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.
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
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.
Senator Joyal: I am Senator Joyal and I represent the division of
Kennebec in the Senate of Canada.
Senator Baker: I am George Baker, and I represent Newfoundland and
Senator Chaput: I am Senator Maria Chaput and I represent
Senator Ngo: I am Senator Thanh Hai Ngo, and I represent Ontario.
Senator White: I am Vern White from Ontario.
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.
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.
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,
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
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
Welcome, Mr. Masse. The floor is yours.
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
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
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
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
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
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
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
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
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
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
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
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.
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?
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.
Senator Chaput: Is there any conflict between your bill and
existing provincial legislation?
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
The Acting Chair: Thank you for being so concise, Senator Chaput.
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
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
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
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
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.
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?
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
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.
Senator Dagenais: Are we supposed to think that this is better for
the community because it is operated by the government?
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.
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?
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
The Acting Chair: Thank you Mr. Masse for your presentation and
the quality of your answers.
Thank you for being here.
Thank you for your testimony.
You have done a very good job of replacing Mr. Comartin. Thank you for
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
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
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
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
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.
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.
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
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
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
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
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
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
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
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
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.
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
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.
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?
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
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.
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
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.
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
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
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
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
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
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
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
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
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
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
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
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
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
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
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
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
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.
The Acting Chair: This is the first time we are welcoming Senator
Paul E. McIntyre to our committee. Welcome, Senator McIntyre.
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.
The Acting Chair: Did you have a question, Senator McIntyre?
Senator McIntyre: I do not have a question as such. It is just
that I welcome the recommendations made by Professor Derevensky.
The Acting Chair: I would just like to remind you that it is
customary for senators to ask questions, not make statements.
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
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
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
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
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
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
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.
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?
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
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
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.
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