Proceedings of the Standing Senate Committee on
Legal and Constitutional Affairs

Issue 23 - Evidence for October 18, 2012

OTTAWA, Thursday, October 18, 2012

The Standing Senate Committee on Legal and Constitutional affairs met this day at 10:30 a.m. to study Bill C-290, an Act to amend the Criminal Code (sports betting).

Senator Joan Fraser (Deputy Chair) in the chair.


The Deputy Chair: Honourable Senators, this morning we continue our study of Bill C-290, an Act to amend the Criminal Code (sports betting). In our first panel of witnesses, we have, as individuals, Mr. Michael Lipton, Senior Partner with Dickinson Wright LLP, and Mr. Kevin Weber, Partner, Gaming Law, also with Dickinson Wright LLP.


I believe you will make an opening statement, gentlemen.

Michael Lipton, Senior Partner, Dickinson Wright LLP, as an individual: Thank you. We appreciate the opportunity to appear before you today. I have a short presentation, after which I would be pleased to answer any questions you may have regarding the amendment before you. I provided copies to the clerk and hopefully you have a copy before you.

My opening comments relate to the benefits of Bill C-290. In particular, I want to talk about allowing provincial lottery corporations to compete with foreign sports books.

At the outset, it is important to appreciate the provisions of the Criminal Code, in particular section 207(4)(c). Under that section, lotteries or lottery schemes operated on or through a computer are the exclusive preserve of the provincial government and, in turn, that means the provincial lottery corporations. The provincial governments are not permitted to license others to conduct an online lottery scheme or lottery scheme on or through a computer.

With that background in mind, regulated single sports betting conducted and managed by the provincial governments, in my view, will offer Canadians a route to bet other than offshore online sports books that are not regulated in Canada. This benefit is real on a number of levels. First, it reduces the need for Canadian bettors to patronize offshore websites that are not authorized by any provincial government. Second, provincial lottery corporations will have a level playing field on which to compete with offshore Internet sports books regulated by other countries. Third, it will and can persuade the Canadian public of the advantages of patronizing sports betting that is regulated in Canada.

The question is this: Will Canadians, overnight, cease using betting websites that are not authorized by the provincial governments? I think the answer is no. It has been noted that despite the existence of regulated horse race betting in Canada, some Canadians still bet on horse races through websites that are not regulated in Canada. This is not a contradiction. Regulation cannot eliminate the unlicensed market activity — not in betting and not in any industry. Certainly, you see that in relation to tobacco and the like.

In a betting product, some may be willing to run the risks associated with using offshore sports books if they offer more advantageous betting odds than those offered by provincial lottery corporations. If such an offshore sports book is licensed by a country with its own strict regulation, risks may be minimal. There are a number of countries that have strict regulations. Others, on the other hand, are more lax in regulation, particular some Caribbean and Central American jurisdictions, increasing the risks.

I believe Bill C-290 will allow the provincial lottery corporations to at least offer the same product as those offshore operators. From there, they can move to educate the public about the advantages of using a service that is regulated by their own provincial government. Also, it will give the public a safer alternative to betting with illegal bookies located in Canada who operate by telephone and otherwise.

In conclusion, allowing the provincial governments to offer single event sports betting is a long overdue innovation that will allow for better protection of the public by putting provincial governments in a position where it can compete with foreign sports books on an even playing field. Additionally, I think it will drive bookies out of business or will certainly put them at a particular disadvantage.

Allowing the provincial governments to offer single event sports books will place the provincial government in a position where they can effectively combat match-fixing. At present, the provincial governments lack the ability to detect and prevent match-fixing. This is ironic since match-fixing was the very evil that the current restriction against single sports betting was meant to combat. My partner Kevin Weber will expand on this aspect in his presentation.

I also want to briefly talk about the proposed amendment put forward by Woodbine. It has been proposed that this particular amendment will empower parimutuel horse race associations to accept bets on single sporting events. In my opinion, this is not a change to the law that should be inserted into the code by means of an amendment introduced at the eleventh hour. The federal government has entered into intergovernmental agreements, pursuant to which it is bound to respect the exclusive jurisdiction of the provinces in the area of all betting other than horse race betting.

Introducing an entirely new body into the operation of betting would entirely create a new form of activity that the provincial governments would be required to regulate. With much respect, I think it is inappropriate to propose the imposition of a new regulatory burden upon the provinces in this form without any input from the provincial governments.

In talking about the difference between parimutuel betting and fixed-odds betting, a previous witness has inaccurately described the parimutuel horse race betting currently carried out by horse racing associations as an existing form of single event sports betting. With all due respect, this mislabelling makes it appear as though the sports betting contemplated by Bill C-290 is identical to the betting that has been carried out by horse racing associations for generations. Perhaps it was done with the intent of minimizing the leap from one to the other, but with respect, they are very different endeavours and the Canadian horse racing associations have no experience or competence in this area. That is not to suggest they cannot acquire it, but currently they do not.

Horse race betting in Canada is conducted by a parimutuel pooling of bets, which is a very low-risk proposition from the perspective of the betting operator. All bets of a particular type are placed together in a pool. The house take is removed and the payoff odds are calculated by sharing the poll among the winning bets. The tote — short for totalizer — is the device that calculates and displays bets already placed. With the tote, the bookmaker displays the approximate odds that they believe they will receive. This approximation is based upon the quantity of bets received to that point. These odds will change, depending upon how much money is placed on the outcome. I am sure for those who have participated in horse racing and at race tracks can appreciate this.

For these reasons, bettors do not know the actual odds they will receive until bets are no longer accepted and the race has begun. Parimutuel betting is low risk for the operator because the tracks know the exact margin they receive in advance and their takeouts are independent of the event outcome.

Single event betting, which is contemplated by this particular amendment, is fixed-odds betting, which is very different. It is a specialized form of betting that requires real expertise and must be carefully managed by experts in order to be profitable. There are major gaming companies and other companies operating in Canada under contract with the provincial governments, such as Paddy Power and the British Columbia Lottery Corporation, and Caesars in Ontario. They have this expertise, as do other large, well-capitalized companies, such as William Hill, Cantor Gaming and Tabcorp. They have been described by a previous witness, Mr. Peter Cohen.

Race tracks in Canada have absolutely no experience in fixed-odds betting. In fixed-odds betting, the bettor knows the exact odds they will receive when they place the bet. Unlike parimutuel betting, not all bettors who bet on the same outcome will receive the same odds because the odds can shift over the period of time on the quantities wagered on each outcome. The bookmaker, in effect, is required to actively price and adjust the odds to ensure that it will make a profit regardless of the outcome.

In a two-outcome bet, if bettors bet heavily on outcome A, the bookmaker will reduce the odds on outcome A and increase the odds on outcome B while keeping the margin relatively stable. This shift in odds will induce more betting on outcome B, enabling the bookmaker to balance the book. Again, I reiterate that this is a calculation that race tracks in Canada have never had to manage in over a century of operations.

Finally, this particular proposal from Woodbine deals with conduct and management issues. From a legal perspective, the proposed amendment causes me a great deal of concern. Presently, the two main entities that may conduct and manage gaming and betting are provincial governments and charitable and religious organizations. I use the phrase "conduct and management" very deliberately because this is a phrase that has been carefully interpreted by the appellate courts across Canada over the last 22 years. Subparagraphs 207(1)(a) and (b) make it clear that the provincial governments and charitable and religious organizations are solely responsible for the conduct and management of the gaming and betting carried out under their auspices. The courts have made it equally clear that these responsibilities cannot be delegated. They may entrust day-to-day operational tasks to private operators, but they must remain in charge of conduct and management. In 1990, the Manitoba Court of Appeal described this as being the "operating mind of the whole scheme."

In the proposed amendment put forward by Woodbine to Bill C-290, the crucial legal question of what entity would be responsible for conducting and managing the sports betting that would be allowed by the amendment has been left deliberately vague. The words "conduct and management" are entirely absent from the proposed amendment. Instead, it states that the provincial governments would "authorize" the parimutuel betting operator "to accept bets" on single sport events.

In my view, the proposed amendment would create confusion as to whether the provincial government or the parimutuel betting operator is the operating mind of the betting, with the potential for the parimutuel betting operators to intrude upon the exclusive provincial jurisdiction over the regulation of gaming and betting. On the face of the amendment put forward by Woodbine, it is unclear whether this proposal would reduce or restrict the rights of the provinces in the field of gaming and betting.

It would also create dual regulation. The proposed amendment would open the door to dual regulation of the betting activities of the race tracks. At present, the parimutuel betting operators are regulated by Agriculture and Agri- Food Canada. This is the only form of betting or gaming that is not regulated by a provincial government or body that is responsible to a provincial government. In 1991, the Supreme Court of Canada recognized that provincial governments have the sole authority to regulate these gaming activities under the various heads of section 92 of the Constitution Act.

Under the proposed amendment, parimutuel betting operators would be under dual regulatory regimes: a federal regime governing conduct of parimutuel betting on horse races, and a provincial regime governing bets on other sporting events.

My question is whether provincial governments are prepared to undertake the task of carrying out this type of regulation that they have never before undertaken. I do not know — with respect, neither does any member of this committee — because there has been absolutely no input I am aware of from the provincial governments into this proposed amendment.

By contrast, before it reached Bill C-290 or this committee as it presently reads, I understood that unanimous approval of the provincial governments had been obtained. This was set forth by the Member of Parliament from Windsor West on October 4, 2012, when he spoke. The provincial governments were allowed time to consider whether Bill C-290 represents an innovation in gaming regulation that they were prepared to accept. They have not been afforded such time with respect to the proposal put forward by Woodbine.

The 1985 federal-provincial agreement on gaming and betting is also important because the present format of Part VII of the Criminal Code — in which one finds the provisions being amended by Bill C-290 — was arrived at pursuant to a 1985 agreement between the Government of Canada and the 10 provincial governments. Mr. Weber will detail this agreement. Clearly, the Government of Canada was to refrain from entering or re-entering the field of gaming and betting and to ensure the rights of the provinces in that field were not to be reduced or restricted in the future.

The proposed amendment to Bill C-290 does not have the consent of the provincial government, and its unclear language opens up the possibility that it may have the effect of reducing or restricting the rights of the provinces in the field of gaming and betting. It is possible that the proposal would bring about a conflict between the provincial and federal governments based on the 1985 agreement.

In conclusion, in my opinion the benefits of Bill C-290 are such that the federal government should enact it without amendment and should not delay its enactment to accommodate the proposed amendment. It is appropriate that a proposed amendment to the Criminal Code put forward by Woodbine — which would create a regulatory burden for the provinces — should obtain the support of the all of the provincial governments before it is proposed in Parliament. Bill C-290 has received unanimous support of the provinces. The public should not be denied its benefit while awaiting consideration of the proposed amendment to Bill C-290 which has not, to my knowledge, received the support of any provincial governments.

Thank you for opportunity to speak with you this morning. If there are any questions, I would be pleased to try to answer them.

The Deputy Chair: We will turn to questions after we hear from Mr. Weber. Thank you, Mr. Lipton.

For the benefit of our television audience, before turning to Mr. Weber there is an element of the parliamentary process I would like to clarify.

Mr. Lipton, you made it eloquently clear that you are opposed to the amendment that has been proposed by Woodbine, which is your absolute right. However, in terms of parliamentary process, an amendment in committee is not eleventh hour work. It is in committee that parliaments study legislation. It happens in the House of Commons and also in the Senate. This committee is engaged in the study of the bill and it is in committee that amendments are normally proposed.

I am not saying this committee will or will not adopt an amendment to this particular bill, but amendments are not at all unusual, particularly in the case of private member's bills, which this is. I know you understand that, but just in case people watching are starting to get confused about how parliaments go about their sometimes complex business, I thought I would put that on the record.

Kevin J. Weber, Partner, Gaming Law, Dickinson Wright LLP, as an individual: Mr. Lipton has spoken of the benefits that the public would earn if Bill C-290 was enacted in its present form. I want to begin by providing some detail on one item he mentioned briefly, namely, detecting and combatting match-fixing. I will then move on to some comments relating to the proposed amendment put forward by Woodbine, specifically in relation to the 1985 interprovincial agreement that governs in this area between the provinces and the federal government. For that purpose, along with my speaking notes, I have asked that a copy of the 1985 agreement be distributed to all members.

I believe that one of the benefits that one was intended to receive back in 1985 — when this current restriction that is in the Criminal Code against single event sports betting was first enacted — was meant to entirely to combat match-fixing. That was the purpose of the restriction. I have had that confirmed to my satisfaction by people who were involved in the drafting back then.

The idea was to make it so that a criminal would need to fix multiple events in order to profit by a bet and that would make the activity too difficult to successfully carry out. I would say this was a sensible precaution in 1985. In 1985, a person physically present in Canada had to place their bet in Canada and would therefore be subjected to the single event betting restriction unless they went to a street bookie or a bookie operating by telephone. Other than those illegal measures, the only other way to place a single sport bet would be to leave the country and go to Las Vegas or some other jurisdiction where single sports betting was allowed.

However, that sensible restriction ceased to be sensible not many years later. With the advent of online betting, the single event betting restriction in the Criminal Code now poses absolutely no obstacle to anyone inclined to take part in match-fixing. Gamblers who are inclined to illegally influence the outcome of a sporting event taking place in Canada will simply place bets on an offshore website. They will not have to leave Canada. They can do whatever they want.

I know you have heard from other witnesses who have said that match-fixing is not, demonstrably, a large problem in Canada as it stands, and I have no evidence that it is a problem at all. That said, it was still the evil that Parliament intended to combat when it first put in the restriction, so it is very relevant. The fact is that with online gambling the smallest events are now being taken as betting fodder throughout the world, including small events where the participants are not making a great deal of money and have to hold down second jobs. I am thinking of lacrosse in Canada, soccer in Canada and the CFL in Canada. While it may not be a problem, when you have athletes who are not being well paid, it does open up the possibility for match-fixing to occur. We have to do something to restrict it, and, clearly, the current restriction against single-sport betting will not accomplish that.

In a world in which Internet betting bans are not enforceable, what is the best tool for combating match-fixing? The tool is information. Provincial governments can institute measures whereby betting patterns are monitored for the kind of unusual activity that indicates that bets have been placed based on inside information. This information can be shared with other jurisdictions that monitor sports betting activity. The major U.S. sports leagues work with the Las Vegas Sportsbook in exactly this way. They also work with European sports books, including online ones such as Betfair, and so do the Olympic committee and FIFA. This is a very common way of combatting this evil throughout the world, particularly in many other jurisdictions where it is more of a demonstrable problem than in Canada. The primary limitation on the process is that only bets placed in regulated jurisdictions can be tracked in this fashion. Obviously, if you have a jurisdiction where all such bets are underground, no tracking is possible.

By providing regulated betting on single event sports, the provinces can bring a large percentage of Canadian bets currently placed in a way that cannot be tracked into a system regulated and monitored by the governments. I am thinking of bets that are placed with bookies, bets placed on the telephone and bets placed online in less regulated jurisdictions. Obviously, if Canadians place bets in places that are regulated, then those can be tracked, but Canadians may not necessarily choose where they bet on the basis of where the best regulation is. As my partner pointed out, they may simply look for best odds. Canada can be part of the solution if we bring a certain percentage of the bets into the country. Without the amendment, Canada will continue to push its sports betting public toward other options that may not be able to be tracked.

As for the proposed amendment to Bill C-290 —

The Deputy Chair: Mr. Weber, sorry to interrupt; I hate to do that. However, we will be a little tight for time, so when you discuss the amendment, if you have arguments that are different from those brought up by Mr. Lipton, we would love to hear them. If you are just going to hammer home the same points for the sake of reinforcing something you strongly believe, perhaps we could take that from the written brief and go to questions.

Mr. Weber: I would like to skip quickly, then, to the 1985 agreement, if that has been sent to everyone, and go ahead to what I consider to be the most salient points of that agreement as they relate to the amendment.

Section 1.1 of the 1985 agreement provides that the Government of Canada undertakes "to refrain from re-entering the field of gaming and betting (except to the extent of its present role . . . with respect to horse races) and to ensure that the rights of the Provinces in that field are not reduced or restricted."

Section 1.2 put forward draft amendments to the Criminal Code as a schedule to the agreement and committed the Government of Canada to consult with the provincial justice ministers before amending the code in accordance with that draft.

Section 2.2 provides that the provinces were to continue making indexed payments to the Government of Canada in accordance with an interprovincial agreement signed in 1979. I have been advised that those payments amounted to $66.6 million a year paid to the federal government as of 2010.

Section 4 provides that if any dispute arises with respect to the Government of Canada's fulfillment of its undertakings under section 1, namely reducing or restricting the rights of provinces in the field of gaming and betting, the provinces are entitled to withhold their annual payments and to exercise all recourse they may have with respect to such a dispute.

Section 7 of the agreement makes it clear that it is anticipated that litigation could be a recourse as it states that the parties agree that the agreement is a commercial matter and that the governments undertook not to invoke Crown prerogative or immunity in any dispute, including court proceedings arising from the 1985 agreement.

Finally, section 8 provides that the agreement can only be terminated or amended with the unanimous consent of the provinces and the Government of Canada.

Now, we do not know how the provincial governments view the proposed amendment to Bill C-290. They have not, to our knowledge, given their opinion. They have not, to our knowledge, been consulted. Given the issues raised by my colleague, Mr. Lipton, it is at least possible that some of them could view the proposed amendment as reducing or restricting their rights in the field of gaming and betting given the uncertainty over which entity will conduct and manage the betting. That would be a breach of section 1.1 of the agreement. The provinces could respond in the political field. It could simply be a matter of damage to federal-provincial relations generally, or they could escalate it to responding by withholding their annual payments to the federal government. Most extremely, they could respond by bringing action in court.

Since 1985, it has been the practice of the Government of Canada to seek provincial consent before it amended any provision of the code that related to lawful gaming and betting. Whether that is a matter of precedent or whether it is actually related to ensuring that no disputes arise with relation to the 1985 agreement, I am not certain. However, I think that it is important to recall once again that, as my colleague pointed out, Bill C-290 did not arrive here before it had received approval from all the provincial governments.

We do not know how unilateral change would play out in terms of federal-provincial relations. Given that the benefits that stand to be gained in the protection of the public by enacting Bill C-290, I submit that the committee should approve it expeditiously. I do not think, necessarily, that the amendment put forth by Woodbine will be consigned to oblivion by that process. I believe that the proper method in which they can bring forward this amendment is the same method that Mr. Comartin used. They can bring forward a private member's bill. I am sure there are many members of Parliament whose ridings include horse racing interests who would be pleased to do so. They can bring it forward and then attempt to get the approval of the provincial governments, including whatever changes might be necessary to get that approval. With that, we can ensure that there will be absolutely no difficulties either in the interpretation of the section or in terms of federal-provincial disputes.

The Deputy Chair: Thank you very much, and thank you for doing a super job of abridging there. I think you covered all of the points that were in your written brief. We are very grateful.

Senator Runciman: I find intriguing the amount of time that you devoted to horse racing, not only in the proposed amendment but also in the lack of qualifications for folks running tracks to operate sports books.

I am sponsoring this bill and voting for it, but I have to tell you that if there is one thing that gives me pause, it is the OLG's devastating policies on the horse racing industry in Ontario. They have done really serious damage to rural, small- town Ontario, with possibly 30,000 jobs being lost. I cannot tell you how I can get really worked up about what they are doing here with their short-sighted cash grab. In any event, Mr. Lipton, you are suggesting that they are not qualified to be in this business. That is aside from the merits or lack thereof of the proposed amendment.

I have a couple of questions about New Jersey and their plan to implement single event betting. Their approach is to put it into casinos and racetracks.

Mr. Lipton: For clarity, they have not had any experience until now in dealing with that particular form of betting. I thought I also indicated that it is certainly a competence that could be gained through studying, training and what have you.

From my particular perspective, I think the operation carried on by Woodbine is superb. There is no question about it; it is a world leader in what it does, and it might certainly be able to get into this particular field. However, I wanted to try and cast more light on some of the information that was provided earlier to this committee about the idea that, because there is single event horse race betting, it is not a bit of a leap to getting into single event sports betting. I think there is; I think there is a significant leap. That is not to say you cannot become aware of it. I wanted to bring that fact forward to you and to the members of the committee.

Senator Runciman: With all due respect, I thought your emphasis was on lack of qualifications rather than their ability to learn the business.

I would like to move on with respect to New Jersey and Delaware, where all the major professional sporting organizations and the NCAA are launching lawsuits with respect to the implementation of single event sports betting. I would like to hear your views with respect to the positions taken by the professional leagues. Is there any possibility from a legal standpoint that we could see similar actions being taken against provinces that move in this direction in the future?

Mr. Lipton: On the first part of your question, in relation to the position taken by the leagues concerning the action taken by New Jersey, let us back up for a moment. New Jersey determined it wants to proceed to get involved in single event sports betting. As you have indicated, they want to do that at casinos and race tracks. Governor Christie has come out in favour of this particular form of legislation.

It relating back to the Professional and Amateur Sports Protection Act, PASPA, that was enacted through the efforts of U.S. Senator Bradley, who was a senator from New York and also a very famous basketball player who played for the New York Knicks. At the time that particular piece of legislation was enacted — which I think was in the early 1980s — Congress did permit the states to have a —

Senator Runciman: May I interrupt? I have asked some specific questions. I do not want to be rude, but we do have time limitations. I would prefer if you would discuss the issues that I raised with you rather than getting into the history, which some of us are familiar.

Mr. Lipton: The legislation in New Jersey is being tested in the courts on the basis of whether this is an interference with the rights of each state to be treated equally. The sports leagues are taking the position that allowing this type of betting may impact the integrity of their particular sport.

I think that under the circumstances they have their particular views, but at the same time I think that the NFL the other sports leagues work closely with the regulators in Nevada and the like in relation to trying to determine the statistics of how much betting goes on in that particular field. Therefore, the sports leagues use the sports betting information to determine if there are problems in relation to the types of bets and if there is a possibility of match- fixing and the fact that it will impact the integrity of the sports industry.

We have in the United States close to 300 million — maybe more — of underground sports betting going on, yet the NFL and Major League Baseball and the like seem to be able to weather the storm in relation to any attack on integrity. The last time that occurred was 1919. Therefore, the position taken by the sports leagues in regard to the impact of single event sporting betting is no longer justified in my respectful submission.

In terms of what may happen in the province of Ontario or the other provinces within Canada, when the Raptors sought to come to Ontario, I think the government at that time contracted to ensure that NBA bets would not be part of PRO-LINE. Some of the sports leagues may ask for that. I cannot read their minds in that particular regard.

Nevertheless these sports leagues go to Las Vegas to hold major-league events. They had their NBA All-Star game in Nevada, and there is lots of betting go on there. They also go to London, England, to hold football games and there is lots of betting going on there. Therefore, I do not think there will be an impact from this on sports leagues from the perspective of it attacking integrity. I think it will do exactly the opposite.

Senator Runciman: This question is for Mr. Weber. What type of implementation do you see as being necessary to have the maximum impact on organized crime?

Mr. Weber: We have to divide up what we call "organized crime." When I speak of organized crime in this area, I think of land-based bookies in Canada who operate by telephone or by secret drop-off spot that everyone knows where they go to place their single sport bets. I am not considering anything that occurs offshore because that does not qualify as organized crime, for the most part, because many of the places where one goes to bet online outside of this country are in highly-regulated areas. Frankly, the provincial lottery corporations across Canada will be working to get themselves up to that level when they institute single sport betting.

In Canada, I can tell you of the experience of other jurisdictions — I am thinking of Australia, and I believe the committee heard something about it before. Very shortly after it becomes widely available to people, first of all, and you educate them as to the advantages of placing their bets legally, then there is pretty much nothing at that point in the way of providing better odds that the organized criminals can do to prevent their business from practically being wiped out.

There is a danger on many levels that comes with betting with organized crime. Organized crime will loan you money when you are in trouble. Therefore, now you have a combination of loan sharking involved with the operation, so there is a threat there. Some provinces ban the extension of credit in betting and gaming altogether by comparison. There is a physical danger involved when one does not bet by telephone but by going to the place where bets are taken; these are not secure places.

There is also a simple matter of getting paid. The government will pay you. You know that. That is also an advantage you have over online sites. If you are picking an online site and not being careful about whether where it is regulated, you do not know whether you will be paid.

The advantages they have over organized crime are huge. I think it would severely dent their business, first, by being implemented and, second, by educating the public as to the advantages that come with betting legally.

Senator Baker: First, I want to thank the witnesses for appearing here today. I simply want to make the point that I think it is unfortunate that we do not have the Department of Justice Canada appearing at one of these committee meetings to give us their interpretation of the change in the Criminal Code that we are now considering.

I do not question the expertise of the witnesses here because both of them are on what is called Chambers Global and they are identified by other lawyers as being on the list of the best lawyers in Canada. However, I always thought their expertise was in the area of chartered accountants and managing; I thought that was where their case law is.

Regardless, I understand the legal points that you are making. I do not agree with your conclusion, however, on those legal points.

I am hesitant about this bill because it eradicates all of paragraph 207(4)(b) of the Criminal Code. There is no case law on paragraph 207(4)(b) of the Criminal Code, or of paragraph 207(4)(a). There is a paragraph 207(4)(c), which you have referenced.

My problem with that is the conjunction "or" in what we are removing. "Or" appears at least two or three times in that entire section: "or" fight, "or" single sport event, "or" athletic contest, "or" this and that. In looking at case law dealing with the value of the conjunction "or," the Supreme Court of Canada has ruled many times that the use of the word "or" in this context separates distinct things in and of themselves.

All of your testimony has been about removing the section that says "on a single sport event." What about all the other things that we are eliminating here that are separated by the conjunction "or?" I do not know if you have had a chance to look at it or consider it, but what will be the impact of eliminating that entire subsection, which we are doing with this bill?

Mr. Lipton: I will start off. My partner Kevin Weber and I have been working together for over 15 years. Whatever I may not cover, he will certainly focus on.

I have been practising law for over 40 years. I have had the opportunity to work in this particular area for the last 20 or so years. It never ceases to amaze me that there are always different perspectives and issues arising. What is so wonderful about the practice of law is being able to look at different issues and from various perspectives.

From a general point of view, you may have a point respecting the interpretation of what the Supreme Court said concerning the word "or" as opposed to the word "and," deleting the first two or three occurrences of "or" so that it reads "fight, single game sports bet, or athletic contest." I think the underlying rationale was that Parliament sought in 1985 to protect against a possible match-fixing issue that could arise at that time.

Clearly, going forward 27 years, we are in a position where technology is available for us to be able to discern quickly through the computer whether there is a risk of that type of occurrence — match-fixing. The underlying rationale of the 1985 legislation no longer applies, in my respectful submission, because of the technology, which is good. Therefore, whether it is a fight, race, single sports event, or an athletic contest, it is my view that the elimination of this particular section does not create danger in respect of possible match-fixing. It will permit the unregulated type of betting, whether on a race, fight, single sports event, or athletic contest, to be regulated. It will bring it from underground to above ground and make it regulated to the benefit of the public.

Senator Baker: Going back to 1985, I was here then. I tangled with the minister who introduced this restriction, the Honourable John Crosbie, then Minister of Justice, and it was put in. I recognize what Mr. Weber read previously — that there must be unanimous consent with the provinces before any change is made in the Criminal Code as it relates to these matters. All the evidence we have heard so far is that five provinces have agreed with this but we have heard nothing regarding the remaining five provinces.

Mr. Lipton, I would like you to verify. I imagine that any committee that has been working on this would probably have you on it if it were changing this section of the code. Will you verify for the committee that you have been sitting as a part of a working group with some deputy ministers of the provinces regarding this, chaired by a person of great respect in the Department of Justice; that you did consider that this has been gone over by the provinces at those meetings; and that no definitive answer was given, but the alarm bells were signalled at those meetings that there must be measures to "alleviate the threat of match-fixing." Could you verify for the committee that this is the case?

Mr. Lipton: I appreciate the opportunity, senator. Certainly, I was not on any particular committee at that particular time. I have read extensively what was available. Certainly, coming forward today, I have been informed by the Member of Parliament for Windsor West that, based on what he testified to on October 4, all provincial governments have approved Bill C-290 as it stands.

Senator Baker: That is what he says.

Mr. Lipton: Yes, that is what he says, and I am relying upon that, senator.

Senator Baker: Of course.

Do we have any evidence, Madam Chair, that all provinces have agreed to this?

The Deputy Chair: We have copies of some letters, but I do not know whether they are from every province.

Senator Baker: Do you have one from Newfoundland and Labrador?

The Deputy Chair: Refresh my memory, colleagues.

Senator Baker: That is why, Madam Chair, it would be worthwhile to have the chair of the working group of deputy ministers from the Department of Justice appear before the committee to tell us what the reactions of the provinces are to this bill.

The Deputy Chair: Senator Baker, we have invited witnesses from the Department of Justice. So far, they have been reluctant to appear, but we continue to press.

Senator Baker: We always have the option of the subpoena.

The Deputy Chair: That is for the chair to decide.

Senator Baker: Oh, the chair.

The Deputy Chair: I am the deputy chair, as you know.

Senator White: I continue to hear about the billions of dollars going offshore to gambling. I also heard last week from a witness from Australia who talked about having no offshore gambling problem. Later, the witness acknowledged that they have over $1 billion going offshore. What amount goes offshore in relation to single sports betting?

Mr. Lipton: Unfortunately, those figures are not published, largely because such bets are going offshore to jurisdictions that may not be regulated or to jurisdictions that may be regulated but that particular information has not been sought or, if it has, is not available. Anecdotally, it is between $2 billion and $4 billion.

Senator White: That is how much in single sports betting that leaves Canada every year.

Mr. Lipton: That is the information I have.

Senator White: I would love to know where you got that information.

Mr. Lipton: It is through reading various documentations and the like. I read material constantly in respect to this particular area. In the United States, the information that comes from Nevada is that approximately $1 billion is bet in Nevada through sports books. Anecdotally — and I repeat, anecdotally — it could be between $350 billion to $400 billion underground.

Senator White: You mentioned the United States, so I would like to ask why you are not here suggesting that we put in place an enforcement act such as the U.S. has, which in one day this summer seized almost $1 billion in assets? Why is that not the suggestion, rather than our legalizing something because money is leaving the country that would allow us to attack this from the end that I would argue, which might be the better end?

Mr. Lipton: In my view, the Unlawful Internet and Gambling Enforcement Act is not working. The amount of money seized in relation to the announcements of the Department of Justice in the United States is a pittance compared to what is anecdotally going through system.

When one person or one company is stopped, others come in and get involved. The bottom line is that the Unlawful Internet Gambling Enforcement Act, from the perspective of the banks seeking to block these transactions, does not seem to work successfully. I think there is talk in the U.S. Congress about modifying the UIGEA to permit online poker. Nevada has taken legislation to permit that and is starting to regulate it. A number of other states in the United States are looking to regulate online poker as well. Granted, theses are poker-type sites, not single event sports betting. The only states interested in doing that are New Jersey, Delaware, Nevada and the like.

I can go on for some detail in relation to some issues, but the bottom line is that, in my respectful submission, the Unlawful Internet Gaming Enforcement Act is not working.

The Deputy Chair: Thank you both very much.

Before I move on, we have copies of letters to the Minister of Justice from the Provinces of Ontario, Manitoba, Saskatchewan and British Columbia. We do not have copies of such correspondence from Newfoundland and Labrador.

We have asked every province to inform this committee about their views on this bill.

Senator Baker: You have had four provinces respond.

The Deputy Chair: These were letters sent to the Minister of Justice. We have not directly received briefs from any province.

Senator Baker: I simply raise the point because as per the agreement that was arrived at, which Mr. Weber outlined to us, it is necessary to have unanimous consent from the provinces.

The Deputy Chair: Thank you very much, gentlemen. You have been very helpful and we are grateful.

Our second panel of witnesses this morning includes the Honourable Michael Chong, P.C., M.P., Wellington- Halton Hills, appearing as an individual. It is not often we have an M.P. appear before a Senate committee, and it is always a pleasant occasion. As well, from the Institute of Marriage and Family Canada, we have with us Derek Miedema, Researcher.


The Hon. Michael Chong, P.C., M.P., Wellington-Halton Hills, as an individual: Honourable Senators, thank you for your invitation.


I appreciate the opportunity to appear in front of this committee to register my opposition to Bill C-290, as elected members of Parliament were not given the opportunity to formally vote on this important piece of leigislation.

Various forms of gambling have long been restricted by the Criminal Code. Since 1969, the Criminal Code has undergone several amendments that have expanded legal gambling in Canada. As a result, gross revenues from government-run gambling operations rose from about $3 billion in 1992 to $14 billion in 2011; a five-fold increase.


However, the evidence shows that government gambling revenues come with high social costs. The risks outweigh the benefits.


I will now outline these risks.

The adverse social costs of gambling are borne by children, lower income families and people with compulsive personalities. Problem gambling has become a serious mental health issue and a growing public concern.


For example, gambling-related suicides are on the rise in Canada. In 1998, Quebec's coroner's office linked 27 suicides to problem gambling. In 2004, that annual number rose to 32.

In Ontario, the chief coroner reported that gambling-related suicides more than tripled between 1998 and 2007.


Since many provinces do not formally report gambling-related suicides, these figures could be much higher. The Canada Safety Council estimates over 200 Canadians a year commit suicide due to gambling-related problems.

Gambling is an inefficient way to raise government revenues. For every dollar in revenue, governments must spend 50 cents to collect it. In 2011, governments across Canada spent approximately $7 billion to collect $14 billion in gambling revenue. It is far more efficient to raise government revenues through traditional means rather than inefficient sources like gambling.

Gambling does not create good employment. Statistics Canada indicates that compared to jobs in the non-gambling sector, jobs in the gambling industry are more likely to require a high school education or less, to be paid by the hour and to be paid less.

Some argue that gambling is provincial jurisdiction, but this fails to acknowledge federal jurisdiction over the Criminal Code. The courts have consistently ruled that the federal Criminal Code power is wide and broad as outlined in the Margarine Reference case of 1949.

I quote from the decision:

Public peace, order security, health, morality, these are the ordinary, though not exclusive, ends served by that law.

Clearly, gambling falls under the federal Criminal Code. That is why the current Criminal Code contains 20 pages of prohibition on various forms of gambling in Canada. No one is suggesting that we strike all 20 pages from the Criminal Code.

Bill C-290 will also negatively impact professional and amateur sports in Canada. Both professional and amateur sports leagues in North America have voiced serious concerns about the impact of single sport betting on their games and, consequently, may cancel exhibition games or decide not to establish new franchises in Canada. There is a reason why there is no NFL in Las Vegas. Just two days ago, the New York Times reported that the NCAA, of which Simon Fraser University is a member, pulled six championships from the State of New Jersey because the state has adopted single event sports betting. The four major professional sports leagues in the United States have filed numerous lawsuits in U.S. Federal Court to prevent the introduction of single-event sports betting outside of the four existing states that were grandfathered by U.S. federal law. Clearly, this bill will have a negative impact on professional and amateur sports in Canada.

Although various forms of gambling have been legal in Canada for decades and although this will undoubtedly continue as governments have become hooked on these revenues, we should not add to the adverse impact by expanding this activity. I urge you, honourable senators, to consider the negative consequences of adopting Bill C-290.

Derek Miedema, Researcher, Institute of Marriage and Family Canada: Mr. Chair and senators, on behalf of the Institute of Marriage and Family Canada, I would like to thank you for the opportunity to present to you our considerations with regard to Bill C-290. The clerk has copies of my presentation, and the two papers on which it is based have already been translated and distributed.

The Institute of Marriage and Family Canada argues against the passage of Bill C-290 for two reasons: First, gambling is profoundly damaging to the families and communities of problem gamblers. Government bears much or some of the cost of cleaning up the resulting messes. Second, provincial governments take almost a quarter of their profits from gambling addicts. Government is abusing its power when it relies on addicts to generate revenue. The Canadian Centre for Addiction and Mental Health defines problem gambling this way:

Gambling is a problem when it gets in the way of work, school, or other activities, harms your mental or physical health, hurts you financially, damages your reputation and causes problems with your family or friend.

We know that, in the families of gambling addicts — problem gamblers — there are far too many innocent victims. A study of children of problem gamblers by Philip Darbyshire of the University of the South Australia heard three siblings describe an episode "when their mother was trying leave to gamble as one of her younger children struggled to wrest the suitcase from her grasp to make her stay."

A 2008 study published in the Journal of Gambling Studies found that violence between spouses was significantly higher in their sample of problem gamblers than in the general population.

A 2008 study in Norway found that families of problem gamblers experienced family conflict at a rate more than 50 times higher than the general population.

In a 2011 Alberta study, Dr. Robert William of the University of Lethbridge found that roughly 6 per cent of gamblers account for 75 per cent of all the money spent on gambling in that province.

A 2009 study found that an estimated 3.2 per cent of Canadian adults have a moderate to severe gambling habit. This is comparable to the number of Canadians 25 and older who are frequent heavy drinkers.

More importantly, we know that problem gamblers deeply affect those around them. An Australian study estimated that one problem gambler can affect five to ten people. This would translate to roughly between 4 and 8 million Canadians.

Provincial governments are themselves addicted to gambling revenues. Ontario is undergoing a massive plan to modernize the Ontario Lottery and Gaming Corporation, OLG. The government wants to use this plan to raise OLG profits by $1.3 billion annually by 2017.

We know that B.C., Ontario, Quebec and the Maritimes have all expanded or are about to expand into online gambling. Ontario's Finance Minister, Dwight Duncan, stated publicly that this move is "about the competitiveness of OLG going forward and ensuring that it continues to be a reliable source of revenue for the province." Simply put, when provincial governments are short on cash, they turn to gambling to line their pockets, and the house always wins.

We are also witnessing an enormous conflict of interest here. Governments claim to be concerned about gambling addiction and even spend some money to address it, but no government will make a serious effort to help problem gamblers quit when their profits depend on those same gamblers.

Remember that in Alberta, 6 per cent of gamblers account for 75 per cent of all the money spent on gambling.

Bill C-290 further expands gambling. In fact, by expanding it to individual sporting events, it expands it greatly across the country. It is, frankly, giving families of gambling addicts another reason to fear that things are only going to get worse.

In closing, the Institute of Marriage and Family Canada cannot support Bill C-290 because problem gamblers and their families will suffer more as gambling expands. Our governments pay to deal with the resulting problems. Add to that the fact that provincial governments, addicted to these very revenues, cannot be trusted with this expansion.

Thank you for the opportunity to appear before you. I look forward to your questions.

The Deputy Chair: Thank you very much.

Senator Runciman: Mr. Chong, you mentioned that gambling-related suicides are on the rise. I was looking at the Ontario statistics. Take 2008 — there were eight deaths where there was gambling involved. In 2009 there were five. In 2010 there were six, and in 2011 there were four. How do you arrive at the conclusion that they are rapidly on the rise?

Mr. Chong: That came from a report that the Ontario coroner did in 2011. It was an analysis of the period between 1998 and 2010. It was titled Suicides — Gambling and was produced by the Ministry of Community Safety and Correctional Services. That is where that statistic came from.

Senator Runciman: I do not have the complete report, but I do have the chart from that report, which certainly does not indicate a rapid rise in deaths related to gambling involvement.

We had witnesses yesterday, and their view was that the defeat of this bill is not going to have the impact that you have indicated you would like to see it have. They felt, on the other side of the coin, that passage of this legislation will not have any impact in terms of encouraging new folks who are not already engaging in that activity through the Internet and other channels to get involved in single-event sports betting.

You have taken a different view on this. I wondered how you arrive at the conclusion that simply putting it into a regulated and transparent environment will encourage more people to get involved. What do you base that conclusion on?

Mr. Chong: I would say two things in response to that point of view. The first is that when there are violations of the law because of offshore activity, I think the law should be enforced rather than that those aspects of the law should be decriminalized. I think that that is the approach that the Parliament of Canada has taken on a wide variety of issues as they relate to prostitution or to the issue of marijuana. Many people have advocated decriminalizing those activities as a way to deal with the fact that they take place. However, as a Conservative, many people argue that we should force the law and put more resources into law enforcement.

The second point I would make is that the Ontario Lottery and Gaming Corporation, OLG, itself has said that if single event sport betting is permitted in Canada, it will lead to an increase in revenues. It was reported in the Toronto Star on March 2, 2012, that the OLG estimates that Windsor alone would see an increase in revenues of about $70 million annually as a result of allowing single event sports betting.

Senator Runciman: I think most of that was projected to come from the United States, if you look at that report. You mentioned prostitution and drugs, and I think there is a clear distinction here that gambling is legal and widely available through legal means.

I am having difficulty with the positions that both of you are taking. I understand your concerns about gaming. We heard similar concerns about that yesterday in terms of proximity; some of the new facilities in Ontario and so-called modernization, which is a cash-grab, essentially.

However, in terms of this legislation having an impact with respect to increased numbers of people engaging in single event sports, I have yet to hear a persuasive argument that makes that case. I am afraid I am not hearing one from you today.

Thank you.

Senator Baker: First, I would like to congratulate both witnesses for their very excellent presentations, and Mr. Chong for his presentation here today.

Mr. Chong, people watching this proceeding and listening to you would be struck by your first sentence. In elementary school we learn that we elect members of Parliament to go to the House of Commons to vote on the laws that we pass. They have a chance to vote at second reading, at report stage from committee, and then at third reading. However, I will just read back for you what you said and then ask you if you could explain in some detail why this is so. Here is what you said:

I appreciate the opportunity to appear before this [Senate] committee to register my opposition to Bill C-290. As elected members of Parliament, we are not given the opportunity to formally vote on this important piece of legislation.

Could you explain to us how that is possible? You are an elected member. Here is a major change to the Criminal Code of Canada, and you said that you — any elected members of Parliament — were not given an opportunity to formally vote on this important piece of legislation.

Mr. Chong: Thank you for the question. The honourable senator will know, having himself been a long-time member of the House of Commons, that from time to time bills are passed through the House of Commons on unanimous consent at all stages. That is what happened in this case. That does happen from time to time, as he will know and I am sure as he observed when he sat in the lower chamber.

Senator Baker: Yes, I was there for 29 years. Was this one of these bills where a motion was made and it was deemed to have been accepted, or did it happen on a Friday morning or at a time when there were very few people in the House to get it through? Was that what happened here?

Mr. Chong: If you look at the transcripts of Hansard, the bill was adopted at all stages. It was at report stage on Friday, March 2. I assume that was either an agreement of the House leaders or as a result of debate collapsing.

Senator Baker: Debate collapsing. In other words, it was one of these instances. Therefore you did not have an opportunity as a member of Parliament to vote on this legislation; is that what you are saying?

Mr. Chong: No, I did not, and that is why I very much appreciate the opportunity to express my views here and to go on the record.

Senator Baker: You can be assured that every senator will be given an opportunity to vote on this legislation. Thank you very much.

The Deputy Chair: Was there a committee study of this bill?

Mr. Chong: There was.

The Deputy Chair: So it was after report stage that you did the —

Senator Baker: The fix was on.

The Deputy Chair: This is a process that we do not have in the Senate and it always fascinates us to learn about it.


Senator Boisvenu: My first question goes to Mr. Miedema. As I read your brief—and I am trying to look at the big picture—what I gather is that your organization has an overall approach, not related to any sector. You are opposed to any kind of betting or any kind of game where people's health and stability are at risk. Yours is a blanket approach, is it not? It is not just about this bill, is it?


Mr. Miedema: I think the position that we have adopted and which you will find in the paper Government — gambling's biggest addict is that there is an inherent conflict of interest; more important than gambling being legal, there is an inherent conflict of interest. Where you have a profit motive competing with care for addicted gamblers, profit wins and addicted gamblers lose.

Senator Boisvenu: It is like selling cigarettes or booze.

Mr. Miedema: I would not say it is exactly like that. I think in this case I found it interesting that we have very clearly stated by previous witnesses that, if this bill passes, the government will be taking over from bookies. It also puts the government then in the position of being bookies.

However, in this particular issue, it is an inherent conflict of interest and problem gamblers and their families will always lose because profit will always win. We see that with the expansion of the OLG looking to get another $1.3 billion annually.

It is not an issue of gambling being legal; it is an issue of this conflict of interest, and that needs to be remedied.


Senator Boisvenu: It is much the same for cigarettes: government advertising says that the product is more or less dangerous, but there is the government, pocketing billions of dollars in taxes. It is quite the contradiction.

Mr. Chong, yesterday, some very interesting witnesses came to talk to us about the effects of gambling and how problem gamblers are created. Contrary to what you both claim, they are seeing a decrease. They were people who work with problem gamblers and they came here to tell us that they are seeing a decline in the number of people displaying pathological behaviour in terms of gambling.

We are faced with a number of solutions to complex problems. We have illegal gambling that results in a very significant amount of money being channelled out of the country. The witnesses told us that it is easier to track down problem gamblers when the activity is legal, not illegal.

So I asked them to put themselves in the shoes of senators with a decision to make. Would they maintain the status quo of the activity, knowing that money is leaving the country, that organized crime is making a profit, that it is hard to identify problem gamblers because the activity goes on underground? Or would they prefer to legalize the activity, making it much easier to track down people with gambling problems. Those three experts, who work with problem gamblers, all said that it was better to legalize it.

So there is a kind of contradiction. Could you explain your position, which seems to be that we are going to heighten the danger, whereas those experts in the treatment of people showing pathological behaviour tell us that it would be better to legalize the activity in order to get a better handle on it?

Mr. Chong: Thank you for your question, Senator Boisvenu. I am in favour of the status quo; I am not in favour of getting rid of all the gaming that is presently legal in Canada. But, for illegal games of chance, federal and provincial governments in Canada have to work together and establish resources to combat illegal activities.


The solution to offshore gambling is to enforce the law and to ensure that governments work together to do that. It is no different than offshore tax havens. For many years both the American and Canadian governments ignored the problem of offshore tax havens in places like Switzerland, the Cayman Islands and the like. When the problem became too big to ignore, governments of both countries acted expeditiously and put mechanisms in place to enforce tax collection.

In terms of the negative social impact, it is true, as Senator Runciman said, that the chief coroner for Ontario has reported that the number of suicides has declined in the last two to three years, but I would point out two things. First, the collection of these statistics is not entirely reliable. Many provinces do not collect the statistics at all. Second, in other cases families of those involved are not willing to come forward to admit what happened.

The impact is much broader than just suicides, so we should put additional resources in place to help those families and those individuals with compulsive personalities. As Mr. Miedema pointed out, that is taking place but not to the extent that it should.


Senator Boisvenu: That is what leads me to believe that the bill is good for Canada. The experts who work with problem gamblers tell us that the situation is going to get worse; that, if nothing else, it will remain difficult to find out about everything going on underground in terms of illegal gaming and its links to crime.

Instead, they tell us that we almost have to legalize it so that we can better understand those underground activities. How would you respond to that?


Mr. Chong: I would put to you that if you were to legalize single event sports betting in Canada, these kinds of issues you referred to about the underground activity will not go away. They will remain. Often, the offshore gambling industry provides much better odds than do domestic players, which are run by provincial governments and have certain standards and obligations to uphold.

I am not sure it will deal with that very issue. As well, I am not sure that I agree with the premise that bringing it above ground will solve the problem.

Senator Jaffer: In all the research you have done, have you found that immigrant communities, newcomers to our country, are more affected by gambling? Do you have any research on that or have you seen any findings on it?

Mr. Miedema: I have not.

Mr. Chong: I have not seen formal research, but I have heard anecdotally from people like Tung Chan, the head of S.U.C.C.E.S.S., which is Vancouver's largest immigrant integration organization. They integrate Chinese immigrants from both Mainland China and elsewhere into the Vancouver Lower Mainland. It is one of the largest immigrant organizations in British Columbia. He has told me that this is a huge problem in the Asian community in the Vancouver Lower Mainland. He and others in the community are quite concerned about the emphasis on increasing revenues through these sources.

Senator McIntyre: Mr. Chong, I would like to raise the issue of constitutional jurisdiction with you. In your letter dated March 15, 2012, addressed to the Senate, you raised the issue of provincial jurisdiction over gambling as opposed to federal jurisdiction over gambling as it relates to the Criminal Code. What forms of gambling, according to you, will be subject to restrictions in the Criminal Code?

Mr. Chong: So I understand the question, did you ask what forms of gambling should be restricted?

Senator McIntyre: Yes. You did not raise this in your letter.

Mr. Chong: All forms of gambling currently restricted by the Criminal Code should remain as such. Sections 197 to 209 of the Criminal Code restrict certain types of gambling in Canada. Other forms of gambling are legal in Canada because they are not contained in the Criminal Code. All these sections should remain as they are.

Senator McIntyre: This is what you referred to in your letter addressed to the Senate.

Mr. Chong: That is right. I am a realist, not a utopian. I understand that gambling revenues form an integral part of overall government revenues in Canada. I also understand that people want to spend their leisure and entertainment dollars at these facilities — that is the reality in Canada today. I am not advocating that we further restrict or roll back the legalization of gambling in Canada. I am simply suggesting that we not expand gambling in Canada and that the current restrictions in the Criminal Code remain in place for the reasons that I outlined in my opening statement.

Senator Frum: My question is along similar lines. We were presented today with the original agreement from 1985 between the provinces and the federal government. As Senator Baker noticed in this agreement, changing it requires the unanimous consent of the provinces. We know that four provinces, including our province of Ontario, are eager to see this legislation pass. Are you aware of any provinces that have expressed a negative opinion about this? Do you think that unanimous consent matters?

Mr. Chong: I am not aware of any other provinces that have expressed negative opinions about this bill. I would add that the agreements struck in the 1980s should be respected. If that consent is required, it should go ahead on that basis. I also believe that as a federal government, we should not simply abdicate our responsibility for federal jurisdiction of the Criminal Code. If all 10 provinces were to tell us that they wanted to eliminate sections 167 to 209 in the Criminal Code in one fell swoop, federal parliamentarians should resist that effort, even though there may be agreements in place at the executive level to see that happen.

We have a responsibility as federal parliamentarians to look at the impact that a bill like this would have on Canadians.

Senator Frum: On another topic, you mentioned the negative impact on the NHL, the NBA, the NFL, the MLB and the NCAA, which operate in Canada. They have a position against this bill and are very clear about it. With this bill, we would allow betting on the very games they are offering. Can you talk about what you think the potential fallout from that would be?

Mr. Chong: Yes. We all know that the NFL has expressed interest in a franchise in Toronto. We also know that the NFL has always expressed interest in exhibition games in Canada. Those would be at risk, I believe, if single event sport betting were allowed in Canada. I would also note that this is not just hypothetical. Two days ago, on October 16, 2012, in the New York Times, the NCAA announced it was pulling six championships from the State of New Jersey for the very reason that the state has recently allowed single event sport betting. The Governor of New Jersey pushed this initiative and as soon as it passed into law by the state, the NCAA pulled those championships.

The NCAA also has a Canadian university as part of its membership. Simon Fraser University is a member of the NCAA. The University of British Columbia has applied in the past. Currently it is not a member, but it has indicated that in the future it may decide to enter into the NCAA. This is not only an issue for professional sports but also for amateur sports in Canada.

Senator Frum: Is there any sense of the impact on NHL expansion teams, which has been a big topic in Canada?

Mr. Chong: Yes. The four major professional sports leagues in the United States have all cooperated to oppose any expansion or any initiatives as they relate to single event sports betting. In fact, a case went to the Supreme Court of the United States. In May 2010, the court upheld the plaintiff's case in Markell v. Office of the Commissioner of Baseball.

The other major sport league supported the MLB in its efforts and indicated they would side with the four major professional sports leagues and ensure that single event sports betting would not be allowed in the State of Delaware.

Senator Frum: We had this interesting dichotomy between the positions of major league sport and all the testimony we received. It says that betting is going on anyway and that the positions of the sports are irrational or in denial because they are trying to suppress activity that is going on regardless; their position is out of date, anachronistic and futile. What do you say to that?

Mr. Chong: I agree with the four major professional leagues in the United States when they say allowing for single event sports betting would undermine public confidence in sporting events and the image of professional and collegiate athletes. We know there have been betting scandals on games — this betting was illegal — and the impact that has on the confidence that fans and spectators have for professional sports.

Senator White: Thank you for the commentary on the NCAA.

Yesterday we had evidence from health professionals talking about gambling addiction. I try to weigh the evidence of individuals and organizations as to whether they have a value in the discussion or a success or failure of the discussion.

Do you know if the Province of Ontario or the OLG have suggested increased funding to organizations such as that should Bill C-290 be passed?

Mr. Miedema: I am not aware of that. I know OLG is proud of the fact that they spend $40 million but bring in $2 billion dollars in profits. That is —

Senator White: You have not heard a suggestion that it would increase the $60 million?

Mr. Chong, do you have know of any suggestion of increased funding for health professionals?

Mr. Chong: I do not. There is a sense among the professionals I talk to, social workers and people who deal with problem gambling, that there are not adequate resources to deal with it.

The negative social impacts of gambling are often unseen and unheard. I can tell you that members of our caucus have been very directly impacted by these kinds of issues. It is not something that is easy to admit or talk about because there is a shame that comes along with it. Often, this is a problem that goes unseen and unheard. When you talk to social workers and people who deal with these problems directly, they will tell you that there are not adequate resources in place to combat problem gambling.

Senator White: Is it possible for us to ask the witnesses from yesterday whether they had any discussions previously with the Province of Ontario about increased funding prior to giving evidence? They were supportive of something that I was surprised they would be supportive of. Is that something we can do?

The Deputy Chair: We can forward that question to them, yes.

Mr. Miedema, the statistic that roughly 6 per cent of gamblers account for 75 per cent of all the money spent on gambling in Alberta is quite jolting. I have a couple of questions. First, are you aware of anything that would make Alberta different or would you expect the same result in other provinces?

Mr. Miedema: I cannot extrapolate that specific result. I am confident that results would be similar in other provinces.

The Deputy Chair: Alberta is a rich province. I suppose it is conceivable that the huge amount of money coming from a few people is coming from multimillionaires who like to spend some of their money on gambling.

Do you have any indication of what proportion of that 6 per cent who bring in all the lovely money would be problem gamblers, as distinct from very wealthy people?

Mr. Miedema: I appreciate the question. The same study found that the top 6 per cent of the highest spenders — this is not the same 6 per cent I quote in my brief — have a prevalence of problem gambling 13 to 20 times higher than the general population.

The Deputy Chair: The likelihood is that there is a significant proportion of the original 6 per cent who would be problem gamblers.

Mr. Miedema: I think that would be a safe assumption.

The Deputy Chair: Are you suggesting that the provinces are reaping all these lovely profits, not just from gambling but from problem gamblers, and if they went away the provinces would be a lot poorer?

Mr. Miedema: Yes, I am. About a quarter of gambling revenues come from problem gamblers. This is where I come to the belief that provincial governments have no real vested interest in dealing with this problem because their revenues depend on it. If the OLG's revenues drop 25 per cent from one year to the next, it would be a crisis for the government. They have no vested interest to deal with this problem.

The Deputy Chair: What do we do? Seriously, this is getting at questions that have been raised by a number of colleagues. It is happening. The numbers are out there.

With the arrival of the Internet it is even more prevalent. You are addressing a serious moral issue, and I am not quite sure what the appropriate public policy stance is at this point. We could put a lot more money to support for problem gamblers and prevention, but would that really work? Does it work?

Mr. Miedema: It is not a guarantee. I am not qualified to say it works. I do not think there is any panacea or simple solution to this problem. I think there are two points. Again, it is that conflict of interest. In provincial regulations we somehow need the provincial gambling organizations to separate the profit motive from care and prevention of addiction.

I am not aware of how they should do that, but I think the best way would be to remove it completely from the purview of the OLG and ensure they set aside a set percentage of gambling revenue so if revenue increased, that funding would increase.

We also have to deal with the fact that provincial governments are relying on this revenue. It is an easy way to increase revenue because people do not decry expansion of gambling in the same way they do of the raising taxes or cutting services.

One of the recommendations I make in this paper about gambling's biggest addict, focusing on Ontario, is to take all the profits from gambling and put them towards paying down the deficit. Take away the profit motive for governments except where they would have increased zeal to pay down the debt. Take it out of general revenue and use it for that purpose alone. We would have a chance of addressing the reliance on the revenue and, while also separating it out from the lottery corporations, a chance to ensure that problem gambling would receive the attention and resources that it deserves.

The Deputy Chair: Thank you very much.

Senator Runciman: I like the idea of having revenue dedicated to deficit. In Ontario right now we see this major expansion of gaming and the whole issue of proximity in putting these casinos in the middle of major urban centres. I am strongly on side with the idea that doing so will increase the issue of problem gambling.

With respect to the bill before us, it is now legal to bet on two events. PRO-LINE is three, but the law allows two. Therefore, this is moving it to one. I have yet to be convinced by any witness that this will have an impact on increasing the number of problem gamblers. In fact, the testimony we heard from witnesses yesterday and last week was on the other side of that coin; it indicated that this would not have a significant impact.

I had testimony from Professor Derevensky from McGill who is an international expert on this. This ties in with what Senator Boisvenu said; namely, that we have not seen any increase in pathological gambling rates internationally with the significant expansion of legalized gambling. However, he also talked about single event sports betting being widely practised now and that bringing it into a legal, regulated environment will provide "a somewhat safer product."

I understand your concerns and I am concerned about what Ontario is doing. However, in terms of this particular issue, I do not see it having the impact that you are suggesting it will have.

The Deputy Chair: Was there a question there?

Senator Runciman: Unless they can provide something that will persuade me.

The Deputy Chair: The question is: "Can you persuade me otherwise?"

Mr. Chong: I would say two things in response.

There is clearly a correlation between the massive expansion of gambling in the last 20 or 30 years in Canada and the increase of social problems. Whether those social problems have somewhat diminished in the last two or three years, there is no doubt that the overall trend remains in place. With the five-fold increase in gambling revenues from $3 billion to $14 billion from 1992 to 2011, there has been a corresponding increase in adverse social effects. That is clear. It may fluctuate from year to year, but it is clear that there has been a commensurate increase in adverse social effects.

Is that increase tailing off or remaining constant? It could be. Nevertheless, there are adverse social effects. Logically, if we expand gambling by allowing for single event sports betting, we will see a corresponding increase in social problems.

I believe in the "do no harm" principle. I think that we should not add to adverse social effects by expanding this activity, not to mention the whole raft of other reasons that have to do with professional amateur sports, with the fact that it does not create good employment and that it is a very inefficient way for governments to raise revenues.

Mr. Miedema: There are two questions here that I see. One is the question, "Will this expansion increase the number of problem gamblers?" The second is: "Given the percentages I have just quoted, if that percentage remains even relatively constant, will the expansion of gambling further soak problem gamblers and their families?"

I want to be clear here. I am not only talking about the 3.2 per cent of Canadians, but also their spouses, children, co-workers and neighbours. I am talking about families that lose their home and kids who do not have enough food in the fridge or who cannot go to summer camp. When money goes to gambling, it cannot go elsewhere. This is broader issue than just this 3.2 per cent, and I am confident — though I would have to continue to track this — that as expansion goes forward, it will give problem gamblers more opportunity to spend more money out of their family's budget.

Senator Runciman: As we heard yesterday, problem gamblers will find a place to do it in any event, so I do not think there is any indication that it will increase in terms of the volumes of dollars flowing. Problem gamblers will find a venue to place their bets.

We are going in one lane and it will move over to a regulated, transparent lane, so there is no indication or solid testimony we have heard that will persuade me that this will increase the problems.

The Deputy Chair: I think that was a repetition of the same question.

Senator Runciman: It was worth repeating.

Senator White: I want to see whether either of you has an opinion on the following. My understanding is that easier access to gambling and growth in gambling will increase the amount of money people gamble. Alberta is a good example. Madam Chair talks about how rich they are, but I am sure they would still love to reduce their gambling problem.

Are you suggesting that by making a piece of the gambling pie — single event sports betting — more accessible — and we hear the OLG saying they want to increase revenues — that we will take the same amount of money spent by a family today and we may have more of it going toward problem gambling issues instead of being spent in other areas?

Mr. Miedema: That is a real possibility. I will acknowledge that I do not have data for the future, but we need to be very clear that the current reality is that families are suffering financially, emotionally and physically because of problem gambling. The OLG is expanding because they want to raise profits by $1.3 billion annually, and that money has to come from somewhere. Some of it will come from people who know how to budget and who gamble for fun. A good chunk of it will come from the pockets of those 3.2 per cent families.

Senator White: The same people you talk about are a small group of people who spend a large amount of money already and they will spend a larger amount of money. Is that correct?

Mr. Miedema: Possibly.

The Deputy Chair: I owe an apology to Senator Baker who had asked for a spot on the second round.

Senator Baker: I will be brief.

There are 38 words that will be eliminated from the Criminal Code if this bill passes. We have been talking before the committee about only five words. The five words we have been talking about are "on a single sport event."

Then there is a list of other things separated by the conjunction "or." Have either of the witnesses given consideration to the effect of this bill as it relates to all of these other subjects included in this bill that would be eliminated; for example, the words "any race"? It could be the presidential race; it could be the election of Mr. Chong in the next election campaign. It is a race.

Without qualifying words there, it opens up great possibilities. Have you looked at the other words in this section other than "on a single sports event"? Do you have any opinion on it?

Mr. Chong: I have looked at the section in question, but I think the overwhelming concern is the betting as it relates to single event situations.

Senator Baker: You are not concerned about elections.

Mr. Chong: I am not. Whether the single events are in the professional sports arena, an amateur sport or the horse racing industry, I think there are a variety of reasons why we should act cautiously before going down this path.

Mr. Miedema: Like Mr. Chong, I accept the status quo and am concerned about any expansion. Certainly, individual sports events are one aspect. However, the other aspects in the part that would be struck from the Criminal Code speak of even further expansion. They speak of even further expansion into — I do not know if we would say — more accessible events or events that reach farther and farther into the lives of individuals. We can already bet on horse racing, but if it becomes a UFC event in Toronto, or hockey games, baseball games, Olympic Games or junior hockey games, this is a small bill that would lead to a huge expansion.

The Deputy Chair: Thank you, Senator Baker, and I apologize for missing your name on the list.

Gentlemen, thank you both very much. This has been a very interesting session and very helpful to us in our work.


The Deputy Chair: We are continuing our study of Bill C-290, an Act to amend the Criminal Code (sports betting). For our third expert panel this morning—this afternoon, I should say—we are pleased to welcome Mr. Gerald Boose, Executive Director of the Gaming Security Professionals of Canada.


From the Ontario Provincial Police, we have Chief Superintendent Fred Bertucca, Bureau Commander, Investigation and Enforcement Bureau. He is accompanied by Detective Sergeant Bill Sword, from the Organized Crime Enforcement Bureau.

Welcome, gentlemen. Thank you very much for joining us. The more we study this bill, the more of its complexities we begin to understand.

Do you have a preference as to which of you goes first?

Gerald Boose, Executive Director, Gaming Security Professionals of Canada: We thought that perhaps I should go first.

Thank you for the opportunity to appear before the committee. I am Executive Director of the Gaming Security Professionals of Canada, GSPC. The GSPC is a not-for-profit association with a membership that consists of executives, senior managers and private and public sector organizations responsible for supporting and ensuring the security of gaming operations. Its mandate includes game protection, game integrity and regulatory compliance in general and, more particularly, the protection of casino video lottery, conventional lottery ticket systems and electronic gaming products and systems.

My career began with the Ontario Provincial Police, where I rose to the level of deputy commissioner of operations. Included in that mandate were responsibilities for criminal intelligence, organized crime and illegal gaming. My mandate also included the support of legal gaming through assigning investigators and enforcement staff to the Alcohol and Gaming Commission of Ontario and through representing the interests of law enforcement as Chair of the Charitable Gaming Subcommittee of the Ontario Association of Chiefs of Police.

I retired after 30 years of service in law enforcement but remain involved in the police community as a member of the Ontario and Canadian associations of chiefs of police.

My second career has been in the gaming industry, where I have had responsibility for game protection and integrity, security, surveillance investigations and regulatory compliance. Over the span of 14 years, I have worked for private and public corporations, as well as governmental organizations. In the early years, this work was performed in Ontario and then in Manitoba. In more recent years, I have had responsibilities, at the national level, on the board of directors of the GSPC and now as its executive director.

I draw on this experience when I comment on the matter of single event sports wagering. At the outset, I would like to state that the Gaming Security Professionals of Canada support this legislative amendment. We believe that it would be good for the Canadian public, good for the Canadian gaming industry and bad for organized crime. I will take a few minutes to elaborate on our position.

The argument for having the ability to wager on a single sporting event is that it enhances the enjoyment of the event. The argument against it is that it can result in the corruption of the event as those having placed a wager on its outcome may want to somehow influence the results. In fact, corruption of sporting events has occurred from time to time in other jurisdictions, but it remains rare to see evidence of this activity in Canada.

A large segment of the population has clearly put aside any concerns with regard to the prospect of corrupting influences and are watching, listening to, monitoring the results of and wagering on sporting events. In North America, there are limited opportunities to bet legally on a single sporting event, with some notable exceptions including parimutuel wagering on horse races. The State of Nevada is one of the few jurisdictions in the United States where single sporting event wagering is permissible.

Aside from horse racing, the ability to legally wager on sporting events is being partially met in Canada by gaming jurisdictions providing opportunities to wager on multiple events with a single bet, essentially working around section 207(4)(b). This form of parlay wagering is offered to the public as Sport Select, Sports Action, PRO-LINE, et cetera. They are essentially the same product. With the legal opportunities being so limited and the demands so great, it is not surprising that the gap is being filled, in large measure, by organized crime, through their traditional methods and through more contemporary means of hiding behind the legally murky area of offshore betting by Internet gaming.

As societies have evolved so has organized crime, but one thing that has not changed is that bookmaking has remained a reliable profit centre for many of these organizations. As bookmaking remains a key profit centre for segments of organized crime, it may seem to be somewhat of an anachronism, but there are a number of factors in its favour. Demand from the public is high, legal venues are few and/or limited in scope, and the public view is that this is a victimless crime or no crime at all. Investigations are labour intensive and expensive, prosecutions are complex and difficult, it is not a police priority and experts in the field are few. The penalty upon conviction is a maximum of 2 years and generally much less.

For the majority of participants, this appears to be a harmless activity. There is little, if any, awareness that criminal organizations may be profiting from the transactions and the increasingly aggressive marketing of these services provides a façade of respectability.

The bookmaker will deal with the consumer fairly in the normal course of events as they depend on their reputation to sustain and grow the business. However, this is a very fragile relationship that can deteriorate overnight because of its criminal nature.

On an individual basis, there is the inherent risk of dealing with criminal organizations in that those organizations are fully prepared to engage in loan sharking, extortion and other criminal behaviour to achieve their ends. Further, the philosophy of responsible gaming — which has been so fully embraced by the provincial gaming jurisdictions in Canada — is a completely foreign notion in this venue. The only responsibility is to pay one's debts on time.

This well-established criminal activity has undergone a renaissance and achieved exponential growth owing to the introduction of the multi-channel universe and the Internet. Together, the opportunity to be fully engaged in the world's sporting events and to transact the business of wagering on these events has become virtually limitless.

As you have already heard, there are estimates that suggest the Canadian market in illegal bookmaking is in excess of $10 billion annually and could be as much as $40 billion. Wagering through offshore sports books alone is estimated to be approximately $4 billion. This is a very big business.

The attraction of the public to placing sporting event wagers through illegal bookmakers or through the legally grey areas of offshore service providers is that the Canadian provincial jurisdictions are prohibited from offering single event sport wagering. As noted earlier, the only current legal alternative is for those jurisdictions to offer multi-event wages, parlay wagering, but that is viewed as being a much less satisfying form of gaming. In spite of that, Canadians currently wager approximately $450 million per year through this legal venue. It is a significant amount and yet a small fraction of the total market.

The public policy framework is very different in many other jurisdictions where wagering on sporting events is considered to be a legitimate pastime. By way of example, in the United Kingdom and Australia the public policy orientation is to ensure that gambling is conducted in a fair and open way. In those jurisdictions, well-established and legal private sector models deliver bookmaking services with the government's role being to ensure integrity through licensing and regulation.

The impact on organized crime and policing from providing a legal outlet for single event sport wagering is difficult to measure. However, it is abundantly clear that when a legitimate, easily accessible and well-regulated alternative exists, organize crime's bookmaking revenues suffer as a result. This is evidenced by police services being able to reallocate their scarce resources from this law enforcement activity.

By comparison, current Canadian public policy as reflected in the Criminal Code has a number of negative implications. In effect, there can be no assurance that the system is fair, delivered responsibly and it is certainly not open. At the same time, it serves to stigmatize a large segment of the population by criminalizing their activities and seeding billions of dollars of revenue to criminal organizations. Finally, it serves to divert precious law enforcement resources from higher priorities.

The recommended amendment to the Criminal Code would enable the legitimate gaming authorities in Canada to provide this very popular form of wagering to the public in a responsible manner and in a highly regulated environment which ensures the integrity of the system and method of payment. This would not mean the complete end of all illegal sports betting. However, it would provide for a legal alternative in which the public could have confidence and would become the preferred form of sports wagering based on the experience of other jurisdictions.

The Deputy Chair: Thank you.

Chief Superintendent Fred Bertucca, Bureau Commander, Investigation and Enforcement Bureau, Ontario Provincial Police: I will be brief. Good afternoon everyone. Thank you for the opportunity to offer some insight from the law enforcement perspective and provide comment regarding Bill C-290.

I am the chief superintendent of the Investigation and Enforcement Bureau, which is part of the Ontario Provincial Police's Investigations and Organized Crime Command. Also with me is Detective Bill Sword from the OPP. The Ontario Provincial Police provides investigative expertise related to both illegal and legal gaming in the Province of Ontario. This is accomplished through the OPP Organized Crime Enforcement Bureau and the Investigation and Enforcement Bureau attached to the Alcohol and Gaming Commission of Ontario, also known as the AGCO.

The Organized Crime Enforcement Bureau's Illegal Gambling Unit provides a multi-jurisdictional investigative and enforcement response to illegal gambling in Ontario with an emphasis on organized crime. This unit was formed in 1996 with the adjoined announcement from the then Solicitor General and the Attorney General for Ontario. The OPP was mandated to take a leadership role in a coordinated enforcement initiative to combat illegal gaming. At this point, I would like to draw the distinction between illegal gaming and legal gaming.

The OPP's Illegal Gambling Unit conducts investigations involving the type of gambling that occurs outside and independently of the legal and provincial gaming and lottery platforms, such as underground or after-hours poker rooms. The Government of Ontario's comprehensive gaming strategy also includes a partnership with the Alcohol and Gaming Commission of Ontario. The AGCO is responsible for ensuring that legalized commercial gaming, charitable gaming and lotteries are conducted in the public interest and in a manner that is socially and financially responsible.

The goal of the Investigations and Enforcement Bureau, which is attached to the AGCO, is to provide a safe and security gaming environment which ensures the highest standard of honesty and integrity free from criminal elements and activities. This is accomplished through investigations focusing on the areas of criminal investigations, eligibility and financial investigations.

Should Bill C-290 be implemented, it may well follow that so-called sports books could be located within licensed gaming parlours and existing casino environments. The OPP casino enforcement unit polices four commercial casinos as well as six charity casinos and several racing facilities that have slot machines.

The unit's secondary mandate is to assist local police in accordance with existing protocol agreements. Members act as first response officers to all calls for police service and facilitate police investigations within the boundaries of the casino properties. Typical occurrences involving cheating at play, the theft of wallets, purses and/or cash, underage gamblers with fake ID and assaults involving unhappy gamblers in disputes over access to slot machines are all things that we investigate.

The outcome of major sporting events would certainly add to the list of potential conflicts if sport books are to be established at or near existing casino environments. The casino enforcement unit also offers investigative support to other sections within the OPP and other police agencies within and outside of Canada.

Information and intelligence gathered and provided over the years has involved a large variety of criminal-related activity crossing provincial and international borders. One notable investigation demonstrated the essential cooperative approach required when criminal organizations are involved. In May 2007, simultaneous arrests were made in Ontario and across the U.S. as members of an international casino cheat team were taken into custody following a 44-month investigation.

Officers assigned to the AGCO initiated this complex investigation after receiving information from the California Department of Justice regarding the Tran Organization. The cheat at play scenario included the recruitment of casino dealers to pre-determine the outcome of card games. Ontario's financial losses were believed to be in excess of $2 million.

Arrests in the United States were coordinated by the FBI with the support of police agencies in Michigan, Indiana, California, Washington, et cetera.

Eight months later, the investigation resulted in the arrest of three additional casino dealers, two of whom were employed at Casino Rama.

Other unique cases over the years include money laundering operations with cross-border implications based on the difference in value of U.S. and Canadian currency at the time — which is not an issue today — and information regarding casino cheats with ties to terrorism, which was sent to the FBI resulting in jail time. The relationships we have established with state police services and the FBI in the U.S. over time continue to serve us well today.

As you are aware, the Criminal Code does permit parlay betting relating to sports, and this is provided through the conduct and manage clause in paragraph 207(1)(a). In Ontario, the conduct and management of parlay betting related to sports is carried out by the Ontario Lottery and Gaming Corporation, or the OLG, with regulatory oversight by the Alcohol and Gaming Commission.

As outlined earlier, the police and regulatory partnership is a highly effective and proactive — and reactive — approach to organized crime or other criminal involvement in this industry. Therefore, the Ontario Provincial Police is not offering an opinion on whether the amendment as outlined in Bill C-290 should or should not be implemented. It is my understanding that the original rationale for not having single event sports betting was to prevent organized crime from affected the outcome of a sporting event or contest. By introducing single-event sports betting through Bill C-290, there may be an increased risk of organized crime involvement through attempts to bribe athletes, officials or other associated participants.

It is our opinion, though, that these risks would be reduced through the use of a strong regulatory body or bodies that may or may not be similar to the Alcohol and Gaming Commission model in Ontario. The regulatory body would therefore require continued investment in qualified investigative and enforcement personnel. Regulating the gaming industry in Ontario requires our members to stay on top of trends and technology, and to share information. Our members must change and adapt as the industry and criminal element changes and adapts, as well.

We see the potential impact of Bill C-290 as another opportunity to not only change and adapt but to provide investigative insight, expertise and advice to others based on our experience.

Thank you for the opportunity to speak to this bill and I would be happy to answer any questions.

Senator Runciman: Thank you all for being here and contributing to our deliberations. It is very much appreciated.

What is the size of the Illegal Gaming Unit in Ontario today?

Detective Sergeant Bill Sword, Organized Crime Enforcement Bureau, Ontario Provincial Police: It is approximately 20 officers now.

Senator Runciman: When you talk about illegal gaming, can you quantify it in terms of how much of what you have to deal with is related to single event sports and dealing with these bookmakers, or is it primarily dealing with video game machines or other elements — these card dens, I guess you call them? How much would be related to what we are dealing with in this legislation?

Mr. Sword: The majority of our investigations now are geared to organized crime, and the majority of our investigations would be to sports wagering. Secondary is the card houses. Very little would be related to video lotteries; we combated that when we first started the unit back in 1997, and it eliminated a lot of that problem. Therefore, the majority of our investigations to do with organized crime relate to sports wagering.

Senator Runciman: There was a lengthier submission about Part VI, judicial authorities. How difficult is it to obtain that? That is perhaps the most helpful tool with respect to getting evidence on these organizations.

Mr. Bertucca: Part VI, judicial authorities, and anything involving those types of investigations, are complex. It is essentially an investigative process that we have to work through. Is it difficult? Yes. Do we do it? Yes.

Senator Runciman: How long does it take you to go through the process on average?

Mr. Bertucca: It depends on the evidence, sir.

Senator Runciman: Proceeds of crime has been another element you believe has had an impact in a positive way with respect to your unit's ability to cope with this challenge; is that not right?

Mr. Sword: We would not do an investigation without proceeds of crime. Investigators are attached to it because of the amount of money involved in reference to penalties.

Senator Runciman: I saw a relatively recent U.S. statistic in this submission, as well, about a dollar bet legally. The ratio is $100 to $152 dollars bet illegally. That is a U.S. number. Do you have any idea with respect to Ontario — would that be comparable?

Mr. Bertucca: I am leery of statistics, especially when they involve such gigantic different numbers. We hear about sports betting being somewhere between $80 and $380 billion. When I hear that, I am not really convinced that the research was thorough.

The fact is that illegal gaming is there. There is no doubt about that. How much do they make? We do not know. We could tell you specifically that, with one case one year, the betting action was $380 million. That was what the betting action was. What the profits were for that I do not know.

To say that and take that number and apply it across the entire country would be misleading.

Senator Runciman: How big an element with the illegal betting areas is loan sharking? We have heard some testimony with respect to that being a key element of this. This legislation will not be able to counter that. Is that a significant part of this problem?

Mr. Sword: I have not run into as much loan sharking as I have extortion, where people are so much in debt that they would give up a vehicle or homes. I have been involved in cases where they have given up a business. It is more extortion that I have been exposed to as opposed to loan sharking.

Senator Runciman: The bottom line is that your unit is supportive of this legislation passing. You think it will help address some of the challenges that you have to face on a regular basis. Am I interpreting your position correctly?

Mr. Bertucca: It will put things like you are talking about — loan sharking, because that does occur at some casino sites. We have come across that. The only reason we have been able to combat it is because we are there and we are seeing the evidence develop. If the amendment is passed and sports betting is allowed, it will be a legalized environment and it will be an environment that we have, for lack of better language, at least some control — maybe control is not the right word, but at least we are observers there.

Senator Baker: The general public viewing the proceedings will hear some witnesses say, "Well, there are billions of dollars leaving Canada through illegal betting." The Canadian public knows that our police services are very effective at tracking down criminals, and you have all the tools that you require under the Criminal Code — you have production recent, ex parte orders. They are simple to get; you go to a judge — ex parte, secretly, privately. You can get whatever records you want from any companies — any Internet company. You can get the records of every single service provider if you so wish.

The general public would ask, "What is the chief problem? If all of this illegal activity is going on, why can the police forces in Canada not get to the bottom of it and prosecute those criminal organizations that are conducting these illegal activities right now?"

Mr. Bertucca: That is a very good question. I can only respond by saying that I have a tool box and it is only so big. With that tool box I will, as a senior police officer, get reports from my staff that will say, "We need to investigate this." I will weigh that against other things; i.e., how much money and/or staff do I put to impaired driving; how much money or staff do I put at the recent cyberbullying issues, which have been in the news; how much money and staff will I assign towards terrorism? My answer to that question is should that case come to me and I can allocate the staffing and resources to do that, I will.

Yes, people are saying there are billions of dollars leaving this country, and like I said earlier, I am not too sure, given the large numbers and the difference of $10 billion and $40 billion, or $70billion and $380 billion, that the research is actually effective, cited research. I do know that it exists.

Senator Baker: I read in the last couple of days some of the proceedings that took place with the Deputy Ministers of Justice in a group that meets regularly concerning the Internet gaming industry. The conclusion of the Deputy Ministers of Justice was that they were not encouraging investigations and prosecutions of these illegal activities. I suppose the reason for it would be the reason that you just gave, that you have your priorities. You have only a certain amount of money and personnel. You mentioned that 20 personnel take care of the entire investigative arm dealing with illegal gaming.

It is still puzzling to me. Section 487(1) of the Criminal Code gives you wide authority to investigate anything and gives easy access to warrants and information.

Mr. Bertucca: I am unfamiliar with that recommendation by the Deputy Ministers of Justice. I heard you reference that earlier today as well. I have, of course, not received any instruction from them to do that. I can tell you that we are investigating Internet gaming sites today, and I believe we will be successful when those investigations come to fruition.

Senator Baker: You are the initial body that investigates. You do not take your orders from Crown prosecutors or the Department of Justice. You are independent; you investigate it and you lay the charges. As the chief superintendent, you are responsible, I imagine, for allocating the resources among these many demands that you have within your jurisdiction. Do you foresee the need for more resources if this bill passes?

Mr. Bertucca: It is possible. If the bill passes, it will depend on how Ontario decides to take advantage of the amendment. How will they provide that opportunity? I believe the bill came from Windsor, and they may put it in resort casinos. They may put it in corner stores like lottery tickets. I have no idea how they will deliver it.

From the legalized component, my staffing requirements will be different depending upon how the government decides to roll out that form of gaming. From the illegal side, this bill has an effect on providing a similar product to what is already provided by organized crime, so I do not know that it will actually have an effect on my staffing. It may diminish it; it may not.

Senator Baker: However, you will have to police it.

Mr. Bertucca: You are correct; I will have to police it.

Senator Baker: Therefore, that means more resources?

Mr. Bertucca: No, not necessarily. We are an innovative group, and we deal with risks. We will have to look at new and innovative ways, and it may not require more people. I just cannot say today.

Senator Baker: Sergeant Sword obviously does a good job in the organized crime section. You might decide to give him an extra five or six personnel.

Senator Frum: I was interested in your testimony about how this will help you monitor loan sharking activities because you will be present when the betting takes place, but my understanding from some of our witnesses is that a great deal of this single sport betting activity will be taking place online and will not be in your sight. How will that help with the loan sharking aspect? People who want do this activity will still try and find credit and ways to get cash to do it, maybe out of your sight.

Mr. Bertucca: When you are providing Internet gaming, especially in relation to poker or something like that, you are worried about collusion and fraud. I am not an expert in data analytics, but the data analytic component of this is phenomenal. I can tell you from the lottery side that the data analytics that the Ontario Lottery and Gaming Corporation has is very effective. It was effective in identifying anomalous behaviours for convenience stores operators, the registrants that we have, in determining what risk level these behaviours were, and therefore, we were able to target individuals in the sense of whether they were up to something.

The data analytics for that exist in the lottery industry and also in Internet gaming. They will have alerts if someone is chip dumping or colluding with another player. That is how we would be part of that. Through our relationship with the OLG and the Alcohol and Gaming Commission, we participate in that as well.

Senator Frum: Does it help law enforcement if much of this betting is happening online? Is that easier for you to monitor?

Mr. Bertucca: I do not yet know if it is easier for us to monitor because we have not instituted Internet gaming in Ontario, but from my involvement to date in the introduction of that in Ontario I can say that it will not be preventive. I was referring to our involvement at the casinos with the casino enforcement unit. With regard to loan sharking, we are able to see on camera relationships between people and to gather information. We will do that differently online. We will gather that information through data analytics.

Senator Frum: You are all here to express your support for the bill. We are trying to enable legislation that will allow people to bet on games that are provided by primarily major league sports, although Senator Baker raised the possibility that now we can bet on the Olympics. That was a new thought.

Senator Baker: Elections.

Senator Frum: I am not very worried about people trying to throw their election, but sporting events.

However, the purveyors of these events have been unequivocal in their position that they do not welcome this activity and, as they did when New Jersey tried to enact it, they will sue to prevent it from happening. How do you balance your support of this knowing that the purveyors of the sports that will be bet upon are profoundly not in support?

Mr. Bertucca: I am not familiar with the NCAA. I am not familiar with their regulatory body or how involved they are in compliance. I know that they must make ethical statements; they must have a code of ethics, and that is all part and parcel of any regulatory body. Therefore, it is difficult for me to say why they would say no. Perhaps they are saying no because there is a possibility a game could be thrown by an official, but that has happened already. If I remember correctly, there was a famous basketball referee who was taking bribes to throw games.

I do not know why they reacted in New Jersey the way they did or why, as I think someone said earlier, the NHL might not want that. I guess it depends on what type of regulatory body you have in place at the provincial level with regard to athletes and/or providing gaming in Ontario. I know that Ontario has a strong regulatory body in the Alcohol and Gaming Commission. I am unfamiliar with the athletics commission. There is one and I would assume they are effective. The horse racing industry also has an effective racing commission.

That is a long answer to say I do not know why.

Mr. Boose: If I could add to that, I have heard the issue raised, and I am sure with time minds will come together and sort this through.

If we look at the situation today, the wagering is occurring in any event. It is happening today. All we are trying to do is shift it from the murky, illegal form to the transparent, legal form. It seems to me that, in the end, rational thinking will move us in that direction.

Where it does exist, you have relationships between the sporting bodies, the regulators, the licensing bodies and those that provide the services, and it is completely open and transparent. I would think that when it is demonstrated that it will be infinitely easier to detect the corruption of events through the analytical tools that we discussed there will be a realization that this is clearly the way to go. Certainly it is the way the rest of the world has been going well in advance of us.

Senator McIntyre: In his memo dated October 18, 2012, and in his oral presentation, Mr. Boose speaks of organized crime and bookmaking. Speaking of bookmaking, he draws a number of factors in his favour, namely that prosecutions are complex and difficult and that the penalty upon conviction is a maximum of two years and generally much less.

When a person is charged for a violation or of a criminal offence, as you know the Crown can proceed either summarily or by indictment. If the Crown chooses to proceed by indictment, it means it is a much more serious offence. Also, by proceeding by indictment, the accused is entitled to a preliminary hearing, the purpose of which is to determine if there is sufficient evidence to send the accused up for trial.

Since the penalty upon conviction is a maximum of two years and less, are we to assume that the Crown normally, in Ontario, proceeds summarily and not by indictment on gambling violation issues?

Mr. Sword: With the indictable offences that are listed in the Criminal Code, they are absolute jurisdiction, so they are indictable. You cannot go to summary at all. They do not have that option. It stays as an indictable offence when you are going through those types of charges.

Senator McIntyre: Do you have any idea how many people were charged in Ontario for gambling violation issues in the last year?

Mr. Sword: My unit does that in Ontario. I do not know of any other police department in Ontario that has laid gambling charges other than the Illegal Gambling Unit of the OPP. One of the reasons for that is our unit is a JFO unit, so we have municipal partners within our team, major police forces that work together as a JFO unit.

As far as charges laid, I cannot give exact totals. We currently have three separate teams across Ontario, stationed in different major centres, that do these gambling investigations. I can tell you that I have finished recently doing a major sporting event investigation in southwestern Ontario. Each team tries to do at least one a year.

Mr. Bertucca: We should be able to provide that information, the number of people charged, for you. Over what period of time?

Senator McIntyre: It would be interesting. Bearing in mind Mr. Boose's memo and his remark, it appears that included in the bookmaking, another factor is that the public views this as a victimless crime or no crime at all, that it is not a police priority and experts in the field are few when it comes to gambling-violation issues.

Senator Baker: You say it is indictable. That is a serious prosecution, which is a point.

Senator McIntyre: How many people have you prosecuted?

Mr. Bertucca: I cannot tell you that today. We can get you that information and submit it to the clerk.

The Deputy Chair: Senator McIntyre, I think the witness also asked over what period of time you would like those data. Five years?

Senator McIntyre: Five years would be sufficient.

The Deputy Chair: The sooner the better, please. Tomorrow morning would be wonderful. Transmit the information to the clerk, if you would.

Mr. Sword: To clarify, is that just to do with sports wagering or all illegal gambling charges?

Senator McIntyre: Gambling violation issues.

The Deputy Chair: Any breakdowns would be good, but data to give us an idea of what actually happens.

Mr. Bertucca: One clarification: You want charges also related to legalized gaming?

Senator McIntyre: For illegal gambling.

Mr. Bertucca: Just illegal gambling. Okay.


Senator Boisvenu: You mentioned the resources that you have at your disposal for investigations. I understood that you have 20 investigators who deal with illegal gaming in Ontario. We know that, with the Internet, illegal gaming knows no borders. Do you have links with other police forces in Canada, such as the Sûreté du Québec or the RCMP, for example, so that you can conduct investigations that can often go on in more than one province?


Mr. Sword: We do work with other police agencies. Currently, I am recognized as an expert in three provinces in Canada and I have worked with the RCMP as an expert in Calgary. I have worked with the Winnipeg Police Service as an expert there. We teach. We are the only agency that actually teaches and lectures on illegal gambling in Canada. We ran a course for all police officers across Canada, and currently we are the only police department that does that.


Senator Boisvenu: I wanted to get you in hot water. I do a lot of work in the province of Quebec to improve resources for missing persons cases, unsolved crimes. Ontario often plays a leading role; the provincial police have a specialty in unsolved murder cases, in criminals violating parole conditions, and so on. You have a whole range of experts, meaning that your performance in solving crime is better than in Quebec.

In this area of illegal gaming, as you understand it, do you think that provinces have enough resources? Are the resources distributed well enough among the provinces to allow a good job to be done on illegal gambling? Or are some provinces ahead of others, like Ontario is ahead of other provinces with fewer resources? I am asking you to make a judgement about your colleagues in other provinces. How would you characterize the resources from province to province in this regard?


Mr. Bertucca: Thank you for the question. For the first part I would like to say that we have a very effective relationship with the Sûreté. We work well with them, and I believe they are an effective police service, as are a number of other police services in Ontario.

With regard to British Columbia, we deal a lot with the RCMP there in relation to gaming activity and also the regulator, which is essentially populated by a number of ex-RCMP officers.

I do not feel comfortable in commenting on the focus of a particular police service as to their allocation of resources because it is a unique situation in every province, every city and every town.

There has been a lot of discussion in the policing organization about the generalist point of view and commodity- based policing, et cetera, and specialization. It has been going on for 20 years plus. The OPP has elected to stay involved in certain areas that other police services have not. A case in point is that we also rely on the experts of other police services to help us. What you are probably seeing in Canada is a transition in policing generally to rely on other services as well. Quite frankly, policing is expensive, and we cannot all do it the same way. We rely on other services to help us in certain areas.

The Deputy Chair: I hate to interrupt.


Senator Boisvenu, I think you have your answer.

Senator Boisvenu: I would just like to finish by congratulating the police force on its performance, especially the Ontario police. I am amazed.


Senator White: I had asked the question earlier. I know that you were sitting in the back, so I will ask it of you as well. In relation to the legislation in the United States, the Unlawful Internet Gambling Enforcement Act, the witness earlier stated that it was ineffective and may have even gone beyond that. However, my discussions with people in the United States point to the amount of money that they have seized. On one day in July 2012, for example, $731 million dollars were seized as a result of illegal gambling online.

Do you have an opinion as to whether or not we, in Canada, should be considering legislation like that to combat what we see now as a problem with unlawful — or unlawful in Canada — Internet gambling?

Mr. Bertucca: I am not totally familiar with the UIGEA, which I think is the acronym that they use for that. It has to do with the transferring of money between banks, which makes it unlawful. I believe it has to do with the banks regulating themselves to know what the money transfers are. In Canada we have the FINTRAC system that you are very familiar with. Without consulting FINTRAC or even the banking industry, I would not want to hazard how we would deal with it the way the U.S. dealt with it. As well, their federal law system is a bit different than ours.

That dollar figure was, I believe, the quote of monies for when they brought down the entire site —

Senator White: Three sites, actually.

Mr. Bertucca: Three sites, yes. One was Poker Stars, I believe.

Senator White: Absolute Poker was one of them.

Mr. Bertucca: There is no doubt that Canada should be looking at a way of dealing with these offshore sites. One of them is through direct enforcement, which we will try to do. There are other technologies — ISP blocking, et cetera — and advertisement regulations to prevent those companies from operating. It is my opinion, from what I read, that if you do not do that through a multi-pronged approach, it will not be effective. You have to take all of that into consideration.

Senator White: Thank you very much. Thank you to all three of you for being here today.

The Deputy Chair: Thank you. It is extremely helpful to us to hear from people who are actually experts in this field, and we are very grateful to you all for being with us.

(The committee adjourned.)

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