At the time this article was
written Judy Gordon was Member for Lacombe-Stettler in the Alberta Legislative
Assembly and Chair of the Lotteries Review Committee.
Alberta has long been a pioneer among
Canadian provinces, both in introducing new forms of gambling and in fashioning
strict but workable regulatory controls. This is a revised version of a
presentation to the 20th Canadian Regional Seminar in Fredericton on October
27, 1996. Gambling produces significant financial returns to both charities and
government and provides employment for thousands of individuals. This article
looks at some of the public policy issues relating to gambling.
Each year the proceeds from
lotteries and gaming go to support everything from local baseball teams to
up-and-coming artists, theatre groups, and events such as the Canada Winter
Games. Here is how the system works: revenue generated through charitable
gaming, namely casinos, bingos, pull tickets and raffles goes directly to the
charities which operate them. The Alberta Government’s net revenue from these
activities is generated through licensing fees and is used to cover
While few Albertans have concerns
about how the gaming industry operates, what became a concern was the sheer
volume of lottery revenue. The following figures illustrate this point. In
1983-84, the Lottery Fund received $8.8 million in net revenues from lotteries
and gaming activities. In 1995-96, that total was $554.9 million. Grants
totalling $122.9 million were provided to community groups and $385 million was
transferred to the General Revenue Fund.
Most of the increase in lottery
revenues was due to the introduction of video lottery terminals (VLTs).
Clearly, it was time to ask some important questions. A Lotteries Review
Committee was established by Premier Ralph Klein in October 1994 to consult
with Albertans on the following seven key issues:
What should lottery funding be used for?
Are there better ways of allocating lottery revenues?
How can we improve accountability?
What is the impact of VLTs on community organizations?
How should casinos operate?
How do we address problem gambling?
Should lottery funding go to support professional sports teams?
The Lotteries Review Committee held
22 public meetings in 14 locations around Alberta. More than 2,200 Albertans
attended the meetings. We heard 462 oral presentations and received some 18,500
written responses in the form of letters, discussion papers and petitions.
While our review process was open
to all Albertans, the vast majority of respondents were from interest groups
and organizations which currently receive lottery funding. About 80% of the
responses came from arts and cultural organizations. To further enhance the
consultation process, the committee also arranged focus group sessions in each
of the communities where we were holding public meetings. These groups brought
small numbers of people together to discuss our seven key issues.
The focus groups provided some
important input to the process. The participants were randomly selected and
could not be elected officials or members of the executive or organizations
which received lottery funding. In this way, a balance of views was provided.
Our consultation process was very
rewarding. The Committee actually earned a positive review from the media. The Edmonton
Journal wrote "If anyone wanted to see what a real public consultation
looks like – the Lottery Review Committee makes a pretty good example. One way
you could tell this was a real grassroots meeting was the equal time allowed
for different viewpoints." Given the usual response to elected officials
by the media, we took this to be high praise indeed.
In preparing our recommendations,
Committee members considered very carefully the many diverse views we heard.
Time and time again we heard from individuals and groups who expressed concerns
about gambling on the one hand, but on the other hand, wanted to ensure that
their own groups or communities could share in the revenues. This dilemma was
and is at the centre of many discussions about the future of lotteries in
Our report outlined a new direction
for lotteries and gaming reform. Our objective was not to put unnecessary
restrictions on legitimate gambling and gaming activities. Rather, the
Committee’s recommendations were designed:
to maintain a well-regulated and streamlined system
to return substantial benefits to communities
to respond to concerns with VLTs
to ensure that lotteries revenue continued to be used for the benefit of
My colleagues in the Alberta
Government responded favourably to our report and the new directions we sought
were confirmed. Before outlining some of the highlights of this new direction I
would like to set out the principles that not only guided our decision-making,
but that also established the future direction of lotteries and lottery funding
in Alberta. These principles are as follows:
Projects approved for lottery funding should contribute positively to
the quality of life in Alberta.
The primary recipients of lottery funding should be charitable,
non-profit organizations that benefit the community or the general public
Programs receiving lottery grants should benefit the whole province, not
just the special interests of the individuals or organization involved.
Lottery funding should not be used to support essential, ongoing
programs. If a program is essential, it should be funded from the general
revenues of government.
Lottery funds should be reinvested back in the community to support
volunteer organizations and improve the community’s quality of life.
The process for allocating lottery funds and the decisions that are made
should be open and visible.
A streamlined, simplified and efficient process for allocating lottery
funds should be put in place to remove overlap and duplication and improve
Clear guidelines should be put in place to ensure that the allocation
process is fair and unbiased.
Future directions in lotteries must provide a balance between the need
for revenues to support valuable community and volunteer initiatives and any
further expansion of gaming in Alberta.
With these principles guiding our
work, the following are highlights of the new face of gaming in our province.
Highlights of the Review
The current system of allocating
lottery funds will be replaced by one umbrella foundation and community lottery
boards. The status quo was maintained for the 1996-97 fiscal year while the new
system is being developed for implementation in 1997-98. The umbrella
foundation will fund province-wide organizations and groups who, in turn, will
make decisions about how best to allocate funds. The new Lotteries Foundation
will support province-wide initiatives in the arts, culture, recreation, health
and wellness and other priority areas currently supported by five existing
Community Lottery Boards will
support local priorities and initiatives on a community and regional basis.
This will allow communities to benefit directly from lottery revenues and to
make their own decisions on how funds are allocated.
The number of VLTs in bars and
lounges was reduced from 10 to a maximum of 7 per license. Surplus machines
were reallocated to reduce the backlog of applications. Overall, the number of
VLTs operating in Alberta has been reduced from 6,000 to about 5,700. The cap
is flexible and managed. No other issue generated as much discussion at the
public hearings as the VLT issue. Revenues generated from the machines,
accessibility, the impact VLTs are having on communities and on the ability of
volunteers to raise dollars, the possibility of returning a portion of VLT
revenue back to communities, and the problems associated with addiction were
often discussed at length. However, the number one concern expressed was the
possible expansion of the program. Eighty-seven percent of people said there
should be no further expansion, while 10 percent supported expansion. In the
focus groups opinion was not quite as strong, although 72 percent were opposed
to expansion. Even though people acknowledged that limiting the number of VLTs
would not eliminate problem gambling, they did acknowledge that the key problem
lies in accessibility. Thus the committee considered alternate ways of limiting
In the committee’s view
well-regulated, charitable casinos should be the primary location for gambling
in Alberta, not bars and lounges. Typically people go to a casino as a destination,
specifically to gamble, while people go to bars and lounges for a number of
reasons, most often for a social drink. Casinos are not as readily available.
Their hours of operation are carefully regulated, and nonprofit groups share
directly in casino profits. With government agreeing to our recommendation that
charitable casinos be allowed up to 50 VLTs, nonprofit organizations and
charitable groups will now directly share in VLT revenue. Thirty percent of the
net revenue from VLTs and casinos will in the future be shared equally by the
nonprofit groups and the casino operator.
Communities can decide by
plebiscite to prohibit VLTs and the government will honour the outcome of such
a vote. Casinos in Alberta must be government-regulated and will retain their
Several Committee recommendations
were designed to increase the amount of profit made by charitable groups. For
example, charities now get a fixed percentage of the net profits from a casino
first. This ensures that charities, not the casino management company,
ultimately benefit from casino revenues and that casino operators provide
We were sensitive to the concerns
of Albertans about a growing dependence on lottery and gaming revenues, to the
concerns of charitable organizations whose needs are growing and to the fact
that more communities want a share in lottery revenues. We listened carefully
when Albertans told us it was time to get our priorities right, that the future
of Alberta and our quality of life should not depend on revenues from lotteries
Our report and recommendations
sought a balance between maintaining lotteries as a source of revenues for
charitable organizations and becoming overly dependent on gaming revenues; a
balance between lotteries and gaming as entertainment for some and a problem
for others; a balance between government’s responsibility to regulate the
lotteries and gaming system and each individual’s responsibility for their own
I believe we were successful in
striking that balance and I also believe that our report was not the end of our
task. Because we recommended such sweeping changes, we also recommended that
the impact of these changes be monitored so we can make sure that we are
following the right course. Lottery and gaming revenues provide Albertans with
countless benefits, service and facilities. With a responsible and responsive
administrative system in place we hope they will continue to do so for a long
time to come.