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April 1, 1999
Standing Committees
Community Services
Meeting topics: 
Community Services -- Thur., Apr. 1, 1999

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HALIFAX, THURSDAY, APRIL 1, 1999

STANDING COMMITTEE ON COMMUNITY SERVICES

8:00 A.M.

CHAIR

Ms. Maureen MacDonald

MADAM CHAIR: Good morning. We should get started. There may be one or two people still to come from the committee but let's start because I know the Vice-Chairman, Mr. Muir, has to leave early. I would like to welcome the consultants.

Before we start, if they would just bear with us for a few moments. Because Mr. Muir has to leave early, I would like to ask committee members if we could deal with Item No. 2, which is about the meeting schedule for this committee for the month of April. Mrs. Henry has circulated a schedule of times for this committee to meet and it was a suggested time, given that she had to look at what time the other committees are meeting, she had looked at the work that we have undertaken and the time-frames that we are trying to meet in terms of getting our reports pulled together and back for the House. What has been suggested is that we use this time slot, 8:00 a.m. to 10:00 a.m. on Thursday morning for the month of April as long as the House is in session and that we revert to an afternoon time slot when the House is adjourned. I would like to find out from members of the committee if that is a suitable time, if we can schedule that in?

MR. JAMES MUIR: Madam Chair, the only difficulty that I would see is that when the House goes into extended hours, which I think the House Leader indicated may be next Thursday and it is liable to sit at 11:00 a.m., which we all caucus, I assume, prior to that. (Interruptions)

MADAM CHAIR: It might sit at 11:00 a.m., though. John, our House Leader, has said possibly 11:00 a.m.

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Perhaps we can play it by ear. We are all in the House. If we are in extended hours and it doesn't work, then we will have to cancel. Would that work?

MR. MUIR: The other thing, Madam Chair, what if we were to set the meeting for 8:00 a.m. next Thursday and rather than setting it for two hours, set it for a lesser period than that, a flexible period might . . .

MADAM CHAIR: How about 8:00 a.m. to 9:30 a.m.?

MR. MUIR: Something like that, perhaps.

MADAM CHAIR: An hour and a half? Okay. Is that agreeable?

SOME HON. MEMBERS: Agreed.

MADAM CHAIR: Mr. [Charles] MacDonald.

MR. CHARLES MACDONALD: Madam Chair, if I may, before we start, in the distribution of time after we are finished - I assume we are having a presentation - with the presentation, can we have equal distribution of time on the question side so we do get time to question?

MADAM CHAIR: Sure.

MR. CHARLES MACDONALD: Okay, thank you.

MADAM CHAIR: Well, welcome. We have with us this morning, again, the consultants from Porter Dillon Limited and Sterling Research Incorporated: Mr. John Heseltine, Mr. Kerry Chambers and Mr. John Jozsa. We have received some material from them and they are going to give us a presentation and walk us through.

MR. JOHN HESELTINE: My name is John Heseltine. This is Kerry and John. We will be exchanging parts of the presentation this morning. We submitted our report a week ago for your review. We have been, obviously, building up the report that we presented some time ago. The first three chapters in the document are pretty much what we presented previously with some expansion, particularly in relation to a summary of the Focal Research survey that has been released to the public since the beginning of our work. It is a very useful document providing an excellent profile of gamblers and problem gamblers in Nova Scotia and we have made considerable use of it in backing up our focus group research and in our economic analysis.

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I just want to run over where we are with the study to begin with. Essentially, we have finished the third phase so we have worked through the beginning of our project, a measurement of fiscal and economic impacts and estimation of the social impacts. The fiscal and economic impacts portion is John Jozsa's. Kerry is responsible for the focus group research which is the primary basis of the social impacts assessment that we have done. We are going to deal with them, though, in reverse order, starting with the results of the focus group work with Kerry and then moving along to John. Kerry.

MR. KERRY CHAMBERS: I am Kerry Chambers from Sterling Research Incorporated. We held six focus groups. Three focus groups were held in Halifax and three were held in New Glasgow. In each area we held one focus group with non VLT players. We held one focus group with: non-problem players, regular VLT players who indicated or displayed no signs of any video lottery gambling problems; and problem players who were screened and, given the criteria, showed fairly significant signs of problem gambling with video lottery. The impacts that we are looking at essentially were the positive and negative impacts on the individual, the family and the community. For non-players, it was mostly perceived impacts and then when we got non-problem players and problem players, it was what the actual impacts were with these particular individuals.

We probed all three groups of the attitudes towards a ban for video lottery in Nova Scotia and, across the groups, the non-players and the problem players were pretty much equally split on a ban; the non-problem players, the people who are regular VLT players but did not have any problems, were basically opposed to a ban. The reasons for a ban by the people who stated that they would like to see a ban was, first of all, the social damage caused to problem players and this included the problem players being unable to restrain themselves. They felt that this would ultimately be a way of controlling their play which later on was kind of refuted and I will come back to that in a minute.

Another reason was harm to the families and the communities. Again, the perceptions among many of the non-players and a lot of the problem players was that there was harm done to their families. There was less discussion among the problem players as to the actual damage that was being done but it was, I think, fairly evident. There was even less about what they felt their impact was negatively on the community.

The one argument for the ban that came up in almost all the groups - and very few people, including the non-problem players, had difficulty refuting or arguing against - was that it would protect young people or people who had not yet played video lottery, it would reduce the access to the machines; even if they became illegal, it would reduce the access and, therefore, there would be less of a chance that some people would develop problems with VLTs.

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Those who were against the ban, and again it was equally split almost, the first was that people have to be responsible for their own actions. Society has to take a stand, things like these people know what they are doing and yet they continue to do it. Not only that, there was the notion among all the groups that non-problem players should not be penalized because there are people who do have problems.

The second argument that came out from a lot of the groups, and the non-players were equally predisposed to come up with this, was that if they banned video lottery then they are going to have to move to ban other harmful things in society such as smoking, drinking. A lot of them said it was a slippery slope, once you start banning one thing then what is next, that type of thing.

The last sort of major argument was that the problem players will just turn to the First Nations reserves if they have machines and they will look for illegal machines and other forms of gambling. Most of the problem players at one point stated that even though they said, yes, it will help us restrain our play but they turned around later on and said, well, gee, if there are illegal machines I am going to find them and I am going to be playing them more. One group said that the Indians are going to love us because we will be travelling to the reserves.

Possible changes to the environment that we probed. First of all, there appears to be - not only from this set of focus groups that I have done with problem players but with other focus groups that I have done in the past with problem VLT players - a problem with the bonus mechanism where problem players will chase the bonus; a bonus is credits that you receive and when the credits get to a certain point, the problem players will start to chase the bonus and will, in fact, if the bonus is worth, say, $200, end up putting $1,000. They get to the point where they don't care how much they put in, they just want to win the bonus. They search out machines that have a high bonus. They also don't want to leave the bonus for someone else to come along and get it.

Another possibility is the elimination of the stop button. The stop button is not on all video lottery terminals. It is on certain machines. The stop button, most of the problem players and non-problem players did not view the stop button as controlling the machine but they viewed it as speeding up the play. So it was not clear that that led to excitement, or the adrenaline, or anything like that. All it did was it simply allowed them to play quicker which inevitably leads to quicker losses if they are losing. The problem players thought that limiting the hours of operation would be a viable thing for them, that they would not be in there all day and all night if the hours of operation were limited to certain periods of the day or evening, or whatever, that that would be of help to them.

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Periodic cash out information in terms of possibly a pause, a one minute pause; both the non-problem and problem players thought that this would be a good wake-up call, you know, a one minute pause would allow them to sort of, you know, the machine might ask them, here is where you are, do you want to cash out now or do you want to continue. They thought that that might be viable. Looking at it from the problem player's perspective, I am not sure, it would all depend on their perception of where they are at in their winnings but it probably would help. That is my personal opinion. That is based on the findings.

Restrict VLTs to regions of the province; both non-problem and problem players felt that this would not work. The problem players felt that it would lead to other social problems such as drinking and driving. They felt, for example, even if VLTs were on First Nations reserves, that there would be instances of themselves possibly having a few drinks and driving back.

The final thing that we believe to be very important is to educate the players and the public as to people who are at risk. There is some evidence that people who go through significant life changes are at risk and also the signs of problem gambling in general and the magnitude of the video lottery gambling problem. It is clear from the focus groups and from other studies that I have done that there is very little knowledge about problem gambling in general and the factors that are associated with it. I will turn it over to John Josza now.

MR. JOHN JOZSA: Good morning. My name is John Jozsa and I will be speaking to you about the economic impacts of VLT gambling in Nova Scotia. First, a few words about the model or the sources of economic growth and then where I go to look for it and test the hypothesis. Do I see this? Yes or No. If I see it, I can start measuring the direct growth as well as the spin-off effects. If I do not see it, there has not been any expansion or improvement of the economy and there is a difference between expansion, development and improvement.

Exports. Economies grow by exporting more. If we sell more tires to people outside of Nova Scotia, we do better, more and more fish, or more tourism services, our economy grows as a region. We can do import substitution. If we produce goods and services that are used by residents, by Nova Scotians, that used to be bought elsewhere by Michelin instead of Goodyear, the economy may grow if we now make locally what we used to make or buy from somewhere else. So it is import substitution. That is a place where growth can come from or we can simply increase the productivity in making the goods and services we sell to ourselves. If we manage to figure out a way to make newspapers, that is less expensive. I can now buy a newspaper and a coffee as opposed to just the newspaper. So the economy grew and those are the sources of economic growth. Everything else is shuffling around.

These are the sources of growth and this is why I want to look for them, do VLTs do any of these things for us? So this is our test. I know what you are thinking and yes, you will be responsible for that on the final exam.

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VLT impacts. On exports we did not find in any of our focus groups or the players surveyed, our research, that there was virtually any reason to believe they encourage exports of, say, tourism services. There was or is a few million dollars of spending by non-residents at VLTs but they are definitely casual players, it is not a destination activity, it is difficult for us to look at any of the data to say, they wouldn't have spent $4 million in Nova Scotia otherwise, it probably would have gone to the casino or to Scratch 'n Win or restaurants or whatever. So we can't argue that this attracts people to Nova Scotia. There really isn't any exports.

Import substitution. There are two ways to do this. Do players who play VLTs, would they have gone and gambled outside the province? Their direct gambling expenditures. Our focus groups, the players surveyed, the other secondary sources tell us that no, these people aren't the kind of people who would have gone to Las Vegas or to Montreal instead. But there is another form of import substitution that does go on with VLTs. The operation of VLTs, in terms of goods and services, is very much less expensive than the other forms of gaming. Other forms of gaming, apparently from the data, purchase a large amount of products, design services, consulting services, ticket printing services, buying the car from General Motors that you raffled off as part of, when you pull the lottery machine down here at the casino and you win the big motorcycle or what not, a lot of that is purchased outside the province. VLTs on the other hand have very low expenditures on goods and services to run them and, as we all know, a very substantial portion of revenue goes right to the province. So that does stay inside.

The truth is, they do import substitute. Not that gamblers, the VLT players, will stay home instead. No, they are still going to be here playing Scratch 'n Win or something else even if they weren't here. But much less goods and services, because we believe from the data that most VLT players will go to other forms of gaming, those other forms of gaming tend to need a lot of goods and services from outside the province to run them and there is a bit of an import substitution effect on that indirect level.

The other way is increased productivity and that is, as I said, doing something better like a lower cost newspaper so I can buy a newspaper and coffee or just better, better is productivity too. I get colour pictures instead of black and white and I now have a better product. That's economic growth. There really wasn't any evidence that VLTs, in essence, were a more productive way to do gambling, because they seem to be, as we say in economics, pricing elastic. The cost of VLT gambling is not cheaper or more effective in any way for the gambler than any other forms of gaming. That is one of the reasons the government and the retailers can have such a relatively high take from the VLT because players seem to be - it is not incredibly pricing elastic as we say - they don't respond to price changes that much. It is sort of like the old smoking thing, keep raising those taxes and it will keep going. So there really wasn't evidence of that.

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Our economic impacts are coming really from here. The change and the nature of the gaming. Which brings us to, what are the impacts? Having said that, and we find that, and I did a net economic impact analysis and the question there, is not the growth of just measuring all the activity but what is the difference. If we didn't have VLTs, what could we reasonably expect the difference to be in the province?

The difference that I measure is about $4.5 million per year in income to households. That is what it would be if we didn't have VLTs, Nova Scotian households, as a group, would probably have about that much less household income, because we would be playing other gaming activities primarily or going to restaurants for the casual players, or going to movies and a lot of those expenditures from movies and restaurants and other entertainment activities are purchased from outside the province. This is that reflection. So what does it mean?

MR. MUIR: Could you go back to that statement, again, for me, please. I am just not quite clear on what you are saying there.

MR. JOZSA: What is happening is that this impact, the economic impacts are derived primarily from the import substitution effect of VLTs. Other gaming activities require a large portion of their gross revenues just to pay their operating expenses. Many of those operating expenses are purchased outside of the province and the impacts flow outside the province.

VLTs require a very small amount of expenditures, and therefore there is simply less outflow, because households collect it, government collects 60-some odd per cent of this, so it stays inside. When it is inside, that is good, it didn't go out. If VLTs are abolished, other things being equal, legal stuff and what not, money would tend to flow out, because people would revert to other forms of gaming or leisure that require more non-Nova Scotian products to run.

MR. JERRY PYE: That is on the promotional side?

MR. JOZSA: Promotional side or when the big win is a car at the casino. Well, the car came from someplace else, they don't give you a set of Michelin tires, that sort of thing.

MR. MUIR: Assuming that they gambled something else, this 175 full-time equivalent jobs, if they bought scratch tickets or whatever you do, then somebody has to print those tickets, therefore that creates another job. Is that what you are saying?

MR. JOZSA: Well, no. This is a loss, this is a net loss. If we do not have VLTs in the province, we measure that people will continue, that the problem players will continue to gamble, that the regular players will continue to gamble but may also engage in some of their other previous leisure activities which we document. The casual players are a very small amount anyway and they might buy another beer or go to a movie or something instead, or pop into the casino and play a hand of blackjack.

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Because VLTs keep more money circulating in the province than other forms of gaming or leisure, because we have to import goods and services to run those other forms of gaming or leisure, they do have a net effect on the size of the Nova Scotia economy. We substituted some imports, and we said great, we will keep the money instead here; rather than having to buy the car from GM, we can give them a VLT and they will be happy playing that game - they apparently are, they do it - and we can keep more of that money in Nova Scotia circulated among ourselves. That includes households and government of which we are all in the same pot.

I don't want to rush through this. If there is another way I can explain it, I know sometimes I do revert to jargon and I don't want to do that here.

MR. MURRAY SCOTT: So you don't feel, from the information that you gathered, that a good portion of those dollars that are being spent in VLTs would stay in the communities if those VLTs were unavailable? Was there anything determined before VLTs came on the scene? Were there any of these people who were gamblers of other types? Were they introduced to gambling because of VLTs, and was that money spent in the community before this came along so that it would go back to the community if they weren't there?

MR. JOZSA: That is exactly my point. Thank you. Our research, and maybe Kerry is going to correct me on this because this is really his expertise and I learned from Kerry on this, is that the regular gamblers, especially the problem gamblers, did engage previously, before VLTs or any form of gambling, they were gamblers. The casual players, probably like you and me, we go in, say well, that is interesting, pop a quarter in.

MR. SCOTT: That is the point, there are more casual gamblers than there are problem gamblers.

MR. JOZSA: They spend very little money though. I think the number is - and I don't have it with me but it is in the report - $5 million. It is nothing compared to the $240 million, the casual gamblers are just nothing.

MR. SCOTT: Just one more point, when you talk about gamblers, then you are talking about whether it is bingo, no matter, whatever.

MR. JOZSA: Absolutely, any kind of gaming activity, bingo, card games at home, Scratch 'n Win, going to the casino, charity lottery tickets, any form of gaming, horse racing. (Interruption) But that is a form of gaming.

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[8:30 a.m.]

MR. SCOTT: Prior to 1985 horse racing was quite significant . . .

MR. JOZSA: All I was saying is from our measurements the majority of the VLT gaming money would remain in the Nova Scotia gaming sector. Some would slip out to other leisure activities, like going to a movie or more money at a restaurant, because many people just treat it as leisure. I have been to the casino, for example, and if it was not there, we probably would have gone out to dinner but what is the difference? Well, the difference is the nature of this import substitution. Did one activity leave more money in Nova Scotia than another activity? VLTs tend to leave more money in Nova Scotia than other forms of gaming activity. So the answer to your question is, yes, they do leave a lot of money in the community.

MR. SCOTT: Provincially . . .

MR. JOZSA: When I use the word regional, community, provincial Nova Scotia, I am talking about the same thing here, in my presentation. I am looking at the Nova Scotia community, yes, but I see what you are getting at, sorry. I am thinking Nova Scotia here.

MR. SCOTT: Thank you.

MR. JOZSA: So that is really the 175 full-time job equivalent jobs. If you eliminate VLTs, we believe that about 175 jobs will go away, about that, full-time equivalents.

MADAM CHAIR: Can I just ask you, what is a job?

MR. JOZSA: Full-time equivalent, about $27,000, $28,000 a year, full-time equivalent. This is a full-time job so it might mean 300 part-time jobs.

Net government fiscal impacts are substantial for VLTs. The government collects about $57 million more per year than it would if you did not have VLTs. If you have VLTs, you get about $80 million. If you do not and they go to other forms of leisure and gaming, your fiscal return comes down to about $23 million. This is because VLT operating expenses are so low. The willingness to play them is strong which leaves us with a big profit. It is the ideal business almost. It is like no expenses and lots of profit. It is like Porter Dillon would like to be, no employees but revenue. All I am is a cost to Porter Dillon. If they could figure out a way to make money without me, I would be toast but that is why this occurs and that is the fiscal impact as far as we can measure.

Maybe a brief word on, and it is in the report, the aggressiveness of the tax. The players' survey does show that among casual players it is a non-aggressive tax and that is do poor people play it more than rich people. Actually casual players play VLTs more than poor

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folks do, I believe, yes, they do. I do not have my book in front of me. Among the regular players there is a slight bias to play among the middle-income players but within the range of the survey done and the players surveyed, it is a tough call to say whether that is real or a sampling error or what not.

It does not appear to be a regressive form of taxation which is something that I was interested to look at. So that argument is probably not a large issue but there are people with neuroses, of course, who do get trapped into this, yes.

MS. YVONNE ATWELL: How did you determine the casual player? It is probably in here but I did not read it.

MR. JOZSA: I use the definition from the players' survey. Kerry.

MR. CHAMBERS: It is less than once a week. Regular players played at least once a week, if I am not mistaken.

MR. JOZSA: A casual player, I think, spent on average something like $10 a year on VLTs and regular players were, in the report, very large numbers. Problem players were even larger. They are in the report and I do not want to start quoting numbers without having my book in front of me but I would be glad to sit down and answer those questions.

MS. ATWELL: Just looking here where you talk about the $80 million a year; if the VLTs were removed, it would drop down to $23 million?

MR. JOZSA: Yes.

MS. ATWELL: Is this mostly because the problem players play a lot more than the casual players and just people who play regularly? Is the bulk of the money coming from the problem players?

MR. JOZSA: You just asked two questions; I am going to answer both. The first answer is, and I can quote you the exact numbers, almost half of the money comes from 1 per cent, the problem players. We have the report, about 2,400 so-called problem players as measured by people like Kerry contribute about half of this $80 million; then there are the regular players who contribute about 45 per cent of it, and then the casual players are really truly pennies.

The second question, the difference is due to the fact that alternatives to VLTs are less taxed, if you will, than VLTs are. The government gets a smaller take of alternatives to VLTs; because their operating expenses are so high, you can't tax them at the same rate obviously. People probably wouldn't play the game, you see. That is the reason. Operating expenses of

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other gaming activities are quite high. It takes a lot to run a lottery or to raffle off a car or run a bingo or whatever, according to the data, and that is the reason for the difference.

We believe from our data that people will switch from VLTs to other forms of gaming or leisure. Their operating expenses are higher, therefore more difficult to tax at a high rate. Also their operating expenses, some of them have to be imported and they get right out of our tax range. That is the reason for the difference.

MR. CHARLES MACDONALD: On your numbers, I believe you just said that the problem gamblers were greater numbers. I thought from the report that the problem gamblers are a very small percentage but they spend more money.

MR. JOZSA: Yes.

MR. CHARLES MACDONALD: You just indicated before when you talked about problem gamblers that there were greater numbers of problem gamblers.

MR. JOZSA: No. The problem gamblers are about - by our calculations and the player survey calculations - 2,400 adults in Nova Scotia who would be categorized as problem gamblers.

MR. CHAMBERS: It is roughly between 13 per cent and 19 per cent of regular VLT players.

MR. JOZSA: Those 2,400 adults contribute almost one-half of the VLT play. That is why we call them problem, they are really into it. Therefore they contributed almost one-half of the $80 million in fiscal 1998.

MR. SCOTT: That relates to VLTs only though, doesn't it? You are saying problem gamblers in regard to VLTs, 2,400?

MR. CHAMBERS: Problem VLT players.

MR. JOZSA: Yes. Problem VLT players, there are about 2,400 of them in the province and they contribute about half of all VLT spending. It is in the report though, so don't quote me on that, quote me on the report, and therefore they contribute about half of this tax.

MR. SCOTT: There is no way to determine if they were problem gamblers before VLTs.

MR. JOZSA: Well, I will leave this to Kerry, let me have Kerry comment on that, that is going beyond where I should go.

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MR. CHAMBERS: I guess the farthest I would go is there is some suggestion that people who have significant life changes, who have been through some sort of debilitating accident, divorce, loss of a loved one, even retirement, went on to start VLTs and became problem players, but the remainder it would be difficult to say because most of them were gambling before and a lot of them were gambling quite heavily in poker games, other things.

MR. SCOTT: Pre-VLTs.

MR. CHAMBERS: Pre-VLTs, yes.

MR. GORDON BALSER: How static is that group of 2,400? Is there a fair amount of transition, that is people who would be problem gamblers, do they seem to get the cure, let's say, and a new group move in? Is there a fair amount of movement across the spectrum or is that 2,400 pretty well set?

MR. CHAMBERS: I think something that came out of this study is that the problem VLT players are somewhat managing their play, their lives evolve around VLT play, and some of them are managing to control themselves to a certain degree. So they may stop for six months, for example, and get caught up a bit, and then start again. To answer your question, it is very difficult to tell at this point, because we have only started really measuring it as of 1996.

MR. BALSER: Would you anticipate that 2,400 over time moving up to 3,000, 5,000? Do you see more people becoming problem gamblers without that out-migration at the other end, that is people getting cured? Is it a growing problem?

MR. CHAMBERS: I would have to be careful to comment on that because we have been tracking it since 1996 and at this point the evidence is unclear. To put it mildly, there has just not been enough research to track VLT players in particular, let alone problem gamblers, because there could be other types of problem gamblers as well.

MR. SCOTT: Just going back to about changing the environment. You mentioned the stop button, I guess people that play a lot use the stop button so that they can play faster. Is that the idea?

MR. CHAMBERS: Yes.

MR. SCOTT: Was there any indication that if the play was slowed down on the machines if that would deter people from playing?

MR. CHAMBERS: I don't think it would deter problem players.

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MR. SCOTT: I guess my point was if the stop button helps them play faster, if we slowed the play down, would that deter those problem gamblers?

MR. CHAMBERS: I guess I would hesitate to comment on that because there is a study being undertaken at Dalhousie University right now to determine that. My understanding is that they are measuring skin temperature and heart rate and everything else in conjunction with the stop button and what not, to look at whether or not it would deter play. I am not certain that it would deter play. I would be speculating. It would deter play for some people, and other people it wouldn't.

MR. SCOTT: I am thinking more of the problem gambler.

MR. CHAMBERS: The problem gamblers, I doubt very much.

MR. SCOTT: You don't think it would? You don't think that the slow play would deter playing the machines?

MR. CHAMBERS: No. I would hypothesize, and I want to make this very clear, this hypothesis, that the problem gamblers are hooked on winning. The evidence that I have gathered here, and it is not fully in this report, and that is why they reinvest their winnings, because why else would they take a win of $600 and stick it right back in the machine.

MADAM CHAIR: Just for one moment, I would like to bring it back so that we can have some order. Mr. [Charles] MacDonald has asked that questioning be allocated on the basis of some time among the members. That would give each member approximately a little under 10 minutes to ask questions. The presentation has finished now and we can have some questions. Is there another little piece?

MR. HESELTINE: I think maybe we can have questions, and then I will run through what I have left in the presentation which is just where we are in the project and what we have to do to finish.

MADAM CHAIR: Mr. Pye and then Mr. Balser and then Mr. Muir.

MR. PYE: Madam Chair, I am not so receptive to using the 10 minutes at one particular time so from time to time, I might want to ask questions.

In Changing Environment, Kerry, one of the focus groups, I believe, there was a limit on the amount of bet, I don't see that, or the amount of prize pay-out. It could be here. I am wondering, in certain regions of Canada and parts of the United States where gambling was a severe problem, there was a restricted amount which you could bet. You could wager the bet on, from 1 to 50, or whatever the bet may be. It was limited to a certain bet, maybe possibly four or five, so the problem gamblers would not spend all their money despite how

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long they stayed at a VLT. I don't see that in the Changing Environment section. Was that omitted, or was there a reason for that?

MR. CHAMBERS: I went through the tapes fairly thoroughly and if that was, it was in one group only, and it was not something that was seen by the remainder of the players, particularly problem players, as being something that would slow them down. I think what is happening with the problem players is more a case of attrition.

MR. PYE: It would not slow them down, but it would save the problem gamblers from spending all their money in a short period of time. It would give them the opportunity to continue to play if they wished to play, but to at least go home with some money. An example I believe is Goose Bay, Labrador, some years ago?

MR. CHAMBERS: Yes, I think that the evidence among the problem players is that the only thing that basically stops them from reinvesting their winnings is if the place is closing. On the odd occasion they will take their money and leave, but in general they reinvest their winnings. If you limited the bet amount, that would be one thing; if you limited the amount of pay-out, that might be something totally different.

MR. PYE: That is what I am saying, I am not worried about them reinvesting their money, I am concerned about how many dollars they take home after the end of the day or after the 24 hour period that they are there. If in fact there is, within Changing Environment, a limitation on the number of credits that you can receive per your coin and the amount of prize pay-out, then in fact somebody is going home with some money, they are not going to be spending it all at one time.

MR. CHAMBERS: I guess the answer would be they would be spending less, but my take on the problem players from both these groups and other groups is that they are going to reinvest their winnings and that is why they make up so much of the revenue, because they are basically not winning any money because they are putting it back in. I guess to answer your question, yes it would reduce the amount of . . .

MR. PYE: That is what I want to hear.

MR. CHAMBERS: Yes. It would reduce the amount of money that they are spending, but would they leave the establishment with money? That would be very difficult to say because it would take them longer to spend as much money as they presently are.

MR. PYE: The hours of operation would do that.

MR. CHAMBERS: Yes.

MADAM CHAIR: Mr. Balser.

[Page 15]

MR. BALSER: I realize that part of the mandate of your review did not include making recommendations but, from the information you presented and what I read in the document, my interpretation of that information would be that a complete ban on VLTs in this province would not address the problem, that there would be a diversion of monies from VLTs to other either grey machines or other forms of gambling. Is that correct? I don't wish to put you on the spot, but I am telling you that is my interpretation of it. Am I off the mark?

MR. CHAMBERS: Okay, first of all the non-players are a non-issue. The non-problem players, they stated that they would miss it; they would miss going and having a beer and playing the machines. The problem players, when we first started talking about this stuff stated yes, this would be the answer for me. If the machines were no longer available, that would be the answer, but then when someone in the group suggested they are going to be around anyway, then it was if they are around I will find them, and/or if they were close enough to a First Nations reserve where VLTs were located, they would more than likely go and play on the reserve.

A lot of the problem players, probably a third of them, were expending very large sums of money in other activities such as scratch tickets and bingo and what not, so they may transfer that into other gambling activities. Particularly with New Glasgow, very few would make a trip to the casino, for example.

MR. JOZSA: Just one thing, in terms of the number of problem players, I did mis-speak when I was standing up, our calculation and the players' survey, is about 6,400 adults, not 2,400, are categorized in the problem category and they do account about one-half of all VLT play. I mis-spoke when I was standing. (Interruption) Yes, 6,400, on Page 50.

MADAM CHAIR: Mr. Balser.

MR. BALSER: This is a fairly emotional issue, whether you are for them or against them or whatever. In your document you talk about the Maclean's article that sort of paints problem gambling and VLTs and so on in a very bad light. Is part of the problem that in the lack of any concrete information available to the public at large that we are running on perceptions of what is perceived to be the problems and so on and that maybe part of the resolution of the problem would be in having some of the profits or some of the money set aside for addiction treatment and so on used to educate the public in terms of the broader information? Is that a strategy, do you think? (Interruption)

Yes, that is a question in general to open up. Obviously, you want to address the problem and it seems to me that in the absence of factual information, people run on perceptions and that seemed to be what was contained in your focus group information sessions, that there were some contradictory statements based on what is perceived as the case. I am just saying that perhaps some of the strategy would be to clearly show what the

[Page 16]

pay-outs are and how many people are addicted and those kinds of things and where treatment is available. Is the province doing a good job in educating the public?

MR. HESELTINE: Maybe I could just start on that and perhaps Kerry will want to add to it. I do think the Maclean's article, as we indicated in the report, is pretty strong; maybe from some perspectives, it may be a bit over the top. I guess it does certainly give a strong indication of how fiercely some people who are opposed to VLT machines and gambling in general feel about it. I think that is certainly important in relation to what we are looking at there. There is powerful opposition and it is expressed strongly and certainly in the articles in that issue.

I think that the focus group research did tend to show that among non-players and players there was not particularly good knowledge of the reality of the issues, how many people are problem gamblers and so on, estimates that were given that the focus groups were extremely inaccurate in relation to the actual numbers. So I personally think that obviously the exchange of knowledge and so on is beneficial and is good for people to have an accurate perception.

I also know in our research the suggestion has been made that the machines show information in relation to issues like problem gambling and so on at the outset of play. That is a possibility in terms of modifying the machines.

MR. CHAMBERS: For the problem players, information as to pay-outs and odds and what not are irrelevant. They simply don't care, they are already at the problem stage. I guess I would liken it to alcoholism where the difference is with alcoholics it is a difficult thing to hide. It can be hidden but there is smell, behaviour that goes with it. With problem gambling of any type, it is very easy to hide. I think, and this is my personal opinion and based on the research that I have been doing for some time now, there is a huge need for public awareness of what constitutes gambling problems, who is at risk and there has yet to be any research done as to who is at risk.

The public needs to know what constitutes a problem, how people develop problems, what the warning signs are, such that I don't think any of these people that had problems that I talked to were, a lot of them displayed self-destructive behaviour, et cetera, but I don't think any of them wanted to clearly drive themselves off a cliff. I think that if they saw warning signs along the road that at some point it might wake them up a bit. Now, that was not clear for all of them but for at least some.

MADAM CHAIR: Are there any further questions? Mr. [Charles] MacDonald.

MR. CHARLES MACDONALD: In looking at banning VLTs totally, and you talk about the alcohol and the alcoholic or whatever and I look back to the 1960's when liquor outlets were very scarce and few and far between, everybody travelled to reach that point,

[Page 17]

whether that was good or bad I am not sure. Before VLTs became licensed they were in all the little dives and any place that you could possibly have them. There was no restriction on age, children could be there, anybody could be there whether they were drinking, whether they were smoking or whether there were drugs involved. All these things go with it, when they are put off in the closet someplace. Is that not right?

MR. HESELTINE: Certainly, that was considered to be a problem before VLTs were legalized, they were available illegally, apparently, extensively in the province. The RCMP, their indications in the gambling authority's annual report, suggest that the legalization of VLTs has largely eliminated illegal VLTs and that is certainly one of the potential consequences that we acknowledge in the report and that follows from what the focus groups said if VLTs are banned it may result in some return of illegal machines.

MR. CHARLES MACDONALD: And in that situation, we don't have control over the age or whatever else might take place?

MR. HESELTINE: Yes, certainly, one of the benefits of the existing situation, having them restricted to licensed establishments in the province is you have a controlled environment and an environment from which minors are excluded and there may well be some benefits in having that type of an arrangement.

MR. CHAMBERS: However, an argument that did come out of all the groups was that if there was - and this was seen by the majority of the participants as one of the only real arguments for banning was that - if they were made illegal, yes, they probably would be around but they would be difficult to find, there would be insiders that knew about them and, therefore, it would be less likely . . .

MR. CHARLES MACDONALD: Difficult to find?

MR. CHAMBERS: Well, that is what they claimed.

MR. CHARLES MACDONALD: Okay, we accept that.

MR. CHAMBERS: I am not saying that I accept it or don't, I am just saying that the argument was that they would be more difficult to find than just walking into a bar and that people who have not yet tried them would have less access to them.

MR. JOZSA: It is very much sort of a benefit cost statement; it is like would the benefits be greater than the costs. It depends. How big is the problem? There are a lot of things that we don't condone in society that we don't legalize because we just don't do those things. Yes, our research does show that some of the gambling, as I said in the economic analysis, will go to home card parties and what not that are illegal. Betting a nickel in your house is illegal. But it is like a benefit cost study, what do I want to give up to get something?

[Page 18]

What do I want to give? So, I would have to agree with you as well; it depends on what you are getting for that activity as well.

MR. CHAMBERS: I should point out that one problem participant indicated that a friend of hers presently has four machines in their house and has all the problem-player buddies coming over there and the group was aghast at this because it was like they were making money off their friends, how could they, type of thing.

[9:00 a.m.]

MR. CHARLES MACDONALD: They pay out too on a different level.

MR. HESELTINE: There was a statement that illegal machines may pay out - this is definitely anecdotal - 15 per cent as opposed to the regulated 80 per cent.

MR. CHARLES MACDONALD: I am chasing the bonus, I guess, and you put that one on the chart earlier. I guess I have watched people chase the bonus but I have not seen them spend a great deal of money on chasing that bonus. If you can sit at a machine for two hours for 50 cents or $2.00 and chase the bonus that is on the machine.

MR. CHAMBERS: It all depends on the credit level that you are playing.

MR. CHARLES MACDONALD: On the VLTs?

MR. CHAMBERS: Yes. With the problem players, most of them are playing what they call max bet.

MR. CHARLES MACDONALD: To chase a bonus?

MR. CHAMBERS: Yes, most of them are playing max bet to chase the bonus.

MR. CHARLES MACDONALD: If the bonus is credits, . . .

MR. CHAMBERS: I am not sure I understand the question. The way it was explained to me by the players was that initially they will see a bonus of say 500 credits which, at max bet, would translate to (Interruption) How much?

MR. CHARLES MACDONALD: That is all. You cannot maximize. All you are getting is a credit and that is a 5 cent credit, or whatever.

MR. CHAMBERS: I will explain it to you the way it was explained to me.

[Page 19]

MR. CHARLES MACDONALD: No. You said they were chasing the bonus and spending a great deal of money to chase the bonus which I disagree with. You cannot spend a great deal of money to chase the bonus but you can also spend very little and you can spend five hours sitting there chasing the bonus for $5.00.

MR. CHAMBERS: Yes, but the problem players . . .

MR. CHARLES MACDONALD: You get the same amount of return in the end. You only get the bonus.

MR. CHAMBERS: But the bonus is contingent upon the level of . . .

MR. CHARLES MACDONALD: No, it is not.

MR. CHAMBERS: Well, that is a misperception of the problem players.

MR. CHARLES MACDONALD: No, it is not a misperception of the problem players. They are very well aware of what it is. A credit is a 5 cent credit and if there are 500 credits on the screen, that is all they can get, is 5 cents for every credit that is there.

MR. CHAMBERS: That is right.

MR. CHARLES MACDONALD: You are not going to spend 50 cents to get a 5 cent credit when you can spend 5 cents to chase that 5 cent credit.

MR. CHAMBERS: You are not but a problem player is.

MR. CHARLES MACDONALD: No, he is not. (Interruption)

MR. CHAMBERS: I beg to differ with you because I talked to these people and they indicated to me that it started off with them that if they were to get this bonus, they would win x number of dollars and at a certain point the money became irrelevant to them, they just wanted the bonus.

MADAM CHAIR: Mr. Montgomery.

MR. LAWRENCE MONTGOMERY: I am just looking at the non-player side of it which probably represents most of the people in the province. The perception that they have in terms of those who, say, lost everything, I was interested in what their perception was of losing everything or in terms of the numbers. Their perception of the numbers who are in that category let's say, that is the question that I was interested in. I was wondering if you might like to elaborate on it?

[Page 20]

MR. CHAMBERS: From this focus group research and other research that has been done through surveys, in this focus group research there are ranges that anywhere from 30 per cent to 80 per cent of VLT players are problem players and problem players will eventually lose everything. It was not defined how long that would take. (Interruption)

MR. MONTGOMERY: So the perception of the number of people who are in that category by the non-player group, was there anything that came out in terms of the 6,400 as you are suggesting or as is suggested in the report?

MR. CHAMBERS: I am not sure I understand the question, I am sorry.

MR. MONTGOMERY: How would they feel in relationship to the numbers of people who are in that category? Did they feel in their own mind, their perception that it was 6,400 or their perception, as was indicated earlier, was 2,400, or whether it was 1,000?

MR. CHAMBERS: The non-players did not think of it in terms of absolute numbers. They thought of it in terms of percentage of VLT players. Their indication was generally upwards of, well, it started around, a couple of people said 30 per cent, most were around 50 per cent and the extreme range was 80 per cent of VLT players were problematic players. They were addicts as these people referred to them.

MR. MONTGOMERY: So the non-player group then pretty well zeroed in on the fact that there were that many people who had difficulty with gambling?

MR. CHAMBERS: That is right. When we told them the actual number, given the study that was presented, a lot of them were very surprised. For some of them it did not change their perception of VLTs, but for some it did.

MR. MONTGOMERY: What sorts of perception change were there then, what would be an example?

MR. CHAMBERS: They stated that they were not aware that the number was lower than what they had anticipated.

MR. MONTGOMERY: The other question I have. People who can control should not suffer the consequences of those who cannot, I was wondering if you might like to elaborate a little bit on that in terms of the study?

MR. CHAMBERS: Yes. Both among the problem player groups and, I guess it was across all three sets of groups, but it is equally important to realize that there was a split in the problem player groups. For example, a lot of the problem players said they realize they have a problem and it is really unfair that other people who can control their gambling, who can control their VLT play, should be penalized because they have a problem; however, this

[Page 21]

is the only way they think they can stop and, therefore, that is why they would be in favour of a ban.

The non-problem players felt that it was up to each individual to basically exercise some degree of control over their behaviour, and there was the same thing found in the non-player group; however, the non-player group was fairly split almost evenly on this.

MADAM CHAIR: Mr. Pye.

MR. PYE: Just briefly, first, Madam Chair, for clarification about the bet and the credit prizes. In 95 per cent of the video lottery machines in Nova Scotia, in order to get a bonus credit there must be an 8 bet or more, simply because the 5 cent bet had been taken away about two years ago. So the minimum is an 8 bet.

You are absolutely right, Kerry, from the focus groups that I sat in on and the individuals I know who are problem gamblers, they do the maximum of a 50 bet, which is $2.50 per hit. They simply chase a bonus of 400 credits or more and they certainly go after those credits and that, in fact, is true, I have watched it myself. I want to go back to the executive summary for a minute, please. It says that about 1 per cent of the adult population of Nova Scotia are problem VLT players. I guess that is of all the VLT players in Nova Scotia and that is what you are saying, is the 6,400 people . . .

MR. CHAMBERS: Yes.

MR. PYE: . . . and I guess the video lottery machines, with respect, is a moral question whether they continue to be in your community or not, I guess is what you are saying in that executive summary. It also says that the findings suggested prohibiting video lotteries would not necessarily help the people who already have developed the problem?

MR. HESELTINE: I do not have an executive summary. Could you tell us what page you're . . .

MR. PYE: Page 62 and Page 63.

MR. HESELTINE: Yes, okay, our Preliminary Conclusions.

MR. PYE: There is another argument though, that abolishing VLTs would reduce the number of future players. Is that logical or is that viable, would it reduce? Do we have some models that tell us that that would happen?

MR. CHAMBERS: That was seen - I guess maybe that is possibly misworded - as logical and viable by the players and I guess the participants in the focus groups.

[Page 22]

MR. PYE: It says that Nova Scotians have to decide whether they want video lottery gambling, and that comes back to the moral issue again and that is what you are saying. When you do the final report, is that what is going to be in there to some extent if it's cut to a recommendation?

MR. HESELTINE: Yes, basically in the final report, we have to expand a bit on this. We have said all along that we were going to provide conclusions as opposed to recommendations and I think that, in fact, the evidence that we are putting forward I hope you can see the complexity of it. There is some benefit, there are some costs and these things have to be weighed to a considerable extent. It is a moral judgement with respect to the impact on problem players, the impact on the community in relation to the revenues and what might happen if you withdraw VLTs.

MR. PYE: It also says that if video gambling is retained in the Province of Nova Scotia, it is imperative to aim market research at harm reduction. So, in your final report to this committee, there would be some recommendations around how one goes about doing that?

MR. CHAMBERS: Recommendations about how one goes about conducting market research?

MR. PYE: Harm reduction either by way of . . .

MR. CHAMBERS: Not recommendations, I think we would leave it . . .

MR. PYE: Suggestions then.

MR. CHAMBERS: Well, that is quite difficult because I think what we are trying to get at here is that rather than doing market research on VLT machines to maximize profits, there should be market research done to ensure that they minimize the problems associated with them.

MR. JOZSA: Maybe an analogy to the alcohol situation is best. Let's face it, 20 years ago driving home drunk from a party was almost a joke. Now, it is simply socially unacceptable and there is the difference. That is the education process. It not funny coming home drunk anymore. People look at you like, what are you, some kind of a deviant? That is the kind of education that would, I believe, help people who aren't now problem players; like wait a minute, maybe I shouldn't come too close to this, it could be fire. I think that is what Kerry is talking about in the harm reduction.

[Page 23]

MR. HESELTINE: I think to add on that with the alcohol issue, we have seen a considerable change in alcohol advertising over that period and producers have legally, or perhaps in their own perception, changed the way they market their product. A lot of advertising on that subject now markets restraint and controlled consumption.

MR. CHAMBERS: I guess if I could just add one thing, if you look at Australia, in particular in New South Wales and Queensland, they have probably the highest level of gambling in the world in terms of what they call EGMs, which are VLTs, casinos, dog racing, horse racing, everything. Their gaming industry works very closely with the government to ensure at the community level that there is a very comprehensive responsible gambling platform. Part of that is driven by market research that, before they release a new game, they will try and determine - it is very difficult to determine obviously what the actual outcome is - what the potential outcome will be with problem players.

MR. PYE: Also, finally in your last paragraph, Page 62 and Page 63, you are recommending that there be an educational program with respect to educating individuals on gambling in Nova Scotia. You are not recommending, but you are suggesting to us, and that is a decision that the committee would have to make, I guess, is what you are saying?

MR. HESELTINE: That is a matter the government could certainly take.

MR. PYE: Look into, is what you are saying?

MR. HESELTINE: Yes.

MR. PYE: Thank you, Madam Chair.

MADAM CHAIR: Mr. Scott.

MR. SCOTT: A portion of the revenues have been allocated to research and assisting with problem gamblers. Through your research, have you determined what monies have been spent, particularly I am concerned about the problem gamblers, and has there been any indication whether there is a problem to access those funds, either individually or from groups? If so, what would your recommendation be?

MR. HESELTINE: No, actually seeing it is in that preliminary conclusion we specifically note that that is something that we have to look into, that rehabilitation costs are obviously a factor and to the degree that we can identify what is being spent on rehabilitation, we have to try and determine that. It was a matter of putting the report in at this point. It was just something we didn't complete. There is that and one or two other subissues related to the economic impact of VLTs that will still have to be investigated to wrap the report up.

[Page 24]

MR. SCOTT: In the report, it indicates that the accumulated balance is growing. So, obviously there is more now than there was previously. Obviously, the money is not being used as fast as it is coming in.

The other thing I am wondering is, the moratorium is in place now on the number of VLTs in the province. Any idea what effect the number of VLTs in the province has either on players or on business? In other words, with an increased number of VLTs in the province, what effect does it have on businesses or what effect does it have on players?

MR. JOZSA: Well, the easier question is probably the effect on business. By the moratorium, of course, it places a high premium on having VLTs because if your establishment has one, you have a more valuable establishment than the next person. So the moratorium is an effective way to redistribute income among Nova Scotian licensed businesses. Those that have VLTs are more valuable because they have a better revenue stream, those that don't have to get the revenue in different ways. So, of course, it has that effect on business. Just like anything else, if you have a lobster license, try to buy one.

Any moratorium in a free market has counter-intuitive results, they are difficult to map. Any time we try to put constraints on a free market, strange things usually happen. We have to accept those impacts in order to get some benefit. In the case of the fishery, obviously, it is don't eliminate the resource. In the case of VLTs, is it a non-renewable resource? I don't know. It is a much more difficult question, but clearly the moratorium has an impact on the value of different businesses in the province, if you can get the VLTs you are probably in better shape.

MR. CHAMBERS: Can I just comment on the thing about research? Under the present Gaming Control Act, the Nova Scotia Alcohol and Gaming Authority has the mandate to study the social, health, economic, justice and the impacts that all gambling is having on the province. This is just my personal opinion but I think it is holding or tying the hands of that particular authority. For example, I don't believe that they can go out and do a study on how education is going to affect, it gets very murky in terms of what they can actually study and what they can't. So, that might be something that you may want to look into.

MADAM CHAIR: Ms. Atwell and then Mr. Muir.

MS. ATWELL: Thank you, Madam Chair. On Page 46 of your report, the fifth paragraph, it reads, "All of the problem players openly admitted that they could not stop playing video lottery, . . .". They recognized they couldn't stop playing but was there any indication that they wanted help or they were about to seek help?

MR. CHAMBERS: Very little. I think out of 18 players there were 2 or 3 at the most who had taken previous steps to seek help and these were what I would consider to be preliminary in that they called Gamblers Anonymous but didn't follow up on it. None of them

[Page 25]

had, to my knowledge, called the help line for example, none of them had sought treatment through Drug Dependency or anything else like that.

MS. ATWELL: Do you know why or did you get any indication as to why?

MR. CHAMBERS: I would have to speculate.

MS. ATWELL: Okay. To speculate is fine.

MR. CHAMBERS: I would speculate that like other problem gambling groups that I have done, these people don't feel that they have yet reached the point, not a point of hitting bottom, because that is not the question for them - they know that they are causing dramatic impacts, deleterious harm to their families, the community, themselves - but they haven't as of yet made the decision, and they all made references to alcohol or other addictions, that you have to sort of finally decide it is time. None of them appeared to have made that decision yet.

We did follow up with all of them and pointed out that there is help available and counselling and what not. One person in particular appeared to be ready, but over a few weeks period dropped off, we lost contact with him.

MS. ATWELL: The other question I have, it was mentioned that the fund is not being used. It was also mentioned that usually problem players hide the fact that they are problem players. I would suspect that the two would go hand in hand. Do you feel that there should be some way, and probably through the educational process could be one way, where you could kind of bridge the two so that people who are problem gamblers but who are hiding it from their families can feel that there is some place that they can go or someone they can talk to or get some help without having their families involved? Is the fund set up to do that, do you know?

MR. CHAMBERS: I am not certain, and in terms of bridging the gap, I think it is more important from the research I have done for families of problem gamblers to know what to look for than for problem gamblers to know that they can come to their families. Ultimately it is the families that drag the problem gambler in for treatment as opposed to the problem gambler coming on their own. That is where you get into early intervention, that sort of thing.

I think the more the public is aware of the actual signs of problem gambling, not only video lottery problem gambling, but everything from bingo to scratch tickets, et cetera, the more they would be aware that their partner, son, whoever appears to be having a problem and will take steps to deal with it.

MS. ATWELL: Finally, did you find in the focus groups that there is a preoccupation with trying to beat the odds? Did people spend a lot of time trying to figure out how they could win, whether it is the video lottery or scratch tickets?

[Page 26]

MR. CHAMBERS: A lot of the problem players stated that they originally all had, they all laughed and said we all have our strategies, we all had our strategies, they just don't work. The notion, at least from this evidence, that the problem players are trying to influence the machine, I think that there was some evidence of that, but the people who have been playing video lottery a long time, simply accepted the fact that it was a game, but there were certain things that happened that would lead them to believe that the machine would tease them, sort of. They have a misperception of how the game actually works, I guess that is the best way to put it. They feel that if they are one card short of a royal flush, then it has to come soon so they will increase their bets, which is absolute nonsense because it is all random.

MR. JOZSA: Correct me if I am wrong, Kerry, but I also read in the focus groups, problem players also all know they lose. To a person, they know that if you play it long enough you can't come home with any money. These are not stupid people. These are people like the rest of us with neuroses, except their neuroses are a little bit more deep-seated than the ones that I carry maybe.

MADAM CHAIR: Mr. Balser.

MR. BALSER: Looking at the issue of VLTs and putting aside the sort of moral, social aspect, if it is approached from a business standpoint, businesses attempt to grow their market and they certainly look at what the upper end potential of that particular market might be.

In your research, does it appear that the market for VLTs is still there to be grown? Let's suppose that we set aside the ban, the moratorium, all those things and look at it from purely a business perspective, does that market from gambling have a lot of growth potential, in your estimation or is there some, because by and large it would be driven by, in the best of all possible worlds, someone's disposable income or the money they expend on leisure time activities? What would be your estimation there? The reason for the question would simply be around the moratorium and that is, if there were no moratorium or more VLTs were made available to businesses, would you simply be watering down the market or by placing a moratorium have we in fact made, as you alluded to earlier, some business people very rich and others standing by the wayside?

MR. JOZSA: The answer to your first question is yes, the market is growing. If I as a business person could get a VLT machine, and setting aside the moral issues, I would get one. The market, the expenditures on VLTs have been growing, continue to grow at twice the rate. I should go to my report, but it far exceeds the growth rate in the rest of the economy. The answer is, there certainly does appear to be more demand to be soaked up. As a business decision without the moral questions, I would love to have one. As a person, well, you are talking to John Jozsa now so I will keep that to myself. Strictly business, yes.

[Page 27]

The expenditures on the VLTs are growing at two, three, I forget the number, three times the rate of the economy. If I was selling cars and saw that going on with car sales, I would say this is a good place to be.

MR. BALSER: What about the rationale? My perception of the rationale for the moratorium was simply that if we don't put any more of those out there, then the market won't grow. Is that a fallacy or is that fact, do you think?

MR. JOZSA: Of course, it is a fact, because we can only get so many people in front of these machines. If we limit supply, there is a physical limit, so many hours, so many chairs, so many bets per minute, so of course it is limiting, and of course the moratorium will limit the regular players whose desire to play these is maybe not compulsive. If they have to drive five miles, they say, ah, not this week. So of course a shortage of supply, in a physical way, it is going to limit play simply because you are going to have so many people in front of them and so many hours, and the regular players who contribute about 40 per cent of the spending on VLTs, if the machine is three, four miles away, because they are not compulsive about it might play less.

The short answer is, the moratorium probably does hold toll expenditures down. Whether or not a moratorium eliminate or reduces the number of problem players, I am going to quickly defer to Kerry on that, because I don't know.

MR. CHAMBERS: Based on other evidence in other jurisdictions such as Australia, I would say no. Australia has roughly 70,000, the State of New South Wales has roughly 70,000 EGMs for a population of 3 million adult, and their problem gambling rate is about 2 per cent, where ours is 1 per cent. I would have to look at the actual figures on that again, but anyone who is interested, I would refer to Professor Mark Dickerson at the University of South Wales.

MR. JOZSA: I don't want to ask questions, but Kerry is that definition of problem gambler the same? You described to me the difference in definitions of what a problem gambler is.

MR. CHAMBERS: No, that is using the South Wales gambling screen.

MADAM CHAIR: Mr. Scott, did you have a question?

MR. SCOTT: No.

MADAM CHAIR: Mr. [Charles] MacDonald, you have one minute left, and you are next.

[Page 28]

MR. CHARLES MACDONALD: I was counting the minutes before, Madam Chair, and it seems some people have already run over, but anyway if I have one minute left, I guess I will take one minute.

[9:30 a.m.]

In your study here, on Page 25, the last paragraph, "Many of the problem players had substantially altered their expenditures from other forms of gambling to VLT gambling." - so what you are saying is that you just replace one with the other - "A few individuals in each of the problem player groups still spend $100 or more per week on instant and on-line lottery tickets. Nevertheless, it is clear that VL play is their gambling activity of choice:".

Beyond that, I want to go back to a statement that you made earlier in your presentation, which was that the problem players are not in the poorer section of society. What was your . . .

MR. HESELTINE: The evidence is actually from the Focal Research profile of VLT players which suggests that, in fact, VLT players have, I guess, slightly higher than average incomes. Actually, I found it a little surprising that the most typical player would be a male between the ages of 19 and 24, with a slightly above-average income for that age category and, incidentally, a who person is fairly involved in things, who does other gambling, likes to go to sporting events and so on. So if there is a stereotype about VLT players as being loners who are going to the bar to play by themselves, it doesn't really fit the evidence. There is some indication that problem players would tend to be older than typical players and, as Kerry indicated, there is some indication from the more detailed research that we have done that there is an association with certain life issues, but in general . . .

MR. CHAMBERS: Sorry, I would like to interrupt. The regular VLT player is basically right across the board; the problem players appear to be, I wouldn't say a significantly lower, but a lower socio-economic status.

MR. CHARLES MACDONALD: You are talking about people now who are spending $800 per month, your problem player, and you are saying that he is at the lower end of the social or economic income . . .

MR. CHAMBERS: Not economic, but socio-economic. There was one person who was an industrial welder and was making a very good wage and had a problem with VLTs.

MR. CHARLES MACDONALD: Then I had one last question.

MR. JOZSA: Sorry. I say the data we can rely on, because the problem VLT sample is so small, that is why we have trouble making any reliable comments. We - Focal Research - estimate there are 6,400 of these people in Nova Scotia. The sample they had was very small,

[Page 29]

so it is hard to know, but we do know, and in a direct answer to your question, among the regular players - and these include the problem players - about 20 per cent are from what Focal Research called low-income households, and about 20 per cent of Nova Scotian households are low-income households; about 43 per cent of the regular players are from the middle-level households and, in the population, that is about 35 per cent. So it is not, at least among the regular players - which includes problem players - a poor people's profession, so to speak.

The reason we appear to be hedging here is that the sample of those problem players is so small to deal with, it is hard to say what the real tendencies are; we would almost have to talk to 500 or 600 of them to know what the profile was. It is difficult. I wish I had the answer myself, because I want to know.

MR. CHARLES MACDONALD: Could I have just one more question?

MADAM CHAIR: No, Mr. [Charles] MacDonald, you are way over and we now have a list of people who still want to ask questions. Mr. Montgomery is next.

MR. MONTGOMERY: I just have one comment. We were talking about rehabilitation here a little while ago and I do know that in the community college in Middleton there is a program offered for rehabilitation in terms of people who have addictions of all sorts: drug addiction, alcohol addiction, gambling addiction. Whether that is a characteristic across the province, I am not sure, but I do know that the program does exist.

MR. BALSER: I don't know how much time I have . . .

MADAM CHAIR: You are over as well; you are finished your time. You had 11 minutes.

MR. SCOTT: Am I over?

MADAM CHAIR: No, you are not. You have four minutes.

MR. SCOTT: Madam Chair, if permission is allowed, I would defer my four minutes to Mr. [Charles] MacDonald if he had some more questions.

MR. CHARLES MACDONALD: The last question I wanted to get to was, if you have any comments on gambling in general and the expendable income of our population today, baby boomers going through the system and the amount of money that is there today. If we look at gambling around the world - and you will see it in Australia and everywhere else - the recent increase in dollars being spent in that area, it seems that we continue to see new markets coming up all the time. Is it geared to the amount of money that is available in society now?

[Page 30]

MR. HESELTINE: I guess I could speculate a bit; demography is something I am quite interested in. If what you are suggesting is, is gambling rising because of some aspect of the age of our population, I would just infer from the information that we had, for example, that the largest number of players on a percentage basis is in the 19 to 24 age group, in fact, would suggest that it would not have anything to do with the baby boom, because that is a post-baby-boom group.

MR. CHARLES MACDONALD: They are the ones with the money today. They are the group that is coming in to inherit all the dollars that are . . .

MR. HESELTINE: Males aged 19 to 24 are a group that has a high level of discretionary income and, apparently, perhaps this interest in participating in things that have winning outcomes is of more interest to young men in that group, you could speculate. In any case, I do not really think there is anything in particular about the way our population is changing or aging at the moment that is necessarily going to impact on it.

MR. CHAMBERS: That is VLT play because there are other forms of gambling that have totally different demographics.

MR. JOZSA: Also, what you have just observed is part of a much wider trend. Savings rates in Canada used to be among the highest in the world; 15 per cent to 17 per cent. We are down to 2 per cent to 3 per cent now, and all that did not go to gambling. For whatever reason - pick one, name one - our society has figured out, hey, why save? I am going to spend it. Gambling is another way to entertain a lot of folks. I admit, I am guilty, I went to Las Vegas once and I had a hoot. I spent $30. (Laughter) But it was an entertainment form, so I admit it, guilty.

It is part of a bigger trend of the savings rate, literally, going down to zero. Why? Because we are more consumption oriented, because we watch too much television, because we do not go to church enough, I don't know, but gambling is part of it and it is part of that mix. That is where a lot of the growth is coming from, out of the savings we used to have. We used to save, now we spend, and gambling is picking up its fair share.

MADAM CHAIR: Is that it, Mr. [Charles] MacDonald? There is still time.

MR. CHARLES MACDONALD: It is very interesting, because it has to do with where we are going in society today; it has many aspects.

MR. SCOTT: Could I have it back?

MR. CHARLES MACDONALD: You can have it back, sir, yes.

MADAM CHAIR: I have two questions that I wanted to ask, but go ahead, Mr. Scott.

[Page 31]

MR. SCOTT: I just have one question. In regard to research, is there any indication, regionally in the province, if one area is more addicted than any other, per capita? I know you only did Pictou County and Halifax, and that was a concern of mine originally because I think that it should be less concentrated and more spread out. Is there any idea, regionally, where it is more of a problem?

MR. CHAMBERS: First of all, the focus group method would not show that, number one, and I would have to defer to the Focal Research study. I am not sure if they did regional breakdowns or not. I would speculate that there may be more social impacts in rural areas simply because there is less to do.

MR. SCOTT: Definitely.

MR. CHAMBERS: That has been my observation across a number of studies that I have done; there is just less to do. That is not only with video lottery, that is bingo, so-called illegal gambling which is Tarbish games, card parties and all the rest of it.

MR. PAUL MACEWAN: Tarbish is the official game of Cape Breton. We passed that in the Legislature.

MR. CHAMBERS: I stand corrected.

MADAM CHAIR: I have two questions. One is about whether or not there are any formulas or applications that can tell us, numerically, the numbers of people who are affected by problem gamblers? If we have 6,400 people who are problem gamblers, their families are going to be impacted. How many people are we looking at? Do we have any way of calculating that?

MR. HESELTINE: I guess an easy way to do that would be to simply take average household size in Nova Scotia, you know, I guess with some qualification. I do not know, John, I guess you would probably imply that a population between about 15,000 and 20,000 people might be impacted in terms of having a problem gambler in their household.

MR. CHAMBERS: There have been studies that suggest you can take a problem gambler and multiply it by 15, but that number is very questionable.

MADAM CHAIR: The other thing, I guess, I am wondering about, and I do not know if you can say this from your work thus far, but in reading the report it is clear that VLTs have had an impact on licensed establishments in terms of their profitability. It does not necessarily mean that there have been any jobs created with that, but it does mean that the profitability of those establishments has significantly improved, right?

[Page 32]

MR. HESELTINE: Actually, I do not really think that our study would say that. I think what we did find in looking at statistics on licensed establishments, which I have to admit actually contradicted a hypothesis I had, which was that they made a good deal of money. The data that is available, by the way, is Atlantic level, so it is New Brunswick, Prince Edward Island, Nova Scotia and Newfoundland. It shows that 51 per cent of licensed establishments do not make a profit and so that suggests to us that, obviously, an additional source of income, which VLTs definitely are, would be a benefit to businesses in that category. They are playing on a fairly narrow margin as opposed to what, I admit, I first thought was that they were playing on a fairly wide margin. So it could have an impact on that sector.

MADAM CHAIR: Right. I think that is the point I was making, that the VLTs have stabilized that sector.

MR. HESELTINE: Yes, certainly they are a benefit to them.

MR. JOZSA: VLTs do redistribute money from the economy into the licensed establishment sector.

MADAM CHAIR: That, then, is the other part of my question. Where did they redistribute it from? There are so many non-profit organizations whose existence quite often relies on doing the fund-raising, the lottery tickets, the casino nights, whatever. What impact does this have on charities? Do we have any way of determining that? Obviously there is some form of redistribution going on here.

MR. HESELTINE: Well, there is one piece of information that we put in the report, that the NSAGA data did show that actually in the past year gambling on charities or through charities has actually increased, and actually the increase is fairly significant. This may be an indicator of several things: possibly an increased interest in charities, possibly an increase in a kind of gambling culture and therefore charity is turning more to that particular form of fund-raising, or it could be related to something else. Certainly there isn't any evidence from that data that money has been shifted from the charities over to VLTs; in fact, both are growing.

MR. CHAMBERS: Also in the focus groups, the non-problem players were asked what effect this had on purchasing raffle tickets or whatever, and virtually every non-problem player said that if it was a worthy cause, they were going to dig deep, type of thing.

MADAM CHAIR: Okay, we will turn it back to you to sum up where we go now.

[Page 33]

MR. HESELTINE: I will tell you just a little bit of project manager stuff, I guess. I explained that we have done the first three of four phases on the job. The final phase, which we had allocated a month to, is to prepare a draft final report. In a lot of respects, I feel we are quite well ahead on that. I feel we almost have a draft final report at the moment.

There are a few things that I will indicate we have in terms of additional research yet to incorporate. We have a bit more interview information in relation to some interviews that have been finished over the last while. I think there are a few economic issues, some that have been raised in the questions here. Rehab was specifically mentioned, the impact on charities, and I am interested in the impact on reserves which are very likely to be beneficiaries.

The information that is available to answer those questions, we are not really sure of, and in fact we may be coming back to say that we have investigated this and we cannot give you anything particularly definite. That is what I see as the balance of our research program in relation to the economic issues.

In the context of the overall report, I think there is a need for some tightening up here and there and tying some of the connections between some of the research presented earlier and through the focus groups in the economic material, and then obviously on the basis of that, we want to move from having preliminary conclusions, which we have titled it in the report, as it now stands into what we consider final conclusions, basically as firm a position or as firm a body of information as we can provide to the committee.

As we have said all along, our objective is to provide the information for the committee to base your decision on, where we feel that very many of these issues that we are raising are value type issues and the weighting really has to be provided by the committee and the Legislature in terms of what the best action is. Certainly our conclusions will indicate what the potential avenues for the province to take are.

We will be preparing that draft report over the next couple of weeks; I guess really, as I said kind of firming up, tightening up the report that we have presented today. We will have one more meeting like this to present that, get a final round of comments and then on the basis of those comments, we will make final revisions of the report and resubmit it. We hope to have that all done by the end of April, which is all within the original schedule that we set for the work.

MADAM CHAIR: Thank you. Well, this has been really very interesting. Our next meeting is scheduled for 8:00 a.m. on Thursday, April 8th.

We are adjourned until then.

[The committee adjourned at 9:51 a.m.]