They're not going to be victims in a year's time or two years' time or 10 years' time when things grow more and more. They're victims now, and to encourage the increase of any kind of disease to me is abominable.

The Chair: I thank you very much for your presentation here today.

As I requested, if I could see the members of the subcommittee, Mr Kormos, Mr Flaherty and Mr Ramsay, after the meeting. We are adjourning this meeting to 9 am on Tuesday, August 20, at the Ambassador Hotel in Sudbury, Ontario. This meeting is adjourned.

The committee adjourned at 1651.