CHAIR (Joyce): I just want to thank everybody here for attending.

Ms Carinci, thank you very much to you and your officials for attending. I thank the media and the general public for attending.

Just a few items. When anybody is speaking, we ask that you turn on the mike - there is a talk button there - because the proceedings will be recorded and we need the talk button pushed in order that it be recorded.

We are just going to go around the table and introduce everybody in the beginning. Then, we are going to have a few preliminary things that we have to do. Ms Carinci, then, will have some opening statements.

I will start with myself. I am Eddie Joyce, Chairman of Public Accounts.

MR. HARDING: Harry Harding, Vice-Chair of the Public Accounts Committee.

MR. YOUNG: Wally Young, a member of the Public Accounts Committee.

MS GOUDIE: Kathy Goudie, a member of the Public Accounts Committee.

MR. HUNTER: Ray Hunter, a member of the Public Accounts Committee.

MR. BARRETT: Percy Barrett, a member of the Public Accounts Committee.

MR. COLLINS: Randy Collins, NDP, MHA for Labrador West.

MS GOODWIN: Hi, I am Cynthia Goodwin. I am the Director of Public Affairs and Social Responsibility of the Atlantic Lottery Corporation.

MR. DAIGLE: Hi, I am Patrick Daigle. I am the Vice-President of Finance and Corporate Services of Atlantic Lotto.

MS CARINCI: I am Michelle Carinci, President and CEO of the Atlantic Lottery Corporation.

CHAIR: We have to swear in the witnesses.

Mr. Patrick Daigle

Ms Michelle Carinci

Ms Cynthia Goodwin

CHAIR: The procedure we are going to follow this morning is, we are going to ask Ms Carinci for her opening remarks, then we are going to start with questions from the members of the Committee. I mentioned to Ms Carinci that any time her officials need a break, that is not a problem whatsoever - a five or ten minute break - so don't hesitate.

Ms Carinci, please.

MS CARINCI: Good morning.

I would like to thank the Chair and the members of the Committee for the opportunity to come in and talk about the Atlantic Lottery Corporation and, as well, truly paint a picture of the gaming industry as it is in Atlantic Canada today, and in Newfoundland and Labrador.

The Corporation is owned by the four Atlantic Provinces. Our mandate is to provide sustainable financial growth through responsible regulated adult entertainment products for the benefit of all Atlantic Canadians.

Each province appoints two board members, which gives us a total of eight board members. As well, there is an independent chair who is a non-voting member of the board. The board oversees us from a governance perspective. They approve the strategic plan, business plans, operating plans. They form policy and really provide oversight on - actually, on a monthly basis we meet.

I would like at this point, though, to acknowledge Phil Wall, who was a board member of ours for over nine years. For the four-and-a-half years that I worked with him, he lent great support, guidance and governance. I also acknowledge Gary Norris and Terry Paddon, who are our current board members for Newfoundland and Labrador.

Myself, I thought I would give you a little bit of a background. I have been in the lottery and gaming business for over thirty years. I started when I was twelve - that is a joke - and have been in senior positions, both on the regulated side of the business as well as in the private sector side of the business.

In my former position, I worked for GTECH Corporation and I worked with lotteries all over the world, of which there are well over 100, so I have experience on every continent and jurisdiction, pretty well, worldwide. My family and I moved to Moncton four and a half years ago.

Now to gambling and gaming. Gambling and gaming has actually been a source of revenue for governments and shareholders, and it dates back to the Chinese dynasty of 100 BC where the game of KENO was actually first introduced. Today, as I said, almost every country, jurisdiction, province and state offer regulating gaming within their jurisdiction. Most of those members belong to the World Lottery Association which I am going to come back to because it is an important association in terms of standards, principles and best practices worldwide.

This year marks the Atlantic Lottery Corporation's 30^th Anniversary, and so for, I think, thirty years the Atlantic Lottery has been a stellar example of Atlantic cooperation, and has been contributing to the economy though regulated gaming entertainment, and in short making a difference in the community. The corporation is also an advocate for corporate social responsibility. It lives by the principles of leadership, governance, transparency and integrity, community commitment, customer care, valuing our employees, respect for the environment, and equality and diversity. In fact, for two years in a row Maclean's Magazine has recognized the corporation as being in the top 100 employers in Canada.

Since the corporation began over $1.4 billion in prizes has been paid to winners right here in Newfoundland and Labrador, the largest being $17 million a couple of years ago; $1.2 billion has gone to the shareholders for good causes within the Province; almost $500 million has been paid to our retailers and site holders in commissions; over $6.5 million has been spent directly in Newfoundland and Labrador on goods and services; and we have sixty-eight employees here today with a payroll of $3.6 million on an annual basis. We are also very proud to have our very own printer of break-open and pull-tab tickets, and that is British Bazaar, and they have over 100 employees who are directly related to the lottery business employed here in St. John's.

The profits to Newfoundland and Labrador have grown, as you have seen by our annual reports, year over year for the past thirty years, and in the past year in addition to the $117 million in profit that went to the shareholder, we also spent over $200,000 in the communities sponsoring such things as the Winter Games, the Summer Games, the Corner Brook Triathlon, and a variety of other community events which we do on an annual basis.

We have excellent relationships that we have developed here in the Province with all of our stakeholders, and I think that attributes a lot to our sustainable success year over year in this every-changing working place that we are in.

Now, I would like to talk a little bit about that to, sort of, give you a picture of what has happened with gaming. The marketplace is changing on many, many fronts, and we evaluate that on a regular basis, everything from what is happening in the marketplace, also to public sentiment and public opinion around gaming. Well, the once very popular Irish sweepstakes of the 1950s and 1960s - nobody in this room, of course, would remember that - they had a draw every three months and, of course, it was very popular and very attractive but that is certainly not the case any longer.

I can remember, actually, when I started back in 1975, there were five employees and we had a draw every three months. I sort of scratched my head and said to Cynthia: I don't know what we did between draws. Today, we have something like over 1,500 when you add up daily draws and all of the things that we have. But even popular games, like Lotto 649 are losing their lustre with our players who are, today, in search of something that they call experience. So, it isn't entirely about the winning anymore, it is about the experience and the entertainment and the social piece of gaming, and the interactivity has become much more important. That is apparent when you look at - I talked about we had four draws when you look back in the 1970s, and today in Canada there are over 120 gaming facilities, either casinos, gaming at the tracks.

In British Columbia and Ontario, they also have what they call community gaming centres, which offer electronic bingo and KENO to support the charities who had diminishing revenue. If you look back ten years ago, there were no facilities. So, that gives you a picture of what has happened in terms of - and also not with the demand so much, but the appetite for a much more interactive social gaming as opposed to buying a ticket, waiting three days and then looking at the numbers. So, that social experience has become very important.

Then, of course, we have the Internet which has grown dramatically. Five years ago, the spend on the Internet was estimated - and I underline, these are estimates because not all of these unregulated operators open their books to you. So, they are estimates that we get through very reputable financial institutions worldwide. About five years ago it was estimated that $22 billion was being spent on the Internet in gaming. Today, that estimate is $70 billion and growing. Now, it is estimated that there are over 2,000 unregulated sites on the Internet today. Canadians are spending somewhere around $700 million, and growing, on gaming on the Internet today.

Then there is the poker craze that we have seen in the last week in the news, not only in bars and in community halls but also on-line, which again, demonstrates the appetite for the marketplace today in looking at more social and more interactive types of gaming entertainment. Last year it was estimated that $1.3 billion was spent on on-line poker rooms worldwide. That estimate is now - they are saying in two years that will be $5.9 billion. Today our children can participate twenty-four hours a day. Anybody can play on-line poker in an unregulated environment.

The point of all of that is to say that the traditional market that we know, the lotteries, the fun-for-a buck that we have seen over the last thirty years, has matured and flattened. Well, we have seen things like VLT revenue and other forms of gaming has grown. Again, it is because that is what the player wants and that is what our players are interested in and, certainly, the unregulated competition is providing that today.

So, if the regulated lottery or gaming organizations are to continue to generate shareholder profit for good causes and protect the public, we do need to stay relevant to our players in the marketplace today. Our rule in that is not advocate gaming in any way, shape or form, but rather to provide options to our shareholders and opportunities to sustain, albeit, a moderate growth from gaming revenue in a very sociably responsible way in this regulated environment.

The four keys changes that are happening in the marketplace today that, I guess, create opportunities and challenges for us - one is the changing demographics and player behaviour that I spoke to. Those folks in their twenties and thirties, and even forties, no longer want to just play impassively, they want to look for convenience and they also want interactivity.

The consolidation at retail is also providing a challenge for us. As we all witnessed, what has been happening across Canada, and inland Canada, is where the Ma and Pa stores, the independent variety stores, that used to be our bread and butter and mainstay are disappearing and being swallowed up either through key accounts and chains who are buying them out or big-box stores coming in and putting them out of business. The way we deliver our product and distribute our product is also a challenge for us. Technology has certainly opened up a number of options worldwide. Beyond the Internet, mobility today, cell phones, playing games on cell phone, particularly in Asia and Korea, is estimated today to be $3 billion and growing dramatically. Interactive television is also in Europe where you can play games in the home. The competition, of course, much of it illegal and unregulated, is where the money is leaving the Province, and our players are not protected. Again, there is no social responsibility or codes of conduct being applied to these organizations. Those are sort of the dynamics in the marketplace today.

With all that growth that I have talked about, the industry has also seen a growing controversy about gaming and, on a number or fronts, particularly about the social impacts of gaming. I think it is important at this point if I could briefly just talk about, why regulated gaming. It wasn't that one day in the 1970s government woke up and said: Gee, I think we should go into the gaming and entertainment business. That was not the case at all. That gaming and entertainment business already existed. Government became involved in it for very specific reasons. One was that prohibition had proven itself already with alcohol, that it is not effective in terms of protecting the public, and that gaming will exist whether it is regulated or not. I think I have clearly demonstrated that with the numbers I have given you about the Internet and mobility.

When government looked at this they said: This activity needs to be regulated to protect the players, to make sure there is integrity in the games, for one, and secondly, to ensure those folks who have problems or who are at risk - albeit a small percentage but there are folks who do have problems and are at risk - were able to get the treatment they needed, and that the games could be designed in order to be harm reduction and responsible socially. In the grey market and unregulated market it was very uncomfortable for those with problems to be able to speak openly about them or even seek treatment. If you look back twenty or thirty years there probably wasn't even a lot of effort or investment around gaming as an addiction.

Those are the three reasons the government got into the business to begin with. The Corporation, while we are always looking for opportunities to generate sustainable, albeit moderate, growth, we are always mindful of the balance between protecting the player and the public, and the revenue opportunities.

While gaming is an innocent indulgence for most, it is a problem for a few. Prevalence around the globe is between 1 per cent and 5 per cent. Just recently, as you know, the Government of Newfoundland and Labrador conducted a prevalent study and the numbers for Newfoundland and Labrador were right within those global numbers. While those numbers seem small, we acknowledge that the impact is still very significant. So, integrity and responsibility are the core values of the organization and of our employees. Making money is not our key objective. It is how we make it that is our most critical objective, and to have the ability to continue to be successful.

Responsibility runs through every aspect of our business, whether it is developing products, our marketing messages, or where our product is sold. There are many stakeholders, however, involved in this issue of responsible gaming and problem gaming, and the Corporation certainly is an important one but we are not the only one.

The Atlantic Lottery Corporation is considered a world leader in the field of responsible gaming by our industry and by well-respected researchers in this field. Our approach is prevention-based, focusing on education, on awareness, and on informed choice and harm reduction. Our resource commitment, like the government's over the last couple of years, has increased. It has increased quite significantly. Responsible gaming is part of our culture. We strongly believe in the principles of informed player choice and community partnerships. A recent example is, we participated in the community prevention and awareness project in Central Newfoundland and Labrador.

ALC is a founding member of the Canadian Partnership for Responsible Gambling. I am the founding Chair of the World Lottery Association Responsible Gambling Committee that has advanced a worldwide commitment to principles, best practices and standards in the area of responsible gaming and corporate social responsibility. ALC supports academic research. We provide equipment and technical assistance to gambling laboratories at universities in Atlantic Canada. We consult regularly with addiction experts such as Mr. Ladouceur out of Laval, Mr. Shaffer from Harvard University, and a number of others in Australia and the United States. We provide training for all our site holders and our retailers.

We also have a responsible gambling specialist who resides in Newfoundland and Labrador and has worked very closely in the communities and met with addiction services around the Province, as well as with problem gamblers, to go beyond this sort of academic research and better understand the realities of the issues within the community as they relate to gaming.

We have also provided our health regions with copies of interactive CD-ROMs that promote youth awareness and prevention. Next month, we have a play that was created for high school students called, Caught in the Game. That will be introduced in Atlantic Canada in six, I think, cities and around Newfoundland and Labrador to really educate, inform and create awareness for our youth, and that is a preventive measure. We are currently in discussion with the Operation ID folks, who have a very successful program here around tobacco at retail, and incorporating our products into compliance at retail for minors.

In addition, we are currently testing player card research around video lotteries in the province, in another province, to determine whether or not it will have an impact on the players that we would like to have an impact on. So, as we evolve the gaming model, the Corporation is working very closely with the Newfoundland and Labrador Government to examine the options that best reflect the values of this Province.

Recently, as you are aware, the government did make an announcement around the reduction of VLTs, 15 per cent over the next five years. We conducted a prevalence study for the first time and also, as the minister announced, there was $3.4 million committed to addiction services which certainly included and made gambling more a part of that than it has been in the past.

In closing, the Atlantic Lottery Corporation team is a dedicated team that has core values of integrity and responsibility. We are very proud of the success that we had over the last thirty years, and we are very proud to be contributing on an ongoing basis to the economic success in Newfoundland and Labrador as well as in Atlantic Canada.

Thank you.

CHAIR: Thank you very much.

I just want to recognize Shawn Skinner. Shawn is the Member for St. John's Centre. Shawn, I just want to recognize that you are here at the hearings also.

Thank you very much, Ms Carinci.

I will start off, and we will just go around the table as each one finishes.

You mentioned the Atlantic Lotto Corporation. How much money does the Corporation itself spend on the addiction counselling part?

MS CARINCI: We have increased our budget significantly over the last couple of years, and I believe it is about $700,000 that we have committed into our budget this year which will go into programs such as I talked about, with youth awareness and education. It goes into training for our retailers and site holders, into resources, and a number of other programs that were developed.

CHAIR: Is that for the four Atlantic provinces, $700,000?

MS CARINCI: Yes.

CHAIR: You mentioned the prevalence study that was done in Newfoundland and Labrador. I don't know if you had time to go through it or not.

MS CARINCI: Well, Cynthia I know has gone through it page by page. I read the executive summary.

CHAIR: I will just read a part of it here and have a few questions.

Of problem gamblers, 64 per cent have experienced income loss and debt, 47 per cent experienced relationship problems, and 33 per cent experienced mental health problems. Evelyn Tilley, Director of Additions Services for Health and Community Services Eastern, has said that gambling has replaced cannabis and prescription medication as the number two addiction in the Province after alcohol. She estimates that 95 per cent of those addicted are through VLTs.

Is this disproportional in Newfoundland as compared to other provinces that have the VLTs?

MS GOODWIN: I am sorry, you question is with respect to whether the numbers are comparable to those across the country in other jurisdictions?

CHAIR: Yes, 95 per cent of the people who Ms Tilley has mentioned are addicted to the VLTs. Is this disproportionate, because in Newfoundland and Labrador VLTs is a social problem that is getting a lot of media attention. A lot of us around the table know of personal experiences. Is this disproportionate from her statement that 95 per cent of the people she sees are addicted to VLTs?

MS GOODWIN: I will answer the question in two parts, the first part being that prevalence rates again are comparable across gaming jurisdictions. Newfoundland's prevalence rates are right on par with prevalence rates across the country. In terms of this prevalence study - and again I don't have the stats right in front of me - but it is my understanding that of those who play video lottery in Newfoundland and Labrador, according to this study, 18 per cent of those people have problems with their play, be it from a problem gambling perspective or from a moderate risk perspective, because the numbers are combined.

CHAIR: From this prevalence study that was done it is obvious that the VLTs is a major problem, more so than most other gambling in Newfoundland and Labrador.

Is there any concentrated effort from Atlantic Lottery Corporation to concentrate on the VLTs more so than bingo or whatever other games are around, because for VLTs - and most of the people, even in the study, say that VLTs is their major problem and it is the greatest loss of revenues. Is the Atlantic Lotto Corporation doing anything to concentrate on the VLTs in the Province?

MS CARINCI: Certainly. Most of the $700,000, for instance, that I talked about earlier is concentrating in that area. That is not to say that there aren't other areas of gaming that have problems, but you are right, the more significant numbers do reside with the VLTs. So, we have started out, several years ago, with putting training in our site holders to actually understand and coach them on how they might, not intervene, but help folks and educate folks and create awareness around the dangers, at times, of gambling.

We have also invested in collateral. We buy into the principle that the researchers around the world have now touted, which is informed choice; that the gambler themselves also plays a role in this. It isn't just all the other stakeholders, education awareness can definitely have an impact. Some of the features that we put on the VLTs, the clocks and the amount of spend over the last several years have helped some.

We have invested, as I said earlier, in a pilot now to look at whether player card research - and what I mean by that is, that the player themselves would have to register and get a playing card, in fact, in order to engage in that gaming activity. Then they would be able to set limits over a given period of time that would come into play and also be able to see what the transactions and the amount of the gaming that they have spent. That test so far, while it is very early, we have had some feedback that, for those with problems, it is helping them from an information basis.

The youth awareness programs that I have just referenced - and we have become very involved. Scott Costen, who is our resident here in Newfoundland and Labrador, is working closely with health and education because this isn't a simple question and it is not a simple answer. It is a very complex issue for us. It is difficult for us, for instance, to research the socio-impact because addictions, generally speaking, is estimated in about 60 per cent of the cases. There are cross addictions. So, it isn't just solely a gambling addiction. Those who have a gambling addiction, in 60 per cent of the cases, also have some sort of other addiction. So it is difficult just to single out gambling from that perspective.

The other thing that we are doing is working closely with the Newfoundland and Labrador shareholder and government on looking at what the gambling model should be. You have seem some of the steps already that were announced in the last budget, which is the reduction of 15 per cent over the next five years, as well as the prevalence study to better understand and get a baseline of what the issues really are, so that we can direct our efforts in a way that could have an impact. Prior to this we were sort of working in the dark.

There are a number - I know it is a long-winded question but it is a complex one - there are a number of things we are doing and learning, as well as consulting on an ongoing basis with researchers. Next May we will be hosting the World Lottery Association responsible gambling conference in Atlantic Canada and bringing in experts from around the globe as well as industry CEOs and corporate social responsibility VPs to have a better discussion about what standards and principles we need to apply with more rigor throughout our jurisdictions.

CHAIR: Newfoundland and Labrador - and of course this is in the study and I will just read it - has 2,369 VLTs or one for every 155 adults, the highest ratio in Canada and almost double the national average of one for every 293 adults.

Is that proportionately out of whack? That is in the prevalence study itself.

MS CARINCI: One of the things I could speak to while we are looking for those statistics is that there are two different gaming models across Canada. The gaming model that we see here in Newfoundland and Labrador, in Atlantic Canada, which is what we call sort of a wide area model where you find gaming devices such as VLTs in bars and adult social setting, that is largely a result of the fact that there was a grey market already here in Atlantic Canada and, as I spoke to earlier, the government chose to regulate it to protect the players and to also benefit from the revenue that would also help addictions in the Province.

In the Province of Ontario and in the Province of British Columbia, where I worked for nineteen years, there is a different model, and we call it destination gaming model. What that means is that you still have electronic gaming devices but they are in destinations such as tracks, community gaming centres and casinos. When we look at the prevalence across Canada, the prevalence is no different regardless of which model you have. In other words, the prevalence in Ontario and British Columbia is basically in along the same realm as it is in the rest of Canada where you see a wide area model. What is different, though, is public sentiment towards gaming, significantly different.

Do I have the answer to this question?

MS GOODWIN: I have it with respect to electronic gaming devices.

MS CARINCI: Okay. I would be happy to share this with the committee. When we look at electronic gaming devices, Newfoundland and Labrador is not out of whack, nor is it the highest when you look at total devices.

CHAIR: In the prevalence study, the number of VLTs is extremely higher. I am just concentrating on VLTs. In the study it says there are 2,369 in the Province, one for every 155 adults, the highest ratio in Canada. The national average is one for every 293 adults.

MS CARINCI: I would have to examine exactly what they are looking at, but our numbers when I look at the provinces, for instance Saskatchewan and Manitoba, which is VLTs, their numbers are significantly higher actually. It depends on what numbers they are looking at. There are a number of ways to look at this. I would be happy to come back to the committee, through the Chair, and provide those comparisons.

CHAIR: It seems it is very disproportionate in Newfoundland and Labrador. With the number of machines and the availability, it would cause a problem. That is one statistic that, when I read the report, is very noticeable - saying: Geez, we have so many. How come? Why do we have so many in Newfoundland and Labrador?

If you look at the age - and you answered part of the question in your opening statement - over 67 per cent of the people who gamble now, who are identified, are age twenty-five to thirty-four, and the age is getting lower.

What steps is the Atlantic Lotto Corporation taking in targeting the youth about education with regard to the problems in gambling and VLTs and other things?

MS CARINCI: There are a number of things we are doing. First of all, in the discussions we have had with folks in Newfoundland and Labrador who are in Additions Services, in health and in education, it is my understanding is that we are looking at this with a more holistic approach to addictions, and tying those things together from an education perspective. So, it would include gambling, it could include tobacco, it could include drugs and other issues where we need to be educating our youth; so, on that front, we are participating in developing a more robust program in the education system.

What we are doing in the short term, I mentioned the operation idea at retail in terms of intervention, and the compliance around the sale of our products to minors. We do have a policy, by the way, that prohibits the sale to minors, and we exercise our right to withdraw our licence to operate gaming should a retailer not comply with that.

I mentioned the Caught in the Game drama, a play that will be introduced in communities this year by the Canadian Council for Responsible Gaming, and what they have discovered - I think it is hundreds of schools that they have put that program in, in high schools in Ontario - is that it does resonate. Eighty per cent of those students who have seen the play found it believable, educational, and it gave them a lot of information that they needed to dispel some of the myths that caused some of the issues, such as: people believe there are lucky machines, or if you play long enough you will get paid back, et cetera, so it helps to dispel a lot of those myths around gaming, and talk about the issues of gaming.

Is there anything else you would like to add on that, Cynthia? Go ahead.

MS GOODWIN: I would add that, currently in all of Atlantic Canada, the prohibition of lottery play amongst minors is not legislated, so perhaps there is an opportunity for us to work with governments to see what the possibilities might be around legislating age of majority play around lottery tickets.

CHAIR: In the study, it says problem gambling is - it describes it as gambling behaviour that creates negative consequences for the gambler. Does the Atlantic Lotto Corporation have the same criteria and definition in the same realm as the problem gambler in all provinces? For example, in this study it says problem gambler has negative consequences for the gambler, others in his or her social network, or for the community.

MS CARINCI: The methodology that was used in the prevalence study in Newfoundland and Labrador is the same methodology that not only is used in the rest of Atlantic Canada but in all of Canada. In that way we are able to have reliable and relevant comparisons across the nation. By the way, that also extends to other continents. We are using the same methodology so that it is comparable. Several years ago that was not the case, so it was difficult to determine.

CHAIR: You mentioned also, and it is common knowledge here in the Province, that the Province announced that there is going to be a 15 per cent reduction in the VLTs. We had a few of the board members in earlier, in our closed session with the Public Accounts, and we asked how this was going to be done. They said it was up to the Atlantic Lotto Corporation on how this reduction was going to take place over the fifteen years.

Can you explain to us how this reduction is going to take place, the criteria for it?

MS CARINCI: I do not have the details on the strategy of how that will be looked at, but we will look at it across the entire Province. There already is a regulation in place that limits the number of VLTs per location to five. We may look at it from - there are sites that have multiple licences, and that certainly will be addressed so that if there is, for instance, one location that has several different licences, that will probably be one of the first areas that we will look at, reducing it to one licence per owner. I do not know if you are familiar with what I mean by that.

CHAIR: I do, yes.

MS CARINCI: Okay, good.

That would probably be the first step. Then, the second step, to be fair, we would probably look at applying some sort of percentage across the Province so that we are treating each site holder in a fair way.

CHAIR: With this 15 per cent, because the way we were informed and, of course, this is a great way to get it straightened out, is that if an establishment closes down and they have ten machines, those ten machines will be included into the 15 per cent reduction over the five year period. Is that correct?

MS CARINCI: That is possible. I do not think there is certainly a policy or instruction within the strategy that says that would not be the case, so that could be an option that we would exercise, or maybe not.

CHAIR: Because the people who are involved with addictions would say that if you are going to cut the machines by 15 per cent, and if you, for example, have 100 machines running at 70 per cent, if you put eighty machines in, they are only going to go at 90 per cent. The usage will not go down. The machines may, but the usage may not.

Is there anything done on if the usage will go down if it is cut by 15 per cent? Was there anything done by Atlantic Lotto Corporation?

MS CARINCI: Yes, we have examined other jurisdictions where there has been a reduction. Certainly there is some merit in what you have suggested, that the other terminals may get more play, but what we have seen is that there has definitely been a reduction in VL play when we have reduced the access to them.

CHAIR: Since the VLTs came into Newfoundland and Labrador back in 1990, I think it was, have you, the Atlantic Lotto Corporation, gotten any report on the number of addictions from VLTs? Has it steadily increased since 1990, or is it just now that it is hitting a peak?

MS CARINCI: That is a very interesting question, and we have looked at that. The fact is, this is the first prevalence study that has ever been done in Newfoundland and Labrador, so it is the first time we now have data to look at that is relevant for us. I would be speculating at best to say what addictions or what prevalence was back in 1990. One thing, though, that I will add is that the prevalence in Newfoundland and Labrador, as Cynthia stated earlier, is within the norms in Canada and worldwide, which in interesting.

I think, to come back to the regulated piece, when VLTs were in what we refer to as the grey market, it wasn't a socially accepted activity, and therefore those who had problems would not necessarily come out of hiding, if I could use that term. What the lottery and regulated gaming did is to legitimize the activity and create an environment that those folks who may have had problems or people who knew they had problems or were at risk could seek out treatments, and it was okay to do so. It also provided the government and the shareholder with the information they needed to be able to develop addiction services and programs within the Province. I think if we look back twenty years, there probably was not a recognition of the issue and therefore there wasn't funding. Once again, the regulated environment has allowed for that.

I cannot answer your question with a yes or a no, but I can say that the numbers in this Province today are within the norms of the other provinces.

CHAIR: Is that based on the prevalence study that was just completed?

MS CARINCI: Yes.

CHAIR: Okay.

MS CARINCI: That is the only real data that we have, everything else would be anecdotal, from communities, etc.

CHAIR: You mentioned, and I mentioned, the 15 per cent reduction, and you mentioned that, yes, there should be a decrease in the usage.

MS CARINCI: Yes.

CHAIR: Was there any analysis done on the decrease and lose of revenue to the Province with a 15 per cent reduction in VLTs?

MS CARINCI: We put that into our existing budget. Certainly, I should add that the smoking ban, by the way, has had a very big impact on VLT revenue; to the tune of close to 20 per cent the moment it was implemented. So, you will see in the year that we are in, once it is completed you will see a reduction in revenue from VL to the shareholder of somewhere between 18 per cent and 20 per cent.

I will let Patrick address the projections on the 15 per cent.

MR. DAIGLE: In terms of the reduction in terminals, we prepare five-year forecasts and we prepare them with the information that we have at the time. So, we will take the number of terminals, we will take any environmental changes that we know of, such as anti-smoking legislation or anything else that will be introduced into the environment that could have an impact either way on revenues. So, we have accounted for that.

CHAIR: Have you calculated the loss of revenue over the five years with the 15 per cent?

MR. DAIGLE: We have. I do not have the number with me right now in terms of the impact over five years. The number would be based on an assumed migration rate, and that is what you were talking to before. You were talking about a reduction of terminals. It is not straight math, unfortunately, because there is still a distributed market of terminals out there that players will migrate to. So, the forecast is based on assumption.

CHAIR: Okay.

Ms Carinci, you mentioned the youth. Of course, in the Province here we target the youth for smoking - anti-smoking. Are there any such programs specifically just for youth problem gamblers? Did you do any study to identify potential youth gamblers that you are targeting for an education program?

MS CARINCI: First of all, the data that we have around youth and ages within the prevalent study - the programs that I spoke to earlier around awareness, education, prevention and harm reduction in the high schools, which may also flow into middle school at some point - and we are working closely again, as I said, with the Ministry of Education and Health in developing those programs. The Operation ID is another example also.

While we have not formally discussed it, one of the options that we will be presenting to the shareholders - as Cynthia mentioned - is legislation. We have a policy in place, but it would give it more teeth if there was legislation with regard to minors participating in gaming activities.

Is there anything you want to add?

MS GOODWIN: Yes, I could just add to that, that not only will youth be an important target audience, if you will, for any kind of programs around awareness and prevention, and retailers as Michelle has stated, but I think it is also important that the broader community, parents for example, receive these messages about the inappropriateness of minors gambling.

Just in speaking with some experts as McGill University, they say that not only, in some cases, are youth and other jurisdictions receiving products from clerks, they are receiving them from their parents and from their grandparents who unwittingly would give a minor, say, a scratch ticket or a lottery ticket in their stocking at Christmas, for example. That will be an important target audience. As a matter of fact, before Christmas last year we issued a letter to editors throughout Atlantic Canada making that very point, reminding parents and others to not give minors lottery products as Christmas gifts.

CHAIR: You mentioned KENO. Is Newfoundland and Labrador the only place that will introduce KENO in Atlantic Canada?

MS CARINCI: At this point in time, this is the Province that has approved introducing KENO. That actually leads to another point, that while we have Atlantic cooperation on many games where we need critical mass, the corporation also, the way it is governed, allows for flexibility and diversity within Atlantic Canada, so the gaming strategies may vary.

For instance, the focus in Prince Edward Island over the last year was to revive the harness racing industry through gaming revenue, and we built a gaming facility as well as a new racetrack in order to revive a very important economic piece within Prince Edward Island. That has been their focus for the last year.

In Nova Scotia they just recently introduced a gaming strategy, last fall, around video lotteries, but they are also looking at an initiative with regard to bingo. It is a pilot that will be introduced, and that is really to revive and look at how we can revive the revenue for good causes of the charities, because bingo has been on a decline for many, many years. That has been almost the sole source of revenue for community groups and non-profit organizations within the province, not just in Nova Scotia but elsewhere. They have focused their strategy on that.

The provinces haven't said they will not introduce KENO, what they have looked at is what their priorities are within their strategy. As I say, the corporation has that flexibility that is not necessarily a homogenous approach in all provinces.

CHAIR: You mentioned the Province approved KENO. Is it up and running in the Province right now, all throughout the Province of Newfoundland and Labrador?

MS CARINCI: The KENO game that I believe you are referring to, which is the multi-draw KENO, is not, but since back in 1990 when VLTs were regulated, there has been a KENO game on the video lottery terminal since 1990 and it still exists today.

We introduced KENO in the Province, actually in Atlantic Canada, back in 1989 and it is a daily game today that you see in all four provinces. The game that I believe you are referring to is the game where there would be a multi draw. So, the difference is, it has just evolved to, you know, from a weekly, to a three-day, to a daily, to a game that is every five minutes within social settings. That is part of a strategy that we have looked at, of giving players an alternative form of gaming in social settings beyond the video lottery.

As I stated earlier, it is not our intention to go deeper into the same pockets but to provide a variety of different types of games that are sociably responsible within the social settings because we know that is where folks want to play. I give you poker as an example. So, that game has not been introduced yet but what has been introduced, as part of the long-term strategy in social settings, is we have put our sports games in those locations and the intention would be, at some point in time, to introduce KENO and any other types of socially acceptable, interactive types of games.

If I could make a point, Mr. Chair, on that.

CHAIR: Sure.

MS CARINCI: Because of the different types of KENO games that already exist in the market, it is natural that there is some confusion around what it really is. KENO is a very passive draw. It is like Bingo or Lotto. You buy a ticket. You pick your favorite numbers from one to ten and then you wait for five minutes, and then the numbers come up like they would for a Lotto 649 game and you match your numbers and away you go. That game exists in British Columbia, Saskatchewan, Manitoba and Alberta today, and in many jurisdictions in the United States and Europe, and, actually, its recent origins are Australia. But, as I mentioned earlier, it started in China with the dynasties 100 BC.

So, the game that we talking about is - actually, I will pass this out later. It is just like if you play 649, you pick your favourite numbers and you wait for a draw. What happens, in the research that we looked at around this game, is that it is too passive for some players, especially those who fall into more of that at risk or problem arena. It is not fast enough, it is not interactive enough. It is a lotto game with a more frequent draw, basically.

CHAIR: With the KENO, as you mentioned, it has been around. Have you seen any studies where people become addicted more to KENO than any other game?

MS CARINCI: What I can say to that, is that in the jurisdictions - I introduced it when I was the vice-president of marketing in British Columbia, and when you look back to 1996 - so it has been there for ten years.

So, the first piece to that question is that some of our research is based on experience in other jurisdictions, and as I have said earlier, in those jurisdictions throughout the world that have introduced KENO, particularly those in Canada, the prevalence rates have not gone up. We did a prevalence study in 1993, before any introduction of what I will call more interactive or fast-paced games, in British Columba. KENO was introduced in 1996. We did subsequent prevalence studies after that. There was no change in those prevalence studies to speak of and no indication that this game was a socially irresponsible game, if you will. So, that is the first thing we have done in terms of usage.

The second thing we have done is to consult with some of the experts that I referred to, such as Ladouceur from the University of Laval, to talk about the inherent qualities of that game and how we could ensure that we have applied the most responsible qualities to that game, in other words, preventative and harm reduction. The game that will be introduced is considered to be, by those experts, as the most progressive of all the KENO games. We have altered some of the maximum pay and play, et cetera, just to make sure that it is even more progressive than the other games.

The other thing that we will be doing is conducting long-term research. So, the moment the game is introduced we will conducting research so that over time we can judge - and I will be able to answer your question much better - and determine whether or not there has been any negative, social impact and then we will be able to address that over the long term.

I hope that answers your question.

CHAIR: It is a difficult question to answer -

MS CARINCI: It is.

CHAIR: - because if the studies are not there, the information and the data, it is a difficult question.

In the KENO being introduced in the Province, has there been a cost analysis of the income that it will create for the Province of Newfoundland and Labrador?

MS CARINCI: Yes, the projected revenue - and that will sort of put it in perspective too. When we looked at other jurisdictions, which is what we based our revenue on and also the marketplace in Newfoundland and Labrador today, in the first year we would look at about $1 million in profit. So it would be about - about $6 million or $7 million in sales are projected and the profit would be $1 million year over year.

CHAIR: Okay. In the prevalent study that you just mentioned, that was the first one done for this Province, I take it?

MS CARINCI: Yes.

CHAIR: Will there be any criteria or can the Atlantic Lotto Corporation ensure that there is one done every two or three years, or is that a provincial jurisdiction to ensure that it is going to be done?

MS CARINCI: That would be determined by the shareholder. Certainly, I am sure there will be consideration given. You would not do it year over year because you probably would not see any statistical - it was probably too soon, but every couple of years would be something I am sure the Province will consider doing now that we have a base.

CHAIR: But, is it the responsibility of the Province?

MS CARINCI: Yes, the Province.

CHAIR: The Province, okay.

MS CARINCI: To give it the credibility, it is not that the corporation could not do it. It is just from a perception perspective, if we did it we would have a credibility perception issue.

CHAIR: Okay.

Back on the VLTs, I have two more questions. Is there any - and of course the VLT, because of the social programs. Is there any work done on why people become more addicted to VLTs than most other gaming, in your experience or the corporations experience? Because VLTs seem to have more - people could spent more in a quicker period of time and the devastation of it. Is there any reason for that or is it just the ability to be able to spend quicker?

MS GOODWIN: There has actually been quite a bit of work and research and debate and discussion done on this subject amongst problem gambling and responsible gambling experts around the world, and policymakers, and it is a very difficult question. Experts like Dr. Howard Shaffer - Michelle has mentioned his name of Harvard Medical School - would say that: No gambling product in and of itself causes addiction, that a number of things contribute to addiction, and it gives a fairly clinical explanation as to why that is. Prevalence studies do tell us that problem gambling seems to manifest more often with video lottery terminals. There is discussion as well, and some who would say that it is perhaps because of the continuous nature of the play that video lottery becomes an effective method for those who may be experiencing other problems to self-medicate if you will. Again, due to the continuous nature of the game people are spending a lot of money and that becomes a problem, in some cases more of a problem than they originated with. So, it is very complex.

MR. JOYCE: For some reason, and it may be the amount of money, that is one of the concerns of the Keno, that people can spend a lot of money, every ten minutes I think it is or every five minutes.

WITNESS: Five.

MR. JOYCE: Every five minutes you can spend a fair amount of money.

MS CARINCI: If you look at, though, the projections, and those projections are based on experience in other jurisdictions, we are talking about $7 million in terms of actual sales. You compare that to our traditional products, because it is what I call a lotto product, where we are doing - how much in traditional today in Newfoundland and Labrador?

MR. DAIGLE: One hundred and eighty million.

MS CARINCI: One hundred and eighty million in other lotto and passive games, like the instant game, for instance, which you can play much faster than you can play Keno. Keno is, you know, you play, you wait for a draw, which is very different from the instant game or the break-open. It is a passive game. I think the fact that our projections of $1 million in profit versus what you look at overall from our other games, including 649 which is significantly higher than that, would indicate, in itself, that is not an issue.

MR. JOYCE: Okay.

MS GOODWIN: Could I -

MR. JOYCE: Sure, go ahead.

MS GOODWIN: I would like to just add a final point on that. Again, going back to Michelle's earlier statements about the nature of the marketplace. Whether gaming is regulated or not, it is going to exist. If you look at the prevalence study here in Newfoundland and Labrador - poker, for example - it is showing, in that study and the results, 14 per cent of poker players experience problems with their play as well. So, perhaps the challenge is striking the right balance, acknowledging that gaming exists, that human nature is what it is, and that people like to play games of chance, and what is the best way to ensure that is offered fairly and with integrity, and ensuring that the harm minimization components are added to gaming, and that is sort of the role that we play at ALC.

MS CARINCI: If I could add to that, when we went, I will call it on-line, in offering the convenience of being able to buy 649, Atlantic 49 and Super 7, our passive traditional games, over the Internet, we applied a great deal of rigor and worked with researchers and experts to ensure that all of those, as Cynthia referred to, harm minimization and prevention, were on there. What we are able to do on-line is create a maximum amount that you can play in any given week. The player determines that. You can self-exclude, and we have had - not many, but we have had - a few players who have said: I do not want to be able to play on this, so exclude me over this period of time.

When you are in that environment, it is a lot easier to be able to apply prevention and responsible gaming features as well for the player.

CHAIR: Does the Atlantic Lotto Corporation have any statistics on the amount of addiction counsellors, new addiction counsellors, hired per province pertaining to addictions to gambling?

MS CARINCI: A comparison across provincially? I don't think, off the top of our heads. I know that in the Budget Speech the minister announced the increase in contribution. There was also a mention in that particular release of additional resources - I believe it was five additional resources in this Province - that would be dedicated to gambling addictions, but I do not have the number on a per cap. I don't even know if we could get that number easily, but we certainly could in Atlantic Canada. I don't know if -

CHAIR: That is what I mean, just for Atlantic Canada.

MS CARINCI: Yes, we could try. We could try.

CHAIR: Okay.

Mr. Harding.

MR. HARDING: Thank you, Sir.

CHAIR: Thank you very much.

MS CARINCI: Thank you.

MR. HARDING: As Vice-Chair of the Committee, I would like to take the opportunity as well to welcome Ms Carinci and your officials, and also the members of the media and the general public, and the Chairman has already pointed out my colleague, Mr. Skinner, from St. John's Centre.

Some time ago, our Committee received a request from an individual expressing concern with respect to the level of gambling in the Province, specifically with respect to the number of VLTs, as the Chairman has already pointed out. Gambling, as we all know, has been with us for many, many years, and even VLTs have been with us now for fourteen or fifteen years. My understanding is that they were permitted in the Province by the government back in 1991, and they have grown now to the point, as the Chairman has already pointed out as well, whereby the number of these machines in the Province has increased to the point where we have more per adult population than any other province in the country. Having said that, it is something that we, as a government, have inherited now. It is something that we are concerned about, and certainly we are taking steps to deal with it.

With respect to questions, now, after the information that you have already given, I don't know if the Chairman stole my questions of not, but I had pretty well every one that he had there, I think. Anyway, you made reference to gaming prevalence, or the gambling prevalence study. Our Province, as pointed out, had our study done just last year and we were the last Province in Canada to do that. Anyway, at least it gives us a base now to work from.

I am just wondering, I know you have looked at the study but I don't know how much in detail, and I don't know if there were any things in that study that sort of stood out, that the Corporation may incorporate into any future gaming policies that they might -

MS CARINCI: I will let Cynthia also speak to this, but when I looked at the study I did not see anything unusual. What I mean by that, in other studies that I have read extensively throughout Canada as well as in the United States, there wasn't anything that really, from my perspective, popped out that said there was something extraordinarily different here than there is elsewhere. Having said that, it certainly - some of the highlights you spoke to around VLTs, and Cynthia spoke to with respect to poker - is excellent information in helping us to evolve the strategy in our discussions with the Government of Newfoundland and Labrador and it will certainly play a role, I believe, in the decisions that we make going forward about the gaming model of the future, for certain.

MR HARDING: This current budget now, 2005-2006, our government allocated $3.4 million to deal with addictions of all types in the Province. Do you have any idea how this might compare with other smaller provinces in Canada with respect to this problem?

MS GOODWIN: We currently do not have the numbers in terms of overall addictions across Canada. We would typically look at just monies spent on problem gambling treatment and prevention, and things of that nature.

I would also mention, that as a result of our participation in the Canadian Partnership for Responsible Gambling, there is a very useful tool. It is called the Canadian Gambling Digest. It has all of those stats across Canada; comparative stats on all aspects of gambling and treatment within that document. I would be happy to share with you the document and the Web address so that any of you can reference it whenever you wish. It is a very good document.

MR. HARDING: The game of KENO, I was going to mention that as well but you have already explained that. I am not familiar with it at all. I have heard talk of it, but you have explained what it is and how it works. You may have already answered this, but is there any concrete evidence at all to suggest that game may be more harmful than any of the other types of games that are out there?

MS CARINCI: There is concrete evidence in terms of the experience that other jurisdictions have when we look at the revenue coming from KENO and the prevalence in each of those jurisdictions, which is no different than the jurisdictions that don't have it. So, we have not seen an increase in prevalence or issues, and most of those jurisdictions have had KENO, as we are speaking about it, for a decade or more. So it is not like it is too early to tell. That is a pretty good experience.

Also, when we look at our revenue projections, I mean if this was to appeal to the masses or to those who have a propensity to spend a lot of money, our projections would not be $1 million in profits going forward. So, I think that speaks to it.

We are confident in the exploration we have done in focus groups, in a simulation - even with people who are at risk, the problem gamblers - that when we put this game before them it did not have the qualities. It is too passive often for them.

You spoke earlier in your speculation - and Cynthia talked about all the research that is done - of what makes one game more addictive or dangerous, and we are saying the game in itself does not. There are a number of things that come together. Certainly KENO, when you look at its passivity versus some of the other games we have, if we felt there were any issues with that, as an agent of the Crown representing the shareholder, we would not be recommending, even considering, a game to go ahead because our issue, as I said earlier, is not how much but how. In order for gaming to sustain itself in the future, you absolutely have to apply integrity and responsibility to that.

MR. HARDING: Just a general question: How many employees does the corporation have? Somewhere around 500?

MS CARINCI: As we speak, about 494 employees throughout Atlantic Canada.

MR. HARDING: Okay. How many of these are in the Province of Newfoundland and Labrador?

MS CARINCI: Newfoundland and Labrador, there are sixty-eight, with a payroll of $3.6 million.

MR. HARDING: Okay.

Thank you.

MS GOODWIN: If I could just add to that, there are about 125 or so more employees at the Charlottetown Driving Park Entertainment Centre, which was opened just last August.

MS CARINCI: That is right.

MR. HARDING: Okay, thanks.

MS CARINCI: And, of course, we have our 100-plus at British Bazaar, that is directly related to (inaudible).

MR. HARDING: Thank you.

CHAIR: Mr. Young.

MR. YOUNG: Thank you.

I suppose I just have, sort of, one question, because VLTs has been a big concern in the Province. I guess that is what really got us here today, VLTs.

In controlling the settings of those games, can you go out there - you speak of competition from the Internet and poker and whatever, so I am assuming competition is a big factor in how you make the settings. You know, from the settings for the payouts and the settings for the sounds, and things like that to make it. Do those games have to be more to the point of maximum, or they would be more addictive or less addictive? Is there research there that would - are you following me?

MS CARINCI: Are you asking if we would link the payout to the actual behaviour of a player?

MR. YOUNG: Yes, if you have a certain payout, you pay out at a certain scale and a certain percentage. Is the science there as such, that you will have more payouts that may appeal more to a problem gambler or less to a problem gambler? Is the research there?

MS CARINCI: Actually, that is an interesting question, and it is also one of the things that, when we look at options within the gaming model, we could consider. The payouts in Atlantic Canada are pretty consistent on VLTs. They are between 93 per cent and 95 per cent, and I believe the regulations are such that they can't go below 80 per cent. We, in fact, have reduced the payout in some jurisdictions and it has not impacted the play, and we have also increased it in some games. I guess, when you look at games that are very popular versus games that are less popular, as payout related, it is not consistent across the board. It is usually about the experience of that particular game. Did I answer your question?

MR. YOUNG: Sort of, because the other part of it is the sound. Those games, at one point I think, first when they came in, owners just turned the sound off. It became an issue, the sound came on and it came on very loud.

MS CARINCI: It is part of the experience.

MR. YOUNG: It is part of the experience. Does that make it part of the addictive experience as well?

MS CARINCI: Again, I go back to - and I am not trying to dodge the question, but I don't think there is a straightforward answer in all the studies. As Cynthia referred to, the complexity around - because there are so many things. There is the sound, there is the pay, there is the way the game plays itself, and there is the setting that the game is in. There are a number of different factors that come into play, that create the experience. We have never been able, to this point, to isolate any one specific thing. Now, within the gaming strategy in other provinces they have started to look at: Can we alter one thing and see if it has an impact? For instance, it could be slowing down play or it could be the hours of operation. We are starting to isolate those things, because if you do more than one at once you can't get the answers. It is really looking at these things independently.

When you go back to the prevalence study and the things we are doing, those are the kinds of things that we are having discussions about, in terms of what would have the most impact timing-wise.

MR. YOUNG: I think it is out there. If you look, or you are talking in a community, it seems to be that the problem gambler is there. You wonder if we are doing something to catch them, to help with becoming a problem gambler, or are we doing something to help them not become a problem gambler, within the machines themselves?

MS CARINCI: I think the steps that we took in Atlantic Canada led the way on this a couple of years ago in putting the gaming features on the video lotteries, like, for instance, the clock timing out after a certain period, which causes the player to stop and have to reconsider if they really wanted - because that was considered to be something important, that there was a break in play, and showing the actual dollars that are being spent versus credit so that it would resonate exactly what you are spending. We really led the way on that. By the way, those features are now introduced in most jurisdictions across Canada. Have they had an impact? Hard to say, very hard to say, but there are a number of things that we look at doing in order to be preventative.

Do you have anything you want to add?

The second point that I wanted to mention as well is with respect to working closely with video lottery retailers. We are actually working very closely with various representatives of video lottery retailer associations across Atlantic Canada to see what we can be doing even more so in partnership with them to promote awareness, education and prevention right on site. The great news is that they approached us and they are very, very interested in making a difference.

I would also mention that we recently appointed somebody within the company to be a responsible gambling specialist dedicated to our social channel. Again, social channel, by that I mean we refer to video lottery sites. That is another example of how we are taking this very seriously to see what we can do to make a difference.

MR. YOUNG: Today, if someone with video lottery terminals chose to not start their games until a certain point, is it quite easy for them to do that? Because I know at one time your games had to be on at all times because you did your accounting at a certain time in the morning. Is that still the case? Or, if someone decided that they were not going to open their games until 7:00 in the evening and they were going to close them at 11:00, would that be possible?

MS CARINCI: Well, you could manually go and do it, but that wouldn't be something - we would wonder what you were doing.

MR. YOUNG: What you were up to.

MS CARINCI: What you were up to, if you did that.

We can do that. From a system's standpoint - I don't think I have had this request, actually - for instance, if you wanted to change your hours, et cetera, we could likely do that through our new central system that we are introducing. With the existing system I don't believe we could do that today, but we will be able to over the next several weeks. Hours of operation is certainly one of the things to consider.

MR. YOUNG: I know that in the past, first when they got on the market, when they came out there, lounge owners were trying to manage them and we had to fit - they didn't fit us; we had to fit the games kind of thing (inaudible).

MS CARINCI: Absolutely. It was an older and more archaic legacy system that we had in place.

We are in the throes right now of introducing a system that will be much more flexible in terms of what we can do, and also better for our site holders in terms of being able to validate winning tickets and those types of things, so there will be some advantages for us with the new system.

MR. YOUNG: In the project that you are doing now in tracking, will you be compiling the information so that you will be able to say that, of the percentage of people who fall into the gambling problem, this is the amount of revenue that comes from this particular group versus the occasional person who passes by? Would you have that information (inaudible)?

MS CARINCI: The new system will allow us to track, but, of course, there are privacy laws and things that come into play as well. Even in the pilot that Cynthia spoke to, we do not know who you are once you are put in the system, but we would know your play. Because you are spending a lot of money does not necessarily mean you have a problem. Even just looking at the revenue, or the spend, is more difficult.

What you can do, as an individual, if you want to control that spending, through that technology, is set maximums on a weekly, monthly, daily basis so that - and, once you are done, you are done, if all players had to play with the card. You have the ability to do that, as well as the ability to see the record of what you have actually spent. We know that has some impact for folks, when the reality sets in of what you are actually doing.

MR. YOUNG: At the end of this study you will know how many people set maximums for themselves, which will be an indication -

MS CARINCI: Yes, we will know that.

MR. YOUNG: - and you will know -

MS CARINCI: How many self-exclude? Yes.

MR. YOUNG: You know, if the top 5 per cent are putting 50 per cent of the revenue going through, you will know that as well so that (inaudible).

MS CARINCI: That is the challenge in the wide area network, albeit the prevalences are different regardless of the model, but if you are just dealing with destination it is a lot easier to self-exclude and do those kinds of things than when you have 500 sites to deal with, and then whose responsibility is it? That is why the player card technology is actually interesting for us because it takes the intervention issue away from the site holder. Really, it is not their responsibility. It is their responsibility to be aware and educated, but to intervene is difficult, so the card allows for the player to do that themselves.

MR. YOUNG: I just look at it as being important that we find a way of dealing with gambling problems and VLTs as such, because in Newfoundland and Labrador they are all throughout the Province. They are creating employment all throughout the Province, versus having a casino in St. John's or whatever the employment is here once again versus all throughout the Province. By finding that solution, we do not lose it to a casino or we do not lose it to the Internet so the dollars are going elsewhere, that it is helping to bring stability, like the lounge industry with the non-smoking, I suppose, the factor you mentioned, but even the drinking and driving laws over the past number of years, those operations have become very dependent on the video lottery to be able to make ends meet. So, if we shut those down, we are having a massive impact on the rural places once again, and our society is moving to be more urban. Only the opportunities are in the urban setting, and that is unfortunate.

MS CARINCI: We couldn't agree more. When we look at the gaming model we have today, and we look at the concerns, we know we need more knowledge about impacts, and it goes back to finding that balance, as you say, between - you know, the reality is, there will be gaming. The reality also is that if you do not regulate it then you will not even have these discussions around protecting the player, and you certainly will not have the benefit of the revenue for good causes, and you will not have the ability to be able to identify those with problems and be able to treat them. So it is critical for us, on a go-forward basis, to not only address the issue around video lottery but also, as I said earlier, to look at alternative forms of gaming from an entertainment perspective that will appeal to the groups coming up, in their twenties and their thirties and their forties, so that we can sustain the revenue.

That isn't necessarily going to be an appeal through video lottery. We suspect that video lottery definitely will go down. What do we have to replace that, that is entertaining but is also socially responsible? That is why we started to look at things like KENO in a social setting, and a number of other aspects that we are always testing, to say: Is poker an opportunity or does it have the inherent qualities that could create issues that will abandon that? Having said that, we know it is not going to be abandoned by the players.

We have that issue right now in bricks and mortar, and within our bars and within our community poker is being played. It is unregulated and it is a game, by the way, where it is not difficult to cheat, so it requires surveillance and all kinds of things to ensure that the player is protected, and that is not happened today. Those are the issues that I think all shareholders are sort of debating and struggling with to come up with what is the best model, because it is an activity that is going to happen anyway.

MR. YOUNG: I would think so, when we see the age groups that are at the video terminals. I have to assume that the kids who were playing their games when they were five or six are not still playing those games, they have gone on to other things, and on the Internet they are finding ways to gamble. So it is not really appealing to the younger set.

MS CARINCI: The other thing we look at is, are there games on the video lottery that have more appeal to those who are at risk or have a problem, because there are a number of different games to play. They have everything from the Little Green Men to Texas Tea to your basic real games. We are taking a hard look at that too, because we do have different types of players. We have casual recreational players who will go and have x amount to spend, and that is their form of entertainment and they go home. Then, of course, we have those who may be more at risk and then we have a problem. What we are trying to determine is, can some of those games be altered to make them less of an escape, as - what did you call it?

MS GOODWIN: Escape is good.

MS CARINCI: You called it medicated something, I am not sure everybody got that - a.k.a escape, right?

MS GOODWIN: Yes.

MR. YOUNG: Very good. Thanks.

CHAIR: Ms Goudie.

MS GOUDIE: Thank you.

I think we are starting to run out of questions here actually. First, I would like to thank you, as a member of the Public Accounts Committee, for coming here.

Wally alluded to, just then, the benefits to local businesses. You talked about the benefit to the shareholder and how much revenue was received by the shareholder in the past year, and you talked about the benefits to the employees that you have here, the contribution of $3.6 million. What other benefits - like, we don't necessarily see it in the community - do the Atlantic Lottery Corporation provide to our Province?

MS CARINCI: Well, there are a number of them. First of all, the commissions that go to our site holders and retailers, there are over $500 million, accumulatively, that has gone in. What is that on an annual basis, Patrick?

MR. DAIGLE: About $50 million.

MS CARINCI: About $50 million a year in commissions to those who are selling our products. Well, if you divide that among the 1,200 retailers and site holders that we have, that is probably the equivalent of a salary for each location. So, I think that is important.

We are very involved in community events and sponsorship and looking for always opportunities where we can give back to the community in a meaningful way. It is not always by writing cheques. Sometimes it is, but other times it is actually participating in various activities. I know that our employees, for instance, are involved in the United Way. We are getting more involved in literacy all the time as well because that is something you can do on a one to one for adult learners, and we are always looking for opportunities around that from goods and services. Over $6.5 million is being spent in this Province in goods and services. A fair amount of that is with British Bazaar; about 25 per cent or 30 per cent of that.

Can you think of anything else that I missed?

MR. DAIGLE: In fact, the number that we work off that has a direct economic impact, for the year 2004-2005, is about $280 million. The interesting thing about that number is it is a direct economic impact. It is the spinoff benefits from that, in terms of subsequent employment and then subsequent spend within the community and then the reinvestment that those vendors are making, and British Bazaar is a great example.

Michelle referenced the $6 million that we spend with our vendors in Newfoundland. In addition, $100 million was awarded in prizes, and we certainly do not want to forget our players. What our players do with their winnings, because they are Atlantic Canadians and they have the same values that we all have, they tend to keep their money in their community and they spread it around with siblings. They purchase vehicles from the local car dealership. So, it has a good spinoff then as well.

The last comment I would make on economic benefit, is the profit that we return to the shareholder in order for the Province to fund programs like education and health. For 2004-2005 it was $117 million.

MS GOUDIE: You mentioned about the smoking ban. Since the smoking ban came in we know there has been a decrease in VLT use, and you talked about a decrease in revenue. Do you have numbers on that yet? How much decrease there has been due to the smoking ban?

MS CARINCI: There was a direct impact of 18 per cent to 20 per cent as soon as it was introduced. What would that equate to in revenue?

MR. DAIGLE: Twenty-eight million.

MS CARINCI: For a twelve-month period, that would be $28 million. So, along that line. What we do in our mandate to look for revenue from gaming entertainment, as we say: How do we replace that with games that will appeal to our players and at the same time be socially responsible? That is one of the reasons we have entertained KENO and we will look at other types of gaming, knowing that policy decision of government is going to take a direct hit.

In the Province of New Brunswick, we have not seen that revenue bounce back - and they are in their second year - whereas in other provinces we have seen it. But where there is a complete ban, like in New Brunswick and Newfoundland and Labrador - and soon to be in Nova Scotia - that is a direct impact that does not necessarily recover, at least not in the short term.

MS GOUDIE: Okay. That brings me to my next question, I guess. The debate that is going on now regarding VLT use here in the Province - and the simple answer would be to go out and ban VLTs. I have had this debate, and we all have had this debate as members of Public Accounts and as Members of the House of Assembly. We have all had the debate with individuals and our colleagues regarding banning VLTs. That would be the simple answer. How would you respond to that?

MS CARINCI: I do not think there is a simple answer. Prohibition has never proven to have worked in any jurisdiction that we have looked at. Our experience, and I guess the most obvious one is the experience we have had with alcohol. We know gaming will exist, either regulated or unregulated. The question that we are, I think, trying to answer is: Under what condition should it exist that would make it acceptable? We have managed to do that with the alcohol business over the last several decades. I think we are in a transition period of determining what those conditions need to be.

What prohibition does is it drives the activity underground. The activity will happen. We do not have enough law enforcers, courts and police to actually be able to control that, and I am sure they have much better things to do. So, it is a difficult thing to even administer. What we do is we drive the activity underground and then several things happen. Players are not protected. The integrity of the game is in question. We have that on the Internet today. Are you going to get paid? Who is at the other end managing that game? You can manipulate price payouts. There are a number of things that can happen. So, the player is not protected. The public is not protected. As importantly, you drive those who have issues and problems underground and we are back in the boat of not being able to determine what the impact is and how to treat them. Then, of course, the fourth thing is you do not have the benefit of the revenue. It is going into somebody's pocket, or in a place like Antigua, so that we do not have the benefit also, in this Province, of being able to put it towards good causes and the priorities of the government. That is the reality. There are jurisdictions that have tried to prohibit it and it does not work.

MS GOUDIE: You mentioned regulation of gambling and video lottery, or whatever games. What about the government looking at playing a role in, like, bingo, poker play, computerized gambling? We know on the Internet - if they are not going to get it at a VLT they are going to go to the Internet.

MS CARINCI: That is an interesting question. It is, sort of, a two or three-part question. If I could, let me deal with the bingo one first.

I had the experience in British Columbia, for instance, where we recognized that charitable revenue was on the decline and there were so many non-profit organizations that were reliant upon revenue from bingo for their good causes. It is a bit of, if they would have stayed in the dark ages with their daubers and their smoke-filled rooms - actually, the bingo demographic is dying as well, because it appeals to a certain demographic. What we did is we applied technology and raised the level of creative community gaming centres that offered bingo in a regulated setting with the technology that has the integrity that we have with our games of 649. It had an incredible impact on the charitable sector, and the shareholder then has the opportunity to be able to say: We will come in and operate and manage and conduct, and we will earmark that revenue back to the non-profit sector under certain conditions.

That is certainly an opportunity. We are pursuing it today as part of a strategy in another province in Atlantic Canada. We are piloting it, so there is a great opportunity for the shareholder to make an impact and make a difference for non-profit organizations, just as we have done with the harness racing industry in P.E.I.

The other part of your question was about: Why not on the Internet? We are on the Internet now with our traditional games. I spoke of, earlier, the rigour we put around, you can self-exclude. We manage the maximum you can play on a weekly basis. The player manages that, but we have a limit that we set so there is a lot of rigour put in that. Certainly, there are opportunities. The question is, in some of these cases, like on-line poker, you need critical mass. So, you know, the population of Atlantic Canada, which is where we operate, may not offer us the same opportunity as these guys in Antigua or Gibraltar have, where they have the globe; and they have, by the way, over 33,000 players at any given time in their poker rooms. You need about 300 at any given time, so the things we have to look at are: a) Could we? Then, of course, the question is: Should we? To try and enforce or prohibit or stop it is a long shot, so it is back to the old: Okay, then, should we regulate it, and under what conditions?

There are opportunities, for sure, but there needs to be a business case and then we also have to look at the social impact.

The other question about poker, I think I have addressed the on-line piece, but in the bricks and mortar, so to speak, certainly we could look at, and we are examining, what it is we could do as the operator and those who manage and conduct games for poker in those sites. The challenge for that is, to have that game have all the integrity it needs - it is easy in casinos, because they have the cameras and surveillance, and they know about marked cards and all of that kind of stuff - how do we, from a practical perspective, offer it?

I think there is a solution. Certainly, the non-profit organizations are asking for a solution because they see it as an opportunity for revenue. It could be that perhaps it is not in many sites, but it could be several sites where it is operated with integrity and then it is shared revenue among a number of non-profit organizations or a number of site holders, so there are opportunities, certainly, there.

MS GOUDIE: There is certainly difficulty with regulating the Internet gambling, is there?

MS CARINCI: Yes, it is. So, what government has done in the past - that is why we are in the VLT market. There was a grey market. It was established. They did not feel it was going to be practical to prohibit it. It was regulated.

If you go back to when lotteries begin in 1976 in Atlantic Canada, the reason they got involved in it, for the most part, is because Atlantic Canada was, I think, the only jurisdiction that didn't have lotteries in Canada at that time. There were mail order operations and things, so the money was leaving Atlantic Canada, because people wanted to play.

We have always come into gaming sort of on the backs of unregulated, or grey and regulated. This one is a much different challenge because it is not a simple answer of regulating it, because you have folks operating offshore and the globe is their market. So, it is now: How do we compete?

I believe, based on the research we have done in Atlantic Canada, that people will play on our site if we were to offer these things, because we would have the Good Housekeeping seal of approval. They would know the game has integrity, and that they are going to get their prizes, et cetera, so there is certainly indication, although there also is some healthy respect for the dangers around that, too, from the public's perspective.

MS GOUDIE: We talk about the balance between responsibility in providing this service, I guess, is what we call it. I come from a nursing background, actually. We were taught - we spend several years in research, talking about the prevalence of addictive behavior in society. We know there is a certain percentage in society that have a tendency towards addictive behaviour. With the increase in VLTs here in the Province, has there been an increase in that percentage? I know that was kind of asked earlier.

MS CARINCI: Unfortunately, because we didn't have any prevalence studies or hard data prior to this study, it is difficult, other than anecdotally, to answer that question. If we had done the prevalence before, you would probably, in discussions with addiction services, the limited amount that was available in communities, you could maybe determine by talking to those folks and saying: Have they had an increase?

MS GOUDIE: In our last discussions, I think - I have worked in the health care system for the last ten years, before I entered into this profession, and I keep thinking that, okay, we are going to remove the gambling here but they still have the tendency towards addictive behaviour and they are going to find something else to replace that addiction. I guess underlying the addictions are other problems in society, so I think it has to be looked at in a -

MS CARINCI: Holistically.

MS GOUDIE: - holistic way, and you mentioned that earlier.

MS CARINCI: The researchers and the scientists and the academics around this have really evolved to that, that it is complex; there are cross-addictions. They are now saying the game, in and of itself, is not the issue. It is just like, the problem isn't in the bottle.

MS GOUDIE: No, exactly.

MS CARINCI: That is not what you are treating. You are treating a number of other more complex issues, and that is why it is a difficult thing for us to be able to give straight answers on. You are right; you take gaming away - back to your last question - that addictive behaviour is still there, and therefore those people are vulnerable to a grey market.

MS GOUDIE: Exactly.

Okay, those are my questions.

Thank you.

CHAIR: A few members want to take about a ten minute break, just to have a cup of coffee, so if we can get back in ten minutes for the proceedings.

Thank you very much.

CHAIR: We will continue with the proceedings.

Mr. Hunter.

MR. HUNTER: Thank you, Mr. Chair.

First of all, I would just like to say how glad I am today that this interview is going on, because I certainly learned a lot. A lot of the questions that I did have in mind were already asked and some good answers to them, I must say.

There are some things, at least two there, that I really am concerned about and probably did not understand. The concerned part is the illegal and unregulated gambling with respect to the Internet and on-line gambling, but you have just answered a lot of the questions that I had on that. But it is a growing problem and it must be a big concern for not only your corporation, but I guess all the other corporations across Canada and around the world. One question that I did have in mind, I guess, would be a national question with respect to your corporation and others that you work with and your association with them, with respect to what part of the national government, the federal government. I mean they must be concerned, because we are all concerned about money leaving our communities, our homes and our Province, and I guess the national government must be concerned about the money leaving the nation. Are there any steps now, that you are aware of, not only through your association and your corporation but as a national concern? Which way is the federal government trying to address this problem?

MS CARINCI: It is an excellent question. Thank you.

The Atlantic Lottery Corporation is a part of the Interprovincial Lottery Corporation. We refer to it as ILC. It is a joint corporation where all the members are the ten provinces of Canada, and under that umbrella we mark it national games, such as 649 and Super 7 and some instant games. Wherever we need that sort of critical mass, that marketplace, to offer larger prizes, we join together. We also work very closely on other aspects such as the corporate social responsibility we talked about in responsible gaming, et cetera.

We have recently met over the last several months to address two things. One is, what options from a legal and enforcement perspective do we have, and that specifically got some momentum when Bowman, which you may or may not be familiar with - if you follow the CFL then you would be. Bowman's is a sports betting company offshore, a very large one, that takes sports betting over the Internet, and they are using Canada as their entree into North America, because they are confident that the US Wire Act and Internet laws will end up being deregulated over time. Canada, by the way, is viewed as sort of the entree into North America for these Internet companies.

Bowman's made a deal with our very own CFL as a sponsor. There we have the spectacle, the Grey Cup last year, of looking at Bowman's, an illegal - well I should be hesitant to say that - an unregulated sports betting company sponsoring our CFL. That really raised an awareness for everybody that this, over time, is certainly going to impact us. We are now pursuing, from a legal perspective, what is legal and what is not, what our enforcement opportunities are, where the CRTC fits in, because these folks are advertising as well, not just sports but poker, and what impact can we have there. The reality is, while do have opinions saying that even the advertising of this activity is not legal, the enforcement of it is something else, that is a challenge.

That is one piece of it. We are working with the authorities in a couple of provinces who are providing information to give us the background information that we need to go forward to the federal government should there be something of substance there to go forward with. We need our homework done first, and we expect that will happen over the next couple of months.

The second thing is, looking at, overall, what would need to be done to allow us to compete if that indeed was an option, on a go forward basis.

I might add, this is not just a Canadian issue. The Europeans, who have an association as well, are looking at this very seriously. The World Trade Organization actually ruled in favour of Antigua, when the U.S. took them on as saying this is an illegal activity. Antigua challenged that, and the WTO actually ruled to some extent in favour, so there are a number of worrisome things that are happening worldwide.

MR. HUNTER: I think on-line gambling is contributing a lot to family violence. I know every MHA deals a lot with their constituents, and when you bring it right in the home it creates a lot of problems, especially for people who cannot get to local clubs or local bars where VLTs are available, so they use the Internet to gamble. I know a lot personally who have big problems. It is sad when you see illegal, unregulated gambling, and we know that it is growing out of proportion. It has to be a concern not only for you but for everybody, because it is easy to get access to the Internet now, and it is growing so fast.

One of the others things that I am not quite clear on is, when you mentioned the problem area for Newfoundland and Labrador it was within relatively the same percentages of the other provinces, and a global percentage between 1 per cent and 5 per cent. Was that based on the overall per capita population of a province, or was that based on a percentage of users within the Province? Is there any distinction between the overall population, or do you know how many users and that percentage was based on the users?

MS CARINCI: That was based on those who gamed, was it not?

MS GOODWIN: Actually, prevalence studies - the Canadian Problem Gambling Index was the methodology used in Newfoundland and Labrador, and that is what is pretty much used across the country. The methodology for that research would be through surveys of the adult population.

MR. HUNTER: The general population, not asked if you were a user, or -

MS GOODWIN: They do ask that question.

MR. HUNTER: So, is it broken down between yes, there is a percentage of users, 1 per cent to 5 per cent -

MS GOODWIN: Yes.

MR. HUNTER: - or just overall? Okay.

Out of that, was there a survey on the category of income - like different incomes, low, middle, and high income? Because, the way I see a lot of my friends and, of course, people I deal with, they are middle income people who have the biggest problems. When they should be buying new cars and houses, they are out gambling. We know the lower income people cannot afford to buy the new cars and houses, but these people are in the $60,000 or $70,000 a year bracket. I think my preference would be to see them buy new cars and products so that we can get taxes from that, not gambling, because it benefits the communities and their families a lot more in my point of view.

MS CARINCI: You raise a good point, because there is a myth about the poor and playing, and there is a disproportionate amount. That is a good point. Typically, when we look at income, although it varies somewhat by game, it is not the low income - they don't play disproportionately - nor is it the high income. It is in that middle group that the bulk of our participation resides. There is some skewing. With our sports games, that would skew more to the higher income male, whereas something else would skew another way. Overall, your observations are pretty accurate.

MR. HUNTER: So that is pretty well normal for gambling right across the country?

MS CARINCI: Yes, player profiles don't vary by game very much across the country or around the world for that matter.

MR. HUNTER: Those are the only two things that I was really concerned about or not clear on. All the other questions were asked.

MS CARINCI: I could make a point on your observations around the Internet and your concern about controls. In a regulated environment it is actually much easier to control on the Internet than it is in retail or in bars or anywhere else. We have set limits.

MR. HUNTER: That is why I ask, because the federal government can regulate it more.

MS CARINCI: Yes, if you go on our site to play, which you can play all of our online games on, you know, LOTTO 649 and SUPER7, you can set your limit up to a maximum and then we don't allow you to go beyond that. You can self-exclude, and once you do that - and we have had players do that and then change their mind, but we don't let you back in.

There are a number of things that you can do more effectively. Somebody said, when we were taking our break: So, you are sort of like the nanny. There is the ability to be able to offer that activity in a controlled environment in a responsible way.

MR. HUNTER: Lots of times I get questions on gambling. Some people are saying: Why don't you mind your own business? It is my money, if I want to gamble it then leave us alone. Then I have other people who are saying: I am addicted, I need help. We need government to regulate it, to slow it down and help us control our spending and gambling. There are two points of view. We have a lot of cases where businesses are saying: This is a business, we are surviving because of this. There are so many different views about the gambling. It is a big social problem. I find in Central where I am from it is a big problem, especially with the middle income people.

MS CARINCI: Public opinion is that gaming should be regulated. The vast majority of people want that freedom of choice, but they strongly believe that we need to play a greater role in addiction services and responsible gaming. They want to see us doing that, as well as government, and they want to know where the money goes. Those are the conditions. I think it needs to be regulated and controlled and I want the freedom to do that, but there are two things I want. I want to know where that money is going and I want to make sure you are investing heavily in taking care of the folks who do have problems.

CHAIR: Mr. Barrett.

MR. BARRETT: Thank you.

I want to welcome you to the great Province of Newfoundland and Labrador, and today is no indication of our weather. It is normally around 25 degrees Celsius and sunny. So this is unique.

MS CARINCI: But I did experience that yesterday.

MR. BARRETT: Okay, good.

Anyway, I guess the discussions we are having today are not too different than the discussions we had in 1990. I sat around a caucus table, and at that particular time I was a part of the government that brought in the VLTs to Newfoundland and Labrador. We had a great deal of discussion at that particular time in terms of the problems associated with what we were doing. It was a very trying experience, I can assure you, in terms of a caucus trying to get a consensus on this.

As a matter of fact, we participated - in the House of Assembly at that particular time - in an all night sitting. This particular issue in Newfoundland and Labrador was a very controversial issue at that particular time. It was, I think, probably one of my first sessions. I got elected in 1989, and it was one of the first sessions that I had to experience spending all night in the House of Assembly. As a matter of fact, I was Deputy Speaker of the House of Assembly at that particular time. So, I not only had to participate in the debate I guess, but I listened to most of the debate. As a matter of fact, we had three people in the Opposition that kept the House open the whole night because we were in Committee of the Whole House and the debate was going back and forth, ten and ten and ten. The reason the government used at that particular time, for bringing it in, is because if we did not bring it in the underground was going to participate. I do not think that this has changed anything today. The debate is the same today, but I guess the focus of the debate today is more in terms of the addictions and the problems it is causing.

I mean, alcohol has caused us untold problems in our society. Those of us who are MHAs see the problems of addiction in alcohol. We also see the problem of addictions in terms of gambling. I guess, right now, is: How do we control? That is the problem. We have the Internet. Back in 1990, we were only thinking about the person who was going to have a backroom in a club and was going to have machines; that people were going to go in and they were going to play, and people would get ripped off. But, today, I guess, we have the problem of the Internet. So, it is not just the Atlantic Lottery Corporation, but it is also the other avenues that people can access in terms of gambling.

The disturbing thing about it is, from Atlantic Lottery Corporation, that the message out there is to make it consumer friendly. Some of your advertising does bother me, all right? Some of it does really bother me in terms of your advertising. As a matter of fact, one of these nights I am, probably, going to beat up my TV because when I see people on television getting excited that they just won $10. One of your advertisements, these people who come on -

MS CARINCI: The winners, yes.

MR. BARRETT: - and they get so excited that they just won, I do not know if it is $5 or $10. I am sitting there and expecting that they just won $10 million, but the big excitement is that they have just won $10. To me, it is disgusting. That particular advertisement itself is disgusting because it does indicate to people, I guess, in terms if you are trying to attract people. I think our government, at one time, prohibited advertising. We would not let you, under the Clyde Wells government - as a matter of fact, one of the conditions in our caucus, I think, at that particular time in terms of bringing in this whole system, the decision was that we would not promote it. It would not be a promotion thing, that we would not make it nice to gamble; that it was almost like it was forbidden or taboo or what have you. In other words, we should place the same restrictions on gambling as we do on advertising in terms of cigarettes, in terms of addiction to tobacco, and I guess alcohol the same way. Right now you spend a lot of money on advertising. I am not a television watcher very much, but there is a lot of advertising to encourage people.

It was very interesting in terms of your statements today that we need to make it more fun and we need to make it more entertainment wise, because you are in a double role. Your role is to attract people to play; but, at the same time, the other young women here, your role, I guess, is to discourage people from playing, so you are in a double roles in terms of trying to get more people to play the games that you have out there, which is causing a problem. The more people you attract to the thing, and make it more attractive, then more serious the problem becomes.

It is very interesting; you are profit driven, because in 2002 the payouts on those machines was 95 per cent, 93 per cent. You reduced it down to 93 per cent in 2002. What was the reason why, in 2002, you lowered the payouts from 95 per cent to 93 per cent in the VLTs?

MS CARINCI: You had a number of statements there.

MR. BARRETT: Yes.

MS CARINCI: I will answer the last question. I can comment on all of it, or - I will answer the last one first?

MR. BARRETT: Yes, okay.

I have another dozen or so that I want to ask you, but I just wanted to give you some history in terms of where I am coming from in terms of this, and the history of VLTs and the whole situation within the Province.

MS CARINCI: On the video lottery game payouts there is a range. Not every game is at the same percentage. It varies by game, and there is a range between 93 per cent and 95 per cent, and I believe the regulation does not allow us to go over 96 per cent. We stay within that range because that seems to be conventional wisdom for specific games that, that is the payout that you need in order to have those games be games that the players want to play. We didn't wholesale lower our payouts on the games. Those games are all different and they do range. I don't think there is anything below 93 per cent - no.

To answer that question, we have not -

MR. BARRETT: No, no, if we could follow up there, the payouts on these machines were lowered from 95 per cent to 93 per cent. Why did you lower the payouts in 2003?

MS CARINCI: There are still games that pay out 95 per cent.

MR. BARRETT: No, I am talking about on an average. Your average in terms of your payouts went from 95 per cent to 93 per cent.

MS CARINCI: I don't believe it was ever at 95 per cent, the average. If they average at 95 per cent, that would mean there had to be a lot at 96 per cent. I will get back to you on that, if you will, because there wasn't a wholesale across-the-board lowering of payouts. The games do vary, as I say, between 93 per cent and 95 per cent.

MR. BARRETT: What I am saying is, when you look at the parallel in terms of entertainment - you talked about entertainment. Let's face it, the role of the Atlantic Lottery Corporation is not to provide entertainment, right? I mean, if you are going to provide entertainment, I can think of governments setting up all kinds of other things to provide entertainment, so forget the entertainment part of it. Entertainment is not a part of it. The role is to make a profit.

MS CARINCI: Let me go back. You are asking a philosophical question and then another question to that, if I may answer it, whether profit and entertainment are not linked.

The philosophical question, I think, and it is a good one, is: Is government involved in gaming because it will be an activity that happens anyway, so we are there to protect the public? - which is why your government, in 1990, made a decision to regulate VLTs. That is one.

The other philosophical question, on the other side of the coin, is: Is government in this business to maximize revenue through gaming?

Depending on where you look around the world, you will get different answers. There are some who are there to maximize revenue within a socially responsible framework, and there are others who seriously say: We are only here to regulate what the market would do anyway, and it is for the greater good. So, that is the philosophical thing and it is a good debate.

Are we in the entertainment business or are we in the business of making a profit? I think the picture I was trying to paint earlier is that if we are going to continue to sustain the existing revenue that we have today - all indications are from the marketplace is that we must be providing products that are different than we have in the past, that are just passive - you know, where you buy and you wait for a draw - because winning isn't now the only motivator. We are saying people want, and they are telling us that, it is the experience. We see that beyond gaming. We see that in many areas, that I do not just want to buy a cup of coffee. I want to have the Starbucks feeling, you know.

So, for us to continue to sustain revenue, what I was suggesting, based on what we are seeing in the marketplace, is that we would need to look at products that provided more of that experience; whether that is an entertaining experience or whether it is just an experience of other types in interactive, social, entertaining, esthetic. When we see the products that the players are migrating to in the unregulated market, those are the inherent qualities of those types of products. So, I wasn't suggesting that we should go into the entertainment business. I am merely suggesting that if we are going to continue to sustain revenue, we will have to consider different types of gaming products.

MR. BARRETT: Yes. You are in the role, I guess, in terms of - your role is to provide this service to people. I do not know if I should call it a service or not - but the role, at the end of the day, is that your role is to make a profit and you make a profit for your shareholders, which is the four provincial governments in Atlantic Canada.

MS CARINCI: That is definitely the result of our activities.

MR. BARRETT: Yes. We, as politicians now, are seeing that gambling is becoming a problem, and I think it is increasing. There is no doubt about it, that gambling is increasing and it is becoming a problem. So, how do we put controls on it right now, in terms of people?

I have been in politics. I have been a member for seventeen years and I have seen the affects of alcohol on families. I have seen the affects of gambling on families. I guess, those of us who are elected to serve and to make laws, we have to come up with some ways to protect people from themselves, unfortunately. It is not everybody today who is going to go into a club and get drinking and go out and get behind the wheel of a car and drive. We have responsible people who drink. We have responsible who gamble, but we have people who are not responsible drinkers and we have people who are not responsible smokers and we have people who are not responsible gamblers. So, as a society, we have to come to some kind of a way to protect people from themselves.

I like the study that you are doing in terms of the limited access to the machines because in today's technology, if you can go on-line and you can use the system to gamble and do whatever you want on-line, with our technology today, every individual should have a gambling card. Right? And it is possible. In our technology today - as a matter of fact, you people in Moncton can almost tell right now, if you give me a card, when I am going to breathe and when I am going to smile. The technology is there. If you want to limit people's gambling, you can do it. There is no doubt whatsoever that you can do it. There is a card available. Of course, if you give people a card, it is going to have to be a card that has their picture on it, if you are going to limit it, because then we are going to get into - for example, if both of us have a card to gamble and once I have reached my limit in terms of my gambling, I am going to pay him so I can use his card. Therefore, there are going to have to be controls on that.

MS CARINCI: If I could comment on that.

MR. BARRETT: Yes.

MS CARINCI: I do not think we are going to find a system that is going to guarantee, 100 per cent, that we can limit activity. Because if you have a problem, and you do not want to solve that problem, even though we have provided you with the tools, the information, the education, then you will find a way around it. We are not fooling ourselves into saying that we will be able to effectively solve a problem that you do not want to solve yourself. It is no different than the alcohol issue. What we are doing is saying that we care enough and are responsible enough to provide you with the tools and all the information you need to know to make an informed choice of what you do with your life. As an operator, we see that as our role among the many stakeholders. I could not look you in the eye and say that we have the technology that could stop you from continuing problem behaviour if you did not want to stop. I don't think we can do that. What we can do is give you everything you need to make an informed choice.

MR. BARRETT: You can discourage people from doing it.

MS CARINCI: Yes, absolutely, and there are many things. We talked about them here today. We can give you the tools to self-exclude. We can give you the tools to limit your expenditure, if you really want to. We can give you all the information you need to make an informed choice. We can look at the options that we talked about earlier, whether that is hours of play and the types of game and the payouts, and those things - and we should, and we are doing that - but, at the end of the day, if you don't want to solve the problem then we are not going to be able to help you.

MR. BARRETT: We talk about the Internet. In terms of technology today, if governments were serious and they did not want people to participate in Internet gambling, and they wanted to make it only the legalized government, people could participate, right? It is possible today, for example - I guess, if you have to gamble on the Internet, then you have to use some kind of a card to pay your debts, right?

MS CARINCI: Yes. In the unregulated market they are using credit cards and bank transfers.

MR. BARRETT: But the government could regulate it.

MS CARINCI: There is a way to do that. You would have to go after the credit card companies.

MR. BARRETT: That is what I mean.

MS CARINCI: You would have to go to the supply chain, because these organizations are operating out of Antigua, Malta, Gibraltar, countries that have said: It is legal for you to do that here. By the way, don't sell into our country but we will let you reside here.

Some of these companies are traded on the UK Stock Exchange. There are gold chip, blue chip buyers, companies coming in and investing. The last IPO for party poker went to $10 million in two days. It is difficult to go to Antigua and stop that, but what you can do, perhaps, is to look at the supply chain, those who are supplying, like the credit cards, the telecommunications companies, but I do not know if that is a practical solution. Do you know that the gateway into North America for the Internet resides in Gananoque. There are thirty-two servers that sit on First Nations land, and they have a huge part of this market, so it is right in our own backyard.

MR. BARRETT: There is no doubt about it that, if governments wanted to, they could say to the credit card companies: You cannot, and it is illegal to do it.

MS CARINCI: In the U.S., they have taken some action -

MR. BARRETT: They should probably also indicate to the credit cards companies that it is illegal to charge the interest you are charging, too, but -

MS CARINCI: Wouldn't that be nice?

WITNESS: Criminal.

MR. BARRETT: It is criminal to charge the interest you are charging; but, let's face it, the only way the transactions can be done on the Internet is with some kind of a card, right?

MS CARINCI: Credit or a bank transfer, debit, money order (inaudible).

MR. BARRETT: Yes, but, let's face it, if somebody is going to sit down and -

MS CARINCI: It is a credit card if you are talking about gaming, pretty well.

MR. BARRETT: Yes, it is credit card or debit card from a bank or what have you. I mean, it is easy to be able to identify all these sorts of things, and it would limit it in terms of what you can do with your card.

MS CARINCI: As has been pointed out earlier, there has to be a will, either at the federal level or at the provincial level, to do that; because, for one province to act on its own, it is not going to be effective. This is government to government, and it isn't just for Canada.

MR. BARRETT: But governments, when they want to, can control it.

MS CARINCI: Absolutely.

MR. BARRETT: Right now, for example, if I am in the States, I have difficulty bringing back any more than a carton of cigarettes, or I cannot bring back any more than forty ounces of liquor. So, governments in the past have already come up with mechanisms to be able to control behaviour, or things that we should not do. Therefore, they cannot say that governments cannot come up with the controls or make -

MS CARINCI: Oh, no, I wouldn't say that.

MR. BARRETT: - with the credit cards, the controls on the credit cards.

MS CARINCI: It is definitely policy decisions, and certainly those things are doable.

MR. BARRETT: But I think in terms of, right now, there has to be some - the payback system, KENO. I just want to mention KENO. KENO is the one game in the world where the person who sponsors the game has the greatest control. In bingo you are always left to luck, but the person who comes up with the KENO game regulates if there is a winner or a loser.

MS CARINCI: I don't know what you mean, Sir.

MR. BARRETT: Because it is the only game in the world where you buy the numbers and, before the numbers are drawn, the agency knows what numbers they should not draw because it is already - it is one of the games that can be easily rigged.

MS CARINCI: Absolutely not true. Absolutely not true.

MR. BARRETT: I can assure you right now that in Las Vegas, Nevada, or anywhere where there is a KENO game, all the numbers are in the system before that machine calls the numbers.

MS CARINCI: Yes.

MR. BARRETT: In a bingo game, it is not.

MS CARINCI: Let's go back.

If you look at the -

MR. BARRETT: The numbers are already entered into the system. When they put that card in, the system knows what numbers have been bought, and the combinations of the numbers, and it can be all programmed to make -

MS CARINCI: Let me backtrack.

If you look at our 649 game today, our Atlantic 49, our Payday game, if you look at any one of our on-line games, we have a period of time that you can buy and then we stop you from being able to buy at a specific time. What is it, ten o'clock at night, for instance, in Atlantic Canada? After all the number are in what we will call the tank, sort to speak, in the central system, then the draw is held. It is no different for 649 than it is for KENO. It has all of the integrity -

I don't know about Las Vegas - I won't comment on that - but I can assure you that this game is no different than any other lotto game. All the numbers are in the draw and then we make the draw. There is no other way to do it.

MR. DAIGLE: Can I just make a comment on the integrity around the draw process? Because it is the cornerstone of our business. It is obviously one of the core values of the Corporation.

First of all, the draw is performed by our security department. It is witnessed by our internal audit department, and it is also witnessed by external auditors. Right now, we are using KPMG. So, we have built in numerous controls to avoid any form of conspicuous activity or any form of wrongdoing or any fraudulent or any kind of negative activity like that.

I just want to make that very clear, because it is an important point.

MS CARINCI: I think the other check for that is -

MR. BARRETT: Will you lose on the KENO game?

MS CARINCI: No, we don't - on some draws.

MR. BARRETT: How do you know you are not going to lose?

MS CARINCI: On some draws we will, because it is what you call a prize that the player actually determines based on how much they will bet or they will wager. It is like our sports betting. Sometimes if a longshot, if somebody with long odds comes in - let's say Pittsburgh last weekend was a game that had put the odds against winning, and someone puts a lot of money down on that, then we will be paying out a larger proportion on that particular draw than we would have had Pittsburgh not come in. KENO is similar. If somebody has put certain bets on certain numbers and, by the luck of the draw, those numbers come up, the prize payout can fluctuate, go higher some days and lower some days. Sports is very much like that too. Over a period of time - sometimes it take a long period of time - that payout will even out to be whatever we determined it to be. In the case of KENO I think it is 59 per cent. In the case of sports it is about - 60 per cent?

MR. DAIGLE: It is about 60 per cent, 65 per cent.

MS CARINCI: Some days we are paying out 80 per cent and some days we are paying out 30 per cent. It depends on the luck of the draw, the numbers or the outcome of the teams. Overall, the shareholder certainly will make a profit and the players will get their prize payout as we have put in the regulations of 59 per cent or 60 per cent over time.

In our Atlantic 49 game, for instance, in the first two years, when you look at the game and the odds and all the things around that game, we predicted, based on sales - and the sales we projected happened - that we would have three $1 million winners in, say, a year, and we had, I think, double that. Our payout for that particular year was up at around 80 per cent.

MR. BARRETT: How are the numbers picked for the KENO and how are the numbers picked for LOTTO 649? Are they like the bingo games, in that the number comes out and rolls out, or is it being done by computers now?

MS CARINCI: Two different ways. In the case of 649, they used to televise them and they are called (inaudible) machines, ball machines if you will. In the case of KENO, because of the higher frequency, it is done through a random number generator, which is basically computer.

MR. BARRETT: That is what I mean. If I go tonight to a bingo game, for example, and I go in and buy a card, the balls come out of the machine, unless you are going to load the balls, and there is a possibility that I could win. In a KENO game, what you are talking about right here which is a computer driven thing, the numbers are fed into the computer, the numbers are fed into the system before the numbers are drawn by the computer. You can program that to say if there is going to be a winning number or there is not going to be a winning number.

MS CARINCI: No, absolutely not. We have -

MR. BARRETT: Yes you can.

MS CARINCI: We have a central system that all of the selections - I will call them selections or wagers - from the players go into. Then, distinct from that we have a random number generator. This is ten to twenty out of eighty games, so you can pick up to ten numbers. We will draw twenty numbers from a range of eighty. So those eighty numbers are in that system and then randomly, once the game is shut down, we select twenty. That is, as Patrick said, audited both internally and externally. Ernst & Young are our current auditors. KPMG are actually out at the draws. We have security systems on that.

MR. BARRETT: So, they are there for every KENO draw?

MS CARINCI: Absolutely.

MR. BARRETT: There is an auditor actually observing every - every five minutes there is going to be an auditor checking that?

MS CARINCI: No, it will be audited. Patrick can name up the details on how it will get audited on the (inaudible).

MR. DAIGLE: Yes, we are going to be setting up the proper security around the computer and access controls. In fact, I would argue that having a computer-generated draw is much less susceptible to interference, in terms of providing a logical and physical access controls, than an actual ball machine. We can set up stronger controls and that will be subject to audit. Internal audit will be attending the draws. External audit will be reviewing the draws on a periodic basis, but, certainly, they will be reviewing the processes.

MS CARINCI: This is an agent of the Crown for Crowns that operates with the absolute utmost integrity. It is a core value of this corporation. Part of that integrity is to ensure that every ticket has an equal chance of winning, otherwise we could never sustain this business based on the controls that are there. That I can assure you.

MR. BARRETT: Well, the thing about it is that we all know in our system, that, you know, within the last number of years or what have you, to be very, very cautious in terms of we can all have the best intentions but there is always something that can happen within the system.

MS CARINCI: Absolutely.

MR. BARRETT: The corporation itself can be the most honest and upright around, but there are still places where there can be abuse of the system.

MS CARINCI: That is why we have such rigor around our enterprise, risk management in the controls that we have, so that even if somebody tried to collaborate, it just would not be successful.

MR. BARRETT: So, based on the situation that is existing in society today in terms of - and we hear it more and more in terms of problem gambling. Will there be a conscious effort on the part of your corporation to downplay the positives of gambling? Instead of, for example, wasting or spending all that money - because this particular one is on television. The ad that I am talking about is on television. I think it is on during the NHL hockey game, because mostly that is what I watch on television, hockey games. Therefore, when I see this ad, it either has to be on during the news or - it is always prime time, in terms of advertising. You are probably paying thousands and thousands of dollars for that thirty or forty seconds so that this woman can be so excited that she just won $10.

MS CARINCI: What is interesting about that is - I respect what you are saying and your opinion around our marketing. I absolutely respect it and I hear what you are saying.

If I could though, I would like to explain and put some context around, and particularly, that campaign. The public trust is - as you referred to in our earlier conversation - absolutely paramount. One of things the public wants to know, and needs to know, is that there are winners. A very, very important part of our overall business is that there are winners, and then we need to tell the public that. It is interesting, because the public often thinks that winners are $10 million or more, or $1 million or more, because you often hear: I never win. Then I will say: Well, have you won $10? Oh, yes, but that does not count.

In that particular campaign we actually asked - and we did it here in St. John's and elsewhere. We said if winners wanted to tell their story, regardless of the amount, they could, and that is basically what they did. These are real people who won and it demonstrates to the public that, in fact, the games that we offer do produce winners. I respect that you may not like it or approve of it but that is the intent behind that particular winner's campaign. Whether it is $10 or $10,000 or $10 million, it is still a win, and there are a lot more of those smaller winners than there are the big, obviously.

MR. BARRETT: I guess what I am saying in terms of - if you are talking about spending money and if we have concern about gambling becoming a problem, to spend all that money to show three or four people getting so excited because they won $10, I mean, the shareholders of the Corporation should be looking at it and saying, if the Corporation has that much money to be able to spend hundreds of thousands of dollars to advertise the excitement of someone winning $10, then, surely God, we should have more money to put into addictions and help for people.

What I am saying is: What is the priority in terms of governments? The shareholders are the four governments. They see gambling and addiction as a problem but, at the same time, the same ones who see that as an addiction are putting advertisements on that is costing a lot of money that could be channeled into addictions to pay for this kind of an ad that is costing a lot of money.

MS CARINCI: I absolutely hear what you are saying. The other comment I just might make is that through marketing efforts, whether that is TV or radio or at point of sale, that actually enables us to make the profit as well and to make a profit that could go into addiction services.

There are products we do not advertise at all. We do not advertise, obviously, VLTs for the reasons you explained. We do not advertise the break open products, other than at the point of sale. Anyway, it is a philosophical discussion and I respect your opinion, absolutely.

MR. BARRETT: What I am saying is, VLTs are a problem and the break opens are a problem. From what I see, it is the break open. The break open is the one that you win - that is what used to be called the Nevada ticket, or something like that. Is it the Nevada ticket?

MS CARINCI: Yes, or the pull tab. Nevada is another name for it, yes.

MR. BARRETT: If you spend $100 you might be really, really lucky and win $50 or $25 or what have you.

MS CARINCI: That's right, yes. Small prizes.

MR. BARRETT: It is about the worst ticket that was ever created, I guess, in terms of - I know in my time in politics, the crack open is the one that probably caused me more anguish as an MHA than actually the VLTs in terms of - I think that is the one that has attracted more of the lower income people. The peel off one is the one that attracts the real low-end people.

I know in my first year or so in politics I received a call that a family had no groceries, had nothing to eat during Christmas. The word came to my office and I arranged with the business in the community that groceries would be delivered and I would pay for them. I do not advertise this very much, and I did it, but when I went to pay the businessperson the bill that I owed, the grocery guy indicated to me that the person who you sent the groceries out to was in here and spent $70 that week trying to win the $25. Of course, my response was: That, I could not control but at least the two kids had groceries for Christmas. Those are the kinds of stories we get sometimes. It really daunts me, when I see that particular advertisement where somebody won ten dollars and got really excited about. In the ad it is almost like they are going to have a heart attack because they just won ten dollars.

I think, as people, we should be looking at more discouragement. If the role of governments is to set up the Atlantic Lottery Corporation to make money and to be a profit, to make oodles and oodles of money, then I guess you are doing it the right way, but we probably should be out there discouraging people from playing altogether, whether it is on the Internet or what have you. Probably we should say to people: Don't play the Internet. The money that we are spending showing people excited about winning, shouldn't we be spending money to tell people what the hazards of gambling are?

MS CARINCI: That is something that, I think, Cynthia and I both referred to earlier. We have put significantly more dollars into ensuring that people do understand what the games are about, that there is a lot more awareness and education, so that they can make an informed choice. I think the debate that you put forward is a philosophical one, that I referred to earlier.

Our mandate is to certainly create profits through gaming, adult gaming entertainment, in a socially responsible way. That is what we do.

MR. BARRETT: I know what your role is and you are paid to do a job. Your job is: the four shareholders say to you, go out there and make a profit for us. I guess, from that -

MS CARINCI: With conditions, because there could be a lot more money.

MR. BARRETT: From your point of view you are doing a good job, you are doing an excellent job with the role you do. I guess, where we are falling down is: How many people are being hurt and being affected by the policies of the four shareholders? It has nothing to do with you. I am not arguing with you about it. You are paid to do a job and you do a good job.

MS CARINCI: My job is also, and my mandate is also, to do it in a socially responsible way and to minimize harm. I think, maybe ten years ago our awareness level was quite different and you probably would have seen mandates and mission statements from lottery jurisdictions that just said to maximize revenue. Now, they are very different. It is create, generate profit for the shareholder, but under certain conditions.

As a matter of fact, you will see, probably for the first time, over the next year or so, that revenues are declining. They will decline if the status quo remains, and that may be something that the shareholder is perfectly fine with, and that will be fine. I will manage, and this Corporation will manage, based on the status quo, what we have existing today in a responsible way, because the shareholder might make the decision that a decline in revenue is satisfactory for a number of reasons. I can tell you, around the boardroom table that I sit, it is not profit at any cost. It is a far cry from it.

MR. BARRETT: Well, I guess I will just make - this all started in terms of the national and what have you. It all started to pay for the Olympics, right? It all started to pay for the Olympics, for governments to raise money to pay for the Olympics. I guess, since that time, all governments have become addicted. I once said to the Minister of Finance, I have a smoking problem, but I say that the Minister of Finance is more addicted to the money he gets from smoking than I am to the nicotine that I take when I draw a cigarette. I guess gambling is going to be with us forever. It has always been with us, believe it or not.

MS CARINCI: Regulated or otherwise.

MR. BARRETT: Bingo has been played in Newfoundland for a long, long time, and it will still be around, but I guess those of us who are in responsible positions have to come up with some kind of controls that will protect people from themselves. That is the thing that we have to face right now: How many people out there are going to get hurt? There are a lot of homes broken up, and a lot of things happen because of alcohol, and we seem to have taken some control over the alcohol in terms of drunk driving and education. Believe it or not, some of our greatest success in alcohol and drunk driving, and what have you, was once we got young people involved in promoting it. That is what I liked about - you said that you were going to do a play and you were getting young people involved in it. I think a lot of the success in terms of recycling - let's face it: We, as adults, in a lot of respects, have failed, but once we get children involved, and children out there promoting, and children doing the job, they do a lot better job than we do, you know. They have done a great job with drunk driving and all that sort of stuff, some of the things that have happened with our young people, so probably we should be out there in the schools asking our kids: How do we control problem gambling?

I will leave it at that.

MS CARINCI: That is an excellent point.

I think what has happened over the last decade is that we have evolved to better understand the issues and the problems, as you are pointing out, and I think we will go a lot further over the next ten years. I think a decade from now, while there might still be concerns - I don't think we will wipe the problem out completely - I think we will have made some real advances in that area.

Thank you for your comments.

CHAIR: Mr. Collins.

MR. COLLINS: Thank you, Mr. Chairperson.

Welcome to Newfoundland and Labrador. Welcome to our Province.

MS CARINCI: Thank you.

MR. COLLINS: I have probably been the most outspoken critic in this Province, against VLTs in particular, among a lot of people here. I want to start off by making an opening statement to set the parameters.

You know, one of the things I find troublesome is, when you talk about a grey market, that the Atlantic Lotto Corporation and governments became involved to do away with this grey market or black market. I don't buy that, and many people in this Province don't buy that either, because, at the last session that we had here, we had officials from the Department of Health. One of the questions that we asked them was: Prior to the advent of VLTs, what would have been the frequency of gambling addictions that you saw? It was not because people were underground and did not come forward with their addiction. If they had an addiction, no matter from what source - I mean, people have cocaine addictions. People know that; they go for treatment. That is underground, that is not legal, so the problems would have been there.

The fact is, fifteen or twenty years ago, prior to VLTs, if you went around this Province and asked every individual if they knew somebody with a gambling problem, 999 out of 1,000 or more, the answer would have been no. Today, you do not have to leave this room. You can walk out to any street in any town in this Province and ask them: Do you know someone who has a gambling problem? They will be able to tell you yes, and they know them personally, not someone they hear tell of. So, it has escalated to that level.

If we want to carry that to the extreme, where we say government got involved to protect the people, to me that is a fallacy. If you follow that thorough, then you would say government should be selling cocaine, marijuana, extacy, and all these other things, because they are being sold under a grey or black market. People are being hurt by them. Why doesn't government get in on that and legitimize it? That is not happening. Government has seen a real opportunity here, as far as I am concerned, to exploit people, not protect them, and they have done that very successfully.

Gambling in this Province, prior to VLTs - and I want to make one thing clear. I am not on an anti-gambling campaign - that is not what it is all about - but I do believe there are certain aspects about gambling in this Province that need to be curbed and need to be eliminated, and VLTs certainly follow right in there.

When we talk about VLTs providing entertainment, well, I am sorry. I can tell you any number of people in this Province you can go to, or pick up the phone now and call, whose family members have committed suicide because of their addiction to VLTs; not to Lotto 649, not to bingo, not to pull tabs, but to VLT machines.

There are untold numbers of people in this Province whose lives have been changed and will never be the same again. There are a lot of children who have suffered, and there are many, many people who are financially ruined to the extent that they will never recover.

There are lineups in this Province for addiction services, gambling in particular - lineups. We are creating people with gambling addictions faster than we can help the people who currently have them, and I think that is a very sad reflection on the kind of society that I want to live in, and I think most people do, because the polls in this Province have been consistent with the idea of banning VLTs. Some of the polls I have seen have been seventeen, eighteen and nineteen to one to keeping them, so there is an overwhelming desire in this Province to ban VLTs, because they have been referred to by experts in the field as the crack cocaine of gambling, and they have been referred to as that simply because of the damage they can do in a short period of time.

I think it is time that the Atlantic Lotto Corporation recognizes that. I think it is time that the provinces recognize that and do something about it. We are destroying people's lives - not to provide entertainment, not so they will have something to do on a Friday night, but simply because we want the money. There has never been a cost-benefit analysis done to determine what, in the long run or in the final analysis, the benefit to government is. If we talk about the amount of revenues VLTs bring in, then most of that money would be spend in the economy anyway, if it didn't go to VLTs, in a lot of cases through addictions. Let's face it, the studies have shown that most of the revenue from VLTs comes from a small percentage of people who are addicted to them. That is a reality. These people are not rich people. If they were not addicted to VLTs, there is no saying they are going to be addicted to anything else. We had pull tabs, we had 649, and we had other draws prior to VLTs coming to the Province, these people were not addicted to any of these products. I don't buy the argument that if you weren't addicted to VLTs you are going to be addicted to something else. I don't think that is correct either, although I do understand the nature of addicted personality types and things like that. The money would be spent on things that people need. Families wouldn't be going hungry.

We talked about that versus alcoholism. Well, if you get paid $1,000 on a Friday and you stop into your neighborhood pup on your way home, it is not possible to spend $1,000. When you go home, you may be entirely intoxicated, you may have bought drinks for everybody who was in the club, but you spouse can go through your pockets to find enough money to buy groceries. But $1,000 going into VLT machines, people lose all that in a relatively short period of time. There is no detection from the spouse or family members that they were doing anything wrong, whereas with alcohol or drugs there are probably symptoms they would recognize. It is the VLT thing and the fast draw KENO, which I will come to later, that raise the hair on the back of my neck, and certainly people who I have talked to in this Province.

I have to commend you on a good presentation here today. If I had come to this meeting without having had the opportunity to talk to the people who are suffering in this Province because of gambling, then I would have walked away today probably singing the song, what a wonderful world we live in, but unfortunately that is not the reality. There are a lot of problems out there that are being generated and caused by VLTs in particular, and other forms of hazardous gaming. If you put a product on a shelf and it caused a couple of people to die, if it caused a greater number to get sick, you wouldn't be in business very long, you would be shut down. You certainly wouldn't be able to put your product back on the shelves next month, with the exception of probably one thing, tobacco. Now you see governments suing the tobacco industry to recover health coats, so they are not even putting up with that anymore. I am just wondering when a class action suit will be brought against government and the Atlantic Lotto Corporation from people whose lives have been destroyed, or who have lost loved ones. I think that is going to happen sooner rather than later, and I will certainly encourage people in that position to pursue that.

I do have some questions that I would certainly like to ask. I would like to start off by asking if you could describe the processes used to determine which games are introduced into either of the Atlantic Provinces. With our Province alone, if electronic Keno came here next week and started up, who would we have to point the finger at? Would it be our own Province, or would it be the Atlantic Lottery Corporation or the board of directors?

MS CARINCI: The approval process is what you are asking?

MR. COLLINS: Yes.

MS CARINCI: Well, it is from a selection of the product perspective. You know, the corporation looks at opportunities, scans the market and sees what is successful or not successful. Research is not just to look at whether it will be a success but also what the impacts might be as best we can from a social responsibility perspective. Then we provide those opportunities to the representatives of our shareholders, which is our board of directors. Ultimately, the board of directors, who represent the shareholder, make policy decisions and also make the decisions as to which types of games go into the market.

MR. COLLINS: Okay. How much money does ALC spend each year on that, on research on new products?

MS CARINCI: On research and development? Well, over the last several years it is probably in the neighbourhood of about $400,000 we spend on researching products and, again, from the perspective of whether they would be something that players want to engage with, as well as the focus groups and the research we do around responsible gaming that Cynthia is involved in. So that would be combined.

MR. COLLINS: That does not seem to be a lot of money, $400,000 for research into areas like that.

MS CARINCI: Well, that is in the past year that we have spent that. Part of the $700,000 that Cynthia talked about in terms of responsible gaming would include the research as well that we would conduct there. There is no doubt, that should a decision be made that we want to sustain revenue - for example, replace the revenue that we know will be declining from VLTs, whether that is through policy decisions or other decisions that are made around that, that if we are going to look at sustaining the revenue for the good causes through other forms of gaming that is acceptable, then we will have to increase our research and development investment on a go-forward basis. There is no question about that.

MR. COLLINS: Could you explain further what process is followed to conduct research into each product that is developed to determine and identify any potential negative impact it may have on the public who will be exposed to the product?

MS CARINCI: I will actually let Cynthia take that one on because she is intimately involved in that process. I can give you the overview but I might as well give you the expert.

MS GOODWIN: Actually, we do a number of things to try to assess the social impact of a new product. Earlier in our conversations here today we talked about taking a look at research in other jurisdictions, be they prevalent studies or other research that might have been done to assess the social impact of a given product.

We also conduct literature reviews. We take a look at what other experts are saying, and by experts I mean problem gambling experts and gambling experts in general, about a given type of product and its impact. Sometimes we do our own research, and Michelle referenced that earlier in the conversation as well. We talked a little bit about our experience with Play Sphere, for example, where we designed what has become really the leading responsible gambling approach in the industry around the world. So, that would be the type of research that we would do leading up to the development of a new product and then we also do research once it is in the marketplace as well.

MS CARINCI: I will not pretend that it is not a challenge for us. One of, I guess, my quests over the last decade is to create a wind tunnel, if you would, where you could put all of these elements of a game through an (inaudible) and that would come, go or no go, based on - I would love to have it. By the way, if anybody ever figures it out it will be worth something.

We are working with research companies to try and develop something that could be a little simpler to deal with such a complex issue. The UK has undertaken to work that and we are hoping they will share some of their data with us, as does Denmark. But, it is not a slam dunk for us anymore than it is for me from a revenue perspective. I would love the same wind tunnel to tell me whether something was going to be successful in the market. A lot of it is experience, input from the experts and trying different ways of researching.

What we did with KENO, for instance, is we actually simulated it for when we identified those who are at risk, I think, and those who were self-admitted problem gamblers and those who just play for fun. They are difficult actually to find, whether it is because they will not admit it or there is such a small percentage, I am not sure, or a combination of the two. So, we have tried to actually simulate environments to see what the reaction of those folks are, but it is a challenge that is ongoing and we are getting better at it.

MR. COLLINS: Have you done any extensive research into VLTs in particular, in the addiction rates and the problems resulting from the use of VLTs?

MS GOODWIN: What type of research? I am sorry, Mr. Collins.

MR. COLLINS: Like the addictive nature of them, and what makes people become addictive to certain things.

MS CARINCI: Not just us, I mean that is being done around the globe; not just by gaming organizations but also by the research and experts. I hate to keep saying it is a complex situation, it sounds like I am dodging the question, but it is.

MR. COLLINS: Has ALC done research themselves?

MS GOODWIN: Again, we are in the process of doing some research with respect to this card based concept in Nova Scotia, and all of the initiatives related to video lottery in Nova Scotia is part of the Nova Scotia gaming strategy. For example, rejection in speed of play by 30 per cent, the removal of the stop button feature on the machine, would be two examples. Closure at midnight. Those are specific initiatives tied to video lottery in Nova Scotia that we are researching as well so we can understand the impacts of those.

MS CARINCI: Trying to do them sort of one at time to see what actually is having the most impact, because it gets more complex. If you introduce them all at once you do not really know, but nevertheless, it is too soon to provide you with data on that. We hope to be able to do that over the next several months and see whether in fact it has had an impact, and the impact I am talking about is not on the casual player. The impact we are looking for is: Has it had an impact on those who are at risk or those who are already experiencing a problem? How preventative has it been, and has it done anything from a harmful perspective to mitigate that. That is the challenge.

MS GOODWIN: I would also add that there are at least two universities in Atlantic Canada that are doing problem gambling related research, and it is specific to VLTs, the University of New Brunswick and also Dalhousie University. We have a relationship with researchers there and work with them as well to try to understand what is it, for example, about a particular game or the way that a VLT plays that might potentially contribute to problematic behaviour. That is another way through which we are trying to get answers.

MR. COLLINS: Do you, as a corporation, agree that VLTs are, by far, the most addictive product that you have out on the market?

MS CARINCI: I believe the prevalence studies have stated that fairly clearly. In the most recent study when we looked at where the problems are, I believe VLTs was at the top of the list. I know it is the case in other provinces. The data speaks for itself.

MR. COLLINS: Of course, the prevalence study includes someone who bought a raffle ticket on a turkey from their church, as a gambler, and that is the only thing they did all year. It sort of skews the numbers, in a way, because if you targeted just the people who were specifically gamblers - and they identify to some degree the area of problem gamblers, but when they talk about 2 per cent to 3 per cent of gamblers having a problem, that includes the person who just bought a raffle ticket and that is the only activity they had all year. They are included in that 100 per cent of which you based the 2 per cent to 3 per cent.

MS CARINCI: Right, but through the methodology they would not probably (inaudible).

MR. COLLINS: I know, but all I am saying is that you could put it out. I mean, one of the things from some of the proponents of VLTs in this Province when the study was released was that there was only a very tiny percentage of gamblers who have a problem, so that is the cast that they put on it when, in fact, the numbers, if you look further, if you look deeper, you see where they are.

MS CARINCI: Yes, I understand what you are saying.

MR. COLLINS: But, as a statement, they can just say: Look, it is only 1 per cent or 2 per cent, which includes -

MS CARINCI: If you look at it overall, the complete spectrum.

MR. COLLINS: Exactly, and that is a problem.

We talked a bit about youth earlier, and somebody asked a question. You were talking about some of the things you are doing with young people, because today's young people are probably - not probably - they are, the first time ever in our society that young people are being exposed to gambling as a problem area. When most of us around this table grew up and finished school, the most that we knew of gambling was someone probably had a poker game for, you know, a twenty-five cent ante or something like that, or five cents, but young people now are being thrown into this.

Can you tell us how much money or resources are allocated to educational awareness concerning gambling addictions, how much is spent in our school system, and what is the percent of your budget dedicated towards that versus the amount dedicated towards advertising in promoting your products?

MS CARINCI: I cannot answer the first question, which is how much goes into the school system. The Ministry of Education would probably be able to do that. That is not a number that I am aware of at this time.

MR. COLLINS: You said you spent $700,000.

MS CARINCI: Yes, that is from the Corporation's perspective. I don't know what the government spends.

MR. COLLINS: No, no, I just want to talk about the Corporation's perspective.

MS CARINCI: Okay.

The Corporation will spend $700,000 this year.

MS GOODWIN: That is our budget for our next fiscal, at a high level. That does not, by the way, include the salaries of the three or so people who are dedicated to the responsible gambling program, development and implementation in our company.

We are actually still segmenting out the precise budget for exactly what we are going to spend, not just on our youth awareness program but also age of majority program, if you will. Michelle mentioned a program by the name of Operation ID, for example.

MS CARINCI: Which exists in Newfoundland today.

MS GOODWIN: Yes.

We are still in the process of chatting with them to get a sense of what the program really looks like, what the options might be, and what some of the costs might be.

MR. COLLINS: It is $700,000 now; that is for the four Atlantic Provinces.

MS CARINCI: That is right. That has grown, and it will continue to grow. Maybe it should be double that, but there is only so much you can do in a period of time. In this fiscal year, we have really said that we want to put not all of our efforts but more of our efforts, significant effort, against youth awareness and gambling around youth.

Your other question about advertising is a good one as well, because the other discussion we had - and as we learn more we get better at this - is: To what extent can we use our marketing dollars to actually put against education and awareness as well? We do that today with collateral that is at the point of sale or in the bars, et cetera, so we have really increased the amount we are spending on that collateral.

The discussion we are having now is: Should we be incorporating that into - and, by the way, I think the answer is yes - any of our product marketing, whether that is electronic billboard print, et cetera. It is not so much about money as it is about the amount of time you dedicate within your messages. That can be very effective as well.

MR. COLLINS: What is the budget for advertising and promotion?

MS CARINCI: Advertising and promotion, marketing? About $8 million, and that would be, rightly or wrongly, within the same percentages we look at across Canada, or actually in North America, from a marketing perspective.

MR. COLLINS: I just want to go back to something the Member for Bellevue mentioned and brought up about the advertisement that is on during the hockey game. I don't watch hockey so I didn't see the advertisement, but I agreed with him that it is probably stupid. Your response to that was: Look, it is important to show people that there are winners and that they are real people, and let them tell their story. Wouldn't it be also prudent to have people whose lives have been drastically affected be able to tell their story as well, as part of a responsible gaming plan?

MS CARINCI: I think it is a good suggestion. I will defer to my colleague here.

By the way, we have created relationships with those folks who are problem gamblers. They have visited the Corporation and have spoken to our staff, so we are not ignorant of these impacts. We speak directly with them. We have them share their stories with us as well.

I just wanted to add that, and then I will defer to - whether the experts will see that as having an impact or not, I do not know, from a marketing perspective. I will leave that to you.

MS GOODWIN: A lot of our approach so far with responsible gambling and problem gambling has been very targeted. By that I mean, instead of going on TV with a message, we would have messages available at video lottery sites.

You talked a lot about youth awareness. In the play, for example, that will be shown in high schools, it does just what you have described. It shows the consequences of problem gambling, and then it would engage the students in a conversation about that, having them identify maybe what went wrong and what could those people have done a little differently to avoid the terrible consequences that they have encountered.

There is no question that I think we do need to take a look at what the opportunities are, to go out with some of these messages in more of a mass media way, but to do so in a way that is going to connect with the consumer, connect with the public, so that it is not seeming to be too heavy. That is a challenge. How do you communicate not only opportunities and issues around prevention in a way that it is going to make sense and be meaningful, and people would say: I agree with that, and I think I can apply some of that to how I play games of chance. Also, how can you get information out there in an effective way to provide pathways to treatment?

It is a big challenge and it is a big discussion and debate that has been had amongst the experts from a social marketing perspective. How can you get the message out there in such a way that it will be received and it will impact people's behaviour? We have not necessarily fully figured that out yet but we are working on it.

MR. COLLINS: I think there are plenty of volunteers, in this Province at least, who would volunteer their stories and their personal tragedies.

In the play that you are talking about in the schools, how much of that is dedicated towards the VLT, which seems to be the biggest culprit here?

MS GOODWIN: I believe there is a segment that is addressing VLTs.

MR. COLLINS: Is that in relation to the problem percentage-wise, total time?

MS GOODWIN: I would have to get back to you on the percentage of time (inaudible).

MR. COLLINS: One of the problems we have with VLTs, and many of the members here, and the Chairperson and others have mentioned, in this Province they are, by far, the culprit. I mean, of all the tragedies that we have heard, VLTs have been behind them. One of the problems that we have is that the VLTs are in every single nook and cranny of our Province from Nain right down to Port aux Basques. You know, everywhere in this Province there are VLT machines, but treatment centres are not everywhere in this Province, and people who have lost their entire savings and money and are desperate do not have the money to get to where the treatments are located. That is a real problem. Governments are not keeping pace with addiction counsellors. Like I said, we have lineups in this Province where, right now, in certain areas of this Province, if you want to see an addictions counsellor for gambling, you could wait up to six months. That is a long time, and that is why I go back to say we are creating gamblers faster than we can treat the people who already have the problem. There has to be more done.

MS GOODWIN: Can I just -

MR. COLLINS: Sure.

MS GOODWIN: You know, another point to be made is, with the release of the prevalence study showing all the data around problem gambling, and how that segments out with respect to specific games and information on - well, just the wealth of information the prevalence study provides gives us the opportunity to work with government and their plans to certainly do so, to build a strategy to deal with the statistics that are shown in the prevalence study.

MR. COLLINS: Have there been any meetings held to date with government?

MS GOODWIN: We were actually involved in the advisory committee for the prevalence study. It is a very important piece of research for us, so we have to (inaudible).

MR. COLLINS: Since the study has been released, have there been any meetings held with the Department of Health, between the ALC and the Department of Health?

MS GOODWIN: Not specifically yet. We have had many meetings with addiction services representatives at the community-based level; but, in terms of beginning the strategy piece, that will happen, I understand, very soon.

MR. COLLINS: Okay.

On the electronic five-minute draw, KENO, which was scheduled to start in our Province last year - to date it has not started - did the Province of Nova Scotia say no to electronic KENO, fast draw?

MS CARINCI: What the Province of Nova Scotia said - as did the Provinces of New Brunswick and Prince Edward Island - is that they were focusing, at this time, on the gaming strategy that they released last fall, which Cynthia referred to, which is specifically targeted at dealing with the video lottery market, and also on bringing in a link bingo pilot that would revive revenue for non-profit organizations, because bingo revenue has continued to go down simply because it has never been updated in terms of its offering. In their strategy, they have said that is what they are going to focus on.

What they have also said is that they were impressed with the diligence that we did around multi-draw KENO in terms of our simulation research, the progressive changes we made that also have been approved, if that is the right word, by some of the research. It was talked about as being one of the most progressive. They haven't outright said, no, that it won't happen at this time because they are occupied with other things, as was Prince Edward Island with the harness racing. Now that we have implemented the track and the gaming at the track, that is an option that Prince Edward Island might consider. It is more about timing and strategy at this point.

CHAIR: I was going to make the suggestion that we break for lunch, because I think Randy has a lot of additional questions.

MR. COLLINS: Yes.

CHAIR: I think it is fair that we break for an hour for lunch before the cafeteria closes if you are going to stay in the building.

MR. COLLINS: Yes, sure.

MS CARINCI: It is fine with me.

CHAIR: We will continue at about two-thirty.

CHAIR: We are going to continue on now with Randy.

MR. COLLINS: Thank you.

In your 2004-2005 annual report, you talk about responsible gaming. On page 10 of the report, it says: The gaming industry is highly regulated which provides an environment where problem gaming is both recognized and visible. Could you explain what that means?

MS CARINCI: What? The statement that problem gambling is recognized and visible?

MR. COLLINS: Yes.

MS CARINCI: From an industry perspective - and I think the reason I felt it was important to point that out is because if you go back ten to fifteen years, I do not know that it was. Today the industry recognizes it as something that we, as one of the stakeholders, are responsible in playing a role and recognizing the issues around that and the impact. That would govern, again, the types of games - back to your question around the types of games we put out and the messages we put out. So, I felt it was important for the gaming industry to acknowledge it.

MR. COLLINS: Even though it is regulated, how does it identify problem gambling as being visible and recognized? Could the argument not be made that prior to it being regulated that there was not any degree of gambling problems?

MS CARINCI: Well, I think it would be difficult to make that argument because I do not think we knew because folks did not feel comfortable about treatment and we know that from talking to people who were problem gamblers, or the treatment was not available, so that we did not have the statistics and the data that we had. I think the regulated industry has made it easier for folks with problems to seek help because it also brought it to the surface. So, it is visible to us. We know that in our role as a stakeholder or government as one of the stakeholders can provide for the services, as you pointed out, that are so desperately needed in each province.

MR. COLLINS: The problem as I see it now, people will still have to hit rock bottom before they seek treatment in most cases. They have to be really down in order to seek help. I do not know of anything that existed in our Province prior to VLTs that would have required people, to any degree, to even seek treatment for addictions related to gambling. Are you aware of anything that existed here?

MS CARINCI: I am only aware that there was a grey market within Atlantic Canada. There was VLT activity prior to being regulated, but other than that, there was the Irish Sweepstakes or if you happen to be a sports better booking - those are the only types of other activities that were probably going on.

MR. COLLINS: When I questioned the people from the Department of Health on this, as I said, people in the Province would have been hard pressed to know of anyone with a gambling problem prior to the arrival of the VLTs.

MS CARINCI: You know, there is an interesting - and I do not have the answer, but I think another thing that is interesting is I referred to my time in British Columbia, for instance, that does not have the wide area VLTs today and never did. Back in 1993 there wasn't a multi-draw KENO. We knew there was a grey market of sorts but we could not quantify. In 1993 we did the first prevalent study. Basically, all we had in the regulated market was Lotto 649, instant games, break open, and yet the prevalent study that year came out with the statistics that they actually see today, ten years later, and there were no VLTs in the market. So, one could speculate that book making - is it underground? Is it that there were clubs that - where we knew gaming and poker games and things were going on.

I cannot answer the question but I can tell you that the first study - and there were no VLTs - had the statistics of between 1 per cent and 5 per cent. I believe it was about 1.6 per cent in terms of problem gambling. One can only speculate what it was, Mr. Collins, in Newfoundland and Labrador, other than the antidotal information that you have from talking to people directly.

MR. COLLINS: Well it is not just me speaking to people directly. On the news a while ago, a guy took a sledgehammer and trashed a few machines in Grand Falls. That has happened in Nova Scotia and other places as well.

MS CARINCI: Oh, for sure. I am not suggesting that there aren't issues and problems today at all. I just don't know to what extent it was before.

MR. COLLINS: According to health officials, there was nothing before that they can determine.

MS GOODWIN: I am just going to make the comment that, looking at prevalence studies, and again the prevalence study that was recently released in Newfoundland and Labrador, we find it very interesting to note that the statistics around poker, for example, show that 11 per cent, I believe it is, of the adult population plays poker, and of those poker players 14.2 per cent experience some levels of problem with their play. Again, this is an unregulated part of the industry. I find it is very difficult to make a correlation between regulated gaming having impacts on problem gambling and unregulated gaming having impacts on problem gambling. It is very complex.

We have also heard, anecdotally, from some of our contacts in the treatment community that more and more they are hearing about people, to your earlier point, talking about issues with respect to Internet based gaming as well. So, that could be the future, that could be where we see the numbers a little bit higher potentially.

MR. COLLINS: I am sure that in the future that is an issue that governments, federal governments in particular, will have to deal with and address. It is also interesting to note here in this Province that we have a large number of employers and organized labour who have employee assistance programs in place at the workplace, and this year, for the first time ever, VLT addictions have taken over as the number one problem that they are dealing with, for the first time ever in the history of EAP committees. As a matter of fact, they are planning a huge conference here in St. John's during the month of March to address that problem and to expose exactly what is happening.

MS CARINCI: That is actually encouraging in some ways. I don't know if that means the statistics are going up or people are reaching out and seeking help and the help is being provided. While there is a negative side, there is also a positive side, that -

MR. COLLINS: It is positive that they are coming out and asking, but it is very, very negative that VLTs are the culprit that is causing them to do that, and other forms of gambling is not.

Also, on page 10 of the annual report, it states that this also ensures that those who are struggling with a gambling problem, their own or that of a loved one, can reach out to a provincial addictions service for help. You know, it is not that simple. As I pointed out earlier, the lists are long for gamblers in this Province seeking help, some six months. That is due to VLTs in particular as well. While this looks good on paper, you know, you have a problem don't worry about it, here is a phone number, here is a quarter, call 1-800 and you are fixed, it is not as simple as that.

MS CARINCI: No, it is not. I know that and I understand that.

MR. COLLINS: You also talk about VLTs having built-in features to help prevent excessive use.

MS CARINCI: Those are the features that I referred to earlier, which is where we put the clock on them so that you could actually monitor the amount of time that you spent on playing, as well as a timeout. I think it was, with 150 minutes it would time out so it would create a mandatory break in play, which we have been told by experts is one of the important things that those with problems need, to have a break. We changed it from having credits to dollars. This credit thing didn't really quantify the amount being spent, so we changed that so you could actually see the amount of dollars you were spending. Then there were some key messages, reminders: Do you still want to play? That was probably one of the first major attempts at trying to determine what would be effective in creating education awareness and perhaps being preventative.

As you say, Atlantic Canada led the way. Some of these results are still unknown, as to whether they are actually having an impact. To me what was important is that we, as an organization, were taking some proactive action to attempt to understand what could have impact, particularly for those with problems and at risk.

MR. COLLINS: Do you think you are taking enough action?

MS CARINCI: I think that we are learning, because what I don't want to do is fluff, and a lot of organizations have. I don't want to go out and do things because it will look good or it will be perceived that we are doing something, when in reality it is just, what I will call, public image, you know, these kinds of things. I want to make sure that the organization is investing in things that are actually going to have an impact and demonstrate that they have an impact, that they are real. That is what the pilot is about in Nova Scotia, and that is what some of these other thing we talked about - we are monitoring the impact of the gaming strategy in Nova Scotia around hours, a stop button and slowing down play.

MR. COLLINS: When is that project scheduled to -

MS CARINCI: That strategy was released last spring, and it was started to be implemented in the fall, in November, where there was a reduction of VLTs -

MR. COLLINS: Thirty per cent.

MS CARINCI: There was the speed of play in January.

MS GOODWIN: It is just being implemented now.

MS CARINCI: It is just being implemented. The stop button is just being -

MR. DAIGLE: The hours of operation in July.

MS CARINCI: The hours of operation were in July, and the stop button, I think, was in January as well.

MS GOODWIN: It is starting now.

MS CARINCI: Is it enough? I do not know, but when we look at the research, and through discussions, we are doing everything that we think might have a meaningful - and testing it and piloting it to see whether or not it actually does.

We also make sure that we are monitoring some other jurisdictions that are progressive, such as some parts of Australia, what Sweden is doing, to determine if there are things that are actually working and it is demonstrated that we could actually apply here.

MR. COLLINS: Go on gambling watch on-line and you can see what is happening in these countries as well.

MS CARINCI: Also, we are members of an association so we do dialogue and talk about it. It is an issue for everybody.

Is it enough? I think we will be doing more and more as we learn, but I want to make sure that it is real and that it has the potential of having an impact.

MR. COLLINS: I guess what I am trying to get my head wrapped around is the fact that the vast majority of your revenues are coming from VLTs.

MS CARINCI: Yes.

MR. COLLINS: The vast majority.

MS CARINCI: Yes.

MR. COLLINS: The vast majority of the problems are caused by VLTs. We watch what is happening here in this Province, and there is nobody around the table who has not heard stories - and there are many.

I was in Nova Scotia last July, for about eight days. Every single day, VLTs captured the front page on the morning papers. For about five days in a row they captured the front page with the destruction that they were causing there. We have seen a hunger strike in New Brunswick. Doesn't that tell you something, as a Corporation, that this product is very harmful?

MS CARINCI: Certainly, all of those things, and the prevalence study, tell us that there is a percentage of folks that, yes, are impacted by this activity, that do have addictive behaviour.

MR. COLLINS: But you do not see people out in the streets like that over 649 or Super 7 or bingo. It is targeted, focused to VLTs.

When you are sitting around your board meetings, are these concerns ever expressed, like the number of people who have taken their own lives through suicide out of desperation, the number of marital breakups, the financial ruin? These are real stories and they are pretty sad and tragic. Doesn't that tell you something as a corporation, that we are doing something wrong here or something that is not morally correct?

MS CARINCI: The question was: Do we ever have these discussions at the boardroom table? Yes, regularly. I refer to our business plan and an overall strategy in looking at the options. The shareholders are concerned. They are concerned for two things: One is that we are, as one of the many stakeholders - and we are only one of the stakeholders on this issue - that we are doing and investing appropriately insofar as we can. Obviously, we would not provide treatment. That is not our core confidency but the things where we can be impactful, that we are in fact doing. The discussions around alternative types of games that could be offered in social settings because, again, it has been demonstrated that is where people want to play and interact and be social. Are there other alternatives to gaming that we can offer? So, we are not going deeper into the same pockets, that is a concern.

Then the discussions around, for instance, the strategy that we put together which was implemented in Nova Scotia, that we should all be watching carefully. Those things are all part of board discussions, policy decisions, that the shareholder is making, but at the same time, as a shareholder, they recognize that the vast majority of the constituency in Atlantic Canada wants the freedom of choice.

MR. COLLINS: I will have to cut you off there. I do not believe that, because every poll that has been done in this Province consistently says: Get rid of the VLTs. It does not say: Give us a choice. They say: If you had a choice, would you keep VLTs or get rid of them? Time after time after time, consistently, it is: Get rid of them. And not by slim majorities, by huge majorities.

MS CARINCI: Well, I have not seen that data. What I do know, if it is put in context, when you talk about what the consequences of getting rid of them or what the alternatives are, for instance, destination. I am not talking about big casinos or anything. I am just saying they are in fewer sites so that you can offer more controls and regulatory controls around self-exclusion and things; that is what I am referring to. So, if you put context around it, they will say: Gaming under certain conditions. And VLTs, or slot machines for that matter, under certain conditions are acceptable.

I think what we are doing, like the alcohol business did thirty or forty years ago, is saying: What are those conditions? I think we are in that transition that probably the alcohol industry went through. What are the conditions under which something that could potentially be harmful to a few - what are the conditions society and its policymakers will accept? I think that is what we are moving towards, is trying to discover: Just what are those conditions?

MR. COLLINS: Look, I do not take any exception whatsoever in agreeing with you that prohibition does not work, but if you put it in context, during the prohibition period alcohol flourished. Government said: Okay, we will end prohibition. But, by ending prohibition they set standards. Number one, alcohol content could not be greater than a certain amount.

MS CARINCI: Absolutely, right.

MR. COLLINS: Homemade moonshine is still illegal because of the dangers that it presents. If we look at what is happening in the country with our drug problem, they are looking at easing off on marijuana but there is no talk about legalizing cocaine.

MS CARINCI: No, or crystal meth.

MR. COLLINS: Or crystal meth. It is still being sold but there is no talk of legalizing that, and this is what we are saying. We are not against the ALC or the provinces or gambling per se, but we are against the forms of gambling that destroys people's lives in short periods of time. That is where I think we are at in this Province, in particular with the VLT machines, and that is why we have the fears about the fast draw electronic KENO because if we are going to reduce the machines now by 15 per cent - some of the machines may have KENO on them, I do not know.

MS CARINCI: They might.

MR. COLLINS: They might. I do not know either.

MS CARINCI: There are about 360 that has KENO on them today. So they could, yes.

MR. COLLINS: I do not know, but it seems to me what we are going to be doing is cutting out 15 per cent of the VLTs. Now, instead of somebody having to wait for a machine to use, everybody in a club is going to be able to play at the same time and they are going to be able to spent $100 every five minutes if they are addicted to it. They could spend ten minutes maximum on a card, on a draw, but they can buy ten cards, ten different sets of numbers. They can spend $100 every five minutes if they want.

Is the demand for entertainment so great that we need five minutes every hour of every day, five-minute draws? Is the demand for entertainment that great?

MS CARINCI: You have several questions in there. The activity that we are seeing with poker on the Internet, on Mobility, although not that much in this country yet, is - two things are happening. We are seeing that go up and, when you look at it, it is happening in social settings, it is interactive, and in some cases you might call it more entertaining, but it provides a different experience. Then you look at what is happening to the games that we have accepted for the last two decades: the Lotto 649, the instant games, the sort of traditional fun for a buck games that do not seem to cause the same issues. That has been flattening, and it is on the decline.

I think the marketplace is telling us the answer. I am merely giving you a reflection of what we are seeing in the marketplace. There is a demographic shift. Behaviours are shifting and the games of yesterday are not the games they want to play, and the inherent elements they want - I am not saying they are VLTs, by the way, but it is not always about winning, so much. For instance, a sports better, by and large, does not play to actually win. That is a secondary thing. They play to be right. They play to beat the house. They play to say: I know more about what is going to happen between the Maple Leafs and....

It is an experience for them. What we are learning when we look at the trends is: Yes, there is a movement there. Now, it is a policy decision as to whether government and the shareholders actually want to move in that direction, or are they quite prepared to accept the declining revenues from gaming and watching an unregulated market grow? That is a fundamental decision for governments going forward. Now, VLTs may not need to be a part of that picture, which I think is what your question is.

MR. COLLINS: Yes.

Have you ever watched people play VLTs?

MS CARINCI: Oh, yes.

MR. COLLINS: Do you ever see them having fun?

MS CARINCI: Well, they are probably having fun inside. I am not making light of it, but it is a very solitary activity. It is not an interactive, social -

MR. COLLINS: There is no need (inaudible) get in the way.

MS CARINCI: It is not a social activity. It is not an interactive activity, when you compare it to some of the other activities. You are quite right.

To go back to the boardroom, I am not going to speculate what the shareholders decision will be down the road, but I referenced earlier that I am not so sure there would be great opposition or outcry if the revenue from VLTs decreased, and continued to decrease. I think the issue is: What will, from a gaming perspective, if anything, replace that revenue and also be safe from a player perspective?

MR. COLLINS: I thought we were focused on what would replace it as entertainment.

MS CARINCI: That is right, gaming entertainment.

MR. COLLINS: Revenue is the correct answer.

MS CARINCI: Ultimately, absolutely, that is why we are here.

MR. COLLINS: There are problems associated with this that are deep-rooted. I have watched people playing the machines when I have been in different places, sitting around and having a beer or something, and, I tell you, you are right, I don't see anybody having fun either.

MS CARINCI: It is very solitary.

MR. COLLINS: I have seen people throw chairs. I have seen people storm out and throw whatever they were drinking at the wall, and I know probably what happened when they got home. I have probably an idea of what happened then, and it is not a pretty picture.

MS CARINCI: That, at the end of the day, is really a policy decision, as you know, that government has to make. Our role as a Corporation is to provide the facts, the information, options, and also ensure that we are demonstrating to the best of our ability, as one of the stakeholders, responsibility.

MR. COLLINS: We have two members of the board from this Province?

MS CARINCI: Yes, you do.

MR. COLLINS: I heard you mention this in your opening remarks, but is it still from Finance and Tourism?

MS CARINCI: It is Gary Norris, Deputy Minister, and Deputy Minister Terry Paddon.

MR. COLLINS: From Finance.

MS CARINCI: Yes.

MR. COLLINS: I know you don't decide who the Province puts there but, in your opinion as President of the Atlantic Lotto Corporation, do you think there would be any merit in the suggestion that one of the representatives from each province should be from the Department of Health versus Tourism? I mean, there is nothing touristy about this but there are health concerns that could be there.

MS CARINCI: I think the reason, and I can only speculate based on what I know of Mr. Norris in particular, and Mr. Paddon, is that Mr. Norris brings twenty-nine years of experience, where he has been in a variety of different portfolios, and I think it is that experience that was the reason for appointing him to this board, that he would have the ability, through that experience, to reflect the values and the direction of the shareholder from a health perspective, from an education perspective, and from a finance perspective. I would suggest that is probably the reason, or that is the reason, that Mr. Paddon was also put on the board.

MR. COLLINS: It just seems to me that the public would have probably a bigger degree of comfort as well if there were somebody from the Department of Health who would be looking at new games and so on from a health perspective and an addiction perspective. At least they are in that department at the current time.

MS CARINCI: I think one thing that might give you some comfort about that is that our representative here, Scott Costen, for Responsible Gaming, has developed and reached out relationships with some folks in health. We have not had a lot of meetings. I know he has had some. Certainly, we have involved our board members in those discussions, and our ministers. I think, overall, the initiative that we are taking as a corporation ensures that there is inclusion from the appropriate parties going forward. It would be very difficult for us not to involve and be involved and learn from the experts in health and be effective in the responsible gaming arena. We need them to do a good job.

MR. COLLINS: Going back to the VLTs when they were introduced and the changes that are being made now. How much research was conducted into the potential negative or hazardous impacts it could have upon people prior to them coming into the public domain?

MS CARINCI: In 1991, when the government took over the unregulated program, I do not know the answer to that, but I can tell you I have not seen any. I do not know if the shareholder themselves conducted any research on that. So, I don't know the answer to that, but I don't believe that ALC did. The government may have. I would have to -

MR. COLLINS: Has there been any research conducted recently into the addictive nature of VLTs or the hazards that they present to a segment of the population?

MS CARINCI: Research in what respect?

MR. COLLINS: Research into the negative effect that they have on people. The consequential results that could come from - if you have 1,000 people playing. I know that the studies have touched on this, but has ALC, as a corporation, conducted any research into - you have a product here. We are going to put this product or we have this product out in front of people. There are flags going up. There are people questioning whether they should exist or not. Has there been any study done into trying to get into the details of: Is this product really hazardous, or is it safe or anything else?

MS CARINCI: There are a number of studies now. I will let Cynthia - we collaborate with a number of different parties that are experts in this field. I will let you answer the question.

MS GOODWIN: In addition to prevalent studies, off the top of my head, I am aware of other research studies that do exist.

Michelle earlier talked about research in Australia, for example. That research, I believe, is more geared towards the impacts though of certain things, like slowing down the speed of play, how that impacts behaviour. I believe that Focal Research has done some research with respect to VLTs and player behaviour as well. They are out of Nova Scotia.

MR. COLLINS: You spoke earlier about electronic KENO, and I asked - because when I was in Nova Scotia one of the headlines that I saw was that Nova Scotians say no to electronic KENO. When I asked a question before, you talked about Nova Scotia is headed in other directions, in other ventures, but was there a proposal that went to Nova Scotia and the government said no?

MS CARINCI: I answered that question previously. I will answer it again though.

The Nova Scotia Gaming Corporation certainly does not write the headlines in the newspaper, and I know you know that. Unfortunately, we usually cannot control what those headlines are sometimes, but what the Nova Scotia Gaming Corporation has said is that they are going to focus on an implementation of the gaming strategy that they announced last spring. I outlined what those things were around VLTs, as well as charitable gaming and doing a pilot there.

MR. COLLINS: But, was the gaming commission originally going to bring in electronic KENO until the government said no?

MS CARINCI: No, the government - as far as I am aware, Mr. Collins, the Government of Nova Scotia has not said no to KENO. What they have said is we want to focus on this issue around VLTs and the strategy there and we want to introduce a form of gaming that is going to revive charitable gaming for their good causes.

MR. COLLINS: On the five-minute KENO, the plan was in this Province, and still is, I guess, although it hasn't happened, that five-minute KENO will be coming to 112 bars and 900 stores. Some of the evidence from other provinces and the States, I think Manitoba in particular, is of the addictive character of this game, especially in bars and stores, not just casinos, where it attracts more players, including youth, and is disruptive for non-players in terms of their going into a store and trying to buy what they went in for, when people are lined up probably punching in their numbers. There have been cases where stores have had picnic tables with monitors set up, people standing there spending their grocery money and long lineups at the cash, people wanting to get their numbers in. Bars, like many casinos, more or less - did you take any of that into consideration during the plan to implement that in 900 stores in the Province?

MS CARINCI: Absolutely. My experience, which is fairly vast in the arena of this particular game is that - I don't know if that was Manitoba you were referring to or not, but the experience I had in British Columbia and that I had in South Australia and in some of the States, such as Oregon and Maryland, is that, that game, first of all, is in retail today on a daily basis, so we are talking about just increasing the frequency of the draw. It is pretty well the same game. My experience there is that the players who play at retail, 60 per cent at least, or probably more, will come from the social settings. Now, that doesn't mean they are necessarily licensed. What happened with KENO, for instance, in British Columbia is you had coffee shops or you had a corner store that felt they wanted to take that opportunity and use some of their real estate and put a coffee station in. That is generally how they play, they socialize and every five minutes they might look up and check their numbers. That is really the experience.

I have had no experience as to its being disruptive.

MR. COLLINS: Wouldn't that be exposed to minors, minors being exposed to that?

MS CARINCI: At retail it is exposed to minors as are all of our games that are at retail today. We have a policy that I referred to earlier, where we have made it clear that if retailers are found selling to minors they will put their license and their agreement with us in jeopardy. However, it could use some legislative teeth behind it, such as we have done with tobacco in the provinces. Where there is legislation, that helps the retailers -

MR. COLLINS: Is there any legislation under the Criminal Code for minors?

MS CARINCI: No, it is a provincial jurisdiction and some provinces have made it legislation. In Atlantic Canada we do not have that legislation.

MR. COLLINS: Gambling is not covered under the Criminal Code of Canada?

MS CARINCI: Not from an age restriction, no, it is not under the Criminal Code. It is provincial legislation. Just like drivers' licences and drinking, those ages, they vary province by province and age by age. That is something, though - and you touch on a very good point - that would be very helpful not only to us but I would say more to the retail network. They would appreciate it.

Interestingly, just as an aside, when we spoke with the Operation ID folks - that is a tobacco program, and they do a lot of mystery shopping to make sure there is compliance - they undertook to do some research on their own to see what the gaming compliance was here. In Newfoundland and Labrador, it was significantly higher. The retailers here were actually very compliant. Not as high as we would like, and we need to work on that, but they were asking for ID, and we suspect that it is because - I think it is beer that was sold in some of the corner stores, which we do not find in the other provinces, so they are used to asking and challenging the age group. Certainly we could use some help in that area.

MR. COLLINS: It seems to me you would probably be opening another can of worms if you had picnic tables or areas assigned for people to sit down and play electronic KENO when you have kids wandering in and out, unless it was in a separate room isolated from the mainstream.

MS CARINCI: We have that today, though. They see the winning numbers for 649, and people scratching and playing the instant game.

Again, to go back, while the draw frequency is more frequent, really, it is a lotto game. It is like 649 or bingo, except it is called KENO and it plays a slight bit differently. You pick your numbers and you wait for a draw to happen.

MR. COLLINS: Do you know anybody who gambles just for fun?

MS CARINCI: I think most folks I have met, whom I know, gamble for the entertainment. They all do it for different reasons; that is why there are different games. For instance, those who play the scratch game are playing not to win a huge prize and change their life; it is sort of a break in the day and they have some fun and it is a little bit of excitement, whether they are playing Crossword or Bingo. The sports player I mentioned before plays to be right. That is their entertainment, and they have something while they are watching - whether it is Sunday NFL football, especially right now - the game. It gets them more engaged in the game.

I think, when you talk about 649 and big jackpots, who hasn't had the conversation, when it has been $17 million or $20 million, of speculating what you might do? The chances of you winning are very slim, but it is sure fun to talk about what you might do with it. Yes, I think lots of the people and the players engaged in our activities are having fun.

MR. COLLINS: Is there anything on the VLT machines informing people what the odds are of them winning?

MS CARINCI: Yes. There are screens that they can go into that actually show them the pay tables.

MR. COLLINS: They can go into it, but it is not in front of them.

MS CARINCI: They have to go into it.

MR. COLLINS: They have to go and find out themselves.

MS CARINCI: They have to stop playing and go in. The pay tables are in there, and I suspect they have the odds along with the pay tables.

MR. COLLINS: Somewhere along the way here we had a discussion, I think, about site holders being trained. What are they trained on?

MS CARINCI: Actually, it is a program that Cynthia developed a couple of years ago and implemented with a third party who is an expert in this. I will let Cynthia explain that in detail.

MS GOODWIN: Video lottery site holders would be trained to understand what problem gambling is, and we use the fairly simple definition, actually, a similar definition that would have been used in the prevalence study here. It is a problem if it causes a problem for people personally, or in their family lives or in their work lives, that kind of thing. We give some warning signs, provide information as to warning signs of problem play. We also outline for retailers what their role is, if they think that somebody might be having a problem. Again, that role is largely to provide information to the player so that they can seek help from Addiction Services.

MR. COLLINS: So, if I were to go down the street here now to East Side Mario's or West Side Charlies and ask the person behind the bar any questions on this, they would know?

MS GOODWIN: They should know.

MR. COLLINS: Do you train them, or just the owner?

MS GOODWIN: We currently train the owner, and it is the owner-manager's responsibility to share the information with their staff.

MR. COLLINS: Do you do any follow-up to see if that, indeed, was done?

MS GOODWIN: We have not done any follow-up over the past couple of months but, again, I will go back to an earlier statement.

MR. COLLINS: Did you do it prior to the last couple of months?

MS CARINCI: Yes.

MS GOODWIN: Yes, we would have done some research on that, in terms of effectiveness.

MS CARINCI: Actually, if I could interject, we have a balanced scorecard where the corporation monitors a number of things, and one of them is retailer and site-holder awareness around responsible gaming. At the retail level, it is a little bit lower. We have more retailers to deal with, plus turnover.

On the site-holders, a year ago we did this research to follow up to see if we were having an impact - I don't know if you have the stats.

MR. DAIGLE: Eighty-six per cent.

MS CARINCI: Eighty-six per cent. So it is not 100 per cent, but that is our challenge.

MR. COLLINS: Actually trained your staff?

MS CARINCI: Eighty-six per cent were aware of the training and the importance and the (inaudible). I don't know what exactly the questions were we asked them when we were doing the polling, but it was to determine whether or not we actually had made an impact. One of our biggest concerns around this type of training is turnover. We know at retail it is just a never ending revolving door, so it is a huge challenge for us, that snapshot in time. It is a challenge for us to keep that up and even maintain averages as high as that. It is something that we are dedicated to doing.

MS GOODWIN: It is not the only initiative, as well, that we have in place to provide information to our site-holders about responsible gambling and problem gambling. There are other things as well. For example, I had earlier mentioned that we had recently appointed a responsible gambling specialist to the social channel, and it is her job to largely communicate with site-holders right in the field and help to ensure that it is understood and people know how to deal with this issue right in their social sites.

Another example: When our business development representatives are out in the field and they have, I guess, what they would call their check list or their steps to a call, responsible gambling is added to that. We will be checking to see that the responsible gaming signs are up, the posters are up, the stickers are on the VLTs, and that brochures are in place. We will have just a general conversation with people in the bars to make sure that they understand again what their role is, and just that they understand the general issues around problem gambling.

MS CARINCI: I think the posters at the point of sale, have become must more blunt, I guess, or aggressive with the messages. I don't know if we have unrolled all of that, rolled that out.

MS GOODWIN: We are testing.

MS CARINCI: We are testing.

MR. COLLINS: There are places in other jurisdictions in the country.

MS CARINCI: We are testing it right now, so that, for stance, on the backs of doors in washrooms and things like that, there is a fairly hard-hitting message.

MR. COLLINS: In the Province of Quebec, I saw the ones on theirs.

MS. CARINCI: Yes.

MR. COLLINS: That is as direct as you can get.

MS CARINCI: Absolutely.

MR. COLLINS: They don't pull any punches for the suicides and everything else.

MS CARINCI: And I think you will see - where are we piloting it?

MS GOODWIN: I think there are a couple of Dooleys sites.

MS CARINCI: Here?

MS GOODWIN: Yes.

MS CARINCI: Yes, okay. So we are testing it here and I think you will find it - I will get the addresses from Scott - fairly direct and blunt in terms of its message.

MR. COLLINS: This is a question, I guess, that you wouldn't be able to answer, but it is certainly a legitimate one for the Province. I am told by a former president of the Newfoundland and Labrador Beverage Industry group that about twelve years ago, before these machines really caught on everywhere, twelve or thirteen or fourteen years ago, there were 376 bars in this Province, and today there are about 800. His opinion is that most of them have sprung up solely because of VLTs.

MS CARINCI: We have, I think, right now 524 sites that offer video lottery gaming.

MR. COLLINS: In this Province?

MS CARINCI: In this Province.

MR. COLLINS: Has that steadily increased over the past ten years?

MS CARINCI: I don't know. Do you have that statistic? I know we have it, so if you would just give us a minute we will look for it.

MR. COLLINS: One of the interesting things that I ran across - as I say this is one for the Province, but some jurisdictions say, if you apply for a bar license, then if you are making $1,000 a month from selling liquor and you are making $2,000 a month from VLTs, you lose your license, because the primary thing -

MS CARINCI: It is disproportionate.

MR. COLLINS: That is right. - that you apply for your liquor license on is not your real source of income. Many places around now are operating a mini-casino under the guise of a liquor license.

MS CARINCI: Yes, you need a liquor license, first of all, to even be able to quality, because you have to prove it is an adult social setting. One of the dilemmas - and I know Quebec addressed this in a certain way - is that liquor licenses were given out, and in some cases more than one in a location so you had multiple licenses, in different rooms but the same location. That becomes a challenge then for us, because once you have a liquor license the owner feels now that they have the right or they qualify for a video lottery agreement with the corporation. If there isn't, usually speaking - I know in the case of Quebec, if there was not a business case to say that the video lottery should not go in, then it was very difficult to not have it go in. What they did is they worked with the public safety in terms of liquor licencing and said: If you want to help us curtail the growth of video lotteries and sites, then you also need to rethink your policies around licencing.

In this Province we do have sites that have multiple licences and for the very obvious reason is that they are restricted to up to five terminals per licence, yet the demand perhaps in certain areas is greater. So, they then will create the conditions under which they can get multiple licences.

MR. COLLINS: Some have as many as twenty.

MS CARINCI: Yes, that's right. Twenty terminals.

That is being addressed in the strategy that the government announced in the last budget. There are other ways to look at that. You could say: Well, we won't have a minimum requirement at the site but we will have - in the case of Nova Scotia - a cap and total. Then you manage your assets based on the population and the demand within a certain (inaudible).

MR. COLLINS: One of the things this Province said specifically is that there will be a maximum of five.

MS CARINCI: Yes, they have. Also, we will be removing VLTs from multiple licences. It is part of the strategy over the next five years.

MR. COLLINS: That is what I mean. There will be a maximum of five in your establishment, regardless of how many bars you have set up.

MS CARINCI: That is right.

MR. COLLINS: I think they turned that responsibility over to you.

MS CARINCI: Yes.

MR. COLLINS: They said that was going to be over the next five years. Is that going to happen this year or is it going to happen in the fifth year?

MS CARINCI: It will start happening this year, and I know that Patrick was going to look for the projects when we addressed that earlier about whether revenue would decline. I know the projects for this year include implementing that strategy. I do not know the details of it, but that is certainly something I would have no problem sharing with you.

MR. DAIGLE: The reduction equates to approximately 400 terminals over five years. Right now, the strategy is to reduce it gradually over the five years. So the strategy is not to wait until the fifth year or to do them all in the first year.

In regards to the number of sites, historically (inaudible) offered video lottery in Newfoundland and Labrador, I am going to have to bring that back to the committee in the form of a document because I do not have the statistic with me.

MR. COLLINS: Is there any product that you market, that comes under the jurisdiction of ALC - of all the products that you market, is there any other product that has had suicides associated with their use or misuse?

MS CARINCI: Let me clarify what I think your question is. First of all, I think even looking at the coroner's report, for instance, that came out of New Brunswick - what, last fall?

MS GOODWIN: May 3, 2005.

MS CARINCI: I do not know if you have had a chance to see it. Also, I think that the coroner in Nova Scotia has actually abandoned trying to link gambling directly to suicides or at least VLT gambling to suicides because, again, it is back to that complexity of cross addiction and multiple addiction. They are unable to, so far, say that it is specifically just this solely because there are so many other factors that come into it. I wanted to put that on the table first.

In New Brunswick, when we looked it over, all suicides, gambling was a very, very small percentage.

MS GOODWIN: Yes, just to cite some of those statistics out of the - it was the Department of Health and Wellness out of New Brunswick who released the study. Again, it was May, 2005, and the study is still available on their Web site. Some of the statistics coming out of that show that 97 per cent of suicide victims had one mental health problem, 75 per cent had two or more mental health problems, 61 per cent had a substance abuse problem, and then it goes down the list. It shows as well that 5 per cent of victims had a gambling addiction but it was not considered the sole factor that led to suicide. Just to add to that, not to say that - you know, one suicide is one suicide too many. Absolutely!

MR. COLLINS: With all the things that you have just named off, even substance abuse, some of that would be illegal activity?

MS CARINCI: I do not know.

MS GOODWIN: It would say in the study but my notes here do not specify.

MS CARINCI: It is on their Web site as well.

MR. COLLINS: We know that there are. You would have to be -

MS CARINCI: We are not denying that there is not an element in there, and that shows up in the study too, but as they said, it is not a direct link. They could not say that was the sole reason, but we are not saying that there is not an element in there. I think that is important to know.

To answer your question: Is that specifically VLT related? I would be guessing because it does not state in the study but I certainly antidotally have not read any newspaper articles or had the kind of experience that you also have had around other forms of gaming and that kind of distress, no.

MR. COLLINS: We have had real instances in this Province that were directly laid at the doorstep of VLTs, and I would suspect that in other provinces it probably played a major part too.

MS CARINCI: I don't know enough about those cases, Mr. Collins, whether there were other elements at the same time. We are not in any way dismissing it, or trying to minimize that impact in the system.

MR. COLLINS: Shouldn't the Corporation be concerned enough to find out?

MS CARINCI: Yes, and that is our challenge. With the experts, the researchers, even the coroners' offices - I am not saying it is not doable. Even those who dedicate their life to just looking at those things have not come up with an easy answer or solution for us. That is why we are collaborating all the time and working with them.

MR. COLLINS: It sort of goes to the core of the problem. People in this Province, when they call somebody about a problem - I mean, people have called me, and I am sure have called others. I am sure some people around this table may have family members who probably had difficulty with VLTs and other forms of gambling, and there are people in this Province who, unquestionably, have taken their own lives as a result of VLTs.

I think I might have asked this before, but I want to go back to it. When you see that you have products out there - you have a lot of products out there - generating a lot of wealth for the Corporation in the provinces, when you have one specific product out there that is causing problems to the extent where some people have taken their own lives, shouldn't that product be removed?

MS CARINCI: Again, I think that is a policy decision of government, but I can tell you that certainly discussions around these issues, serious discussions, are happening, not just at the board level but also directly with the shareholder. I do not know what the conclusions would be at this point. It would be premature for me to even speculate on that, but I can state to you with confidence the issue is not being ignored. It is on the table and it is being discussed.

MR. COLLINS: If this was about entertainment and not about money, we would still have the ones that use nickels. If it was entertainment, you would use nickels instead of $20 bills.

MS CARINCI: Actually, in the casinos today, some of the most popular games that are growing in the casinos today are actually penny slots and nickel slots. They are the most popular, and growing all the time.

MR. COLLINS: They are being used not by the person who owns Sobeys or anything like that; they are being used by people who are at the lower incomes of scale.

MS CARINCI: What is?

MR. COLLINS: They are being used by lower income people, the nickels and the pennies.

MS CARINCI: I don't know. I would be happy to read it, but I don't have data that would demonstrate that.

MR. COLLINS: I don't think you will find too many millionaires sitting around putting pennies or nickels into a slot machine.

MS CARINCI: Actually, I don't think you would find them putting anything more into slot machines. If they are playing at all, they are probably at the high roller tables.

MR. COLLINS: Has there been any discussion around the ALC board table of banning VLTs?

MS CARINCI: Specifically about banning them, no. We have talked about prohibition. It is my experience, and based on other folks who have gone through this experience, that it does not work. So, while it might have been discussed, I think there is a real concern that all prohibition does, as I stated earlier, is drive the activity underground.

MR. COLLINS: Prohibition legalizes the least harmful products and still doesn't allow the most serious damaging products. Once you lift prohibition - like moonshine, you are not allowed to make moonshine.

MS CARINCI: That does not mean there isn't any moonshine.

MR. COLLINS: No, but it is illegal.

MS CARINCI: Right, but it doesn't mean it is not -

MR. COLLINS: This is sort of the moonshine of the gambling industry.

MS CARINCI: If you accept that comparison, then I am sure we will find moonshine in the marketplace somewhere.

MR. COLLINS: We are finding cocaine, but it doesn't justify making it legal.

Do you have any copies of any research that you have done into the products that you offer, research that you may have done prior to them being put out into the public domain, research into: Would this be harmful or would it not, and what are the chances of people becoming addicted?

One of the things I noticed you said earlier is the projected revenues from the electronic five-minute draw KENO. They are pretty modest, I must say, pretty modest. I wonder what the projections would have been on VLT revenues. I don't think anybody could have seen the jumps that has taken in terms of revenues. Do you agree with that?

MS CARINCI: I would say, generally speaking, that you could say that about any of the games. I look back at when I started in this business in 1975 and no, you would have never projected what we see today with 120 different gaming facilities in Canada, and the Internet gaming. I can tell you that none of us would have been able to project that or even guess at it. Each year as a marketer, which I was before I became a CEO, you would say: At what point does this mature and flatten? So, I think the answer is no.

MR. COLLINS: We really don't know what the result of electronic five-minute KENO would be from a financial perspective.

MS CARINCI: I can tell you that our experience and our ability to project what specific games will do in markets based on our experience is pretty accurate. I thought you were speaking more to the long-term. Back in 1990, would you have ever pictured that revenue from VLTs would have grown to be what it is today?

MR. COLLINS: Well, every year they are dropping now tremendously.

MS CARINCI: Actually, it will go down this year right across the provinces, and I suspect it will continue to decline in varying degrees in each Province.

MR. COLLINS: Why would you suspect that?

MS CARINCI: Well, there are a number of reasons. One, I think the -

MR. COLLINS: The smoking ban?

MS CARINCI: Well, the smoking ban definitely has had a direct hit. One of the things we are observing in Nova Scotia is that because of the press, for instance, that you referred to earlier, there is a stigma now attached to this particular form of gaming. This is anecdotal on my part.

MR. COLLINS: Does that tell you that the people are out in front of you?

MS CARINCI: It could be. This is not researched, this is clearly anecdotal because we don't have enough data to actually know what the answer is, and we will have. I think it is bound to have some impact, if there is a stigma attached to a certain activity, whether or not they will participate. I think some of that is the case, yes.

MR. COLLINS: I just have one final question, Mr. Chairperson.

MR. JOYCE: I'm in no rush.

MS CARINCI: Easy for him to say.

MR. COLLINS: Does the Atlantic Lotto Corporation have any plans to allocate more resources addressing problem gamblers? We talked about Percy's ten-dollar win and everybody being ecstatic. Do you have any plans showing the downside of that as well?

MS CARINCI: Yes, absolutely.

MR. COLLINS: What are they?

MS CARINCI: First of all, this year, the year we are going into, we have made a significant increase, as I stated earlier. We have added more people and resources. We now have located someone in Newfoundland and Labrador. We have brought a specialist in to deal with gaming specific in what we refer to as the social channel, bars and pubs. We are also now exploring, as I talked about, the youth and how far we can take that program. If that is just a question of money - and I don't know if it is - in terms of being able to expand that so it goes into more communities, then we are quite prepared to be adding that to the budget.

We are looking at our existing marketing dollars and saying: Okay, how can we best use our existing budget, because we are also very conscious of improving the bottom line and being operationally efficient? Can we adjust those to some of the things you have seen in Quebec, some of the hard-hitting messages they have tried electronically? Some of those have worked and some of those haven't worked. As Cynthia said, you get more targeted to the audience that you want to see that, so we are looking at how we can allocate those dollars better.

MR. COLLINS: Would there be any advertising or promotion of the negative impacts of gambling targeted at people prior to them becoming gamblers?

MS CARINCI: I think, yes, there would be. The advice we are being given, or the opinions, I guess, of these experts we have cited from Harvard and Laval and whatever, is that you are going to be most effective if you target your messages to those who are at risk, probably even more effective with them than those who actually have a problem. Those are the targets, if you only have a certain amount of dollars, as opposed to, sort of, mass media that may not get the message out to the people you want to impact.

For instance, when we look at demographics and we know that it is younger males, for instance, who participate a fair amount, or partly, on VLTs, how do you impact them in a way that it will resonate with somebody who thinks something hip? How do you understand their language, how they think? I think what you see with the (inaudible) program - I think that is the one, isn't it, that is directly targeted at them. It is a matter of making sure that you have the right message at the right target. Once we understand that, I don't think allocating dollars to it is going to be an issue, it is just that you want to make sure you are spending dollars the right way to have an impact.

MR. COLLINS: Just to recap: If we, in this Province, have any issue with any form of gambling that is under the umbrella of the ALC then our anger should be directed towards the provincial government?

MS CARINCI: Well, the provincial government is the shareholder; as is the public and the citizens of Newfoundland and Labrador are the owners. We are an agent of the Crown.

MR. COLLINS: It is not done by consensus? Each individual province has a right to decide their own -

MS CARINCI: Absolutely, yes.

MR. COLLINS: Has any province ever requested - I know that they get their share of revenue, whether it is $100 million or $150 million, but has there ever been any discussion by any of the provinces saying: Look, ALC, you direct $5 million towards addiction treatment services and send us the rest after that is deducted, or is it just that you give it all to us and then we will decide how much we appropriate to addictions?

MS CARINCI: There might be exceptions, Patrick - but, to date, the revenue flows directly from us to the shareholder and then would be allocated from there to the respective priorities that they have. I cannot think of any exception to that. Can you, Patrick?

MR DAIGLE: No.

MS CARINCI: It is not beyond our capacity to make recommendations on what the spend might be or should be, but it is certainly not our decision. That is a policy decision of government.

MR. COLLINS: Thank you very much.

CHAIR: Okay. Are there any other questions?

MR. BARRETT: Yes, I just want to ask a question.

Are the casinos that are located in Nova Scotia under your control or are they under a different body?

MS CARINCI: There are two casinos, one in Sydney and one in Halifax. They are operated by the Great Canadian Gaming Corporation, who also operates many casinos in British Columbia and some tracks in British Columbia and Ontario. Then they are managed and conducted by the Nova Scotia Gaming Corporation, which is also a Crown corporation. A shorter answer is: No, we don't have anything to do with (inaudible).

MR. BARRETT: So, there is no connection at all with the Atlantic Lottery Corporation and the casinos?

MS CARINCI: No.

MR. BARRETT: I guess the next question would be: Do you think it would be better that the Atlantic Lottery Corporation, instead of having mini casinos in every little neighbourhood, wouldn't it be better in terms of marketing - better controls and better training and better being able to identify problem gamblers - if the province had just a couple of casinos rather than 500 casinos?

MS CARINCI: Well, I think that I can answer most of those questions, if I can remember them all.

Certainly, the public would perceive that to be so, and we know that. Prevalence has not demonstrated that, that would change. We have seen that in Ontario and British Columbia. They are about the same as they are everywhere else.

From a control's perspective; yes, because you are able to implement self-exclusion programs. You are able to implement - for instance, what we have done on Prince Edward Island is we have responsible gaming specialists who understand the problem in addictions, on site, at the site, the whole time it is open or most of the time it is open. Most of the time it is open there are trained counsellors so that folks who have problems, who are at risk, know that they can go there confidentially and seek help. So there is definitely a benefit to that. You would know better than I, that some political decisions like that were made. It has issues, as referred to earlier, because of the reliance that the business community has upon this type of gaming within their facilities, but overall destination is much easier to control from a problem gambling perspective.

MR. BARRETT: From the other point of view, has there been any studies done in terms of the economic - like if you have two casinos, or in this case 500 casinos, if it is a casino then it is very labour intensive. It employs a lot of people.

I remember being in Las Vegas in the early 1990s, at the same time the cod moratorium struck - they closed the fishery in Newfoundland and Labrador. At that time there were five big hotels and casinos ready to open in Las Vegas and they were advertising for staff. They were advertising for 28,000 people. The same number of people who were involved in the fishery in Newfoundland and Labrador were involved in five casinos and hotels in Las Vegas. I was reading the newspaper and saying: Look, if we had those five casinos in Newfoundland and Labrador we could employ the same number of people who were involved in the fishery.

Casinos are, in themselves, an entertainment centre, a fun centre, and it also attracts people other than the people of the local area. I would say that there are a fair amount of dollars that goes into Halifax from people who go to Halifax for the weekend.

MS CARINCI: Absolutely.

MR. BARRETT: As part of other activities, but go to the casino as part of it.

MS CARINCI: For conventions you have extended stays, and things like that, because there are other activities.

MR. BARRETT: Would you, as the Atlantic Lottery Corporation, advise your shareholders to get away from the crack cocaine 500 locations, or go to crack cocaine locations?

MS CARINCI: In the options that we look at across the market, first of all, to have a facility such as you are taking about, you have to have a market for that. You have to have critical mass for that, or at least the tourism for that. You need to understand if there is a business case for doing that in Atlantic Canada, first of all, and to what scale.

If the question is: Would that be an option, or one of the options, that government could or should consider? - yes, it is certainly an alternative; it is certainly an option. It has all kinds of implications and impacts that I would leave to the shareholder to assess whether or not - and probably its own risks.

Our role is to not necessarily advocate one or the other, but to say: Here are your options. Here, from our perspective, are the pros and cons of those options - and then leave the policy making to the policy makers.

MR. BARRETT: Believe it or not, the debate we had in the early 1990s, at that particular time my representations in my part of the discussion indicated I was presenting that point of view, that we would have been better off, rather than going with this, and every little nook and cranny having a casino, we would have been better off in the Province going with two casinos.

MS CARINCI: Those decisions were made in the Province (inaudible).

MR. BARRETT: Nobody would listen to me at that particular time. That would have generated a fair amount of economic activity.

MS CARINCI: I can speculate that the reason the government, maybe, of the day did not entertain that is because of the fear that it was already so entrenched or widespread. I can only speculate, because in British Columbia -

MR. BARRETT: I think it had more, at that particular time, to do with religion and Christianity and all that sort of stuff, than -

MS CARINCI: It may have, philosophically.

MR. BARRETT: Setting up a casino was more that you were endorsing this evil activity, and the casino represented more of an evil activity than -

MR. COLLINS: Let is happen, but don't highlight it.

MR. BARRETT: Yes, whereas the other type of thing - it is interesting, you drive down through the States, down through Montana and all down through there - because I have done it, I have drove from Calgary to Las Vegas, and you would see the sign on the highway saying: Casino. Big display signs. Anyway, I stopped at one of them because I thought it was a casino. When I stopped at it, it was a typical Newfoundland bar with five machines in it. They were calling it a casino. They were advertising on the billboards on the highway as being a casino.

MS CARINCI: In British Columbia and Ontario, they made a conscious decision to not pursue the model that had been implemented first in Atlantic Canada and, subsequently, in Quebec and the Prairies, and instead looked at the destination model. Today in British Columbia - mind you, the population is also more than double, but today in British Columbia there are over fifty destination sites of varying sizes. In Ontario, there are seventeen tracks and whatever else, and several casinos. Again, critical mass, population, access to tourism; a whole number of things. That is a philosophical decision. Different governments make different decisions. In British Columbia we did make that decision, that we were not going to pursue this model.

Again, though - and I may sound like a broken record - but prevalence is no different with either model. What is very different is the public opinion.

MR. BARRETT: The only thing about it, I guess, if it is restricted in terms of - I mean, if you are in Timbuktu or Bumble Bee Bite in Newfoundland, and the only place that you can gamble is St. John's or Marble Mountain, then you have no other choice. But, as you say, you can go on the Internet, I suppose.

MS CARINCI: Or you have perhaps savoury, or maybe not so savoury, folks who might capitalize on that opportunity. That is what I mean when I refer to, they will go underground.

MR. COLLINS: That does not stand up in small communities.

MR. BARRETT: No. You could never go underground in Newfoundland.

MS CARINCI: Oh, okay. Too much rock!

MR. BARRETT: Nobody would ever convince me that you could go underground in Newfoundland. There was one place in St. John's that you could go to have a game of poker before VLTs and everybody knew where that was. Everybody in St. John's knew where it was, and you did not use forks either to eat your food.

MS CARINCI: You are right, then, the alternative would be the Internet.

MR. BARRETT: It has been very interesting today and I guess, from our point of view, we have to decide where we are going to go, as a society, in which direction we are going to go. Let's face it; it is causing problems and we have to address them. Whatever you do, take that advertisement off, will you? Don't ruin my hockey game!

MS CARINCI: Okay.

MR. COLLINS: A final question I have for you is: Would the Atlantic Lotto Corporation agree to have public consultations in the Province prior to the introduction of the electronic five-minute KENO?

MS CARINCI: I don't think that is a decision that I would make, or could make. I think that is a decision that the shareholder would have to make.

MR. COLLINS: Okay.

CHAIR: Any other questions?

MS CARINCI: I really appreciate - and I mean it - the opportunity to come and sort of try and paint a picture of what the gaming environment is, not just in Newfoundland and Labrador, which you are very familiar with, but what the external factors are that are happening today, and some of the issues that the shareholders are having to deal with, which go beyond some of the things that we see on a day-to-day basis and, in some cases, might be much bigger issues than the ones we are actually dealing with today.

It is a challenge for all of us, so I really appreciate the opportunity to come and meet with you face to face and be able to provide the information and get your input, and hear your concerns and your feedback.

Thank you.

CHAIR: Michelle, Patrick and Cynthia, thank you very much, and your staff that you have there. I thank you guys for getting everything organized for us. Thank you very much. On behalf of the Committee, thank you for coming down. I am sure it won't be the last time that you will be invited.

MS CARINCI: I hope not.

CHAIR: It is more information for all of us.

I thank the members of the Committee for your indulgence. I know the media is not here, but I thank the media and the general public for attending. I am sure the information that we will compile and present to government will be useful in some manner.

MS CARINCI: We have made note of the things that we were not able to answer today, that we said we would send to you. Do you send it through you, as Chair, or to...?

CHAIR: Send it to Mark.

MS CARINCI: To Mark? Okay, great.

Thank you.

CHAIR: Thank you very much.

On motion, the Committee adjourned sine die.