ADMINISTRATIVE REPORT

Date: June 16, 1998

Author/Local: M. Lee/6034

CC File No. 2633-2

TO:	Vancouver City Council
FROM:	Director of Community Services, Social Planning in consultation with the Director of Legal Services
SUBJECT:	Gambling News

INFORMATION

The Director of Community Services, Social Planning presents this report for information.

CITY MANAGER'S COMMENT

The City Manager presents this report for INFORMATION.

COUNCIL POLICY

·On November 1, 1994, Council passed a resolution opposing gaming expansion including the introduction of VLTs in charity casinos and licensed drinking establishments, the expansion of electronic bingo, and an increase in the number of charity casinos in the City of Vancouver or in adjacent areas where the City could be impacted, and furthermore, that the City of Vancouver consider gaming expansion a matter of determination by the people of British Columbia through appropriate broad and local involvement in a meaningful consultation program.

·On March 25, 1997, Council reiterated its demand to the Provincial Government for a comprehensive Gaming Act before expanded gaming activity goes forward. Council further advised the Minister of Municipal Affairs and the Minister of Employment and Investment, that Vancouver opposes the addition of slot machines as an expanded gaming option.

·In addition, between January 27, 1987, and April 22, 1997, Council passed several additional related resolutions expressing concern that maximum financial benefits accrue directly to the social service agencies sponsoring casino events; that controls be in place to discourage or prevent possible negative social consequences, such as compulsive gambling or criminal activity; that revenues be made available to mitigate community impacts; that there be by-law amendments to prohibit electronic gaming devices; and that Council object to the Provincial Government’s approval of an increase in the betting limits and expansion of gaming hours.

·On October 11, 1997, Council made amendments to the Zoning & Development By-law and approved new policies and regulations to deal with casino use in the City of Vancouver.

UBCM POLICY

On September 23, 1994 the UBCM unanimously endorsed the resolutions submitted by the City of Vancouver:

"Be it resolved that the UBCM request the Provincial Government to ensure that there will be municipal participation in the evaluation of community impacts of any expansion to gaming activity, and that gaming legislation or regulations require municipal endorsement of specific gaming locations prior to approval;

And be it further resolved that the UBCM request the Provincial Government ensure through policy that any new gaming activity, including First Nations, be conditional on a portion of the revenue being available to local government for mitigating measures, and that any proposals for new gaming activity specifically address the potential effects on charity gaming."

PURPOSE

The purpose of this report is to provide Council with information on the implementation of changes to the gaming model in British Columbia, particularly in relationship to casino operations. This Information Report also provides up-dates on other news from the gambling industry, particularly as they relate to Municipal Governments concerns.

BACKGROUND AND DISCUSSION

At the Vancouver City Council meeting on June 2, 1998, Council requested a report back from staff to provide information on the new model of ownership and operation of casinos.

A new gaming model has been implemented as of June 1, 1998. The new model has many changes, but the main and most significant change relates to casino table games.

1. Casinos under Section 207(1)(a) of the Criminal Code

Under Section 207(1) (a) of the Criminal Code, the provincial government must "conduct and manage" gaming activities. The new model attempts to satisfy this requirement by increasing the involvement of the B.C. Lottery Corporation (an agent of the government) in gambling activities.

To this end, the BC Lottery Corporation has established operational agreements with casino owners/operators who are now assuming the role of "Service Providers". In the cases where the BC Lottery Corporation is not the owner or lessee of the casinos, the Service Provider agrees to provide the Corporation with the exclusive use of the casino for the purpose of conducting, managing and operating casino games. The BC Lottery Corporation is also the owner of all the Gaming Equipment in casinos and provides the Service Provider with such equipment.

Under this new arrangement, the casino service providers will get remuneration similar to what was agreed to prior to the June 1st deadline, that is:

a) 25% of Slot Machine Win and

b) 40% of the Win on all Casino Games, other than Slot Machines.

2.Recent Court Cases

On April 17, 1998, the B.C. Supreme Court held that a Surrey zoning by-law prohibiting games of chance "played on or through a computer, electronic or other video device or machine" had the effect of prohibiting slot machines. The Court ordered that the Great Canadian Casino Company Ltd. cease slot machine gaming in its Surrey casino.

After this decision, the Great Canadian Casino Company apparently assigned its lease of the casino premises to the Lottery Corporation, and on May 29, 1998 the Lottery Corporation commenced a new proceeding against Surrey. In this proceeding, the Lottery

Corporation is seeking a declaration that the Surrey zoning by-law does not apply to the Lottery Corporation, and an Order setting aside the earlier Court Order prohibiting slot machine gaming in the Surrey casino. In this new proceeding the Lottery Corporation is relying upon section14(2) of the B.C. Interpretation Act which provides that enactments (including by-laws) affecting the government in the use of development of land do not bind the government. It is not known at this time when this proceeding will be heard by the Court.

3. Charity Impacts

BC Gaming Commission staff has just finished touring the province (May 1998), meeting with charity representatives to explain the new revenue distribution formulae that has been established. Some of the highlights of the new arrangement are:

·The B.C. Gaming Commission will continue to be the sole agency for charity access to gaming revenue.

·Charity organizations will access casino revenue through an application process similar to a granting scheme (it is called "direct access").

·New direct access applications (in the GVRD) will not be received until October 1, 1998.

·The Commission will also continue to license charitable access to gaming revenue through bingos, ticket raffles, social occasion casinos and wheels of fortune events and gaming at fairs and exhibitions.

·A revenue guarantee of $125 million for 1998 has been established.

·Volunteers will only have to be supplied at licensed events such as bingo.

Many charities still have many unanswered questions, such as how is the BC Gaming Commission going to assess the needs of a particular charity organizations. Charities must calculate a self-assessed need to be included on a grant application. It is not clear how the BC Gaming Commission is going to evaluate and decide on the final amount of funding.

Another question is how are revenues going to be guaranteed over the long-run when more and more new organizations start requesting funds from the same source. It is possible that a larger bureaucracy will be needed to review grant applications.

4.Destination casinos

On May 14, 1998, the provincial government announced that three Destination Casinos have been approved in principle:

·Casino of the Rockies. St. Mary’s Indian Reserve - Cranbrook. This casino will have 30 tables and 300 slots. The casino is part of a resort proposal that will have a 124-room hotel, lodges, restaurants, a conference centre, an 18-hole golf course and other amenities.

·Jack O’Clubs at Wells near Barkerville. This casino will have 7 tables and 125 slots.

·Motor Vessel Pacific Aurora - to be based at Prince Rupert. It will have 4 tables and 35 slots. The cruise ship has 38 cabins, a 70-seat restaurant, a pub and a viewing lounge. It will cruise from Prince Rupert to Vancouver in the summer and between Prince Rupert to Victoria, Seattle, Nanaimo and Campbell River in the off-season.

On this last proposal, the UBCM has raised the question of what is the status of the ship when it is docked in ports other than the home port. UBCM staff was advised that when the vessel was docked, gambling would not take place.

There are another 34 proposals for gaming facilities that the provincial government continues to review. Minister Mike Farnworth has announced that less than 10 of the original 37 proposals under review will get to the approval-in-principle stage. Thirteen of those original proposals are located in the Lower Mainland, none of them in the City of Vancouver.

5.Adjacent Municipalities’ News

a. Richmond

The Great Canadian Casino located on Number 3 Road in Richmond, has put forward a rezoning application to permit relocation to the BridgePoint Market. The application is presently under review.

b. Burnaby

The casino located at the Villa Hotel is almost ready to operate. This facility was approved by the BC Gaming Commission as a charity casino in 1997. Under the present City of Burnaby’s Zoning By-law, this facility is permitted to operate as long as they don’t have slot machines. It will require, however, a re-zoning approval if the province wishes to install slot machines in it.

6.UBCM and Gaming Act consultation

Frank Rhodes, the consultant in charge of the development of a provincial Gaming Act, has put together a working group to prepare a White Paper and draft legislation by late October, 1998 (legislation is to be introduced in the House in 1999). Mr. Rhodes has approached the Union of B.C. Municipalities to invite them to meet with the working group and to provide any briefs or presentations. It is not clear at this point if this is the extent to which consultation with municipalities will take place.

7.Alberta Summit

The Alberta Government is the provincial government that relies the most (proportionally) on gaming revenue. It collects more than $600 million a year, mostly from 5,866 Video Lottery Terminals (VLT’s) distributed in 1,221 locations, mostly bars and lounges. The addiction rates in Alberta are also the highest in Canada (5.4% of adult population are problem gamblers).

The Alberta Gaming Policy has been heavily criticised over the years, particularly during this last year, and many municipalities have had referendums on the question of removing VLT’s from their communities, many of them successfully. More referendums are going to be held in October 1998 during the Alberta Municipal Elections, including the City of Calgary, where 124,000 signatures has been collected petitioning the referendum (only 80,000 were required).

In part, responding to criticisms, the Government of Alberta agreed to hold a Gaming Summit on April 23-25 in the City of Medicine Hat. The summit was held to assess the status of gaming in Alberta and to determine if any changes were needed.

Nearly 125 Albertans representing a variety of interest and communities met for three days, and discussed the development of recommendations to the government. Five working groups were established and they produced a variety of recommendations. Some of the recommendations agreed upon all five working groups were:

·Restrict gaming and wagering to people 18 years of age and older.

·Dedicate gaming and lottery revenue to charity and community pursuits, rather than the province’s general revenue fund.

·Keep Albertans informed by ensuring accountability and disclosure.

·Dedicate resources to research, including; the prevention and treatment of problem gambling, and the social impacts of gaming and lotteries.

A final report will be submitted by the Chair of the Gaming Summit this fall. The recommendations are not binding to the government.

CONCLUSION

Staff will continue to monitor the situation and will work together with the charities and other municipalities in anticipation of further impacts arising from the implementation of the new model for gaming. * * * * *

(c) 1998 City of Vancouver