CITY OF VANCOUVER

POLICY REPORT
OTHER

 

Date:

July 8, 2003

 

Author:

Mario Lee

 

Phone No.:

604-871-6034

 

RTS No.:

3372

 

CC File No.:

2633-1/8009

 

Meeting Date:

July 24, 2003

TO:

Standing Committee on Planning and Environment

FROM:

City Manager in Consultation with the Director of Social Planning

SUBJECT:

Introduction of Slot Machines at Hastings Park Racetrack

CONSIDERATION

Or

 

CITY MANAGER'S COMMENTS

The City Manager puts this Report forward for consideration noting that the introduction of slot machines into Vancouver is a controversial issue. Consideration B in this report, which raises the possibility of the introduction of slot machines at Hastings Racetrack, contemplates a report back from staff, which will outline an appropriate public consultation process about this issue.

The City Manager presents A or B for CONSIDERATION.

 

COUNCIL POLICY

· On January 27, 1987, Council asked the Attorney-General to begin a review of the regulations governing the operation of casinos as soon as possible, and that the City and other concerned groups and individuals, be given the opportunity to express in detail their concerns and suggestions for improvements. Council also expressed its concern that revisions to casino gambling regulations adhere to basic principles, including that the maximum financial benefits accrue directly to the social service agencies sponsoring the events; and that appropriate, strict controls be in place to discourage or prevent possible negative social consequences, such as compulsive gambling or criminal activity.

· On July 26, 1994, Council requested that the Provincial Government ensure that there will be municipal participation in the evaluation of community impacts for any expansion to gaming activity, including video lottery terminals, gaming on First Nations lands and major casinos. Council further requested that gaming legislation or regulations include municipal endorsement of specific gaming locations prior to approval, and that approval of any new gaming activity be conditional on a portion of the revenue being available to local government for mitigation measures.

· On November 1, 1994, Council passed a resolution opposing gaming expansion including the introduction of video lottery terminals (VLTs) and that the City of Vancouver considered 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 opposed the addition of slot machines as an expanded gaming option.

· On October 7, 1997, Council adopted amendments to the Zoning and Development By-law to permit a limited number of charity-operated casinos in certain areas of the city and to prohibit casinos with slot machines. The amendment prohibiting casinos with slot machines was challenged by the B.C. Lottery Corporation and the City successfully defended the By-law in the B.C. Supreme Court and Court of Appeal.

· In January 1999, the Province introduced the White Paper on Gaming, which recommended legislation changes which could have drastically limited historic municipal powers in relation to casinos and other gaming establishments. On March 9, 1999, Council responded to the Provincial White Paper, by reiterating its stand on the preservation of municipal powers on issues surrounding gambling expansion.

· On September 12, 2000, Council indicated to the Province, a number of concerns regarding the Gaming Control Act (Bill 30-2000) introduced to the Legislature in July, 2000 (later withdrawn). Some of the concerns raised at the time related to commitments made by the Province through the Memorandum of Understanding signed with UBCM in June, 1999.

· On March 12, 2002, Council informed the Minister Responsible for Gaming in B.C. that it had serious concerns with Bill 6-2002, the Gaming Control Act, and submitted a staff Report outlining these concerns to the Provincial Government and to the UBCM, as the City of Vancouver's response to the Gaming Control Act.

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."

· On June 17, 1999, UBCM signed a Memorandum of Agreement with the Province, whereby the Province fully affirms the municipal powers related to casino location, relocations and scope and type of gaming in gaming facilities within municipal boundaries.

PURPOSE AND SUMMARY

This report is in response to Council's request on March 25, 2003, to analyse the impacts that may arise from a change of policy, which would allow for the introduction of slot machines at Hastings Racetrack, and at the same time would continue the existing prohibition of slots in casinos.

This report addresses a number of potential impacts that would arise as a consequence of this change of policy such as potential social and economic impacts, consequences to charities, and effects to the casino sector. If Council chooses to further consider permitting slot machines at Hastings Racetrack, it would likely have to be done through a rezoning, or through other appropriate regulatory mechanisms. Public consultation and a more substantial analysis of neighbourhood impacts would occur as part of this process.

The City has now received a formal submission from the British Columbia Lottery Corporation (BCLC) and Hastings Entertainment Inc., indicating that between 600 and 900 slot machines could be installed at the racetrack with a potential for significant capital investment in the facility.

The proposal has some positive components in terms of employment retention, job creation, increased revenues, and overall enhancement of the facilities at Hastings Racetrack. The installation of slot machines at the racetrack could produce revenues of $6.5 to $9.0 million a year for the City of Vancouver. The City presently receives $750,000 from the racetrack, and the monies are currently dedicated to the restoration of Hastings Park.
The report also identifies some of the negative effects associated with the gaming industry, most significantly the issue of problem gambling and the negative effect that addictive gamblers have on families and society in general. The report also describes some of the main findings from the latest provincial problem gambling prevalence report, which was released on May 2003.

BACKGROUND AND DISCUSSION

On March 25, 2003, City Council requested staff to report back on the impacts of a change of policy which would allow for the introduction of slots at the racetrack but would continue the existing prohibition of slots in casinos. The Council resolution also included a request for information on a variety of related topics as listed below:

· the provincial government's decision-making time lines on gaming issues;
· the social and economic costs of gaming;
· the impact of an effective transfer of gaming activity away from neighbourhoods to a single location such as the racetrack;
· further information on employment gains claimed by the racetrack operators as well as the specific proposals under consideration, including where liquor would be sold in such a facility;
· the potential consequences for charities in the city; and
· the social and economic costs associated with introducing slots to the community.

The request for a report on this issue was triggered by a letter sent to Council on March 10th, 2003, by Hastings Entertainment Inc., the operators of the racetrack at Hastings Park, in which Council was requested to consider the approval of slot machines at the racetrack. The racetrack operator in conjunction with the British Columbia Lottery Corporation (BCLC) which, as required by provincial legislation, is responsible for the management of slot machines at any gaming facility, including a racetrack, has now formally presented this initial request to the City.

The decision regarding a change of policy, which would permit slot machines in Vancouver, is being contemplated at a time when the British Columbia Lottery Corporation, on behalf of the provincial government, is in the process of enhancing the slot machines capacities of surrounding casinos in the Greater Vancouver area.

BCLC and Hastings Entertainment Inc. Proposal

On June 16, 2003, the BCLC, jointly with Hastings Entertainment Inc., presented to City staff a detailed proposal to add electronic gaming at Hastings Racetrack. The proposal indicated that between 600 and 900 slot machines could be installed at the racetrack in a dedicated space of approximately 27,000 sq. ft. The BCLC has indicated that initially only 18,000 sq. ft of that space will be required for the installation of 600 slot machines. The final number of machines to be installed would be decided by the BCLC depending on the market demand and the allocation of the total number of slot machines permitted by provincial government policy.

Recent changes to provincial liquor regulations, which allow for the selling of liquor at gaming facilities, would permit the racetrack operator to include a service bar, attached to the gaming area, in their floor plan. At present, there is a Lounge and a full service restaurant as part of the existing facility. Staff would be extremely concerned if, in the future, alcohol becomes available on the gaming floor. Staff will need to monitor this development.

The proposal estimates that the City of Vancouver will benefit from revenues of $6.5 to $9.0 million a year depending on the final number of slot machines allowed in the site. This revenue estimate is based on the assumption that the current provincial formula, giving the City ten percent of net revenue from casinos in the city, would also apply to the City's share of net revenue from slot machines at the racetrack.

The racetrack operator anticipates a capital investment of $30 to $45 million for general improvements to the facility, and the eventual creation of another 550 permanent jobs at the site. Staff have not fully analysed these projections. (Please refer to Appendix A to view the summary proposal)

Hastings Entertainment Inc. proposes that the introduction of slot machines at the racetrack will augment the facility's revenue and enhance the horseracing component of the business. By being able to increase purses and upgrade the racing track, the operators are hoping to encourage horse owners and horse breeders to invest in the business and increase the value of the breeding stock, which in turn increases the wager. Economic spin-offs can be created at the track but also at the farm level where horses are being bred. Staff note that while the intent is to support this sector of the industry, there is no formal agreement at this time.

Employment Perspective on Racetrack Proposal

The Office and Professional Employees' International Union (OPEIU), representing employees at the Hastings Park Racecourse provided City staff with a copy of a submission that they have prepared for City Council, in which they advocate for the approval of slot machines at the racetrack.

The OPEIU represents 250 workers at the racetrack, including: tellers, ambulance drivers, nurses, valets, program sellers, clockers, customer service representatives, admission and parking attendants, groundsmen, administration clerks, maintenance and security workers. The Union is concerned about the potential loss of these jobs if the racetrack fails to develop strategies, such as the introduction of slot machines, to revitalize the industry. Over half of the employees have been employed at the track for 20 years or more, and almost one third of them reside in the City of Vancouver. A copy of the OPEIU submission is available in the Social Planning Department.

ISSUES

As indicated above, there are a number of issues related to the Hastings racetrack proposal that must be considered. The issues to be addressed in this report are as follows:

(1) Municipal and Neighbourhood Impacts

Ever since the discussion surrounding the proposal of a commercial casino in Vancouver's Waterfront in 1994, the City has indicated concerns with the potential impacts on residential neighbourhoods from adjacent gaming facilities. As a result, in 1997 the City amended the zoning bylaw to include restriction of casino sites to non-residential areas. City staff have not received significant negative feedback from neighbours in areas near the existing gaming facilities in Vancouver. The most common concern relates to parking issues in some of the locations.

If Council decides to consider the introduction of slot machines at Hastings Racetrack, there will be opportunities for residents in the area to raise any issues or concerns that may exist as a result of such a proposal. Some of the issues that may arise as potentially impacting the neighbourhood include hours of operations, increased traffic and congestion, noise, policing issues, and parking issues.

(2) The social costs of gaming

(a) Addiction

Even though for the majority of people, gambling is an enjoyable activity, there is a minority population that experiences negative consequences from gambling. For the most part, these negative consequences relate to addiction and its impact on individuals' mental health, family disruptions, job related problems, and potential criminal involvement.

Addiction studies conducted in different provinces including British Columbia during the last few years, indicate that on average an estimated 3% to 6% of the adult population suffer from gambling related problems (Gambling in Canada, An Overview, Canada West Foundation, August, 2001).

On May 28, 2003, the Ministry of Public Safety and Solicitor General released a problem gambling prevalence study for the province of British Columbia. The study was conducted by Ipsos-Reid and Gemini Research and involved a total of 2,500 telephone interviews of adult British Columbians conducted between November 12 and December 14, 2002.

The study utilizes two methodologies to analyze problem gambling, including the South Oaks Gambling Screen (SOGS), which has been utilized in the past here in British Columbia. The results from this approach indicate that the incidence of problem gambling in British Columbia is unchanged from previous surveys, as the following table indicates:

SOGS Among Past Year Gamblers

 

BC - 2002
(n=2134)

BC - 1996
(n=736)

BC - 1993
(n=1122)

Not at risk

76.8%

75.7%

80.2%

Low risk

19.4%

20.5%

16.0%

Problem gambler

2.8%

2.7%

2.6%

Probable and pathological gambler

1.1%

1.1%

1.2%

 

Problem + Probable Pathological Gambler

3.8%*

3.8%

3.8%

Source: British Columbia Problem Gambling Prevalence Study, 2003 *adding error in original.

The second methodology used in the study is known as the Canadian Problem Gambling Index (CPGI). The CPGI allows for meaningful comparisons with other provinces. The following table shows some comparisons of problem gambling rates among Canadian provinces when utilizing the CPGI methodology:

CPGI Provincial Comparisons

 

BC
Dec 02
n=2500

AB
Feb 02
n=1804

SK
Jan 02
n=1848

MB
Apr 01
n=3119

ON
Dec 01
n=5000

NB
Aug 01
n=800

Non gamblers

15.0%

18.0%

13.4%

15.0%

16.8%

19.8%

Non-problem gamblers 69.3% 67.0% 71.4% 75.6 69.8% 72.1%

Total Non-Problem

84.3%

85.0%

84.8%

90.6%

86.6%

91.9%

At risk gamblers

11.1%

9.8%

9.3%

6.0%

9.6%

4.9%

Moderate problem gamblers

4.2%

3.9%

4.7%

2.3%

3.1%

1.8%

Severe problem gamblers

0.4%

1.3%

1.2%

1.1%

0.7%

1.4%

Total Problem Gamblers 4.6% 5.2% 5.9% 3.4% 3.8% 3.2%

Source: British Columbia Problem Gambling Prevalence Study, 2003

The results of this approach indicate that 4.6% of the adult population can be assessed as problem gamblers, with 4.2% being moderate problem gamblers and 0.4% being assessed as severe problem gamblers. However, the fact that 11.1% of the population is categorized as at-risk gamblers, indicates that British Columbia is not without risk of developing more serious problems in the future. As the authors of the prevalence study indicate in their report: "this suggests the need for focussing on prevention and awareness issues to avoid a progression of at-risk gamblers into the more serious problem categories."

When the problem gamblers population in British Columbia is projected across the province, it equates about 150,000 individuals, an estimated 14,000 of whom can be categorized as severe problem gamblers. The study utilizes a definition of problem gambling as "gambling behaviour that creates negative consequences for the gambler, others in his or her social network, or the community." Among other issues, the study found that problem gamblers are more inclined to engage in alcohol drinking and use of illegal drugs than the rest of the population.

Population most at risk and preferred activities

The provincial prevalence study also found higher rates of problem gamblers among Northern residents (10.2%), among young adults under 24 (9.8%), and lower household income residents (6.8%, <$30K). The types of gambling with the highest rates of problem gamblers are sports lotteries (12.9%), bingo (10.9%), horse racing (10.4%) and casinos (8.8%). The study also found that 8.4% of past year electronic gaming machine gamblers are classified as moderate or severe problem gamblers.

When measuring which gambling activities British Columbians engaged in during the past year, lottery games were the most popular (74%), followed by charity raffle (49%), casino gambling (27%), sports or other events (18%), speculative investments (13%), horse racing (8%), and bingo (8%).

Another finding in the provincial survey is that 23% of all gamblers are willing to travel more than 10Km to participate in their favourite type of gambling. This percentage goes up to 28% for moderate problem gamblers and 52% for severe problem gamblers. Information provided by the BCLC confirms the fact that Vancouver's gamblers are already accessing slot machines at Burnaby, Coquitlam and New Westminster, and that with a new casino with slots being built in Richmond, easy access will be increased.

For more information about the provincial prevalence study, please visit the provincial web site at: www.bcresponsiblegambling.ca

(b) Prevention and treatment

Unfortunately, there is not a great deal of in-depth analysis in Canada on the general social impacts arising from gambling addiction. There have been, however, some studies in other jurisdictions about the effects of gambling addiction on social problems such as suicide, family disruption, bankruptcy, criminal involvement, and others. Some studies make an important connection between these problems and gambling, while other studies find it difficult to generalize, particularly in relation to suicide, divorce and crime.

According to a recent study published by the Canada West Foundation: "Policy makers need to be aware of the impacts of gambling to balance the trade-off between the desire to provide gambling opportunities and the desire to minimize the harm to individuals." (Triumph, Tragedy or Trade-Off? - Considering the Impact of Gambling, Canada West Foundation, August, 2001). The study calls for a continuous review of the effects of gambling and the success or failure of related policies. For a listing of resources and relevant web links, please refer to Appendix B.

The B.C. provincial government does have a gambling addiction program available to those who suffer from this condition. The program has a $4 million annual budget and includes public awareness, prevention, information, referral and treatment components. In 2002/03, 45 counsellors in 35 agencies, provided prevention and counselling services throughout the province. Currently, there is one agency in the City of Vancouver providing prevention and treatment services. Family Services of Greater Vancouver (FSGV) provides general problem gambling services as well as language and cultural specific services targeted to Chinese and Vietnamese communities. There are a total of six trained problem gambling counsellors providing these services with FSGV.

Some of the steps that the provincial government has taken to address problem gambling are:

· prohibiting minors under the age of 19 from participating in gaming activities;
· prohibiting video lottery terminals in B.C;
· restricting gambling machines to specific gaming facilities;
· prohibiting extension of credit to patrons at gaming establishments;
· requiring casinos to participate in the "self-exclusion program."

The province also has a hotline available to problem gamblers and their relatives. In addition, Gamblers Anonymous has a number of self-help groups organized in the Vancouver area.

Perhaps what is missing in British Columbia is a more comprehensive approach to the development of responsible gaming strategies, such as the ones developed in Ontario and Alberta, where prevention and treatment are being supported together with research studies. The Alberta Gaming Research Institute, for example, is a consortium arrangement of the Universities of Alberta, Calgary, and Lethbridge. The Government of Alberta provides the funding for the Institute and gaming related research. Staff suggests that the provincial government could examine this kind of approach.

(c) Increased criminal activity

Another social concern regarding gaming and gaming establishments is the potential for increased criminal activity. The British Columbian and Canadian experience in this matter indicates that there is little correlation between the proliferation of gaming establishments, particularly casinos, and criminal involvement. A recent KPMG study, submitted in June, 2002 to the City of Moncton, New Brunswick, indicates that:

"In Canada, increased criminal activity has not occurred in any significant way in communities that have introduced casino gaming. No jurisdiction has reported a significant increase in street crime, prostitution or organized crime as a result of the introduction of casino gaming."

Feedback received from policing agencies in other Lower Mainland municipalities such as Burnaby, Richmond, Coquitlam and New Westminster, and other British Columbia jurisdictions (Nanaimo, View Royal), indicates that the presence of casinos with slot machines does not seem to present additional policing concerns. In the case of the City of New Westminster for example, the Chief of Police indicates that the two casino operations in New Westminster have increased legitimate pedestrian and vehicle traffic, bringing a positive result to other businesses. Throughout British Columbia there seems to be a good collaborative system between Police, casino operators and government regulators.

(3) Consequences to charities

The provincial government has expressed its commitment to maintaining charity revenues at their historical levels either through direct bingo revenue or from "top up." The allocation of grants through the Direct Access program, which draw revenues from casino activities, complements those allocations. During the 2001/2002 period, 620 Vancouver based community organizations benefited from gaming revenue in the amount of $41.4 million. In this sense, the introduction of slot machines at Hastings racetrack should not affect charities adversely.

However, as a result of the proposed installation of slot machines at Hastings Racetrack, the charities associated with Planet Bingo and Cordial Bingo Halls (89 charities in total) have approached the City with concerns related to potential negative impacts on their sector. According to the bingo charities submission, some of the issues to consider when analysing potential impacts arising from the introduction of slot machines are as follows:

· bingo players and slot players belong to the same demographic group. People who play bingo are likely to play slots;
· past experience, particularly with the opening of the Burnaby Casino in late 1998 (with 300 slots) meant a significant drop in revenue for Planet Bingo.

In their submission, the bingo charities also cite the findings of a study done by a number of bingo hall associations in the province of Ontario, where it is indicated that the commercial feasibility of bingo halls has been affected by the introduction of slot machines at casinos and racetracks resulting in the closure of some bingo halls in that province.

Information given to City staff by the BCLC indicates that they are aware that the introduction of slot machines at the racetrack, or at casinos for that matter, would impact the bingo operations. However, the BCLC remains committed to maintaining a viable bingo gaming model. The BCLC acknowledges that each time casino gaming with slots has been introduced to a British Columbia community, bingo revenues have dropped between 10 and 20 percent initially; however, bingo revenues have rebounded over time. The BCLC also notes that in spite of the expansion of casino gaming in British Columbia, bingo revenues have remained relatively stable.

The BCLC indicated to staff that they would continue working with the bingo sector, including the two Vancouver-based commercial bingo halls, to bring new games and develop strategies to help that sector remain competitive and profitable. Another potential strategy that is being considered by the charities involved with the two Vancouver-based bingo halls is the relocation of their facilities into one new facility attached to a combined casino (with slots) being proposed by the Grand and Royal Diamond casinos, a proposal that is further explained below.

4. Effects on Vancouver's casino sector

In their submission to the City, the BCLC indicates that they will fully respect the City's position if the City continues to maintain its opposition to slot machines in casinos. This is reflected in existing legislation, which requires municipal approval for the introduction of slot machines in a casino without slots. The BCLC acknowledges, however, that market opportunities in Vancouver remain high for a full service casino (with slot machines). If casinos with table games only, continue to be the City's policy, the BCLC maintains that they will continue to allow this type of casino, at least over the near term.

At present there are four casinos operating in Vancouver: Great Canadian Casino at the Holiday Inn, Great Canadian Casino at the Renaissance, Gateway Casino at the Mandarin, and Grand Casino, with a fifth, The Royal Diamond casino, closed for operations for almost two years now. One of the Great Canadian casinos in the city, the Renaissance, is slated to close once the new Richmond casino (with slots), also operated by Great Canadian Casino Company, is developed.

City staff received a copy of a submission dated June 19, 2003, to City Council by the Grand Casino and the Royal Diamond casinos, the two Vancouver-based casinos that are presently allowed by the provincial government to relocate and expand into full service casinos with slots. In their submission, the two casino operators indicated to Council that they have some concerns about the impacts on local casinos, should the City approve slot machines at the racetrack while maintaining the ban on slots in casinos.

In their submission, they indicate their willingness and desire to work with the city in seeking a solution to identified issues. To minimize potential impacts to neighbourhoods, the two casino operators are proposing to consolidate casino operations in one appropriate location. They also propose to work with the City and BCLC in the implementation of strategies that address some of the issues identified by the bingo sector, including the incorporation of a relocated bingo hall adjacent to the new casino (with slots) facility, as well as supporting programs that address problem gambling concerns.

The proposed relocation for the two local commercial bingo halls (Planet Bingo and Cordial) into one facility, would address an already identified need for a more appropriate bingo facility (particularly in relation to Planet Bingo, which is presently located at 2655 Main Street). The concept of a bingo hall adjacent to a casino, while a new concept in British Columbia, is a practice in other jurisdictions.

The Grand Casino and Royal Diamond Casino submission attaches a study of financial options, including the option of allowing slot machines at Hastings Racetrack and the two combined eligible casinos.

5. The economic costs and benefits of gaming

(a) Gambling Expenditures

Recent research data obtained from a study conducted by Dr. Robert Wood and Dr. Robert Williams from the University of Lethbridge in Alberta, confirms the long held belief that problem gamblers spend a higher proportion than non-problem gamblers. In their study, Drs. Wood and Williams conclude that, on average, problem gamblers (2.3% of the population) account for 12.7% of expenditures. When analysing data from British Columbia, they concluded that 4% of problem gamblers account for 12% of expenditures. (The Proportion of Gaming Revenue Derived from Problem versus Non-problem Gambler, presented at 12th International Gambling Conference in Vancouver, May 28, 2003).

The expansion of gaming that has taken place in the last decade has meant that Canadians are spending more money in gambling activities. While acknowledging this, it is difficult to assess which other sectors of the economy are seeing a corresponding reduction to their revenue due to gambling expenditures.

The following table indicates the changes in individual gambling expenditures that have occurred during the last ten years:

Annual Gambling Expenditures per capita (18+) in Canada

 

 

1992

2001

Canada

$130

$447

Newfoundland and Labrador

$190

$438

P.E.I.

$205

$283

Nova Scotia

$180

$473

New Brunswick

$210

$311

Quebec

$130

$466

Ontario

$105

$441

Manitoba

$185

$538

Saskatchewan

$85

$467

Alberta

$120

$604

British Columbia

$155

$319

Yukon, N.W. Territories and Nunavut

$80

$105

Source: Statistics Canada, Fact-sheet on gambling, March, 2003

(b) Gambling Revenues

This level of expenditures has meant that gambling revenues in Canada have grown from $2.7 billion in 1992 to $11 billion in 2001. Gambling revenues in British Columbia have doubled in the last decade to reach $1.1 billion (excluding prizes and winnings). Nationally, the provincial governments are the main beneficiaries of gambling expansion, with some provinces relying on gambling revenue for more than five percent of their general revenues (Alberta, Nova Scotia, Manitoba and Ontario).

In the province of British Columbia, gambling revenues are distributed among the provincial government, gaming operators, charities and municipalities. During the 2001/2002 period, the provincial government received over $600 million in revenue, while gaming operators (casinos and commercial bingo) received $207.4 million as part of their revenue share, which they use for operating and capital expenses. During the same period, charities in British Columbia received $156.4 million derived from bingo operations, direct access grants (from casino revenue), ticket raffles, and other gaming activities. More than 5,000 community organizations benefited from this revenue.

Municipal Revenue

For the fiscal year ending on March 31, 2003, municipalities in British Columbia received $38.2 million as their share of casino revenue. The City of Vancouver, which has four operating tables-only casinos, received $3.9 million. It is interesting to note that the City of Burnaby, which has only one casino with 300 slot machines, received $6 million during the same period, while the City of Coquitlam received $5 million from their single casino (also with 300 slot machines). The BCLC has indicated that if slot machines are installed at the racetrack, it is likely that the same revenue distribution formula that is applied to community casinos (10%) will be used for the slot machines revenue generated at the racetrack.

Gaming revenue is being used by municipalities for a variety of uses, mostly capital expenditures, as the following table indicates:

Use of Gaming Revenue By Municipalities - 2001/2002

Municipality

Revenue

Use of Gaming Revenue

Burnaby

$6,274,000

Capital projects related to environmental or heritage initiatives.

Coquitlam*

$2,280,000

Capital projects and one-time only community grants.

Kamloops

$1,280,000

Capital projects.

Kelowna

$1,598,000

Policing Costs.

Nanaimo

$2,680,000

Policing costs, property tax reduction (2%), victim services, and community grants.

New Westminster

$6,583,000

Capital projects (new Police building), general revenue, community grants.

Penticton

$1,584,000

Capital projects, Policing, community trust fund.

Prince George

$1,390,835

Capital projects.

Richmond

$1,957,000

Capital projects, community grants.

Vancouver

$3,601,000

General revenue and allocated to time limited projects.

Vernon

$996,000

Capital projects

View Royal

$881,000

Sharing arrangement with municipalities of Langford and Colwood, Library, Parks.

Source: Municipality of Prince George survey, February, 2003

* Coquitlam casino opened October, 2001.

 

In the past, many cities, including Vancouver, have chosen not to develop specific funding streams or develop criteria to allocate gaming dollars to fund ongoing programs due to the fact that this type of revenue was not considered stable enough. It has been four years since the provincial government began distributing the municipal share of casino revenue and the annual allocations have continued to increase on a yearly basis, from $19.5 million in the first year (June 1, 1999 to March 31, 2000) to $38.2 million for the last fiscal year (April 1, 2002 to March 31, 2003).

TO THE CITY

Last fiscal year, the City received $3.7 million from casino revenue. It is projected that this coming year, the City will receive $3.9 million. Some casinos are poised to either close down or eventually move out of the city, and this will have a detrimental effect on the City's ability to collect this casino revenue. Ever since the City began receiving casino revenue on June 1st, 1999, the City has received an accumulated amount of $14.3 million.

At present, the City receives $750,000 a year in rent from the racetrack through an agreement. This funding is currently dedicated to the restoration of Hastings Park. If the Hastings Racetrack is allowed to introduce slot machines, the City could receive additional gaming revenue between $6.5 and $9 million annually (BCLC estimates), with the allocation of these revenues to be based on Council priorities.

FUTURE STEPS

On the one hand, If Council adopts Consideration A, no further action is required. The current situation would be maintained and there would continue to be no slot machines in Vancouver. On the other hand, if Council adopts Consideration B and decides to further consider the introduction of slot machines at Hastings Racetrack, amendments to the zoning applicable to the racetrack, or changes made through other appropriate regulatory mechanisms, would be required.

The City is also in the early stages of developing a visioning exercise for the site of the Pacific National Exhibition (PNE). The PNE is located in the site adjacent to the racetrack, and any operation will continue under the direction of the City of Vancouver. If slot machines are introduced at Hastings Racetrack, they will create neighbourhood impacts that would have to be considered as part of a number of public processes.

At the present time, provincial policy does not allow for slot machines at racetracks. However, the province is already considering a request from Fraser Downs Racetrack to approve the introduction of 300 slot machines at their facility in Surrey. Officials with the Gaming Policy Branch of the Provincial government have indicated to City staff that it is likely that the policy will be changed soon to allow slot machines at racetracks. Before slot machines could be introduced at Hastings Racetrack, this change in Provincial policy would have to occur.

SUMMARY OF OPTIONS

The potential introduction of slot machines at Hastings Racetrack will be a controversial issue in the City of Vancouver. Two options with pros and con's are presented to Council:

Options

Both of the options presented for Council's consideration have positive and negative implications.

1. No slot machines in Vancouver

Positive:

· it would not be necessary to address potential neighbourhood impacts arising from expanded activities at Hastings Racetrack;
· it would send a message to the provincial government that the City is concerned with gaming expansion;
· it would minimize potential impacts to the bingo sector; and.
· potential at-risk machine gamblers will not have easy access to gambling machines.

Negative:

· it may force the Hastings Racetrack to close down operations and probably move out of the city, with the resulting loss of jobs and revenue for the city;
· if the racetrack closes down, it would mean a loss of a tourism attraction in the city; and
· it would facilitate the increase of slot machines into surrounding municipalities with casinos, attracting Vancouver players and diverting revenue potential for Vancouver-based gaming facilities.

2. Introduction of slot machines at Hastings Racetrack

Positive:

· it would maintain horse racing jobs in the city and would require additional hires;
· it would bring capital expenditures to the Hastings site;
· it would permit Vancouver resident and visitors who enjoy gambling with slot machines to stay in the City;
· an improved racetrack facility and enhanced horse racing would provide tourists with another entertainment option and ensure their dollars are spent here vs. in another municipality; and
· it would provide the City with additional revenues, which Council could allocate for specific priorities within the city.

Negative:

· it would be necessary to address potential neighbourhood impacts;
· it would provide another close-to-home venue for those at risk from gambling problems to engage in machine gambling;
· it may impact other sectors of the entertainment industry, drawing dollars away from existing established venues like bingo halls.

This report presents an analysis of social and economic implications arising from the potential introduction of slot machines at the racetrack, and presents to Council two options to consider. The first option is to maintain the current situation, with no slot machines in Vancouver. The second option is for Council to indicate a willingness to consider the introduction of slot machines at Hastings Racetrack, and to instruct staff to report back on the procedural and other issues relevant to the introduction of slot machines at the racetrack including an outline of a public consultation process to be implemented prior to any Council decision.

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APPENDIX A
PAGE 1 OF 4

SUMMARY SUBMISSION BY BCLC AND HASTINGS ENTERTAINMENT INC.

Section I: Addition of Slot Machines to Hastings Racecourse

Introduction

The City of Vancouver has had a longtime policy prohibiting slot machines within the City of Vancouver. City Council has made a decision to review this policy and, through City staff, has requested the British Columbia Lottery Corporation (BCLC) to provide information on a number of issues, including the proposed introduction of slot machines at the Hastings Racecourse. Accordingly the BCLC has worked cooperatively with the Hastings Racecourse to provide the following information.

As an agent of the Crown, BCLC has responsibility to conduct and manage all lottery gaming, casino gaming, and commercial bingo in the province, including all slot machine gaming. BCLC is committed to providing balanced, impartial information which will serve as the basis for a report being prepared by City staff. BCLC's response:

Section I: Addition of Slot Machines to Hastings Racecourse

Introduction

The City of Vancouver has had a longtime policy prohibiting slot machines within the City of Vancouver. City Council has made a decision to review this policy and, through City staff, has requested the British Columbia Lottery Corporation (BCLC) to provide information on a number of issues, including the proposed introduction of slot machines at the Hastings Racecourse. Accordingly the BCLC has worked cooperatively with the Hastings Racecourse to provide the following information.

As an agent of the Crown, BCLC has responsibility to conduct and manage all lottery gaming, casino gaming, and commercial bingo in the province, including all slot machine gaming. BCLC is committed to providing balanced, impartial information which will serve as the basis for a report being prepared by City staff. BCLC's response:

· Provides direct responses to specific information requests by City staff,
· Adheres to BCLC's commitment to provide high-quality gaming in a socially responsible manner,
· Responds in context of BCLC's responsibility to manage the gaming marketplace overall, and specifically in areas of lottery, casino, commercial bingo and horse racing.

Economic Impacts

Several provincial governments have established electronic casino gaming at traditional horse racetracks as a means of stimulating horseracing industries within their jurisdictions. These facilities can be found in Alberta, Manitoba, Ontario and Quebec. A similar proposal for Hastings Racecourse will create a unique gaming opportunity for the City of Vancouver.

BCLC has conducted an analysis of marketplace demand and developed economic projections for the proposed slot gaming facility. BCLC proposes a range of 600 - 900 slot machines to be operated at Hastings Racecourse, subject to BCLC's decisions on market demand and the allocation of the total number of slot machines permitted by government policy in the British Columbia marketplace. A synopsis of the proposal follows:commercial bingo and horse racing.

Economic Impacts

Several provincial governments have established electronic casino gaming at traditional horse racetracks as a means of stimulating horseracing industries within their jurisdictions. These facilities can be found in Alberta, Manitoba, Ontario and Quebec. A similar proposal for Hastings Racecourse will create a unique gaming opportunity for the City of Vancouver.

BCLC has conducted an analysis of marketplace demand and developed economic projections for the proposed slot gaming facility. BCLC proposes a range of 600 - 900 slot machines to be operated at Hastings Racecourse, subject to BCLC's decisions on market demand and the allocation of the total number of slot machines permitted by government policy in the British Columbia marketplace. A synopsis of the proposal follows:

New capital investment (Initial) $30 to $45 million
Jobs (construction) 1079 person years
Number of slot machines 600 - 900
Annual visitations (electronic gaming) 1.4 to 2 million visits
Facilities operating jobs (on-going) 2145 full time equivalents (Hastings Racecourse)
Annual payroll (on-going) $67.2 million (Hastings Racecourse)

Revenue Generation

The following table outlines the revenue forecasts based on the number of slot machines provided.

 

    Financial Impact/Revenue Forecasts

 

600

700

800

900

Annual Net Win

        

($Millions)

$100

$115

$123

$140

         

*Revenues to the City of Vancouver

        

($ Millions)

$6.5

$7.5

$8.3

$9.0

* Staff note that the City's revenue is arrived at after operations costs are deducted from the net win.

 

Slot Win Distribution

The slot win distribution formula will provide capital funds for the initial retrofit of the existing Hastings Racecourse facility, including the build out of the proposed new gaming area, as well as on-going facilities upgrades. It will also provide allocations to the "purse", which goes to support the horseracing industry, and 10% of net income to the City of Vancouver as the local host government.

Vision for the New Hastings Racecourse Facility

The proposal to add electronic gaming to Hastings Racecourse envisions a significant upgrade to the present Hastings Racecourse site facility. This renovation represents a considerable economic investment in the City of Vancouver, with a preliminary capital budget of between $30 and $45 million, as dependent upon the number of slot machines approved.

Major components anticipated in the capital budget include the upgrading of the physical building, mechanical systems, electrical systems, construction of the new electronic gaming floor, upgrades to track's public spaces, back of the house areas including kitchens, surveillance, security and seismic upgrades.

One of the most dramatic exterior changes being planned is the redevelopment of the entrance, lobby and driveway areas. This is being done to provide improved visibility, better access and circulation, and add a dynamic new look to the overall facility.

When completed, the revitalized Hastings Racecourse would include:

Electronic Gaming Area

· Offering traditional slot machines as well as unique electronic casino style gaming, this area will contain 600 - 900 slot machines and related signage. Players will have a choice of spinning reel and interactive slot machines with various denominations and themes.

· Options being considered for casino style gaming options include a Sega Derby, (an animated version of a traditional racetrack in which customers can wager on racing outcomes) and various electronic table games such as blackjack, roulette and poker. The gaming area's design would complement the overall property.

Dining/Show Lounge

· A new addition to the Hastings Racecourse, the dining/show lounge would appeal to new customers as well as the traditional racetrack customers. It would be integrated into the gaming area and would be themed to complement overall interior design.

Meeting Rooms

· Meeting rooms would be configured to accommodate small or large groups. Rooms would be available to be rented to external groups for special occasions, or used to greet tour groups and host special customer events.

Racing Facilities

· Currently the facilities are undergoing upgrades for racing patrons and these would be integrated with the slot operations.

APPENDIX B
PAGE 1 OF 2

LISTING OF RESOURCES AND RELATED WEB LINKS

1. Gaming Policy and Enforcement Branch of British Columbia

Responsible for policy and legislation, standards, regulation, licensing, registration, distribution of gaming proceeds, and enforcement for all sectors of gaming.

http://www.pssg.gov.bc.ca/gaming/

2. British Columbia Lottery Corporation (BCLC)

Responsible for conduction and management of gaming in British Columbia.

http://www.bclc.com/Corporate/News/news.html

3. Canada West Foundation (CWF)

The Canada West Foundation is an independent, non-partisan, non-profit public policy research institute located in Calgary, Alberta. The CWF has produced a number of reports related to gambling issues.

http://www.cwf.ca/

4. Alberta Gaming Research Institute

The primary purpose of the Institute is to support and promote research into gaming and gambling in the province. The identified research domains include bio-psychological and health care, socio-cultural, economic, and government and industry policy and practice.

http://www.abgaminginstitute.ualberta.ca/index.htm

5. University of Nevada, Institute for the Study of Gambling

http://www.unr.edu/gaming

6. Ontario Problem Gambling Research Centre

http://www.gamblingresearch.org/

7. Australian Gambling Research Panel
http://www.grp.vic.gov.au/

8. National Council on Problem Gambling (US)

http://www.ncpgambling.org/

9. Responsible Gambling Council (Ontario)

http://rgco.org/

10. Centre for Gambling Studies of New Zealand

http://www.gamblingstudies.co.nz/

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pe20030724.htm

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© 2002 City of Vancouver