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.