City of Vancouver

Key Implications of the Province's White Paper on Gaming

Discussion Paper from the City of Vancouver

February 1999

The Provincial government released its Report on Gaming Legislation and Regulation in British Columbia on February 2, 1999. This document has two parts -- the "White Paper on Gaming in B.C." and the proposed Gaming Control Act. These parts contain a series of recommendations that, if adopted, will form the basis for gambling policy and gaming administration in British Columbia.

British Columbians have been invited to respond to and provide feedback on the White Paper before March 15, 1999.

The White Paper on Gaming contains proposals that may have long-term implications for our City.


Key Implications for the City of Vancouver

The Provincial government's proposed legislation on gambling:

  1. Takes away municipal jurisdiction
    Proposed legislation gives the Minister power to over-ride local government. In Vancouver, this would mean Council's ability to regulate casinos would be undermined (e.g., the Minister could over-ride City by-laws for Zoning and Development, Building, Licensing, Noise, Signs, Parking, Street and Traffic).

    It would give the Minister ultimate authority over relocation of existing casinos (where they go, size, and the type of activities permitted).

    The White Paper suggests that, in the future, the Minister may be able to permit existing casinos in one municipality to be relocated into another municipality.

  2. Avoids dealing with serious social issues around expanded gambling
    The City of Vancouver may have as many as 7,800 pathological gamblers that could cost our society hundreds of millions of dollars per year. The proposed legislation recommends only $2 million to address the social issues of problem gambling -- not enough to appropriately implement treatment programs or develop and implement education and prevention programs, particularly among youth.

  3. Ignores economic issues
    The proposed legislation does not say whether there will be any economic or social impact assessment of expanded gambling.

  4. Does not realistically address policing issues
    The proposed legislation does not adequately deal with the cost of increased demands on police resources to control legal or illegal gambling.

 

This Discussion Paper has three components:

 

Inventory of Gambling in British Columbia and in Vancouver

The gambling industry and gambling activity in British Columbia have been growing rapidly over the last few years. The total amounts wagered just six years ago, during the period 1992/93 was $1.2 billion. By 1995/96 this had grown to $1.7 billion. The amount now exceeds $2 billion.

A significant component of the money wagered goes back to gamblers in the form of prizes. A portion is dedicated to cover costs. Another portion is earned by business operators, while the rest is divided between charities and the Provincial government. Of this last component, the Provincial government portion is the faster growing element.

Government and Charities gaming net revenue in millions (from all sources):

1995/96 1996/97 1997/98 1998/99
Charities $131.6 $130.7 $158.7 $144.1
Government $264.9 $285.8 $304.6 $392.8
Total $369.5 $416.5 $463.3 $536.9

Gambling in British Columbia includes: horse racing; bingo; casino games; lotteries and ticket raffles. The City of Vancouver is home to a significant component of this industry, with:

Historically, the City of Vancouver has accepted and cooperated with the development of this industry. However, as early as 1987, Vancouver City Council expressed concerns to the Attorney General of B.C. about possible negative consequences arising from casino gambling. At the time, City Council also indicated its support for the concept of gaming revenue supporting charities.

Casinos in Vancouver

Some of the most significant changes to this industry involve casino operations. Originally, casinos were operated by charities. But in June 1998, they became government casinos operated under special agreements with private management companies.

As recently as 1993, casinos in Vancouver were permitted a maximum of 15 tables, operating eight hours a day, with small betting limits. Now, the maximum number of tables is 30. Casinos are allowed to operate 18 hours a day and have higher betting limits (up to $500 for traditional casino card games). Slot machines have already been introduced in many of the provincial casinos but are not permitted in the City of Vancouver (an earlier attempt to introduce them in 1997 was overturned by the Courts).

The five existing casinos in Vancouver are:

The City's Zoning and Development By-law was amended in 1997 to regulate the areas in the city where casinos are permitted. Only casinos with table games are permitted. Casinos with slot machines are specifically prohibited. Casinos are limited to a maximum of five in the city, and their size is limited to 1,500 m2 (about 16,000 sq. ft.).

If one of the existing five casinos wants to relocate, City Council requires a pre-site clearance process that involves neighbourhood notification and input, as well as an evaluation by staff of various City Departments with respect to neighbourhood impacts. Council then decides whether or not to endorse the relocation application, or may decide to hold a referendum in the neighbourhood.

Summary of the White Paper on Gaming

Copies of the full White Paper on Gaming report and the draft legislation are available on the Government of British Columbia Gaming Policy Secretariat web site at: www.ei.gov.bc.ca
or by contacting Ben Pires, Manager of Communications, Ministry of Employment and Investment at (250) 952-0611.

The White Paper on Gaming contains 39 specific recommendations. If these recommendations are adopted, they will form the basis for gambling policy and gaming administration in British Columbia.

These recommendations are intended to reflect Provincial principles relating to issues concerning the legal foundation for gaming, gambling expansion, charity entitlements, administration and regulatory issues, policing, treatment programs, role of business and municipal jurisdiction.

Some of the key recommendations of the White Paper on Gaming include:

  1. The British Columbia Lottery and Casino Corporation should be responsible for government gaming. Government gaming includes traditional lottery tickets with casino gaming, including slot machines.
  2. Charities should have exclusive domain over all bingo activities, subject to licensing by another branch of the Provincial government, namely the B.C. Gaming Commission. The Gaming Commission should retain responsibility for reviewing, approving and monitoring applications by charities for access to gaming venues or revenues.
  3. The Minister responsible for gaming should have clear authority under the Gaming Control Act to approve gaming expansion and types of gaming.
  4. Legislation should create a mechanism to exempt existing gaming facilities from municipal jurisdiction (this includes the five Vancouver casinos).
  5. Local government approval should be sought for all new gambling facilities.
  6. The Provincial government should approve a special police and prosecutorial program dedicated to investigating illegal gambling and prosecuting criminal offences. The program should be funded with gaming proceeds in the initial amount of $1.5 million.
  7. The Provincial government should mandate, and fund with provincial gaming revenues, programs for problem gambling education, addiction and treatment. Government should authorize the expenditure of approximately $2 million in the next fiscal year for the problem gambling program.
  8. In respect to revenue sharing:
  • Local governments hosting a destination casino should receive 1/6 of the net revenue (16.7%). Local governments hosting existing community casinos, formerly known as charity casinos, (five in Vancouver) should qualify for 10% of the net revenue.
  • Local governments, including those opposed to gaming or gaming expansion, should indicate by Council resolution, in a form prescribed by the Minister, their willingness to receive the revenue.
  • Funds not requested by qualifying local governments should be earmarked for other local governments and distributed annually by the Minister.

Issues and Implications for the City of Vancouver

If the new proposed policies are adopted and implemented, it would mean a level of gambling expansion unparalleled to what we have seen in Vancouver. This could have significant repercussions for the city, its neighbourhoods and its residents.

There are many issues and implications associated with gambling expansion, but in recognition of the small amount of time the Province has allocated for discussions, we will concentrate on four specific areas of concern.

  1. Municipal jurisdiction

    Under the proposed new legislation (the draft Gaming Control Act), the new "British Columbia Lottery and Casino Corporation" is an agent of the government responsible for conducting, managing, and operating all "provincial gaming", including slot machines. The new Corporation may enter into contracts with gaming service providers, which are agents of the government for limited purposes.

    The draft legislation makes a distinction between new gaming facilities, which are new casinos, and "pre-existing community gaming facilities", which are existing casinos:

    (a) New casinos

    Under the draft legislation, the Lottery and Casino Corporation cannot create any new facilities for provincial gaming without the approval of the municipality in which the facility is to be located. No new casinos could be created in Vancouver without the approval of the City. The draft legislation also contemplates a consultation process concerning the location and development of new casinos with both the municipality in which they are to be located and neighbouring municipalities that may be affected.

    (b) Existing casinos

    Pre-existing community gaming facilities are defined as facilities that, on December 31, 1998, were operating in a municipality as a facility for provincial gaming. In Vancouver, this definition would include five existing casinos.

    Although it may not have been intended, the definition also appears to include Vancouver's three bingo halls, and the majority of the "independent" halls where bingo is played (usually about once a week), and any place, such as a corner store or pub, where lottery tickets are sold or Club Keno is played. The definition of a pre-existing facility also includes existing casinos that move to a new location. These casinos could be expanded in "size and scope".

    For these facilities, the proposed legislation gives the Minister the power to over-ride City Council's ability to regulate casinos in any way, including the Zoning and Development By-law, the Building By-law, the License By-law, the Noise By-law, the Parking By-law, the Sign By-Law, and the Street and Traffic By-law. It will give the Minister ultimate authority over relocation of existing casinos including where they go, the size of facilities and the type of activities permitted in the premises. In particular, the Minister can over-ride City by-laws prohibiting slot machines.

    The White Paper suggests that, in the future, the Minister may be able to permit existing casinos in one municipality to be relocated into another municipality.

    This means that the regulations, guidelines and approval procedures City Council adopted in 1997 to limit gaming expansion in the City, and to ensure that casino relocation does not disrupt neighbourhoods, will no longer be in effect.

    The City's present approval process includes extensive neighbourhood notification and consultation. The City's current zoning controls limit casinos generally to the commercial areas near the downtown. With no zoning controls, the Province could allow relocation to any area of the city without any public notification or consultation. City Council will no longer be able to control any aspect of casinos, including where they are located, how big they are, how much parking they provide, and what type of signs they have. Since the City will have no control over casinos, City staff may not have the authority to respond to complaints.

  2. Social issues

    The introduction of slot machines will bring issues related to problem gambling to a new level. There are many concerns related to this form of expansion. Gambling machines, whether electronic or mechanical, are highly problematic. The literature on gambling addiction clearly indicates that continuous forms of gambling, particularly slots or video lottery terminals (VLTs), present a special challenge for problem gamblers for the following reasons:

    • immediacy -- you get the results right away
    • ability to increase play -- the amount wagered and the time spent playing can all increase
    • perception of skill -- a game of chance that creates the illusion one can beat the machine
    • mesmerizing effect -- ability to lose yourself in the activity
    • losses seem painless -- there is small-increment, but high-volume betting.

    British Columbia already has a significant number of problem and pathological gamblers. A study conducted by the Gemini Research/Angus Reid Group in January 1994 (with no slots or VLTs in the market) for the B.C. Lottery Corporation indicated a prevalence of addiction rate of 3.5% in the province -- of these 1.8% were in the probable pathological category. The White Paper itself indicates that in a 1996 report to the British Columbia Lottery Corporation, an estimated 4% of British Columbians are problem gamblers. With 3.2 million adults in the province, we therefore have a possible 128,000 British Columbians suffering from problem gambling and probable pathological gambling.

    The literature is also clear in indicating that the availability of different forms of gambling has a direct impact on addiction rates. The introduction of a more addictive form of gambling such as slots will only increase the levels of addiction already encountered in the province.

    The social impact of gambling can be thought of as a continuum. At one end, gambling is an everyday activity that provides entertainment, recreation and socializing, and one which a majority of North Americans "take in stride". At the other end, a small but significant number of people gamble excessively and experience a variety of personal, family and financial problems as a result. Like substance abuse, problem gambling is a broad term. At its most serious, however, pathological or compulsive gambling is a public health issue.

    An area of particular concern relates to gambling addiction among teenagers. At a recent meeting of the American Psychological Association it was revealed that between five and eight per cent of young Americans and Canadians report a serious gambling problem, a prevalence twice as high as that among adults.

    The social costs of gambling are extremely difficult to calculate. Some research suggests that each pathological gambler affects between 10 and 17 individuals including spouse, children, extended family, employer, employees, clients, consumers, creditors and insurance agencies (Politzer et al. 1992). Another study (Lesieur, 1994) reported that the typical gambling debt of compulsive gamblers entering both treatment and membership in Gamblers Anonymous averages between $20,000 and $50,000.

    Politzer's 1992 study estimated the total social cost of a pathological gambler at about $30,000 per year in 1988 U.S. dollars, for a total cost to U.S. society of $80 billion. The City of Vancouver may have some 7,800 pathological gamblers (based on the conservative figure of 1.8 per cent of the adult population). Translating Politzer's social cost per gambler to around $45,000 (current Canadian dollars), pathological gamblers in the City of Vancouver may already cost society over $348 million per year.

    No one has yet done this kind of research here, so the figure may be less or more. Even if the true figure is just a portion of Politzer's estimate, the effect is serious. It should also be noted that the figure does not take into account youth gambling. Similarly, this figure doesn't consider the costs associated with problem gamblers beyond those defined as pathological gamblers.

    The $2 million recommended by the White Paper to address the issues of problem gambling is a step in the right direction, but it may not be enough to appropriately implement treatment programs and, more importantly, to develop and implement education and prevention programs, particularly among youth.

  3. Economic issues

    No one could deny some of the positive elements of a vibrant entertainment sector that includes gaming venues in Vancouver. The gaming industry employs hundreds of people in the city. The question is not so much its existence, but rather the degree of gaming expansion that should be allowed without proper analysis and consultation.

    Last October, the Union of British Columbia Municipalities (UBCM) presented to the Province seven recommendations dealing with issues of gaming. One of the recommendations specifically requested that an economic and social impact analysis be conducted prior to any future expansion, whether in a new or existing gaming facility. The White Paper gives no indication that there will be any economic or social impact assessment required by the proposed legislation.

    It is important to note that the present Provincial proposal doesn't necessarily call for an expanded bingo or horse racing sector, it concentrates rather on expanding casino operations.

    During the 1994 Casino Review (related to the "Seaport Centre" casino proposal on Vancouver's waterfront) it was concluded that in order to determine if a casino was a real contributor to the local economy, one of the necessary conditions had to be its ability to attract new visitor dollars. If local residents are the main patrons (a likely scenario since gambling expansion is occurring everywhere), money will be diverted from other existing business, such as movies, restaurants and shops.

    But regardless of where the money comes from (visitors versus locals), a fully expanded casino industry in Vancouver will bring a tremendous amount of direct revenue to the Provincial government. It is estimated that if Vancouver's five casinos are fully expanded, they could produce more than $200 million for the Provincial government.

  4. Policing issues

    The Vancouver Police Department is on record as opposing any expansion of gambling. Studies have indicated that the incidence of criminal activity increases significantly with gambling. Some compulsive gamblers may engage in insurance related fraud, theft, domestic violence, break and enter, assault and other crimes, resulting in increased demands for police resources.

    If casinos in Vancouver are fully expanded, the Vancouver Police Department estimates that a minimum of two police officers per gaming facility, plus a commanding officer, will be required to provide adequate coverage.

    The proposed legislation does not adequately deal with the cost of increased demands on police resources to control legal or illegal gambling. It is said, however, that a host local government where facilities are located could apply the municipal share of revenue (if willing to request) to offset policing costs.

    At present, the Vancouver Police Department does not have enough resources to properly police the existing gaming venues, let alone the illegal gambling activities that are also part of Vancouver's gambling inventory. These illegal gambling activities include:

    • video gambling machines
    • horse racing bookmaking
    • sports-bet bookmaking
    • illegal poker clubs
    • midnight casinos
    • lottery ticket reselling.

The White Paper on Gaming does not specifically deal with issues of illegal gambling other than recognizing its existence.

Conclusion

The Provincial government's proposed gaming legislation, if implemented, will have serious repercussions on the City's ability to regulate gambling facilities.

The City of Vancouver is concerned about the effects of expanded gambling in our neighbourhoods. The policies proposed by the Province's White Paper on Gaming will seriously impact municipal jurisdiction. The social and economic costs associated with gambling expansion may surpass the government revenue generated by this expanded industry. Also, gambling expansion will impose increased demands on the resources of the Vancouver Police Department.

The Province has given a deadline of March 15, 1999 to receive feedback on the legislative changes proposed by its White Paper on Gaming. The City will hold special public meetings in the first week of March to gather public input on the proposed changes. This feedback will be delivered to the Provincial government.

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Last modified: February 18
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