Committee Documents: Standing Committee on Finance and Economic Affairs - 1993-Sep-01 - Bill 8, Ontario Casino Corporation Act, 1993

Bill 8, Ontario Casino Corporation Act, 1993
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Wednesday 1 September 1993

Ontario Casino Corporation Act, 1993, Bill 8

Jim Millar

Sparks Street Mall

Ken Dale, executive director

City of Ottawa

Leonard Potechin, chairman, task force on casinos

Jacquelin Holtzman, mayor

Hospitality and Service Trades Union, Local 261

John Robert Kearney, vice-president

Ted Daniels

Eastern Canadian Thoroughbred Association

Carol Baker, president

Algonquin Golden Lake First Nation

Dan Kohoko, spokesperson

Ontario Restaurant Association

Phil Waserman, chairman

Paul Oliver, president

Canadian Trotting Association

Paula Burchell, first vice-president

Bank Street Promenade

Gerry LePage, executive director

Casino Turmel

John Turmel, owner


*Chair / Président: Johnson, Paul R. (Prince Edward-Lennox-South Hastings/

Prince Edward-Lennox-Hastings-Sud ND)

Vice-Chair / Vice-Président: Wiseman, Jim (Durham West/-Ouest ND)

Caplan, Elinor (Oriole L)

*Carr, Gary (Oakville South/-Sud PC)

Cousens, W. Donald (Markham PC)

Jamison, Norm (Norfolk ND)

*Kwinter, Monte (Wilson Heights L)

*Lessard, Wayne (Windsor-Walkerville ND)

Mathyssen, Irene (Middlesex ND)

North, Peter (Elgin ND)

*Phillips, Gerry (Scarborough-Agincourt L)

*Sutherland, Kimble (Oxford ND)

*In attendance / présents

Substitutions present / Membres remplaçants présents:

Dadamo, George (Windsor-Sandwich ND) for Mr Jamison

Duignan, Noel (Halton North/-Nord ND) for Mr Sutherland

Harrington, Margaret H. (Niagara Falls ND) for Mr Wiseman

Martin, Tony (Sault Ste Marie ND) for Mrs Mathyssen

McClelland, Carman (Brampton North/-Nord L) for Mrs Caplan

Sterling, Norman W. (Carleton PC) for Mr Cousens

Also taking part / Autres participants et participantes:

Duignan, Noel, parliamentary assistant to the Minister of Consumer and Commercial Relations

Clerk / Greffière: Grannum, Tonia

Staff / Personnel: Luski, Lorraine, research officer, Legislative Research Service

The committee met at 0931 at the Delta Hotel, Ottawa.


Consideration of Bill 8, An Act to provide for the control of casinos through the establishment of the Ontario Casino Corporation and to provide for certain other matters related to casinos / Loi prévoyant la réglementation des casinos par la création de la Société des casinos de l'Ontario et traitant de certaines autres questions relatives aux casinos.


The Chair (Mr Paul R. Johnson): Jim Millar, please come forward. You have 30 minutes to make your presentation and field questions from committee members. Whenever you're ready, please proceed.

Mr Jim Millar: Thank you. Mr Chairman, ladies and gentlemen, you have my presentation in front of you. You'll see on my letterhead that my company name is Scotland House Ltd.

I'd like to thank this legislative committee for the opportunity to express myself on the question of casino gambling as a private individual.

I have been a resident of Ontario for the past 43 years and I have conducted a business in the city of Ottawa for the past 27 years. My present business is located at 135-139 Sparks Street, immediately adjacent to the proposed site for an Ottawa casino at 125 Sparks Street, the former Bank of Nova Scotia building.

Much prior to the selection of this particular site, when the province first surprised most people with the announcement of considering to permit the operation of casino gambling houses, I was asked by one of the local radio stations for my opinion on this decision. I gave it readily. I stated at that time that I was shocked to learn that the politicians would take this course of action as another means of taxation without giving consideration to the existing social problems before creating more. At that time, I felt we should address the problems of the hungry, the homeless, the ill-clad children, the runaway youths roaming the streets, the addicted and the distressed in general. I have not changed my opinion. The whole social problem will be aggravated by the introduction of gaming casinos into our province, and our politicians must face this reality.

Atlantic City, where the casinos were supposed to revitalize the city's stuttering economy, according to their local economic development committee, now has the highest rate of people on public assistance in the United States of America.

Officials are extremely concerned about children being left unattended while their parents are gambling in the Atlantic City casinos. Executives at such casinos as Harrahs, Bally Park Place, Bally's Grand and the Showboat acknowledge the problem but class it as "negligible." I ask you, how can anyone say that the problem of leaving children unattended in the vicinity of a casino is negligible?

Captain Carlton Duncan of the Atlantic City police department is on record as stating that he remembers a man had to be physically removed from a casino floor to attend to his children. Another man left his three young children for several hours until he was tracked down in another casino. One casino employee called unattended children "victims-in-waiting." "You have all kinds of people coming into casinos, child molesters, drunks, thieves. Every casino has them."

For anyone to dispute that gambling creates social problems ranging from spousal assaults, child abuse, marriage breakups to increases in criminal action to feed this particular habit is totally irresponsible and displays a complete disregard for the dignity of the individual and the quality of life in our communities.

In the 1993 Yellow Pages Directory in Ottawa-Hull, there are 56 listings under Addiction Information and Treatment Centres. Not one of these is listed for gambling addiction, and there is little doubt that this will change dramatically should casino gambling be introduced at a time when, as a society, we should be striving to find an answer as to how to reduce the number of existing addicted persons from other sources.

The state of Maryland Department of Health studied the effect that legalized gambling had in its state and found that gambling addiction was on a disturbing rise: An estimated 1.5% of the population was addicted to gambling. This represented a 100% increase in the previous 15-year period, when casinos were not legal. This resulted in an annual cost to the Maryland taxpayers of $1.5 billion.

With respect to criminal activity, since the beginning of time society has been plagued with individuals who are not prepared to earn their living by their own sweat, and this type of person is not unique in our modern society. They maintain themselves by living off the avails of others, be it prostitution, theft by housebreaking, armed robbery, purse snatching, loan-sharking, illegal gambling, mugging, narcotics etc. All will be associated to the casinos, and our communities would see a drastic increase in crime where the casinos were located. It would be totally irresponsible to state that somewhere along the line, organized crime elements would not have a finger in the cash pie.

This fact is being addressed and acknowledged by Mr Claude Ryan, the public security minister in Quebec, when he stated that it was certain that the presence of a state-operated casino would create a problem with respect to security and police protection. It was further stated that the Quebec casino was being located on a site selected from a security standpoint. Incidentally, that site is an island.

One Quebec official stated that the economic spinoffs appear to the outweigh the threat of an increase in illegal activities, such as loan sharking, prostitution and racketeering.

In a recent A&E television special dealing with the problems created by the explosion of gambling casinos in the USA, it was stated that this can be attributed to part of the reason why the Americans have experienced a 29% increase in major and violent crimes in the past five years: every 17 seconds, a violent crime.

The introduction of a casino into the business environment of a "High Street" resulted in an increase in rent and taxes that placed the businesses in a position of either closing up shop or changing to a gambling operation themselves.

Our police forces are stretched to the limit at the present time. The service, prevention and detection of crimes have diminished in recent years, probably due to fiscal restraints placed on them due to the period of recession in the early 1980s and the 1990s. One of the crucial services that are required in an organized society is that of an efficient police force capable of maintaining the preservation of law and order and the protection of life and property.

We cannot afford to place these requirements in any form of jeopardy to accommodate gambling casinos, nor can we afford to open the door to unethical practices by the "bad apple" in our police forces and must ensure that their professionalism and high standard of conduct are maintained in the eyes of the public that they are serving.


Extravagant claims of financial benefits to the communities where casinos will be located are being made by the proponents of legalized gaming houses. If they can only show what they expect to receive and not what it is going to cost, then how can they predict what the bottom line will be? Perhaps the economic development committees throughout this province should be taking a look at the Atlantic City experience that gives it the dubious distinction of having America's highest rate of people on the welfare rolls.

"Policymakers should be aware that the taxes on casino gambling place a proportionately heavier burden on low-income groups." That's what a 1991 study in the American Journal of Economics and Sociology said, under the heading of "The Incidence of Taxes on Casino Gambling: Exploiting the Tired and the Poor."

Also in the American experience, a Chicago study found that the average lottery spending was $76 in the 10 wealthiest zip code areas, compared to $221 in the 10 poorest. This, to me, symbolizes a great part of the problem associated with this form of gambling, in that people's false dreams and illusions are being manipulated by the operators of casinos for their personal greed. It is time for the restructuring of opportunities of realistic dreams to improve the quality of life, and not follow in the path taken by our neighbours to the south that led them to the multitude of problems created by casino gambling.

Obviously, I do not feel that gambling casinos are a real answer to the economic problems of today, and it would constitute a regressive form of taxation. I will not take up this committee's time by outlining my objections to the proposed casino next door to me on the Sparks Street Mall in Ottawa other than to express my concerns over the process whereby this location received city council support and the awarding of the franchise to one party. I feel that the democratic process was not followed in this particular matter.

In conclusion, I ask that the proposal on casino gambling be abandoned by the provincial government and that this matter be reverted back to its status as a criminal offence. Should the government feel that it should proceed along the lines that it has taken in the recent past, then I would ask that the matter of locating in a particular community be determined by the inhabitants of that community by a voting process that was formerly employed under the auspices of the LCBO for the introduction of liquor outlets. In areas where a casino was approved, there should be a bonding requirement placed on the operator of the gaming house of several million dollars to address any social problems and the increased incidence of criminal activities.

Once again, I thank this committee for the time it has made available to me as a private citizen to express my concerns in this matter which should be of mutual concern.

The Chair: Thank you very much for your presentation, sir. We have a little more than five minutes per caucus. We're going to start with Mr Phillips.

Mr Gerry Phillips (Scarborough-Agincourt): I appreciate your brief, Mr Millar, and I think you've outlined concerns that many of us have. I think the challenge on the other side is that, as we've found in these hearings, there is what I call almost a gold rush mentality about these things. It's like they are the solution to the economic problems of every community. It looks like people are enthusiastically embracing it from a job perspective and from a tax perspective. Have you had an opportunity to review at all any of the material in terms of predictions of jobs and of tax benefits that could accrue to a community that had one of these things?

Mr Millar: Yes, I have, sir. Some of the material that's been supplied to me or that I've heard about was put forward by people -- for example, we had a First Night celebration here in Sparks Street Mall to celebrate the new year, in place of the activities on Parliament Hill. It was proposed by these same people who are making predictions of job and tax revenues today. Initially, they said to expect to have 40,000 people in Sparks Street Mall; it finished up with 15,000. I think that pretty well answers your question.

As far as the gold rush is concerned, let me remind you that the north, the Yukon, is full of shack towns abandoned. I think it's more important for the business community to put their heads together and come up with some constructive ideas, something that fits into the environment in the mall. We should be a people place; it's a pedestrian mall.

Mr Phillips: The presentations we've heard to date from the community tend to sound quite supportive of the proposal here and you're one of the few who have raised concerns about it. Why is it that it appears the rest of the -- or at least the perception is -- Sparks Street proprietors tend to be fairly strongly in favour of this?

Mr Millar: I wouldn't really agree with you saying that the rest of Sparks Street were totally in agreement with it. The main advocates are restaurant owners, four of which are on the board of management. They have a vested interest here in seeing this come to Sparks Street Mall. As far as the rest of the business community, the retailers and such are concerned, some don't want to take sides, others are concerned, others would have been here today but they have their own businesses to look after.

Mr Phillips: We'll be hearing later from the mayor this morning, but I gather that city council is fairly strongly in favour of this. Assuming that this might go ahead, have you any advice for the Legislature on things that we should try and ensure are part of the legislation? I know that at the end of your presentation you had a couple of recommendations for us. Have you any other thoughts for us on how we might minimize your concerns?

Mr Millar: I think if you follow my recommendation of holding plebiscites within the local community, that would address all my concerns. From what I hear from my customers and people on this street, and I talk a lot to people on the street, they're all against. I think one person said he was in favour of it. I don't think he was in favour of it totally; he was in favour of it, but not totally, no. It wasn't really a major concern to him, but I got the impression that he wouldn't be a customer of the casino.

Mr Phillips: Actually, we were in Sault Ste Marie on Monday and that community seems to be quite strongly in favour. The mayor predicted that 80% of the people would be in favour with their projection. Based on what I've seen so far, the people who are in favour of these can launch a pretty strong argument in terms of jobs and revenue and what not.

I appreciate your recommendation on the plebiscite, but if one assumes that it carried, have you any other recommendations for us in terms of how we would minimize your concerns if there is a casino? I realize your belief is that the referendum wouldn't pass, but I think we also in the bill have to anticipate that where it passes, how we can minimize concerns by someone like yourself.

Mr Millar: One of my main concerns and my opposition to this particular form of gambling is the effect it has on the social life. I'm in a position where I have funds available through an organization to which we make contributions to help people such as Operation Go Home, Soup Kitchen Live, distress centre -- there's quite a number of them that we apply these funds towards. I resent making that effort and then have the government create more problems that we have to address.

Mr Norman W. Sterling (Carleton): I'm very pleased to see you here today, Mr Millar, if I can call you Jim. I should tell the members of the committee that Jim and I met some 15, 16, 17 years ago when I was practising law and I represented Jim on a number of occasions. I haven't seen him for 15 or 16 years because I haven't practised law for 15 or 16 years, but I did know at that time of your strong feelings on issues of the day and I also know that you in a sense have been a gambler yourself in terms of being an entrepreneur and starting a number of businesses and being successful in those.

I want to thank you for coming forward and bringing your moral convictions to this committee, obviously having done some reading and preparing yourself for this. As someone who might on the fringe receive some benefit, opposing some kind of activity next door to you on a moral basis -- I think that says a lot for you, Jim.

Do you think it's going to revitalize the Sparks Street Mall, this proposal that the city of Ottawa's looking at?

Mr Millar: No, I'm not of that opinion. The customers who will be coming to that particular location would be there solely for the purpose of gambling. We have a problem with parking as it is at present, a parking problem in that area. Although there are probably lots of parking spaces available, they're not readily identifiable. However, that's one of the main concerns of the business community, the parking. We see where the gamblers who come, not to do business with us, will take up the parking facilities.

In fact, I believe I made a recommendation to city council in June, as a last-ditch effort to get them to try and change their minds, that they take over an abandoned building on Sparks Street Mall, which was really quite an eyesore -- it's the Woolworth building -- and demolish that and create a parking facility, that the cost of this should be borne by the developer. So the parking is a problem.

I really don't think that people are going to come in there in their tuxedos at night to buy a tartan tie from me, a pair of shoes from the gentleman next door to me or some other garment. I can't see them going to be a benefit to the mall restaurateurs and whatever else springs up there to accommodate their needs.


Mr Sterling: I was astounded to hear yesterday, as many members of the committee were, about Ottawa's choice and its manner of dealing with choosing this particular proponent to provide the casino there. That proponent was here represented yesterday, indicating that it had no experience in this area. I guess of all of the concerns that I have in terms of not only what emanates out of a gambling casino, as proven historically in the USA -- at least, in most of those cases, they had experienced people coming in who knew how to run a casino, who knew how to handle the cash, how to handle the staff, could hire the appropriate people, had managers to deal with this. Have you looked at all at the background of this particular proponent and do you have any confidence in this particular proponent?

Mr Millar: I'm rather sceptical of the whole operation there in that, first, it's not a large enough facility for a real, viable proposition, as far as taxation is concerned. The developer has had that property for several years now and a company called Genesis Corp, gentlemen who are in town here, the Falsettos, had it prior to that. They presented the BIA board with a proposal for development as a restaurant. We all thought this was a good thing for Sparks Street Mall, a classy restaurant, to get away from the hamburgers and hot dogs and the French fries that we see so often in malls.

We wanted to try and build up the prestige of the mall too, in that we could offer a better quality of clothing and more attractive to the tourists in the mix of the stores. We were all under the impression that this restaurant was going to materialize and all of a sudden it doesn't; there's a lack of funding and the whole thing falls apart. They bring in another gentleman from Montreal, another developer. It was supposed to be a restaurant also; it was supposed to be a restaurant under the terms of the lease from Public Works to Empire Developments, up until most recently. I don't know if it's changed or not, but it was leased for a restaurant and a restaurant only.

I made a major development in my particular company, in that I took over two other stores that were vacant; they'd gone into bankruptcy in the spring of last year. Then, all of a sudden, I see there's a casino suddenly being proposed by the mayor and it was to be located right next door to me.

When I checked with Public Works, I was given the impression that, "No, everything's all right; it's leased for a restaurant and a restaurant only." After a couple of newspaper articles, eventually I wrote to Mr MacKay, who's Minister of Public Works, and he, in a sense, gave me an assurance that there wouldn't be any casino there. As it stands right now, to the best of my knowledge it's not leased for a casino; that's not one of the items that can be used there under the terms of the lease. Of course, a lease can be amended quite readily.

But now we find that we have a gentleman coming in from down in Florida with a cruise line, a multimillionaire. It looks to me as if he's a very shrewd businessman and the bottom line means a great deal to him personally. He's getting involved in a small operation, Sparks Street. I just can't see what his motives are here. I have concerns along those lines. I just can't see this businessman becoming involved in this.

Mr Kimble Sutherland (Oxford): Thank you, Mr Millar, for coming here this morning. You've outlined a case against casino gambling and what you feel are some of the problems associated with it. I guess I'd like to know how you see other forms of gambling, whether that be lotteries, charity casinos, betting at racetracks etc. It seems to me that we have quite a bit of gambling going on right now, yet there seems to be an impression by many that somehow casino gambling is a lesser form of gambling or it's a more evil form of gambling. What, in your view, makes one form of gambling worse than another type of gambling?

Mr Millar: I think, firstly, each generation seems to change its values with respect to all matters. I can recall, back in the 1950s, there was a gaming house, a roadhouse on Highway 10 just south of Cooksville that was being completely raided all the time. They had guard dogs, iron bars. The Toronto criminal element seemed to hang out there.

Then we changed our attitudes towards gambling and we had bingo halls, then government-run lotteries. The bingo halls are easy to control. The province benefits by issuing a licence through the local municipality. There is a degree of enjoyment for the ladies in certain communities, and also gentlemen. They don't lose a great deal of money, from what I can see.

As far as lotteries are concerned, there's a beneficial spinoff from the province that was established. The proceeds from the provincial lotteries were dispensed through the local members of Parliament or other different people to local associations and especially in the sporting field, in the cultural areas, the arts. They all benefited from that. I can't really see any problem with that type of gambling.

Racetracks: I find nothing wrong with racetrack gambling. I think it's a great evening out for the family, if need be. Friends meet there and have dinner. It's usually a $2 bet and you don't lose a great deal of money, unless they become addicted to it, and there is a problem there. I haven't seen too many people become extravagantly addicted to racetrack gambling.

I've seen problems in areas where somebody loses their paycheque at the end of the week to gambling and it results in the wife and husband getting into a dispute, the fist comes up and the husband gets jailed and that's the marriage over with. Society has to bear the burden of bringing up these children.

The Chair: Ms Harrington, we have one minute.

Ms Margaret H. Harrington (Niagara Falls): You mentioned some of the social problems that you see. I want to ask you about the image of Ottawa, whether you feel that this casino idea complements the whole aspect of Ottawa. I grew up fairly close to here in Brockville and my image of Ottawa was of a very unique city with things like the museums and skating on the Rideau Canal and the very many unique attractions of the capital. Do you feel casino gambling would complement this or not?


Mr Millar: No. As far as that particular location is concerned, we're only one block away from Parliament Hill and it's only in the past couple of years that we've had tourist designation in Sparks Street Mall. We went to a great deal of trouble to get that identification because we want to attract the international tourists down there.

That particular location would be better suited for an international fruit bazaar, or even Canada House. The Canada House that was located in Elgin Street last year for the celebration of 125 years was immensely successful. It should be continued as a tourist attraction, as an educational feature for our children in the local schools and during the tourist season for the children who come in from other parts of Canada. I think it's better suited for that than a gambling casino. It would be out of character on that Sparks Street Mall.

The Chair: Thank you, Mr Millar, for presenting before the committee this morning.

Mr Millar: Thank you, sir.


The Chair: Our next presenter this morning is Mr Ken Dale, executive director, Sparks Street Mall, if you would please come forward, sir, and make yourself comfortable. You have 30 minutes within which to make your presentation and field some questions from the committee members. Whenever you're prepared, please proceed.

Mr Ken Dale: Good morning, members of the committee. Thank you for giving me the opportunity to speak here today on casino gaming in Ottawa. My name is Ken Dale. I represent the Sparks Street Mall management board as executive director, which represents several hundred members, be they retail stores, offices, landlords.

Originally, the Sparks Street Mall management board was formed about two years ago, and there were two boards running one street. One was a BIA, much similar to Yorkville or other areas, and that was run by a director who was charged with the promoting of the street. There was another board with levies attached that was charged with the physical plant maintenance of the five blocks as you walk up this street, which is the lighting, the flowers, the street cleaning, the parking and all those issues.

I was brought on board about 20 months ago when they amalgamated the two boards, and at that time another part of my objective, and I believe of the board's, was development of that street. There was $6 million put into that street in 1988. They've spent $500,000 a year since 1988, and in only the last two years has that mall begun to turn around.

By the way, I might add the board is made up of one person who is a director of property for the Department of Public Works, which owns most of the north side of the street, the vice-president of property for the National Capital Commission, which owns most of the south side of the street, landlords, a city councillor and concerned business people from that five-block precinct.

It is an important street. It's bounded by Wellington Street and the Parliament buildings to Queen Street, and from Lyon Street outside this hotel up to Elgin Street. It is literally the heart of downtown Ottawa. The historic mall involves several hundred businesses including hotels, small businesses, small retailers, restaurants, legal firms and professional offices. It is Ottawa's most central and vitally important pedestrian-only mall. Each day it serves 120,000 office workers at lunch within five blocks and caters to millions of international and Canadian tourists as a premier destination during the summer.

I might add that in 1987 the building we are speaking of was zoned for the use of a casino by Mr Bruce Firestone of the Ottawa Senators, and it was his wish at that time that the building be utilized as a small, upscale European casino. He was obviously ahead of his time.

I've spent just under two years trying to create an upscale European street and reposition that street from other streets in Ottawa and Toronto. We have accomplished some of that if you walk up the street today and see the outdoor market, the tents, the flowers and what we've tried to do.

This all sounds very wonderful. However, Sparks Street is literally dead after 6 pm at night, 365 days a year. We urgently need a catalyst to bring back a strong retail mix and improve our retail mix, bring people back after hours and lease up the many empty office spaces. I believe a casino on Sparks Street in Ottawa will help kickstart that revitalization. A casino is not the total solution for Sparks Street, as we all recognize, but it is a building block for us to work from.

I am not naïve enough to believe that a casino of any size will deliver droves of money into everyone's pocket and be the sole saviour of Sparks Street in downtown Ottawa.

Prior to the province announcing Windsor as a site, the city of Windsor and private businesses demonstrated the ambition, will and diligence in developing a concept for a Windsor casino for the province to consider.

I brought together the developer and Carnival Cruise Lines for 14 months to deliver a package that I felt was comfortable, that the city of Ottawa could bear and that the Sparks Street Mall could bear.

Sparks Street Mall has surpassed the original Windsor effort in what we can offer this province with an excellent gaming facility in Ottawa. We have already crossed many hurdles that other areas must still face when choosing a particular site. To date, the following has transpired in Ottawa with respect to a casino being established on Sparks Street in the beautiful old building at 125 Sparks Street known as the old Bank of Nova Scotia building. Many efforts have been tried to create a restaurant out of that building, but you're looking at 300 to 400 seats, so it will not survive as a restaurant; it will not survive as many other things. That's why it's been vacant for five years.

I point out the regional municipality of Ottawa-Carleton has voted in favour of casino gambling in this region. The Sparks Street Mall management board had two votes, the first one being that the executive director aggressively pursue the concept of a casino for Sparks Street and the second one being that the executive director and the board request immediately that the mayor ask the province to have a casino. That vote passed 15 in favour with one dissension.

The city of Ottawa has voted overwhelmingly, 12 to 3, in favour of a casino, not only in Ottawa but more specifically at this 125 Sparks Street site. There was a lot of deliberation, and after that, with the excellent merits of the location, the beneficial impact to Sparks Street and the core area, the strength and success of the developer and Carnival Cruise Lines, a world-class operator, it was obvious to city council that the casino proposed by Sparks Street, Empire and Carnival was exactly the proper fit to what Ottawa needed and could absorb in the entertainment gaming industry here in the region.

I'll say very clearly, why Carnival Cruise Lines? I consider them to be the Walt Disney of gaming. They operate small casinos on their cruise ships which are not intrusive and add and are an amenity to the cruise and the experience of the trip. They're not the sole means of support for Carnival Cruise Lines. That is the type of operation I believe in for the Sparks Street Mall.

Let's look at what Sparks Street offers the province. We have a historical site dead centre of the downtown core, where according to the casino newsletter it is needed most, a site which can offer excellent parking facilities, valet parking, no vehicle interference and built-in traffic flow of local workers and existing tourists. The Sparks Street site benefits 12 hotels within very easy and safe walking access year-round. We have a five-block firm of office buildings, which creates a natural buffer from any residential impact, thereby mitigating that impact. Sparks Street is a beautifully lit, safe environment which can accommodate the casino and its patrons very easily. There is no new infrastructure required for this casino.


According to the criteria set out by the province for the Windsor model, the Sparks Street site meets most criteria to a T. It will revitalize and encourage leaseups and retrofits of over 17,000 square feet of unused retail space just on Sparks Street alone. Nowhere else in Ottawa is this needed more. A casino here will encourage leaseups of 125,000 square feet of empty office space along the Sparks Street precinct plus more in surrounding areas.

It could very well help finally kickstart three very important projects that have stagnated on Sparks Street yet are crucial to the mall's success. One is the Canlands B project, which is an assembly of vacant buildings that has never started. The second is the Seltzer project that Mr Millar referred to that has sat empty; it's half a square block, an important block. The last is the completion of block 5: If you walk up the next block by the Radisson Hotel, you'll see it doesn't look like the other four. We ran out of money.

The casino would fill the 25 or more restaurants with people after hours and fill the eight large parking lots which sit empty nights and weekends. Over 75 bus tours are estimated will visit our proud street. We have 100 hotel rooms within walking distance. I hope increased small convention business and businesses meeting like this will help fill those rooms. No other location or site in this region will better serve the hotel industry, the taxi industry and the parking lot industry on a more equitable basis geographically, and that's why city council went with the proposal.

I've submitted to you letters endorsing the Sparks Street casino site from eight or more major core hotels which feel the Sparks Street site is the most beneficial site. Taxis will once again bring passengers here instead of taking them away. As well, I've submitted over 32 letters from independent merchants on three blocks of the Sparks Street Mall. We have about 60-some merchants. These are independent merchants. They feel it will be a catalyst to stimulate their business and for the overall welfare of the street.

Sparks Street is the highest-taxed street in the province next to Yonge and Bloor Street, yet the traffic at night and during the winter just doesn't justify the cost of doing business. With that I agree with Mr Millar. A casino here just might bring this inequity in line.

The Sparks Street casino group has done its homework. The building plans for an excellent upscale casino layout within the restored bank have been approved, as well as site usage and zoning. The necessary parking has been researched. The Ottawa police chief has stated publicly he's comfortable with casino gaming in Ottawa, and our group has met with various police agencies and social agencies to seek their concerns. I've asked one to come and speak to you this afternoon. We want their suggestions and advice on what they feel is best for the city.

Regarding the scope and the size of a gaming facility here in Ottawa, I wish to make the following comments.

Windsor calls for a massive facility which is intended to ensure that vast amounts of people and money come in and become a focal point for Windsor. This is an admirable yet complex and somewhat risky undertaking for a first-time facility on the part of both the province and the city of Windsor. At 75,000 square feet, combined with hotel land assembly, infrastructures and changes required around the site area, it poses a great deal of scrutiny and adjustment. Yet if it serves the objectives of Windsor, then I wish them success.

I believe that the Ottawa public will demonstrate, however, and more specifically the city of Ottawa politicians, the business sector downtown and the tourism sector, that they want a smaller, more manageable and less intrusive facility which adds to the other entertainment facilities in Ottawa rather than overwhelms them. By that I mean the museums we have, the Parliament buildings and other areas. I believe the Sparks Street Mall shares this.

We are already tourism-driven. It's our second-largest employer next to the federal government, and that industry is shrinking.

We don't require a massive casino for it to be successful, nor for it to be a standalone attraction or a destination site. It is for this reason that after all the debate, the city councillors felt this is the ideal location and model which could best serve Ottawa's needs and the province's goals as well: maximum gain, minimum risk and problems.

Though it may be smaller in size, according to the Coopers and Lybrand suggestion of 60,000 square feet, I believe the Coopers study only reflected what was required by the province to meet financial revenue goals and was not based on what goals the citizens and business sector of Ottawa wanted to accommodate and achieve. I'm glad you're here today to find out what we want.

The Sparks Street Mall has a well-researched model. I ask this committee to seriously consider asking the province to look at the merits of our proposal as soon as possible in order to give us feedback on an initiative which is quite different yet no less appealing by all measures than the Windsor initiative.

With the potential threat of a casino very soon across the river in Hull, Quebec, which already hurts Ottawa after-hours business with 3 am bar closures, and print ads currently running, which I've given you, and Montreal offering bus tours from here to Montreal in the fall, we all must continue to move forward to explore the Sparks Street model with cautious diligence and a sense of urgency as well.

You have before you an excellent proposal, which has been embraced by the city of Ottawa and the downtown business sector, which can be realistically up and operating within five months after the province grants this city a licence and after your concerns have been met. Not only do I encourage you to present our Sparks Street plan, I'd like you to take some time to walk up the mall either with myself or her worship, the mayor, and take a firsthand look at what we're dealing with.

I might point out quickly, in closing, the following opinions on gaming. I've been involved in this for 14 months, since I originally read about the developer's proposal in Windsor.

Regarding addiction, I firmly believe that casting blame on a casino facility for creating gaming addiction is akin to blaming the LCBO or Brewers Retail for creating the alcoholic. I don't drink. I do gamble. In fact, the LCBOs were kept open last Friday as an essential service. Let's not start drawing lines now, under legislation, of human behaviour or conduct.

Regarding the horse racing industry that will speak today, I do empathize with its concerns over new competition for the entertainment gaming dollar and I'm sure it will be protected by this government. Yet, if we were to eliminate casinos in this entertainment industry, then let's ban VCRs to save the movie houses in this province.

I haven't pursued this initiative for 14 months on a wide-eyed basis. I've done diligence on both the upside and the underbelly of what impact a casino, specifically on Sparks Street, would have. I don't wish to create problems on such an important street under my charge, and on a parochial level share similar concerns that you may have. I believe that with moderation, effective regulation and enforcement by all parties involved, we can create a beneficial opportunity for all.

I'd be certainly glad to answer any of your questions. Thank you for allowing me to speak, Mr Chair.

The Chair: Thank you very much for your presentation. We have about four minutes per caucus. We'll start with Mr Sterling.

Mr Sterling: Do you think there should be a referendum of people in Ottawa as to whether or not they want a casino?

Mr Dale: Mr Sterling, this has been bandied about in the press now for about nine months in front-page news. We have been at the forefront of this and Sparks Street has been at the forefront of the initiative. I suggest that I'm the lightning-rod for any complaints that I would receive. I have not, to date, receive one phone call either from a merchant or from the public. I have not received one letter from the public in the last nine or ten months regarding this issue. I am surprised by that fact. However, I must construe that the lack of feedback from the public or merchants either constitutes apathy or acceptance, because it is my experience that normally I hear from the negatives on my street regarding problems; I never hear the positives.

Mr Sterling: You haven't answered my question: Should the people have an opportunity to say we have a casino or not?

Mr Dale: I don't believe so.

Mr Sterling: So you would deny the public the opportunity to say yes or not to a casino in Ottawa?

Mr Dale: I believe the elected representatives of my board and of the city and of the region have made that decision on behalf of their constituents.

Mr Sterling: Thank you. The next question I have is, do you not think that a tendering process or the ability of other proponents should be made, I guess in a good business sense, in order to make it a fair process so that people will have the opportunity to gain the profits and revenues out of this endeavour? Should there be a tendering process?

Mr Dale: Originally, there were three or four sites that were jockeying for this same situation. They were working hard at it in the Ottawa area, and after the province made its announcement they fell by the wayside. We continued working on this because we believe in our proposal. The other proponents who came forward with sites in Ottawa have disbanded and fallen by the wayside.

Mr Sterling: But there was no open tendering process by the city of Ottawa or the province of Ontario. My view is, should it not be that when a monopoly is given, there should be some kind of equal access to that monopoly by people who might put forward better proposals than Carnival in terms of not only how they can operate but also perhaps alternative sites?


Mr Dale: I do. I believe the council looked very seriously at this and was comfortable with it or it wouldn't have voted so strongly in favour of the complete model that was presented to it.

Mr Sterling: So you're not in favour of an open tendering process for this?

Mr Dale: Not based on what I've seen and my comfort with the model.

Mr Sterling: The bingo halls in Ottawa-Carleton are now earning $20 million for charities. If those charities should suffer some loss as a result of the opening of a casino, do you think the casino should reimburse those charities for that loss?

Mr Dale: I've looked at the tax base issue that goes in from property tax, from business taxes generated. I do believe that there should be some mechanism in here, either on a municipal level -- I would hope on a provincial level, but if not, on a municipal level that would allow us to take care of any of the problems that will arise from this casino.

Regarding charity gaming, I have studied that as well in the Ottawa market. They are not making money, the charities, at this point. I have researched several. I have rented space to one gaming charity and they have not made money. I do not believe that charity gaming is working. Secondly, on that point, the person who goes in and games at a charity casino is somewhat different from the model that we're proposing here.

Mr Sterling: But the bingos do earn $20 million in Ottawa-Carleton, according to the Ministry of Consumer and Commercial Relations of this province.

Mr Dale: Yes.

Mr Sterling: And you will be cutting into their area, presumably, in terms of an alternative gaming opportunity.

Mr Dale: From what I've researched, I don't believe that the demography of a bingo player is similar to that of a blackjack player or a horse player or a person who buys lottery tickets.

Mr Sterling: Do you think a casino would hurt the Rideau Carleton Raceway?

Mr Dale: No, I don't. They are already expanding into off-track betting right now around Brockville and other areas.

Mr Wayne Lessard (Windsor-Walkerville): Mr Dale, the more I hear about this project, the more questions I have about it. Unfortunately, my time is limited. However, I understand the nature of the initiative you were talking about, an upscale European-style casino, and it's in a very small area. Therefore, you're going to have to try and make sure that the crowds you attract aren't bigger than what you can accommodate. Something that was brought up yesterday was the possibility of having a membership to gain entry. You didn't mention anything about that. I wonder if you could tell us anything about that or whether that's an idea that's part of this proposal.

Mr Dale: I don't believe we should exclude people from the opportunity to game. What I personally like about the membership is that it allows you to do diligence on a person. It will stop somebody from walking in the mall and, I'd hope, losing their paycheque, but I don't want it to be discriminatory or stop people from gaming. It comes into marketing.

I also believe that with the tourists. It was brought up yesterday: What happens if I'm staying at this hotel and I want to go in and I'm not a member? I'm sure that can be arranged. Obviously, a tourist coming into this city who wants to game, he or she is here to spend money, whether it be visiting a show or a theatre or going gaming. They are here with the intent of spending money on holidays and I would certainly hope that they are accommodated and not excluded. But that would be part of a merchandising or a marketing plan presented by the operator.

Mr Lessard: You're talking about attracting bus tours here and you're obviously interested in trying to maximize the amount of business that you can do in the casino. It looks to me as though the space you have available is very restricted and that's one of the concerns that I have. I know my friend Mr Dadamo has a question, so I think I'll just let him pursue his area.

Mr George Dadamo (Windsor-Sandwich): Mr Dale, thank you. I've had a chance, since yesterday, to take three walks down the Sparks Street Mall --

Mr Dale: Three walks?

Mr Dadamo: Yes, sir. Three walks, as I do when I go to most cities. The most recent was at 7:30 this morning and I stayed to about 9 o'clock. I want to talk about the clientele or the demographics that you serve in the area: government employees, obviously, the bulk of them. I had a chance to witness the scurrying out of buildings at about 5 o'clock last night. Now, once they go, the obvious reason for your closing at 5:30 or 5 o'clock is that reason alone. I suspect that you wouldn't be in business if it wasn't for the government employees who surround you in the downtown area. That's obvious, and it doesn't take a scholar.

If someone is sitting down and proposing a business plan for opening a business in that immediate area, what are the demographics? Who you going to serve?

Mr Dale: That's a very good point. You said 5 o'clock. I did studies and last year it was 4 o'clock, so we're getting better. The peak ridership out of that town is 69,000 people from 3:15 to 4:15 in the afternoon on the Transit Way right on the next street over.

Regarding the demographics, the average salary on that street is $69,000. The people who are down there are all gainfully employed. You're dealing with an upscale market already. Unfortunately, because of the economic climate, I personally believe that we've got a downscale retail mix with an upscale audience, and I have to somehow bring that in line. Regarding the size as well, the throughput of that casino operator, I believe in the afternoons we have people I see wandering around there and they have the type of job, I believe, that affords them the luxury of not going back to work and gambling at whatever hours they so choose.

The evening, I believe, would be a different demographic crowd. We've got Privy Council on the street, the Senate, we've got a lot of federal people -- it's a very upscale street -- the diplomatic corps. I want to cater to that street and bring it up to their level of expectations. That's why a massive structure, I don't believe, regardless of the crowds you want to serve -- I don't want a giant, mass-merchandise K mart type of thing.

Mr Monte Kwinter (Wilson Heights): I haven't got enough time to ask all the questions I want to ask, but I do have a concern that I sort of detect from the newspaper article that you distributed and just the general tone of what I've heard. There seems to be a feeling that, "The deal is done; all we're looking for is the province to approve it." They've picked the operator; they've picked the site; they've done everything; they've decided what the format is going to be and all they're looking for from the province is to say, "Just give us the approval to run it."

If we take a look at the Windsor model, what has happened is that the province set the criteria for what the casino was to be, the city has assembled the land and is in the process of expropriating it, and the proponent is going to have to either buy or lease the land, make sure that the city gets a relatively fair return and then they're going to have to build it and it will then have a provision whereby the province will ultimately own it, with the proponent being the operator.

All of that has seemed to be totally bypassed, and the city of Ottawa has endorsed a proposal that's had, from what I can understand, no provincial input at all, just: "This is what we want. This is what we'll do. Just give us the okay to do it." I have the same concerns that Mr Sterling has. I think if that were to happen, it would be challenged immediately in the courts: What right does anyone have to take what will be a monopoly and just arbitrarily award it to somebody? I just would like to get your reaction to why you feel that, given the fact that the province hasn't even indicated that there's going to be a casino in Ottawa. According to the government, it is looking at Windsor only and it's going to do a test proposal to see how it works and then it will make a determination of whether it is going to expand it.

What happens if they use the same procedure that they've used in Windsor and decide that Sparks Street is not the place that it should be and that the cruise line is not the operator? What do you do then?

Mr Dale: Obviously, then we go to the public process that you're suggesting. There's something important to recognize here. The Ottawa Congress Centre was bandied about; Lansdowne park was bandied about; the Palladium that is not built yet was bandied about prior to this; this was not just slid through anyone here.

I firmly believe that what Windsor is doing is probably required by the city of Windsor. They need that size of project. One reason I am anxious for this proposal and this model is that I believe that this size and type of casino fits in with the fabric of Ottawa. If you wanted to build a similar-type program, with a hotel or without a hotel, of 75 acres or whatever's revolving on that, I can't commit that the citizens of Ottawa will buy into that. I don't believe they will, I don't think the city of Ottawa believes they will and I would actually be against that size of a casino in Ottawa. I just think it's too massive. The people who make the decisions in this region and this city have at least proactively gone forward and said: "We understand what the province wants. Let's look at what Ottawa can live with and then let's take that to the province and let's discuss it."

Regarding regulation, that is the plumbing that has not been worked out. I would not even begin to tell you that we have worked out the regulation, the security. We have worked closely with Carnival Cruise Lines, its security program and its people to find out and understand what is required so that we are knowledgeable when we work with the province regarding the plumbing of this casino project. That is something that has not been discussed, that has not been considered. That we defer to the province: the regulation, the management and the operation of it.

The Chair: Thank you, Mr Dale, for presenting before the committee this morning.



The Chair: Our next presenter is Mayor Jacquelin Holzman. Would you please come forward, Mayor. Please make yourself comfortable. Would the individual assisting you be so kind as to identify himself for the purposes of the committee and Hansard.

Mr Leonard Potechin: My name is Len Potechin and I was the chairman of the casino committee that the mayor appointed for a report.

The Chair: Thank you very much. You have 30 minutes within which to make your presentation and field some questions from the committee members. Whenever you're ready, please proceed.

Ms Jacquelin Holzman: Thank you and welcome. Bienvenue. It's a pleasure to be appearing before the members of the standing committee on finance and economic affairs today. I want to tell you why Ottawa, Canada's capital city, should be the location for a casino. I will not discuss the morality of gambling, as I presume and I assume the government of Ontario took this into consideration prior to announcing that there would be casinos in Ontario.

I know that the province has made the decision -- and I overheard a few of your questions to the last presenter -- that it's going to go with one pilot project. I know it's supposed to be in Windsor. I know that governments frequently come up with other options and governments frequently change their minds. In the event that there is going to be a second or other pilot projects in the province, or in the event that you're looking at other models for casinos, I'm here to tell you why Ottawa would be a good location.

I do this based on a motion that was passed by Ottawa city council on June 16, 1993. We passed a motion that recommended that "the province of Ontario designate the city of Ottawa as a site for a casino and further that the city of Ottawa endorse and support the development by Empire Developments and the operation by Carnival Cruise Lines Inc of a casino at 125 Sparks Street." This decision followed upon the receipt of a report in May 1993 from a task force on casinos that I requested the Ottawa-Carleton Board of Trade to establish. Mr Len Potechin, among other people, was on the committee. Mr Potechin chaired the task force and is here as well to discuss this with you.

The location we had endorsed was mentioned a number of years earlier by Mr Bruce Firestone, who was successful in bringing the Senators to Ottawa. Many, many years ago, he had recommended that that empty bank, a heritage building, on Sparks Street would be a good site for, of all things, a casino. That was long before the province had even indicated any interest in casinos. So it wasn't a new idea.

We had a task force, as I mentioned. Mr Potechin chaired the task force. The task force addressed concerns such as gambling addiction, other gambling activities, style and operation. I have a copy if you don't have a copy.

I will tell you all about the economic impacts this will have on the city and the benefits to the area that we have selected.

A casino would have a positive economic impact on Ottawa. It is estimated that there would be over 200 people to gain direct employment from this venture and 1,400 people in indirect spinoff employment. Consultants have also estimated the following:

-- The leasing of new and old retail space, including 17,000 square feet of unused retail space currently on the Market and Sparks Street; in excess of $18 million in local construction business.

-- We estimate the leasing of over 125,000 square feet of office space currently available in the Sparks Street precinct.

-- Over 75 bus tours daily are expected from northern New York, eastern Ontario and western Quebec. Like Windsor, we also are a border city.

-- Increased occupancy of the 3,800 hotel rooms in the downtown core. We believe that's certainly feasible.

-- An increase in small business group conventions in downtown hotels, reducing the stress on the already burdened congress centre.

-- Increased business for downtown restaurants and retail outlets.

-- Parking lot revenue from the 3,000 spaces which are currently empty during evening hours.

-- Increased revenue for the taxi industry.

-- We believe this would expedite the building of Highway 416, as well as encouraging better air links for Ottawa, which we desperately need.

The benefits to the business corridor from Wellington Street south to the Laurier Street area and from Elgin Street west to Lyon Street cannot be understated. This is an excellent opportunity to revitalize our downtown core.

The existence of a casino would complement the other hospitality and tourism businesses within this area. The empty parking lots would be utilized at night. The casino would be an additional entertainment activity for tourists, as well as an additional drawing card for the Sparks Street Mall businesses. The conference facilities at the Ottawa Congress Centre and the various hotels in the downtown core would similarly benefit from the gaming facility. A casino downtown would certainly add to the overall mix of attractions that a tourist would find in the city of Ottawa and would quite possibly cause him to lengthen his stay in our city.

Although we are considered to be a government town, in fact the hospitality industry is our largest private sector business, employing around 30,000 people. So apart from stimulating the tourism and convention industry, there is no doubt that a casino would generate jobs.

The Sparks Street proposal requires renovation at a minimum of $1.4 million to bring it to the building standards required by Public Works Canada. In addition to completing the base building, the casino facility must also be installed at a cost of approximately $6 million. There would also be jobs that would be created from the operation of the casino and the general maintenance and repair of the building. As I mentioned, it's a former bank building and it has been given heritage status. The city of Ottawa already had approved the renovations and restorations to heritage standards for the exterior of the building and to the interior of the building, so it's ready to go. Of course, having it in that type of building, a heritage bank setting, certainly enhances the high quality of the proposed casino.

I believe you have received a copy of the presentation that the casino operators have given to the city of Ottawa. If not, I'll leave you a copy of it. They're talking about the site, the operation, the impact on the neighbourhood, the economic impact, the participation of the city of Ottawa, and they conclude that 125 Sparks Street would be a different kind of casino than what has already been approved for Windsor.

I welcome and encourage the initiative of Carnival Cruise Lines and Empire Developments. The city of Ottawa hopes that the province will immediately see the wisdom of exploring our unique model, because we are a different community from Windsor: We are a different market; we'll attract different players; we have different needs; we have different problems. We have designed, and the city of Ottawa has supported, a casino that is unique and tailor-made for our city, and we can talk about why that is if you have any questions.

I know there are perceptions as well as possible problems that come from a casino. I've given to you a copy of a newspaper article where our new police chief has indicated that "Ottawa police would not stand in the way of the city being awarded a government-run casino"; "Casino Bid OK With Top Cop." But as soon as a casino project or a pilot project was awarded to the city of Ottawa, I would immediately establish a task force to advise council on the perceived and potential problems related to such things as criminal activity, gambling addiction, traffic congestion etc.

Again, thank you for listening to my presentation. Mr Potechin will speak if you have some questions about the task force work. The task force did not deal with the site. The site came as a result of the input from the task force and others and city council deliberations.

I thank you and I welcome questions.


The Chair: Thank you very much. We have about six minutes per caucus. Mr Duignan.

Mr Noel Duignan (Halton North): Thank you very much and welcome to the committee this morning in making a presentation to the committee.

The city of Ottawa, along with the city of Sault Ste Marie and I suspect the city of Niagara and a couple of dozen other cities and municipalities in the province, is looking to operate a casino. As you are well aware, the policy of the government at this time is that there will be only one casino, located in the Windsor area, and there will be no further expansion of that until such time as the evaluation of that project is complete.

Given the fact that under the Criminal Code, the operation and the conduct of business can only be done by the province or by the law of the province, which under Bill 8 gives that to the Ontario Casino Corp, and given the fact that a number of members on both sides here have raised the concern about this proposal for the Sparks Street Mall, the proponent aspect of it etc, that there's been no open tendering process on this particular site, on pure speculation on my part here right now, I would suspect that if any decision is made to expand casinos in the province, I think one of the requirements would be to have an open tender process for a site in the various locations. I was wondering, have you some comment on that in relation to the presentations made here today and, yes, in relation to the one proponent on one site here in Ottawa?

Ms Holzman: Personally, if your tender was as broad as what was approved for Windsor, I don't think we'd support that because we don't want that size, that magnitude, that type of casino in the city of Ottawa. We wanted to show you that Ottawa being the capital city, and with a location a block away from the Parliament buildings, this is a different project. It's not like Windsor at all. We wanted to show you that there are other models, and if you wanted to design a tender process that would be as wide open as the kind of project that you're speaking about in Windsor, it probably would not be the kind of casino that we would like for Ottawa.

We are talking about a Monte Carlo style, we're talking about an upscale type of casino, and with all things being considered, we like the downtown area; we like the area a block away from the Parliament Buildings. But if the province decided in its wisdom to offer the opportunity for a public tendering process on a second pilot project, we would read what the criteria were, and the city may or may not support it. I can't tell you. I can only tell you that we wanted to show you what Ottawa has to offer.

Mr Duignan: And I appreciate your comments. I understand some of my colleagues had some questions.

Mr Sutherland: I have just a couple of questions on that, your worship. The proposal seems to be for a small, upscale casino, yet we heard Mr Dale say they're looking at 75 bus tours. With all due respect, I don't think a lot of the upscale people travel by bus. In the type of bus tours that go to other casinos that we're aware of, certainly with the information we're made aware of with the bus tours that go to Sault, Michigan, and that type of thing, it's a lot of retired people on bus trips. It's a lot of people coming for weekend trips.

I guess the other question is, though, why wouldn't you want a larger one? If you're saying you want the jobs, the benefits, the expanded tourism, why wouldn't you want to maximize that as a city and go for a larger one as the Coopers and Lybrand study has suggested, a 60,000-square-foot facility which would maximize more jobs and more economic activity in your community?

Ms Holzman: More doesn't necessarily mean better. We're talking about quality as opposed to quantity. Bigger also doesn't mean better. But bus tours are something that we strive to get in this city. People do travel by bus, and we encourage people from all walks of life to come to Ottawa by bus. Each bus that comes into Ottawa leaves at least $7,000 a day, so we encourage buses and we don't in any way minimize or denigrate the people who travel by bus. This is a thriving industry. The people who come to Ottawa come here because it's a capital city. We're not talking about people who go to Sault city, Michigan, or whatever it may be. Don't denigrate bus tours.

Mr Sutherland: I'm not denigrating the people who go on bus tours, but just in terms -- if you're looking at the market, people travel by bus because it's a cheaper way versus maybe travelling by air or other forms.

Ms Holzman: I can tell you that the National Arts Centre, the University of Ottawa -- my sister has organized for 15 years bus tours of very upscale, mobile, professional people, and they go because they like the camaraderie on the bus, they like the fact that they are travelling together. In no way am I going to speak negatively about bus tours. However, bigger doesn't necessarily mean better. We're talking quality; this is a quality facility.

The Chair: Mr Lessard, you have about a minute.

Mr Lessard: Very briefly, along the same lines, how do you ensure that you get that quality?

Ms Holzman: It's up to the operator. It's up to the style and the kinds of reputation the operator has. It's up to the controls that the city would put on it. It's up to the controls the province would put on it. You have no ability to ensure that, for example, Windsor will have any particular style, any particular quality, either. If you're going to put controls on to ensure quality, those will be the controls that any operator will have to handle.

The Chair: Mr McClelland.

Mr Carman McClelland (Brampton North): Mr Phillips first, if that's all right.

Mr Phillips: I appreciate, your worship, the presentation. I guess you've probably had a chance to review the Coopers and Lybrand report. It paints quite an interesting picture of the future in the casino business, like this is going to be money pouring out that we've never seen before. In fact, I think their thought for Ottawa is a casino that would have 4,000 direct jobs and another 2,500 indirect jobs. I think the province would plan to get about $150 million a year in tax revenue out of it. It's like a money machine. I would have thought that would have a fair bit of benefit to the Ottawa area as well. Has your group had a chance to review the Coopers report?

Ms Holzman: The group has reviewed the Coopers report. I personally am not au courant with everything in it. However, I can tell you that the province may be looking at this as a money machine, but the city of Ottawa is not, particularly. We're looking at this as another one of the attractions that we will promote when we promote the capital city of Canada. We promote the Parliament buildings, we promote all of the galleries, all of the festivals, all of the activities that we have here. We will promote that in the same upscale, high quality that we promote everything else.

We're not looking at this as a cash cow. We're looking at this as just another attraction that makes the city of Ottawa something that people would like to visit. People in Ottawa would like to take part in it; it's really fun. I have no problem with it, I think it's fun. I wonder, though, Mr Potechin, if you had anything you wanted to add to this.

Mr Potechin: Not really. I think you've done very well.

Mr Phillips: There you are.

Mr McClelland: Your worship, I wanted to set aside the issue of site selection for a moment. I understand very clearly, from what we've heard, that hypothetically, should you have a casino, there's been a preference, if not a predetermination, both with respect to site and operator. Setting aside site, I think that's a different set of arguments and a different rationale; I can understand fairly readily how there would be a tendency to focus towards a particular location. The issue of operator, though, I find somewhat more curious in the sense of narrowing the funnel, if you will, almost right upfront, prior to having a specific determination as far as the method of operation and some of the details ironed out.

I guess one of the things I'd be interested in knowing is, did you look at a number of operators? If you did, how many did you look at and what kind of criteria did you give them to measure one against the other? To what extent was there a competitive aspect of your determination? Understanding the fact that you're speaking in hypothetical terms, focusing it that narrowly that quickly causes me, I guess if nothing else, curiosity, and I'm wondering how you arrived at that point at this early juncture.


Ms Holzman: When the whole issue of casinos began to arrive and arise, there were a lot of people who had locations that they thought would be suitable for casinos. That's when I appointed the task force to look at the type of casino that would be interesting.

Mr McClelland: I understand the location aspect.

Ms Holzman: Okay. So we looked at the type, but we decided we didn't want to look at hypothetical cases, because this is not a hypothetical city; this is a city that plans with the facts it has available. We felt we could offer a pilot project that would be in operation in its permanent location far faster than anybody else in the province.

Mr McClelland: How did you determine the operator, though?

Ms Holzman: This was a group that came forward because of the location. We researched, we looked at them and we did what we had to do, and we decided that for that site and that style of casino at this time, this was the group that should do it, it was a package, sort of like design-build. It was a package. It was a program with a site etc etc. We looked at it and we did not have an open tender call, because we wanted to deal with specifics and to show you that, if you want a cash cow and if you think it's a cash cow, we could get you the money flowing far faster than anybody else.

Mr McClelland: I just want to be clear. There was only one operator considered.

Ms Holzman: For this particular site, my understanding of the information I have is that when we looked at them all, it was Empire Developments and Carnival Cruise Lines, and that's the proposal that came to the city of Ottawa. We looked at this proposal, we liked the proposal and we supported the proposal.

Mr Kwinter: I have photographs of the proposed site and I have to admit it's very elegant and the building itself will set the tone of the casino. I was just commenting to some of my colleagues; we visited Sault Ste Marie, Michigan, to see its casino and I was joking that it would be interesting to see that clientele in this building.

But the point I would like to make is that given the relatively limited size, if it's a quarter of the size of the Windsor casino we're looking at 18,750 square feet, which in itself is going to be self-limiting; it's only going to be able to accommodate a certain number of people. In order not to turn off the people I think you're trying to target, you're really going to have to have some kind of control. If it is perceived that it is a casino and you start getting the bus tours or the kinds of people you may feel are not in keeping with the tone of what the operator wants to have -- I also want to refer to the fact that by choosing a cruise line, the people who go on cruises, just by the very nature that they're on the cruise, are a limiting economic factor; you don't get people walking off the street going on a cruise. They run casinos because they have a captive audience who have got nowhere to go and they've got to keep them entertained. How do you deal with that? In your study, your task force looked at how you are going to deal with making sure you get the volume but also making sure that the kind of casino you want to run is the kind of casino you're going to get.

Ms Holzman: I don't intend to run a casino; the operator will run the casino. The operator, Empire Developments and Carnival Cruise Lines, will run the casino. They'll take the risk, and if they don't think there's a bit of money that they can make on this, they won't enter into this. They have obviously analysed the numbers.

But it doesn't necessarily follow that a bigger restaurant is going to be more successful than a smaller, intimate restaurant or that a large department store is going to be any more successful than a small boutique. Large, big, doesn't mean better, it doesn't mean quality. I can't even argue the value of small over large if you don't understand that large doesn't necessarily mean bigger and better.

People have a choice and people will choose to come to the casino or they won't choose. People who are organizing bus tours usually book their tours into places in advance; you don't arrive with a bus of 50 people and say, "Here we are; now serve us dinner." I know, because I have relatives who've organized tours. You make your arrangements in advance and the operator of the casino or the restaurant or the museum or the gallery books the tours in, just like they do in hotel rooms. These things are very well planned.

So the tours will be booked in advance. Large doesn't necessarily mean better. Choice is there. People who don't want to come on a bus tour that's coming to this casino will go to Windsor.

As far as this site and proposals for this site are concerned this was the proposal, as I say, for 125 Sparks Street that we dealt with. There were other sites and other operators or people who wanted to come forward and provide casino services. But the city of Ottawa, for all sorts of reasons, chose this upscale, Monte Carlo-style smaller casino right in the centre of the downtown core.

Mr Sterling: Thank you very much, Mayor Holzman and Mr Potechin, for coming to us today. We appreciate your appearing in front of the committee.

I asked Mr Dale a number of questions, and I guess one of the serious questions that I have is that in the last municipal election and indeed in the last provincial election casinos were not even a question of debate. Therefore, we've had this thrust upon us at the provincial level and now at the municipal level without the electorate having an opportunity to elect politicians who stood one way or the other on this particular issue. Having said that, do you not think it's fairer to the people of Ottawa to have this placed on the next municipal ballot about whether or not they want casinos?

Ms Holzman: I've always assumed that part of assuming an elected position was using your best judgement to make decisions on behalf of the city that I am elected to represent and, as well, each member of council. You can consult as much as you want, but in the end we must make our own decisions.

I don't recall on the last provincial election that there was anything on the ballot about social contracts. I don't recall the Palladium being on any ballot. I don't recall air links to the United States. These issues are the ones for which you elect people who you presume and assume are going to have the judgement to make those decisions. There was nothing on the provincial ballot about casinos, yet the provincial government decided that there would be casinos in Ontario.

A lot of people don't want casinos in Ontario, but if there's going to be a casino in Ontario, I'm here to fight for the city of Ottawa to have that opportunity as well. I don't necessarily believe everything has to be on the ballot. Mr Potechin, from your task force, you went into this as well.

Mr Potechin: We had two different task forces. The first task force was made up of a number of people who wanted a casino on their sites. At that point, I recommended to the mayor that task force be disbanded and a second one be constituted. The second task force included some leading people of the community, and I think that Jean Pigott is a good example of a leading person. I think the Honourable Lloyd Francis, former Speaker of the House, is a leading citizen of our community.

We discussed the possibility: Should we have a casino or should we not have a casino? We agreed that a casino should be located in the city of Ottawa. We did not address sites because we didn't want to get into a controversy.

But I did hear your previous questions to Mr Dale. We did address the charities and we found that it wouldn't interfere with bingos because we recommended that bingos not be included, and I know that the province agreed with that type of recommendation. A lot of the things you were questioning him about we did address, and I thought it should be mentioned at this point that that was looked into.

Mr Sterling: Notwithstanding the reluctance to hold the referendum, I don't approve that politicians take stands. I think that part of the new way of governing is to go to the people on issues which they can understand, like casinos, and ask them their opinion and abide by their opinion. Therefore, I don't think because this provincial government has failed to follow the mandate under which it was elected is a valid defence.

The second question: The province has clearly said it's not going to grant a casino to Ottawa now. Part of the credibility gap, I believe, that is coming from the Ottawa proposal is that there wasn't a publicly tendered process that was undertaken. In other words, there weren't, to my knowledge, advertisements in the papers saying: "Ottawa is considering supporting a proposal for a casino. Please come forward with proposals. Here is the outline" of whatever, whatever.


Would it not seem at this time, Mayor Holzman, in order to add credibility to your bid for a casino, if in fact you have made that decision and the province makes that decision some time in the future, that you go back now and say, "Yes, we have supported this one proposal, but we are now willing to look at alternatives in a very much more open and democratic way"? Would that not make more sense in terms of putting you further up in the line in the future?

Ms Holzman: If the province decides there's going to be a second pilot project and comes up with some criteria, some parameters, we'll follow the rules. There's no point wasting anybody else's time on this in this municipality if the decision on one pilot project in Windsor is the decision. We're here to ask you for a second pilot project, and then you lay down the rules.

But I'd like to address for a moment that there's no reluctance to put questions on the ballot or reluctance to have a referendum. In fact the city of Ottawa did have a question on the ballot a few elections ago, and I hope the province will look favourably upon that when you get back in the fall and you're dealing with the reorganization of the region. We did have a question on the ballot in the city of Ottawa a couple of elections ago. There was a question there asking the citizens of the city of Ottawa, do they want us to work towards one level of government, and 85% of the people who voted said yes. I hope you'll bear that in mind, because that was a question on the ballot.

Mr Sterling: In the city of Ottawa.

Ms Holzman: In the city of Ottawa. Let the others do it as well.

The Chair: Thank you very much, Mayor Holzman and Mr Potechin, for presenting before the committee this morning.


The Chair: Our next presenter this morning is John Robert Kearney, vice-president, representing the Hospitality and Service Trades Union, Local 261. Welcome to the committee. Please make yourself comfortable. You have 30 minutes within which to make your presentation and field some questions from the committee members. Whenever you're ready to proceed, please go ahead.

Mr John Robert Kearney: Great. Thank you. The Hospitality and Service Trades Union, Local 261, is pleased to have this opportunity to present our views on Bill 8, the Ontario Casino Corporation Act.

Our local has represented workers in the hospitality and service sectors for over 35 years in Ottawa and we know first hand the detrimental effects that GST and the recession have had on our industry and the people who work in our community. Service workers and their families were among the first to feel the impact of the recession and will likely be the last to recover from it. Bill 8 offers these workers new opportunities for employment and an industry facing an uncertain future with a chance at rebirth.

We fully support the government's willingness to be innovative and progressive in its approach to solving the economic problems facing all Ontario residents. The key to continued prosperity and economic growth in the next decade is simply, we believe, joint venture, not in the corporate sense of the word but rather in the combining of efforts at all levels of government, business, labour and various community groups to plan and mould our economic future. Casino gambling we believe represents the kind of cooperative ventures Ontario communities will need to involve themselves in if we hope to remain at the forefront economically and socially.

Why Bill 8 is not a gamble for Ontario communities: The contributions casino gambling can make to provincial coffers are substantial. Manitoba has enjoyed the benefits of its casino jackpots to the tune of some $10 million to $12 million per year. Provincial authorities in Montreal estimate $50 million a year in revenues alone from operation of the casino on île Notre-Dame. Tourist spinoffs from the casino are estimated at about $54 million. A similar windfall for Ontario communities will represent rebirth for the service industry and employment for service sector workers, not to mention workers in other sectors like retail and construction.

We can say with confidence that if a casino were located in our nation's capital, it would provide our members with greater employment year-round. The addition of casino entertainment would provide the much-needed boost to our city's downtown core and tie in nicely with Ottawa's seasonal family attractions like Winterlude and Festival of Spring etc. A casino attraction in our community would help Ottawa build more convention trade and expand our existing bus tour business. The economic spinoffs from the increase in tourism trade alone would represent a significant gain for Ottawa in terms of employment and revenues.

We believe other communities in Ontario also have the possibility of sharing in similar economic benefits from casino gambling and we are not aware, given the approach proposed by Bill 8, of any detrimental economic consequence for Ontario residents from the introduction of casino gambling.

The government's approach to the introduction and implementation of casino gambling is in keeping with the philosophy of working together to build a better future. The cooperative response and campaign which emerged out of Windsor is the best illustration of just that philosophy. Cooperation and participation from all areas of the community, from various levels of government, business and labour all came together to fight for this economic opportunity. The alliances built as a result of those efforts and the success they have found in their joint venture will act as a foundation for future joint ventures, social as well as economic.

We can speak personally of the benefits of such cooperative experience. In our preliminary discussions with Ottawa community groups, business and labour about the benefits of a casino in our community, there was an unexpected eagerness on the part of all we approached to cooperatively pursue such an attractive economic opportunity. The benefits of cooperative experience are not easily measured, but the future potential gains are apparent.

The odds against: The gambling industry has been labelled a bad risk for Ontario communities by those who claim it attracts crime and will lead to addiction and immoral lifestyles. We disagree.

We are affiliated with the Hotel Employees and Restaurant Employees International Union, which represents workers across North America who work in casinos or in cities where there are casinos. Over the 100 years they have served workers in this industry, they have seen the emergence of casino gambling and its growth from Las Vegas to the Yukon. Throughout this period, our experience has been that gambling is the fastest-growing form of family entertainment in North America.

With this experience and firsthand knowledge, we believe the likelihood that casino gambling will attract crime is as likely as with any other form of tourist attraction and we are confident that our government and law enforcement officials will be able to competently handle the natural adjustments which come with all forms of change.

Bill 8 offers economic opportunity, cooperative experience and future growth for service workers province-wide. Ontario residents have a unique opportunity before them and we hope they support the government's efforts. Casino gambling is not a sucker's bet. Simply ask those communities north, south, east and west of us who are winning at our expense.

We thank you for this opportunity to express our views on this important economic matter of development.

The Chair: Thank you very much for your presentation. We have about seven-plus minutes per caucus. We're going to start with the Liberal caucus.

Mr McClelland: Sir, I don't want to take issue with what you're saying here. I just want to point out that there are a lot of people as we've travelled who don't necessarily see -- for instance, point 3, "odds against," "a bad risk," "who claim it will attract," and so on, just to use your own words -- that this is necessarily a bad risk. I think what a lot of people have been saying, not just ourselves in opposition, is that there are some downsides: "Let's be realistic about it. Let's think it through and let's make sure that things are in place."

By way of example, you represent women and men in your union. Restaurateurs in Windsor said there's a downside risk here: "People in our industry, in the hospitality industry, have a downside risk. We want to address it." The downside risk is that we may develop casinos much like they had in, by way of example, Atlantic City. You build this black hole, to use their terminology, and it sucks everybody in. It's designed to hold people in there: All the amenities are provided with the intent of keeping the tourist, the gambler, in that facility. So people in your industry, owner-operators for the most part, said: "We want to make sure that our people continue to be employed. The downside risk is that people are going to stay in there, so let's address that issue and make sure that we design it in such a fashion to get people out and into the community."

It seems to me that would be an issue you'd want to perhaps comment on, the need to make sure that other people aren't simply displaced, that you create a job potential in a locale at the cost of jobs elsewhere. I'd be interested in your comments on that. I think you can see that there would obviously be a dynamic tension there. The interest of the operator would be to keep people inside. The interest of some of the people you may represent in other restaurants would be to get them out of the casino and into those establishments. Any thoughts or comments on that?

Mr Kearney: I think with any situation where there's going to be an attempt to try and draw people to a tourist attraction, there's going to have to be a balance in competition. I'm not sure if there is an appropriate place in government to control that competitive factor, but I think there should be something to try and balance it and not offset it. If we're going to look at the option of a casino, it should be something that's going to be a contribution to the community and draw people into the community. There's no doubt about that in terms of our approach.

In the various cities where there are casinos, at least from the information we've got from the international, there are some concerns, as you've raised, by people in the community, but by the same token there's the other side which says, "Because the casino's there, people do get out of the community and come to our city in the first place who may not have come." So the question is finding out whether there's a loss or a gain in the process.


As far as I'm concerned, we would not want to see our members be any more unemployed than they are. But I think no matter what style of casino would be put into place or if one was to be considered for Ottawa, it would definitely be a plus in the industry we've got now, given the cyclical patterns. It would certainly get us out of the recessionary mode that we're in. As you know, the first thing that goes when people are in a recession is disposable income: Expense accounts for business are gone and employment in the hotels drops off drastically, and before that expense account comes back, it's well into the recovery, so our people are going to be dragging along for a little while longer.

I think the benefits in the long run will far outweigh any potential loss, and I think in our industry we can see in the city restaurants come and go, businesses come and go in the service sector, and it's a very competitive field. It's going to have to be a balance of competition, and that's going to be part of choosing a location: determining where people are going to stay, what type of facility it's going to be, whether it's going to be with a hotel, without a hotel. Those are the factors that definitely need to be considered and I think should be.

The Chair: Mr Sterling.

Mr Sterling: I don't have any questions. I think you've put forward your points clearly and I accept them as that.

Mr Lessard: Thanks for making your presentation to the committee today. I was impressed by the fact that you're one of the few people who hasn't come to advocate a specific project here in Ottawa, only that you'd like to see a casino located in the nation's capital. But I'm sure that you are aware of the project that's being proposed by city council and others, and that involves the operation by Carnival Cruise Lines. I wonder whether any of the employees for Carnival Cruise Lines might be organized by your union or whether you're aware of any of their employment practices or history.

Mr Kearney: I'm afraid I have no knowledge of that whatsoever. We operate in every state in the United States and represent over 54,000 workers, so I'm sure that somewhere along the line there are some units or operations by them that may be unionized. I can get the information and forward it to you if you'd like. I can provide it to the committee. I can find that out quite rapidly.

Mr Lessard: Okay. Where are some of the casinos located in which you do have members?

Mr Kearney: Las Vegas, Atlanta, various other states. We got a general notification from the international. We wrote to them and asked them for information generally about their experience and what benefits they may have had or disadvantages there may have been, and we just got a general paper back. I could provide the committee with more specific information if you'd like.

Mr Lessard: I'd be interested in having that, because one of the questions that's come up on other occasions before presenters, especially in Windsor, was about salary levels that might be expected by people who would be working in the casino and average salaries. Of course, being a member from Windsor, I'm interested in knowing how much people are going to be making who are going to be working in the casino, because that's going to have an impact on our community.

Mr Kearney: I guess I could provide you with a philosophical comment on it. I know that right now down in the States, in Las Vegas, we've been on strike for a prolonged period of time trying to get a collective agreement. In the United States, in one particular casino they've been on strike for more than nine months down there. Again, the concerns with respect to employment factors would probably be a lot less in Ontario, particularly with the labour legislation that we currently have to provide protections, which are far greater than those found in many states. But the fights and the struggles we've had in organizing casinos in the States have ensured that the membership was requesting only the highest of benefits and wages. I can provide you with the specifics of that down there. I can provide you with collective agreements with respect to the casinos that we do represent, and then you can have an idea of what we've been able to obtain. Again, that factor of the legislation and the bargaining situation in Canada and the United States is very different.

Mr Lessard: I'd appreciate that. Have you had any discussions or are you aware of any discussions of anyone from the international with any of the proponents for the Windsor casino?

Mr Kearney: Not to my knowledge.

Mr Tony Martin (Sault Ste Marie): I'd just like to follow on that line of questioning. Certainly we have in Ontario, I think, an infrastructure re the labour relations legislation we have in place that will support the introduction of organized labour where it's warranted, where workers need to be protected and looked after and their lot in life improved. I'm sure you'll be out there aggressively doing that, should this --

The Chair: Tony, could you sit forward?

Mr Martin: Sure. The criticism that we often get as we go around is that we're creating low-paying jobs that don't have a whole lot of prestige that goes with them and this kind of thing. We had a woman come before us in the Sault who spoke very highly about the kind of training that was required, the kind of skill that was required in these jobs, the level of expertise and commitment and all of that kind of thing.

Perhaps you've answered this already in talking to my colleague here, but in terms of your membership and your experience of that, is that your experience? What kind of jobs do you anticipate will be provided through this initiative, and what kind of training do you think will need to be put in place to support this?

Mr Kearney: From the knowledge that I have, one of the primary things we see as a benefit in any city where there is a casino operation coming into effect or where casinos are set up is that their level of training tends to be far in excess of that of the normal operations. In the city of Ottawa here, we have a number of hotels that we represent that provide what I consider to be minimal training, limited money invested and so on, whereas what we foresee, if a casino comes to town, is that there's going to be a higher level of expectation from the casino operators, there's going to be training levels provided, and that will have a ripple effect on the industry itself. There will be an upgrading effect and a desire to meet that training challenge that's going to be made, that is going to be set by the casino.

Currently in the city of Ottawa, Algonquin College provides training for people in the service industry. Most of the people that we represent are long-service people, and we believe their incomes are quite substantial. I take offence at anybody who describes the type of work as anything other than professional and expedient. We have people who are members who earn more money than I do at the local, so I can't see that it's a menial job or describe it that way. Our people are very professional. I think anybody in service is very professional, so I don't have any fears that it's going to create a job ghetto or create anything of that nature. When our representation started 35 years ago, maids were making $1.35 an hour and didn't have benefits or sick leave. Now they're making over $10 an hour, have sick leave benefits, pensions and so on. We're not going anywhere, we've been here 35 years, so if a casino comes to Ottawa, we're not going to sit back and let it become a job ghetto. It's not going to happen.

Ms Harrington: In your comments in answer to the other question that was asked previously, you mentioned that certainly a casino would, in your mind, get us out of an economic downturn or slump that is being experienced here as well as everywhere. Then you also went on to mention that casinos depend upon disposable income. What I'm saying is that there is not a lot of disposable income around for most people because of the economic situation. We have to be careful of the number of casinos, the saturation point, because we're talking disposable income; we're talking entertainment; we're talking tourism, I would think. Part of that is bringing in people from outside of Ontario, probably outside of Canada, probably even outside of North America, to really, as you say, get out of an economic downturn and make it worthwhile.

I wanted you to comment about, to make it viable, where is this disposable income going to come from?


Mr Kearney: The disposable income was in reference to the nature of business class that comes to town, what the corporate class is going to spend. The tourists, who will be attracted whether there's a casino in Ottawa or not, will come based on vacation pay and holiday income and presumably will come because they have income that is disposable.

Ms Harrington: We don't want their income if it's not disposable, I would say.

Mr Kearney: I think people should make their own decision as to how they spend their income and how they live their lives. If they choose to come and spend it in our fair city and enjoy the wonders and beauties of our city and its attractions, I think that's great. I'm not going to tell anybody, "You shouldn't be here because you can't afford it." That's not my place or my responsibility.

I think the primary thing we need to remember is that we're trying to create an additional attraction to bring people who are leaving the province, who may have disposable income and are going to other parts of the country or going to the United States or leaving the country altogether, and trying to attract people who are from outside Canada to view our other tourist attractions as well. So the concern about the disposable income being drained in the province of Ontario I think may be a narrow view of what we're trying to do. I think we should be looking at trying to bring people who are from outside Canada, who do have the income, who can come to Canada --

Ms Harrington: And you think this casino proposal here would do that?

Mr Kearney: I think it would be a plus in attracting those people, yes. The examples that we've got so far -- in the hotels, we've had a number of charity casinos run in the city of Ottawa. Our experience from those charity casinos is that the tourists in the city found them very inviting and very interesting and they were glad to be here when they took place. It gave them an additional option.

Ms Harrington: How many casinos do you think there should be in Ontario? We know there's a saturation point.

Mr Kearney: I really couldn't comment on that. I think the city of Ottawa, within my experience, could probably be best dealing with a single casino simply because of the size of the infrastructure at this point. The city is expanding and gradually growing. Perhaps in the future there would be a need for an additional casino or a benefit from one, but it's not within my expertise or parameters to be able to make a comment on it. All I'm saying is that I see it as a positive outlet in terms of a draw for tourism which will help the people I represent, who currently work on a fluctuating basis in the industry, and that's a plus. That's basically what I'm here to promote, the fact that it is a positive thing for the people we represent.

Ms Harrington: And I think you'd probably agree that because we're doing a pilot project in Windsor, looking very carefully at the downsides as well as the economic benefits, that this is the way to go. Would you agree with that?

Mr Kearney: Absolutely. That's why I wasn't here pounding the table and saying Ottawa should have got it. As far as I'm concerned, the approach was in fact appropriate and responsible in terms of evaluating the effectiveness and the benefits. One of the members had made a comment earlier about being sure that the community had a say. I think this is a positive way of ensuring that the community is aware of what they should say, because it's easy for all of us to come and say the world is wonderful and we're going to get great things from it, or the world's going to be terrible, but until you've got an example to really work from, I think people really can't make an informed decision.

The Chair: Thank you very much, Mr Kearney, for presenting before the committee this morning.

Mr Kearney: Thank you.

The Chair: Our next presenter is Mr Ted Daniels. Are you present, Mr Daniels?

Mr Dadamo: He's out there. I was just talking to him.

The Chair: We'll just rest for a moment until the clerk gets Mr Daniels.

Although all the members aren't here, it may be an appropriate time to raise the issue of additional presenters in Niagara Falls. I have an opinion that I'll share will you and I'll certainly take any further concerns you might want to raise, but at this point in time, the clerk has made arrangements for people to make presentations and given them times when to be before the committee. We have no expectation at this point in time of going beyond the time that we have scheduled.

What we've done in other venues is allow people to be present, because in other venues there have been people who wanted to make presentations who weren't given that opportunity because of limitations; Sault Ste Marie, for example. We had asked them if they wanted to attend the committee hearings, understanding they may have an opportunity to fill in should there be a cancellation. They were given that, and some did, as you know.

Basically, I think that same process or that same idea should be practised throughout the hearings, and I would suggest that's what we do in Niagara Falls as well. There was a time limit for sending in requests to make presentations before the committee. A number of people were many weeks late but would still like to make presentations before the committee. I think, fairly, they weren't successful applicants at this point in time. But that's what I think we should do. Are there any objections to that?

Mr Phillips: Good idea.

Ms Harrington: My only comment is that in most places we've started earlier, at 9 o'clock, so there has been a little more ability to get on the list, so we have been a bit limited in Niagara Falls. Of course, it's the end of the week and everybody's tired from travelling; I don't want people to stay longer. I know these people were late, so I have no objection to that. My hope is, if people are there waiting and anxious to get on, that if there's a cancellation or if there is any extra time, we'll try and squeeze them in and be as hospitable as we possibly can.

The Chair: Absolutely; like we always are.

Ms Harrington: But I just wanted to draw to your attention that I don't think we have as much of a time block as in Sault Ste Marie or Ottawa. Obviously we're a day and half here, so that in a sense they have been penalized.

The Chair: Well, there are other communities which wanted us to come to their communities and we didn't show up at all, so if you look at the whole process, we did limit where we were going to go and some of the times. And although we're starting an hour later in Niagara Falls, we're staying an hour later too.

Ms Harrington: Is that right? Okay, that's fair. Thank you, Mr Chair, for considering it.


The Chair: Mr Ted Daniels, welcome to the committee. You have 30 minutes within which to make your presentation and field questions from the committee members. Whenever you're comfortable, please proceed.

Mr Ted Daniels: Welcome, all members of Parliament. I'm here on behalf of Sparks Street and the organization. We would like to see the casino on the street. I think it will be very good for our retail business. It would also, in turn, allow us to have a night life on Sparks Street which is lacking right now. We need that. We also need different types of restaurants on the street. I believe that with Empire and with the help of Carnival Cruise Lines, they're going to put in a restaurant there as well as the casino. I believe this again will add to the ambience of Sparks Street and is what we need. Sparks Street is a beautiful street; it's well known all over Canada. With a casino, I believe it will draw a lot more people into Ottawa, maybe even from the States. We could use some of the States' money, since we keep going over there and spending our money over there.

I also believe there are bad sides to the casino. I believe with the size they are putting in there, it's not a big casino, so it's not going to attract as many of the wrong people we don't want to have in there. I think they'll have the opportunity to guard against it because there won't be as many people going into that casino.

I think that's basically what I really wanted to say in terms of having a casino. I just believe that it would be very good for our street and our city.

The Chair: Thank you very much, Mr Daniels, for making your presentation. Because we do have quite a bit of time, I'm going to take just a minute. I want to tell you that I too took a walk down Sparks Street last night. I was very impressed with the way it's laid out. I was somewhat disappointed there weren't any stores open because it was after 6 pm. I also noticed that there was, in my opinion, a shortage of restaurants, but I've got to say I can't say that absolutely because I didn't check out the rest of the city. I just walked down Sparks Street. I found it to be a very nice place to go.

Mr Daniels: It is a beautiful street with everything that goes on down there, especially during the summer, and then once the winter comes on, it dies out.

The Chair: Indeed. I might share this with you too. I happened to sit outside one of the restaurants for about half an hour after I'd eaten, or maybe it was 15 minutes. When people were walking by, I listened to their comments. I wasn't eavesdropping; they were just speaking quite loudly. They suggested that they were looking for restaurants. I thought that was interesting because so was I when I went down there, actually. I wanted to check out a few varieties of restaurants before I made the decision where I wanted to eat. There weren't that many.

Mr Daniels: No, there isn't.


The Chair: Anyway, the committee members have a considerable length of time to question Mr Daniels. We'll start with Mr Phillips.

Mr Phillips: The challenge for us, I think, is that the Coopers and Lybrand report -- I don't know whether you've had an opportunity to review it or not.

Mr Daniels: I haven't, but I've heard about it.

Mr Phillips: It indicates that there's just going to be so much money flowing out of these casinos that we'll hardly know what to do with it all. I think it says it'll be about $850 million a year flowing into the province. If I'm not mistaken -- I can't remember the exact number for Ottawa -- I think they're predicting about $150 million a year flowing into the province.

That assumes a substantially larger casino than, I think, the Sparks Street group had proposed, something more in the order of 60,000 square feet. Have you a thought for us on whether it's in the best interests of Ottawa and the province to have your proposal of a comparably smaller casino, or should we at least open our minds to the much larger one that would presumably attract, in total, more people?

Mr Daniels: I don't think that we need such a big-size casino. I find that there are a lot of problems and you would probably be better off to have maybe another casino in another area of the city. At least this way I find that you're able to contain the amount of people who are going in and it can never come to the point where we're having too many people and you can't do anything with them. I think the size of that means a lot: By having that small place there, it'll handle enough people to allow Empire to control it better. If we get too many people, it becomes hard to control.

Mr Phillips: Based on what we understand, it's likely we'll see a kind of proliferation of casinos throughout North America, really. It looks like there's no place that is not considering opening a casino.

Mr Daniels: That's right.

Mr Phillips: What's your view on where that may lead the casino business? One would speculate that there is a limit.

Mr Daniels: There is a limit; I agree with you.

Mr Phillips: It strikes me that right now we are expecting to take out of the pockets of the people of Ontario about $1 billion a year in this. Most people felt there wasn't any more money available in disposable income, but this industry's expected to develop about $1 billion of new revenue. What would happen if we did face a proliferation of casinos and, for one reason or other, it didn't work? Is there anything we should be thinking about to minimize the damage that could be done as a result of that?

Mr Daniels: I think it should be controlled. I don't think you should have anybody opening up a casino in a city and have 10, 15, 20. I think in every city the amount of population should be how many casinos should be allowed in that city so that it doesn't go overboard and it doesn't have people going in there who can't afford to go into casinos and spend money.

We have a lot of people in Canada who tend to go over to the United States to go to the casinos. Instead of having them go over there, we can keep that money here in Canada, which is needed. By the same token, maybe we'll get some of the people coming from the United States and bringing their money into our casinos.

Mr Phillips: One thing that might be a challenge is stopping people who can't afford it from going in there. They may be tough to identify.

Mr Daniels: Yes, you're going to have that problem. Again, that's why I say I believe that the smaller it is, you're able to deter that: Not everybody is going to walk in there and you're able to see that person walking in. Where you get too big, you can't watch everybody who walks into your casino and how they act and what they do and how much money they spend, but on that size, I think you are able to do that.

Mr Sterling: Thank you very much for coming to our committee. What kind of a retail business are you involved in, Mr Daniels?

Mr Daniels: I have a men's clothing store on Sparks Street.

Mr Sterling: I had heard some concern about parking; that was in one submission. Then I heard in another submission that everybody seems to be looking at after the 6 pm period of time, that they're not so concerned with the afternoon. In what you're seeing as what's going to happen in this Ottawa proposal, is it the plan that the casino is not open till 6 pm or is it going to be open during the day? I was just a little concerned that on the one hand we said we've got a serious parking problem in downtown Ottawa at Sparks Street Mall, and then when the proponents come forward they say, "Well, there's no problem after 6 pm because nobody's down there." Is the proposal not to have a casino until 6 pm, or do you know, Mr Daniels?

Mr Daniels: In my view, I would probably look at seeing a casino open up maybe, say, around 12 or 1 o'clock and go right into midnight so it's running basically that part of the day. I don't think you need a casino in the morning time.

Regarding parking space, I think there's ample parking space downtown for anybody who wants to park down there. There were a lot of people at one time who didn't know where all this parking was, but right now I believe that there's plenty of parking down there for people; all they have to know is where to go. Since the world trade plaza opened up -- I can't remember exactly how many parking spaces are in there, but that place is empty. Every day I park my car there and it's not always full.

Mr Sterling: So you're not concerned about the parking then?

Mr Daniels: Not at all.

Mr Sterling: Thank you very much.

Mr Dadamo: Mr Daniels, thank you for our conversation outside before you came in. I guess I'd like to spend a little bit of time talking about the volumes of people you'd like to have. I'm sure every downtown business area that has experienced the problems you've had in drawing people in -- what kinds of ideas or gimmicks, if you want to call them that, have you tried to bring people in after hours?

Mr Daniels: I have close to 3,000 customers, and I call them and talk to them all the time. I've always stressed to my customer that he can come and call me at any time and we will set up an appointment at night-time. A lot of times they will tell me: "Well, for me to come down and see you at 8 o'clock at night, what am I going to do after? I'm driving from the east end, coming to see you, I'm going to buy a suit and then I'm going to go back home. There's nothing down there to keep me there to spend at that time." They say what they do is that they do their looking during the week and on Saturday they'll come back with their wives, during the day, and do their buying.

We're trying to find ways that we can keep these people downtown after work and then on a Saturday and on a Sunday and on holidays so that we will have some form of traffic on that street. If you took Sparks Street and put it in Montreal or put it in Toronto or even Vancouver, that street would be open 24 hours a day, but for some reason, in Ottawa nobody comes down there. They all go to their malls, and we need that. That's a gorgeous street, and people say it when they come down there. They love to be there, but they never have a reason to be there to enjoy it.

Mr Dadamo: In 1981, I spent a short time in Regina, Saskatchewan. They had the stores closing at 6 o'clock every night except for Thursday and they proudly announced that Thursday night the stores will be open till 9 o'clock, and that seemed to draw a lot of people to the downtown area, because they knew they had a chance to do some late-night shopping. Have you tried something like that?

Mr Daniels: We have. We do it every year, especially at Christmastime. We've done it through Boxing Day, the biggest day of the year for 90% of the retailers out there, but not on Sparks Street: It's the worst day of the year for Sparks Street, and it shouldn't be. Nobody's there; they go into the malls. There's no reason to keep them there: The restaurants are not right, there's not a night life, there's no bar that they can even go and sit in comfortably. It's not there, so people say: "Well, I'll go to the mall, because they have a nice little restaurant that I can sit in. I can go and do a little bit of shopping." There'll be a little bar there where they can drink. It keeps them there. We don't have that.

Mr Dadamo: Okay. Thank you very much.

The Chair: Thank you very much, Mr Daniels, for making your presentation before the committee. You might want to put a plug in for your business. I don't think that's inappropriate. You told the committee that you had a men's clothing store. I was up and down the Sparks Street Mall. What is the name of your business?

Mr Daniels: The name is T.K. Daniels Men's Wear. It's right next to Morrows Nut store. I sell very, very fine clothing made in Canada; 90% of my materials all come from Canada. I believe in Canadians, so let's keep our Canadians working. That's another reason, the unemployment; I think the casino will alleviate some of that problem. Also it will do a lot for the city: It will open up other businesses; it will make people want to go into Sparks Street; companies will want to invest their money into Sparks Street, and I think that's what we need here.

The Chair: Great. Thank you very much for making your presentation.

Mr Daniels: Thank you.

The Chair: The clerk would like to know which committee members are planning to utilize the bus from Queen's Park to Niagara Falls tomorrow morning.


The Chair: Okay, I think we've got that information. The other thing I'd like to say is that I just want to remind everyone we have to check out of here by 1 o'clock and you can bring your effects into this room, your own personal effects.

Before we recess, Lorraine from research would like to make a comment.

Ms Lorraine Luski: Members should be aware that a copy of the interim summary of recommendations on Bill 8 has been sent to your offices at Queen's Park. I'm also bringing extra copies to Niagara Falls tomorrow morning and I'll distribute them at the start of the hearings.

The Chair: We will recess now until 1 pm this afternoon.

The committee recessed from 1142 to 1324.


The Chair: Order. The standing committee on finance and economic affairs will come to order. Mr Carol Baker is our next presenter, representing the Eastern Canadian Thoroughbred Association. Welcome to the committee, Mr Baker. You have 30 minutes within which to make your presentation and field questions from the committee members, and I want to thank you for being here a few minutes early.

Mr Carol Baker: I'd like to thank you on behalf of the Eastern Canadian Thoroughbred Association for giving us this opportunity.

The Chair: Whenever you're comfortable, please proceed.

Mr Baker: As I mentioned, thank you again for this opportunity to present the concerns which the Eastern Canadian Thoroughbred Association, which commonly goes by the abbreviation ECTA, has about the proposal to introduce casino gambling in the province of Ontario.

Let me first outline what the ECTA is and how our membership is comprised. The ECTA was formed about eight years ago by a mere handful of local breeders who were primarily, at that time, interested in the racing aspects of the thoroughbred industry. It has subsequently grown to about 80-some members who own, breed or, in some cases, have only a love of the thoroughbred. Our members are mostly located in eastern Ontario, but we do have some members in Quebec. Contrary to the eastern part, we do have a member as far west as Alberta and one member in the United States.

The organization provides a forum which enables people interested in the thoroughbred to seek answers to their problems, promotes the thoroughbred as a breed that has many potential career possibilities including racing, dressage, jumping, line show, polo, eventing, hunter, leisure riding etc, encourages development of new thoroughbred owners in one or more of the foregoing disciplines and holds one of the largest annual thoroughbred shows in Ontario.

Our membership comprises people interested in each of these disciplines, with the possible exception of polo. We work in close association with the national body for the breed association, the Canadian Thoroughbred Horse Society, but we are not part of that association itself.

Given the multidisciplinary composition of the ECTA, we are concerned that the introduction of casino-style gambling will affect not only the racing interest of our membership but its fallout will surely be felt by those who compete in non-racing events. In short, we believe there will be a very negative impact in the further development of the thoroughbred, which we believe to be a marvellous animal with great versatility.

By this time in your deliberations you will have heard the basic arguments of how horse racing will be hurt by the proposed casino legislation. I apologize for the fact that you will hear them once more before this presentation is finished.

However, I would first like to bring to your attention a factor which I do not believe has been given serious consideration by any of the consultants involved in the review of the racing/casino issue. I refer to that relationship between thoroughbred racing on the one hand and the sport and leisure aspects of thoroughbred ownership on the other.

The ECTA, because of the broad membership interests which I have outlined, is keenly interested in the possible negative economic impact which the decline of racing will have on those who show and campaign thoroughbreds in non-racing events. Let me be more specific.

At the end of July, the ECTA held its seventh annual all-thoroughbred show. The event, although scheduled on a busy civic holiday weekend, attracted thoroughbreds from many parts of Ontario as well as Quebec and the United States of America. The judge for this year's show was Rita Jeffries, a well-known author, columnist and thoroughbred owner. She commented at the end of the show on the quality of the animals which she had seen exhibited in the various line and performance classes. The quality noted by Ms Jeffries did not materialize overnight. Rather it has evolved through, in some cases, the purchase by local breeders of prominent stallions with good race records and, in other cases, breeding mares to stallions standing at stud at major Ontario thoroughbred farms.

The third source of thoroughbreds for sports and leisure events is the retired racehorse or the ones who, although possessing good race credentials, prefer to be show horses. Translation: They may look like a million but run like a dime, and I had one of them. I'm not aware of any study which has been carried out to determine the value of this second market for the thoroughbred racehorse; however, the vast majority of thoroughbreds taking part in performance as opposed to racing events had their origins in racing. It is ironic that just as more interest is developing in the use of thoroughbreds in non-racing events, the impact of casino gambling is likely to decrease the number and quality of thoroughbreds available for sports and leisure events.

In the eastern Ontario area, there is at least one horse show each weekend day through the late spring and summer. Often, there are minor events on week nights. Unfortunately, no data exist on the percentage or number of horses competing in these events which are thoroughbreds. We do know that a few years ago, when the ECTA offered prizes to champions on the Trillium circuit, we fully expected that only a few of the champions would actually be thoroughbreds and therefore qualify for our prize incentives. To our surprise, virtually all champions were thoroughbreds. We also know that ECTA members own approximately 300 thoroughbreds. About a third of these are directly involved in racing and the remainder are owned primarily for sports and leisure pursuits.

Further, we estimate our membership accounts for only about 20% of all thoroughbreds in this part of Ontario. The cost of maintaining a racing thoroughbred is conservatively estimated at between $20,000 and $25,000 annually. However, the cost of owning a performance thoroughbred can vary widely depending on the calibre and the number of the shows which they attend. A reasonable average estimate would be between $10,000 and $15,000 annually; this could go up as high as a thoroughbred to $25,000 in some cases. The cost that I've mentioned does not include the purchase cost, which would be above and beyond, and again you get a wide range in the purchase cost of these animals.

Taking an average annual upkeep cost of $12,500, which is the median between the $10,000 and $15,000 I mentioned, we therefore believe that thoroughbred ownership, apart from the direct racing interests in this small part of Ontario accounts for over $12 million in direct owner expenditures annually. This money is spent in local communities and helps support many small entrepreneurs. It would not, for instance, include things like the construction of an arena or the purchase of trucks, trailers etc. So what I'm trying to say here is we have taken a very, very conservative estimate of direct expenditures, and even that is a fantastically large amount especially when you put it into small local communities like Arnprior or Portland or Kemptville, other small communities in the Ottawa region.


If you have any doubts about the numbers I'm talking about, drive down a local highway on an early Saturday or a Sunday morning and note the number of horse trailers which are travelling to local shows. Alternatively, visit one of the local tack shops and note the number of customers making horse-related purchases.

The above figures are quoted to illustrate that thoroughbred ownership is neither limited to southern Ontario nor to strictly racing pursuits. Oftentimes we have found that people believe that thoroughbred ownership stops somewhat short of the eastern limits of Oshawa, but as I mentioned here, we have a very active, very extensive thoroughbred ownership community in eastern Ontario.

The relationship between racing and the ownership of sports and leisure thoroughbreds is acute, ie, the fewer racing thoroughbreds in existence, the fewer horses will be available for those interested only in non-racing events. We are therefore critical of all studies which we have seen to date because they have concentrated only on the potential losses to thoroughbred racing and have completely ignored the significant downstream impact on the losses to the economic market resulting from a decrease in thoroughbreds in the sports and leisure sector of the industry. In fact, the projected losses on the racing side may represent only the tip of the proverbial iceberg if all the thoroughbred sports and leisure sector were to collapse as well.

The ECTA is of course also concerned about the potential for major damage to the racing industry. Already we have seen some of the better stallions standing in Ontario leave for the United States. Should this trend continue, it will be necessary for more mares to be sent south of the border for breeding, with resulting loss to the Canadian economy. The costs of shipping to the USA will drive many of the smaller owners out of business, with a further loss to our economy.

Smaller foal crops mean fewer potential racehorses. Fewer racehorses mean smaller fields for racing cards, which in turn will discourage the betting public. Lower handles mean lower purses and more owners leaving the industry. In short, it is a rapid freefall that, once started, is very difficult to arrest. Many are now looking for the parachute which will alleviate that particular rate of descent.

While the Ontario government has issued comforting words about wanting the horse racing industry to continue to be a full and active player in the gaming industry, its actions do not entirely support this laudable stand. By pressing ahead with casino legislation in the absence of a referendum and on the basis of a hastily prepared report, the government has shown a high disregard for the concerns which both the horse industry and the people of this province have over the project.

Let me first of all comment on that portion of the Coopers and Lybrand report which affects the horse racing industry.

Page 44 of the report suggests that racing must "compete on equal terms with other sports and forms of gaming to attract the consumer." For many years the government did allow racing to have a monopoly in the gaming field. This has not been from a purely benevolent standpoint, as it taxed the industry accordingly. Research shows that, with one exception, the racing industry in Ontario pays the highest percentage of taxes of any jurisdiction in North America even though it no longer has the monopoly which it once enjoyed. Data also show that horse racing now represents only 27% of all legalized gambling in the province. This percentage will decrease rapidly as casinos are brought on stream.

Ernst and Young in its report, Sustaining the Horse Racing and Breeding Industry in Ontario, recommended a decrease in the provincial share of parimutuel wagering from 5% to 2%. Three years later, the province is still extracting the 5% levy. Wagering has decreased as predicted, as has the size of purses available to horsemen. Instead of relief from this onerous tax, the province is on the verge of introducing yet another form of serious gaming competition to the horse industry. One wonders what kind of Alice in Wonderland world of economics we are living in.

Coopers and Lybrand quote an Insight Canada Research survey of racetrack patrons which concluded that, "The vast majority of racing patrons are attracted by the skill factor involved in racetrack wagering." This must have been a very unique group of patrons interviewed by Insight Canada. Tom Ainslie, one of the world's most respected horse racing handicappers, notes that, "The crowds function on a blend of hunch, horoscope, hot tip, individual handicapping, the motley forecasts of newspapers and tip sheets...and the dubious predictions of innumerable selections systems." I have personally known people who have selected on the basis of horses' names, the colour of the jockey's silks, favourite numbers, and in one extreme case, a man who had the urinals in the men's washroom numbered and selected exactor bets in accordance with which ones were occupied immediately before the call to the post.

Mr Phillips: Did it work?

Mr Baker: It did in one case.

Ainslie's conclusion, which is very much at odds with Insight Canada's findings, is that, "I doubt, in short, that more than a tiny percentage exploit the predictability of racing by putting available information to profitable use."

Although Ainslie's observations and the Coopers and Lybrand conclusions are not mutually exclusive, it does appear to us that racetrack patrons will initially be attracted to new and legitimate gaming opportunities. Whether they will return to racing or, more importantly, whether there will be racing to return to is another question.

The Coopers and Lybrand study further downplays the impact of casino gambling on the horse racing industry. They conclude that with certain combined government and industry actions, the impact on racing would be in the 5% to 10% decrease range. The basis for this conclusion again appears to be that unique group of gamblers found by Insight Canada Research. The study on page 42 states, "The vast majority of gaming participants expect casinos not to affect their current gaming patterns.... More than 85% of racetrack patrons overall (and 91% of those surveyed at racetracks) indicated that their wagering would either remain the same or increase."


Compare this finding with that of Christiansen and Cummings in their report on gambling in Connecticut. The latter found that between 16% and 35% of their respondents would spend less at each parimutuel facility if a casino were located within a one-hour drive. Further, they noted that respondents typically tend to underestimate the impacts that new, highly attractive gambling options will have on their current activities.

Empirical evidence in other jurisdictions where casino gaming has been introduced suggests that the potential decrease in wagering on Ontario horse races will range between 20% and 37%. New Jersey, which enjoys the greatest relief from taxation, half a per cent in parimutuel wagering as opposed to Ontario's current 5% net, still experienced a 33% decrease in wagering and a 27% decrease in attendance at thoroughbred tracks after casinos were introduced. The statistics for other jurisdictions are equally sordid.

Coopers and Lybrand has downplayed these startling figures by attributing the losses to mismanagement and competition from other sources. While these two factors may well be at play, the correlation and timing between the introduction of other gaming opportunities and the downturn in track handles is too great to completely ignore.

Coopers and Lybrand additionally state on page 43 that, "The two most important factors for betting on a race are the quality of horses and the handicapping skills required." We've already dealt in the foregoing with the myth of the betting public being an expert handicapper. In regard to the quality of horses being the other important factor, we would again refer the authors to Ainslie, who states that the top races bring together horses that are evenly matched, which makes handicapping extremely hazardous at best. Most name races, he feels, are "simply too close to bother with."

The size of the field was completely ignored by the Coopers and Lybrand study and might well be considered a more significant factor than the quality of the field. A question should have been asked to determine whether a race patron would sooner bet on a field of five stake-calibre horses or a field of 12 mid-level claiming horses. It is our feeling that the latter would be chosen by most patrons. Again, we're backed up by Ainslie's findings when he states that fewer than eight horses in a field is a very unpopular race. I think there have been other studies conducted in North America in the last few years too which prove that. Unfortunately, I was not able to identify which studies they were in time to have them before you today. The point is that lower fields draw fewer betting dollars from the public.

A wide range of estimates of the jobs which are associated with the racing industry is on public record. We are not in a position to state which is the most accurate prediction. The thoroughbred industry, both racing and non-racing, is labour-intensive, with flow-through benefits going to numerous small businesses, skilled professionals and non-skilled labourers.

When Fort Erie was threatened with closure, an estimate of job losses in the 4,500-person range and a corresponding loss of some $38 million in the payroll was widely quoted. To the best of our knowledge, neither figure was disputed. Given that Fort Erie was only one track of the some 23 in operation, it's not too difficult to believe that the upper end of the 18,000 to 49,000 estimated scale would be correct, particularly if the non-racing aspects of the industry mentioned in the earlier part of this presentation were to be taken into consideration.

Again, we wish to stress that neither Price Waterhouse in its study commissioned by the Ontario Jockey Club nor Dr Arthur Hosios in his evaluation of this study which was done for the Ontario casino project examined this aspect of the issue. We feel this was a major error, since a complete picture has not been presented to those of you who are preparing the legislation.

It has been correctly pointed out that many of the jobs associated with the horse industry are occupied by people with skills that are not transferable. Although retraining is a possibility, the question must be asked about the costs of such training, as well as, retraining for what purpose? Are we about to create one category of jobs at the expense of another category?

Price Waterhouse noted that the number of people employed in the horse racing sector in Canada outnumbered jobs in logging and forestry, mining and quarrying and fishing and trapping. It should be noted that, compared to these, horse racing is an environmentally friendly industry. It does not fill in the wetlands, pollute the atmosphere with acid rain, deplete scarce resources nor destroy virgin timberlands. I might add here at this point too that it's also more friendly because it returns about 80% of the dollars bet to the public, which I think will be far greater than any casino proposed.

Another factor we note is that the number of young people involved in the horse industry, both in the racing and non-racing sides of it, is significant. At a time when concern is expressed about opportunities for the youth of the province, it will be unfortunate if yet another potential job market is taken away from them.

As an aside from this, the actual number of jobs or employment provided, the number of youth involved as a hobby in this business is really significant. Go to any show and you'll see the number of young men and women of this country who are involved in it, and I doubt if any of these are engaged in wrecking shopping malls or gang fights because they are bored with the locale that they're living in. They just simply don't have time if they're involved with this.

Let me conclude by saying that we are fully aware that all is not well within the horse industry itself. In the last few years, I have attended race meets and offtrack betting establishments in several jurisdictions in North America and as far away as New Zealand. I've noted the decrease in the percentage of young people in attendance, particularly at live races and particularly at those in North America. New Zealand was slightly different on that point.

Tracks have in general not done a good job in promoting the product to ensure that they have a continuing and loyal clientele, a factor which was noted by Coopers and Lybrand, nor have they gone out of their way to encourage small owners, who, contrary to popular belief, are really the backbone of the racing industry.

We feel that the introduction of gaming opportunities that are decided by the play of a card, the pull of a handle or a 20-second spin of the wheel will be very difficult to overcome by an industry which relies on a 20-minute wait between each betting event. The main solution presented to date is the expansion of simulcasts and teletheatre betting establishments. Somehow the quality of horse racing will be diminished as patrons abandon our beautiful live racing premises to sit in front of banks of television monitors where they can have a play every few minutes instead of two or three times per hour.

The industry is being rapidly pushed towards this solution by the proposed high-stakes casino approach. No matter how repugnant this scenario is to the race purist, it may extend the product to many who do not live near a major track and provide interim protection to the industry from the encroachment of other forms of legalized gaming.

However, short-run solutions often lead to long-range disasters. This could similarly be the case with the anticipated bonanza which a tax-hungry provincial government, equally financially strapped local municipalities and local developers expect to reap from the casino project.

Thank you again for this opportunity to make the concerns of the ECTA known to you.

The Chair: Thank you, Mr Baker. We have three minutes per caucus.

Mr Duignan: Just a quick question. You've indicated some concern about bringing casinos to the province of Ontario. I was wondering, have you any idea what the impact will be on your industry from a casino that would be sited, for example, in Montreal?

Mr Baker: I guess no matter how far away, if it's in an easy driving distance, there is going to be an impact. Again, I guess we'd have to quote the New Jersey situation, where casinos were all located in Atlantic City. Meadowlands is 120-some-odd miles away, one of the major tracks, and the New Jersey situation was that I think -- sorry; just let me check. I think New Jersey found they went down about 27% in their racing handle even though the casinos were well over 100 miles away. We're within 100 miles of Montreal, slightly over an hour and a quarter's driving time. So, yes, there'll be an effect on the racing handle, there's no doubt about it.

Mr Duignan: There's also a possibility of a casino being established in Hull in Quebec as well.

Mr Baker: That's correct. We're speaking for the thoroughbred racing, but even so, the simulcasting of certain races of thoroughbreds is now coming into our local standardbred track, so I would expect that would have an impact as well.


Ms Harrington: Thank you very much for your very detailed brief. I wanted to mention to you that I can understand your love of horses in eastern Ontario. My father, who lived in Brockville, owned a horse boarded with Eve Mannering. Do you know her?

Mr Baker: I don't know her personally. I know the name well.

Ms Harrington: Okay. Just last night I was visiting my sister west of Ottawa, and her daughter, who's 20 years old, came home from the stables and was telling me how expensive it is. She takes all her time and money to support her horse, which is about $400 a month just for board.

Mr Baker: I hope it's a thoroughbred.

Ms Harrington: I hope so too. I don't know the horse at all.

I represent Niagara Falls, which of course is very close to Fort Erie, and I know the commitment of this government and what we have gone through over the last year and a half or more to maintain and sustain the track there and try to give a long-term commitment. Now, I understand what you're talking about is the breeding stock over the long term, what will happen to the value and quality.

Mr Baker: And numbers.

Ms Harrington: Right. I certainly will take your concerns with regard to that, and thank you for your presentation.

Mr McClelland: I wonder if you'd expand somewhat on the non-racing aspects of the industry, particularly page 6 at the conclusion of the second paragraph. We unfortunately ran out of time, but we were engaged in a little bit of a discussion with Dr Hosios last week. It's rather unfair to try to comment on his response, but if I understood him correctly, what he was trying to do was, if you will, apportion time and essentially say that if you only work x number of hours, then we have to prorate that in terms of impact on job loss.

Unfortunately, we didn't have a chance to engage in it, but I thought it was very well put by Mr Eves, who said, "Well, I guess then teachers aren't full-time workers because they only teach 180 days." My thought was, and I didn't mean this in a disrespectful sense, "I guess a professorship isn't a full-time job if you only lecture six hours a week," because everything else you do on the side is irrelevant, it would seem to me, if you were to follow that argument through to its conclusion.

I wonder if you would expand on that somewhat, because I too share the concern, as do a number of people, and I'm sure my colleagues do as well, that the impact on job loss may be much greater than the numbers that have been brought forward by Dr Hosios and others.

Mr Baker: It's difficult to quantify what that would be. Again, in our presentation here we've mentioned that the sports and leisure side of the number of horses involved in our association numbers about two to one to the racing interests, and although it doesn't cost as much to maintain most of the sports and leisure horses, there are probably twice as many in existence.

The only area of this province I'm familiar with is local eastern Ontario. If the review and research that we have done here is projected to central, southern and western Ontario, where there are many more horses because of the fact that the racetracks are at Toronto and Fort Erie, we envisage that the number of sports and leisure horses must be really significant and the amount of money going out -- well, just drive around through this area and see the number of arenas going up. It's the same thing in the Toronto area. When we've driven there we've seen all of the construction of horse farms, and not all of them, very few of them probably in fact, are really connected with racing. So it's a second market that hasn't been explored by any of the consultants that I have been able to determine. It's fallen into a gap, and I'm really concerned that it's been missed.

Mr Gary Carr (Oakville South): Thank you very much. I appreciate the presentation.

Once we get this casino and the people of Quebec get their casino and Detroit gets its and all the ones that have been anticipated get up and running, what would you anticipate happening to your actual membership? Percentage-wise, what do you see happening to your membership?

Mr Baker: As you have noted, compared to the Canadian Thoroughbred Horse Society, the CTHS, or the Horsemen's Benevolent and Protective Society, the HBPA, and those others, ours is a voluntary organization, so we do have low numbers compared to the other people you've probably heard before.

Mr Carr: Just percentage-wise, though.

Mr Baker: Percentage-wise, I would think that small owners and with maybe two or three exceptions we really do have small owners, one or two horses to a large extent, in many cases -- will be the first ones to drop out. I would think that maybe three quarters of our membership could eventually be out of thoroughbreds, particularly in the racing side. I should emphasize that. That would be the first to go, and I would be one of the first of those.

Mr Carr: You mentioned in here the issue of taxation. One of the things I'm hoping is that the government will see fit to make some of the changes. I think you talked a little bit about the percentages of taxation.

Mr Baker: Yes, it's 5% tax.

Mr Carr: As you know, the government seems intent on going ahead with the casinos. You say if casinos come in you're going to lose three quarters of your members. If they were to change the tax, what do you see happening to your industry? What difference will that make if one of the things they do positively reduces some of the taxation? What do you see happening if they do that?

Mr Baker: It depends on how soon it's done and how much money flows down into the purses of the individual horse people who are involved. If the purses were to not decrease, as we envisage they will right now, I think it would encourage an awful lot of owners to stay in the business. Naturally, we'd feel that if Bill 8 was removed from the agenda, that would be the best. Lower taxes in the industry would certainly be secondbest.

Perhaps another way to help out the horse industry would be to have breeders' incentives provided through a percentage of the purses -- and maybe that could come out of the cutback you're proposing -- to make it more effective than the present side, where breeders of horses that win races don't get any particular prize. Up till now, high purses which exist in Ontario are support and initiative enough for breeders to stay in the business, but we in the ECTA feel that maybe special percentages of purses given directly to breeders of those winning horses would be a better way to distribute it. That again would help people to stay in the business.

Mr Carr: Do you see this as a real urban-rural issue? As you know, we've gone to some of the cities and they're all in favour of it for getting the jobs. It seems to me we may be substituting jobs in cities, whether it be Ottawa or Windsor or so on, for jobs that will be lost in rural Ontario. Is that how you see it, as sort of a tradeoff, that we'll be producing some jobs in the urban centres and the cities, but we may be losing them in rural Ontario?

Mr Baker: I think that in the case of Fort Erie or Woodbine you'd certainly be losing an awful lot of urban jobs there as well. As for communities and municipalities trying to find the secret magic to tapping into casino windfalls, maybe they should be careful, because from what I've seen in Atlantic City, they had 2,100 businesses there just prior to the introduction of casinos and within a few years afterwards, only 210 of those business actually existed. So it's not exactly a good example, perhaps, for urban communities to really be following and pushing. In other words, I'm saying beware. It may not be as good a source of income as they feel.

In addition to that, I think the same statistics showed that only 10% of the jobs that were created actually went to residents of Atlantic City. Crime went up 75% in five years as compared to 17% in Detroit over the same period of time, which is one of the notorious cities in the United States for crime, and at the same time, Atlantic City had the third-highest rate of people on public assistance. There's an urban concern there as well, although it's not related to the horse industry.

The Chair: Thank you, Mr Baker, for presenting before the committee this afternoon.

I want to inform the committee members that the telephone call was Chief Robert Whiteduck, and he was, I believe, calling on his car phone to tell us he was going to be five minutes late, so we're going to recess until he shows up, which I expect will be very soon.

The committee recessed from 1401 to 1406.


The Chair: Are you Chief Robert Whiteduck?

Mr Dan Kohoko: No I'm not. My name is Dan Kohoko. I'm working for Chief Robert Whiteduck. Unfortunately, at the very last minute, he wasn't able to make it and they got me a message about half an hour ago saying to go ahead with the presentation.

The Chair: I see. Welcome to the committee. You represent the Algonquin Golden Lake First Nation?

Mr Kohoko: Yes I do.

The Chair: You have 30 minutes within which to make your presentation and field questions from the committee members. Whenever you're comfortable and prepared, please proceed.

Mr Kohoko: Yes, I'm ready. As I mentioned earlier, I'm replacing Chief Robert Whiteduck. On his behalf, our presentation is as follows.

I welcome the opportunity to be here today to discuss the proposed legislation concerning casinos in Ontario. We're all aware that gaming is a dynamic industry, with great potential for social and economic development and growth. We have also heard stories and allegations on the negative side of this issue. However, we believe that the key to success of the gaming industry in Ontario is cooperation. Cooperation will ensure the greatest benefit for both the government of Ontario and the first nations, which will in turn ensure the industry is effectively controlled.

We don't have to look far to appreciate the potential resulting from the casino industry. Tribes in the United States have experienced tremendous growth as a result of casino operations. We know from Minnesota tribes that casinos are lifting them from the decades of poverty and neglect and powering their drive to become self-sufficient. Casino development has allowed US tribes to contribute to local, state and national economies. In Minnesota alone, Indian people paid an estimated $35 million in state taxes as well as generating goods and services estimated at $550 million in 1991, directly resulting from the casino industry.

In that same state, a number of other benefits have accrued, for example, in employment and wages. There are currently 13 Indian gaming operations in the state of Minnesota alone. They employ approximately 5,700 people and four of them have become the largest employer for their nearest city. Current employment includes 1,350 natives, or approximately 24% of the total employees. Indian gaming in that state currently pays wages at the rate of about $78 million annually.

In terms of tax revenue, Minnesota's 13 Indian casinos generate over $11.8 million in social security and medicare tax revenue on an annual basis. In addition, they pay over $2.1 million annually for combined state and federal unemployment compensation.

Government assistance: Based on state figures, the amount of Indian aid to families with dependent-children recipients in the 11 counties containing Indian casinos decreased by 3.2% over a two-year period. The number of Indian recipients in the balance of the state increased 14.6% for the same two-year period.

Other impacts: The greatest area of impact in the state has been the amount of new construction which has taken place. The total estimated cost of construction related to Indian gaming for 1991-92 equals $68.8 million. An additional $27.1 million in planned construction expenditures has been identified as the gaming industry in that state continues to grow.

Based on current operations, Indian casinos spend over $3 million annually just on advertising and promotion to attract out-of-state and out-of-country patrons.

So we look at those kinds of figures and that type of thing. Our own as well as other people's reasons for interest in the casino industry is evident, but we think ours goes perhaps further. The casino industry presents us with a desperately needed development opportunity. The development needs of first nations in Ontario are self-evident. Extraordinarily high unemployment, poverty and poor health conditions plague our communities. Community infrastructure, including basic services such as a good supply of potable water, roads and sewers are all needed.

The Union of Ontario Indians, of which Golden Lake First Nation is a member, has advised us that Minister Churley, in her remarks to this committee on August 16, stated that the Ministry of Consumer and Commercial Relations is "currently discussing with aboriginal groups their participation in the gaming industry" and that they "are currently negotiating self-regulatory agreements with a number of first nations with respect to charitable gaming." She went on to state that she felt first nations should be involved like everyone else. I guess that's why I'm here today, to say that Golden Lake would like to be involved.

We welcome the minister's comments. However, the union has also advised us that the ministry has not entered into any formal negotiations on casinos with first nations. In fact, they have indicated that the few meetings that have been arranged have come about as a result of the union's insistence to begin a dialogue.

Ontario and the first nations, as you all know, have signed an agreement that recognizes a special government-to-government relationship and respects the inherent right of first nations to self-government.

I want to reiterate what Grand Chief Joe Miskokomon said: "There is a great opportunity for casino venture cooperation that will benefit all of Ontario. We have witnessed the very negative consequences that have resulted from lack of coordination between first nations and provincial governments in other provinces. Dangerously explosive situations have been created in Manitoba and Saskatchewan. This is the situation that we want to avoid."

Also, in principle and in practice we at Golden Lake support the action taken some five years ago by the Union of Ontario Indians, which recognized the opportunities for growth and development in the casino industry and also recognized the need for cooperation. At that time, they immediately moved to consider the essential issues of regulation and management. They built a concept that they called the Anishinabek Gaming Commission, which specifically addresses the issues of safety, investigation and compliance with all relevant regulations. They tabled a document with the Ontario government that clearly outlined roles and responsibilities. While I can truthfully say that we at Golden Lake support this action, I must also look at the potential for being left out in the current situation. Let me explain.

In March 1983, we, the Algonquin Golden Lake First Nation, presented the Governor General with the latest in a series of at least 26 petitions that spread out over 220 years, concerning our land and our aboriginal rights here in the Ottawa Valley. Eight years later, in March 1991, the province of Ontario made a commitment to begin negotiations. They made that commitment to begin in June 1991, and indeed they did begin. On December 7, 1992, Canada formally entered these talks.

Prior to this form of startup negotiations, in 1988, Golden Lake had presented a settlement proposal to both the government of Ontario and the government of Canada. At that time, we briefly stated that we would, in the future, seek to be a part of the mainstream economy through investments which we legitimately believe can be paid for from settlement funds. We were looking at previous examples and expecting settlement funds.

There is an indication, however, that the players in the mainstream economy, at least as we see it here in eastern Ontario, are not ready to accept us. Instead, they appear to see us as a group that might be able, with government assistance, to force our way into business sectors already occupied by non-aboriginal businesses, thereby putting those businesses in jeopardy through additional, and what they perceive to be unfair, competition. We don't agree with that analysis, but that is another area that doesn't really concern us at this point.

As evidence that the non-aboriginal business people here in the Ottawa Valley feel that there's very little room or no room for us, we were planning to table some internal notes taken at a meeting organized in June 1993 for consultation and information purposes. That meeting was with the Renfrew county council executive committee, its land use and forestry panel. Since I don't have the material to table, I'll just indicate one comment out of that.

The warden of the county, who apparently sits on that committee, basically told both Ontario, Canada, and us at Golden Lake that there was no additional land for Golden Lake and that what Golden Lake should seek is cash compensation, which we interpreted as money coming into the Indian community to go immediately back out, spent in their businesses. That's why we don't like the situation.

I stated that we would explain the potential for being left out. If there is some truth to the county's assertion that the existing business sectors are fully occupied, then their assertion is certainly not true in relation to casinos and the gaming industry as a business sector. There are currently no business casinos in operation, and certainly none here in the Ottawa Valley.


If we proceed to negotiate our jurisdiction over the industry, we would have the potential situation whereby the government of Ontario could proceed at the same time with casino development based on proposals coming in from the non-aboriginal business and municipal sectors or as what appears to be the case in the Windsor casino development, which is fully owned and operated by Ontario.

What I am saying here is that while we support the Union of Ontario Indians' initiative, we're also prepared to work on the development of a casino in this area under the current jurisdiction of Ontario. This means that we are asking for either ownership in conjunction with Ontario or on our own so that the opportunity to participate is not lost because it is being picked up and developed by other interests while we are a part of a jurisdictional negotiation process.

In conclusion, I wish to state that the Algonquin Golden Lake First Nation's position is that no development work or planning take place on a casino within our traditional territory until such time as we are ready and able to participate.

As I indicated earlier our participation may be contingent on the negotiations we are conducting with both Canada and Ontario. We expect this process to provide us with the investment capital that would see us participate as owners or as equal partners in the development of a casino within our traditional territory.

This is one business sector that is currently available to us without having the potential of creating injustice by displacing existing businesses already operating within the sector. The government of Ontario, in our opinion, should not be setting itself up as our competition, nor should Ontario contemplate setting someone else up as our competition in the casino industry here in our traditional territory.

Rather than competing, we would like to work in cooperation.

The Chair: Thank you very much for your presentation. We have about five minutes per caucus. We'll start with the Progressive Conservative caucus. Mr Carr.

Mr Sterling: Perhaps before you start, Gary, could I just ask, what is your traditional area? Could you just outline that for us in rough terms.

Mr Kohoko: The traditional area is the watershed of the Ottawa Valley in Ontario. It stretches from North Bay, it takes in most of Algonquin Park, goes past south of Bancroft over to north of Kingston, Brockville and then up along the St Lawrence towards Cornwall and over to Hawkesbury. The Ottawa River is the north boundary. Currently, we're negotiating with both Ontario and Canada our land claim within that jurisdiction.

Mr Sterling: That would include the city of Ottawa?

Mr Kohoko: It would.

Mr Carr: Thank you very much for your presentation. In one of the parts here, you talk about the investment and it seems to me what you're saying is that if you had the money for the investment, you'd like to get into casinos right now. Is that what you're saying? The big stumbling block seems to be the upfront investment.

Mr Kohoko: In past experience with land claims, there has always been a chunk of money that could be used for capital investment that was made available to the claimant group. From that perspective, we expect there will be a similar chunk of money available to us at the end of negotiations or at some point in the negotiations.

What we have said all along is that we are prepared to participate fully as equal partners in the economy of eastern Ontario within our traditional land claim territory. What we're saying right now is that the casino industry is just developing. Ontario does have a plan in place where it's going to be doing some evaluations; they're going to take some time. If plans are going to be made, we would like to be part of that planning process so that we can, in fact, participate as investors.

We're not saying we're jumping on the Indian bandwagon on this. We're saying that we'll take money as private sector investors and come in to an operation that happens in eastern Ontario. The other thing we're saying is that what the Union of Ontario Indians is doing is negotiating a jurisdictional type of situation. We support that and will endorse that, but we don't want to lose our opportunity now, while we're fighting on this other issue.

Mr Carr: One of the big questions is how many casinos Ontario can have and still have a viable industry. As you know, the Coopers and Lybrand report talked about Windsor, talked about the Sault, Niagara Falls and so on. I don't know if you're familiar with the locations. What do you think would be fair in terms of the first nations, in terms of dividing up? Have you thought, in Ontario, what to you would be a fair division of some of the casinos?

Mr Kohoko: From our perspective, there are going to be casinos, so if there are going to be casinos all over Ontario, rather than say, "This casino is an Indian casino and this casino is not," all of the casinos could potentially have some form of Indian ownership and have some benefit coming out of all of those casinos. From our perspective and the position that we're stating here in relation to traditional territory, all of Ontario at one point in time was traditional territory for some Indian group within Ontario. There is good reason right now for us to participate in this business sector, which is not occupied by anyone. We don't come in on unfair competition.

Mr Carr: If you don't get it, do you see a problem where, for example, Ottawa would open up one like they want in downtown on the mall and then you open up one? If the cooperation isn't there, do you see that you become competitors? Do you see that happening if it doesn't work out in terms of cooperation?

Mr Kohoko: Yes, I do see that happening, because then we would be forced to go with the jurisdictional issue in the negotiations that are happening. If we do secure the jurisdictional right, and people seem to have every reason to believe that we would, then yes, we would be moving into that area.

Mr Carr: So it's better to cooperate now than have a situation where you're competitors.

Mr Kohoko: We think that's probably the best way to go.

Mr Carr: Good luck.

Ms Harrington: Thank you for coming. On the third page of your brief, you quote the minister with regard to this issue as saying the ministry is "currently discussing with aboriginal groups their participation in the gaming industry" and that it is "currently negotiating self-regulatory agreements with a number of first nations with respect to charitable gaming." Then you say, from your point of view, "the union has also advised us that the ministry has not entered into any formal negotiations on casinos with the first nations." Does that seem to be contradictory to you?

Mr Kohoko: It does. We were using it to demonstrate our point. We want to get into a cooperative situation here.

Ms Harrington: From what I understand, the minister and the ministry are certainly very serious in their negotiations and their discussions. I was wondering if I could ask the parliamentary assistant to just maybe update both you and I on the state of what is happening at this moment, as much as possible. Mr Chair, would that be possible?

The Chair: Mr Duignan, do you have anything further to offer at this time?

Mr Duignan: At this point I don't have anything further to offer on that.

Ms Harrington: Do you know if the ministry is working with the first nations?

Mr Duignan: We have a native gaming section which is.

Ms Harrington: So it is ongoing and we certainly hope there will be an agreement reached very soon. I understand from what the minister has said that they are working to that end.

Mr Kohoko: From our perspective, we are going to go into a meeting next week in Toronto which will be the first meeting we attend on the issue that the ministry people will be meeting with. I'm not sure who a number of the Indian groups are.

Ms Harrington: Our government does realize this is very important.

Mr Kwinter: I found your presentation interesting. I just want to get a clarification so I don't have a misunderstanding of what you're saying. From what you've said -- this is my interpretation and correct me if I'm wrong -- basically, all of Ontario is a traditional territory for some Indian group.


Mr Kohoko: That's right.

Mr Kwinter: And that because there is no casino gambling, there is no danger of anyone being impacted by the first nations getting involved with casino gambling. So you effectively want to have either a relationship with any casino that opens in Ontario or the exclusive right to a casino that opens in Ontario. Is that a fair representation of what you're saying?

Mr Kohoko: I wouldn't say an exclusive right in all areas, but I would say a relationship, definitely.

Mr Kwinter: What I mean by an exclusive right is that either you would run it by yourselves or you would run it in conjunction with some other group, but you would be involved in every casino that operates in Ontario because you feel that this is part of the traditional territory and this is an area you have sort of staked out for yourselves.

Mr Kohoko: No. What I'm saying is that all of Ontario was at one point a traditional territory of some first nation, and that particular first nation, if there was a casino operation happening in its area, should at least have some benefits of that casino. If those benefits go so far as being exclusive, owned and controlled, that's fine, but if they go so far as to be a percentage of owned and controlled or deriving benefits, then that's fine as well.

Mr Kwinter: But you would expect to participate in all casinos, for that reason.

Mr Kohoko: That would seem to be the ideal type of situation, rather than from the perspective of saying this casino is Indians and this casino is not Indians. It would seem to be a much more fair way of determining the benefits that we would derive from this type of an operation.

Mr McClelland: Chief, in your concluding comment you say that your position is that no development work or planning take place on a casino within your traditional territory until such time as you are ready and able to participate. That is your position, stated. When do you envisage that to occur? At what time do you anticipate you would be ready and able to participate?

Mr Kohoko: I can't answer definitively when the negotiations might be finished on the land claim and that we might have money for investment. What I can say is that if we were going to be given the opportunity to participate in the fashion that I've outlined, as effective business partners we would then proceed to open talks with both, say, Ontario and Canada on interim arrangements to cover off any economic initiative, this one in particular. Right now, we do have an interim arrangement with Ontario in respect of our hunting rights within the traditional territory. With that in mind, we see no reason why we could not also open up an interim arrangement to accommodate development work on the casino issue if it is now ready to go ahead.

Mr McClelland: In short, you're saying if you can reach an agreement you're ready now.

Mr Kohoko: That's right.

Mr McClelland: And until such time as you reach an agreement, you're not ready.

Mr Kohoko: That's right.

Mr McClelland: Would it be your position, a fallback position -- I don't want to go on a fishing trip here, but if you can't reach that resolution, would it be your position that you have jurisdiction in any event and you proceed on your own when you feel you're ready to proceed on your own?

Mr Kohoko: We would then move, as I mentioned in here, in behind the initiative that is being undertaken to negotiate jurisdiction over the thing, and where that goes -- I guess the answer to your question is yes, that would be our fallback position.

Mr McClelland: Thanks, Chief.

The Chair: Thank you very much for presenting before the committee today. Before you go, though, I'd like to know, what's your title?

Mr Kohoko: I'm one of the negotiators in our land claim negotiations and we wind up doing a great deal of stuff. Economic development is kind of one of the areas I'm involved with.

The Chair: Okay. Thanks again for presenting to the committee this afternoon.

Mr Kohoko: There was some information also on the table along with the presentation itself. If I can get an address, then I'll make sure that material is sent.

The Chair: Okay. We'll make sure you get an address.


The Chair: Our next presenter this afternoon is Phil Waserman, chair of the Ottawa region of the Ontario Restaurant Association, if you'd like to come forward, please. You have 30 minutes within which to make your presentation and field questions from the committee members.

I also want to raise at this time, before you start, that the committee directed the clerk to take responses to the call for people making presentations before the committee. We did not want to duplicate any of the presentations. I know this area is a little grey, because the horse racing association had many representatives come forward, all from a different area of that industry. I just want to put on the record that this is the second or third time, the second time for sure, that the Ontario Restaurant Association is making a presentation before the committee. It just makes it difficult for us as a committee and for me as the Chair and the clerk, because we're trying to get as many people as possible who have concerns, including private individuals, before the committee, and we have had to turn a number of people away at every venue. It does concern me somewhat, and I just wanted to raise that with you.

Ms Harrington: And they are on the agenda tomorrow in Niagara Falls.

The Chair: I did have a quick look through your submission and it's very repetitious of the one we saw in Windsor as well. But you're on the schedule today, so please proceed.

Mr Phil Waserman: In all fairness, the other presentation was done before the Coopers and Lybrand report was released, so there is some additional information. I'm sorry if there's going to be some repetition, but --

The Chair: Please continue.

Mr Waserman: Anyway, good afternoon. On behalf of the Ottawa region of the Ontario Restaurant Association, I'd like to say we're very pleased to appear before you today and to have the opportunity to discuss the development of the casino in Windsor as well as the potential development of casinos in other regions, hopefully including Ottawa.

Today we'll outline some of our industry's recommendations to improve Bill 8 and, more importantly, detail critical changes which we believe must be enacted prior to the passage of this legislation so as to protect the local foodservice and hospitality industry.

I am Phil Waserman; I'm the chairman of the Ontario Restaurant Association as well as the past president of the Ottawa region of the Ontario Restaurant Association. With me today is Paul Oliver, who is the president of our association.

As you are well aware, the past several years have been very economically challenging for Ontario. It has been particularly devastating for the foodservice and tourism industry in Ontario. The restaurant industry has been severely hurt by the current recession. We believe it is important that government and industry work together to improve the economic health of the restaurant and tourism industry in Ontario.

The foodservice industry believes that the development of a casino in Windsor and eventually in other cities in Ontario can be a positive step towards revitalising the restaurant and tourism industry, provided it is done in a fashion which protects the local hospitality industry. Prior to the passage of Bill 8, the ORA encourages the government of Ontario to amend the legislation to insert fail-safe mechanisms into the legislation to ensure that Ontario's hospitality and tourism industry is not undermined, as has resulted for our counterparts in Atlantic City.

The foodservice industry is a key partner in Ontario's tourism and convention industry. Tourism is a significant economic force in Ontario and generates an inflow of over $3 billion of foreign currency. The Ottawa region itself plays host to four million visitors each year, which infuses $465 million, directly and indirectly, into the economy and eventually into the treasury of Ontario.

Approximately 21% of all tourism dollars spent in Ontario are accounted for by food and beverage operators. The cost of food and beverages and the viability of the hospitality sector directly influence Ontario's attractiveness to foreign tourists, especially major North American conventions.

Today, Ontario faces a record annual travel deficit approaching $4.5 billion. This massive outflow of capital, either from the absence of foreign tourists or from Ontarians going out of the province, must be addressed by enhancing the competitiveness of Ontario's tourism and hospitality industry. We believe that the development of casinos in Ontario can help to address this serious problem, but it is important to note that the development of casinos cannot be seen as the only solution; it is only part of a much broader solution. There are many other issues which must also be addressed.


The ORA is concerned that the development of casinos in Ontario is becoming a single focus and is being portrayed as the panacea to solve all the problems within the tourism and hospitality industry. This simply will not be the case. The tourism and hospitality industry needs government assurances that our sectors will not be ignored or abandoned once casinos are opened in Ontario.

The Ontario Restaurant Association has historically supported the concept of introducing casino gambling in Ontario. This support, however, was premised on the fact that the principal focus of introducing casino gambling must be to generate increased tourism.

Unfortunately, today the Ontario Restaurant Association must qualify its support for casino gambling in Ontario. The ORA has a number of major concerns related to the design and operation of the proposed casino for Windsor and the possibility that the Windsor model will be duplicated in other parts of Ontario such as Ottawa. We believe that these issues need to be addressed prior to the passage of Bill 8 and in some cases be fixed in either the legislation and/or accompanying regulations.

The ORA continues to support the concept of casino gambling in Ontario, but we have a number of significant concerns regarding Bill 8. For the foodservice industry, the development of restaurants and beverage facilities within the casino is a major concern. The Minister of Consumer and Commercial Relations, the Honourable Marilyn Churley, has stated that the casino complex would include three modestly sized restaurants that will accommodate about 10% of the casino's daily visitors.

As we have stated previously, the ORA supports the concept of limiting the availability of foodservices so that casino patrons will be encouraged to leave the casino complex and utilize the local hospitality operations, taxi drivers and accommodations. We are very concerned that this provision does not appear in Bill 8, is absent from the government's request for proposals which was issued to prospective casino managers and is not used as a basic principle in the recently released Coopers and Lybrand study.

We believe that this promise by the Minister of Consumer and Commercial Relations must be written into Bill 8 before it is passed. As we have noted earlier, the Ontario Restaurant Association believes that the issue surrounding restaurants in the casinos needs to be clarified and outlined in the request for proposals document which was released to nine potential casino management firms. Without this guarantee, the foodservice industry cannot support Bill 8.

The ORA is very concerned by the inconsistencies between the economic impact study prepared by Coopers and Lybrand and statements made by government officials. In our analysis of the impact study we were very surprised by the dollar amounts outlined in the detailed operating cash flow projections contained in section 8 of the report. A copy of the cash flow projections is attached to this submission. These cash flow projections are based on a number of premises which we believe contradict statements and commitments made by the Minister of Consumer and Commercial Relations. We have received assurances from officials in the casino project office; however, we remain concerned.

As noted earlier, the minister has indicated that the restaurant and foodservice facilities contained in the casino will accommodate approximately 10% of the patrons. This was done in order to assist in encouraging tourism in Windsor and to ensure that the casino does not negatively impact existing hospitality establishments. Unfortunately, a review of cash flow projections would suggest that food and beverage services are far in excess of those suggested by previous government statements to be built within the casino. According to our calculations, the cash flow projections prepared by Coopers and Lybrand are based on foodservice facilities accommodating approximately 50% of potential customers. At this level, the likelihood of cannibalization of local restaurants is very probable.

The Ontario Restaurant Association is very concerned that small independent local hospitality establishments will face unfair competition as a result of internal casino cross-subsidization. The principal area of potential subsidization is that of wine, beer and spirits as well as foodservices. It has been stated by government officials that alcohol prices within the casino will be established in relation to other area entertainment facilities. The ORA supports this proposal related to competitive concerns, but we believe, however, that further clarification is required regarding what will comprise the local price comparison.

The ORA is further disturbed by the fact that over $58 million has been set aside in the operation cash flow expenses to pay for complimentary expenses. This is an amount equal to over $12 per visitor to the casino. This suggests to the ORA that free food and free alcoholic beverages will likely be an integral part of the casino plan. If enacted, this would have a detrimental impact on restaurants through price cannibalization. The hospitality industry needs assurance that it will not face unfair competition as a result of millions of dollars of freebies being given away by the casino.

In addition to introducing casinos into Ontario, the ORA encourages the government of Ontario to introduce video lottery terminals, in particular in border regions where casinos are not being placed. We believe VLTs represent a double benefit to Ontario. Firstly, they represent a significant income stream to the government of non-tax revenue, conservatively estimated at $400 million per year. The introduction of VLTs in controlled and LLBO-licensed establishments represents a potential source of revenue to the operation which will sustain many establishments which are struggling to survive and preserve jobs in the hospitality industry. The introduction of VLTs into licensed establishments will also provide the hospitality industry with a competitive advantage in border regions and will encourage more American cross-border travel into Ontario. This, in turn, will generate additional sales for non-licensed hospitality operators, the retail sector and other sectors catering to American visitors.

We believe the introduction of video lottery terminals is particularly important to maintain the competitiveness in areas outside of the casino region. Manitoba has effectively balanced the impact of casino gambling by introducing VLTs outside of Winnipeg. The ORA believes the government of Ontario should explore the same possibilities with VLTs.

In conclusion, Ontario's restaurant and hospitality industry is very apprehensive and concerned about the introduction of casino gambling. We are particularly concerned about the discrepancies which exist between public statements made by government officials, what is contained in the request for proposals and the premises and cash flow projections contained in the economic impact study prepared by the Coopers and Lybrand Consulting Group. We believe it is imperative that these inconsistencies be addressed and resolved before this committee completes its review of Bill 8. The ORA cannot support this legislation until the ground rules are better clarified and firmly established.

To allay the concerns of the tourism and hospitality industry, we believe provisions regarding the day-to-day operation of the casino must be included in Bill 8. We recognize that Bill 8 was designed simply as framework legislation to establish the casino corporation. However, we believe the scope of this legislation must go well beyond simply establishing the parameters. It must have true substance and must build in accountability.

The government has asked the people of Ontario to take a leap of faith on casino gambling. The least that we can do is outline, in permanent legislation, how the casino will function and operate. Without provisions in the legislation protecting small local restaurants and hospitality establishments, the hospitality industry is being asked to roll the dice on its future. This is simply a notion we cannot support. We have already seen the devastating impact this public policy approach has had on local restaurants in Atlantic City through both customer and price cannibalization.

Unfortunately, without meaningful and enforceable safeguards in this legislation, the Ontario Restaurant Association cannot support Bill 8 in its current form. We are pleased to have had the opportunity to appear before you today to discuss our views on the development of casino gambling in Ontario. We welcome any questions you may have.

The Chair: Thank you. We have about four minutes per caucus.

Mr Kwinter: Thank you very much for your presentation. An article appeared in Forbes magazine on March 1, 1993, about casino gambling. It talks about the application of casino gambling in the city of New Orleans. I just want to quote a short passage from the article and get your comments as to whether you think this is a valid observation of what could happen.

The author is talking about the two proponents. He says:

"Do these people really believe their extremely optimistic projections, or are the numbers for bargaining purposes only? It's anybody's guess. In business, as in sex, it's an ancient ploy. Promise whatever it takes to land the deal and then forget the promise. Once the casino is built and people are employed, the developer will have the leverage to threaten to close down if the tax rate isn't lowered, more expenses aren't made deductible or if he's not allowed to open hotel, restaurant or retail operations in the casino."

How do you feel about that? Do you think that that's an accurate portrayal of what could happen? If you agree with it, then what purpose is there in enshrining in the legislation prohibitions against that happening?

Mr Waserman: Well, because we think that the enshrining will in fact work.


Mr Paul Oliver: If I could just answer that, I've been in contact with some my colleagues in New Orleans on this specific issue. There was the guarantee made to the hospitality industry of a 10% food ratio, the same as in Ontario, before the casino was built, because it wasn't enshrined in any legislation. We already have signs that the project there will accommodate somewhere between 40% and 60% foodservice. They didn't have it enshrined in legislation there.

We think by at least putting it into legislation here in Ontario, there will be some public accountability. It will have to come back for public review and public debate if there are to be substantial changes such as that. It's better than not having it at all. It's been a promise that's been made to the industry by the minister, but if the minister changes or the government changes or the developer comes back with a revised proposal, we have no guarantees and there's no accountability, and we think the accountability's the key mechanism.

Mr Phillips: The numbers in the Coopers and Lybrand report indicate, I think, that the average daily expenditure on food and beverage is about $10 a person who's visiting it. I don't know how you interpret that. I guess if only 10% are spending the money, then the 10% must be spending $100 a day. In your judgement, I gather you're saying that the financial analysis is incorrect and assumes too much expenditure on food and beverage in each of these casinos, does it?

Mr Oliver: Yes, because it's based on potential customers, not actual customers, which are far less than the 100%. But it's also based on the same ratios as have been demonstrated in Atlantic City. In Atlantic City we've seen half of the restaurants close since casino gambling started there, because of the structure that they have and the subsidization that they have for the foodservice internally. Taking the same ratios as we have in Atlantic City and applying them here, where we are supposedly going to have different ground rules, we don't see the validity of that study.

Mr McClelland: Ask him how many people --

The Chair: What was that, Carman?

Mr McClelland: I was just wondering how many people are in their industry in Ottawa. How many do you represent in the Ottawa area in your industry, sir?

Mr Waserman: There are 400 active members in the Ottawa area.

Mr McClelland: Employing how many people?

Mr Waserman: I believe in excess of 20,000.

Mr McClelland: Thank you, Mr Chairman. I appreciate that.

Mr Carr: I appreciated that presentation. Thank you very much. As Monte suggested, what happens with governments trying to get support for things is they leave things out in order to deflect criticism or gain support. What happened in Windsor is that we had a lot of the people from the restaurants come in and say this is going to be a great thing, based on the assurances that they've got. Then of course what happens when it opens up is that things change because it isn't entrenched. So I commend you for trying to get things in writing from governments, and I say this non-partisan to any government.

But really what you're saying on page 4 there is that you don't trust the minister or the government to live up to the promises that they've made. Is that what you're really saying in that middle page there?

Mr Oliver: No, what we're saying is that we don't know what minister will be there when the casino is finally opened in two years. We don't know what government will be in office. We don't know what realities the casino management company will have once it is up and running. If they come back to the government and say, "We need this, this and this," and it's a different minister and a different government, or even the same government but a different minister, there's just no accountability there.

There's no way for public input, even on those types of fundamental changes. Giving away free beverage alcohol, for example, is a major social change, but there would be no mechanism that would require public review of it or public accountability or even public input into that decision before the government decides to head in a different direction.

Mr Carr: I thought it was because of the number of changes in this government's position. They didn't want casinos, then they did. They didn't want Sunday shopping, then they did. They wanted auto insurance, now they don't. But I guess that's probably not the reason that you want that in there.

Mr Lessard: Sounds a little bit partisan.

Mr Carr: No, that's not partisan.

The other issue I have relates to the customers. I think that what's going to happen if the government doesn't change its position -- and I see where it's trying to get the support of the restaurant people in places like Windsor -- but what I see happening is they haven't done it from a marketing standpoint. The first time they get Americans coming across, seeing that they can't get a drink, finding out that the restaurants are overcrowded because of the number of people and being told, "Well, get in a cab and go out" -- I see why they want to help the people in the community, but I don't think you're going to get those people coming back. The perception is going to be: "This is Mickey Mouse. I can go to the other casinos in the US."

What do you say to people on the other side who say that if you're going to do it, you have to set it up so that you can complete with the US casinos, which offer everything from free drinks to plenty of restaurants and so on? My big fear, quite frankly, is that they will take your advice and try to limit it but that what will happen is that they won't get the US customers coming across. What do you say to people who say that if you're going to do it, do it properly so that they can compete with the US casinos?

Mr Oliver: Well, the government has sold this idea on a series of objectives which it has that were outlined in its request for proposals, and that is to create community economic development, create jobs, promote tourism and hospitality. I think the third one is an important thing. Especially if it's going to hurt the hospitality industry, I think then we need to evaluate why we're even doing it.

Mr Carr: The government does a lot of things based on economic theories, but I can tell you, when it took office the unemployment rate was 6%; it's now well over 11%, so it hasn't been too successful in a lot of areas.

My final question is this: With the legislation as it is now, and they say they're only going with a pilot project, what is the feeling of the other communities that are out there? We've heard from some restaurant people in the Sault, obviously some in Ottawa. What are the rest of your members saying, who might not be affected by this because there won't be a casino in their area? Do they have any thoughts, or are they just saying "Good luck to you" in those areas where a casino is going to open? What is the rest of your membership saying?

Mr Waserman: It's additional business for restaurants that are going to be located near a casino. They may not be positive in fact on a restaurant in the suburbs, but I don't think they would wish their fellow restaurateurs bad luck. To answer your other question, to open a casino and sacrifice 60 restaurants in Windsor probably wouldn't make a lot of sense.

Mr Oliver: If I could just add on to that, Manitoba went through that same problem when it was looking at opening the casino in Winnipeg, and they counterbalanced it by providing the hospitality establishments outside the city with video lottery terminals as a way to balance to make sure their traditional customers in Brandon or in Steinbach were not going into Winnipeg and spending their money there and hurting the local establishments. That was a counterbalance mechanism they put into place that seems to have worked quite well.

Mr Carr: What happens to some of your members who may be close to some of the racetracks? As you know, there's been a tremendous fear that we're going to lose in the horse racing industry and in some of the rural communities. I know some of them are in trouble. What may happen to a place like Fort Erie? Of course, Greenwood is shutting down. What are some of your members saying who are close to horse racing facilities?

Let's take the Windsor example. There are some people who are saying the Windsor Raceway is going to close down. Have you had any feedback from your members close to the horse racing industry that are saying: "Hey, wait a minute. Some of our friends in some of these areas may benefit, but we may lose as a result of horse racing"? Has there been any feedback from your members from that standpoint?

Mr Oliver: No. The only real comment we have received is that some of the hospitality operators have expressed concerns that they think the approach of the racing industry has to change, to be updated. One of the things they're looking at with the ministry is the offtrack betting as a way to help sustain the racing industry. That's something that dovetails both the hospitality industry and the horse racing industry together.

Mr Carr: Mr Chairman, just very quickly --

The Chair: Mr Carr, your time's up. Sorry.

Mr Carr: This was just a commercial. I understand he has a very fine restaurant, Norm informs me. I just wanted to get that on the record.

The Chair: Very good. Mr Duignan.

Mr Duignan: The government quite agrees with your statement that the foodservice industry is a key partner in Ontario's tourism and convention industry. That's the reason, and I'll state this here again today, that we're limiting the seating capacity in the Windsor casino.

We're only talking about the Windsor casino, because there are no other plans for a casino anywhere else. It will be limited to approximately 10% of the patrons visiting that casino. That's our commitment, that's what we stand by, and we're not deviating from that one little bit. Whether it's enshrined in legislation or not, I can't guarantee that, but what I can guarantee is that at this time the government has no intention of extending the VLTs to anywhere else but the casinos.


Mr Oliver: If I could just add, we appreciate the government's commitment on the foodservice proposals. Our only concern is that we don't know 5 or 10 years down the road what government will be in office or who the minister will be and we don't where their position is. Already, there is the example of New Orleans, where the governor gave the commitment of 10% and then, before the sod is even broken on the project, it had changed already. Our colleagues across North America are telling us, "Make sure it's entrenched in legislation, because we've had bad examples elsewhere."

Mr Duignan: As I said, we can guarantee you that that's our commitment and it's a commitment we're sticking to. The figures used in the Coopers and Lybrand report are Coopers and Lybrand's figures; they're not ours.

I've been asked to keep my remarks short by the Chairman here because we're running short of time.

The Chair: Thank you very much for presenting before the committee this afternoon.


The Chair: The next presenter we have this afternoon is Paula Burchell, first vice-president of the Canadian Trotting Association. You have 30 minutes within which to make your presentation. You might want to field some questions from committee members. Whenever you're comfortable, please proceed.

Ms Paula Burchell: My name is Paula Burchell and I live in Perth, which is a town of 6,200 people 50 miles southwest of Ottawa. I come to you today as the first vice-president of the Canadian Trotting Association but, probably more importantly, as a concerned horse person. I am an owner and a trainer who is very active in the harness racing scene of eastern Ontario, and I fear for our industry's future.

Your government has made it quite clear that casinos are in the plans for the future. Your government needs the money to support the programs for the people of Ontario. But what of the consequences?

The harness racing industry in recent years has faced many competitors such as lotteries, sports betting etc, and we have held our own, considering the economic crisis in this country. Casinos will be the biggest competitor we have ever faced. What I am concerned about is that our biggest competitor is also our regulator. Harness racing, like any other business, wants only a fair playing field.

I could rhyme off all the statistics that are negative towards casinos, but I suspect you've heard them all already. Please let me say that I am in full agreement with those negative facts that have been put forth by groups like the Ontario Agriculture and Horse Racing Coalition. I know that casinos will adversely affect the harness racing industry. There is only so much disposable income out there and it can only go so thin.

The damage of casinos will not be limited to those people in harness racing like drivers, trainers, grooms, owners and breeders. It will have a trickle-down effect to the suppliers, if you will, of our industry, people like veterinarians, feed stores, feed producers and farmers. There will be approximately 50,000 jobs at stake, not to mention the $80 million the industry pays in parimutuel taxes each year and the $2-billion impact that harness racing has on the province's economy.

I know that Ottawa is a city that has been targeted as a site for a casino. Eastern Ontario is a very economically depressed area. Windsor is a far more affluent area with a stronger industrial base. The casino is going to hurt the Windsor track. You can only imagine what it will do to Rideau Carleton and Connaught Park, our two local tracks. In eastern Ontario we race for far less purse money than in western Ontario but our expenses remain the same.

Our industry needs help both from within and from our regulators if we are to survive. We need help with taxation levels to invite more people to invest and to keep the investors we currently have. I ask you to consider the losses that will happen in our industry when you consider the gains you perceive will happen from casinos.

The Chair: Thank you very much for your presentation. We have about eight minutes per caucus, and we'll start with Mr Carr.

Mr Carr: Thank you for your presentation. On page 2 you talked about the 50,000 jobs at stake if the government proceeds and has the casinos in the areas that they've outlined in the Coopers and Lybrand report, anywhere from Niagara Falls to the Sault and so on. How many jobs do you think will be lost in the industry?

Ms Burchell: In our area, in eastern Ontario, I would think upwards to 3,000, 4,000 perhaps.

Mr Carr: And that's including the spinoff --

Ms Burchell: The harness people, everything, yes.

Mr Carr: We heard some of the other statistics that are right across the province, in Toronto, from some of the people. I've mentioned to one of the other presenters the difference between the urban perspective and the rural. A lot of people in the urban areas are saying, "We'd like to have the jobs." They don't see the spinoff.

Do you see this really being an urban-rural split, where we're going to see some jobs come to Ottawa and Windsor and, as a result, where we're going to lose them in rural Ontario, which already is facing many problems because of the numerous problems in agriculture? Do you see it really coming down to trading jobs in the cities for jobs that are presently in --

Ms Burchell: I do. I think, as the reports have said, they're projecting that there will be all kinds of employment from the casinos, but I think it's going to hurt rural Ontario. There's no way that it can not hurt rural Ontario.

Mr Carr: If the government proceeds as it says it is, there's been some talk about how some of the changes to the tax structure may assist a little bit. If you don't get your wish in having Bill 8 killed and casinos killed in this province, would you like to see something done with the tax structure?

Ms Burchell: You bet. I'd like to see more money from the bet go back to the purse structure. I'd like to see more done to the Ontario sire stakes. I'd like to see small horse people like myself be able to write off more than $5,000 a year, considering that I invest anywhere from $25,000 to $50,000 a year. I'd like to see us be able to get the same kinds of breaks that small business people do, because that's what I am. I'm a small business person.

Mr Carr: What the government has said -- as you know, they've come in with some very warm, fuzzy statements saying that they will work with the horse racing industry. Quite frankly, they aren't worth the paper, because there's nothing definite. Before the passage of Bill 8, if they came in and outlined some of the things they're proposing to do and came in with some definite solutions -- and I mentioned the taxes as being one, and some of the write-offs and a couple of the other things. Would you like to see the government negotiating with the people in the horse racing community to do something like this before the passage of the bill, and, if you do, do you think we're going to be able to keep some of those jobs that will be lost otherwise?

Ms Burchell: I would like to see the government negotiate with all the various horse associations. I think it's necessary. I think we've got to be able to try to achieve everybody's aims. My association's aim is to keep the industry alive. The government's is to supply money to support its programs. I think if we do this, we can all win -- maybe not as much as each group would like, but I think we can. I was involved in a meeting with Minister Churley in April. At that time, she spoke of round table discussions. There haven't been any. I'm very disappointed.

Mr Carr: I didn't realize that because, as you know, we've heard even the minister come in and say they're going to work together, although we'd also heard from the people of the first nations. She said they were going to have negotiations with them, and they haven't come about either. I think sometimes ministers throw around the words "negotiation" and "consultation" rather loosely. I am depressed to hear that, but I hope there will be some type of solution that can be worked out. Rest assured -- and I think I speak for the other opposition parties -- that we'll be pushing the government on that initiative as well. Good luck to you and to your industry.

Mr Sterling: Thank you very much for coming in front of our committee. I am a former owner of three standardbred horses, none of which were very successful. I can understand your concern with regard to your industry. I think one of the things that members of the committee, particularly those who come from urban areas, should understand is the importance of the horse racing industry to the agricultural infrastructure of Ontario. The horse racing industry, for instance -- I was on another committee earlier this week and a gentleman from Lanark county, Al Dobie -- maybe you know him.

Ms Burchell: Yes.

Mr Sterling: Al Dobie was speaking on the stable funding issue in front of the resources committee, I believe it was, of our Legislature. Al Dobie was talking as a farmer about what he did. He said, "My major crop" -- he's a cash cropper -- "was the sale of hay to horsemen," presumably up in Lanark county and in the Ottawa Valley. But what is very, very important to not only your community but also to the dairy farmers, to the hog farmers, to the livestock people, is that the people who are in the seed and feed business and who are in the farm machinery implement business have enough of a base to continue to operate and provide all those other people with the services which are very important to be close and timely. Perhaps part of your pitch on this should be related to that.


The second part: When I first was elected, I represented Grenville county, and there are several horsemen down in that area. There are some in the area that I still represent, in Carleton, on the outskirts of Ottawa-Carleton, but particularly in the areas as you get further and further from the mass of population, and the very important cultural part and heritage that horse racing has been in Ontario. If harness horse racing is killed in this province, we're going to lose a valuable part of our history and something which is really quite important to a lot of people in rural Ontario yet. It's still a very, very important part of their life.

Ms Burchell: I myself am third-generation involved with harness racing.

Mr Sterling: Yes. One of the most unfortunate parts, I think, if harness horse racing goes down the tubes, so to speak, is that people who are marginally employable in other areas will lose all of their selfesteem, their ability to go out and be useful in terms of earning a living if this is gone. I'm sure you've experienced that.

Ms Burchell: Yes, I have, and this is one thing I want the government to be aware of, that our losses will be a drain on its budgets. Right now we have people who are employed, but if the harness racing game goes down, there are going to be a lot more people on welfare, on unemployment. It's going to be a bigger drain. Where does it stop then? Where do we stop trying to generate money? At what cost?

Mr Martin: Thank you for coming before the committee. You certainly raise an issue that has been raised before and that we are very cognizant of and probably more knowledgeable of because of the presentations made by yourself and your colleagues.

I wanted to explore with you a little bit the whole issue of competition and the fact that gaming in North America is an industry, a business, in many significant ways. Certainly, casino gaming is something that's coming on the scene more and more in the North American jurisdiction, and this is Ontario's attempt to get in on that industry and how we do that, I guess, and how we bring it in so that it does in fact bring the positive ramifications that could come with it and somehow minimize some of the other downside. Certainly, in your instance you've presented your case very clearly.

I guess my own experience of that is that one of the major industries in my community faced some pretty stiff competition in the steel market, and we faced the possibility of losing thousands of jobs. Certainly, the government became a partner with that industry and its employees to come up with some new and creative ways to restructure and to in fact have that business declare a profit for the first time in a number of years the last quarter. The government were not the first people in there. The government was certainly there, but it was the employees and the industry itself that came together and then, with the government, came up with some new ideas.

I guess next to saying no to a piece of the industry coming in, what would you suggest we do that might be helpful to your industry at this point? If there was, say, a round table, what kinds of things would you bring to it besides the lowering of taxes? We've heard that one before and certainly understand what it means. Is there anything else that we could be doing?

Ms Burchell: I think because both provincially and federally the governments take so much money from our industry -- let's not forget that harness racing was the first parimutuel and had sole ownership of parimutuel wagering in Canada for many years, and we're still taxed at that level even though there are many different ways out there to wager today.

I think if the government wants to maintain the cash flow that we, harness racing, supply into its general coffers, it's got to become part of the game and help, be it through tax breaks to our breeders, be it through supporting the breeding program in Ontario. Any kind of break that you can give a steel industry, you can give the harness racing industry. That's the kind of thing we're after.

Mr Martin: Although it wasn't breaks so much that they gave the steel industry as challenging the steel industry itself to restructure the way that it did business so that its bottom line was different.

Ms Burchell: There is room within the harness racing industry for us to do that.

Mr Sterling: A big, big cheque.

Mr Martin: No, no, a guaranteed loan. And, yes, that's part of what we do re businesses.

Ms Burchell: And that's great. We'd love that. We'd take that, no problem.

Mr Martin: I guess what I'm suggesting is, what else could we do besides that, if you were invited to the table? Like I said, we heard the tax piece before and we certainly understand that and we know that's a lever that we have control over, but what else could we do?

Ms Burchell: I know from the meeting that I had with Minister Churley earlier in the spring that she spoke quite highly of the program that had been done for the Ontario grape and wine producers and how much good had been done. And it's true I drink more Ontario wines today than I ever have before. I don't know what all was done, what all concessions were given, what all teamwork was involved to bring forth Ontario wines, but why could we not apply the same things to the harness racing industry?

I know we need to do some work ourselves inside our own industry, but I guess what I'm saying is, from limited knowledge, I'm not sure what all the government can do for us. I hope they can. I know we can do a lot for ourselves. I think we're willing to do that, but we need cooperation. We need to have the round table discussions. They were promised. I haven't seen one yet.

Mr Martin: I guess I suggest to you that if they were, they will probably come and, with you, I would hope sooner than later.

Ms Burchell: Yes.

Mr Martin: Just one other question that I've wanted to ask for a little bit, because I sat at home one Sunday afternoon watching the Breeders Stakes on television. I was quite excited about that race and what it was about and everything but was very disappointed that there were only -- what? -- four horses running that race.

Ms Burchell: Yes. That was unfortunate.

Mr Sterling: That's thoroughbred; that's not harness racing.

Ms Burchell: That's true too.

Mr Martin: No, I know, but it's racing. I lumped them all together because I'm not that -- but in the racing industry, whether thoroughbred or the harness racing, they've all been coming forward and saying the same things. I know in my own community there's a casino across the river and the folks across there aren't afraid of the fact that we might get one some day in Sault Ste Marie, Canada. They see it --

Ms Burchell: There's not a track there either.

Mr Martin: No, but there is one in Sudbury, and we have the tele-betting business there. They see it as adding to that -- I forget the word now, but that massive attraction that will bring some people in and give people all kinds of things to do while they are there and all of that.

In light of the Breeders and I think a missed opportunity there at that point because of the four horses that were in that race to really create some excitement and have an event that was top-notch, do you not see any way that instead of seeing casinos as a threat, we could perhaps put together a package that included casinos, horse racing and the racing that you are more intimately involved in, in some way to bring more dollars into the province from outside so that everybody could do well in the end?


Ms Burchell: I will say I'm fundamentally against casinos. The only possible way I could see them helping the harness racing industry was if they were to be held at harness tracks and the horsemen negotiate, as we have negotiated now with simulcast betting, that we get a cut for our purse pool. That's the only way. I don't want to see that happen, but that's better than nothing. That's better than going head to head with them: for the racetrack owners to have the casinos in their own facilities and the horsemen to get a cut and they not go head to head with live harness racing or simulcast racing. If a track wants to race five nights a week, then on their dark nights that's when the casino runs and that's it. Even that I don't want to see happen. I'm fundamentally against them, because anywhere in the United States where there have been casinos put against harness racing, it dies.

Mr Kwinter: Ms Burchell, I want to follow up on exactly that same area. Every representation that has been made to us by the horse racing-breeding industry has indicated that studies show that when a casino comes into a jurisdiction, it impacts negatively on the horse racing-breeding industry. In the requests for a proposal, it says,

"Proponents must outline a strategy that indicates how the casino complex and the Windsor Raceway can work together for their mutual benefit, since the ministry expects the casino complex to work cooperatively with the Windsor Raceway, in particular, and to be sensitive to the Ontario horse racing industry, in general. Strategies for marketing and operations based on cooperation and collaboration should be included in proposals."

From what you've just said, that is something that isn't going to happen or can't happen because of the almost adversarial relationship or the competitive relationship between horse racing and breeding and casinos.

Ms Burchell: This is my personal opinion. This is not anyone's official line.

Mr Kwinter: What possible response could there be from the proponent that would go some way to alleviate your concerns or to satisfy you, other than what you've just stated, that they take the whole casino and put it at the track and cooperate in the operation?

Ms Burchell: The idea of cooperation is all a very rosy and nice and warm and fuzzy feeling, but how would you like the CFL and the NHL to sit down and have to do the same thing? How much cooperation would happen between those two types of groups? We're out there all fighting for the same entertainment dollar, and we're out there trying to survive. I'd like to see the cooperation happen. I think it can happen, but whether it does will depend on individuals and it will depend on how much money, bottom line, people want to put into coffers.

Mr Kwinter: When you say the cooperation can happen, what form would that cooperation take that would be meaningful?

Ms Burchell: Well, you'd have to sit down and talk, and I guess, in my opinion, the harness track would have to say, particularly if we're going to talk Windsor, "Okay, on Windsor we race x number of dates. We do not want to go head to head with the casino. If we race afternoons, you run at night. If we race at night, you run in the afternoons," but not go head to head.

Mr Kwinter: Your recommendation would be that on the days that there's harness racing, casinos close down.

Ms Burchell: I don't want to see casinos at all. Again I'll say that, but yes, that would be better than running head to head against them.

Mr Kwinter: The problem that I have with this thing, and I've mentioned it several times, is that this proposal envisions a Mother Teresa coming to Windsor and it's going to be all benevolent and it's going to go out and look after the horse racing industry and it's going to look after the people who are addicted to gambling and it's going to make sure that St Clair College gets its training component and it's going to make sure that all the restaurants and all the hotels are out there prospering and doing all of these wonderful things before they start trying to generate profits in their various profit centres. I just don't think that's a practical approach, given the fact that you're asking an investor to invest an incredible amount of money and to expect to get a reasonable return on his investment, and then you're saying to him, "Not only do you have to do that, and we're going to take 20% of the win take as tax, but we want to make sure that you look after all of these other things." I just don't think that's a practical approach.

Ms Burchell: Yes, Mother Teresa's ill too, is she not?

Mr Kwinter: Yes. Do you have any reaction to that?

Ms Burchell: I agree. If I was an investor, I would say I'm in to run it for a business, I'm in to make profit, not to mollycoddle anyone else.

The Chair: Thank you very much, Ms Burchell, for presenting before the committee this afternoon.

Ms Burchell: Thank you very much.


The Chair: Our next presenter is Gerry LePage, executive director of Bank Street Promenade. Please make yourself comfortable. You have 30 minutes within which to make your presentation and field questions from the committee members. Whenever you're ready, please proceed.

Mr Gerry LePage: Thank you. First of all, we're a trade area, a business improvement area, much like Sparks Street, and we have a natural linkage from I guess their east-west corridor. We're going north-south on Wellington Street, right off Wellington Street on Bank Street for 15 blocks. So certainly we have a vested interest in this.

However, I guess I'd like to begin by saying that I'm really kind of tired of having this issue polarized by the good and the bad of gambling, and I point to this small article that appeared in the Ottawa Citizen last night that says, "Gambling Fans and Foes Make Case at Hearing."

I can tell you that I'm neither really a proponent of gambling nor an opponent of gambling, but I am a proponent of economic stimulus, I am a proponent of job creation, and I think this is what this whole scenario is about: How do we provide some economic stimulus, especially in central core areas? I don't want to get caught up in the evils or the goods of gambling per se. I think that's inappropriate. What I'm looking at is employment trends, and what the Conference Board of Canada says is that right now there's a devolution of manufacturing as we know it in this country and particularly in Ontario. I think that's well documented. Nobody needs to be reminded of that. Yet there seems to be and there is going to be and will continue to be an increase in service sector employment. That's what this is about: long-term employment opportunities and economic stimulus.

Need I remind anybody on this panel -- I'm sure sitting in Queen's Park you're well aware -- that many areas, especially central core areas, have been pummelled by a recession, have been berated by antiquated tax systems such as market value assessment, and because of the shifts, many of the downtown areas have felt those shifts much more than other areas. We see reduced federal transfer payments, reduced provincial transfer payments. As a consequence, we see increased municipal taxes, increased school board taxes. This is a scenario that is on the precipice of disaster, not only for Ontario but most definitely for Canada.

What are we doing about it? We're trying to create jobs. We're trying to bring back that suburban sprawl with infill. We're trying to expropriate and expedite planning processes. We're trying to provide quantifiable economic stimulus for a city. We're not proponents and saying, "Jeez, we want gambling because," and then the ramifications of that are prostitution and so on and so forth. That's really academic. What people want are jobs, and I think that's what the government of the day is committed to. We have to look at the other programs that you're into here.

What's kind of disturbed me is the vacillation that I've seen by government on this somewhat. It's kind of like being partly pregnant, and I'd like to know how you accomplish that. I mean, either you're in this game or you're not in this game, but you can't be sort of in this game.

I guess what we're looking for is a commitment one way or the other, because these people you see before you, whether it's a casino or whether it's Carnival Cruise or whether it's a developer from Montreal or whether it's a BIA manager, are themselves gambling with their time, their money, their efforts, and for what? A carrot at the end of a stick. That's what we're looking at here.

We're saying, let's not have an exclusive policy -- for any NDPers who happen to be sitting around the table, certainly I believe that goes against your grain -- let's have an inclusive policy. Let's not say Windsor is going to be the magic city that gets this. Let's do much like we did with special status for tourist designations: set up a decision matrix, set up criteria, and if an area fits that criteria, fulfils its obligations under that, then for all intents and purposes it should be granted a licence to operate.

In regard to casinos, no, they're not the panacea to our problems, most definitely not, but they are a component and an equation, and I think that's what we have to look at.

Another disturbing fact is that the approach the government is taking, at least the perception of the approach the government is taking, is an all or nothing approach, 13 acres in Windsor, this Wally World type of scenario or nothing.

I say to you, is it not more practical to implement a large model and a small model parallel to each other so you can make a comparative analysis? What if the large model, what if the Taj Mahal fails? Does that ultimately mean that reduces the chances of any other city acquiring this type of gaming house? Isn't it more practical, isn't it more feasible in the long term to open up two, one on one side of the scale, very large, the other downsized?


Ladies and gentlemen, maybe your participation in this particular sector is a middle of the road participation. Maybe it's not an everything to everybody type of scenario. Maybe it is a smaller gaming house, or maybe it's somewhere in between. But I think from a practical standpoint, here we have commitments from the city, we have commitments from developers, we have a commitment from a board of directors of an area who say: "Let us go ahead with this. Let us proceed with this parallel to Windsor's. Let us make a comparative analysis rather than a singular analysis." As we know, in any formal education, a singular analysis can be terribly skewed and can set you off in the wrong direction, give you the wrong cues and ultimately end up negating what could very well be extremely beneficial for a community.

Now, why are we at this table? What do we have as a vested interest? Do we want to see, supposedly, this prostitution and organized crime near our area? We're in very close proximity to Sparks Street.

Well, let's look at that. I understand that we had a councillor come forward yesterday before this committee talking about prostitution, talking about, "We'll need more police forces." I submit to you that, first and foremost, prostitution is a social problem that has never and will never be solved by a criminal justice solution. So to try to provide that direct linkage here and say one goes hand in hand, I just don't think that works. As a matter of fact, our own city council is wrestling with that today as we sit here. They have a prostitution problem in the Byward Market. By the way, there are no casinos there. It's a mixed commercial area, very trendy, yet there are prostitutes there. And what they're looking at is a traffic solution, rerouting traffic, to a social problem. Does anybody really honestly believe that will work any more than the criminal justice system has worked in solving prostitution? No.

So I ask this committee to separate their feelings on this, to not have a bias, to not look at one and the other in an inextricable manner that are ultimately tied together, because that simply is not the truth. As a matter of fact, if any of you have been to Las Vegas or Atlantic City, perhaps you see prostitutes at the large gaming houses. I've been to Las Vegas, and I can honestly say that in the smaller houses maybe they're completely innocuous, because I don't see them in the smaller houses, or at least what I perceive as a prostitute. So maybe the answer is a smaller gaming house rather than this huge complex.

What I'm saying on behalf of our 524 business members representing an employment base of I guess 40,000 people in the central area is that while this is not a panacea, they are on a precipice. They are on a precipice of going out of business, of losing mortgages, of putting a greater social burden on all the programs -- unemployment, social programs, welfare -- and that is a one-time sunk cost.

So we ask you, please, make up your mind whether you're in this or you're out of it. Make up your mind whether you want to go with one comparison or you want to take a practical and realistic approach and do a comparative analysis, and for God's sake let's get on with the creation of jobs, which I think everybody in this room agrees is the mandate of this government.

The Chair: Thank you very much for a very thoughtful and insightful presentation. We have about eight minutes per caucus. We'll start with Mr Duignan.

Mr Duignan: Very briefly, just for the record again, at this point in time there's going to be just the one pilot project casino and that's in the Windsor area.

Mr LePage: There's no questions?

The Chair: Well, we won't have a free-for-all, but certainly Mr Carr.

Mr Carr: I just have one short question. You say it comes down to the issue of jobs. I don't know if you were here when the lady before presented, but I'll quote. What she's concerned about is the people in the horse racing industry, and to quote her brief, she says, "There will be 50,000 jobs at stake." Appreciating that you're interested in the jobs in the Ottawa area, what do you say to the lady who was in before you who says that by opening casinos, we're going to be killing the horse racing industry?

Mr LePage: Well, I submit, has Ma Bell gone down the tubes because she's had, and continues to have, competition through other carriers on her lines? No, competition is healthy. If you look at the gaming industry as a whole, did the province have the same consideration when it entered the Lotto games?

Most definitely, if you look at the entertainment dollars, the discretionary part of spending, one would have to consider that this would be part of that same discretionary dollar to spend on entertainment or gaming. So I guess what I'm saying is, I don't believe that's going to happen. I think if someone's predisposed to gambling at a racetrack, then that is their particular type of gaming that they enjoy. Other people might enjoy roulette or blackjack, but I guess it's a question of rounding it out.

I guess it's a question of complementary services or gaming services being offered. I don't think a monopoly or an oligopoly is healthy for any economy, and I wouldn't advocate that, whether it's for Ma Bell or whether it's for the horse racing industry.

Mr Carr: What do you say to the horse racing industry which, as the previous lady said, in every other jurisdiction in North America where horse racing has gone head-to-head with casinos, has lost? She doesn't believe they both are going to survive. Do you think we're going to be different from what's happened in other jurisdictions?

Mr LePage: I think the pragmatic approach that the government is taking suggests that there are going to be some significant differences, and I think that's all part of the problem-solving that has to do with the process of undertaking this type of facility in the province.

Nevertheless, irrespective of what we're looking at there, I'd still submit that monopoly is not healthy for an economy, and if people so wish to entertain themselves by going to a gaming facility such as a casino, that will be determined on how well the horse racing market can compete for that discretionary dollar, and that's what it comes down to.

I submit that ultimately who the winner is going to be here is the consumer, because perhaps the horse racing industry will come up with innovative ideas that will make it more attractive for consumers, and conversely casinos will be very well aware that the horse racing industry is doing this and will offset that by their own market advantages. So I think that type of competition historically has proven, in whatever context, whatever sector, whatever industry, ultimately healthy for the consumer.

Mr Carr: Thanks.

The Chair: Mr McClelland?

Mr McClelland: I don't have any questions. I think your position was put forward very well, forcefully and well thought out. Thanks. I think you raise a number of thought-provoking issues in terms of: If you're going to do it, you're going to do it full-scale and do it right, make sure it's done with a business plan and some business acumen brought to it, not on the site-specific but on the macro scale, in terms of province-wide.

What more can I add? I think you raised the issues that need to be addressed, need to be answered, and I'm certainly not in a position to answer them other than to just re-ask, I suppose, my friends in government and hopefully we'll have the answers forthcoming.

The Chair: Thank you, Mr LePage, for presenting before the committee this afternoon. Indeed, you did offer some very interesting points with regard to Bill 8 and casinos in the province of Ontario.

Mr LePage: Thank you very much.


The Chair: Our next presenter this afternoon is John Turmel, representing Casino Turmel. If you would please come forward, sir, and make yourself comfortable, you have 30 minutes within which to make your presentation and field questions from the committee members.

Mr John Turmel: Did you say 15?

The Chair: I said 30, and whenever you're comfortable, you may please proceed.

Mr Turmel: Okay. Well, I do have a submission that I've given everybody if they want to follow it along. I propose to read it and digress, and if someone has a question, throw it in, because I'll be short in my answers and we can continue on. So don't feel any worry about interrupting.

I am the only systems engineer in Canada to have specialized in the mathematics of gambling. I've been accredited as an expert witness in matters related to gambling on numerous occasions before the Ontario and Quebec provincial courts. I was once even used by the crown. I have operated poker and blackjack games in the Ottawa area for the past 20 years and was six times convicted, before finally being acquitted of running an honest game. All judges said, "He's honest," but six said, "He's guilty."

In April 1989, upon an agreed statement of facts, Ontario Provincial Court judges Fontana and Lennox dismissed charges of operating a gaming house against John Turmel and the found-ins. Under the scrutiny of the OPP and Ottawa police, Casino Turmel in Ottawa operated legal card games of skill such as poker, with no rakeoff; blackjack, where they could bank me back; gin rummy, for over a year and a half.


In December 1991, OPP undercover officer Joe Fotia twice investigated the blackjack and poker games held in my home and filed no charges.

Five months later, after I'd started a small blackjack and poker games room on Baxter Road in Ottawa, with five blackjack and three poker tables, and employing 14 staff, Cardinal Agency, a charity casino operator, complained to the police that he couldn't compete. Of course, I'm not blaming him. He wrote and said: "How come Turmel can be running casinos and I have to pay for licences? How does he do it? If he's doing it in some legal way, I want to do it too, and if he's not, bust him."

Again, Officer Joe Fotia investigated my games of poker and blackjack 10 times during the months of June and July 1992. Again, no charges were filed.

Five months later, after I'd started a larger casino at the Topaz entertainment plaza on St Laurent Boulevard in Ottawa, with 20 blackjack tables and six poker tables, operating 24 hours a day, seven days a week, employing over 100 butler-dealers, Ottawa police investigated five times in January 1993 and filed no charges.

Between that point, I did announce at a Toronto press conference that I was going to expand and start these types of poker and blackjack clubs in Toronto, Niagara Falls and Brockville. I'll go into why the American market is important for Niagara Falls and Brockville.

I'd also point out that Peter Kormos came when he heard about my wanting to set up in Niagara Falls and examined the operation at Topaz. So if you want to know as to the professional attitudes and the quality of it, he's a man who actually came and investigated, knowing I was coming to his community.

As for why Toronto, I did start a casino in Toronto last year, early in the year, but the police, in February, threatened to lay the gaming house charges regardless of the judges' decisions that had acquitted me. So I chose to shut down and get some legal opinions, and then I announced I was going to open up again.

Two months later, though, the Ottawa police and the OPP started a combined investigation. This time, they changed their minds. They launched Project Robin Hood -- that's what they called it; in Hull two years ago they called it Operation Blackjack -- and they laid charges. If justice prevails, I'll be acquitted again. As a matter of fact, the pre-trial is coming up September 27 in front of the same judge who acquitted me the first time. For the lawyers in the room, there's going to be one of these rare autrefois acquit pleas going on before the same judge who acquitted me last time. So a rarity is happening on September 27.

If I do win, small card casinos won't be stoppable. You're going to have to face bridge clubs that have money tournaments, you're going to have to face poker clubs with no rakeoff, and of course you'll have to face these types of casinos of legal games, because it seems the focus so far has been on the types of games that large casinos offer. They cannot compete with the small ones for several reasons soon coming out. And if I do win, the province should get ready to handle the increased tax revenues that we'll generate unimpeded.

The jobs I created paid approximately $40,000 a year with tips, so they were substantial and people loved them, frankly. This $4-million yearly payroll represented less than full capacity. At full capacity, there would have been 150 to 200 Ottawa jobs with that number of tables I listed. Card players were being bused in from Montreal four times a week, with more travel agents, one from the US, planning more tours.

After deductions and taxes, government will always reap more than half of all the money won if it's done by private enterprise, yet my Canadian model of small and medium mom-and-pop-style casinos, "Cheers with chips" is how I like to explain it --

Mr McClelland: Everybody knows your name.

Mr Turmel: -- would allow jobs and winnings to stay in the community rather than have them all channelled to a few large cities.

It's been said that gambling would attract drugs, prostitution and organized crime. I can only point out that though they're already here -- let's get that straight; they're already here; this is not going to attract much more than the market's already handling -- I didn't find them to be problems at my games. If a guy wants to come doing drugs, he won't have money tomorrow night to either play or do drugs. You find most people who do play games of skill aren't the ones who want to be impaired. If you can get them off those games where they don't need their brains, like lotteries, bingos, craps, things like that, and get them on to blackjack and cards, even more reason you're not attracting people who want to do drugs or alcohol.

As a matter of fact, we have no alcohol, though I must admit in the past, when I ran it in my home, I had a fridge full of beer. But since I've gotten larger I've decided the problems with alcohol are too much and you don't need drunken people losing their money sorely. So it's turned into more of a bridge club atmosphere by not having alcohol. Whether or not the government's going to allow it, like the big casinos, I have no real opinion on. If you've got a lot of security guards, I guess it can't hurt, but if you want to do it economically and cheaply, then you don't need security guards and you don't want alcohol.

So "Cheers with chips" would allow the money and the jobs to stay right in the community where the money's lost. It's been said that gambling would attract them. They're already here. I haven't found it to be a problem. I think this has largely been a result of the large number of elderly players who actually prefer $5- and $10-maximum poker and blackjack to bingos and lotteries.

I have an 86-year-old man who plays $5 poker. Every Saturday, we have a busload coming in from Montreal and you'd think it was the geriatric ward of the city. Literally, it's the same old people who drive all the way from Montreal by bus to sit down and play poker with each other for eight hours before driving back. I mean, it's actually very cute, you know, and it's a nice way for the employees to make a living.

Believe it, old people can still use their brains at that age, especially with the games I've designed. Blackjack's pretty simple -- count to 21; most people still can -- but poker, most people have difficulty playing stud games because you have to watch all these hands out there and keep track of the cards and it's a problem. But this most popular game in the world right now, called Hold 'em, has only two cards in your hand and five in the middle. It's a seven stud. That way, the old people only have to look at their two cards and the five in the middle and see how they mesh -- they don't have to do anything else -- and listen to the betting.

I'm sure you can't see this kind of intermingling between old generations and young generations, and it's actually quite wonderful to see. I'm sure you see it in Las Vegas if you visit the poker pits at the small stakes, and I think we should have that here too because, frankly, exercising the brain seems to keep these people sharp. I've seen people at 60 years old -- I play accordion in old folks' homes. When I was convicted in 1981, they let me out of jail if I played concerts in the old folks' homes, and I can say that a lot of people at 60 years old can't do very much, but these people are bright. When they get a pair of aces, it's the same rush; try and trap them.

Anyway, because of all these elderly people who do come, it would be quite difficult for either drug pushers or prostitutes to approach gamblers in such a setting, where such activities would quickly be detected and frowned upon. There were no drug or prostitution charges or allegations in Project Robin Hood.

I've demonstrated that my type of small casino has experienced no trouble over the last 15 months, much as any bridge director could attest that bridge tournaments are relatively incident-free. The presence of cash in no way renders the gambling at bridge any more detrimental to the public peace. Similarly, gambling at poker, blackjack, euchre -- that's another hot tournament game coming up soon -- and gin are quite peaceful activities.

As for organized crime, they wouldn't be too interested in small operations with profit levels more in tune with small businesses and, frankly, my profit at the end of all my thing was in the neighbourhood of about 10% of the total winnings that came in. After all expenses and all that kind of stuff, I'll be left with 10% -- it's 20%, but the government takes half. No way in the world am I making as much as Wayne Gretzky or even a large auto dealer, so it's not as lucrative as most people think, but still it's an entertaining and enjoyable way of making a living. I could sit at the poker table for 20 hours a day and love it and be happy and pay the rent. Anyway, organized crime, we've had no hints whatsoever, no pressures, nothing like that.

As for the compulsive gamblers, the personal neighbourhood touch also allows for recognition and help to abusers, which larger and personal casinos cannot do. It's pretty tough for an abuser to hide the fact when a niece or a nephew is working at the next table, and if it's in a small town you bet some kin are going to be working in the casino, so that uncle Jerry can't come and blow his brains out without Aunt Millie finding out, or the kid standing up and saying, "Bar him from the casino."


I can attest that not only have I and other management personnel spoken with abusers, but so have many of the new friends they've made. So friends actually speak up and warn people about this too. No one wants to see them quit the game, but everybody wants to see them playing at stakes they can afford. I have personally barred abusers; I have imposed conditions on others. Some I only buy in once for a set amount, $200, and if they lose it they're gone. Others are restricted to a certain maximum bet, $10, $15, $25. Some have fixed hours, "You've got to go home at midnight because you work in the morning; the wife gets mad if you come in late," and several may not play unless accompanied by the spouse. Frankly, that is the ideal solution. When the spouse comes with the abuser and is sitting at the same table, his gambling is always under control.

So I've found very few problems in that respect. I do have a database of 4,500 gamblers who have played with me and through my doors, and I'd say that I can probably count the abusers on my hands. Besides, the real abusers make great employees.

The Citizen had a big article about my casino and it mentioned that this poor guy had to take a job at Casino Turmel when he lost all his money. The point is, I took care of the abuser. Here's a guy who loved the industry. He can only play a little bit. The management makes sure that he can't play with his rent money. So he's got himself a 40-grand-a-year job and he's under control.

I found, frankly, that those people who did lose control are the ones who understand the games implicitly and then enjoy being on the other side of the table. It seems to satiate their desire. They're at least in the action, participating in some way. So all those people out there at Gamblers Anonymous, come see Casino Turmel. I bet you'll be a good dealer.

I further believe that the curse of gambling is, with few exceptions, the acceptance of cheques and the extension of credit by the house. Problems arise when the gambler is losing and goes on tilt. If the game takes his cheques, he could lose all his savings in the heat of the moment. I will not take a cheque and let a person use funds in his chequing account unless the players are such high rollers as to make the transfers of cash impractical. Frankly, in the second-last month before they raided me, one guy hit me for a quarter of a million dollars. That's a $300 limit, seven hands, betting maximum all the way over the space of three weeks. You need a huge bankroll to sustain those types of limits, but again, this is the type of action that you just can't do in cash. You have to pay in cheques, and that's safer too. If I had my choice, I'd rather it was all done by cheque. Of course the government's happy; they know everything I win, and we're not going to get robbed. Who needs security?

I didn't put it in here, but you might make a note that possible total credit might be an answer to the abusers. You know, you either have a chequing account that's been okayed for gambling, in some way -- and the banks would love to open a new set of accounts, right? In that way it can be controlled. There are ways to control them in the smaller communities that are totally unavailable in the large, impersonal casinos. Anyway, without access to their chequing accounts, gamblers can never lose more than they were prepared to lose when they came to play, and I found very few problems with that policy.

Worse problems arise if the game extends credit. I've extended credit over many years and I've had to write off a lot. I learned my lesson, as I have no stomach for chasing people who have evidently hurt themselves. Any hint of strong-arm policies is eliminated without credit. I therefore will not extend credit, and again, players cannot lose more than they were prepared to lose when they came to play.

There are now five other Turmel-style casinos in Ottawa, with three having opened after the Project Robin Hood raid, so they're all counting on my winning my case again. Unfortunately, they do not adhere to my credit and cheque policies -- a little mistake there -- and I cannot say that those problems will not arise, but to date their mere unobtrusiveness is an indication that such industry can be competently and quietly done.

I further believe that the larger casinos cannot compete with the small neighbourhood games people have access to already. Men who regularly play poker at their golf or social clubs -- and I would bet that if any of you guys play poker at your clubs, you'll understand -- will not be attracted to the large casinos and will inevitably prefer a setting of their own choosing and games of their own choice. They might go to the big downtown casino once in awhile, but most will stay at the neighbourhood game.

The problems with big casinos are immediately evident. The August 24, 1993, Ottawa Citizen article entitled, "Angry Horsemen Rein on Casino Hearing Parade," points out that if the Chippewa Indian tribe in Detroit opens a casino, the Windsor casino will not be viable and a large investment will fail. On the other hand, if several small, Turmel-sized casinos were about to be put in operation, one or two might go under but not the whole industry. There's no need to put all our eggs in one basket.

I further believe that the proposed Windsor casino test site will in no way be indicative of what would actually go on, since it seems to be the case of it being run by Americans for the American market. I bet the ratio of people familiar with guns who visit Windsor from the murder capital of the USA will be far higher than that for Ottawa.

I'd further point out the awesome potential of money bridge tournaments. Such a tournament was recently held in a US casino and has the potential of being the all-time largest gambling game. Now, I host -- I've got it here -- the annual Canadian Open Hold 'em Poker Championship, which last year had over $80,000 in prize money, and I believe that such purses will be dwarfed by the purses created by large bridge tournaments.

I've been holding these tournaments for about eight years now. Last year, we had entrants from the United States, Quebec, Toronto, Winnipeg, the east coast. This is a large tournament now, and as long as I don't take a rakeoff, even if I don't have my permanent Casino Turmel setting, I can still run it in a hotel like I always used to originally. I'm saying it's just a matter of time, as long as I don't take a rake and make a profit. Of course, I always come in the money, so you know -- "always," no -- I usually come in the money in these tournaments, so I'll organize them as often as I can. As long as I don't make any profits and the winners cover the tab -- I've had these investigated by the police and pronounced fine, so like Denny Binnion, who owns the world series of poker in Las Vegas, John Turmel owns the Canada championship here, and I don't intend to give it up as long as I have the wherewithal do it once a year.

Anyway, I think that bridge is coming and I just might decide to try and host one of these massive tournaments. Being from Toronto, you must be aware of these 5,000-person bridge tournaments that take place down there. There are 5,000 people at a bridge tournament seeking master points, simple recognition. Just imagine it. If everybody put up $100 into the pot, or $200 like we do at poker, you'd be looking at a half-million-dollar prize and now people would really have a thrill. As long as there's no rake going to the house, this is going to be explosive.

This kind of activity can't be stopped. People are always going to choose to use their brains. As a matter of fact -- a short one-minute digression -- I wrote a poem when I was thrown in jail about 10 years ago on this problem. I was sitting in a jail cell, they gave me a pen and paper and I wrote:

Here I sit, broken hearted.

Came to play, but was soon parted

From my friends that I do know

Enjoy this game as I do so.

Now I languish here in jail,

Puzzled by my need of bail.

I don't know why they oppose

My wish to gamble; no one knows.

I don't hurt them. Why bust me?

It isn't their game, now I see.

They allow bingos or tickets bought

But never, never a game of thought.

Bingos bore me, lotteries too.

Give me poker, blackjack, backgammon too.

I prefer thought, exercise my brain,

Playing lotteries would drive me insane.

So I choose to make use of my mind

And pity those who won't in kind.

So I'm in here and they're out there,

Yet still I choose to think, to dare.

By the way, I was convicted.

Anyway, money bridge is going to be big. Just ask any of your bridge-playing friends if they wouldn't love a bridge tournament where everybody puts in $100. It's coming.

Now the reason Canada will have great initial success in luring American gamblers, and I found this, is because they're taxed 30% of their winnings right at the casino, whereas here gambling winnings to non-professionals are treated as a non-taxable windfall and they get to keep it all.

Two chartered flights of gamblers used to leave Ottawa for Atlantic City every month; now there are none, with American card players coming this way. Or they were: They must still be going to the other five casinos, because they've hired all my dealers, so word's spread anyway. That's true; most of my dealers have found employment with the other five casinos in town. A lot of people in town think it's unfair that they're just using me as a test case, and I think they have a real weak case too. Keep an ear out on the media and see if they cover it well.

Now there are none of these, and if the quiet, sociable nature of the Canadian model I offer were to be better known, it would beat the more familiar American model hands down. Spinoffs in the tourism industries have surely been well documented by other submissions to this committee.

For these reasons, I would recommend the immediate licensing of mini-casinos allowing the playing of poker with a small service fee. I pick up the rent just because I'm good, but a house ought to be able to charge $5 a seat to pay for the lights. I'm forced to not take a rake-off and just pay the bills with what I win as a player, but I'm good enough to usually win between three and four units an hour.

Just think about that if you find a $100 game and you're playing 50 hours a week. I can pick up the rent, but if I have only one table, I may not find a $100 game. If I have 10 tables in my place with 100 gamblers, out of there you'll get 10 or 11 people capable of playing at the high stakes, allowing me to pick up the rent.


I would recommend the licensing of small poker mini-casinos, card casinos, and allow poker with a little service fee, blackjack or any other lawful games. All those honest underground poker games that have been running illegally in every Canadian city for as long as I'm sure anybody can remember should be allowed to come out into the open, register their wins or gains and pay their taxes. As a matter of fact, if you would come to me and say, "I've been convicted of running a gaming house three times, but the judge always said it was an honest game but I broke the law," I'd call that a recommendation. There are a lot of people out there who've been in the industry, who've been running honest poker games, like myself, who have criminal records. I've finally found a way to do it right, I hope. I'll prove it again.

All these games are honest. The gamblers will police the games themselves usually. Therefore you could sprout an instant industry almost overnight in every small town, so that, again, all the benefits of the money staying in the community would be there. Everywhere you could comfortably situate a billiard table should be a candidate for a poker or blackjack table: clubs, restaurants, racetracks. I think lots of gamblers would enjoy being able to have a poker game at the racetrack, being able to place their bets, like a keno runner, on the horses on the track, with the screens up there. I think the racetracks would be popular casinos.

Just like Circus Circus draws the people with the families in Vegas and other places have their attractions, I think the racetracks would be really solidified by adding a small or even a mid-size casino within their midst. I think people would stay there. I think they're just ideal situations. I don't think they should worry at all, as long as they're allowed to obtain licences on their own. It can only help their industry. There is already a large, talented underground industry out there, ready to sprout into existence beside any larger models with which to compete, and I don't think the larger models will complete.

Finally, government shouldn't be involved in which games players want to play or gamble at. Whatever the players choose should be marketable, and the guy who finds the way to market it in the most pleasant way is going to be the winner. I think it should be left up to private enterprise, and short of leaving the policing of cheats and things like that to the police, really I think these things could pop into existence almost overnight.

Again, any large ones you set up could be liable for large tumbles when the competition in other states do finally open up everywhere or if your neighbours across the border simply allow small casinos to go too. You have to have small casinos so that some will get knocked out, the rest will survive; otherwise, it looks like there could be some big falls, and I predict Windsor will be a big one if those Indians open their casino.

The Chair: Thank you very much for a very entertaining presentation. Very seriously, you offer some interesting ideas. Our time is quite limited, but I suspect that if we're given an opportunity to ask questions, you will have a lot to say in your responses.

Mr Turmel: I'll be quick.

The Chair: Oh, will you? That's great, sir. I wouldn't want to imply that you'd go on at length.

Mr Turmel: I ran in 33 elections with a one-minute constraint on average questions.

The Chair: Again, in all fairness, I offered 30 minutes, and we don't have a whole lot of time, but maybe because you're the last presenter today, we can offer just a little extra time. We'll start with Mr. Duignan.

Mr Duignan: We don't have any questions at this time.

The Chair: Mr Kwinter.

Mr Kwinter: Mr Turmel, I had breakfast with a former classmate of yours this morning, and he told me that you were coming and said that I would find you very interesting and entertaining, and he was certainly right. He also said something you may not agree with, but in his words, that you were a genius. From what you tell me about your ability to win at poker, which really funds all of these operations, just by winning, what happens if you get somebody who's better than you are and you don't win?

Mr Turmel: You see, that's not it. The essence of being a professional is -- I have walked away from games. When they opened the games in Cornwall, I went for six months, made a huge killing. But I walk in there, there's a $50 game, and I look and I see one, two, three, four sharks, four pros like myself, maybe just slightly not as good, because I have some pretty sophisticated mathematical tools, but still winners, guys who can expect to grind out. I look at the $25 table where I see only one or two sharks, because even sharks think the big action's better. I'll pick the smaller table because I know I can win more against less sharks. So sure, there can be a better player who will come up against me, but he can't beat me for very much, even if we were head-on. A better player might win 52 tournaments out of 100 and I might win 48, so the actual difference between skilful players isn't that substantial, but the difference between a winner and a loser is.

Mr Kwinter: The point I was trying to make is that without your proposal of having a service fee of whatever it is --

Mr Turmel: Five bucks an hour or something per seat.

Mr Kwinter: -- yes, whatever it is so that you can finance this thing, you were able to run this only because you have the ability to finance it through your winnings.

Mr Turmel: That's right.

Mr Kwinter: Now, if you couldn't finance it through your winnings and you were at the mercy of the John Turmels who come to play --

Mr Turmel: You couldn't compete. As a matter of fact, if I don't win my case, I will break the Ottawa casino when it opens. Watch out; I'll have nowhere else to go.

The Chair: There goes the $150 million in taxes.

Mr Turmel: Unless they bar me. I don't know what your position is on barring. In Las Vegas they barred me from two casinos and in Atlantic City they had other measures to cope with me. But I don't know if you've even contemplated how to cope with card counters. Are you going to eliminate my chance to gamble chez moi and also bar me from gambling in my home town? So it's an interesting problem, but better to have me on this side of the table than playing against the house, because I can win it faster.

Mr Carr: They may run you as an NDP candidate to get rid of you.

Mr Turmel: That's a cheap shot at the NDP, though. But no, I happen to be in a unique position where yes, I can use winnings to fund that kind of expense and have that large an operation.

But I also notice in Las Vegas that at the poker tables, not only was the house taking five bucks a pot and 150 bucks an hour, but the dealers were being tipped one, two, three bucks a pot, and that's why the employees make $40,000 a year. That's why I reasoned that even if I don't take a rakeoff, the people still tip when they win, and guess what? The people are tipping the tip pool $50 to $70 an hour, and in a high-stakes game sometimes $150 an hour.

Now, I don't touch that. All I can say is a pure tip industry could be created with poker paying $40,000, $50,000 a year, so basically those tips are very valuable. They actually provide more money to the dealers than I provide in salary. I'd say tips are at least as much and maybe a little more. So it's not just me having to win it all, otherwise the dealers would be earning 20 grand a year. Actually, they're getting double with their tips.

Again, the competition's a kind of nice way, because those who serve them better and please the players better and offer nicer surroundings are the ones who are going to do better and keep the gamblers. So tips are also an important element in funding paycheques, and it's not just my gambling.

Mr Phillips: I appreciate your advice to us on the Windsor model. I don't know whether you've had a chance to look at it. I think it calls for roughly 12,000 visitors a day --

Mr Turmel: That's large.

Mr Phillips: -- and I think a 20% fee from the province on the win plus profits. What's your view on the likelihood of success? I don't know whether you've had a chance to look at the model.

Mr Turmel: Only with respect to large versus small. I see that if there's competition on the American side, all Windsor's going to have is that 30% tax leverage, and if they ever eliminated that, then people would be staying on the American side. Most people who play small stakes will stay on the American side for sure, because the tax breaks -- they don't hit you for a $100 win at the cage. There's a certain threshold before they hit you with the 30% taxes, so small gamblers won't cross the river. This tax advantage is really only a lure to the high rollers in Detroit, and we all know who they might be. So I just don't think that can be the problem.

I think the largeness of the casino is a threat to the casino, and if they were rather to start a small strip of pleasant-type "Cheers with chips" to get it started with, even if the Indians did open, it might still survive, even if one or two go under. I think that small would be the way to try, but then again, it's not representative of what I'm experiencing in Ottawa or what I did in Toronto at all. It's a Detroit market, and it would be large and it would bring the same impersonal problems that the large ones do. Sure, the hookers would be hanging around the bars because there are no grandmothers saying, "I don't want my nephew hanging around her."

You can't believe how many times you have a whole family at the table. I mean, people come and they take a whole table, the whole family. So what used to go on in the kitchen now goes on out in another setting where there are more people they can socialize with. Once people get a taste of it, they're not going to go back to the slot machines too much and things like that.

I think that starting small but spreading out the risk would be the better angle. But yet, having experienced no problems whatsoever in 15 months -- and you can check with the Ottawa police: none -- I would say here's the proof of the pudding that small can be done well.

Besides, there have been many small ones operating well across the country, since ever. We've just got to get them out and say: "You're legal now. You've been running a game for 20 years." I know these games in Ottawa -- I used to go play at them -- with a little rakeoff going to the guy, he makes a little bit, but we could have been busted. Yet he's an ideal candidate to come forward, open little shops, have three, four tables, get the wife making pasta in the back. They can compete, is what I'm saying.

Instead of having a few large gamblers get into large casinos, all sorts of little guys can set up. Literally tens of thousands of small entrepreneurs could be out there, you know? The mom-and-pop operations is where I would like to play. Large ones will be available for people looking for high stakes, because I figure if there are more tables, there are more likely to be high rollers there, so I'd check out there first. But if I know the high rollers are going to make an appointment to meet me here, I'd rather go have the great pasta too.

I think that the little entrepreneur's really got to be given a chance. There's a skilled underground out there right now. If you give them permission to come forward and pay their taxes, they'll be right out there and you'll see an expansion that'll go on and you'll see competition.

Five other guys opened up, and I'm sure that if I win my case and I reopen, one or two may go under but the others may be okay. Two of them are Chinese guys; well, odds are they might prefer to win or lose their money with Chinese owners than with me, even though I had 30 Chinese dealers. But who knows what reason they're going to want to choose to go there? I think they ought to have that option.

I've experienced no problems. The industry's ready to go. Just wave and we're off.

The Chair: If there are no further questions, I want to thank you again, Mr Turmel, for presenting before the committee.

Mr Turmel: Okay, thanks for the opportunity.

The Chair: This committee is adjourned until 10 am tomorrow in Niagara Falls.

The committee adjourned at 1613.

Committee Documents