Proceedings of the Standing Senate Committee on
Legal and Constitutional Affairs

Issue 23 - Evidence for October 17, 2012


OTTAWA, Wednesday, October 17, 2012

The Standing Senate Committee on Legal and Constitutional affairs met this day at 4:15 p.m. to study Bill C-290, an Act to amend the Criminal Code (sports betting).

Senator Joan Fraser (Deputy Chair) in the chair.

[Translation]

The Deputy Chair: I call today's session to order. We are continuing our study of Bill C-290, an Act to amend the Criminal Code (sports betting).

[English]

For our first panel of witnesses we are pleased to have with us, from the Canadian Gaming Association, Mr. Bill Rutsey, President and Chief Executive Officer; and Mr. Paul Burns, Vice-President.

Welcome, gentlemen. Thank you for joining us. I think you are going to open with some remarks.

Mr. Rutsey, the floor is yours.

Bill Rutsey, President and Chief Executive Officer, Canadian Gaming Association: Good afternoon honourable senators. I am Bill Rutsey, CEO of the Canadian Gaming Association and with me is Paul Burns, Vice President of Public Affairs.

Our association represents the major participants in Canadian gaming — facility operators, equipment manufacturers and service providers. We sponsor research and speak out on important national and regional issues, which is why we are here today.

Personally, I have participated in gaming from both the public and private sector perspectives for more than 20 years, including assisting in the creation of gaming policy and casino development in Ontario, Nova Scotia and New Brunswick. As Practice Leader of the Coopers & Lybrand Gaming Consulting Practice, which is now PricewaterhouseCoopers, I advised numerous public and private clients, including the Government of Ontario, and authored the Ontario Casino Market and Economic Impact Study, the blueprint for Ontario gaming development.

As CEO of private sector companies, I developed and managed gaming businesses in Ontario, Las Vegas and internationally and have been licensed by gaming regulators in Nevada and Ontario. I regularly comment on gaming issues in media and before government.

We are here today to speak in support of Bill C-290, an Act to amend the Criminal Code, that will allow wagering on the outcome of a single sporting event and answer any questions you may have.

Canadians have enjoyed legalized parlay-style sports wagering for many decades, but the current restriction, which prohibits wagering on a single sporting event, does not reflect the modern reality for sports bettors. As Mr. Masse has told you, Bill C-290 is simple in that it is a deletion of a section of the Criminal Code that will allow the provinces to decide if and how they want to go about offering single event sports betting. As he said, there is currently no legal gambling on single event sports in Canada.

With the passage of Bill C-290, Canadians will have a legal and regulated product for wagering on the individual sporting events of their choice.

The Canadian Gaming Association has supported this initiative since it was raised by the Government of Ontario nearly three years ago, and supported on the record by other provinces, including British Columbia, Alberta, Manitoba and Saskatchewan.

Since then, in addition to communications with provincial governments, their Crown agencies and representatives of law enforcement, we have met with numerous members of Parliament from all parties, as well as many senators, to discuss its merits, have appeared before the House of Commons Standing Committee on Justice, and are here before you today.

The issue is seen by most as a tool of law enforcement and economic development, as well as simply catching up with what Canadians are already doing. As Senator Runciman has rightly said, and as you have been told by many others appearing before you, the reality is that Canadians are wagering on sports predominantly through illegal means, either with bookies or online.

This bill will enable sports wagering to occur in safe, regulated environments in either physical facilities or online. Right now, the only beneficiaries of the existing situation are offshore operators, bookies and organized crime.

A review of the annual reports of Criminal Intelligence Services Canada indicates that illegal bookmaking exists in all regions of Canada, with organized crime ultimately profiting from the revenue. While the size of the Canadian market is unknown, estimates suggest it is in excess of $10 billion annually and could be as much as $40 billion.

The growth in wagering on sports through the Internet has significantly increased over the past decade, with estimates showing that Canadians wager about $4 billion annually through offshore sports books.

Passage of this bill will allow for a legal and safe alternative for Canadians to do what they are already doing through illegal channels, provincial agencies to compete online on a level playing field, a product of competitive differentiation for gaming properties located at or near the U.S. border, and the diversion of monies from the underground economy.

With respect to the operation of sports betting, this is best left to provincial governments through their crown agencies, as are all other forms of lottery and gaming. You may know that betting on horse racing — incorrectly described to you by a previous witness as single event wagering — is entirely different. Horse race betting is done through parimutuel pools; a completely risk-free undertaking for the racetracks. Single event betting, on the other hand, is a very specialized subset of gaming that requires real expertise and must be carefully managed to be profitable. Racetracks in Canada have no such experience or competence.

Companies with such expertise are not racetracks. They are major companies, like Caesars, which operates the casino in Windsor, and large, well-capitalized companies specializing in sports betting such as Cantor Gaming, William Hill and Tabcorp, as described by previous witness Peter Cohen.

Further, the customer profiles for single event sports customers and racing are completely different and seldom cross over. Betting on horse racing is a declining activity undertaken by a relatively small number of people which requires arcane knowledge of racing and handicapping and how to understand a racing form. In comparison, sports betting is an activity with broad popular appeal across a wide demographic customer base.

For provinces that operate online, it could complete their offerings and eliminate the competitively disadvantageous environment in which they currently operate. Sports betting comprises approximately 40 per cent of online gaming activity, so right now Canadian provinces operating online do not have a product for 40 per cent of their potential clients.

It will be a potentially significant competitive factor for border and near-border properties. When people come to bet on sports, they often stay to watch the game. If so, they consume food and beverage, may play some blackjack or slots and stay overnight. If they bring their spouse, even more ancillary revenues are generated. A recent report we commissioned on the impact of sports wagering on Ontario border casinos highlights the benefit of offering a legally regulated sports wagering product in the Ontario border casinos of Windsor and Niagara Falls.

The potential benefits created by additional visits from U.S. patrons include up to 250 new jobs directly in the new casinos, as well as generating economic benefits in the broader community.

We think it makes eminent sense to turn off the tap to such a source of funds for the bad guys and to make it available to provincial governments to help fund programs and services for the general good. From a tourist and economic development perspective, it is a no-brainer. With more than 100 million Americans within a six-hour drive of a Canadian casino, and existing U.S. federal law explicitly prohibiting sports betting where it does not already legally exist — which is essentially in Nevada — single event sports betting could be a significant attractor, especially during times and events like March Madness, the NFL and NBA playoffs, and the Super Bowl. Remember, these revenues from single event sports betting already exist and continue to grow.

The interest to bet on sports is significant and pervasive. Ordinary people, our neighbours and our friends, bet on sports every day. Under the existing law, this makes them complicit in illegal activities. These people are not criminals and what they are doing is legal in many other countries around the world. It is just good public policy to have the law catch up with what so many Canadians are doing, and not simply treat them as miscreants. It is time to catch up with what Canadians are doing, and more importantly take that money away from the bad guys and make it available for the public good. Not only does it make sense, it is just the right thing to do.

Thank you. We will be happy to answer any questions that you might have.

The Deputy Chair: Thank you very much, Mr. Rutsey, and of course we will have questions.

Senator Runciman: Mr. Rutsey, I wonder about the gaming model. Perhaps you cannot speak to this Canada-wide and we have only had a couple of jurisdictions indicate an interest, including Ontario and British Columbia, I think. We have seen letters from a couple of other jurisdictions who support the legislation, but no indication in terms of what kind of gaming model will be utilized. The study you undertook seemed to focus solely on the commercial casinos in Ontario.

How do you envisage this rolling out and how it will have an impact on the revenues flowing to organized crime?

Mr. Rutsey: I will let Mr. Burns answer that.

Paul Burns, Vice President, Canadian Gaming Association: The provinces have not articulated clearly their preferred distribution model for this product. Ontario had indicated and the study was done before the modernization plan was released by OLG. At that point, they were looking at strictly a casino product as a way of regaining a competitive advantage for the border casinos.

British Columbia Lottery Corporation, for example, has been online with a fairly robust platform for several years. Atlantic Lottery has been online for a number of years with limited product offering. Loto-Québec has had about a two-year experience. They are all looking at where the customers are. We have seen the resurgence in sports betting come because of the Internet and technology. Game wagering, or proposition wagers as they are often referred to, has seen a resurgence in interest, and technology is driving a lot of that. A lot of it is from Internet sites. Advertising of fantasy sites in Canada has been proliferated. Some of those sites have had agreements with the CFL, rink boards and the NHL, and mainstream TV products.

The lotteries have not been clear, but it is clear that BCLC is looking for this as a product in that way. Ontario with its online strategy has listed it as a phase three — a way down the road for them because they have not been in that space at all. You will see a mix of offerings. Some provinces have made no decisions at all in this case.

Senator Runciman: The CFL does advertising for offshore sites. Those are legal sites, are they not?

Mr. Burns: To play for free they are legal. However, if you find your way into betting for money, for Canadians it is not under the current Criminal Code.

Senator Runciman: Yes, as a resident of Canada.

Mr. Burns: As well as the "conduct and manage" provisions of the Code. They are advertising a dot-net or a fantasy site, but often they lead people to create accounts and bet for money. That is why we have seen as part of this the reported earnings from Canada from the online space and offshore operators are significant. It is about $1 billion per year in earnings from these companies.

Senator Runciman: You talked about the commissioned study — Michigan and New York specifically — and that U.S. federal legislation restricts single event betting to four or five jurisdictions. It is unlikely from the perspective of the folks who carried out the study that we will see that be created as an opportunity presented in Windsor, Detroit and Niagara Falls.

I give Senator White credit for discovering the NFL perspective on this. We know what is happening in New Jersey where all of the major pro sports organizations are fighting New Jersey's efforts. This will obviously go to court, and now they are suing Delaware as well. There is always the possibility of them winning those cases. They are going into them on the assumption that they will win and we could see a proliferation. There is a real possibility that this could be a short-term panacea for some of the border casinos, but it could be short lived.

Mr. Burns: It could be. It depends on the Supreme Court striking down the federal ban on sports wagering in the United States. The law stated that the states that had currently offered sports wagering in any form could continue if they reaffirmed their state's support for that in a period of time once the bill was passed. New Jersey had a sports wagering product but did not reaffirm in the timeline they had. It put them at a greater disadvantage.

Delaware and most others offered parlay betting except for Nevada at that time. Delaware tried to expand their sports book offering, but the law contended that they could only do what they did before. When they tried to expand, the NFL took them to court and won.

Senator Runciman: One of the arguments for this legislation is that it will have an impact on illegal gaming. How do you balance that with the position taken by all of the major sports leagues and the NCAA? I do not know their rationale, but I assume they are concerned about the impact of fixed games and those kinds of things and that this might encourage that.

Mr. Burns: We ask them what they do now. People are betting on the games today. In terms of preserving integrity in sport, they have to be diligent today. They should welcome a legalized regulated sports betting environment because it brings oversight. In an environment where there is no regulation, who watches and who knows what is going on? When there is a popular form of betting line, there have been many successful demonstrations of untoward things that have been going have been found out by sports books. The margins on the odds on a sports book are between 5 per cent and 7 per cent. That means between 93 per cent and 95 per cent of the money is returned to bettor. If you make a mistake, you lose money. They keenly watch and there is predictability to the odds. Professional bookmakers should see a betting pattern. When it gets out of a normal pattern, they become keenly aware and look for what is going on. There have been many examples of this.

Many of the professional sports leagues in North America actually have data sharing agreements with a lot of the European sports books because they recognize it as something they have to be aware of. I find the position of the leagues somewhat difficult at times because the NFL takes their games to Europe and they are bet on when they are there. The NFL brings their games to Toronto every year — a legal sports betting environment today — and they are bet on where their games occur. I kind of question what their motives are in their opposition.

The Commissioner of the NBA was on the record a couple of years ago saying that they thought it was time to look again at the issue of sports wagering and professional sports leagues. A maturity is coming with the technology awareness and with more eyes watching, and it is all good.

Senator Baker: This information was just given to us by Senator Runciman saying that Senator White informed him of a matter that he just addressed a moment ago, which I had not heard before. Senator White has displayed his excellence in investigating in previous committee reports; and he has held witnesses to account for what they are saying. I am looking forward to hearing from Senator White on this issue.

For people watching at home, we are dealing with a bill that, it has been suggested and referenced by the witnesses, will facilitate the betting on games when the people conducting the games do not agree with it.

Madam Chair, I noticed you were taken aback as well.

The Deputy Chair: Perhaps not quite as much because I had had about 24 hours' notice of this wrinkle.

Senator Baker: We will call it a wrinkle; but it is a pretty big wrinkle when talking about court cases and litigation. I look forward to the questions of Senator White.

I believe he is next on the list. I simply yield to him.

The Deputy Chair: Are you passing over?

Senator Baker: I absolutely give my time to Senator White, plus whatever time he wishes on his own.

The Deputy Chair: That is very generous of you, Senator Baker.

Senator White: I listen with interest when people sit here before us and tell us that the NHL, the NBA, the NCAA and Major League Baseball are wrong and suggest that they have concerns, as you have, around sports bet fixing. To suggest that the NFL's Buffalo Bills, which I am very happy to see play in Toronto and wish it was permanent — I would say that twice if thought I could make it happen. The reality is there is no single sport betting. That is why they are not concerned about playing in Toronto, I would suggest.

People cannot bet in Toronto, and you suggest they could bet on them. They cannot bet on them as one game in Toronto, legally.

Mr. Burns: The NFL and the sports leagues took an equally aggressive tone against the State of Delaware that offered parlay wagering.

Senator White: I understand that, but you suggested they could place a bet on that game in Toronto and that is not correct, is it? They could not place a bet on one game in Toronto when the Bills play.

Mr. Burns: They can today because they can go on line.

Senator White: Not on one game, no.

Mr. Burns: Yes, they can. They can go to bet365 and open an account and make a bet.

Senator White: Illegally, you suggest.

Mr. Burns: That is what is occurring to the tune of about $4 billion a year.

Senator White: You did not say illegally. You say they play in Toronto and they can bet on them now, even though —

Mr. Burns: You can. That is a parlay bet.

Senator White: A parlay bet, which is three games, so you would have to convince one player on each team on three different games to actually fix the game to be successful in winning the bet.

Mr. Rutsey: If I could speak to that, I am not suggesting you are naive, but I think it is naive to think that people are not betting on sports anyway. It is a huge business in North America and around the world.

Unfortunately, most of the business in North America is currently conducted underground. That is not to say that the betting does not occur.

I think that what is important, and I think Mr. Burns touched on it very well, is that when legitimate companies are taking these bets and watching the betting patterns, it is easier for them to determine whether or not something needs to be looked into.

As Mr. Burns pointed out, all of these companies have arrangements with professional sports leagues to share that kind of information. A really good example of that took place a couple of years ago in professional tennis. It was 2008-09 when Nikolay Davydenko was playing against some player who was ranked a couple of hundred points below him and he actually won the first set and then he lost the second set. All kinds of money started pouring in on this underdog for no apparent reason. The companies discovered that, identified it immediately, took the match off the book so that no one could win or lose, and turned all of the information over to the ATP, which conducted a two-year investigation into it. They determined that there was no cheating going on and turned the files over to law enforcement to see whether or not there was anything else they needed to do. They then determined there were some people in Russia who believed they had some inside information and were using that to bet.

None of that would have occurred had all of this activity been taking place underground. It makes a tremendous amount of sense for this kind of information to be above ground where it can be looked at, evaluated, studied and, if something untoward is going on, gone after and prosecuted. That does not happen when all of this economic activity takes place underground.

Senator White: Explain to me why the NFL, NBA, the NCAA and Major League Baseball do not see that makes sense for them? In reality we know the NFL today is arguing with New Jersey, and New Jersey is supposed to hold the 2013 Super Bowl. I would argue that I am sure the NFL is concerned about that if they are successful in having single sport betting in 2013.

Mr. Rutsey: You are asking me to take the position, and it is unfair for me to try to speak on behalf of the NFL.

Senator White: You are speaking on their behalf now by stating they should see the common sense of this. I suggest you are doing that.

Mr. Rutsey: As Mr. Burns said, at least the NBA, at the highest levels, has said this is something we should look at again.

Senator White: In 2007 the NBA signed the same letter to the U.S. Congress disagreeing with any changes in sports betting.

Mr. Burns: It has more to do with money than anything else, senator. The fact is that the biggest provider of fantasy sports betting in the United States is the NFL. They went so far as to take other fantasy sports operators to court to say they owned the names of their players and all the statistics and no one could have them. The Supreme Court firmly rejected it because the players' names are public information, as are the statistics. That is the extent the NFL went to in order to ensure they could make a dollar off of all their products.

I have seen the NHL agreement with Betfair in terms of a data-sharing agreement to say that they recognize it is going on and they are hopefully taking the steps necessary. We have seen the numbers in Canada, and they are huge. To say it is not going on is for a league to have a position.

The NHL's comment on this bill was that they would prefer things to stay the same, but that was a quote by Mr. Daley in one paper. They have quite happily existed in a sports betting environment for decades.

Senator White: This is a couple of times now that we have heard the comment that it is happening anyway, organized crime is engaging in this. Because organized crime is engaged in something is not a reason, for me, to suggest that we ought to engage in it in Canada.

Mr. Rutsey: There are also many public companies engaged in this business, just not in North America.

Senator White: It does not necessarily mean it is something Canadians should be engaging in Canada. That is the suggestion, that organized crime is doing it and we ought to be making that money, but there is a whole bunch of things organized crime is involved in, including drug trafficking. I could go on and on. It does not mean we should change our laws so we can make money off of it.

We are the number four gambling country in the world today behind Australia, Ireland and Singapore. I do not think that is a number one we ought to obtain.

Mr. Rutsey: I was watching that debate last night and the way they were going at each other. I probably could not help myself in interrupting you there. I apologize for that.

Senator White: It was a good debate.

Mr. Rutsey: Having said that, we do not expect the amount of wagering on sports in this country to increase in any material way by legalizing it. All we expect to see happen is that a great majority or some large amount of what is currently occurring will now occur above ground and not through the underground economy.

We think that this will make what is going on more transparent. We see this as something that a tremendous number of Canadians engage in on a weekly and monthly basis in a casual way. You just watch television, the newspapers, they publish the odds. When you watch the sports shows on television they talk about the games from the perspective of odds and betting lines and things like that. It is pervasive in the culture of sports. It is really kind of hypocritical to pretend it does not already exist or to say that if we maintain the status quo that somehow or other it will go away or it is not occurring. It is occurring.

I think it is probably not a good thing to criminalize what our neighbours are doing. I think that information is a good thing. I think that driving the revenue above ground and putting that revenue towards the products and services that we all cherish, like education and health care and things like that, is a good thing. I think, on balance, it makes a lot of sense from a bunch of different perspectives.

The Deputy Chair: You said you did not expect much in the way of increase in the volume of single sport betting, but I wonder if you could explain why not. I do not know how to go on the Internet and find illegal gaming sites. I expect I could find out if I cared enough. It seems to me logical that there would be a certain fraction of the population that will not do it while it is illegal but will do it once it becomes legal, with the imprimatur of, in my case, Loto-Québec. I am from Quebec. Why not?

Mr. Rutsey: I think that it is an argument that is hard for either of us to win. We are saying what we are because it is so pervasive now and so many people are doing it in a casual way.

Many of my long-time friends that have nothing to do with the gaming industry casually bet online or they have someone they can call to place a bet. That is just what has evolved over the last 15 or 20 years in the culture of enjoying watching sports.

We did a poll, and the majority of Canadians already think it is legal. They think that it is already regulated. When we have spoken to members of Parliament and senators and talked to them to about this, they have said "That is not legal?" There are lawmakers in Canada who thought it was currently legal.

I do not think there is a feeling among the people who bet on sports that they are doing anything nefarious. I think they are doing something they enjoy doing, and so I do not think that you are really going to create much more of a market for it. It is big; it is pervasive; it is the biggest single element of what goes on in gaming in Canada and the United States right now.

[Translation]

Senator Boisvenu: Thank you very much; your brief is very interesting. I have a few quick questions. The first thing I am curious about is basically how checks and balances are put in place to keep the sport pure. You tell us that you are going to legalize something illegal, something where there was very little control. By legalizing sports betting, how will the checks and balances that you are going to put in place assure us that the purity that the professional leagues hold so dear will be preserved? What is the control process that will stop the players or anyone else from fixing games?

[English]

Mr. Rutsey: We have spoken to that. Betting on sports already occurs. Legalizing it will not change that basic fact. When you change it from illegal to legal, what does change is the activity then can be monitored. As we said, once it is monitored, then unusual betting patterns emerge. If they are there, they emerge; they can be seen and then investigated.

If it is all underground, then no one knows what is going on except the people placing the bets. If a game has been fixed, there is a much lesser likelihood of that being determined.

[Translation]

Senator Boisvenu: Technically, how are those controls done? Do officers, officials, do it? Is any checking done with the professional clubs to see if players are getting any winnings from a third party, as is often the case? The players do not win directly. There is an intermediary. How are the investigations done?

[English]

Mr. Burns: Right now in Europe the system, which is quite extensive and proving effective, especially in FIFA, is a sports-monitoring system for players, officials, coaches, trainers, anyone involved. These individuals submit to monitoring. There is a company that has provided this technology, and it is something that we have talked to them about. Sportradar is the company, and they have used this technology. It monitors players and their activities, and players submit to it as a condition. It is an effective tool for the leagues to ensure their integrity.

The European sports betting environment is hypercompetitive compared to anything we will see in Canada because it is virtually a wide-open market. There are thousands and thousands of books and there is competition for product and customers. We will not see it here because of the control that falls under the lottery corporation. I think in any one given province there would be one sports book.

The technology has been written into regulation in numerous European jurisdictions and is something we have met with gaming regulators in Ontario specifically about. Adopting the technology, this monitoring system, becomes part of the regulatory scheme. The Italian government is using it, and it is proving effective. It is incumbent upon the leagues to ensure their integrity; it is incumbent upon book operators to share data, and there is lots of data available.

I think all of those things are important, working with regulators, with oversight, and this is why it is not a particular product that anyone can offer because it is highly technical and highly specialized. Frankly, if you do not operate a good book, you lose money. Even the books in Las Vegas lose money on Super Bowls and other things like that. It does happen.

However, there is technology available, and in combination with operators and regulators working together, the ability for oversight is there and the technology exists to do it. It is being done effectively by FIFA.

[Translation]

Senator Boisvenu: I feel that one of the objectives of the bill is to replenish the flow of revenue to the public purse. Revenue seems to have fallen in Ontario, if I look at this graph. Also from the graph, I see that Windsor has a lot more customers compared to Niagara.

The diagram also shows the American dollar against the Canadian dollar. The falling American dollar and falling profits and activity kind of go hand in hand. Is wagering activity linked to tourism to any considerable extent? Some casinos run at a loss, even in Quebec. Does the drop in casino revenue, or in sports betting, not go hand in hand with the drop in the American dollar, meaning that fewer people come to the country to go to casinos, as professionals or tourists? Is the drop in revenue linked to the lower American dollar?

[English]

Mr. Burns: Specifically in Ontario in the past decade we have seen a series of factors that have impacted the market in both Niagara and Windsor. First off, there was no competition on the other side of the border. The State of New York, through the compacts with the First Nations, saw Seneca Nation build casinos directly across the border in Niagara Falls, New York. Michigan, which only had First Nations gaming in the peninsula region, had the City of Detroit opt for three casinos, so the market is shared. Now you have seen Pennsylvania — and both casinos in Niagara and Windsor share part of that market — grow with the expansion of casino gaming. Then you add in the parity in the dollar and a tightening at the border mainly from Americans not wanting to leave their country for daytrips and things like that, and you have seen the decrease. The combination of these factors have affected the market, and that is one of the reasons why Mr. Comartin and the Mayors of Windsor and Niagara Falls have seen this as a tool to regain the competitive advantage to bring tourists and visitors back across the border.

In terms of revenue numbers around sports betting, it is not a very big profit margin business. It is about 5 per cent. The economic benefits of someone visiting and staying overnight and buying food and beverage, maybe they will gamble in the casino when they are there, is the real benefit of bringing people back over the border. It is a product they not do not have right now and may not have in the foreseeable future. Those communities have seen it as a way to draw gaming tourists back in to their communities. They have seen a drop-off, and gaining that competitive advantage is important to those communities. That is why we focused on that in this report. It is partly that Ontario, which was the first province to write, had wanted to do this as a casino product. They still do. They saw it as a great benefit for these two communities.

Senator Frum: I am having difficulty understanding. In his letter, Mr. Masse, who is now the sponsor of the bill, talks about 100 million gaming patrons that live within a six-hour drive of the Canadian border. I do not understand why those people would get into their car and drive for six hours to place a single sports bet when they can already do it, albeit illegally, online.

Mr. Burns: They cannot do it in the United States.

Senator Frum: They cannot bet illegally online in the United States?

Mr. Burns: It is very difficult because of the Unlawful Internet Gambling Enforcement Act that was brought in by the government. The fervour with which the Justice Department of the United States has been pursuing and basically trying to incarcerate and arrest online operators has not occurred in this country. It is the same people operating. Our biggest concern is the rise of the offshore Internet operators has driven the increase in sports wagering.

When you look at $4 billion being wagered through these companies who are licensed and regulated in their own jurisdictions but not in Canada and accessing our market, that has been the one piece. There has been no enforcement, no deterrent in any form or fashion in Canada from people accessing the Internet where there has been in the United States.

Senator Frum: You are saying that an American consumer cannot access those offshore gambling sites that are in the Isle of Man or wherever?

Mr. Burns: If they do —

Mr. Rutsey: It is very difficult.

Senator Frum: The argument that we have to legalize it because we cannot stop it is not actually true?

Mr. Burns: Well, no one has chosen in this country to determine how to stop it.

Senator Frum: The Americans have?

Mr. Burns: Somewhat effectively. They have not sent a whole lot of people to jail. They have taken a lot of executives off airplanes and extracted significant fines from companies without ever going to court. I do not think that would work in our system. They have a tool with which to — whether you want to use the term bully or provide some heavy suasion — encourage them not to take bets from Americans. They have done that, and it has not occurred here. That has been one of our biggest concerns.

Canada is a very wired nation. In a decade, our rise in gambling on the Internet has gone from about 1 per cent or less to almost 10 per cent of the population. It is significant, and people are doing it. They are using it. That is why the lottery corporations have now decided they should get into this space. The governments in those provinces have allowed them to do that, probably by understanding this is where their customers are going and have gone. They want to meet the desire of their customer and protect their business, which is only prudent.

The deterrent has not been here, so we have seen bet365 and Bodog logos plastered across CFL fields. Those companies do not take bets from Americans. They take bets from Canadians. They advertise because in the province of Ontario, for example, if you do not advertise the dot-com but dot-net and take someone to a fantasy site, it is legal to advertise that.

Mr. Rutsey: It deflects away from . . .

Mr. Burns: Look at those sites and you may find a dot-net in the corner of the ad maybe that big, but you will find the brand name. Wherever people choose to take themselves on the Internet is their business. The CRTC is not regulating the Internet. There is a whole host of issues that have gone on that have allowed this to proliferate unchecked.

Mr. Rutsey: To specifically answer your question about people hopping in their cars and driving, if you look at the experience in Nevada when major sporting events take place — like the Super Bowl or towards the end of the NFL playoffs, NBA playoffs and during March Madness — there is a huge increase in the amount of visitation to Nevada. There is a huge increase in the amount of betting that is taking place in the legal sports books there, and it is an approximate dollar for dollar equation.

For every dollar that is bet on the sports book there is another dollar of ancillary economic activity taking place within the economic community there. It is a big, major driver. If something is closer to them than hopping on a plane and spending several hundred dollars to fly to Nevada and the alternative is there, then yes they will do that.

[Translation]

Senator Dagenais: You mention that this type of betting already exists, but that it is illegal. Am I to understand that, if this kind of betting were legalized, it would be better for the players?

[English]

Mr. Rutsey: The short answer is yes. The bets would be taking place in safe and secure environments. They would be dealing with legitimate organizations. All of the issues you hear about or can imagine with respect to dealing with criminal elements simply go away. You are providing a safer and more secure environment for the players to play the games, yes.

Senator McIntyre: Mr. Rutsey, I understand you are CEO of the Canadian Gaming Association and Mr. Burns you are the Vice President of Public Affairs. Gentlemen, thank you for your presentation.

Senator Baker: Hear, hear.

Senator McIntyre: Most people seem to be approaching this with regard to the economics. I am approaching it with a different viewpoint. I am not a gambler; never was, never will be. I am a long distance runner and I am more interested in sports than gambling. I enjoyed your presentation, but found there was nothing in your presentation, either oral or documentary, regarding the impact that the legalization of single sports betting will have on Canadian society. Granted, gambling will increase the coffers of government, whether federal or provincial, and render organized crime very uncomfortable. However, on the other hand, have you taken into consideration the impact that this will have on our society?

Mr. Rutsey: First of all, congratulations. I was also a long distance runner for many years until my knees gave out on me. Good for you. I enjoyed that more than just about anything else I have ever done.

To answer your question, I do not think it is going to have any impact at all. It is already happening. You are simply giving the people that are already doing it a safer alternative. We are bringing an activity that is occurring underground to above ground where it can be monitored and measured. To the extent that there are attempts to fix games, you are certainly giving yourself a better opportunity to see that it is occurring. I see no or very little negative impact on society. I see good things happening with respect to this.

The Deputy Chair: Colleagues, we have six or seven minutes for a second round, but I am going to ask both the questioners and the respondents to be as concise as possible to get in as many people as we can.

Senator Runciman: I could make a comment. I am sponsoring the bill and I think the proponents are perhaps a little overly optimistic with respect to its impact on the U.S. However, I understand when you reference Las Vegas and the major events, like the Super Bowl, which attract a lot of folks to visit and spend money in other areas as well. Hopefully that will be the impact it has in Ontario if the legislation passes.

There are other elements, and I think Mr. Burns mentioned some of them. When you look at the smoking prohibition in the Ontario casinos, my wife likes the slots. I have no use for gaming at all. I try to keep her away from them, so I would like to see smoking brought back.

The passport requirement is quite different from Las Vegas as well. There are the entertainment opportunities available in Las Vegas. I understand that you have to be optimistic about these things and hopefully have an impact, but casinos around North America are suffering. Part of that has to do with the state of the economy.

I am just curious about where the sense of optimism comes from.

Mr. Rutsey: I think we are being more realistic than optimistic. In terms of the study that we did with respect to Niagara Falls and Windsor, we are not suggesting that it was going to create thousands of jobs. We are talking about it creating an additional 250 permanent positions.

It is important for those communities because it is a point of differentiation, and people will come across. It is becoming marginally easier to get across the border now with these new secure ID driver's licences, for example. Everyone does not need a passport now if they have one of those. What is really important — and equally important from our perspective — is the fact that we have been criminalizing an activity that millions and millions of Canadians are doing on an ongoing basis, and it does not really make a lot of sense. When I was a little kid, my parents would buy the odd Irish Sweepstakes ticket, and my mother was concerned that we would have to leave the country if they won because they would be arrested. We have moved beyond that. The law really needs to reflect what Canadians are doing.

[Translation]

Senator Boisvenu: You say that one of the objectives is to eliminate illegal activity as much as possible. You will gather from our questions that we are confused by the idea of legalizing something illegal. Earlier, I believe you were talking about billions in illegal betting. What percentage of that betting is exported because people do their betting outside the country? Do you have an idea? Will legalizing sports betting in Canada have the effect of keeping the money here and stopping it from leaving the country?

[English]

Mr. Rutsey: The short answer is yes. In our testimony, we said that right now the best estimate is that about $4 billion is being bet online illegally, and all of that would be going out of the country to companies that are outside of Canada.

Senator White: As you probably know, when Oregon had sports betting, the NBA had an agreement that their games could not be bet on in Oregon. Have you had any discussions with any of the major sports providers about what they would do if Canada and in particular Ontario were to do the same thing and legalize it? Do you know whether the NBA would request or maybe demand such a legislative change or whether Major League Baseball or the NHL had concerns? What about the NCAA in the case of British Columbia? They now have a team in British Columbia.

Mr. Burns: They do, and the NBA currently has an agreement with the Ontario government that NBA games do not appear on PRO-LINE Sport Select. That was a condition of the franchise when the Toronto Raptors were granted. B.C. agreed to the same thing.

The Ontario Lottery and Gaming Corporation maintains that relationship and those discussions. The provinces have discussions with those leagues to talk about this. There is provincial lottery support for some — not all — of the CFL teams in the country, and they have those agreements because of PRO-LINE Sport Select. They have created marketing partnerships in some provinces. In others, there are none. The best way for those decisions to be made is with the provinces looking at any negotiation that would occur if required.

The NHL and the provincial lottery corporations have had a happy coexistence for decades now. I think that it is up to the individual leagues to determine that. As we mentioned, the NFL has an agreement with every state lottery to provide a scratch ticket with the state team's logo on it.

Senator White: That is not betting on the game.

Mr. Burns: It is still gambling. As for betting on games, some have taken different positions than others over the years, and some have taken different positions in the United States than they have in Canada. The NFL never asked for the Bills games to be removed from PRO-LINE Sport Select as a condition of bringing those games to Toronto.

Senator White: Again, that is not single sport betting.

Mr. Burns: It is still wagering. The NFL and some of the other leagues do not distinguish. Some do. In short, the provinces have had those relationships and have made those decisions based on agreements and on the needs of their various provinces because not every league operates in every province.

The Deputy Chair: Gentlemen, thank you very much for your very interesting testimony. The more we look at this bill, as with so many other things, the more complicated it gets. However, we are very grateful to you for being with us today.

Our next witnesses are Ms. Lynda Hessey, Chair of the Board of Directors of the Ontario Problem Gambling Research Centre; Mr. Gary O'Connor, Chief Executive Officer of the Ontario Problem Gambling Research Centre; and Mr. Jon Kelly, Chief Executive Officer of the Responsible Gambling Council.

Mr. Kelly, please proceed.

Jon Kelly, Chief Executive Officer, Responsible Gambling Council: On behalf of the Responsible Gambling Council, I want to express my appreciation for this opportunity to speak to your consideration of Bill C-290. It is quite imaginable that some people are not quite familiar with the Responsible Gambling Council. This organization was established 30 years ago by people who had first-hand experience with gambling problems. They felt that there should be supports in place, like research, treatment and prevention programs, for problem gambling similar to those in place for alcohol and drug problems. Today, the Responsible Gambling Council is focused exclusively on problem gambling prevention. We do not have a treatment program, but we are heavily into a variety of prevention programs.

The council positions itself attempting to bring together the perspectives of people who have had gambling problems — researchers, people who are in the gaming industry, and anyone with a stake in reducing the risk of gambling problems. On our board, the chair is someone who has had a gambling problem. We have four people who have had gambling problems and two members of the gaming industry, including Ms. Jane Holmes, whom I believe you have met.

In order to be effective, problem gambling prevention has to be double-sided. If you are going to reduce gambling problems, you need to address the demand side and provide information to people who choose to gamble about the risks of gambling, the ways to avoid those risks, realistic expectations and signs of a problem — these types of things. However, no matter how good you are at problem gambling prevention addressing the demand side, you also need to address the supply side and the way the games are structured and the gaming products are supplied. We invest a lot of time looking for best practices in the design and delivery of gambling products in addition to a range of programs addressing the gamblers themselves.

When we are talking about the legalization of single event sports betting, it is important to consider the context. Right now across the world there is a large scale transformation of gambling — what we used to understand to be gambling. I have been in this job for 15 years. When I started, people who talked about gambling talked about casinos, tracks, bingo and the lottery. That was where I started with the Responsible Gambling Council. That has changed considerably. While the venue-based gambling is here to stay, there is no doubt that technological changes are having a pervasive influence on the way that both land-based gambling and online gambling are provided. We can see an explosion of gambling products and formats. Companies like Facebook and Zynga Poker are in the gambling business because they are introducing betting into their social games. The line between social games, video gaming and gambling is being erased. This is happening worldwide and is not specific to any country.

The possibilities offered by new technologies are constrained only by the imagination and legislators. This will be the reality of the world of sports betting as well as most forms of gambling as we go forward. These developments modify the gambling landscape in several ways. They provide instant and unlimited access to gambling no matter where you are, really. They represent a shift from older players to younger players, and they are more engaged in the local market versus a tourist market. In Ontario, for example, we have seen the significant drop in tourism gambling as gambling becomes much more localized.

As a result, there will be an increased risk of gambling problems, especially if new people are brought in to the gambling activity. It is essential that risk reduction and risk mitigation programs be strengthened and modernized to address the new challenges and increased risks we see with new forms of gambling. We are in an era of diversification and integration in which conversations about gambling management are displacing the conversations about gambling prohibition. Bill C-290 is an example of this.

Canada, by and large, has set in place a very good gambling safety net through community programs with programs in schools, colleges and universities, and social marketing campaigns, which we are involved in. In Canada, about $82 million a year is invested in problem gambling prevention, treatment and research. That is the community side, usually through health ministries. On the gaming side, about $35 million is invested in problem gambling prevention programs, usually called "responsible gambling programs," in addition to the $82 million.

When you look at the new types of gambling and the impact of gambling, you see that these programs need to be modernized in order to keep up. They are designed largely around venue-based gambling and slot machine gambling with controlled access, which are rapidly disappearing. On the game delivery side, it is essential that the public sector corporations and regulators play an even stronger role in defining the rules of the game and setting clear limits for what is acceptable. There will be an increasing array of gambling options in the future. This array is somewhat unpredictable because technology allows the imagination to drive what new games will be created. It is very important, then, to address the demand side with gambling literacy programs to help people clearly understand what gambling is about, where to get help if they need it, and what risks are involved to approach gambling from an informed consumer point of view.

As gambling grows, it is also very important to address the awareness prevention side of the equation. The Senate of Canada can play a very important role in making clear that single event sports betting needs careful and scrupulous management, including the careful planning and incorporation of player safeguards and strengthening the problem gambling safety net that is in place to match the different types of gambling that we are entering into. Thank you.

Lynda Hessey, Chair, Board of Directors, Ontario Problem Gambling Research Centre: First, on behalf of the Ontario Problem Gambling Research Centre, I would like to express to the Senate committee our appreciation for the opportunity to speak to you today as you consider Bill C-290 regarding the single event sports betting.

The Ontario Problem Gambling Research Centre is an independent, not-for-profit organization formed by the Ontario government approximately 12 years ago. The intent was to put distance between the government and problem gambling research and to reduce the perception of government bias. The purpose of the centre is to fund research to develop knowledge in problem gambling, to build research capacity for problem gambling research in Ontario and to disseminate the research results through knowledge transfer to treatment and prevention providers and policy-makers.

The centre has a rigorous, objective and independent research review process. That process has been reviewed and validated externally by the Canadian Institutes of Health Research. We have been recognized as a leader in problem gambling research in Ontario, in Canada and internationally.

I will turn it over to Mr. O'Connor.

Gary O'Connor, Chief Executive Officer, Ontario Problem Gambling Research Centre: First of all, as a research centre, we try as much as we can to confine comments and statements to something that is fact based, from research. Our brief we gave you has a lot of reference to Internet gambling because it is something that has been far better researched than single event sports betting, but there is a lot of comparable evidence that we can bring into play, plus it is our understanding that in some locations, in some provinces, there are plans that single event sports betting would be done online.

Over the past two decades there has been widespread expansion of legalized gambling in Canada and in Ontario. Over that time, there has been quite remarkably a stabilization of what you call the problem gambler. Just-published estimates of problem gambling in Ontario show that 1.2 per cent of the Ontario population would be called a problem gambler, and of course depending on severity. Highest prevalence areas, the areas of highest concern, are electronic betting and in the community combined with permanent casinos.

A systematic review of our research has confirmed that accessibility and proximity to gambling, particularly land- based opportunities, have a significant influence on the rate of problem gambling. Therefore, the easier it is for you to access, the more people will gamble and the more you will have a problem gambler. It supports the predictions that, as we expand, new forms of legalized gambling will lead to an increase in gamblers and an increase in people experiencing problems with gambling, and there will be considerable public health costs.

The Ontario Problem Gambling Research Centre has worked with leading researchers and practitioners in the field to contribute to the development of a range of responsible gambling initiatives intended to reduce potential harm caused by legalized gambling. I will not go into a lot of detail, but the examples are online learning tools, pop-up messaging on video screens, restrictions or guidelines in casinos about where ATMs are placed so you have to think more to go get more money, looking at the addictive properties inherent in electronic game design, examining how social media campaigns influence attitudes towards gambling, and looking at venue design in casinos.

In general in Ontario, with the decision of the provincial government to expand gambling, we are facing new challenges. With single event sports betting we will be facing challenges as well.

With regard to Internet gambling and sports betting, there will be an increase — you could say it could be a perfect storm — of gambling addiction. Currently Ontarians wager an estimated $400 million on gambling websites that are not authorized in Ontario. The most recent Canada-wide study indicates that prevalence of Internet gambling was 2.1 per cent, and it is also estimated that the rate of problem gambling among Internet gamblers is 17.1 per cent compared to 7.1 per cent in non-Internet gamblers. People that gamble more intensively tend to also use the Internet and favour the Internet.

There are a number of research activities we have funded that identify aspects of Internet gambling, and likely sports gambling, that may increase risks of gambling: availability of it 24 hours a day, convenience and comfort of playing at home or on mobile devices, greater anonymity and possibly looser age restrictions, better playing experience and the solitary nature of the play, monetary transactions are electronic and sometimes using points or tokens rather than money, and online gamblers can play under the influence of drugs or alcohol.

We have been working with the regulators and the Ontario Lottery and Gaming Corporation, the major gaming provider in Ontario, to suggest policy recommendations that leading experts in the field recommend. These recommendations are: restricting use for those under 18 years of age by implementing verification techniques; implementing pre-set limits on deposits and losses and session time while discouraging re-gaming; prominently placing responsible gaming information and how to access help; implementing controls on advertising; providing transparent information about the odds of winning the game; and offering self-exclusion programs.

The Ontario Problem Gambling Research Centre encourages the Senate — while examining this bill and making recommendations for regulation to accompany it — to recommend, where appropriate, that federal and definitely provincial governments look to the above recommendations that I just read out in our brief about enhancing resources to problem gambling research, prevention, awareness and treatment. Research shows that all forms of gambling lead to problem gambling. As revenue to governments is increased, support for the broader social and economic issues that expanded gambling will bring must be increased.

The Deputy Chair: Thank you all very much. Of course, we have questions.

Senator Runciman: I appreciate your comment with respect to proximity and the increase in access to gambling venues. I think that is probably driving the Ontario government's initiatives with respect to new casinos in larger urban centres. That is their answer to solving their deficit problems, I guess.

I am curious about the issue of monies flowing offshore. You heard the previous witnesses suggesting that in a regulated and transparent environment this will be advantageous. Another comment that was made was with respect to the fact that individuals are already gambling and going offshore to do so. In their view this legislation will not, if passed, have an impact on increasing the number of problem gamblers. Do any of you have a view on that?

Mr. O'Connor: We do not have any research to point to that, but a lot of commentators and researchers have concluded that the legalization of gambling will have little net effect of the total gambling dollars spent. It is correct that there could possibly be little net effect.

However, whenever you make any form of gambling accessible, especially with a new game, you increase the number of people gambling. Any time you increase gambling, you increase the number of people and the end result is they experience problems with gambling.

Senator Runciman: I guess the point is they are gambling now and it is going from an offshore venue to a regulated and transparent process.

Mr. O'Connor: The advantage is that it would be regulated and easier to build in responsible gambling controls.

Senator Runciman: On that note, we had a letter from the Alcohol and Gaming Commission of Ontario assuring us that if this legislation passes that they are quite confident with respect to being able to regulate. I wonder if you have any view with respect to the job they are doing now with regulation of the gaming sector in Ontario. Do you have any concerns from that perspective?

Mr. O'Connor: We work closely with Jean Major and his staff at the commission. They are working very hard, bringing in a new standards-based regulation that will be more proactive.

Senator Runciman: We had Professor Derevensky testify last week. He said that if one looks at pathological gambling rates internationally with the vast expansion of legalized gambling, Internet gambling, land-based casinos, lotteries and horse racing, we have not seen significant changes in the prevalence of pathological gambling. Do you share that view?

Mr. O'Connor: The research that we have, and just recently published, shows that the overall number of people who statistically are problem gamblers has reduced in Canada and Ontario over the last decade. The research also says that the growing number of gamblers means in total you have more people who need support for problem gambling.

Senator Frum: Did I understand that you say Internet gambling is a more addictive form of gambling?

Mr. O'Connor: We do not know for sure if there are more people who participate in Internet gambling who would be diagnosed as having problem gambling. It is more likely that if you are going to gamble, you are going to gamble on a number of sites. More people who are problem gamblers are gambling on the Internet.

Ms. Hessey: Since some of that gambling is done either in the home or with mobile devices, there is no observation of people sitting at a slot machine for many hours and someone observing that. In that more isolated environment, there is a higher probability that the problem gambling will result.

Senator Runciman: Mr. Derevensky also said that if the bill goes through, this will be a somewhat safer product. Would you share that view?

Mr. O'Connor: Being that it is regulated, yes.

Mr. Kelly: One aspect that I have not seen commented on is the issue of betting with a bookie. I was not here for the earlier presentations, but with the support of the Ontario Problem Gambling Research Centre, we did two studies of prevalence of problem gambling in 2001 and 2005. In both those cases we found that betting with a bookie was much more predictive of problem gambling than most other forms of gambling. Again, from my perspective, if it were possible to move people from betting with a bookie — which can be single game betting and also has credit — to more legitimate betting on single games, that would be a benefit to those people betting with a bookie, at least from a problem gambling point of view.

Senator Baker: I want to congratulate each one of you for your presentations.

On the point of bookmaking, the bill that we have before us will remove a section from the Criminal Code that includes bookmaking as not being illegal anymore. It says bookmaking, pool selling or the making or recording of bets, including bets made through an agency of a pool or parimutuel system or any race or fight or on a single sport event or athletic contest.

All of the evidence we have heard so far has only pertained to the single betting portion of that section which is being removed from the Criminal Code. The wording of this bill says simply that:

1. Paragraph 207(4)(b) of the Criminal Code is repealed.

That is it. All of what I just read out, including bookmaking, is repealed. Were you thinking about that when you were making your point about bookmaking or was this on a different —

Mr. Kelly: I did not know that, senator. I was assuming that the bill would not make individual bookmaking legal and that the products had to be delivered by the organizations that conduct and manage gambling, i.e. provinces and non-profits.

Senator Baker: I am not giving an opinion on what eradication of this section will do pertaining to these other matters other than the single sporting event. I am not suggesting anything beyond that because I have not really examined it. We have had no evidence whatsoever before the committee to tell us what the rest of this means in this particular section that is being taken out of the Criminal Code. Hopefully there will be some evidence before the committee as to what it actually means when you remove that section.

Senator Runciman was going to say something that would be of benefit to the committee if we hear him now on the intervention.

Senator Runciman: I was advised that the bill does not deal with the issue that Senator Baker mentioned. It deals with a lottery scheme and not with bookmaking. I would just advise that that is the case.

Senator Baker: I completely understand that, but the way the code reads, a lottery scheme means this, this, this and this and not that. Then we get to bookmaking, single-sporting event betting and so on. All of that section is being removed. We have to keep in mind here that it will still be illegal to have three-card monte, a punchboard or coin table. Just imagine.

Anyway, my point is this: You have not really examined what is being removed here; you do not have a legal opinion as to total effect of that.

Here is my question to you. I have listened to you very carefully. It was very interesting, and your points are very well made. What you are suggesting to this committee, the sober second thought on this bill, is that we include something in the passage of this bill that will address some of the problems that have been raised here today. That is what you are asking the Senate committee to do.

There is a problem because everything that you have asked the Senate committee to do involves an expenditure of money. We cannot, as a committee, make an amendment that involves an expenditure of money on a bill such as this.

Some of us have been wracking our brains trying to figure out how we can amend this bill to address the very problems that you bring up. I would leave you with that, as to the wording of an amendment that a member could propose that would address your concerns. It is a very difficult question simply because the bill just removes exceptions to the lottery scheme. Could you turn your minds to that when you leave the committee room? If there is anything that you want to say now, fine. If you want to forward to the committee a suggested amendment that would not involve an expenditure of money, then I could try to figure out — former law clerk that I was 40 years ago — how to add a new section 4(1) that may address what you say. It cannot involve an expenditure of public funds.

The Deputy Chair: I think that was a request rather than a question. We will turn to Senator Runciman for a quick supplementary.

Senator Runciman: I will just make the witnesses aware of the fact that if they are unable to achieve that goal, with respect to a proposed amendment, the committee has an ability to attach observations. That could encourage some action on the part of provincial jurisdictions with respect to how they go forward.

Mr. O'Connor: I was assuming that my comments were for inclusion in observations, but I think we could make an honest attempt at suggesting some wording.

Mr. Kelly: My assumption as well was that it would be outside of the legislative mandate specifically.

When you look at Canada, I cannot think of another example where the allocations for problem gambling or responsible gambling are actually legislated. I am sure that they are all policy and driven by decisions of cabinets as opposed to legislated. Even the formula in Ontario, where two per cent of the gross revenue from specific venues is allocated to problem gambling, is a policy of the Ontario government; that is not anywhere in legislation.

Senator Baker: You are not suggesting that a member of the committee should not consider putting it into law. You are not considering that.

Mr. Kelly: It is hard to sit on the non-profit side of this and suggest that that would not be a good idea.

[Translation]

Senator Boisvenu: First of all, thank you for your testimony; and congratulations, because I know that you are working with clients who are not always easy and that prevention is not always straightforward. I want to go back to the main argument: legalizing an illegal activity. We are confronted by two problems: keeping gambling legal with all its consequences. You were talking about it earlier in terms of the development of the pathology. It is more pronounced when the activity is illegal because it is harder to look for people with problems because they are doing it under the table. But you say that the pathology has been decreasing in Canada for about 10 years. So that makes me more optimistic. We have to find the least undesirable solutions. We are stuck either way.

Once more, suppose you are legislators; let me give you a legislator's hat. You have an illegal activity, one that involves a lot of money, billions of dollars, leaving the country. You have people you do not know because they are betting anonymously. You can stay with the status quo or you can legalize it and find out who is doing the betting, who may develop the pathology, and whom you have to go after with your prevention programs. Given that we are generous as a government, we are probably going to be putting out millions of dollars to support your efforts. What do you decide?

[English]

The Deputy Chair: Who wants to tackle that?

Mr. O'Connor: Of course, in the way the question is framed, the answer is that you must find ways to bring the gambling out in the open and regulate it, control it and provide for those who need more support. That was the spirit of our presentation. I wholly support your comments.

[Translation]

Senator Boisvenu: You have a lot of credibility because you are working with those clients. I find your position almost as credible as ours. Have you anything to add?

[English]

Ms. Hessey: I would like to add one thing. In a previous Senate committee report by Senator Kirby on mental health and addictions, it was identified that problem gambling was seen to be the storm on the horizon. Many people who have problem gambling may have a mental health issue or another addiction issue. Sometimes, the identification of the issue is not clear.

I believe that, through the work of Senator Kirby, that issue has at least been raised. I would not say that it has been particularly taken up by the provinces or in other mental health reports. It has to do, perhaps, with how it gets identified and reported.

Mr. Kelly: The Responsible Gambling Council was set up by pathological gamblers, people who had totally lost everything to gambling, and the organization still reflects a great influence from people who have significant gambling problems. I have not heard, for the most part, in my 15 years of talking to people who have had significant gambling problems, a great appetite for prohibition. My predecessor, the day I started in this job, said, "Remember, focus on the problem not the gambling." By that he meant that it is not about the availability of gambling, which is becoming more and more available; it is about getting at the problem, which is the problem gambling.

In answer to your broader question, a better way to deal with it is to get it out in the open and provide support, treatment, prevention and research rather than to leave it hidden in the back room somewhere. It is even worse, to enforce it, which becomes a kind of circular problem.

I will go back to your comment about the reduction of problem gambling. Being in the prevention business, I would like to think that we have reduced problem gambling over the years. It may well be that our instruments to pinpoint it are better. I suspect that my colleagues from the Ontario Problem Gambling Research Centre would agree with that. We understand more about problem gambling and pathological gambling. We understand so much more about gambling because this whole area has had a lot of attention because we have had the resources to investigate it more and understand it better than we did 15 years ago. The resources provided have enabled us to understand it better.

My suspicion is that we have a much better fix on it. We have not been enormously successful in reducing it, but we have been enormously successful in gaining a much better understanding. This is a very good thing, but it is not necessarily a large scale drop in the numbers. The numbers that Mr. O'Connor mentioned in his presentation are exactly half the numbers that we found a decade ago. I do not think that problem gambling has gone down by half, but I think we have a better understanding.

Mr. O'Connor: We know that upwards of 60 per cent of people who are experiencing an episode of problem gambling self-correct within a year. The issue is that two years down the road they might be back to problem gambling. It is a constant churn.

[Translation]

Senator Dagenais: At the moment, we know that those who bet on sport do so illegally. The profits go to organized crime and that will continue to be the case if this bill is not passed. How can we bring this all together? People are pocketing money. We have to protect problem gamblers. We know that it is all going on undercover, so to speak.

[English]

Mr. O'Connor: The spirit of the comments from the Ontario Problem Gambling Research Centre was part of your recommendations for the people who ultimately will operate the single event sports betting — the provinces and their provincial lottery corporations or gaming corporations: responsible gambling principles that they must ensure adherence to. In Ontario, like it is probably in all provincial jurisdictions, the legislation that created the Ontario Lottery and Gaming Corporation sates that one of the four pillars of the corporation is that it pays attention to responsible gambling and promotes responsible gambling. You can easily say that the work done needs to be extended as gambling options grow.

Senator McIntyre: I am probably hitting the nail on the head a second time and, in doing so, echoing Senator Baker's remarks.

I am interested in the comment that you have made both orally and in writing regarding the important role of the Senate in the management of single sports betting and any form of gambling product, including player safeguards. You also made recommendations, which I will not go over, and Senator Baker made a request for specifics. In answering the request for specifics, could you send us as much information as possible? For example, could the specifics relate to the provinces, the territories and First Nations reserves? It will be important for the Senate committee to look at those specifics.

Mr. O'Connor: On single event sports betting we will not be able to give you specifics, but we can give you comparables.

Senator McIntyre: Yes. I am driving at the management. For example, you are inviting the Senate to play a role in the management of single sports betting and any form of gambling product, including player safeguards. Tell us exactly what you want. That is what I am interested in knowing. Get to the bottom of things and tell us exactly what you want, and we will look at it.

Mr. Kelly: Yes. I am sure we can provide a number of specifics.

Senator McIntyre: We would like as many specifics as possible.

Mr. Kelly: For example, one specific is: Do not provide credit.

Senator McIntyre: Not an expenditure of public money.

Mr. Kelly: Others include the way that a product is advertised and banning live odds during games. You are asking about what kind of things you could build in as safeguards.

Senator McIntyre: Yes.

The Deputy Chair: Of course, this being politics, we truly need this material as soon as possible. I hate to put pressure on you, but Senator McIntyre is right because it would be very useful for us, and it is no good if it comes after we have already finished our deliberations on this bill.

Senator McIntyre: Thank you for your fine presentation.

The Deputy Chair: Before we go to a second round, I have a point for clarification.

You have been clear that you do not have much in the way of data on single sports event betting. You said that the incidence of problem gambling tends to be higher among Internet gamblers, but no one knows whether that is cause or effect. It is interesting that you said it tends to be higher among people who use bookies. Given Senator Baker's question about bookmaking, that might be worth looking into.

In terms of the single event sports betting, which is what most of our work so far has focused on, do you have any indication whether single event sports betting would tend to attract or encourage problem gambling more than other kinds of betting? I am not a gambler, so I do not know. It seems that you might get more zing or more buzz out of betting. I take your point about not during the actual game but right up to close so that you know as soon as the game is over you will get your fix. Is that a factor?

Mr. Kelly: Single event sports betting and sports betting generally appeals to younger people who are more likely to have a problem. Like in everything else, younger people aged 18 to 24 years will go off on a tangent in a number of ways; and gambling is one of them. Sports betting appeals to that age group. It is a zing. We have an NFL pool at the Responsible Gambling Council. Maybe there are some enforcement people here who could tell me whether that is acceptable. There is no question that it adds a bit more to the game, the banter around the game and the abuse you can take if you lose. It adds that dynamic, which appeals to a great number of young people.

The difficulty is trying to identify single event sports betting as a cause of problem gambling because most people who have a gambling problem, gamble on many things.

When we did our study, the person with the problem is likely to bet on six different types of gambling — sports betting, casino, lottery for sure. When you start trying to distinguish which one is the problem, it is very difficult to do, partly because you get a small number of people and you start getting down too far to be specific.

These things are difficult to tease out. Who really has a specific problem related to single event sports betting is such a tiny little question. To unravel that, it is unlikely that a lot more research can unravel that particular question.

Mr. O'Connor: Research has said quite clearly exactly what Mr. Kelly was saying: It is not the game.

The Deputy Chair: It is the problem.

Mr. O'Connor: It is the problem, yes, and there are people that experience problem gambling with bingos.

Senator Chaput: When you say it appeals more so to young people, could you say if it is more so to young men?

Mr. Kelly: Yes.

Senator Chaput: Is it a higher percentage? Is there quite a difference?

Mr. Kelly: As I recall, it is a fairly significant difference. It is much more young men than young women.

Senator Chaput: What age are we talking about here, approximately?

Mr. Kelly: In the research that we have done, the prevalence studies, we have taken age groupings, 18 to 24, 24 to 35, and you see the 18 to 24 is the highest participation. Toward 35 goes down, and then it sort of levels off. Definitely the 18-to-24-year-old grouping is the one most into sports betting.

Senator Baker: I have one main question. In this section of the Criminal Code, it will still be legal for a lottery scheme to conduct three-card monte or punchboard. Do any of you know whether that is a problem in Canada today, either punchboard or three-card monte?

A punchboard is a board sometimes found in a confectionery store, and three-card monte is your shell game. You try to guess where the marble is or where the ace is with three cards. It is the speed of the eye versus the hand. Do you think those are problems, because why on earth would we leave these things in the law if we are taking out single sport betting?

Perhaps you can answer that in answering this question: The authority — the law regarding what we are talking about — is really enforced and enabled through the provinces, and we have seen over the years a difference in the laws of certain provinces in that some of them outlawed the advertising of booze, of alcohol, for example, and the actual drinking of alcohol.

I think somehow that legislation has gone by the wayside. From looking at recent television, I see people drinking. I do not know if those laws have changed, but would you suggest that perhaps a similar encouragement should be made to the provinces to outlaw the advertising of gambling? It is very attractive when you see some poor person on television on an ad run by some lotto corporation that somebody all of a sudden became a millionaire, a truck driver, a cook becomes a millionaire. It is terribly effective in convincing people to do this sort of thing. Would you advocate the encouragement of the provinces to look at outlawing advertising of gambling?

Mr. Kelly: Senator, we have addressed this question. A few years ago Loto-Québec introduced what were called Ludoplexes in Quebec. They asked us at that time, "Do you think that advertising of these venues should be banned?" They ended up banning advertising in the beginning.

Our organization has never had a difficulty with the advertisement of a gambling product as long as it is within certain guidelines, for example, not appealing to children, not promising that you can do this and your problems will all be solved, not showing someone who looks like they are out of control. There are a number of restrictions on gaming advertising that are in place around casino advertising and lottery as well. From my perspective, it is not about banning advertising; it is about banning certain practices within the advertising.

Senator Baker: What about three-card monte? You would not object if we amend the bill to include three-card monte?

Mr. Kelly: I would not object if I knew what it was, senator.

Senator Baker: Okay.

The Deputy Chair: Thank you all very much. This has been very helpful. We will look forward to receiving your suggestions about what we might attach to our report on this bill.

Colleagues, we shall meet again tomorrow morning at 10:30 in this room. Thank you very much.

(The committee adjourned.)