A Government Learns to Love Gambling

There was a time, it would appear, when the newly elected B.C. Liberals were serious about stopping the expansion of gambling.

During the election campaign of 2001, the B.C. Liberals promised not to expand gambling, but once in power have allowed a massive increase in slot machines in casinos and have pushed to allow slot machines in bingo parlors.

A series of letters, leaked this week to the Victoria weekly Monday, reveals when and how the Liberals’ gambling policies shifted.

‘Gambling’ becomes ‘gaming’

A March 22, 2002, letter from solicitor general Rich Coleman to the president of the British Columbia Lottery Corporation, Vic Poleschuk, says, “As you know the New Era document commits to ending gaming expansion, recognizing the negative social impacts problem gambling can have on families and communities. The recent Cabinet decision reaffirms this commitment.”

He was writing to explain the “operational definition of no gaming expansion” that Campbell and the cabinet had set out in its January 16, 2002, open meeting. The language is somewhat watered down from the New Era document, adding a “can” into a sentence which was previously much more definite about the social impacts of gambling. But the basic intent remains the same.

The letter goes on to say that no new casinos would be permitted, and casinos would not be allowed to add any more slot machines—with a few exceptions. Two casinos in Vancouver, the Royal Diamond and the Grand, as well as Royal Towers Casino in New Westminster and Casino Hollywood in Prince George, were free to relocate or “expand to capacity.” The number of slot machines at any one casino, however, would have to stay under 300.

“In essence,” the letter concluded, “no further casinos will be allowed to relocate or substantially change their facilities in order to acquire additional slot machines.”Four months later, on July 17, 2002, Coleman wrote to Poleschuk again. In that letter, he affirms, “At the January 16, 2002 open meeting of Cabinet, the operational definition of ‘no gaming expansion’ was determined, reaffirming the government’s commitment to stop the expansion of gaming.”

Interestingly, the letter drops the term “gambling,” which the Liberals had used in the New Era document and the earlier letter, in favour of “gaming,” the word preferred by the BCLC and the casino companies.

The letter puts the BCLC in control of the relocation process and appears to free it up to relocate any of the province’s 17 community casinos. “Community casinos may be relocated at the Corporation’s discretion for business reasons,” Coleman writes. Changes for ‘business reasons’

While that seems to free the BCLC to do what it wants with an eye to growing the industry, Coleman apparently contradicts himself in a later paragraph that says only the four exceptions set out in the earlier letter may relocate. “At this time, no further casinos will be allowed to relocate or substantially change their facilities in order to acquire additional slot machines, including if a host local government were to decide to allow slot machines within its jurisdiction.”

It’s unclear what Coleman intended for community casinos, but he was more clear about bingo halls and horse racetracks. “Bingo halls may be relocated at the Corporation’s discretion for business reasons,” he wrote, keeping the number of halls under a maximum of 41. Similarly, the province’s seven racetracks and 26 teletheatres (where people can bet on televised horse races happening elsewhere) could be “relocated for business reasons.”

Allowing gambling facilities to relocate isn’t exactly an “expansion,” but it does show a willingness to allow the BCLC to start making changes “for business reasons” that would allow revenues to grow.

Coleman’s next letter to Poleschuk, dated January 10, 2003, gave the BCLC even more room to make decisions that could expand revenues. “The Province will continue to determine broad policy regarding the scope and scale of gaming in British Columbia,” he writes. “This includes the maximum number of gaming facilities and, in general, whether such facilities may be relocated (under relocation processes managed by the Corporation).”

He goes on to say, “However, the Province is transferring decision-making regarding the following operational matters, formerly the subject of government policy, to the Corporation.” In other words, the BCLC could now decide the type of gaming devices to be used (electronic slot machines could replace the old-fashioned stepper reel ones, for example), casino bet limits, casino hours of operation, the hours of sale for lottery products, whether to have customer appreciation programs and where to put ATMs at gambling facilities. It also allowed the BCLC to set policy on “the extension of credit to patrons.”

Eleven days later, on January 21, 2003, Coleman wrote Poleschuk again, this time to clarify a few things from the January 10 letter. The government would still be controlling the maximum number of gambling facilities and whether they could relocate. Introducing “new types of gaming” would still require the government’s approval.

At the same time, Coleman gave the BCLC permission to move any of the province’s four destination casinos “for business reasons,” and lifted the cap on the number of slot machines any one casino could have. “Current government policy allows for a total of 5,400 slot machines in the Province,” Coleman writes. “That policy has not changed. However, the number of slot machines allowed in any particular casino will be determined by the Corporation and may exceed 300 slot machines to meet marketplace demand.”

Speedy reaction

The next directive from the ministry to the BCLC came on June 16, 2003, when Coleman’s assistant deputy minister for gaming policy and enforcement, Derek Sturko, wrote Poleschuk to say the corporation could now put slot machines at horse tracks “based on business case analysis and market demand.”

Finally, over a year later, in a letter dated August 3, 2004, Coleman wrote the chair of the BCLC, Rick Turner, “to confirm the authority of the British Columbia Lottery Corporation to introduce and operate slot machines in commercial casinos, commercial bingo halls (sometimes referred to as ‘community gaming centres’) and horse race tracks, in numbers the Corporation deems appropriate for business reasons and in order to best meet marketplace demand.”

In case it wasn’t clear enough that the cap on slots was gone, he continues, “This authority applies to both the number of machines within individual gaming facilities and the total in all facilities.”

In the same letter he hands over the authority to start an internet gambling business, something the BCLC would act on quickly with its October, 2004, announcement that it was introducing a website that would allow gamblers to bet on sports results.

The speed with which BCLC acted—two months isn’t a long time to put together a website that has to be sophisticated enough to draw customers and have them securely transfer their money to the corporation—suggests the site may have been under development some time before the official permission was given.

Similarly, the August letter allows the BCLC to start putting slot machines in bingo halls. But according to both Brian Butters, a $10,000-a-month BCLC contractor who is helping pitch the plan to B.C. communities and their councils, and Tom Nellis, the president, CEO and largest single shareholder of Playtime Community Gaming Centres Inc., the biggest bingo hall operator in the province, the BCLC had started on that plan at least seven months earlier, in January 2004.

Taken together, these letters trace the gradual erosion of the Liberal’s hard-line policy on gambling.

What they don’t answer is, why.

No explanation

The explanation for what happened to the promise to stop the expansion of gambling isn’t forthcoming from the premier or the Liberal cabinet ministers best placed to say why that promise was broken. Indeed, as mentioned earlier, Campbell and Coleman have yet to admit the gambling industry has expanded in B.C. at all (though attorney general Geoff Plant has reportedly conceded there has been an expansion). Coleman, the minister who speaks for the province on gambling issues, was not available for an interview. In the absence of an official explanation, there are other possible indications of who may be turning the screws: those who may have interest in a larger gambling industry in this province.

The lobbyist registry shows only four organizations have approached the B.C. government, including the BCLC, on issues that fall into the category “gaming/lotteries.” That tally includes Pacific Coast Video Entertainment Inc., whose lobbyist Michael Bailey approached the BC Ferry Corporation “to seek business opportunities.” It also includes Brian Kieran’s work representing Traveller’s Inn Hotel Group Ltd., and Erik Bornman visiting five Liberal MLAs—including Campbell, Coleman and former finance minister Gary Collins—on behalf of Traveller’s Inn (Canada) Ltd.. The only other lobbying to do with gaming came from the BC Association of Aboriginal Friendship Centres on a subject that was “aboriginal related.” These visitors are far from the high rollers in the province’s growing gambling industry.

In a period when the Liberals were making major changes to how gambling is regulated, the government’s ministers or agencies registered no visits from representatives of the Great Canadian Gaming Corp. or any of its related companies, big players in the bingo industry, or anyone from the horse racing industry.

The gambling companies don’t seem to be big donors to Campbell and the Liberals either. Great Canadian Casino Co. Ltd. gave the party a paltry $400 in 2003, the most recent year for which figures are available, and its executive chairman and largest single stockholder, Ross McLeod, gave another $320. Other companies that run casinos in B.C.—Gateway Casinos Inc., Lake City Casinos Inc. and Royal Diamond Casinos Inc.—don’t appear to have donated that year either. Nor did Tom Nellis or his company Playtime Community Gaming Centres Inc., the largest operator of bingo halls in the province.

There are, however, indications that Great Canadian’s McLeod has the ear of the people regulating gambling in the province. The company’s annual information form for investors for 2002 offers the following nugget in its short biography of its executive chairman and director: “Mr. McLeod is an expert in community charity gaming and a major contributor to British Columbia’s current regulatory framework for casino gaming.”

Also, as the B.C. politics website Public Eye has pointed out, Pat Kinsella, a former consultant to Great Canadian and company stockholder, is an influential Liberal party insider who is chairing the party’s 2005 re-election campaign. Similarly, Jacee Schaefer, a former vice-president of intergovernmental affairs and media relations for Great Canadian, is a Liberal party volunteer who most recently worked on Mary Polack’s campaign in the Surrey-Panorama Ridge by-election.

Neither Kinsella nor Schaefer returned messages left with Liberal party headquarters.

Andrew MacLeod is an occasional contributor to The Tyee. A longer version of this story appears in the current edition of Monday.