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
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
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
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
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
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
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
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
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
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
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
Senator Runciman: With all due respect, I thought your emphasis
was on lack of qualifications rather than their ability to learn the
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
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
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:
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
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
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 Baker: Of course.
Do we have any evidence, Madam Chair, that all provinces have agreed to
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
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
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
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
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 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
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
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
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
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.
Senator Baker: First, I would like to congratulate both witnesses
for their very excellent presentations, and Mr. Chong for his presentation
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
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
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
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
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
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
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
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
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
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
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
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
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
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
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
The Deputy Chair: The question is: "Can you persuade me
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
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
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
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
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
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
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
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
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
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
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
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
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
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
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
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
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
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
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
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
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
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
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.