Proceedings of the Standing Senate Committee on
Legal and Constitutional Affairs

Issue 23 - Evidence for October 4, 2012


OTTAWA, Thursday, October 4, 2012

The Standing Senate Committee on Legal and Constitutional Affairs, to which was referred Bill C-290, An Act to amend the Criminal Code (sports betting), met this day at 10:30 a.m. to give consideration to the bill.

Senator Bob Runciman (Chair) in the chair.

[English]

The Chair: Good morning and welcome, colleagues, invited guests and members of the general public who are viewing today's proceedings of the Standing Senate Committee on Legal and Constitutional Affairs on the CPAC television network.

I will not make a habit of this at each meeting, but since a number of new members have joined the committee I will ask you to introduce yourselves and state the region that you represent.

[Translation]

Senator Joyal: I am Senator Joyal and I represent the division of Kennebec in the Senate of Canada.

[English]

Senator Baker: I am George Baker, and I represent Newfoundland and Labrador.

[Translation]

Senator Chaput: I am Senator Maria Chaput and I represent Manitoba.

[English]

Senator Ngo: I am Senator Thanh Hai Ngo, and I represent Ontario.

Senator White: I am Vern White from Ontario.

[Translation]

Senator Boisvenu: Pierre-Hugues Boisvenu, senator for the district of La Salle, Quebec.

Senator Dagenais: Jean-Guy Dagenais, senator from Quebec, the district of Victoria.

[English]

Senator McIntyre: I am Paul McIntyre from New Brunswick.

The Chair: Thank you.

I would like to introduce two new staffers who are joining us as well; Lyne Casavant, an analyst with the Library of Parliament, and Christine Morris, also an analyst with the Library of Parliament.

Before we begin the formal part of the meeting, I will ask Senator Boisvenu to come forward. I am the sponsor of Bill C-290, and I will not chair these proceedings. Our deputy chair, Senator Fraser, is out of the country on Senate business and unable to attend today, so Senator Boisvenu has graciously agreed to assume the chair for today's hearing.

Senator Pierre-Hugues Boisvenu (Acting Chair) in the chair.

The Acting Chair: Thank you, Chair. Hello everyone. As this is my first experience as chair of this committee, I hope you will go easy on me.

[Translation]

The Acting Chair: Thank you for your confidence, Senator Runciman.

Today we begin our consideration of Bill C-290, An Act to amend the Criminal Code (sports betting). This bill was first introduced in the House of Commons by Mr. Joe Comartin, MP for Windsor-Tecumseh, on September 28, 2011.

Bill C-290 would make it legal to accept bets on a single sporting event. This would allow legal operators of lottery schemes, such as the government of a province, to enter a market currently dominated by illegal bookmakers and by foreign jurisdictions where it is permitted.

It has been estimated that the economic value of single event sports wagering in Canada is in excess of $10 billion per year, yet only $450 million is wagered through provincial sports lotteries. If Bill C-290 is adopted, the provinces will be able to amend their provincial lotteries legislation to allow betting on a single sporting event, should they wish to do so.

Bill C-290 was adopted as amended in the House and subsequently sent to the Senate. The Senate referred the bill to the Committee on Legal and Constitutional Affairs on May 16, 2012, for further examination. These hearings are open to the public and also available via webcast on the www.parl.gc.ca website. You can find more information on the schedule of witnesses on the website under "Senate Committees".

I would like to welcome the members of our first panel. Due to his recent appointment as Deputy Speaker of the House of Commons, Mr. Comartin is unavailable to appear before the committee. Therefore, our first witness today is Mr. Brian Masse, Member of Parliament for Windsor West in the province of Ontario. Mr. Masse has been the member for this riding since 2002.

Welcome, Mr. Masse. The floor is yours.

[English]

Brian Masse, Member of Parliament for Windsor West: Thank you, Mr. Chair, and congratulations on your appointment.

I thank the Senate committee for looking at this bill and its impacts rather quickly. I have some remarks on the bill and the impact that it may have on all of Canada.

I was first elected as a city councillor in 1997 and was elected to the House of Commons in 2002. I have been working on tourism, in particular as it affects my region. I will get into more detail on that later. This bill has a big impact on tourism, as well as other very important impacts.

Bill C-290, an Act to amend the Criminal Code (sports betting), deletes paragraph 207(4)(b) of the Criminal Code, which defines lottery schemes, and explicitly prohibits provinces from allowing wagering on any race or fight or on a single sports event or athletic contest. It is important to know that we are just deleting a section of the Criminal Code, which is why the bill is rather simple. That deletion will allow the provinces to decide how they want to go about sports wagering and betting. The bill is designed to be flexible so that each province can determine how, when and in what types of ways they want sports wagering to take place on single events.

The deletion from the Criminal Code will modernize the code. In 1985 the federal government devolved jurisdiction over gaming to the provinces to allow them to determine the types, amounts and location of gaming activities available in their jurisdictions. As a result, the provinces have different types of systems. A key point about this bill that needs to be reinforced is that it would allow each province to make its own determination on how it would introduce this gaming change in order that they can deal with social issues related to gaming, as well as allowing them to progress at the rate they choose.

Ontario and British Columbia, for example, have indicated that they would like to move quickly on this if they can. Other provinces will take time to determine how they would want to carry out implementation.

Currently sports betting takes place. It is called parlay. For example, in Ontario you have PRO-LINE. On PRO- LINE you have to select at least three games, although you can select many more, and bet on them. I personally am terrible at that game, so I no longer play it. Every time I did, I just made a contribution to our health care system. My father-in-law plays parlay.

The provinces have responded to the fact that they cannot do single betting by creating a system that allows the actual activity. The odds are difficult for the person betting. We want to change that, for a number of different reasons. I will outline a few of them right now.

There is economic benefit. There is the issue of organized crime. There is change related to the Internet and competition that really warrants this to take place, in my opinion. I think that others will hopefully find that that will benefit the economy. That is where I am going to start.

There are approximately 135,000 full-time jobs that generate around $9 billion of gaming revenue, but there have been challenges out there. The dollar now has moved up and is above par. When I started back on city council — and I will get into the Windsor situation a little later — the dollar was at 60 cents to the American dollar at that time. Then we have smoking bans that took place. Over in Michigan they permit smoking in their casinos; that provides a competitive edge to them. I think it was the right decision to have the smoking bans in Ontario, but it creates a competition issue that we have to deal with.

We have increased U.S. competition. I look in my region, and Detroit has opened up three casinos. You also have Aboriginal casinos that are very close in the area. In fact, recently Ohio has opened up casinos as well. Where we had a real competitive edge in the past, and we still could hang on to those destination people coming from Ohio, that has diminished a bit. We are very fortunate that we have had Caesars come in and take the brand of our actual casino because they have a great entertainment venue. When an artist signs a contract with Caesars, he or she is required to play at all their venues, so all kinds of different noteworthy artists will come to the area.

This has been a challenge with the U.S. consumer because we have border thickening and delays. We have had the introduction of the Western Hemisphere Travel Initiative, where Americans are required to get passports. This is an issue on which I have been very active with the Canada-U.S. Inter-Parliamentary Group, which is a joint Senate and House of Commons committee. We have been lobbying in the U.S. for years trying to get better awareness. The fact is that Americans are less likely to get passports than Canadians, so that creates an automatic barrier right there because you need a passport to get back into the United States. Many of their citizens see that not only as an economic issue but also as a privacy issue, so that creates some of the problems. The gaming industry has gone so far as to actually help promote and help Americans get passports. Resources have been put into that. In Canada, the government has done a lot of work on this as well.

The reality is that if we get this product, the single-source betting, which is only happening in Vegas right now, it would allow us in Ontario and other jurisdictions where you would get the cross-border to offer something unique. It is important to note that a study indicated that Windsor would have an increase of 250 jobs immediately from this. We expect that would take place.

The city has been trying to make a lot of changes over the years because we have been heavily reliant upon the auto industry. When we were doing our work in Windsor, there was always an attempt to transition into American tourism. When you think about it, we are three hours away from Cleveland. We are four and a half hours away from Chicago. We are four hours from Toronto.

I can get across into Detroit rather quickly, even with the border delays the way they have been. There have been some improvements recently. Say, for example, I am a Detroit Lions season ticket holder. I can get out of my door and into my seat in basically half an hour.

One of the beauties of the border is the trade back and forth. Having this unique product outside of Vegas would give us marketing competition.

You often see on Detroit highways advertisements from Casino Windsor. There is fierce competition taking place. You can look across and see some of Greektown's casinos right on the waterway, just like you can see ours. There have been attempts to work together as a bi-national region. I am pushing for a bike lane on the new border crossing that will take place in Windsor. Just two weeks ago there were 5,000 cyclists in Detroit who wanted to come over to Canada but could not. It is a good example of the fact that if we open that we would have an ecotourism opportunity that connects nicely into our situation.

The issue over organized crime is very important to recognize, because this type of gaming is taking place and is active. The 1999 U.S. National Gambling Impact Study Commission estimates that the scope of illegal sports betting in the United States ranges anywhere from $80 billion to $380 billion annually. Based on a review of the annual reports of Criminal Intelligence Service Canada — CISC — bookmaking exists in every region of Canada. According to the reports, gaming profits provide revenue to organized crime groups to fund their illegal and legal activities. While the size of the illegal bookmaking market in Canada is unknown, it is thought to be significant. CISC indicates the range of illegal sports betting in the U.S. is equated to the U.S. national gaming numbers, and from the impact study, if it is accurate, it would not be unreasonable to assume that the range in Canada is somewhere between $10 billion and $40 billion.

That is important. I have been dealing with border issues for many years. I can tell you that organized crime is a component of border trade and a series of things, but we know that this is actually happening on this particular issue.

On the issue of change, I want to note that Internet gaming is growing. In Canada it is also growing. We are doing a lot of Internet gaming. It is an illegal form of gaming in Canada when it is not regulated, so we have regulation for that, but other countries around the world have non-regulated Internet gaming. That is going to be an issue to deal with because, once again, if that money is coming from Canada, it can be actually funnelled through a legal way of doing this activity, and we will benefit from having proceeds go into social programs to deal with addiction in gaming. We will have proceeds that will go into other public programs and we will take from organized crime a revenue stream that they currently rely on.

I know that Senator Runciman is part of a government that actually helps the Windsor area diversify. I was on city council, and to provide some perspective of why this is so important for us, the original casino in Ontario took place in an art gallery that we were long seeking to revamp. Long story short, with the deal with the province and thanks to former Mayor Hurst, who deserves probably more credit than he often gets, he set up a complicated land swap and property acquisition that actually gave Windsor our historic waterfront. For years we had fought to keep the waterfront free of buildings and have public and pedestrian access and turn it into a tourist attraction. With the work of the province, we were able to actually acquire the last bit of land. Now Detroit has done the same thing, using Windsor as a model. We saw the vision of Roy Battagello and basically decades of work come to fruition. Now we have this attraction and the casino is on the other side of the road on our waterfront overlooking Detroit. This has been very important for our region. I am hoping that with this change it will allow greater economic opportunity for us in the region, and I think it will be important for other parts of Canada.

Mr. Chair, I have focused a lot on Windsor, but the practical elements I am hoping to demonstrate indicate that there has been a lot of preparatory work by the community and by other levels of government, and investment. This tool would be in addition to those elements. The challenge we faced in the auto industry, for example, where I witnessed so many people lose their jobs over the years, through no fault of their own, requires us to adapt and change. Unfortunately, some of that got undermined with 9/11 with regard to the complications it created on border communities, and also a high dollar that affects our ability to compete and the type of structures that we have.

Through no fault of our own, we are missing this opportunity, and hopefully this new product that would be available will get regulated, will help improve the public, and will also be an economic improvement for any area that really needs it.

Thank you very much for the time to present here today.

The Acting Chair: Thank you, Mr. Masse.

Senator Baker: We thank the witness for his very thorough presentation. The bill was introduced by MP Comartin, as I understand it, and you are the seconder of the bill.

Mr. Masse: Yes.

Senator Baker: You are both from the New Democratic Party. Was this part of the party platform or was this just an individual private member's bill that was sparked between yourself and Mr. Comartin?

Mr. Masse: I think it was part of a party platform, but it has been his work for many years. We see this as a non- partisan issue. I have worked on the Hill in a collegial way for many years. As a New Democrat here, I have brought forward many issues when it used to be a Liberal government, and I have had motions and bills advanced here. A good example is my right to repair bill, which instead of getting passed as legislation, it became a voluntary agreement with the cooperation of the Conservative Party and Minister Tony Clement at the time.

This really comes from seeing the need of the region. Mr. Comartin and I are very good friends, and we worked well together in Windsor, so it is my honour to take up his work. He has been a mentor of mine, and I appreciate the way that he has been able to do this within a very cooperative manner. I know that he would want to be here today. He gets a promotion, he gets a raise, and I get his work, so if I was a betting person, I would really bet on him, not me. I think he has a good reputation on the Hill, senator, and I am trying to advance the rest of his work.

Senator Baker: The effect of this legislation would be to make legal in Canada what is only legal today in the U.S. State of Nevada, which is single-event sport betting. It is a huge step in the gambling scene in Canada to institute an enactment like this that would make such a dramatic change. Have you received much criticism? I mean, are you not afraid that what you are encouraging is more gambling and more poverty?

Mr. Masse: That is a good question, senator. In my background, I used to work on behalf of persons with disabilities. I was an employment specialist for the community living in Mississauga and then the Association of Persons with Disabilities. Then I worked for youth at risk at the multicultural council, helping people either get back to school or go back to work. You worry about the vulnerability all the time, and you also see people that are making decisions with limited resources, and sometimes you question that. At the end of the day, it is their decision.

The reality with this situation is that it is happening anyway, and those people making those decisions unregulated are also very vulnerable. They are vulnerable to other people. The benefits of gaming addiction supports — which I do not think there are enough of. That is my personal opinion. I do not think there is enough of that, and I have seen it in my community. In Windsor, we have shifted from a dominant U.S. market where we had a stream of people coming into it. Now some of it is much more domestic, and they are very active. There is the casino program with points and free tickets for things. We have to deal with a series of issues. However, I see this as an improvement because there could be more resources provided to those services for predators that are doing this under the table and illegally.

To conclude on your point, it would be very unique and it would actually help bring people from the United States to Canada, in my opinion, because it will be a legal way of doing something on a new product they do not have unless they go to Las Vegas.

Senator Baker: You wish to make legal what is presently illegal. Do you not think that more people will participate in this activity when it becomes legal?

Mr. Masse: I do not think so because they are doing it anyway. The provinces are kind of circumventing the law in the sense that they are doing the parlay. You can bet on sporting events right now with the three games. Sports betting and game betting are taking place anyway, at least in the Province of Ontario.

Senator Baker: You cannot bet on single games.

Mr. Masse: You are right.

Senator Runciman: Mr. Masse, welcome and thank you for taking this on on behalf of your colleague and friend. While we have you here, maybe we should ask you for the NDP's position on Senate reform. Just kidding!

Mr. Masse: No, go ahead and pry me. Absolutely! I would not blame you.

Senator Runciman: In any event, I do want to talk about the new references in your submission about the competitive edge. I know the Minister of Finance in Ontario has also stressed this competitive edge issue for the border casinos. I see the reference to the Canadian Gaming Association and the potential impacts this could have. I am just wondering how you see this functioning, and I am trying to align it with the argument that this is going to reduce, if not eliminate, the monies that are already flowing into organized crime avenues.

Are you suggesting that single-event betting, as you understand the approach initially anyway, is only going to be available through Windsor or Niagara Falls casinos? Is that the approach you see here?

Mr. Masse: That is one of the options the province can consider, to have it regulated to their casinos. I think that was one of Mr. Comartin's intents, to allow the provinces to really have the flexibility to continue to decide how they want to roll the product out, how they want to control the product, how they want to be able to see and measure whether it would have an effect on organized crime or if it is going to have an effect on gaming in terms of the volume. I think that is really the intent.

Personally, selfishly, I would hope that Windsor would be the number one place to start for this because I think there is a great market for it and there is an attraction. When you think about what we have across our two-mile waterway, there are the Detroit Lions, the Detroit Pistons and the Red Wings. Once again, we are close to Cleveland. Cincinnati is four hours away and Chicago is four-and-a-half hours away. When you think about what goes on in Las Vegas, people during Super Bowl time buy tickets from Canada, go down to Las Vegas and spend a weekend down there for the Super Bowl so they can bet on that game alone, and then they come back to Canada afterwards. We think we can hopefully capture some of that market.

I think the province needs to do some good homework on how they can measure the introduction of this product into the economy, as well as the social and the economic impacts so that as they roll it out, if they decide to roll it out in a different way, they can measure it and deal with the consequence.

Senator Runciman: We will hear testimony on this, but I assume that most of this illegal betting, if you will, occurs through the Internet. Is that right?

Mr. Masse: Yes.

Senator Runciman: How is this going to offset that? You are suggesting that someone from Michigan, or wherever, is going to be more inclined to go through border hassles to get to Windsor or Niagara Falls to place a bet. However, if one can do it from their computer in the den or basement, why would this be a more attractive destination for a person to place that wager?

Mr. Masse: That is an excellent question. We have a very sophisticated marketing casino in terms of Caesars. It is a great brand. It is the only Caesars outside of the United States, if I am correct. They have been fighting for market share, and they have had a challenge because since they were originally set up, we have had Greektown and Motor City come in, and we have a third one right across the border. This will provide a greater incentive. The sports gaming industry — like I say, I used to play PRO-LINE, but I am no good at it, so I have given up.

People do like to actually go to the place and bet on the game. I have seen this in Las Vegas with the sophisticated elements, where they have all these games there, not just horse racing, but football and all of that. People might bet on multiple games, but single, one time I will bet on this baseball game or I will bet on that hockey game. They go there to watch those games, and part of the excitement is to then cash out your winnings afterwards. I see that as an opportunity to improve and relocate that.

They will have to decide on how they are going to deal with the Internet gaming and the effect, but I think the marketers of our tourism industry will be able to latch on to this in a very sophisticated way to appeal to Americans.

Senator Runciman: I was encouraged to sponsor this bill primarily because of the suggested impacts on organized crime. I understand the enthusiasm of the Ontario government; their gaming strategies are seat of the pants. They are decimating the horse racing industry. When you look at some of the conclusions they are talking about here, 150 jobs and a million visitors, I am just wondering, the government recently closed the Fort Erie Race Track and the Windsor racetrack. I believe the thinking there was that this was going to drive the slot people into the casinos. However, my feedback is that is not happening, so it raises questions about the assumptions being made here as well.

In an initial 150 jobs in these tracks, they have cost close to 400 jobs by closing them and pulling the slots out. I am wondering about some of these assumptions. In terms of the impact on organized crime, which has been a driver for me on this, is there anything more you can elaborate on with respect to how this will diminish the organized crime participation in this?

Mr. Masse: That is an excellent question. By the way, I agree with your assessment on the race industry. It has been a horrible decision and I do not think they are comparable products. At any rate, we will leave it at that.

This will allow the provinces to actually enforce the law — I know that you have a history of pushing for special investigations — and allow them to increase penalties on a series of things. I think that if we can piece off a little bit, it will help.

I have done a lot of work and I have transitioned some of my work. I have been industry critic here for many years, then transportation critic, and I still have Canada-U.S. border relations. I have been focusing now a little more on the contraband, the illegal products that are moving back and forth between Canada and the United States. Some of that involves organized crime. That is where I am focusing much of my work this fall. I have spent time touring courts and other facilities. It is a significant problem. I see this as a significant benefit for organized crime.

If the bill is successful and the product is introduced, we should create an incentive or a demand that we start to measure how it impacts organized crime and set out some benchmarks. That is what I would hope we do with this. It is an opportunity. When we have a shift of the public policy and we know the proceeds are going into organized crime, let us see whether we actually change something and whether it actually gets that objective. How does it get that objective, and by how much? That will help other provinces determine whether they want to introduce this. They can create best practices because each province will have its own decision to make at the end of the day.

[Translation]

Senator Chaput: I have a very quick question. How have the provinces and territories reacted to this bill? Have there been any discussions with the provinces and territories?

[English]

Mr. Masse: We have all provinces supporting. Some are more interested than others, to be honest. Ontario and British Columbia, in particular, are the most interested and advanced on this issue. We have other municipalities that are in favour of this as well.

Again, this allows the provinces to make their choice. One of the important elements of this bill is that we are not forcing them to introduce this; it is only if they want to. The provinces with the resources at that time to deal with the consequences will be the ones responsible to do that.

[Translation]

Senator Chaput: Is there any conflict between your bill and existing provincial legislation?

[English]

Mr. Masse: Not that I am aware of. I am told we have the support of all provinces to proceed. Again, some are a little more interested than others.

[Translation]

The Acting Chair: Thank you for being so concise, Senator Chaput.

[English]

Senator White: Thank you, Mr. Masse, for being here today. I will make a point first and then I will get to a question. I apologize.

On the organized crime piece, you do not talk about the fact that organized crime, single-sport betting, is predominantly in place because loan sharks loan the money and they also give different values when it comes to the actual share. That is something you should talk about. I am not a fan of doing research after we implement something. I think it is a mistake on our part.

More important, we have 36,000 gambling venues in this country already. In fact, Canada, according to The Economist, is the fourth largest gambling nation per person in the world, and the United States is thirteenth.

Another challenge is that we talk about gambling addiction. The work done by the University of Calgary talks about mental health substance abuse disorders, six times increased risk of drug abuse. I am not sure we need to make it easier to gamble in this country, to be honest. I do not care what the sport is or how we bet.

I have not heard one word about the social value of this change and how it will be good for Canadians. One hundred and fifty jobs just does not do it for me.

Mr. Masse: That is a fair question. What I would appeal to is the fact that this activity is taking place. The provinces are also doing it in a hybrid form through the parlay. We are not getting any of the benefits. For every gaming transaction, there is money that goes to addiction programs and awareness. Those resources are being redirected into the black market or the gray market or the crime field, as opposed to responsible addiction programs that affect people.

I have been active with my local community for that too. When it was introduced into my area, I had serious reservations about casino gaming. I think that is a valid discussion, and I am glad that you are aware of it. As I noted, I worked on behalf of persons with disabilities. I saw some people, who had very little income, making economic decisions that I would not make. However, it is still their choice as an individual at the end of the day. I would rather see some of those choices done in a legal way for those people who are still going to do this behaviour, because it will be far more protected than the illegal sports betting that is taking place.

Senator White: Because organized crime is involved in it and we can make money from it, with all due respect, does not mean we should get involved in it. From my perspective, having been a police officer for 31 years, it will lead us to many ills that are not helpful to Canadians.

Mr. Masse, with all due respect, I understand the issues in your community when it comes to employment, but I do not think this is the nest egg that you think it is.

Mr. Masse: We do not know. It is a fair point because it is a new venue. Again, I would point out that the provinces are doing it indirectly by having the parlay, and the activity is taking place.

Your point and your position are fair. We do not have all the answers. However, if the status quo continues, I think it is a worse situation. I think we can benefit to some degree from this. I would love to see more money spent on the social aspect of gaming and the addiction issues that take place, and I would be pleased to work in any direction to encourage that, and the bill to effectively take that place. I am glad that you are raising those concerns.

Senator Joyal: I have two questions. Has the change you propose been supported by the Association of Chiefs of Police, or by the police forces generally in Canada, to fight organized crime as being a necessary change to the Criminal Code to make it easier to prevent the black market that we see and those activities?

Mr. Masse: To be honest, I do not know whether the Association of Chiefs of Police has supported the bill. I do know that the Attorneys General of British Columbia and Ontario support the bill. Having those lawmakers' support is crucial, because they work directly with the police associations and the organizations on a regular basis.

I do not know. I am sorry I cannot answer that question, senator. It is a good question. However, I am glad that, once again, at least the Attorneys General are in favour of this, because they are aware of the consequences.

Senator Joyal: I had the same kind of preoccupation as that expressed by Senator Runciman.

On the economic aspect, you painted the most optimistic scenario of what you expect as fallout. Anyone, of course, can have views on what we should do to revamp the economy of a depressed area, and I am sympathetic to that. On the other hand, there is no such thing as the perfect measure; it has some negative impact. I think we have to be concerned about the negative impact and, in that context, the need to either support, as you said, the addiction of those who fall into the trap of gambling or the organized crime that tries to infiltrate those sections of activity, and so on.

It seems to me that on such a measure, where we know there are two aspects that are essential to well understand and circumscribe, it is important for us to be convinced that we take the specific measures needed to be sure that we will not in one way create an additional problem to the one we try to solve on the economic grounds. That is why I think it is important, when such bills are introduced in Parliament, by whomever is the sponsor, that we take into consideration, especially in relation to organized crime, anything we might do that would, in fact, facilitate their activities.

It would be just as convincing for us if you would come forward and explain how police forces will be helped by these measures — in their fight and in the fight of society against organized crime — for us to immediately support the bill. I think that is an important element in your approach.

Was it raised in the House of Commons when you studied that bill?

Mr. Masse: It has been talked about, but the provinces can now bring in their own enforcement mechanisms for this, giving them more capabilities. It is not a top down approach from the federal government. It allows the provinces to determine the penalties and they will also get proceeds if they flush out or eliminate some of the organized crime.

Revenue streams will hopefully increase. The economic benefit will be hard to measure exactly; it is a best guess. There have been case studies, but I did not want to come here and say this study and that study. It is another tool.

Right now, I can go down to the convenience store on Sparks Street, pick three games and hedge my bets on those. The only difference is if I did it on PRO-LINE, I would pick one team and one game.

I think it offers another product for people to choose. I do not know if it will increase the amount of gaming because it is happening right now in Ontario. It offers a new product that is different than the United States. We can market something unique to them. It will no longer be necessary for people to go to Vegas just to do this. When we have all these different signature sporting events, people go to Vegas, spend their time there, watch the game and do that as an activity. This opens up an opportunity for us to be a destination gaming market place again. However, you are right; it is just another tool.

I think we need to measure the consequences but again, as we move any amount of money from illegal sports betting into legal sport betting, it will reduce the tools for organized crime to have a revenue resource they use for their systems.

[Translation]

The Acting Chair: Senator Joyal, we have two other senators, Senator Dagenais and Senator Cowan, who would also like some floor time. Senator Cowan has a quick question, and we only have a few minutes left.

Senator Dagenais: Thank you, Mr. Chair. Thank you for your presentation, Mr. Masse. I have two short questions.

Some people say that gaming can drive some people to poverty. You are saying that this bill could benefit your region. Could you go over the financial pros versus the social cons?

[English]

Mr. Masse: The pros relate to us having this new product that we can now control versus leaving it out there on its own. It will happen. It is happening. People are doing it. It creates a market that where is no consequences to one's activities related to doing it — whether it is fair or unfair in terms of gaming — other than law enforcement finding out and cracking down.

It creates a problem because you have a citizen that has done illegal gaming, which is involved with another person; that is illegal activity. It really stays below the surface in many ways. Hopefully this will emerge part of the market. If it is done attractively — and my pressure will be on the province to look at the addiction gaming aspect of it — it will that have those resources to put in responsible programs.

[Translation]

Senator Dagenais: Are we supposed to think that this is better for the community because it is operated by the government?

[English]

Mr. Masse: Yes. Government to the rescue is a fair point. There have been some issues with gaming and provincial gaming bodies. At the end of the day, at least there is political and professional responsibility and legal consequences for those organized entities and how they conduct themselves and their businesses. Whether it be the OLG or the British Columbia lottery system, there will be people who will have to account for the practices that take place. As it currently stands in the element of the crime syndicate, until they are caught and brought to the justice system, they are not accountable.

Senator Cowan: We are being asked to enable the provinces to do this, if they choose to take this on. Let us suppose that your Province of Ontario, as you indicate, is enthusiastic about this and my Province of Nova Scotia says no. The government in its wisdom says that for the protection of Nova Scotians, we do not want this to happen. What is to prevent me, as a Nova Scotian, from engaging betting extra-provincially on this kind of thing? How would that work?

Mr. Masse: That is a good question. As a Canadian citizen, you are subject to the laws of the province that you are in as well as the state laws as well.

They will be able to bet in the Province of Ontario, as I understand the way it would work. That is a reality. However, at the same time, I think those people are probably doing that anyway. They can do that in the black market. The black market happens everywhere in Canada, not just Ontario. It happens in every single province and territory. People are making sports bets in this way; it is just a reality. They are doing it from the Internet, their basement, on the street corner, in pools, in lottery systems and at work. It is all happening.

It brings it to the surface legally, which will be an enhancement. However, if we open this in Ontario, maybe someone will come in from Nova Scotia to do it legally in Ontario but they are probably doing it illegally in Nova Scotia in this case.

[Translation]

The Acting Chair: I have a question that will bring us to the end of this panel. Right at the outset, Senator Baker asked whether this bill was part of the NDP platform. We know that the NDP has a close relationship with community groups. Have those groups expressed any reservations or positions that do not support your party in terms of making this type of gaming or betting legal?

[English]

Mr. Masse: Thank you for the opportunity to present here. Yes, we have support. As an example, the Canadian Auto Workers Union makes massive, multi-million dollar donations to the United Way every single year in my riding and across the country. Many of the programs they support are related to addiction gaming and others are anti-poverty. There is a series of things that the United Way and other agencies do across our great country.

The CAW is supportive of this bill as well. They make this massive financial investment to those organizations.

I am glad it has been raised because I do not think we talk about addictions enough in this place. I have been here for 10 years and it rarely gets the attention I think it deserves, but at the same time I do not think this bill will create greater addiction. It brings an opportunity get for economic activity to take place in a legal way and hopefully, as a consequence, it undermines organized crime. I have started more work on the border, but now I focus on some of the contraband stuff taking place and it is amazing. A lot of that is also organized crime, as I am quickly discovering.

The Acting Chair: Thank you Mr. Masse for your presentation and the quality of your answers.

[Translation]

Thank you for being here.

[English]

Thank you for your testimony.

[Translation]

You have done a very good job of replacing Mr. Comartin. Thank you for your testimony.

Thank you, Senators, for making such good use of the time in this first round. We are now going to welcome Ms. Jane Holmes, Vice President of Corporate Affairs, Woodbine Entertainment Group.

Woodbine Entertainment Group is a not-for-profit corporation that operates the largest horse racing operation in Canada. The company owns and operates the Woodbine and Mohawk Racetracks with over 2,800 slot machines. Those machines are operated by the Ontario Lottery and Gaming Corporation, Champions Off-Tracking Wagering, HorsePlayer Interactive and HPItv. Also joining us is Mr. Mark Hayes, Managing Director of Heydary Hayes.

Ms. Holmes, since you have an opening statement, I will give you the floor.

[English]

Jane Holmes, Vice President, Corporate Affairs, Woodbine Entertainment Group: Thank you very much chair and senators. I appreciate the opportunity to speak to you today. As identified, Woodbine Entertainment Group is the largest racing operator in Canada and actually recognized as one of the most innovative in North America.

WEG is the economic engine for the Canadian horse racing industry, and we provide the infrastructure and distribution channels for wagering on horse racing throughout Canada. Of the $1.4 billion wagered nationally on horse racing last year, 66 per cent of that was wagered through the WEG network and its account wagering platforms.

To give an illustrative example of the scope of Woodbine, 90 per cent of the top quality Canadian thoroughbred stakes races and 13 per cent of the top quality North American standardbred stakes races were hosted at Woodbine's race tracks this year.

We are here to talk about this bill because horse racing is another form of legalized gambling in Canada and it has a huge economic impact on the Canadian industry and the Canadian economy. The contribution of horse racing in terms of jobs is more than 130,000 jobs, with individuals employed in our sector through the breeding, training and actual racing of horses and the ancillary activities related to ferriers, veterinarians, suppliers and tack shops. Horse racing has a far-ranging effect, including other equine industries as well, by providing the infrastructure for those other equestrian industries.

Over $3.8 billion is spent in wages and salaries; $3.1 billion in annual expenditures; $4.8 billion dollars in capital investments, and tens of millions of dollars to all levels of government: federal, municipal and provincial. That leads to the horse racing and breeding industries contributing $5.7 billion to the Canadian GDP.

Horse racing is a labour intensive, hybrid sport and gaming entertainment business. Unlike other sports, horse racing involves the production and care of the equine athlete, which takes place in Canada's agricultural sector. In Ontario alone, the horse racing and breeding industry is the second largest agricultural sector in the province. This creates a value chain among the diverse group of businesses through the breeding of the horses, the care and training, and the presentation of the actual live race.

Traditionally, parimutuel wagering was a monopoly in gambling in Canada, and our sole product line, therefore our revenue source has been based on that parimutuel wagering.

The horse racing industry is facing challenges due to the expansion of provincial gaming and the illegal gaming competition, which you heard from the previous presenter. Provincial lotteries have contributed to the diversification of our revenue base. However, a number of provinces are now leaving these partnerships that we have had over the years.

As a result, the Ontario horse racing industry is in a state of crisis. We only have to look at Quebec to see what happened there when the province reneged on some deals with respect to their provincial wagering at racetracks. Quebec was once the second largest parimutuel province in Canada and it is now devastated. There has been an 80 per cent loss in jobs and there has been a loss of horses and mating by up to 95 per cent.

If you look at the competitive gaming marketplace, horse racing represents probably less than 5 per cent of that marketplace now, with a majority of the legal marketplace being operated by the provincial lotteries. On top of that, there is a massive illegal gaming market. There is a land-based market, with bookmakers, poker rooms and sports betting, but the explosion of Internet gaming has made a huge impact on our industry, with tens of billions in betting taking place. We know there are 130 sites taking bets on our product and we know that at Woodbine it is probably about $200 million annually off our gross revenue.

I will now turn it over to my associate to speak about the legal activities.

Mark Hayes, Managing Director, Heydary Hayes: Mr. Masse talked about the devolution of gambling activities from the federal government to the provincial government. This has been going on for some time.

I want to correct one thing that Mr. Masse said. He said that there is no legal gambling on single-event sporting events in Canada and that is just not the case. We have had single-event horse race gaming for over 100 years and that is the industry which has been handling single-event sporting gaming for a long time and knows it very well. That is something I will deal with momentarily.

The way the Criminal Code operates, as you know, is with a blanket ban on gaming activities and then exemptions, which have expanded over the years. The parimutuel horse racing exemption has been around since the 1920s I believe, but what has happened in more recent years is exemptions under the rubric of lottery schemes have been devolved to the provinces. The categories of lottery schemes have increased over the years.

This proposal before you is essentially the last major devolution of gambling to the provinces, that is, single event sporting events, other than parimutuel horse racing, to be devolved down to the provinces.

The question we have before you is should it be done by the provinces alone or should it be in partnership with the horse racing industry? We believe that there are some very significant reasons why it would be important to ask the provinces to partner with the horse racing industry in terms of this type of betting.

Certainly, the horse racing industry already has sports betting competence. They have been doing it for a long time. Not only have they been doing parimutuel horse racing betting, but they have been doing it in an online environment. There are betting theatres, there is telephone betting and there is Internet betting already going on and already regulated by the horse racing industry, and it works extremely well.

The horse racing fans and sports betting fans are from the same group of customer demographic. So it gives opportunities for the horse racing industry to be able to cross-promote the sports betting with other types of betting on sporting activities.

Lastly, racetracks can leverage their existing physical operations. Those of you who have been at the racetracks that are operated by Woodbine, for example, know that they are very impressive physical locations which can handle the type of sports betting infrastructure that is required to introduce this type of product.

The current proposal before you is to increase the scope of the lottery scheme exemption that goes to the provinces to include single event sports betting, and we have proposed that a new exemption be created in section 207, instead of putting it under the rubric of a lottery scheme, to say that the government of a single province or provinces working in conjunction with each other can authorize the operator of a legal parimutuel horse racing operation to be able to also handle bets on other single sporting events. This would enable the operator of these existing parimutuel operations, whether through a parimutuel system or otherwise, to accept bets on any race or fight or any single event or athletic contest providing that the province passes enabling legislation.

It would be completely up to individual provinces whether they want to work with the parimutuel industry to create this new betting product, but if they did, there would have to be a negotiation so that it would be mutually beneficial for both parties, as opposed to being a unilateral situation where the provinces simply can proceed on their own through, for example, their own lottery corporation.

Again, as I indicated at the outset, the current competence in terms of sports betting is with the parimutuel horse racing industry and not with the provincial lottery corporations who have never handled this type of betting. They have always handled, first of all lotteries, and subsequently casino betting, but there is no experience in the provincial lottery corporations for dealing with the type of betting that is here.

[Translation]

The Acting Chair: Thank you very much, Ms. Holmes and Mr. Hayes; your presentations were very interesting. We are going to start the first round of questions with Senator Baker and Senator Runciman, followed by Senator Joyal and Senator Dagenais.

[English]

Senator Baker: Thank you, Mr. Chairman. I would like to congratulate Jane Holmes and her excellent legal counsel for their presentation here today on behalf of the Canadian horse racing industry. You have done an excellent job, and we will certainly look over the material that you have left with us along with the actual wording of a possible amendment you have provided to us with this material. We will, of course, deal with that possibly later on in the hearings. I would certainly be interested in moving such an amendment, Mr. Chairman, when we get to that point in our proceedings.

Correct me if I am wrong. If I say anything that you do not agree with, please correct me.

I have read the material that was supplied to us by the clerk's office regarding this problem that you have. As you say, you are in a state of crisis. The government has removed from your revenue source the slot machines or anything that would have supported horse racing. They have removed it from you to direct that money into the general revenue of the province, leaving you in a state of turmoil, unable to support the industry.

I have before me a report called the Horse Racing Industry Transition Panel Interim Report, August 17, 2012. Are you aware of this report?

Ms. Holmes: Yes, I am.

Senator Baker: They say this is a matter of crisis right now. The provincial government in this province determined that they will remove the slot machines from your organization and this means that some 14 racetracks will have to close by March 31, 2013, including yours. That is what this report says.

However, the report makes an incredible finding, and I will read for you from page 31. Unless something is done, unless they reverse their decision, unless something happens:

. . . the panel has received expert advice that provision should be made for the humane dispatch and disposal of 7,500-13,000 horses in early 2013. . . . initiatives to encourage euthanizing horses . . . would be imperative.

I understand upon checking that a certain amount of this is happening now with newly born horses. It is remarkable that a learned panel such as this on receipt of expert advice is suggesting the killing of 13,000 horses in early 2013.

I know you did not make this recommendation, but this is a finding of a legitimate panel to the Government of Ontario. Do you have any comment to make on that?

Ms. Holmes: I can only say that it is certainly not the industry's desire to see that happen. The horses, for the most part, are cared for by their grooms as well as anybody's family pet. We are hoping that something will happen that will help the industry prevent this from occurring, but the big issue we have is that one does not want what we have seen in other jurisdictions where horses are left without proper food, water and care. If a choice is made, I think a horseman would prefer to see the horse humanely put down than have it suffer.

Senator Baker: This is a massacre of thousands of horses. Are we talking about two-year-olds, three-year-olds?

Ms. Holmes: It could go beyond that too. For every horse at the track, there are three to four horses on the farm, so you have the mares, the stallions, the yearlings, the foals. It is a five-year cycle within the breeding industry, and already you see the number of matings went down this year because the announcement was made during the breeding season, and you also have seen devastation in terms of the recent horse sales this fall where the yearlings are up for sale. On the thoroughbred side, the revenue was down about 30 per cent; on the standardbred side it was down over 50 per cent in terms of the results of this year's sales.

Senator Baker: This expert report comes from the Government of the Province of Ontario; it is their report. It is the minister's report. The panel concludes by saying that they recommend the government not go back on their decision to remove your other sources of revenue that you presently have. I do not see any rationale for that in this report whatsoever.

Mr. Hayes: Senator, they recommended that there be other solutions, and certainly the recommendation we have made to this committee today in terms of essentially requiring the provinces to enter into a partnership with the industry is one of those solutions that could assist in maintaining this industry.

Senator Baker: You already have the infrastructure for that.

Mr. Hayes: Absolutely.

Senator Baker: Whereas, they do not have it.

Senator Runciman: I have to say that I find the suggested amendment interesting if for no other reason than I have no trust in the Ontario government in terms of their gaming strategies. I think Senator Baker outlined that it is not only what they are doing to the horse race industry but also to communities by dividing them on the whole casino issue. They are essentially killing a healthy industry with some of their decisions, costing up to 30,000 jobs in the province and the killing of thousands of young horses, which is shameful and wrongheaded. In any event, we will give this careful consideration.

I am curious about the whole argument with respect to the rationale. There has to be a reason why it is that in North America, Las Vegas is the only venue for single game betting. I understand the concerns in other jurisdictions with respect to game fixing, although I have not heard of any real concerns about game fixing in North America over the last number of years. Of course, if the betting is occurring through illegal channels, it is difficult to monitor the volume of the bet if there is an upset, if you will, in any particular game.

I still have trouble getting my head around why this has been in one venue only. All other jurisdictions of North America have said that it is not a good idea, and they do not want it in their areas. Do you have any way that you can elaborate on why that has occurred and why now, all of a sudden, Canada is the right spot for it?

Ms. Holmes: There is federal legislation in the U.S. that prevents single event sports betting with the exception of six states, where they have had a tradition of sports wagering. Las Vegas is the one exemption right now. Some of the other ones are seeking to get sports betting, only a maximum of six could get it, and some of those would be parlay betting, similar to what is already taking place in Canada. It is related to the legislation in the same way that it is currently in Canada, where federal legislation prohibits it. They have a similar situation in the U.S.

Mr. Hayes: Some of the pressure has come from the sports leagues because of concerns that you raised about fixing. You will notice that there are no major sports teams in Nevada, and that is one of the reasons.

Senator Runciman: Well, there is talk about it.

You talked about the fact that we already have single event betting on horse racing. Prior to your comments, Ms. Holmes said that something like 130 illegal sites are taking bets on our activities at this time. They are already taking bets on single event betting, which is legal. How do you balance that?

Ms. Holmes: If I may clarify, 130 sites are taking bets on our horse racing product right now. There are thousands of sites. The last number that I saw was somewhere over 2,000 Internet gaming sites. You see it on the boards at NHL hockey arenas with ads for Bowman sportsbook. It is happening everywhere. They are advertising in our backyard. Basically, we are putting the blinders to say that it is not taking place in Canada. It is taking place in Canada. The problem is that it is happening offshore or, in some cases, there are incidences where servers are located in Canada as well.

However, the revenue derived does not go back into this economy, and that is the big risk.

Senator Runciman: Yes, I understand.

Ms. Holmes: As well, there are no protections for the Canadian public.

Senator Runciman: I was trying to get my head around the fact that if this was allowed at the tracks, in dealing with the organized crime issue, you already have single event betting.

Ms. Holmes: Yes.

Senator Runciman: At the same time on the parallel side of this, there are 130 offshore illegal sites that are taking bets on your activities. You are not sharing in any of those revenues. I am trying to get at how this helps to combat the illegal gaming activity, since it clearly is not having any impact on these 130 sites.

Mr. Hayes: I think we disagree that it is not having any impact. As we all know, Internet gambling is ubiquitous. Some Internet gambling takes place in respect of Woodbine's races but a lot less than in other sports betting. If you offer people a legal alternative, they most often will use the legal alternative, provided it is attractive. They know they will get their money and not lose their money to some unknown shady character. The legal alternative will never eliminate the illegal alternative, but it significantly reduces it.

Senator Runciman: That is your theory. Is there anything to back it up?

Mr. Hayes: Certainly, we have seen that in terms of horse race betting. Most of the sites that Ms. Holmes talked about are offshore. People in other jurisdictions want to bet on Woodbine's races but they cannot do it because they are not here. You can offer Canadians a legal alternative. As far as we know, there is very little illegal betting on Woodbine races because you can do it.

Senator Runciman: Cannot people offshore bet legally on Woodbine races? I thought they could do that in various spots around the world.

Ms. Holmes: We have expanded our distribution through racing associations around the world. With parimutuel wagering — betting on horse racing, we actually have an honour system amongst the tracks. We do not take the customers from another racetrack. We sell them our signal so that their customers can bet on it, but we share in the revenue with the other racetracks. Right now for Woodbine, 55 per cent of our wagering occurs internationally around the world. We are selling our product around the world in legal systems in conjunction with other racing operations.

Senator Joyal: Since the creation of Internet betting, what new opportunities have there been for gamers in your regular activities? In other words, what part of betting today is on the Internet versus people who go to one of the 130 sites you have mentioned?

Ms. Holmes: Currently, Internet wagering represents about 27 per cent of our wagering. We moved to a distributed system because lotteries are everywhere for customers. We have teletheatres, which is off-track betting. To complement our online wagering, when it was legalized for horse racing, we introduced a horse racing channel. We have a licensed CRTC channel where customers can watch horse racing and get the odds. We have moved it into the comfort of the customers' homes or offices — wherever they may decide to do it — because we have had to go to the customers. With the changes in technology, that was the way we chose to try to combat the impact of offshore Internet gaming on our system. It is about 27 per cent and represents our growth area — the area where we see growth almost every year.

Senator Joyal: If the bill is amended, could we expect it to have an impact on your business activities because it would increase Internet betting? Even though it is adopted only in Ontario, for instance, a Nova Scotian would be able to bet through the Internet on your site.

Ms. Holmes: No, they cannot do that. The horse racing industry is regulated, and each racetrack has what is called a "home market area." For Woodbine, it is the Greater Toronto Area. We can take bets only from customers who have demonstrated that they have a physical residence in that area. All of Canada is divided up into home market areas for each racetrack association. If one province did not agree to allow sports betting, then, based on their postal code, we would not accept bets from individuals in that province.

Senator Joyal: For instance, can I bet on Nevada through my computer? I have never bet and so I ask that question. Would they take my bet even though it is not legal in Canada?

Ms. Holmes: That is the situation; we are regulated.

I will give you a little scenario. When we came down and talked to the RCMP, we have talked to the OPP about the illegal gaming. We are seeking to have greater enforcement about the illegal offshore operators. They said that they needed to demonstrate a physical presence in Canada. There were some circumstances where we believed there was a physical presence in Canada, and they said, "Well, we will not do anything about it. Basically, it is too hard to prove."

We said, "Okay. What if Woodbine goes offshore and we get regulated in the Isle of Alderney, Isle of Man or Great Britain — one of the countries that do have legalized Internet gaming — which would make us licensed elsewhere, and we start taking bets from Canadians?" The response was: "We would come in and we would shut you down — not only for that, but for your racing operations, because you would be acting in contravention of the law."

We cannot even go and do what everybody else is doing because we are regulated.

Senator Joyal: To a point, you are in an unfair competitive position with those who establish the same kind of operation that are made accessible to Canadians.

Ms. Holmes: That is correct.

Senator Joyal: Is that why you support the proposed amendment?

Ms. Holmes: That is correct.

[Translation]

Senator Dagenais: As I was listening to you, Ms. Holmes, you talked about Quebec where things did not turn out very well. As a resident of Quebec City and Montreal, I recently passed by the Blue Bonnets Raceway and it was sad because it was closed. My question has two parts.

I would like to add that the Government of Quebec supported the horse industry at one point. They were losing money, so the support stopped. Should the horse industry not be in tune with the needs of its clients? Since we still have the racetrack in Trois-Rivières, are those losses not more likely to be the doing of organized crime rather than of government lottery corporations?

[English]

Ms. Holmes: No, they are highly regulated, too. The Canadian horse-racing industry is regulated by the pari-mutuel horse racing industry, which runs under the aegis of the federal Minister of Agriculture and Agri-Food. When there was the situation in Quebec where the tracks were closed, we worked with the Club Jockey du Québec and the Canadian Pari-Mutuel Agency to permit what we called the HorsePlayer Interactive, our online system, to go into Quebec. We did so because we had calls from Quebec customers who wanted to continue to bet on horse racing. If we were not able to negotiate that through the regulators, then the customers in Quebec would be going offshore to bet on horse racing because there is no legal venue for them to be able to do it.

We are working very hard to align with our customers, but we come up against a lot of regulatory constraints that the illegal and the organized crime operators do not have to deal with, because we are operating within the confines of the regulatory structure.

[Translation]

The Acting Chair: I have a final question to wrap up your very interesting presentation. My question is along the same lines as Senator Dagenais' comments. We know that the horse industry has been battered over the past few years. I am thinking about France and England that have a long history in the horse industry. Could we adopt a model from somewhere else that works? The horse industry is not just about betting. All the breeders will suffer. We are talking about a lot of jobs. It is a most interesting area of expertise. Are you checking abroad to see if there is a country where this type of industry is doing better than here?

[English]

Ms. Holmes: I think Australia would be an appropriate example to talk about. In Australia, they actually have approved sports betting for the horse-racing industry there. They work with a company called Tabcorp that actually runs the system. There has been a significant rejuvenation of the industry and allowing it to continue to operate.

In France, they have what they call PMUs. You can go to your corner store and place bets on the horse-racing industry. Part of it is a cultural shift and it is something the industry is working with. In countries where it is very traditional and it has a heritage, like in Great Britain, then going out to the track is the event and there is a lot of wagering on it. However, at the same time, the licensed bookmakers have to contribute money back to the horse-racing industry. The online operators, such as Betfair, have to contribute part of its revenue back to the horse-racing industry. Therefore, pretty much in every situation, as the other forms of gaming have come in, a portion of that money has gone back to continue to diversify the revenue base from the horse-racing industry.

I think the big issue that most people do not understand is the massive infrastructure costs that our business has. We work very hard with technology to reduce our costs from the racetrack and the operating side, but it is very hard. How do you reduce the cost of caring for an animal? You cannot turn that over to technology. You need the individuals and the people that work in this industry and have a passion for horses to get up at 5:30 in the morning to go and groom and train the horses to get them ready for the racetracks.

Dealing with live animals is one of the challenges we face as a sport and as a gaming business. It is not a machine that you just put the money into and punch a button, which can reduce the amount of manpower. We do not have that capability in our industry. That is what makes us such an economic driver for Canada, and it is also what helps support the rural areas where it is very difficult to get economic renewal. The horse-racing industry does provide that to many rural regions across Canada.

[Translation]

The Acting Chair: Let me congratulate you on your very enlightening testimony. Thank you for your effort. Let us wish our country a prosperous horse industry that is alive and well. Many people underestimate this sector.

For our third panel, we welcome Jeffrey Derevensky, Professor in the Department of Education and Counseling Psychology at McGill University. Mr. Derevensky is also Co-director of the International Centre for Youth Gambling Problems and High-Risk Behaviors.

Also joining us by videoconference is Peter Cohen, Director of Regulatory Affairs, The Agenda Group. He is the former Executive Commissioner and Chief Executive Officer of the Victorian Commission for Gambling Regulation where he was responsible for all aspects of gambling regulation in the state of Victoria, Australia. Mr. Cohen was also chairman of the International Association of Gaming Regulators in 2009-2010.

Welcome, gentlemen. I believe Mr. Cohen has a presentation.

[English]

Peter Cohen, Director, Regulatory Affairs, The Agenda Group: Thank you for giving me the opportunity to present this evidence.

Today, I work as a consultant advising governments, regulators and industry primarily on gambling matters, and the brief presentation that I am making today summarizes the points made in my witness statement.

Sports betting exists, and the only question is whether it should be legalized, regulated and made safe, or whether it should remain illegal, unregulated and unsafe.

A legalized and regulated scheme provides a variety of benefits, as I described in my witness statement. A properly implemented scheme will eliminate illegal sports betting as there will be no need for it. A properly implemented scheme also provides protections to players, which do not exist in the illegal market. For example, under a properly regulated scheme, responsible gambling measures can be introduced.

In Victoria, which is where I am from, the licensed sports betting provider Tabcorp is required to comply with an approved responsible gambling code of conduct. It also offers self exclusion for customers and displays responsible gambling signage at all points where bets are accepted.

The Victorian scheme goes further than all other Australian states and territories by directly empowering sports to be involved in protecting their integrity. The Victorian gambling regulator will approve a sport as a sports controlling body if the regulator is satisfied that the sport has appropriate integrity controls in place. These controls include, for example, bans on all players, officials and referees from placing bets on that sport; documented rules of games which explain how results are determined not only under normal circumstances but also for unexpected contingencies, for example, if the lights go out during a night match; and they must have clear rules on publication of information relevant to the betting market.

An example of that would be the Australian Football League, which is Australia's most popular sporting code. The teams must publish by a particular time on a Thursday the list of 25 players which will make up the squad for that weekend's events, and 22 players will be selected from that 25 to play, so by Thursday the market knows who is in the team for that weekend.

Once a sport is approved as a sports controlling body, it becomes an offence for any licensed betting provider to take bets on that sport's events without the sport's permission. Permission will generally be granted once the sports controlling body and the betting company agree on matters such as the exchange of information which assists with the monitoring of integrity. The sport can also require betting companies to pay a fee, and I understand that payment is used to defray the costs of the sport's integrity management.

Legalized sports betting provides benefits to governments, sporting organizations, gamblers and community. Governments benefit by taxing the betting providers' take and, in some instances, by issuing exclusive betting licences in return for a substantial licence fee. Sports benefit by entering into arrangements with betting providers for the exchange of information which enhances the sport's integrity. Sporting organizations also benefit financially from entering into agreements with betting providers, who pay the sports for the use of their intellectual property. The community benefits from the enhanced integrity of the sport and because fewer law enforcement resources are required to investigate illegal gambling on sport or the criminal activities associated with unpaid sports betting debts. Gamblers benefit because they can bet safely and with confidence in an environment with appropriate responsible gambling measures.

Finally, and importantly, what I have described is not just a theoretical concept. It is in place and it works. The government, the sports, the community and the gamblers are happy.

I will be pleased to answer any questions you might have.

Jeffrey Derevensky, Professor of Psychiatry, McGill University, as an individual: Thank you, honourable senators, for allowing me to testify before this committee. I will not elaborate on my qualifications. You have those with you. I am considered an international expert in the field of youth gambling and gambling issues in general.

I will try to be brief and highlight our current knowledge concerning youth gambling in general and sports wagering in particular, with implications for this potential modification of the proposed legislation.

Gambling in our society has become normalized both nationally and internationally and remains amongst the fastest growing industries in the world. It is a highly popular activity not only for adults but also for our youth.

Over 80 per cent of adults have reportedly gambled for money, with sports wagering being a popular form of gambling, especially amongst males. National and international studies have shown upwards of 80 per cent of children have gambled for money before the age of 18. All studies report greater gambling and problem gambling rates amongst males. There is also ample evidence that underage youth have been able to purchase lottery tickets at provincially regulated and licensed lottery ticket vendors in spite of age prohibitions.

Sports gambling, both regulated and unregulated as well as through illegal venues, remains a popular activity with accessibility generally readily available.

Sports wagering through provincial lottery corporations across Canada currently represents a substantial source of revenue.

What we know about sports wagering and problem gambling is that between 3 and 4 per cent of teenagers are experiencing significant gambling related problems, with another 8 to 10 per cent showing signs of problem gambling. Among young adults, those individuals 18 to 25, approximately 3 per cent of individuals in Canada and the United States are experiencing gambling related problems. Europeans report 4.8 per cent; Nordic countries report 2.2 per cent; and studies from Australia and New Zealand indicate prevalence rates of 3.7 per cent of problem gambling. All of these are considerably higher than the average adult population prevalence rates of problem gambling, which range in degree but are approximately 1 per cent.

Problem gamblers tend to gamble on multiple types of activities. A sports gambler will also gamble in casinos or may also gamble on the lottery as well as in horse racing.

To the best of my knowledge, there are no representative, empirically supported studies that report the prevalence rates of sports gamblers amongst problem gamblers, especially considering they also gamble on other forms of gambling activities.

We have worked feverishly with lottery corporations around the world to become more responsible in terms of establishing codes of conduct, and we have initiated a holiday campaign, which was joined by the U.S. National Council on Problem Gambling, urging parents not to purchase lottery tickets as holiday gifts as a way of raising awareness that gambling is an adult activity and not one for children. Last year, 30 lottery corporations in Canada, the U.S. and Europe participated in this program, and I am pleased to report that every single Canadian lottery corporation actively participated in this program, and they have been doing so for multiple years.

Provincial lottery corporations currently offering Internet wagering have implemented responsible gambling features including age prohibitions and verification procedures, the ability for self-exclusion and the establishment of self-imposed daily or weekly gambling losses. Those provincial governments currently developing Internet sites and those contemplating getting into the market have indicated their intention to include such features on their sites.

What we currently know is that single sports wagering is both popular and readily available. It is important to note there is a growing trend to offer propositional wagers on single sporting events such that one can make multiple wagers during a given game. A question earlier from one of the senators was related to Las Vegas and this is popular amongst the Las Vegas bookmakers.

It is also easily adaptable for the Internet, mobile phones or electronic forms of gambling devices as well as if the horse racing industry would gain access to offering this as a particular type of gambling.

Concerns over collusion, point shaving and attempts at altering the outcome of sporting events are continually being addressed by the professional sporting leagues, the NCAA in the United States, and individuals and groups responsible for establishing odds for sporting events.

There is little doubt that the ability to wager on single sporting events versus wagering on multiple games simultaneously will increase its popularity, the frequency of wagers and likely the number of people wagering on sports through provincial outlets, especially among young men. This will result in a significant increase in provincial sales and revenues and problem gambling rates will need to be carefully monitored and addressed.

Should this committee and the government decide to change the legislation, I would recommend that provincial lottery corporations be urged to provide better training and enforcement of current age restrictions at their provincially licensed lottery outlets.

I urge the Senate committee to recommend more funds be allocated for the development of prevention initiatives, educational programs for our youth and research to help scientists better understand problem gambling behaviour at the national and provincial levels.

Behavioural analytics, that is, the ability to monitor an individual's playing behaviour in order to help develop predictive models for identifying potential problem gamblers, can now be more easily acquired when wagering is done via the Internet or through mobile gambling. Closer collaboration between provincial and gaming corporations and researchers will ultimately help minimize gambling problems.

Thank you, and I am happy to answer any questions.

The Acting Chair: We will start a round of questions with Senator Baker.

Senator Baker: Thank you Mr. Chair, and our thanks to each of our presenters. You have outlined your positions very well.

The only place in North America, as has been mentioned many times so far on this committee, where it is legal to do what this bill is proposing to be enacted in this Parliament, is in the U.S. State of Nevada. I think the key point there is that you have to go there to take part in single event sports betting. In other words, you have to physically get on an airplane or a boat or a train or car and go there to do it. This bill would introduce into Canada authority for any province to establish that same betting procedure without having to be physically present in this facility while you are making the bet.

In other words, there is nothing that I can see in this bill that tells the provinces what they have to do to institute this and make it legal under the Criminal Code, so this bill would bring in a dramatic change. Keeping in mind that this is a huge change, what do each of you think will be the negative effects in Canada? You have clearly outlined your positions as to what actually happens in Australia and the statistics regarding youth betting versus adult betting and so on.

Dr. Derevensky cautioned us about what we should be concerned about here. This is a massive change.

Do you have any thoughts about what the positive or negative effects of this legislation would be?

Mr. Cohen: People can bet on single-event sports now, they are just not doing it in a safe environment. They can do it with a bookie in the backyard or over the telephone or the Internet without the protections that a legalized system puts in place. While it is correct that Americans have to travel to Nevada if they want to bet legally in a bricks and mortar establishment, they also can bet illegally if they wish to. The Australian model provides a safe environment where people can choose where they want to bet, knowing that the products are safe and that the integrity of the sport is enhanced. It is a much more desirable outcome. I am hard pressed to find negative consequence of proceeding with this legislation. I think there are more negative consequences of not proceeding.

Mr. Derevensky: Senator, you are correct that Nevada is currently the only state in which one can gamble at a sports book, and one has to be present within the state. You can now gamble by mobile if you are in the state on a sports book within a land-based casino. There is legislation pending in a large number of states to change this legislation. The Department of Justice in the U.S. is looking at this very seriously. There is some major concern.

I agree that on some levels this will make it a somewhat safer product. However, it is important to note that even if the Internet legislation through the various provincial governments allows this, you will not be able to do cross-border gambling. If you are registered for the Quebec Internet gambling and this is approved and is offered through their Internet gambling, you will not be able to gamble from Ontario, Nova Scotia or any other part of the country. It will be regulated within the individual provinces.

Senator Baker: Dr. Derevensky, I asked you what the negative effects would be, and you skated around that.

Mr. Derevensky: I will try to address that directly. I tried to address it briefly in my opening remarks.

I do think that we will see an increase in gambling behaviour, especially among young males. Young males tend to think they are very knowledgeable on sports gambling. We know that when the national hockey league is on strike, provincial sales of lottery tickets related to hockey decrease. It would seem to me that it would naturally increase.

We do not know whether this would produce more pathological gamblers, more problem gamblers. Accessibility generally tends to come with some negative downtime and negative consequences, but if one looks at pathological gambling rates internationally, with the vast expansion of legalized gambling — Internet gambling, land-based casinos, lotteries and horse racing — we have not seen significant changes in the prevalence of pathological gambling.

Is that a result of our prevention initiatives? We would like to think it is partly related to that. I do think some individuals will be adversely affected, but there are ways to combat that as well.

Senator Runciman: Mr. Derevensky, you referenced the U.S. Justice Department looking at this. Did you mean they are looking at allowing other jurisdictions to go into single-event betting?

Mr. Derevensky: Yes.

Senator Runciman: They are looking at expansion, and this is primarily driven by economic desires, I assume.

Mr. Derevensky: That is correct.

Senator Runciman: You have written many articles with respect to youth gaming. Have you looked at it close enough to know how much of the participation of young people is focused on single-event betting?

Mr. Derevensky: We have looked at sports wagering among youth, as well as at lottery playing and wagering on games of skill, as well as at trying to get into land-based casinos. We do know it is a particular activity among males. It also tends to be cyclical. During the Stanley Cup playoffs you see an increase in sports wagering among young males.

During the Final Four in the NCAA basketball tournament there is a vast increase in wagering. Overall, those individuals who experience problems tend to have problems related to gambling in general. They tend to gamble on multiple types of activities and one cannot identify it as solely a sports wagering problem.

Senator Runciman: Mr. Cohen, you made statements with respect to eliminating or dramatically reducing the involvement of organized crime.

The witnesses from Woodbine who appeared previous to you were talking about regulated single-event betting already being in existence in Ontario through horse racing. However, they said that even though this is regulated, some 130 illegal sites and offshore sites are taking bets on their activities.

I have difficulty understanding how we will have an impact on organized crime by going in this direction. We already have a regulated process in Ontario for single-event betting, but these illegal sites are still up and thriving. How do you deal with that contradiction?

Mr. Cohen: The experience in Australia is that access to gambling is made available in such a free way that there is no room for illegal gambling. They cannot offer anything that is not already offered through the marketplace of operators. In Australia, Tabcorp is the licensed off-track betting retail provider, but we have a licensed bookmaker and a betting company that are also able to offer their products. There is a competitive marketplace among legalized providers of the service and, because of that, there is no room for the illegal market.

We had illegal betting before about 1960. We called them SP bookies, or "starting price" bookmakers. It was a well- known illegal gambling industry and the government got rid of that in the first phase by introducing government owned betting shops, TABs. Tabcorp is the privatized version of that which was created when the government privatized it in 1994.

Since slot machines were legalized in 1992, we got rid of the rest of the illegal gambling market, which was for illegal slot machines. We have found that Australians will bet with a legal provider when they have the opportunity to do so. With a widely distributed betting operator providing that opportunity there is no need for illegal operators.

Senator Runciman: Is there documented evidence from policing agencies or others that indicates that you have eliminated the involvement of criminal organizations?

Mr. Cohen: I am not sure we can say it is documented because it is difficult to disprove the invisible.

As the regulator in charge of gambling regulation in Victoria for eight years, I have received complaints about illegal poker for money, illegal slot machines being made available, other forms of charitable gaming, such as bingo. I never received a complaint about illegal sports betting. That helps to give us evidence that it does not exist. The police never brought to my attention their concerns of any illegal sports betting or betting on horses, for that matter. There are quite stiff penalties in Victorian legislation for providing betting illegally. In my 16 years, I do not recall ever having to prosecute anyone for providing illegal gambling on sport.

Senator Runciman: There are no offshore sites with respect to affording opportunities to bet on rugby or soccer games or on horse racing. There are no sites engaged in allowing people to place bets on activities in Australia that you are aware of.

Mr. Cohen: I would not say there are not any, but I am not aware of any demands for services from Australians. There was a time when we had a restricted marketplace five or six years ago and some betting companies were established on Vanuatu, an island offshore. However, we got rid of the advertising restriction placed on companies based in Australia but not in Victoria. In those days if you were not in Victoria, you could not advertise in Victoria. There were some illegal operators in Vanuatu who were avoiding the legislation, but they disappeared when we got rid of the ban on advertising.

Senator Joyal: Mr. Cohen, in your submission you mentioned that the Victorian gambling regulator is a very efficient and active body. You also mentioned in your submission that the scheme includes responsible gambling requirements, integrity measures to protect both betting and sport, and a distribution mechanism to ensure that the government sporting organization and betting providers share in the proceeds. Do I conclude from that statement that if we were to approve the changes as before us, we should make sure that our regulatory body parallels the regulations that you have put in place to prevent misuse or to facilitate, in one way or another, the distortion or the objective of the legislation?

Mr. Cohen: One of the things we know as gambling regulators is that there are different ways to do it. You would need some form of well-regulated industry, but whether it fully adopts the Victorian administrative model is not necessarily the right way. Each province should determine what is best for their circumstances. I was asked many times as a regulator what the best form of gambling regulation is. The answer I can give you is: Nobody really knows the best form because if we did, we would all be doing the same thing; and we are not. Gambling regulators all around the world are doing different things. The Victorian scheme works particularly well in Victoria. Whether it would translate in exactly the same form in Ontario or British Columbia is more difficult for me to say. It is a good model to look at and certainly has lots of advantages in the way it has been operating. I could recommend it, but individual provinces have to look at what fits best within their respective legislative schemes.

Senator Joyal: In other words, it would be up to each provincial authority to manage the changes on the basis of what they have already in regulation and how they adapt to face the new situation to prevent the misuse of the opportunities that would exist.

Mr. Cohen: That is the way I would see it. Certainly, the Victorian scheme has a lot of requirements that I would recommend that the provinces adopt, however they would choose how to implement it. I would recommend, for example, what Victoria has which no other Australian state has: the concept of approving sports controlling bodies. By having those sports controlling bodies approved, and they will only be approved if they have an appropriate integrity regime, you empower them to control who can place bets on their products.

With this approved sports controlling body model, which only Victoria has, those sports now have, if you like, the upper hand in agreements with the betting companies to exchange information. It is in an offence for a betting company to place bets on that sporting event without that sport's permission. That gives a sport a lot of control. Through that model, sports can ban particular contingencies. If they do not want someone betting on who the first player will be to get injured in a match, they can tell the betting companies that they are not to place a bet on that type of contingency; and because they have agreements, the betting companies will not do it.

Senator Joyal: In other words, they could frame the opportunities in a very strict context to prevent misuse, as shown by the examples that you have given us. They could ban a certain type of betting or betting object.

Mr. Cohen: They are empowered to do that. The Victoria legislation also lets the gambling regulator do that if the gambling regulator thinks that it is an inappropriate bet type. The gambling regulator has not had to do it so far because the sports have been quite happy to take that on board and do it themselves. The preferred model is to let the sports determine what they think is desirable or undesirable for betting. With the regulator in the fallback position, it can also ban something if a sport lets something slip through that is not in the community's interest.

Senator Joyal: May I have another question to our other expert?

The Acting Chair: Yes.

Senator Joyal: Professor, you mentioned in your presentation Internet mobile phones and other electronic devices. Those are widely available to youth, more than to any other section of society, in particular senior citizens.

What would your recommendation be in terms of regulation that should be adopted in order to avoid the risk that those electronic devices offer and will continue to offer to the new generation? They are using them everywhere, so it would be very easy for any provider of betting opportunities to reach youth and to run after them in that context. What would you suggest as the right approach to be taken?

Mr. Derevensky: You are absolutely correct. The electronic medium is very much a youth market. What we have seen is that those provincial governments that offer Internet gaming have developed very strict regulatory procedures in terms of age and age verification. That is an important consideration. However, we have done a number of studies that also indicate that many parents are unaware of the potential negative consequences associated with gambling in general and Internet gambling in particular. A national study that we did in Canada showed that among the 13 potentially addictive behaviours that teenagers can get involved in, gambling was viewed as the least problematic. I think we need to raise greater awareness. We are trying to work with our provincial governments and our regulatory boards to try to raise awareness amongst parents that this is an adult activity.

There is major concern about responsible codes of advertising. While they are generally accepted codes of advertising, there is nothing currently in most provincial legislation with respect to those codes of advertising, which I think is really important for us to do.

I also mention that the National Collegiate Athletic Association and the Federal Bureau of Investigation in the U.S. are very concerned about criminal behaviour related to influencing the outcome of specific games. Both units have special divisions looking at that. There have been instances of collusion, problematic gambling behaviour and infiltration by the underworld in trying to get college athletes, in particular, to try to alter the outcome of games. They are very concerned about the integrity of the game and about the gambling associated with the game.

[Translation]

The Acting Chair: This is the first time we are welcoming Senator Paul E. McIntyre to our committee. Welcome, Senator McIntyre.

[English]

Senator McIntyre: Thank you, Mr. Chair.

Thank you, Professor Derevensky, for your presentation. I understand you are a professor of psychiatry at McGill University.

Mr. Derevensky: I am a professor of psychiatry. I am also a professor of school applied child psychology.

Senator McIntyre: In listening to your presentation I noted that you have concerns, and I have to say that I have concerns as well. As a former chairperson of the New Brunswick review board I had an opportunity in the last 25 years to work with psychiatrists. As you know, the review board is a tribunal which is set under section 672 of the code. The tribunal deals with people found either unfit to stand trial or fit to stand trial; not criminally responsible on account of a mental disorder. Now, those people, mostly men, are either remanded into custody at a psychiatric institution or in a jail setting in a psychiatric wing, or released on a conditional discharge subject to their review by a board, such as the review board.

I have to say that in the majority of cases we dealt with, those people were found either unfit to stand trial or NCR, as a result of their being involved with either an abuse of drugs and alcohol. I should say that gambling was part of this as well. It brings great concern to me. I am especially concerned about the impact this would have on our Canadian society. I am concerned about the dangerous societal consequences and I share your views on that.

I will close by saying that I welcome the recommendations that you have made to this committee, recommendations such as enforcement of education, research and prevention on the part of the government.

Mr. Derevensky: Thank you, senator.

[Translation]

The Acting Chair: Did you have a question, Senator McIntyre?

[English]

Senator McIntyre: I do not have a question as such. It is just that I welcome the recommendations made by Professor Derevensky.

[Translation]

The Acting Chair: I would just like to remind you that it is customary for senators to ask questions, not make statements.

[English]

Senator McIntyre: My question is: My understanding is that Bill C-290 has already passed in the House of Commons, and I further understand that it was unanimously passed at all stages in the house. It is now before the Senate for review. Do you think the Senate should bring amendments to this?

Mr. Derevensky: I would appreciate if the Senate could consider tacking on to the amendments some funding opportunities to ensure that we have a much better handle on gambling in general and sports wagering in particular.

There is a great variability across this country in terms of funding of research, funding of prevention programs, funding of treatment programs, and as such I think any additional amendments would be greatly appreciated by the treatment community, as well as the research community.

Senator McIntyre: Thank you for that.

The Acting Chair: Remember, honourable senators, this is the first time I have been sitting here. Senator Fraser told me it is not a place for comment but for question.

Senator McIntyre: I went around it.

Senator Baker: I am wondering if the witness might have some suggested wording or an example of the type of wording that is used in another setting that would be appropriate to consider with this bill, or if he could simply put in writing to the clerk of the committee the general substance of what he is talking about. I do not ask for great detail, but enough to carry the weight of what he says.

Mr. Derevensky: I will certainly do that, senator. I appreciate your comments and suggestion, as well as your question.

Senator White: Mr. Cohen, either I misheard or you misspoke. Did you suggest there was no illegal gambling in Australia? Did you say that in the beginning of your presentation?

Mr. Cohen: I said there is very little illegal gambling. I am not aware of any illegal sports betting and that is because we have all forms of legalized gambling in Australia, so there is no opportunity for the illegal market.

Senator White: I am reading an article from The Sydney Morning Herald from May of 2012, which states that Australians were sending over $1 billion a year to illegal gambling sites. Do you have a comment as to whether or not that is correct? It was Communications Minister Stephen Conroy who was quoted.

Mr. Cohen: Stephen Conroy, yes.

Gambling is legislated and regulated at the state level, but there is one exception to that, which is the Interactive Gambling Act of our Commonwealth government. That Interactive Gambling Act disallows betting over the Internet on casino style or slot machine style games, or poker or so on. That is the one section of gambling which is illegal and that is where there is illegal activity going on, but that illegal activity is being offered from overseas sites, not from Australian companies or operators.

Senator White: Is it being done illegally?

Mr. Cohen: It is being done illegally. Each Australian state actually has legislation on its books to provide for a protective scheme for interactive gambling. In Victoria it was called the Interactive Gambling Player Protection Act. When that act was put in place, it was there to establish a regime to allow for licensed provision of Internet betting. The federal government of the day, in 2001, decided it did not like that and put in overriding legislation. Under the Australian constitution, a federal law overrides a state law wherever the laws cover the same patch. That legislation, since it has been in place, has had the effect of stopping Australian companies from providing Internet gambling. It does intend to stop overseas providers but it is not enforced by the federal government.

The exception to Internet betting that is allowed by the federal government legislation is betting on sports, betting on horses and the purchasing of lottery tickets over the Internet.

Senator White: I promised my question would be short; I did not promise your answer would be.

Clearly, though, even though Australia is number one in the world in gambling, per person, they still have over $1 billion being gambled illegally. Is that correct?

Mr. Cohen: I think that billion dollars is probably an estimate.

Senator White: Could it be more?

Mr. Cohen: There was no formal collection mechanism. We know what all the legalized gambling figures are because that is all collected by regulators and published. We do not know the illegal amount. That would be an estimate. The discussion that Senator Conroy was having was a proposal whether to get rid of that ban on interactive gambling so it could come into the regulated and legalized marketplace.

I apologize for misleading the Senate by saying there was no illegal gambling, but I was missing that particular component.

Senator White: Nobody here was misled, Mr. Cohen. Thank you very much.

Professor, I have a comment for you and maybe you can clear this up. You made a comment about influencing an event, and we are talking about single-sport betting here. What you are really saying, and correct me if I am wrong, where you have to bet for three games, which I think it is three games now lawfully, it is impossible to influence a hockey player on three different hockey teams to throw the game, but it might be more likely to have that type of influence on one game. Is that what you are saying?

Mr. Derevensky: That is correct.

Senator White: Your suggestion is that the reason the United States — it is only Nevada that allows this and, by the way, Nevada has no professional sports teams as a result — and Nevada does not allow this is because a lot of the other states are concerned about the fact if they allowed it in New York, God help us, the Yankees might win. They won last night.

Mr. Derevensky: I cannot comment on whether or not the Yankees might win, but there may be a lot of wagering on it.

Senator, I think that is one of the reasons the National Football League, Major League Baseball and the National Basketball Association, as well as the National Collegiate Athletic Association, have been very influential in ensuring that only Nevada currently has single-sports wagering. Delaware has now introduced legislation where they could take parlay bets for two teams, and they are pushing for single wagering. I will say, while it is true there are no professional teams currently in Nevada, a lot of wagering is done on the University of Nevada Las Vegas basketball team as well.

Senator White: Thank you very much. I just wanted to make sure it was clear that your concern — and I appreciate your commentary on the social issues as well — is on the actual betting.

Senator Frum: Professor, I think of gambling as being a highly addictive activity. I was surprised by the list of statistics. When you talk about adult problem gambling, you say it is 1 per cent. I do not know if that is an international figure or a Canadian figure. You do not say what the 1 per cent refers to.

Mr. Derevensky: That is severe pathological gambling, and those numbers are pretty well standard across Canada as well as internationally. It varies depending upon jurisdiction and the methodology used to assess it, as well as the date at which the study was done.

Senator Frum: Just so I am clear, with severe pathological gambling, there is a continuum on which you measure gambling addictions or gambling behaviours that are potentially dangerous or cause the societal problems that Senator McIntyre was referring to. As one who specializes in this, what is that continuum? Where do you go after the 1 per cent of severe pathological? There must be another category after that.

Mr. Derevensky: Correct.

Senator Frum: Can you just comment?

Mr. Derevensky: We find that approximately 3 per cent of individuals are showing some sign or some symptomatology for gambling-related problems, but they have not reached the diagnostic criteria that we have established for severe pathological gambling, compulsive gambling.

It is important to remember, though, senators, that every single pathological gambler negatively impacts between five and seven other individuals. If you take that 1 per cent and multiply it by 7, then now we are talking about 7 per cent of the population that is negatively impacted as a result in some way of problem and pathological gambling.

Senator Frum: I presume you are talking about family members. You are talking about children.

Mr. Derevensky: That is correct, and employers as well, and society in general.

Senator Frum: In the next category down, when it is just troubled gamblers as opposed to pathological, how big a category would that be?

Mr. Derevensky: We generally think of a continuum going from non-gambling to pathological gambling. We have non-gamblers, and then we have what we refer to as social gamblers. This is the vast majority of people who enjoy gambling but do not seem to be exhibiting any gambling-related problem. We are talking here, with adults, about 75 per cent of the population. Then you move to something that we call problem gambling, and we are looking at 3 to 4 per cent, and then with pathological gambling we are looking at approximately 1 per cent of the population. It is also important to note that it is a higher prevalence, again, amongst males than it is females.

[Translation]

The Acting Chair: Professor Derevensky, I have a question for you before we move on to the second round.

The provinces develop or try to develop tools to detect compulsive gamblers with pathologies. Based on your research, is it easier to detect a compulsive gambler in legal gambling settings; is it more difficult to detect them in illegal gambling settings? When gaming becomes legal and it is regulated by the government, will it be easier, for the most part, to detect those with problems as opposed to those who bet in illegal settings? Is my question clear?

[English]

Mr. Derevensky: I think it is, senator. Problem gambling is often very difficult to identify in general. It is often referred to as the hidden addiction. You cannot see it in someone's eyes and you cannot smell it on their breath as you can with substance abuse. What we can start to do now is what I tried to allude to in my testimony, which is behavioural analytics. It is now possible for us to look at Internet gambling, where you can identify each sporting event or every hand played in poker and try to develop some sort of behavioural system to try to pinpoint and identify problem gamblers.

We are now working with a number of different Internet gambling providers to do that. It is much easier to do if the provinces decide to do that as opposed to going to independent industry gambling providers.

As mentioned earlier, there are currently about 2,300 different Internet gambling sites. Many of these will not allow us any information. Some are starting to say we have to take a more responsible approach, and we are generally hopeful our provincial governments are now going to be able to say, "Can we develop systems or predictive models to enable us to try to identify problem gamblers?" It is much easier to do on Internet gambling than it is on a slot machine, on a horse race player, or in fact in terms of a land-based casino.

Senator Runciman: I am intrigued by your comment about the U.S. Justice Department. We had testimony from Woodbine that indicated under the current law there only six jurisdictions that could allow single-event betting, and Nevada or Las Vegas apparently is the only one involved at the moment.

Mr. Derevensky: Nevada. It is throughout the state.

Senator Runciman: Just throughout the state. The justice department is looking at allowing another five. Is that what you are talking about, or is it a complete rewrite?

Mr. Derevensky: Many states in the U.S. are actively interested in expanding their gambling opportunities. We have seen more and more land-based casinos being developed — Massachusetts, Pennsylvania and Louisiana. Florida is now looking at expansion. The Department of Justice is doing two things. One is they are looking at the Internet gambling act as well as the ability for some states that are petitioning, saying that it is unconstitutional to allow only one state to have the ability to do that. Many of the states are looking to expand in terms of single games.

Senator Runciman: I raise this in the context of Windsor. The mover and seconder of the bill and the major proponent, the Minister of Finance in Ontario, are all from Windsor. I know, having been in Ontario politics for a long time, that once the Windsor casino opened up, it was just a matter of a few years before Detroit built, and they now have I think three casinos. I am just drawing attention to the fact that Detroit is a desperate jurisdiction in its own right, an economic basket case, and we have not talked about that, but I see that as sort of a tit for tat approach in terms of seeing this as their salvation. It might not well be in that sense, because we can see the folks right across the river entering into the same opportunity, if you will.

Mr. Derevensky: I think you are absolutely correct. New York State is also very interested. New Jersey is clearly very interested. Delaware lost a legal case with the Department of Justice where they were able to do it, but then the Department of Justice said they must make parlay bets where you have to bet on two teams simultaneously.

The big resistance tends to be from the professional sports leagues as well as the National Collegiate Athletic Association, and the FBI is also very concerned about collusion. There have been a number of high profile cases in Australia as well as in the United States with coaches and referees trying to alter the outcome of the game because of gambling-related issues.

[Translation]

The Acting Chair: Thank you, Professor Derevensky and Mr. Cohen. This brings us to the end of our meeting today. We will resume our work on October 17. Thank you, Honourable Senators, for your passion, generosity and tremendous discipline.

(The committee adjourned.)