Excerpt from the Official Report of


July 12, 2013

Questions during Ministry of Finance Estimates

S. Simpson: We'll be talking about Lottery Corporation issues. We'll just get focused right into the questions. It is my intention to move through these questions in the next hour that we have. I don't expect to get it all done, but I'll provide, then, in writing, questions that we don't get a chance to canvass here.

The first question is…. I've looked at the government's letters of expectations for the Crowns and for the B.C. Lottery Corporation. I have the one that was prepared by the minister's predecessor, who was then the Minister of Energy and Mines and had been the predecessor with responsibility for the Crown, for 2013-2014. Could the minister tell us if there are any material changes in the letter of expectations since he has taken responsibility for the ministry?


S. Simpson: I think it's fine. This is the letter. This letter from the minister's predecessor was dated December 19, 2012. It was signed off at that time by the chair of the corporation and by the minister. I'm just assuming that since the time of that letter being signed and what is incorporated in this letter, that nothing of significance has changed in the government's expectations in regard to that. Would that be fair?


S. Simpson: The letter, and I guess the next thing I'd ask, talks about executive compensation. I'm wondering if the minister could provide — I don't need it here; I'm happy to get it in writing afterwards — information about any changes in executive compensation since January 1, 2012.


S. Simpson: Could the minister tell us: is the Lottery Corporation going to be subject to the core review and to the process of core review? If so, how does that affect a corporation like the Lottery Corporation?


S. Simpson: I asked that because I believe I heard comments by the Minister Responsible for Core Review, who spoke more broadly about Crowns, about other entities — other than ministries, specifically — that would be captured by that. The minister was not a lot more specific than that, but he did seem to cast a net that was wider than ministry, so we'll wait to hear about the decisions of cabinet about the terms of reference.

Could the minister tell us…? There are references in the letter of expectations, and we know around the Crowns that there have been audits and reviews of a number of the Crowns — just looking at operational questions and other questions. Have there been audits or reviews of the Lottery Corporation in the last year?


S. Simpson: Could the minister tell us: what is the anticipated revenue to government coffers from the Lottery Corporation for the next three years?


S. Simpson: And maybe this question. It links to that, though we'll figure out how it is best decided to answer it. Could the minister tell us, generally, what portion of that is anticipated to come from on line — from PlayNow and from on-line revenue streams?


S. Simpson: What is the expectation with PlayNow? I know it's still somewhat…. It's getting established now. I know there are expansion plans into other jurisdictions. Those discussions are ongoing. What's the anticipated revenue, net revenues from PlayNow for the next three years, as a component of the Lottery Corporation's business?


S. Simpson: Moving a little bit to an issue around some of the discussions that have been had around challenges with problem gambling and those matters. I'm sure the Lottery Corporation and the minister would know that there has been a significant amount of analysis done that looks at the question of what percentages of gambling revenues come from problem gamblers versus the percentage that come from casual gamblers or people who don't face those challenges.

I know there's been recent research out of the University of Lethbridge. This was related to a study of Alberta gambling. They have suggested that somewhere between 40 to 50 percent of their revenue generated comes from people that were identified as problem gamblers versus people who do it casually and for recreational purposes — people that have other challenges.

Could the minister tell us: has there been any assessment done here by government or by the corporation — or by GPEB, for that matter — that's looked at that kind of information about what percentage of revenues into the Lottery Corporation may come from people who have significant gambling issues?


S. Simpson: Interesting. I appreciate the answer.

Now, we have here…. I guess it's through gaming policy and enforcement. They have a problem gambling research project. I believe there was an RFP let for it around November 2013 and that GPEB is doing research. Mr. Horricks, the head of the responsible and problem gambling program, is quoted as saying that the study would evaluate current counselling and wants to know how B.C. is doing comparable to other jurisdictions around the world and that the RFP would look at a variety of issues around best practices and those matters.

Would the minister tell us: is that study in play now, or what is the status of that? Can we reasonably expect that some of this kind of information might provide part of the baseline for that research project to do its work?


S. Simpson: I'm going to assume that when those studies are completed, they'll be public. The minister can tell me different if that's not accurate.

My question is: could the minister tell me what percentage of Lottery Corporation revenues go into the combination of problem gambling programs that I know the corporation has? What's the percentage, and what's the dollar amount?


S. Simpson: One of the issues that relates to this…. I was on the website earlier today looking at some of the items. I know that there seems to be a range of incentives that the Lottery Corporation provides. The one I was looking at was the one that says, "If you open a new account with PlayNow and you put 100 bucks in and you spend $500 in the next month, we'll give you $100 worth of chips that you've got to play within a week" — more or less.

I'm sure I can be corrected, but it's generally: "Open up an account for 100 bucks, spend $500 in a month on line playing slots" — I think it's slots — "and then we'll give you another $100 to play slots as long as you play the 100 bucks within a week." I believe there are other incentive programs of that nature to encourage people to sign up to register, to participate.

Could the minister tell me whether it's his view that those kinds of incentives…. I'm going to frame the question differently. Can the corporation tell us whether there's any review or oversight of that in relation to whether that creates issues for people who are already susceptible to getting themselves into a little bit of trouble? The fact you are incentivizing this with "Get a free 100 bucks. As long as you play at least $100 a week for the next month and a half, we'll give you 100 bucks...." Does the minister see that as having the potential to incentivize this for folks who have problems?


S. Simpson: I appreciate the answer. I'm a supporter of the Lottery Corporation. I realize that it provides a recreational opportunity for people, which people want to take advantage of, and that's all good. It oversees the casinos. The vast majority of people go in, and they're responsible, and they enjoy themselves as they would in going to a movie or a concert. They spend a little bit of money and then go home, and everything's good. Generally, for the vast majority of people, it works pretty well. And it delivers not a bad buck to the government coffers as well, and we all know that's important.

We also know, and because it is a government entity, the public has the historic…. I believe there has always been a historic kind of view of the government involvement in gambling that says, "Okay, you're doing it," and I know there are lots of good works coming out of that in terms of where the money ends up, in terms of services to people.

But we want to make sure that we're actually not exploiting those people who are least able to deal with this. We want comfort levels, and we expect this entity to operate at a much higher and more sophisticated standard than some of those people on the Internet that the minister referred to, who shouldn't be operating at all.

I think that's where the questions come in. The minister talked about the oversight that the corporation does and how the corporation decides to stay on top of PlayNow to try to catch the flags if there are people who have challenges or problems in that. Could the minister tell us how the Lottery Corporation monitors individual or cumulative gambling from people who have accounts and are playing?

Clearly, there's, "You hit your limit," but there also must be a way here to decide or look at kind of how people are playing over a period of time — if they're playing inordinate amounts, if the numbers are changed significantly in terms of what money gets played on a daily or ongoing basis from an account and whether that at some point raises flags.

It might raise flags, say, to raise somebody's limit, if they want. But it also might say: "We need to figure out how to at least have an inquiry" — maybe not an intervention but some kind of inquiry — "about whether there's a problem here." We are tracking what might be   fluctuations of amounts of dollars played that raise flags for the people who are smart about this stuff.

How does that happen with the Lottery Corporation?


S. Simpson: I don't disagree with the minister on that. What I would hope, though, is that if the corporation sees changes as they watch that 52 weeks…. As it rolls forward and they see what look like significant changes in the amounts that might be played on a daily or weekly basis — not to make the judgment call that this person can or can't afford to do that; it's their call, obviously, as the person — is there some way, a method of inquiry at least, with the person to just flag this to say: "Are we all good here? Is everything fine?"

This is one of the issues that have always been raised at PlayNow. At two o'clock in the morning, with what I'm doing at home on my computer with gambling and that, there's no oversight. If you go into one of the casinos here in British Columbia, there are staff who are keeping an eye on that. There are resources immediately available. If somebody does look like they're having a problem or whatever, they have methods of being able either to encourage people to take a break or any of a number of things, depending on what the circumstances are.

That doesn't exist when you're at home by yourself on the computer. I'm wondering. Is there a way here that the corporation can make that inquiry of people, if they see a pattern that looks inconsistent or may look problematic or potentially problematic, to say, "Are we okay here," or to raise that issue?


S. Simpson: That was going to be the next question. The method of intervention now is limited to…. As I understand, if you play for an extended period of time, at some point the screen will pop up a message for you that will say, "You've been playing for X amount of hours," and kind of give you a bit of a subtle encouragement that maybe you should take a break or that you've played this amount of money on your account. But the extent of intervention at this point is that technological intervention.


S. Simpson: I'm going to move a little bit to the issue around money laundering and controls and those limits. Back in — what was it…? Boy, my years aren't so good, but I know that the folks from the Lottery Corporation will be able to give me good dates. Obviously, there have been a couple of instances, and there have been some fines from FINTRAC. I believe that on at least one of those fines there was an appeal on the part of the Lottery Corporation of the fine. Could the minister tell us what the status of that appeal is?


S. Simpson: Could the minister tell us if there have been any other instances subsequent to that instance where that fine was levied — any other instances where the Lottery Corporation has either been noted or cited by FINTRAC for problems — or have they faced any other kinds of fines or penalties since that time?


S. Simpson: I'm moving a bit to an issue around the Lottery Corporation and the policy enforcement branch. I've had this conversation with the minister's predecessors, particularly now the minister of LNG, who knows this file pretty well, apparently. It's the question of having the Lottery Corporation and the policy enforcement branch sitting in the same ministry.

The view that I've taken has been that putting promotion…. As the minister has quite rightly said, the Lottery Corporation is in the business of promotion. They significantly advertise. They use incentives — not a problem. That's what they do to try to move people over to the Lottery Corporation or to the casinos that are part of the operation.

I get that. That's a clear marketing tool to build the corporation and, I accept, also to hopefully maybe put some limits on some of the other operators out there who are not as scrupulous.

The policy enforcement branch obviously has a very different job. It's to provide oversight, regulatory review. At times maybe they intervene and say to a casino or to whomever: "There's a problem here, and we need to address this" or "We want to look at this."

I've always seen that as a challenge, to have both those sitting with one minister and asking the minister, with one hand, to go out and actively tell the corporation to promote, promote and, with the other hand, regulate when there might be some limitation.

I wonder if the minister could tell us what he thinks about the question of both those entities resting with one ministry versus separating them and putting them under the auspices of two ministries.


S. Simpson: My view is that clearly, some separation makes sense. I would note that I've looked across the country at other jurisdictions, and it's a mixed bag. Some jurisdictions clearly separate them. Others have a similar model to British Columbia.

What I would hope is that maybe there's some room for conversation there. The criticism has been raised to me in the past. I have picked that criticism up and embraced it, certainly to some degree.

When I think about this, it comes back to the comment that I made earlier about the Lottery Corporation as an entity, the work that they do, the public view of gambling and the role of government in gambling.

Any time you can do things that even are just incremental steps, I think, that create increased confidence that everything is being done in the best interests of dealing with the problem gamblers and making sure the gangsters don't have a role to play and everything is being looked at with the proper oversight…. Every time you can do that…. I think a little bit more is not a bad thing, and this is a piece that I've thought could be helped by that. I would hope that there might be some review of that at some point down the road.

I'm going to just hit a couple more questions. I know we're on a very tight timeline here, and I believe that the Finance critic has a couple of things to finish up. I want to ask a couple of questions about a matter that is pretty current, the Paragon situation, the Paragon deal.

Could the minister tell us what the status is? I believe that the reports in the media, and they may or may not be accurate, are essentially that the Pavilion Corporation has signed a 70-year deal or lease arrangement with Paragon that anticipates a relocation of the current facility or some form of the current facility. My question is: what is the role of the Lottery Corporation in that question and the question around relocation of the Edgewater, I guess it is?


S. Simpson: What I understand the city approved…. The city rejected the expanded facility, but at that time, there was an approval to essentially say: "If you're moving essentially the same operation" — numbers of slots, numbers of tables, etc. — "then we're okay with that, but if you're setting up something much larger, with hotels and whatever, there's a bigger conversation to be had here."

I understand it's not the Lottery Corporation's business to worry about hotels and whether the Paragon people are building hotels or not building hotels. That's not your business. But in the movement, if somebody like Edgewater is going to relocate, then presumably, they're saying: "We're relocating" — I don't know what they have — "X amounts of slot machines, X amounts of tables. This is what we have now. This is how we're going to configure this." And I assume that there'll be some reconfiguration even if there's not some expansion, just as they refine the business model.

Does the Lottery Corporation have a role in signing off and saying: "Okay, we're saying yes to X amount of tables to do this and to do that, and to slot machines and whatever"? Do they sign all of that off and have to sign that off? Is that what the city ultimately will look at and say: "Yes, you followed our rules. You didn't grow," essentially, or "We're taking you back to another public hearing because we think this is different than what we started with?"


S. Simpson: So it will be the position of the corporation and the position of government that the city's authority here stands. If the city is saying, "You can move, but you've got X amount of tables and X amount of machines there, and that's all you can have at the new site. If you can move and do a business deal here and make that work, then we've got something to talk about, but we're not talking about you growing that in any way, shape or form," I'm presuming that's the city's position today.

It can always change. That's the position. But the position of government and of the Lottery Corporation is: "We are respecting that decision, and we're not anticipating trying to overturn that decision of the city. That's what we'll agree to."


S. Simpson: I've got about another two minutes here, and then I'll be done.

The question around the advertising budgets for the Lottery Corporation: could the minister give me the total advertising budget for the Lottery Corporation for the next three years?


S. Simpson: I'm assuming that that's the advertising for the Lottery Corporation. What Great Canadian or Gateway do to promote their own entities, that's a totally…. That's their business, and they're doing whatever it is they do to do that.

A question — and this will be about the last piece that we'll get to. I know, in previous conversations we've had, First Nations in the province have spoken about…. They've looked at their counterparts in the United States and elsewhere, where obviously, on-reserve casinos and things are a pretty significant deal.

I have certainly heard from First Nations groups that are looking at the potential of getting some sort of revenue or economic opportunity or jobs or whatever out of the gaming industry. Are there discussions going on around how that might happen or if it might occur, and is it the Lottery Corporation, this ministry, Aboriginal Relations? Is there a discussion around a role, moving forward — an expanded role for First Nations in gaming?


S. Simpson: Thanks to the minister. Because of short time, I'm going to be done here. As I've said to the minister, I may have some other questions. I'll put them in writing to the minister, and we'll deal with them that way.

Thanks for your time.



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