Casino Law - British Columbia

Introduction

The Criminal Code of Canada¹ permits the Province of British Columbia ("BC") to conduct and manage gaming and lottery schemes in accordance with the laws of BC. The Gaming Control Act² authorizes BC to delegate this authority to provincial agencies. In BC, these agencies include the Gaming Policy and Enforcement Branch, Ministry of Public Safety and Solicitor General (the "GPEB"), and the British Columbia Lottery Corporation (the "BCLC").

The GPEB oversees and regulates all gaming in BC, ensures the integrity of people and equipment involved in the gaming industry, and investigates allegations of wrongdoing. The BCLC is responsible for the conduct and management of commercial gaming, including lotteries, casinos and commercial bingo halls, but not horse racing.

Proceeds from gaming are used to benefit the people and communities of BC. Gaming revenue supports health and education, community organizations and local economic development.

The BC gaming industry is made up of commercial gaming, licensed gaming and government gaming grants.

Commercial Gaming
Commercial gaming consists of:
(a) a range of provincial and national lottery games (for example, Lotto 649, Super 7)
(b) community casinos (currently there are 17 in operation, with over 6,924 in-casino slot machines and 469 gambling tables³ operating in casinos)
(c) commercial bingo halls and community gaming centres⁴ (currently there are 29 bingo halls in operation) and
(d) horse racing tracks and teletheatres for simulcast betting (currently there are 7 racetracks and 21 teletheatres in operation, 18 stand-alone and 3 at racetracks).

All proceeds from commercial gaming, after prize payouts and operating costs, are returned to the province for distribution to eligible community organizations, host local governments (these are local governments with casinos operating within their boundaries), the Health Special Account⁵, local economic development, problem gambling services and other government priorities including health and education.

Licensed Gaming
Licensed gaming allows eligible community organizations to raise and/or receive gaming revenue to support a broad range of important community programs and services.

Eligible community organizations may apply to the GPEB for a license to operate:
(a) a ticket raffle (where tickets are sold on a chance to win a prize, usually through a draw)
(b) an independent bingo (a bingo held in a community facility, rather than a commercial bingo hall)
(c) wheels of fortune (as part of a community carnival, fair or exhibition) or
(d) a social occasion casino (a casino held in conjunction with a social event - for example, a dinner or dance sponsored by a community organization).

License holders, also known as "licensees", are entitled to keep the money they raise from their gaming events, but must use it for approved, eligible purposes.

Government Gaming Grants
Government gaming grants allow eligible community organizations to apply for gaming revenues to support a broad range of programs and services. There are two grant options available to eligible organizations:

(1) The direct access program, which provides grants to eligible community organizations with funds from government gaming revenues, or
(2) Affiliation with a commercial bingo hall. Affiliated community organizations may receive grant proceeds, from a portion of the revenue generated at the bingo hall and in return must fulfill in-hall and out-of-hall obligations.

Community organizations receiving government gaming grants must use their grant funds for approved, eligible purposes.

Economy
Commercial gaming in BC generates about $2.3 billion dollars each year. This includes approximately:

• $910 million from casinos (after prize payouts)
• $970 million from lotteries (gross)
• $230 million from bingo
• $208 million from pari-mutuel betting on horse racing (gross).

Approximately 70 per cent of gross revenue from commercial gaming goes to prize payouts, operator commissions and operating and employment costs.

Revenue from Commercial Gaming
In 2004/05, BC received an estimated $851.9 million in net gaming revenue. This included approximately:

• $292 million from lotteries
• $527 million from casinos
• $31 million from paper, electronic and linked bingo⁶, and
• $1.9 million in horse racing betting fees.

$851.9 million was distributed to the people and communities of BC as follows:

• $147.3 million to the BC Health Special Account to support health care services and research;
• $133.2 million to non-profit community organizations;
• $54.0 million to local governments that host casinos in their communities;
• $11.5 million to local economic development;
• $11.2 million for gaming policy and enforcement;
• $8 million to the Government of Canada, under a federal/provincial lottery agreement⁷;
• $4.0 million to provide problem gambling services; and
• $4.2 million to the horse racing stabilization program.

After all gaming related expenditures are deducted, the $478.5 million remaining was used to support other government programs, primarily health care and education.

Revenue to Community Organizations
In 2004/05, approximately 6,000 community organizations received an estimated $170 million in gaming revenue. Of this amount, $133.2 million came from the direct access program and commercial bingo hall affiliation. Community organizations themselves raised approximately $37 million through licensed gaming events (for example, ticket raffles, 50/50 draws, etc.,)

Revenue to Host Local Governments
BC shares gaming revenue with host local governments of community and destination casinos in BC.

• Host local governments receive ten per cent of the net gaming revenue from community casinos and one-sixth of net gaming revenue from destination casinos within their jurisdiction.
• Municipalities may use this revenue for any purpose within their legal authority, but are required to submit quarterly reports to the Province regarding gaming revenue and expenditures.

Revenue to Horse Racing As part of its commitment to stabilize and rejuvenate the horse racing industry in BC, the Province distributes gaming revenue to enhance purses.

In 2004/05, $4.2 million was distributed to the industry, with the Thoroughbred and Standardbred sectors each receiving $2.1 million for purse enhancements.

How BC Compares to Other Provinces
The level of gaming in BC is moderate compared to most other provinces in Canada. At $451 per year, BC has one of the lowest per capita wagering rates in Canada; only New Brunswick ($435) and Prince Edward Island ($396) are lower. The national average is $577.⁸

Gaming revenues make up about 3.6 per cent of the total government revenues in BC, compared to 5.4 per cent in Alberta, 6 per cent in Ontario and a 5.1 per cent Canadian average.⁹

The BCLC has the discretion to place slot machines in casinos based on market demand, contingent on local government approval. In determining the location of casinos and the placement of slot machines, the BCLC must comply with Part 3 of the Gaming Control Act¹⁰ and Part 3 of the Gaming Control Regulation¹¹.

Most other provinces permit slot machines in hotels, taverns and restaurants. BC does not allow any slot machines in these locations or anywhere else outside approved gaming facilities.

Over the last six years, the main area of gambling growth in Canada has been in slot machines. Slot machines have now taken over as the dominant form of electronic gambling, due, in part to the waning tolerance for VLTs among the public and regulators. Slot machine growth is most pronounced in Canada's western provinces. In BC, the number of slot machines increased a whopping 161% between 2000 and 2005.¹²

Casinos in BC
As of August 2007, the following 17 community casinos are operational:

Race Tracks in BC

Racetracks in the cities of Kamloops, Osoyoos, Princeton and Vernon are seasonal, operating a few days each summer.

Games
a) Types
In addition to slot machines, the following table games are approved for use in BC casinos: Baccarat; Mini Baccarat; Poker; Three Card Poker (which is two games in one, PairPlus and Ante and Play); Blackjack; Craps; Electronic Sic Bo; Omaha Hold'em; Poker; Caribbean Stud Poker; Pai Gow Poker; Fortune Pai Gow Poker; Seven Card Stud Poker; Let It Ride; Roulette; Texas Hold'em Poker; and Texas Shootout.

b) Limits
BCLC has set a betting limit on all table games of $2,500 (subject to player demand). There are no limits on payouts or losses. Keno has limitations restricting prize liabilities. The maximum prize that can be won on any one ticket for any given draw is $100,000 regardless of the amount wagered. The aggregate amount of all prizes that can be won in any given draw is $1 million. Keno prizes of greater than $1,000 may be claimed no sooner that the day after the draw. The maximum prize that can be won on a Keno ticket with Keno Bonus for a given draw is ten times (10x) the value of the Keno prize.

c) Rules
Rules of play of table games are set by the BCLC in its casino policies and procedures.

Legislation and Policy
The Act and the policies of the GPEB and the BCLC require corporations and individuals who intend to provide goods or services to the gaming and horse racing sectors in BC to be registered prior to providing such goods or services. A corporation is not eligible to be registered as a gaming services provider unless it is incorporated or continued under the Business Corporations Act¹³, the Society Act¹⁴ or another enactment, or is an extra-provincial company as defined in the Business Corporations Act and is registered under that Act. Gaming services means services that are required for or comprise any component of the activities of operating or presenting a lottery scheme or horseracing. Gaming services provider includes a corporation or person that provides gaming services, provides gaming supplies, provides gaming workers, or provides a facility for gaming. Gaming facility includes a provision of a facility for horseracing, horseracing teletheatre, a permanent bingo facility, a facility for casino, and any other facility as may be determined. Those persons and corporations with an intention to acquire a material financial interest in a registered company must also be registered prior to acquiring such an interest.

What BC is doing to Help Ensure Gaming Integrity
The BC government protects gaming integrity by registering all gaming staff and service providers, enforcing the province's gaming legislation and the Criminal Code of Canada and establishing public interest standards.

Registration
To ensure all those who work in or provide services to the gaming industry meet high standards of honesty, integrity and financial responsibility, it is required that they register with the GPEB. Unlike some other gaming jurisdictions, the GPEB does not license an entity but simply approves its application for registration. There is a prescribed registration fee that can range from $25 to $35,000 depending on the applicant's category of registration, for a maximum term of registration not exceeding five years. Applicants must submit to a background investigation that includes but is not limited to a criminal record check and a credit check. The GPEB's costs associated with a background investigation are an additional expense of the applicant. The GPEB may suspend or revoke registration at any time where the terms and conditions of registration have been breached or for any reason where the GPEB is of the view that such suspension or revocation is necessary in the public interest.

Individuals who want to work as employees in a gaming facility, and companies interested in providing services to commercial or licensed gaming facilities, must register with the GPEB. All directors, officers and senior employees¹⁵ of a company interested in providing services to a gaming facility must register with the GPEB and submit a completed personal disclosure form.

A) Registration Categories
Registration is a privilege conferred on a company or person by the GPEB to provide gaming goods or services to BC or its agents or to invest in a registered company. The burden of proving suitability for a favorable determination by the GPEB is at all times on the applicant. The following entities must be registered with the GPEB:

(i) Operators: Casinos in BC are operated pursuant to a Casino Operational Services Agreement ("COSA") between the operator and the BCLC. A casino operator must be approved for registration by the GPEB prior to the BCLC contracting with it to operate a casino under a COSA.

(ii) Landlords: Pursuant to the definition in the Act of 'gaming services provider' the landlord of a gaming premise must be approved for registration by the GPEB. The GPEB does not charge a registration fee for landlords.

(iii) Gaming Workers: Means an individual who is paid to assist in the conduct, management, operation or presentation of a lottery scheme or of horse racing, or who is in a class of individuals connected in any capacity with the gaming industry. The following classes of registration as 'gaming workers' are established pursuant to the Regulation and all must be approved for registration by the GPEB:

(a) senior employees, comprised of each individual who
(i) is a gaming control manager, security services provider at a gaming facility or program manager reporting directly to an individual in the senior officials class, or
(ii) performs functions of the gaming services provider similar to those normally performed by an individual occupying any of the positions described in subparagraph (i);

(b) race horse owners, comprised of persons who own a horse that is used for horse racing under Part 7 of the Act;

(c) class A license managers, comprised of persons having managerial or financial responsibility for the operation or conduct of a gaming event authorized by a class A license for which the projected gross revenue, specified in the license, exceeds $250,000;

(d) senior officials, comprised of each of the 5 highest paid officers of a gaming services provider and each individual who, whether or not among those 5 highest paid officers, (i) is the chair or a vice chair of the board of directors or the president, a vice president, the secretary, the treasurer or the general manager of the gaming services provider, or (ii) performs functions of the gaming services provider similar to those normally performed by an individual occupying any of the offices described in subparagraph (i);

(e) lottery corporation officials, comprised of individuals appointed or employed in senior capacities with the lottery corporation;

(f) lottery corporation employees, comprised of individuals who are employees of the lottery corporation and who
(i) are involved in the conduct, management or operation of gaming,
(ii) require access to gaming facilities to perform their duties,
(iii) use or work with the electronic systems that support the conduct, management or operation of gaming, or
(iv) purchase gaming supplies or develop or test gaming supplies or lottery schemes, or assist with any of these activities;

(g) horse racing personnel, comprised of persons who are required to be licensed by rules established under Part 7 of the Act;

(h) other employees, comprised of individuals who are gaming workers but who are not in any of the other classes set out in this subsection; and

(i) lottery ticket personnel, comprised of persons who have on-site managerial responsibility for a retail facility where lottery tickets are sold.

(iv) Gaming Services Providers: Means a person who
(a) provides gaming services,
(b) provides gaming supplies, or services or tests gaming supplies,
(c) provides or trains gaming workers, or
(d) provides a facility for gaming,
and includes persons in the following classes of registration as 'gaming services providers' established pursuant to the Regulation:

(a) class A casino services providers, comprised of gaming services providers that provide casino gaming services at a gaming facility that contains 500 or more slot machines;

(b) class B casino services providers, comprised of gaming services providers that provide casino gaming services at a gaming facility that contains fewer than 500 slot machines;

(c) class A bingo services providers, comprised of gaming services providers that provide bingo gaming services at a gaming facility with respect to which the lottery corporation has paid remuneration that exceeded $1,000,000 in the most recently completed financial year of the services provider;

(d) class B bingo services providers, comprised of gaming services providers that provide bingo gaming services at a gaming facility with respect to which the lottery corporation has paid remuneration that did not exceed $1,000,000 in the most recently completed financial year of the services provider;

(e) community gaming centre services providers, comprised of gaming services providers that provide gaming services at a community gaming centre;

(f) class A suppliers, comprised of gaming services providers that manufacture slot machines or that manufacture and distribute slot machines;

(g) class B suppliers, comprised of gaming services providers that carry out one or more of the activities described in paragraph (b) of the definition of "gaming services provider" for remuneration of a total value exceeding $25,000 during the most recent 12 month period, including the value of gaming supplies supplied by associates of the person;

(h) class C suppliers, comprised of gaming services providers that carry out one or more of the activities described in paragraph (b) of the definition of "gaming services provider" for remuneration of a total value that does not exceed $25,000 during the most recent 12 month period, including the value of gaming supplies supplied by associates of the person;

(i) other gaming services providers, comprised of gaming services providers that carry out one or more of the activities described in paragraph (a) or (c) of the definition of "gaming services provider";

(j) horse racing operators, comprised of gaming services providers that provide gaming services at a race track for horse racing at which there are 50 or more race days per year;

(k) seasonal horse racing operators, comprised of gaming services providers that provide gaming services at a race track for horse racing at which there are fewer than 50 race days per year;

(l) horse racing teletheatre operators, comprised of gaming services providers that provide gaming services at horse racing teletheatres;

(m) security services providers, comprised of gaming services providers that provide security services, surveillance services or both at a gaming facility;

(n) concessionaire games operators, comprised of gaming services providers that provide gaming services at licensed gaming events;

(o) ticket rafflers, comprised of gaming services providers that run ticket raffles;

(p) social occasion casino operators, comprised of gaming services providers that provide casino gaming services at licensed gaming events;

(q) gaming lessors, comprised of gaming services providers that, as lessors, provide to other gaming services providers premises to be used as facilities for gaming;

(r) ancillary services providers, comprised of gaming services providers that provide services routinely provided in casino gaming facilities, commercial bingo halls and community gaming centres, including the following services that are so provided:
(i) building maintenance;
(ii) equipment maintenance;
(iii) janitorial;
(iv) retail;
(v) concession sales of food or other products or services; and

(s) automated banking services providers, comprised of automated banking services provided at a gaming facility by an institution that is not a savings institution.

(v) Junket Representatives: Do not need to be approved for registration by the GPEB.

(vi) Information Services Providers: This category is usually defined as persons who sell and provide information to a licensed sports pool that is used primarily to aid the placing of wagers on events of any kind. Since sports-betting is not offered at BC casinos, the category is not applicable.

(vii) Service Industries:
(a) Ancillary casino services, as prescribed above;
(b) security services, comprised of security services, surveillance services or both provided at a gaming facility;
(c) automated banking services, comprised of automated banking services as prescribed above; and
(d) training services, comprised of training services provided to minors in the play of games of chance or of mixed skill and chance

are prescribed as 'gaming services' in section 1 of the Act and must all be approved for registration by the GPEB.

(viii) Race Books and Sports Pools: No registration required because race books and sports pools are illegal in BC unless conducted and managed by the BCLC.

(ix) Disseminators: A disseminator is a person who receives the type of information a race book operator needs (such as race information, order of finish and track payouts) and disseminates it to race books within BC. Neither BC law nor federal law regulates this activity.

(x) Gaming Devices/Supplies: 'Gaming supplies' is defined in the Act as supplies, equipment and devices used or intended to be used for gaming and including things supplied to gaming facilities, whether or not the things are intended to be used for gaming. BC's gaming legislation prohibits unregistered gaming supplies: A person, other than the BCLC, must not possess or keep for any purpose other than private or personal use, or make, sell, advertise or distribute any gaming supplies unless the gaming supplies have been approved, individually or according to type, by the general manager of the GPEB and are identifiable as prescribed under the regulations, and the person is a registrant and is acting in accordance with the conditions of registration and is authorized by the BCLC to use, make, sell, advertise or distribute gaming supplies approved by the general manager of the GPEB.

(xi) Lenders: Lenders or holders of indebtedness are not required to be registered by the GPEB. However, any significant loans made to a registrant or licensee must be approved by the GPEB.

(xii) Labour Organizations: Labour organizations representing gaming employees are not required to be registered by the GPEB.

(xiii) Gaming Schools: Owners and operators of gaming schools require registration as gaming service providers within the province of BC.

B) Entities
As part of an application for registration submitted on behalf of a company to the GPEB, certain individuals must provide disclosure by submitting a completed personal disclosure form. (i) Individuals: An individual is not eligible to be registered as a gaming services provider or a gaming worker unless the individual is an adult (19 years of age or older) and is qualified under the Act.

(ii) Private Corporations: A corporation is not eligible to be registered as a gaming services provider unless it is incorporated or continued under the Business Corporations Act, the Society Act or another enactment or is an extra-provincial company as defined in the Business Corporations Act and is registered under that Act.

When a corporation applies for registration, the following individuals must file a detailed personal disclosure form at the same time:

(a) every director and officer of the company;
(b) every shareholder (voting and non-voting) or investor who owns or controls shares or has a financial interest in the applicant company where the shares/investment/interest is 5% or more; and
(c) all senior employees including persons in key executive or managerial positions of responsibility with gaming equipment suppliers or gaming services providers. Employees of a gaming services provider in the category of bingo manager, casino manager, security or surveillance manager, personnel manager or outside directors and any other such person identified by the GPEB may submit a short form version of the disclosure application. As companies may be structured differently, GPEB's review of the applicant may lead to the identification of other senior employees that are required to provide an application

(iii) Publicly-Traded Corporations: A public company is a company that is classified as a reporting issuer under the Business Corporations Act (British Columbia). From the GPEB's perspective, there is no distinction between the registration of a private company and a publicly traded company as a gaming services provider.

(v) Partnerships: A partnership is not eligible to be registered as a gaming services provider unless the partnership and any partnership that is a partner in the partnership is registered under the Partnership Act (British Columbia)¹⁶ or legislation comparable to the Partnership Act (British Columbia) in another jurisdiction, and each individual partner meets the registration requirements under the Act and each corporation that is a partner meets the registration requirements under the Act.

(vi) Institutional Investors: Certain types of institutional investors may be found exempt from disclosure requirements on the basis that their regulation under another statute provides sufficient disclosure that would be duplicative and unnecessary to require the same disclosure from them in the gaming context. An institutional investor means a bank, an insurance company, a trust company, an investment company, an investment advisor, a trust fund or a pension fund. A 'Passive Investor Waiver' form must be completed by all institutional investors and submitted to the GPEB for review.

(vii) Foreign Investment: There are no restrictions on foreign investment in BC gaming operations. C) Qualifications
The BCLC does not accept 'new' casino applications. The BCLC will, however, entertain a relocation of an existing casino for business reasons. If a casino is relocated, then its character, financing and business competency together with local government approval of the relocation are all factors that are reviewed by the BCLC.

D) Application
The GPEB does not 'license' any entity but 'approves' an application for registration. At the time of application for registration the applicant must pay to the GPEB a registration fee {these fees are set out below under the heading 'Fees and Taxes'}. From a corporate point of view, the GPEB approves all of the gaming service providers, manufacturers and suppliers for a five-year period. In addition, approval must be granted of the five highest paid senior officials of a company (registration is for five year period) and those senior employees the GPEB deems necessary (registration is for a three year period). On the personnel side, the GPEB registers all gaming workers who work in the province (registration is for a three year period).

All applicants for registration must submit to the GPEB a completed application (termed a registration package). The GPEB has four different types of registration packages:

1. Package #1 - Corporate Disclosure Form - This corporate registration package must be completed by applicants in the following gaming categories: casino, bingo and community gaming centre services providers; horse racing operators and horse racing teletheatre operators; gaming equipment manufacturers or suppliers; other gaming related suppliers or services, including gaming management services, concessionaires games operators, security, surveillance, ticket rafflers and call centres, social occasion casino operators, game test labs, providers of training or gaming workers, automated banking services providers and gaming lessor; and companies that are associates of a gaming service provider (parent, shareholder, investor, lender, subsidiary, etc.).

2. Package #2 - Personal Disclosure Form - The following persons must complete Package #2: Senior officials and partners or associates of gaming services provider companies; every shareholder (voting or non-voting) or investor who owns or controls shares or has a financial interest in the applicant company where the shares/investment/interest is 5% or more.

3. Package #2A - Personal Disclosure Form - The following persons must complete this much shorter application form: senior employees of a gaming service provider, including gaming control, security or surveillance managers in a gaming facility; owners or operators of building or equipment maintenance services, janitorial services, retail sales or concession sales at a gaming facility (all other employees of these companies must complete the Gaming Worker Package #3 {see below}); outside directors; and non-remunerated directors of charities or societies providing commercial gaming services.

4. Package #3 - Gaming Worker Registration - The following persons must complete this very short application form: personnel at a gaming facility including any person who directly delivers services (bingo caller, cashier, dealer, pit boss, food and beverage workers in a casino facility, pari-mutual ticket sellers, horse racing trades, technicians, security and surveillance staff, etc.,) and excludes bingo floor workers; personnel of a gaming services provider providing gaming services for a licensed gaming event such as a ticket raffle, bingo or social occasion casino, or for a licensed gaming events at a fair or exhibition; and personnel of gaming services providers not normally employed at a gaming facility but who require unescorted access to the facility to work.

In addition, the GPEB may accept a completed Multi-Jurisdictional Personal History Disclosure Form. This is a comprehensive 66 page document which provides basic personal information on an individual, such as marital history, identification of family members, educational background, criminal record, civil litigation, employment history, character references and licensing history. It also requires the applicant to disclose the amount and source of his investment in the operation, his most recent federal income tax filing, any bankruptcy disclosures, his salary and his financial net worth statement and supporting schedules.

E) Investigation
Once an applicant (individual or corporate) has provided disclosure by completing one of the registration packages described above, the applicant is then subject to an investigative process that includes but is not limited to an in-depth review as noted below:

i) Companies: Business history and operations - ownership structure - business relationships - organizational structure - corporate standing - shareholders - financial statements and financial viability - income tax returns - corporate governance (internal controls such as compliance and audit committees) - litigation issues - distributor agreements - patents/trademarks - security of the company site - relationships with other regulators (gaming and others such as the Security Exchange Commission) - servicing history - credit checks - police checks - compliance history - verification of information supplied in the disclosure documents.

ii) Persons: 1) Gaming workers (general employees such as dealers, pit bosses, etc.) - the investigation consists of criminal record and credit check combined with verification of information supplied in the disclosure documents.

2) Senior officials and senior employees of service providers - the applicant's personal integrity is investigated and consists of interviews with the applicant and his or her banker, accountant or lawyer - credit checks - criminal record history - employment history -sources of income/assets/investments/liabilities - relatives - financial interest in company (bonuses, shares, stock options) - litigation issues. Initially, the completed registration packages of both individuals and companies are given to the GPEB's Manager, Corporate Registration for review. They are then assigned to an investigator who has primary responsibility for the investigation and a second investigator is assigned to act as an assistant. Data entry is completed for tracking purposes. Upon completion of the background investigation, the investigators submit a report of finding which is reviewed by the Manager and the Director of the GPEB to determine whether approval should be granted.

As stated above, the applicant must pay the costs of all due diligence investigations conducted by the GPEB on the applicant. It should be noted that if the applicant is located within the province of BC, there are no travel costs.

F) Approval Process
The GPEB is responsible for reviewing and approving applications for registration. The approval process is based on submission of the requisite fees and a determination after the initial investigation that the company and/or individual would not be a detriment to the integrity of gaming.

G) Judicial or Other Review
Reasons for refusal, suspension or cancellation of registration are outlined in the Act. In some cases, the General Manager of the GPEB has delegated decision-making authority to specific staff in the GPEB. If the GPEB staff makes a decision that is contrary to the interests of a particular party, the affected party may ask for a review. In all such instances, the affected person or organization will receive a letter outlining the reasons for the decision. At that time, they may request a reconsideration of the decision by the appropriate Director in the GPEB. If the reconsideration decision of the Director is unsatisfactory to the party, they may request an Administrative Review Hearing. There is a $500.00 application fee for this hearing. A panel of one or more persons will conduct the hearing and make recommendations to the General Manager. After reviewing the recommendations, the General Manager will either uphold or vary the decision. If the party is successful in having the decision overturned or varied, the $500.00 fee will be returned to the applicant. If the original decision is upheld following an Administrative Review Hearing, the applicant may pursue judicial review of a decision.

Accounting
Record Keeping and Cash Reports: Compliance with the federal Proceeds of Crime (Money Laundering) and Terrorist Financing Act¹⁷ requires that casinos report and retain all records of large cash transactions and suspicious transactions to the Financial Transactions and Reports Analysis Centre of Canada ("FINTRAC"), as described below: a) An amount of $10,000.00 Canadian (or the equivalent in foreign currency) or more in cash in the course of a single transaction; or

b) two or more cash amounts of less than $10,000.00 Canadian (or the equivalent in foreign currency), the total of which exceeds $10,000.00 Canadian (or the equivalent in foreign currency). In this case, the facility licensee has to record the transaction if any of the facility's employees know the transactions were made within 24 consecutive hours of each other by or on behalf of the same individual; or

c) all suspicious transactions; or

d) any foreign currency exchange over $1,000.00 Canadian.

Suspicious transactions are financial transactions that a casino facility operator has reasonable grounds to suspect are related to the commission of a money laundering offence, including financial transactions that there are reasonable grounds to suspect are related to the commission of a terrorist activity financing offence. "Reasonable grounds to suspect" is determined by what is reasonable in the particular circumstances, including normal business practices and systems within the casino industry.

Compliance with provincial gaming legislation requires every registered gaming services provider to submit annually to the General Manager of the GPEB within six months after the end of each financial year of the registrant,

a) a financial statement, in the form and with the content required by the General Manager, covering the registrant's activities during that financial year in relation to the registration,

b) if required by the General Manager, a financial statement audited by an auditor approved by the General Manager, and

c) any other information required by the General Manager that he or she considers relevant.

Internal Controls: The casino operator is responsible for the implementation of a Compliance Regime, a well-designed, applied and monitored regime, which provides a solid foundation for compliance with the Proceeds of Crime (Money Laundering) and Terrorist Financing Act and the Regulations thereunder. In this regard, the casino operator must appoint a compliance officer, develop and apply compliance policies and procedures, periodically review the effectiveness of those policies and procedures, and implement an ongoing compliance training program.

Audits: In compliance with the Proceeds of Crime (Money Laundering) and Terrorist Financing Act and the Regulations thereunder, GPEB Inspectors and Federal Government officials may inspect, audit, examine and make copies of large cash transaction records or may temporarily remove any of them for those purposes.

The GPEB has an audit division that is separated into "Commercial Audits" and "Charitable Audits".

The Charitable Audit division is responsible for conducting financial audits of the charities that receive any monies from gaming to ensure that they are spending the money in accordance with the Act.

The Commercial Audit group is responsible for the audits of commercial gaming sites and in the main looks at their compliance to the BCLC operating standards and any violations of the Act.

All gaming establishments must put all gaming money into accounts that BCLC then "sweeps". The BCLC then allocates money back to the service providers, charities, etc., based on a formula worked out in the Casino Operational Services Agreement or Bingo Operational Services Agreement, with the majority of the money going to the BC government to be used to benefit the people and communities of BC.

Fees and Taxes
Registration fees are set by the GPEB.
i) Gaming services providers - must pay to the GPEB the following registration fees as well as an additional $250 for each background investigation to be carried out in assessing the application:

• class A casino services providers, $35,000 per gaming facility;
• class B casino services providers, $15,000 per gaming facility;
• class A bingo services providers, $2,000 per gaming facility;
• class B bingo services providers, $1,000 per gaming facility;
• community gaming centre services providers, $5,000 per gaming facility;
• class A suppliers, $20,000;
• class B suppliers, $5,000;
• class C suppliers, $1,000;
• other gaming services providers, $1,000;
• horse racing operators, $5,000 per gaming facility;
• seasonal horse racing operators, $100 per gaming facility;
• horse racing teletheatre operators, $1,000;
• security services providers, $1,000;
• concessionaire games operators, $1,000;
• ticket rafflers, $1,000;
• social occasion casino operators, $1,000;
• gaming lessors, $250;
• ancillary services providers, $250;
• automated banking services providers, $250.

ii) Gaming workers - Registration fees for gaming workers are as follows:

• senior officials, $250;
• senior employees, $250;
• class A licence managers, lottery ticket personnel and other employees, $45;
• race horse owners and horse racing personnel, $30.

Goods and Services Tax ("GST") is a federal tax applied to the supply of most goods and services at a rate of 6%. In addition, there is a provincial sales tax ("PST") of 7% payable on food, merchandise and refreshments purchased.

There is an additional 10% tax applicable to the purchase of alcoholic beverages imposed in all provinces. It should be noted that BC Regulations prohibit serving alcohol in BC casinos.

Gaming Equipment
Although all gaming equipment is owned by the BCLC, it is the GPEB's Director of Registration who is the delegated authority to approve all gaming equipment, as defined in the federal Criminal Code of Canada "that is operated on or through a computer, video device or slot machine and is used or intended to be used as part of or in connection with a lottery scheme". The Director issues a certificate of technical integrity for the lottery scheme or gaming equipment. Any repairs, alterations, upgrades or malfunctions must be reported to the Director.

Chips and Tokens: All casino chips and tokens must be ordered from a GPEB-approved supplier and remain the property of the BCLC at all times.

Dice: All dice must be ordered from a GPEB-approved supplier. The dice remain the property of the BCLC at all times.

Cards: Cards must be ordered from a GPEB-approved supplier and remain the property of the BCLC at all times.

Operational Requirements
Hours: The BCLC approves the number of hours a casino may operate and is based on market demand. Casino hours vary by location and season.

Facilities: BCLC operating standards govern the facilities in BC casinos. The floorplan of a casino, including the placement of all gaming equipment and the location and security features of all sensitive areas (eg. cage, master coin bank, surveillance room, count rooms, etc.) must be approved by the BCLC. Any changes to the floorplan also require prior written approval from the BCLC. The BCLC has minimum surveillance standards which govern the types and placement of cameras, monitors and recorders. The camera coverage must comply with the BCLC's minimum surveillance standards.

Advertising: Advertising and marketing of casinos are controlled by the BCLC.

Entertainment: The gaming services provider controls casino entertainment.

Exclusions (minors, mandatory, voluntary, discretionary):
Minors: The BC Government prohibits minors under the age of 19 from participating in commercial gaming activities.

Mandatory: A person is not permitted to enter into or remain in a casino where the casino, or its employees or agents, is aware (possibly after having been advised by the BCLC):

i) that the person has been convicted of "cheating at play" pursuant to section 209 of the federal Criminal Code of Canada, or a foreign offence that is substantially similar to that provision; and/or ii) that the person has been barred from entering gaming facilities by a jurisdiction outside of BC.

An intoxicated person may be barred from a casino. In addition, the BCLC compiles a list containing the names of persons involved in criminal activity. This list is distributed to all casinos. The BCLC can deny entry to a person named on this list from any BC casino for a period of 1 to 5 years.

Voluntary: The BCLC has established voluntary self-exclusion programs for gaming floor venues including casinos, community gaming centres with slot machines and the gaming floor of race tracks with slot machines, commercial bingo and/or PlayNow® lottery sites.

The programs allow participants to voluntarily exclude themselves from entering these specific venues. Participants choose the length of the exclusion period (minimum six months to maximum three years) and may be liable to a $5,000 fine if they violate the agreement. The programs are administered by the BCLC and enforced by gaming personnel.

Discretionary: There is no policy in place permitting a BC casino from excluding suspected cheaters, card counters or members of organized crime. However, if such a person is identified in a casino, the casino is permitted to "back them off the game".

Gaming Contracts
Enforcement of Gaming Debts: Gaming debts and credit agreements relating to gaming are enforceable in BC courts.

Credit Controls: Casino and casino facility staff are not permitted to cash any cheques, personal or certified, or extend credit in any form, at any BC casino.

Player Disputes: With regard to slot machines, the Slot Manager is empowered to settle customer disputes, based on technical recommendations.

In playing Blackjack, disputes between player(s) and dealer as to interpretation of hand signal are referred to the pit boss. If a player complains before the dealer's hand is played, the pit boss will:

i) allow a player who has missed hit-card(s) to take hits after all other players have completed their hands, but before dealer's hand is played; or

ii) if the player's hand has been hit by mistake, declare the hitcard dead, instruct the dealer to burn it, and the player hand will stand.

If a player complains after the dealer's hand play has commenced, the pit boss will:

i) allow a player who has missed hit card(s) to take hits after the dealer has completed his hand; however, the player must make the decision prior to play proceeding; or

ii) if the player's hand has been hit by mistake, declare the hitcard dead, instruct dealer to burn it, and the player's hand will stand.

Foreign Gaming
There are no prohibitions on BC registrants operating outside of BC. Where a registrant is a foreign entity or is operating outside of BC, the GPEB monitors the activities of the registrant through its disclosure requirements. The GPEB must be notified of any proceedings, sanctions or penalties that affect the registrant in foreign jurisdictions and these issues will play a role in the registrant's renewal in BC.

Renewal of registration will be refused if a registrant has been convicted of an offence outside of BC that in the opinion of the GPEB's General Manager calls into question the honesty or integrity of the registrant.

Refusal, Suspension or Cancellation of Registration
The General Manager may refuse to issue or renew the registration of a gaming services provider or gaming worker if the applicant for registration or renewal, or any person who is a director, officer, employee or associate or the applicant or is a partner in the applicant,

(a) is considered by the General Manager, on reasonable grounds, to be a detriment to the integrity or lawful conduct or management of gaming,

(b) no longer meets a registration requirement under the Act or did not meet such a requirement at the time of registration,

(c) has breached or is in breach of

(i) a condition of the registration of the registrant, or (ii) a contract with the BCLC,

(d) has made a material misrepresentation, omission or misstatement in the application for the registration or renewal or in reply to an inquiry by a person conducting an audit, inspection or investigation under the Act,

(e) has been refused a similar registration, license or authority in BC or in another jurisdiction,

(f) has held a similar registration, license or authority in BC or in another jurisdiction and the similar registration, license or authority has been suspended or cancelled, or

(g) has been convicted or an offence, inside or outside of BC, that in the opinion of the General Manager calls into question the honesty or integrity of the applicant.¹⁸

For any of the above-noted reasons, the General Manager may issue a warning to a registrant or may cancel, suspend for a period of time, impose new conditions on, or vary existing conditions of a registration of any registrant.¹⁹

A registration of a gaming services provider will also be cancelled if: (a) the registrant, through bankruptcy, insolvency, secured creditor realization, the operation of law or the death or incapacity of a person who is primarily responsible for carrying on the activities authorized by the registration on behalf of the registrant, ceases to carry on the activities authorized under the registration, or (b) an individual who is the registrant dies or becomes unable, through mental or physical disability, to continue to carry on the activities authorized by the registration.²⁰

In addition, for either of the reasons specified above under paragraphs (c) and (d), the General Manager may impose an administrative fine on a registrant²¹ that must not exceed:

(a) $20,000 if the registrant is a gaming services provider, or
(b) $5,000 if the registrant is a gaming worker.²²

Requirements Respecting Organizational Changes
It is a condition of registration as a gaming services provider that the registrant deliver notice to the General Manager of
(a) a change in the directors, officers or associates of a registrant that is a corporation or in the partners, officers or associates of a registrant that is a partnership, and
(b) the direct or indirect acquisition or disposition by a person or group of persons acting in concert, in one or more transactions, of
(i) 5% or more of the outstanding voting shares in the capital of a registrant or an associate of that registrant that is a corporation, or
(ii) one or more securities issued by the registrant, other than voting shares described in subparagraph (i), if the amount paid up under the security or securities is equal to or greater than 5% of the aggregate paid up capital of the registrant.²³

The general manager must approve, refuse or specify a new date on or before which approval or refusal will be decided within sixty (60) days after receiving the notice described above.

As a result of these provisions, any change to the registrant's directors, officers or associates, or any acquisition of 5% or more of the registrant's securities, will require prior approval by the GPEB in order to comply with the conditions of registration.

Offences and Penalties²⁴
If a person commits an offence under the Act, such as making a false or misleading statement in a record filed under the Act, then s/he may be prosecuted and if convicted the following penalties may be imposed:

(i) on a first conviction, to a fine of not more that $100,000
or to imprisonment for not more than 6 months or to both, and

(ii) on each subsequent conviction, to a fine of not more than $200,000
or to imprisonment for not more than 12 months or to both.²⁵

A person who has failed to comply with a condition of a license or registration is liable to a fine of not more than $5,000.²⁶

If a corporation commits an offence under the Act, an employee, officer, director or agent of the corporation who authorizes, permits or acquiesces in the offence commits the same offence whether or not the corporation is convicted of the offence.²⁷

Penalties that may be imposed on a corporation convicted of an offence under the Act are, on a first conviction, a fine of not more than $100,000 and, on each subsequent conviction, a fine of not more than $200,000.²⁸

Gaming Crimes
Section 209 of the federal Criminal Code makes it an offence to cheat "while playing a game or in holding the stakes for a game or in betting," with the intent to defraud any person.

The invaluable assistance of the GPEB's Ron Merchant and BCLC's Bob Leach in completing this chapter is acknowledged and appreciated.

Updated August, 2007

¹
R.S.C. 1985, c. C-46 ²
R.S.B.C. 2002, c. 14 ³
396 tables plus 73 poker tables ⁴
Community gaming centres are equipped with electronic bingo and slots. ⁵
R.S.B.C. 1996, c. 185. Pursuant to BC's Minister of Health, funds deposited into this account may be paid out for the administration, operation and delivery of healthcare, health research and promotion and health educational services. ⁶
Includes new gaming enhancements (slot machines at bingo halls). ⁷
Distributed by the BC Lottery Corporation on behalf of the government. ⁸
KPMG Canadian Gaming Industry Highlights Report, February 2003. ⁹
Statistics Canada, March 2003. ¹⁰
Gaming Control Act, S.B.C. 2002, c.14 (the "Act"). ¹¹
B.C. Gaming Control Regulation 208/2002 [amended to B.C. Reg. 280/2004] (the "Reg."). ¹²
Jason J. Azmier, Canada West Foundation Study, 'Gambling in Canada 2005', June 2005. ¹³
RSBC 2002, c. 57. ¹⁴
RSBC 1996 c. 433. ¹⁵
Senior employees include persons in key executive or managerial positions of responsibility with gaming equipment suppliers or gaming services providers. Employees of a gaming services provider in the category of bingo manager, casino manager, security or surveillance manager, personnel manager or outside directors and any other such person identified by the GPEB may submit a short form application. As companies may be structured differently, GPEB's review of the applicant may lead to the identification of other senior employees that are required to provide an application. ¹⁶
RSBC 1996 c. 348. ¹⁷
2000, c. 17. ¹⁸
Act, s. 68. ¹⁹
Act, s. 69(1). ²⁰
Act, s. 72(1). ²¹
Act, s. 69(2). ²²
Reg. s. 28 ²³
Act, s. 73(1). ²⁴
Offences and penalties are set out in the Act at s.97 and s.98, respectively. ²⁵
Act, s. 98(2)(b). ²⁶
Act, s. 98(3). ²⁷
Act, s. 97(4). ²⁸
Act, s. 98(2)(a).

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