| REPORT OF THE COMMITTEE |
TUESDAY, April 12, 2005 |
The Standing Senate Committee on Legal and Constitutional Affairs
has the honour to present its
SIXTH REPORT
Your Committee, to which was referred Bill S-11, An Act to amend the Criminal Code (lottery schemes), has, in obedience to the Order of Reference of Tuesday, October 26, 2004, examined the said Bill and now reports the same with the following amendments:
Page 1, clause 1: Replace lines 8 to 17, with the following:
“(b.1) for the purposes of paragraph (1)(a), a game that is operated on or through a video lottery terminal or slot machine, within the meaning of subsection 198(3), situated on premises other than a casino, a race-course or a betting theatre referred to in paragraph 204(8)(e); or”
Page 1, clause 2: Replace lines 18 to 20, with the following:
“2. This Act comes into force on a day, not later than three years after the day on which it receives royal assent, to be fixed by order of the Governor in Council after the governments of the provinces and territories have been offered an opportunity by the Government of Canada to participate in consultation on its implementation.”
Your Committee has also made certain observations, which are appended to this report.
Respectfully submitted,
LISE BACON
Chair
OBSERVATIONS
to the Sixth Report of the Standing Senate Committee on Legal and Constitutional Affairs
The purpose of Bill S-11, An Act to amend the Criminal Code (lottery schemes), is to restrict “lottery schemes” that are operated on or through a video lottery terminal or slot machine to racetracks, casinos and betting theatres. It will not take effect until a maximum of three years after receiving Royal Assent.
Canada’s policy on gambling is expressed in two federal-provincial agreements (dating from 1979 and 1985) and in Part VII of the Criminal Code. Control over gambling is now largely a provincial matter, and all jurisdictions have their own laws and regulatory bodies. Under the Criminal Code as it currently stands, provinces may license video lottery terminals (VLTs) in locations of their own choosing. Currently, all but two provinces (Ontario and British Columbia) and two territories (the Northwest Territories and Nunavut) permit VLTs to be located in bars, as well as in other locations.
Bill S-11 is based on the premise that gambling through slot machines and, in particular, VLTs is, in important ways, a different kind of gambling from other common forms, such as betting on horse races, card games, and roulette. There are apparently well over 38,000 VLTs in Canada, in over 8,500 locations.
Your committee received testimony that VLTs are very easy to learn to play, and the pace of play is very fast. This can lead to players losing money very rapidly. Deliberate non-random programming of the machines creates an illusion of control by generating a number of near and small wins, thus encouraging players to think that they are close to winning and leading them to continue.
Our evidence was that VLTs are often placed in bars in lower-income neighborhoods. Their accessibility thus encourages people who might not otherwise be exposed to gambling to start, and because of their location, individuals with meager resources often suffer the most. Studies also tend to show that problem gamblers prefer electronic forms of gambling. For all of these reasons, a number of experts in gambling behaviour single out VLTs as posing particular problems for individuals and communities.
Specialists who treat problem gamblers are of the opinion that VLT gambling causes the highest rate of addiction. Youth are apparently particularly vulnerable. The social costs of problem gambling are undeniable. It can lead to debt, sometimes bankruptcy, and sometimes crime – all of which have an impact on the whole family, including its most vulnerable members, children and seniors. Desperate problem gamblers may commit suicide, and a number of suicides have been directly attributed to VLT gambling. Marital stress and divorce, loss of productivity at work, depression, and the need for counseling may all accompany problem gambling.
In 1999 the Canadian Public Health Association passed a resolution calling on governments to take action to minimize the harm to the public’s health from VLT gambling, including by imposing restrictions on access to VLTs. One of the recitals to their resolution referred to a study of VLT problem gamblers in which almost all the gamblers reported that they had experienced no problems until they began playing VLTs.
Not all of your Committee’s witnesses agreed that VLTs are as harmful as suggested above, but we note that the government of Quebec in recent years has committed to reduce substantially both the number of machines and the number of their locations, thus affecting both VLTs’ visibility and accessibility. Nova Scotia has recently announced its intention to make technical changes to the machines, and to also reduce the number of machines and their locations. Similarly, the government of Newfoundland and Labrador has frozen the number of VLTs in the province and will reduce the number by 15% over the next five years. As well, the number of units per establishment will be limited to five. We also received testimony to the effect that, in 1996, Alberta’s Minister responsible for gambling at the time told his Ontario counterpart that VLTs should never have been placed in Alberta bars.
Your Committee recognizes that the adoption of Bill S-11 could have a significant impact on revenues of both the provinces and private sector businesses with licensed VLTs. Statistics indicate that Nova Scotia, Alberta and Saskatchewan all derive close to 2.8% of their revenues from VLTs, while Quebec, Prince Edward Island and New Brunswick derive from 1.3% to 1.6% of their revenues from that source.
Revenues to provinces and private enterprise, of course, represent losses to individuals. For some people, their losses do no harm. For others, however, there can be the serious social costs mentioned above, costs that are only minimally addressed by provincial programs for problem gamblers. Thus, it may be said that provincial revenues from VLTs are a double edged sword; the revenues are welcome, but the social costs for individual problem gamblers and their families may reverberate for years to come. Indeed, your Committee received testimony about studies estimating that the social cost of video lotteries is three to five times higher than the revenue they bring in.
The impact of VLTs on a local economy is also an issue. Our evidence was that approximately 75% of the profit from the machines goes to the provinces, with 25% to the retailer. That represents an out-transfer of 75% of revenue from the region. This becomes particularly important if most of the money comes from local residents and not from tourists. Although some of the provincial money comes back to the community in the form of transfers and local spending by the government, there is no direct equivalence. Thus, if VLTs were to be removed from bars there would be some impacts on those specific businesses, but it may be fair to conclude that other entertainment opportunities would likely open up and thus more local entertainment dollars would actually stay in the region. Overall, there could be a net financial benefit to the community.
One would have expected that a representative of the Association of Restaurant and Hotel Workers of Quebec would be opposed to Bill S-11 on the basis that its passage could lead to job losses. Instead, the Association supported the Bill. They did not agree with the substantial estimates made by some in Quebec as to the job losses that would result if VLTs were removed from bars.
Moreover, the Association reported that in a recent representative survey in the Montreal area of workers in bars where there were VLTs, 90% of the workers supported removal of the machines from bars. Another survey found that 70% had the same view. The Association also noted that the proximity to VLTs had a negative impact on some of the staff’s own gambling, and also led to significant stress when employees had to deal with distraught players.
As was mentioned above, not all of your Committee’s witnesses agreed that VLTs were as harmful as had been suggested. A representative of the gambling industry took issue with some of the anecdotal evidence intended to illustrate the highly addictive nature of VLTs. In his view, the extreme behaviour reported was very rare and, in many cases, the result of management or regulatory failures. In support of the existing system, he noted that some 75% of Canadians participate in legalized forms of gambling, that the incidence of problem gambling is low (and relates more to the personality of the individual than the type of gambling undertaken), that gambling revenue has become important for governments, charities and businesses and, for some (including First Nations communities) gambling has become a road to economic development.
Since their introduction to Canada some 15 years ago, public concern over VLTs has led to a number of restrictions. They are now found only in age-restricted premises and some provinces have capped the number of total machines. A public opinion survey conducted by the Canada West Foundation in 1999 entitled Canadian Gambling Behaviour and Attitudes found that, of the 2,200 Canadians consulted, 70% agreed with the statement that video lottery terminals should be limited to casinos and racetracks, with one half of the respondents in strong agreement.
Your Committee recognizes that passage of Bill S-11 has implications for federal-provincial relations under the 1979 and 1985 agreements on gambling. However, it must be noted that Bill S-11 does not ban VLTs; it merely limits where they may be placed to casinos, racetracks and betting theatres. Thus, even the two provinces that do not have casinos may still have VLTs at their racetracks.
Your Committee wrote to all provinces and territories to solicit their opinion on Bill S-11. Three provinces were strongly opposed (Quebec, British Columbia and Saskatchewan) and the other five jurisdictions that responded in time to be included in this report indicated that they had no submission to make at that time or merely noted that they would be affected by a change in the law.
While your Committee is aware of the financial implications for provinces of the amendment to the Criminal Code in Bill S-11, we nevertheless feel that such considerations should be outweighed by the social concerns we have outlined above. A desire for revenue should not prevail over sound social policy backed up by the advice of those knowledgeable in the field.