Ontario gov pushing gambling

Casino high rollers hit freebie jackpot
Dec. 10, 2005. 07:55 AM
ANDREW CHUNG
TheStar.com

But a Star investigation of the widespread and growing use of "comps" found that the provincial government has no control over what they are, how many are given out or who gets them at its four Las Vegas-style commercial casinos in Rama, Windsor and Niagara Falls, raising questions over its level of oversight of the private operators.

Complimentary gifts are part of an even larger pool of $700 million the provincial gaming corporation spent last year to market and promote gambling — a number that keeps growing despite plummeting commercial casino profits. By contrast, the province spends $36 million on problem gambling prevention, treatment and research. About 450,000 people are classed as moderate to severe problem gamblers in Ontario.

Many compulsive gamblers and their families say comps fuel addiction. At the very least they are a kind of tonic, soothing the sting of heavy losses.

"Do the comps bring the gambler back and help them to become addicted? Yes, I believe that 100 per cent," said Liz Gembala, a Toronto mother of three whose husband received countless perks while a VIP player at Casino Rama. He asked not to be named and would not be interviewed for this story.

Gembala remembers seeing the colourful flyers inviting her husband to special shows and exclusive parties. He would play in the elite VIP room, complete with a hostess offering beverages. A limousine would shepherd him from North York all the way to Orillia.

Though he was racking up major debts, "he was being treated like royalty," said Gembala, a Toronto Transit Commission contracts administrator. "He was earning an hourly wage driving a transport truck, but it gave him the idea of living the high life."

Eight months ago, the Star filed a freedom of information request with the Ontario Lottery and Gaming Corp., the province's gambling arm, for details on "promotional allowances" and "marketing and promotion" expenses described in its financial statements.

The OLGC initially denied the request. The Star appealed and the OLGC then revealed it had no records of specific comps offered by its commercial casinos, even though it owns and regulates them.

The OLGC revealed that, unlike the province's 21 smaller charity casinos and slot venues, which are run by the OLGC, commercial casinos are operated by private corporations. As such they are not subject to freedom of information laws, nor can they be compelled to release the information. Casinos call their list of comps, particularly to high rollers, "highly confidential."

The OLGC instead released a general financial breakdown of comps at all gaming venues for the year ended March 31, 2004.

According to that record, the cashback program — where holders of players' points cards get money back based on their level of play — rang in at $109.8 million; free food and beverage at $103.4 million; coupons for tokens or chips at $47.3 million; hotel, $12.8 million; entertainment, $6 million; valet parking, $2.9 million; and certain "retail" items, $874,000 (no description in records). That's a total of $283 million.

For the year ended March 31, 2005, total comps are $319 million, but no breakdown was available.

Joe Vecsi, OLGC director of public affairs, said his agency has no control over comps at the commercial casinos. "They're casino decisions, yes, as the operator," Vecsi said, adding, "We are not privy to day-to-day operations."

The OLGC approves the casinos' broad marketing and business plans, Vecsi explained. "But the execution of it, and changes on a weekly basis, happen on an operational level."

Vecsi defended the use of comps, saying they help Ontario's lucrative gambling industry compete with the U.S.

"Our customers demand this," Vecsi said. "They can get these types of services on the other side of the border, and we have to provide them to remain competitive, and to maximize the investment for the people of Ontario."

Ontario's casinos net $1.4 billion for the province and support thousands of jobs. Yet they face increasing pressure from casinos in Detroit and Buffalo, and even Las Vegas.

Revenues sent to government coffers by the commercial casinos, where most comps are doled out, are down 42 per cent, to $443 million from $762 million, since 2003. Comps, meanwhile, have risen by 15 per cent. Partly this is due to the opening of a second Niagara Falls casino in 2004, but also to heavier marketing efforts, the OLGC says.

How do comps work? Gamblers are provided increasingly lucrative perks the more they play and the more they spend. As patrons spin the slots or play the tables, they rack up points that are recorded in a "trip history," which eventually determines the benefits.

After years of binges at Rama and Casino Niagara, Ann, a recovering gambling addict, says she probably received every comp on offer while spending hundreds of thousands of dollars. There were plenty of fine meals; she was even able to invite 12 family members to join her for dinner. Buffalo Bills tickets. Toronto Raptors seats. Special access to the Molson Indy. Countless trinkets and statues from the gift shops. She'd regularly gamble for days on end, a hotel room at her beck and call, a new sweater taken from the gift shop. She'd return to Toronto, by limo, only to pick up clean clothes.

"I rarely had to ask for anything," says Ann, who asked that her last name not be revealed. "They just gave it to me."

A few years ago, she says, she was invited by Casino Rama to join an exclusive cruise vacation from Miami to Cozumel, all expenses paid. Her fellow guests were all high-rollers at Rama. They spent most of their time not on the sun deck, but far below in the glitzy on-board casino.

Ann was soon out of control. Before she quit gambling in the fall of 2003, she ended up alone in a hotel room, paralyzed with fear and shaking violently. She had spent everything she owned except for the cash in her wallet.

Casino Rama spokesperson Jenna Hunter said in an email: "We do not encourage Casino customers to play for comps. Complimentaries are a pleasant bonus result of a customer's established comfort level of play."

Another recovering compulsive gambler, who lost hundreds of thousands of dollars, described how he was given a carefully wrapped green box while playing the slots at Casino Niagara.

Inside, he found a sparkling silver and gold Rolex watch.

"I was flabbergasted. I didn't expect anything like that," said Bill, who asked that his real name not be used. "It made me feel pretty important, not realizing that to get a gift like that I was spending a lot of money."

Casino Niagara referred all questions to the OLGC. Vecsi said he's never heard of jewellery as a comp.

Some problem gambling experts worry about how comps affect problem gamblers. Nina Littman-Sharp, manager of the problem gambling service at Toronto's Centre for Addiction and Mental Health, says the program "seems to be effective at getting people to gamble more, which is a risk."

Littman-Sharp, who was surprised by the amount the government spends on comps, says perks like hotel rooms allow people to stay at the casinos longer. The whole idea makes gamblers feel "more welcome" at the casino, even compulsive players, who may be feeling alienated by their own families.

Gabe Macaluso, who says he compulsively lost $1 million from 1997 to 2002 at Casino Niagara, was used to that welcoming atmosphere.

Macaluso, the former head of Hamilton's Copps Coliseum, played the high-limit baccarat tables. He remembers being given a special cake and a box of cohiba cigars on his birthday. On Valentine's Day, he was handed a gift bag to take home to his wife, full of perfumes and toiletries.

"People think they're being rewarded, but it's only for losing their money, for staying away from their families," he says. "No one's getting anything for free. It's a ploy to get you hooked."

The comps form a part of a $2 million lawsuit Macaluso has launched against the OLGC and Falls Management Co., accusing them of negligence. They owed him a "duty of care," he argues.

The defendants deny the allegations, none of which have been proved.

Asked whether comps contribute to problem gambling, the OLGC's Vecsi said, "Our hope is that it doesn't."

He said the OLGC does not allow promotional material to be sent to the homes of patrons who have asked to be banned from the casinos because their gambling is out of control. As well, pilot-project "responsible gaming information centres" opened last month in two commercial casinos, offering on-the-spot help and counselling referrals.

While there is concern over the effects of comps on problem gamblers, others wonder how the government could leave so much control of commercial casinos in the hands of private firms.

Casino Windsor is run by a partnership of Harrah's Entertainment — which owns casinos across the U.S. — and Hilton Hotels. Rama is operated by Penn National Gaming, another U.S. casino company. A consortium of five U.S. and Canadian companies own Falls Management Co., the operator of Casino Niagara and Fallsview Casino and Resort in Niagara Falls.

These companies cannot be compelled to release details of perks. And the OLGC cannot demand further details according to its operating agreements, Vecsi explained.

To some, this lack of direct control over comps supports the view that Ontario's government is too far removed from the business of running its casinos and therefore contravenes the Criminal Code, which provides for gambling if "managed and conducted" by provincial governments or charities.

The concern was highlighted in a report for the Law Commission of Canada, an agency that advises the federal Parliament. In examining Ontario's model, it states, "the authority to conduct and manage gambling events cannot be delegated to a third party."

The comps situation "justifies that legal opinion in a way," said Garry Smith, gambling research specialist at the University of Alberta and one of the report's authors. "Here's an aspect of the business where they're not managing or conducting comps and they can't even get the information about it. They're so far removed from the day-to- day operations which is a violation of the Criminal Code."

"We're confident of the relationship and agreements we have" with the casinos, Vecsi says. "We don't want to be part of the day-to-day operations."