CITY OF VANCOUVER



                              M E M O R A N D U M

   FROM:     City Clerk's Office           DATE:  June 23, 1997
                                           FILE:  2633

   TO:       Vancouver City Council

   SUBJECT:  Charitable Gaming



   Jeff Brooks, Director of Community Services, Social Planning and Mario
   Lee, Social Planning Analyst, will provide a report reference on
   Charitable Gaming.

   The attached Administrative Report, dated June 23, 1997 refers.






                                           CITY CLERK

   TT:li
                             ADMINISTRATIVE REPORT

                                                June 23, 1997
                                                C.C. File No. 2633
   TO:       Vancouver City Council

   FROM:     Director of Community Services Division, Social Planning

   SUBJECT:  Charitable Gaming


   INFORMATION

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


   GENERAL MANAGER'S COMMENT

        The General Manager of Community Services presents this report for
        Information.


   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 1st, 1994 Council passed a resolution opposing gaming
        expansion including the introduction of  Video Lottery Terminal
        (VLT s) 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 October 22, 1996 Council passed a resolution: THAT the Director
        of Legal Services bring forward an amendment to the business bylaw
        to prohibit the operation of electronic gaming devices, including
        CLUB KENO, as defined in the previous amendment dealing with Video
        Lottery terminals in liquor licensed establishments; and Council
        reiterated its concern over the lack of consultation on gaming
        expansion; and as Council authorized, a delegation of the Mayor and
        Council met with the Minister responsible for Gaming to communicate
        Council s position.

   -    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.

   -    On April 22, 1997, Council strenuously objected to the Provincial
        Government s approval of an increase in the betting limits and
        expansion of gaming hours within the Greater Vancouver Regional
        District; and further requested the Provincial Government to
        reverse both those decisions and to hold discussions on gaming with
        municipalities.


   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 inform Council of changes related to
   the charitable gaming model in British Columbia, and how these changes
   could affect charities in the City of Vancouver.

   In previous reports, staff provided Council with a detailed explanation
   of the current model of gaming, as well as with an inventory and history
   of such a model. (for a full detailed explanation please see APPENDIX A)


   BACKGROUND AND DISCUSSION

   The Present Charitable Model

   In 1995/96 of the $668.4 million wagered on casinos, bingos and raffles,
   $436.2 million were prize payouts and the remaining proceeds were
   divided among charities, management companies and government.  

   Total proceeds allocated to operating costs were $85.2 million, the
   provincial government received $15.4 million in the form of License
   Fees, and proceeds for charities were $131.6 million.

   The proceeds for charities came from the following categories:

   bingo:                   $67.5 million
   casino:                  $44.4 million
   ticket raffles:          $16.7 million
   other sources:           $3 million

   The British Columbia Gaming Commission received more than 8,000 License
   applications from charities in the year 1995/96.  There were 5,763
   Licenses issued, and about 1,000 of those licenses were issued in the
   City of Vancouver.  These licensees represent thousands of volunteers. 
   The range of activities in which these charities are involved touches
   upon most sectors of society.

   The types of charities that benefit from gaming revenue are varied.  The
   following table indicates the revenue distribution for the year 1995/96:

       Charitable Gaming Revenue By Purpose - British Columbia -
                                1995/96

    Purpose Type          Licenses     Revenue           Percentage
                                       (million)

    Poverty,              980          30.26             23%
    Disadvantaged
    Public Safety,        798          21.06             16%
    Facilities

    Service Clubs         1,277        21.06             16%

    Amateur Athletics     971          19.74             15%

    Education             807          17.13             13%
    Culture and the Arts  577          14.47             11%

    Religion              119          3.94              3%

    Aboriginal            124          2.63              2%
    Youth Activities      110          1.31              1%

    Total                 5,763        131.6             100%


   British Columbia charities depend on gaming revenue.  A study conducted
   by the United Way of the Lower Mainland (Greater Vancouver) indicated
   that on average, organizations and agencies in the voluntary sector
   depended on 6.1% of their revenue coming from gaming.  The study
   indicated that 32% of the agencies receive between 15% and 50% of their
   total revenue from gaming activities.

   The City of Vancouver funds through its grants programs, many of the
   organizations and agencies that rely on gaming revenue for the delivery
   of their services.  The annual grants allocations to the non-profit
   sector from the City of Vancouver is over $7 million dollars.

   A New  Model for Charitable Gaming

   On Friday June 20, 1997, at a by-invitation-only  meeting with charity
   licensees, the Lotteries Advisory Committee (LAC) of the provincial
   government, released further information regarding the expansion of
   gaming in British Columbia.  It is staff opinion that the announced
   changes are not just a minor expansion, but rather the development of a
   complete new model for charitable gaming in the province of British
   Columbia.

   The Provincial Government announced the expansion of Gaming activities
   in the Province of British Columbia on March 13, 1997, including the
   expansion of Charitable Gaming and  destination style casinos .  The
   expansion of charitable gaming includes:

       higher betting limits for charity casinos (introduced on May 1,
        1997).  Betting limits are now $500 for most games.

       longer hours of operation for charity casinos (effective since May
        1, 1997).  Hours of operation are now from 12:00 noon to 2:00 am.

       up to 300 slots machines per charity casino site will be
        introduced.

       electronic and linked bingo will be offered to all bingo halls by
        the BC Lottery Corporation.

       introduction of new charity casinos.

   These changes will generate increased revenue for both the casino and
   bingo operations.  The most dramatic increase however, is expected to
   come from the introduction of slots.  The Lottery Advisory Committee,
   which is implementing the changes, estimates that the revenue potential
   (net win) for charity casinos and bingo operations could grow from the
   present $200 million to more than $700 million once the expansion is
   fully implemented.

   The rationale given by the Lottery Advisory Committee to justify this
   approach to gaming expansion includes:

       more revenue needed by government

       need to stop loss of revenue to Washington State tribal casinos and
        bingo operations

       declining bingo revenue

       public opposition to VLTs and  Las Vegas style  casinos


   Revenue Splits

   The new information learned at the meeting with the Lottery Advisory
   Committee relates to the government intent to change the split of
   revenues.  Currently, the split for casino operations (net of prizes) is
   50% to charities, 40% to operators and 10% to government.  The split for
   bingo is slightly different, with charities getting over 60% of the
   revenue (net of prizes).

   The new revenue split being presented by the Lottery Advisory Committee,
   for all charitable gaming, indicates that one-third of the revenue (this
   time, revenue is defined as net of prizes and expenses) will go to the
   charities, and two-thirds of the revenue will go to the provincial
   government.  Note, however that with the anticipated increased revenues
   from gaming expansion, the actual money allocated to charities is
   projected to increase.  Owners/operators are not part of this 1/3 - 2/3
   split because their revenue is taken before the split between government
   and charities takes place.

   The revenue split for casino owners/operators will be 40% of table games
   and 25% from slot machines.  With the anticipated significant profits to
   be generated by slots, owners/operators will see a tremendous increase
   in their revenue.

   At present, the government revenue generated by the casinos and bingo
   operations is $14 million, the owners/operators revenue is $73 million
   (operation costs are paid out of this portion), while charities receive
   $112 million from both activities.  Once the expansion is fully
   implemented, the Government revenue from charitable gaming could
   increase to $344 million (a 2,457% increase), owners/operators revenue
   could increase to $284 million (a 383% increase), while the charities
   portion could increase to $172 million (a 53% increase).

   The one-third to charity will be deposited in a trust account prior to
   distribution back to the individual charities.  This trust account will
   be the responsibility of a  newly created organization representing the
   charitable organizations, called the B.C. Association for Charitable
   Gaming (BCACG).  At present, the Ad-hoc Committee Directory of BCACG is
   co-chaired by Randall St. Godard from the Health Action Network Society,
   and Elaine Ridout from the Canadian Red Cross Society.  The Directorship
   of this Association will be elected in the future.  The BC Lottery
   Corporation has provided seed money to get the organization established.

   Historically, charitable licensees were able to get whatever revenue was
   generated on the nights to which they were license holders.  Last year
   that was changed to the current practise of location pooling of revenue,
   and soon to be replaced by provincial pooling, in part due to the fact
   that the new expanded model will most likely see a bigger revenue
   increase for casino operations over bingo operations.  In other words,
   casino operations will subsidize bingo operations.

   Bingo revenue has been declining slightly on the last few years, and if
   slots are introduced, it is quite possible that many bingo players will
   cross over to play the machines instead.

   To phase in the change in split, government will provide a guarantee of
   revenue for charities based at $112 million plus a growth factor of five
   percent for fiscal year 1997/98.  Revenue for charities will continue to
   be indexed until the 1/3 split is achieved ($590 M total).  The
   following table indicates the projected charities, owners/operators and
   government revenue flow as gaming continues to expand:

    Net Bingo/Casino   Charities     Owners/Operators     Governmen
           Win                     (including operation       t
                                          costs)          199M           112M              73M               14M

          270M           118M              95M               57M

          550M           118M              196M             236M
          630M           135M              225M             270M

          700M           151M              248M             301M

          800M           172M              284M             344M
   Lottery Advisory Committee

   Tenure to casino and bingo owners/operators will be offered by the
   government (10 years), to provide for continuity and upgrading of
   facilities as required.  Note that the BC Lottery Corporation will be
   buying all the new slot machines, at no expenses to the owners.


   Questions

   The charitable model that has successfully existed in British Columbia
   for the last 10 years is dramatically changing.  A new partnership is
   being developed between the charities (with a new organization),
   owners/operators, the BC Lottery Corporation and the provincial
   government.

   Many questions are still unanswered, including:

   1.   Why are all these changes being done in secrecy, away from public
        discussion?

   2.   Do all charities agree to these changes?  Many charities have
        already indicated concerns over the pooling of bingo and casino
        revenue.

   3.   What happens to those not accepting slots?  Many charities,
        particularly church groups, view bingo activities as having  a
        mitigating social component.  They are particularly concerned about
        the introduction of slots and the associated high degree of
        addiction to them.

   4.   If the gaming market doesn t grow to the levels anticipated by
        government,  how long is the charities revenue going to be
        guaranteed?

   5.   What about the charities that choose not to belong to the new
        BCACG?  How do new ones get involved?

   6.   Many charities object to the longer hours required for their
        volunteers.  With the pooling of revenue, there will be no direct
        relation between volunteers effort and money earned.  How long can
        it continue?


   CONCLUSION

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

   Charity revenue will increase only if massive expansion takes place, and
   if indeed this expansion materializes, City Council needs to consider
   effects of permitting or restricting expansion.



   APPENDIX A

   Gaming Inventory

   The Gaming Industry has expanded significantly over the last 20 years,
   both in British Columbia and in the City of Vancouver.

   Although the population of the City of Vancouver represents only 15% of
   the total provincial population, the level of gaming activities based in
   the City represents almost one-third of the total dollars wagered
   provincially.

   The City of Vancouver continues to be the dynamic centre for business
   and entertainment activity not only for the Region but for the entire
   province as well.  It is not surprising then that a significant part of
   the provincial gaming inventory is located within the city boundaries. 

                               Gaming Inventory

                                        B.C.            Vancouver


    Casinos                                       17              5
    Bingo Halls                                   41              3

    Major Race Tracks                              2              1

    Lottery Outlets                            2,300            380
    Lottery - Pulltabs                         1,137             67
    Accounts


   Type of Gaming

   Historically, most forms of gambling have been illegal in Canada, but a
   series of reforms to the Canadian Criminal Code in 1969 has allowed for
   expanded public gaming activities to take place.  Under section 207.1a
   and 207.1b, public gaming is allowed if conducted and regulated by a
   provincial government or if done for the benefit of established
   charities (but regulated by the provincial government).

   Before 1970, Horse Racing was the most significant form of gambling
   activity taking place in British Columbia (regulated by the Federal
   Government).  But that year, an Order In Council was passed to permit
   the province to conduct public gaming and a Licensing Branch was created
   in the Ministry of the Attorney General.

   A few years later, in 1974 British Columbia became a partner with the
   other three Western Provinces in the creation of the Western Canada
   Lottery Foundation.

   It wasn't until 1983 that the Province established its own Lottery
   Corporation under the B.C. Lottery Act.  The lotteries component of the
   British Columbian inventory of gaming is by far the most financially
   significant, with close to $800 million wagered in the last reported
   year (1995/96).

   With the creation of the British Columbia Gaming Commission in 1987,
   casinos and bingo operations have  become better regulated and
   organized.  That same year, the Gaming Commission enacted a moratorium
   on the numbers of charitable casinos allowed in the province (a maximum
   of 18 are allowed). 

   Of the 17 charitable casinos presently in operation, 5 of them are
   located in the city of Vancouver.  These casinos operate under a
   partnership between government (regulator), charity organizations
   (holders of the licenses) and management companies.  A revenue-sharing
   formula offers 10 percent of casino proceeds to government, 40 percent
   to the management companies and 50 percent to the non-profit, charitable
   organizations.

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

   Illegal Gambling

   A significant amount of illegal gambling is also present in British
   Columbia and in Vancouver.  According to the Vancouver Police
   Department, many of the illicit operators are criminals in their own
   right or closely tied to organized criminal groups.

   Some of the illegal gambling activities include:

       Video Gambling Machines
       Horse Racing Bookmaking
       Sports-bet Bookmaking
       Illegal Poker Clubs
       Midnight Casinos
       Lottery Ticket Reselling

   Amounts Wagered

   Gaming activity in British Columbia has been growing rapidly over the
   last few years.  The total amounts wagered only three years ago, during
   the period 1992/93 was $1.2 Billion.  By 1995/96 it has grown to $1.7
   Billion, with more than $500 million of that being wagered in Vancouver. 
   The breakdown of monies wagered in British Columbia during 1995/1996 is
   presented below:

                  Amounts Wagered 1995/96 - British Columbia
    Lottery                                  $797 million

    Horse Racing                            $266.3 million

    Charity Gaming                          $668.4 million

   When prize payouts are deducted from each of the categories we have a
   total win of $684 million for the year 1995/96.  It is divided in the
   following fashion:

   Lottery:                           $396.8 million
   Charitable Gaming:                 $231.2 million
   Horse Racing:                      $54.7 million

   Per Capita Spending

   Because of its limited gaming expansion (compared to other provinces)
   the province of British Columbia has the lowest amount of per capita
   spending in the entire country at $231 dollars per capita.  The national
   average stands at $350 dollars per capita, and with residents of some
   provinces, such as Saskatchewan and Alberta spending $448 dollars per
   capita.