Registrar, Alcohol and Gaming Commission of Ontario v. Com. & .Play Café, Inc., 2010 CanLII 80983

IN THE MATTER OF The: ALCOHOL AND GAMING REGULATION AND PUBLIC

PROTECTION ACT S.O. 1996, C.26, S.14.1, SCH

B E T W E E N:

Registrar, Alcohol and Gaming Commission of Ontario

Registrar

-and-

Com. & .Play Café, Inc. operating as Vivid Bar Lounge

Licensee

Panel: Jacqueline Castel, Board Member Allan Higdon, Board Member

Decision Date: December 8, 2010

Hearing Location: Toronto, Ontario

Alcohol and Gaming Commission of Ontario

90 Sheppard Avenue East, Suite 300

Toronto, Ontario, M2N 0A4

Phone: (416) 326-0366 Fax: (416) 326-5566

Toll Free In Ontario: 1-800-522-2876

Website: www.agco.on.ca

Appearances

Registrar, Alcohol and Gaming Commission ) Rena Khan, Representative

Com. & .Play Café, Inc., Licensee ) Lynny William Carter, Representative

Allegations

A hearing into the appeal of Order of Monetary Penalty (“OMP”) number 199 dated January 22, 2010, issued to Com. & .Play Café, Inc. (the “Licensee”), operating as VIVID BAR LOUNGE, 1067 St. Clair Avenue West, Toronto, Ontario, M6E 1A6 (the “establishment” or the “premises”), liquor licence number 201775 (the “Licence”), pursuant to section 14.1 of the Alcohol and Gaming Regulation and Public Protection Act, 1996, in respect of an alleged violation of subsection 45(1) of Ontario Regulation 719/90 (the “O.Reg”) made pursuant to the Liquor Licence Act (the “LLA”), was held on September 13, 2010 in the City of Toronto.

Decision

After considering all the evidence and submissions, the Board UPHOLDS the OMP. Reasons follow.

Preliminary Matters

The Licensee was represented by Mr. Carter, a paralegal licensed under the Law Society of Upper Canada.

Registrar’s Evidence

Mark Hall has been an inspector at the Alcohol and Gaming Commission of Ontario (“AGCO”) for 2.5 years. He attended the premises on the night of October 8, 2009, arriving at 11:35 p.m.
Upon entering the establishment, the witness observed two tables at which people appeared to be playing Texas Hold ‘Em. One table had eight people sitting, the other had six people. There were multi-coloured poker chips visible on the tables. No cash was observed.
A sign on the wall stated “Vivid Poker Tournament”.
The witness spoke to the bartender, Marcella De Darroslira, and asked her how he could participate in the poker tournament. She said she was not really sure.
The witness then spoke to the manager, Fernanda Garcel Cortes, and asked her how he could play in the tournament. She stated he had to buy a membership card for $20. She stated the card was like a “points” card – you could put money on the card and use your accumulated points to purchase food or remit for prizes.
The manager presented the witness with a player’s card on which was printed “Vivid Bar Lounge” and a fourteen digit number. She stated he could not play in the tournament without a card. Players’ winnings were tracked by the last three digits on the card.
The witness stated he observed two unlawful video gambling machines. One was a Cherry Master multi-reel machine, the other a Keno video machine.
The witness asked the manager if the machines paid out. He was told that staff of the establishment did not do the payout; rather, the payout was handled by “a Portuguese guy who owns the machines”.
Ms Cortes said the premises tracked the credits earned by players on a piece of paper. Each credit was worth five cents.
The witness informed the manager of the infractions under the LLA and told her his report would be submitted to his manager who would decide on the disposition. He also told her the poker tournaments should cease operating.
The witness was asked how he knew the plastic chips on the two tables were poker chips. He stated he had worked in casinos for 11 years and knew what they looked like.
The witness stated he observed the card play for three minutes. The participants were playing “Texas Hold ‘Em”, a form of poker.
One of the prizes listed was a trip to participate in a poker tournament, possibly in Las Vegas. He could not recall the location exactly. Other prizes included T-shirts and hats.
The witness stated he observed a man sitting in front of one of the gambling machines. The witness considered the machines to be illegal as they had the appearance of casino slot machines and featured 8 to 10 buttons on the front. Some of the buttons were labelled “Hold”, “Bet” and “Next Bet”.
The machines had bank note acceptors on the front. Both machines were illegal due to the mixed elements of chance and skill with success resulting in a payout.
On cross-examination the witness stated he could not recall any exterior signs advertising the poker tournament. He does not recall any indication the tournament was free.
The bar has an open concept and activity within the bar is clearly visible to those outside given its large glass windows.
The witness only observed the alleged video gambling machines for a short period of time. He did not witness anyone playing the machines or a payout.
The sign on both machines said “For amusement only”. The witness did not see anybody playing the video machines and he did not attempt to play himself.
The witness said he arrived at the premises at 11:35 p.m. and left at 12:26 a.m.
The witness acknowledged he did not see any payout at the Texas Hold ‘Em poker tables.
Helen Giorgoudakis has been an inspector at the AGCO since the fall of 2008.
She visited the premises on October 8, 2009 accompanied by her colleague Inspector Hall.
The witness immediately observed patrons sitting at two tables playing poker.
The witness identified herself to the manager and inquired about the poker tournament. The manager explained the tournament had a $20 fee for which the player would be given a card and chips. The prize was a seat at a casino tournament. The event at Vivid was hosted by “Chip and Chair”.
The manager explained the card given to players allowed them to accumulate points. A hat could be redeemed for 100 points, a T-shirt for 200 points, a golf shirt for 300 points.
The witness noticed players at the poker tables – one had eight people, the other had six.
A sign was posted on the wall which read “Vivid Poker Tournament”.
The manager explained the poker tournaments started in early September and ended in November. Tournaments were held every Thursday.
The witness was told by the manager that a record was kept of all the players and their points. The players’ card could have points redeemed for food or drink. The card could also be uploaded with points.
Inspector Giorgoudakis noted two gambling machines on the premises – one a Keno machine, the other a Cherry Master.
The Inspector was told that each point credit cost five cents. A Portuguese man owned and serviced the machines. Notes were taken of how many points each player had accumulated.
The witness advised the manager of the LLA infractions.
The witness saw a man sitting in front of one of the alleged gambling machines but he was not playing.
The witness left the premises at 12:26 a.m.
On cross-examination the witness confirmed she told the manager she would be submitting a report on the infractions.
There were no questions on reply.
Daniel Alakas is an Ontario Provincial Police (“OPP”) officer and legal counsel at the AGCO.
Ms Khan filed, and the Board entered, as Exhibit # 1, the CV of Daniel Alakas.
After a review of Mr. Alakas’ CV, counsel for the Registrar asked that he be certified as an expert in gaming law. Mr. Carter did not object. The panel certified Mr. Alakas as a gaming expert.
Ms Khan filed, and the Board entered, as Exhibit # 2, a report dated March 15, 2010, prepared by Mr. Alakas.
Ms Khan filed, and the Board entered, as Exhibit # 3, pages 397/8 of the Criminal Code – Disorderly Houses, Gaming and Betting.
The witness addressed the statement he prepared, entered as Exhibit # 2, and reviewed his analysis of the facts as presented to him by the two inspector witnesses.
The witness stated the poker tournament was illegal under the Criminal Code of Canada section 201 as it meets the definition of a common gaming house under section 197 of the Code.
Specifically, section 197 defines a Common Gaming House as a place that is:

“kept for gain to which persons resort for the purpose of playing games...”

Criminal Code of Canada Part vii 197. (1)(a)

Also required is the payment of a fee for play, either directly or indirectly, and the possibility of winning a prize.
The witness stated all three elements are present in this case.
First, evidence was given that players were required to pay a fee of $20. Secondly, this fee enabled a player to participate in a game requiring both chance and skill. Finally, success results in a prize or reward, the redemption of points for prizes.
The report of the expert witness states (page 7 of Exhibit # 2):

“In summary, it is the writer’s contention that the poker tournament conducted at Vivid Bar and Lounge would constitute unlawful gambling under section 45(1) R.R.O. 719/90 enacted under the Liquor Licence Act because the format and nature of the tournament as detailed above would bring the establishment within the definition of a Common Gaming House found in section 197 of the Criminal Code. Section 201 of the Criminal Code makes it an indictable offence to keep a Common Gaming House.”

The expert concluded:

“It is the writer’s opinion that, because the poker tournament format conducted at Vivid Bar and Lounge would meet the definition of an illegal lottery under Section 206 (1)(f) of the Criminal Code, it would constitute unlawful gambling under Section 45(1) of R.R.O. 719/90 enacted pursuant to the Liquor Licence Act.”

The witness addressed the statements of the two inspectors regarding the two video gambling machines found on the premises.
The witness’ report states that he is familiar with such machines. Players insert coins and win credits on winning combinations. He notes, “This practice is not, in itself, illegal as it is not gambling” (page 8 of Exhibit 2).
The witness further noted, “However, in the current situation the staff member admitted to the inspector that players are paid out cash, based on accumulated credits on the machine at the rate of five cents a credit. The staff member admits that they keep track of the credits accumulated and the players are paid out by another individual” (page 8 of Exhibit 2).
This scenario now results in a risk/reward scenario based upon a game of chance. As the gambling occurs through a machine, section 202 (1)(b) of the Criminal Code has been breached. The Licensee has knowingly allowed a machine for gambling to be kept on the premises.
The three elements required for a definition of gambling are present both at the poker tables and the video gambling machines:

A fee is required to play,
The game is a mix of chance and skill,
There is a prize or reward.

On cross-examination the witness stated the description of the gambling machines provided by the inspectors, based on their conversation with the manager, is consistent with every illegal gambling machine he has witnessed, in that they accept money, accumulate credits and have a payout.

Licensee’s Evidence

Mr. Carter, the legal representative for the Licensee, stated his client had instructed him not to proceed with the presentation of witnesses on his behalf.

Registrar’s Submissions

Registrar's Counsel stated the witnesses testified that they entered the premises of Vivid Bar Lounge and observed a poker tournament underway.
The inspectors spoke to staff and were informed the tournament was a regular event every Thursday in the summer. A sign stating “Vivid Poker Tournament” was on the wall. A fee of $20 was required to participate. The game played was “Texas Hold ‘Em”, a poker game which contains elements of skill and chance. Winners could accumulate points and redeem them for prizes.
These elements constitute illegal gambling under the Criminal Code of Canada.
The same elements were present in the two video gambling machines found on the premises.
Given the unrefuted evidence presented, Registrar's Counsel requested the Board to uphold the OMP.

Licensee’s Submissions

The inspectors observed the alleged gambling for a scant three minutes, hardly time to make sufficiently comprehensive observations.
The witnesses stated they saw a man sitting in front of a video machine. He never played. Neither of the inspectors attempted to use the machines and verify if they were gambling machines.
At no time did the inspectors witness a payout.
If the infractions were serious why are the machines still on the premises?
The evidence is insufficient for a conviction under the Criminal Code, where the standard of proof is beyond a reasonable doubt.
The monetary penalty should be dismissed.

Analysis and Reasons

At the outset, for the purpose of a finding of permitting unlawful gaming under subsection 45(1) of the O.Reg, the standard of proof is on a balance of probabilities. As such, contrary to Mr. Carter’s submissions, the Registrar is not required to prove, beyond a reasonable doubt that the Licensee contravened paragraphs 197(1)(a) and 202(1)(b) of the Criminal Code, to prove an allegation under subsection 45(1) of the O.Reg. Rather, for a finding under subsection 45(1) of the O.Reg., it must be established on a balance of probabilities that the Licensee permitted unlawful gaming. Further, in contrast to the criminal courts, hearsay evidence is admissible under the Board's Rules of Practice.
The testimony of the inspectors was credible and consistent. The Licensee called no evidence to refute their observations or testimony, including the hearsay evidence of the Licensee’s manager regarding how the poker tournament was played and how the gaming machines worked.
The Registrar alleged there were two forms of unlawful gaming in this case, one involving a poker tournament, which the Registrar alleged constituted keeping a “common gaming house”, in contravention of paragraph 197(1)(a) of the Criminal Code, and the other involving keeping or knowingly allowing to be kept any machine or device used for gambling or betting, in contravention of paragraph 202(1)(b) of the Criminal Code. Each allegation of unlawful gaming will be considered.
A “common gaming house” is defined in paragraph 197(1)(a) of the Criminal Code as “a place that is”

(a) Kept for gain to which persons resort for the purpose of playing games of chance”

There is an alternative definition of common gaming house in paragraph 197(1)(b), but the Registrar did not rely on this definition, so the Board will not consider its application to the Licensee. In subsection 197(1) of the Criminal Code “place” is defined as:

“any place, whether or not

(a) it is covered or enclosed,

(b) it is used permanently or temporarily, or

“[G]ame” is defined as “a game of chance or mixed chance and skill”.

There is also an exception to the definition of common gaming house under subsection 197(2), but it is not applicable to the Licensee, as it only applies to places occupied or used by an incorporated genuine social club or branch thereof.

As a licensed establishment, the premises would qualify as a place kept for gain for the purpose of paragraph 197(1)(a). The word “resort” in paragraph (a) connotes a frequent or habitual activity. According to Inspector Giorgoudakis, the Licensee’s manager told her that the poker tournaments started in early September and ended in November, and were played at the establishment every Thursday. The Licensee did not call any evidence to refute this hearsay evidence. As such, based on this evidence, the Board is satisfied that the requirement of a frequent or habitual activity under paragraph 197(1)(a) is met.
On the evening of October 8, 2009 the inspectors observed two tables with patrons engaged in playing Texas Hold ‘Em poker, a game involving both skill and chance according to the evidence of Mr. Alakas, an expert in gaming.
The inspectors were told by the Licensee’s manager that participation in the poker tournament required a fee of $20. Once the fee was paid, the participant would be issued a card which could accumulate points redeemable for prizes.
The elements of a fee, a game involving chance and skill, and the accumulation of points redeemable for prizes constitute “playing games of chance”, for the purpose of paragraph 197(1)(a) As such, the Board is satisfied, on a balance of probabilities, that the premises was a “common gaming house” for the purpose of paragraph 197(1)(a) of the Criminal Code.
According to the unchallenged evidence of the inspectors, the Licensee or its staff knew about the poker tournaments or unlawful gaming. The Licensee’s manager told Inspector Giorgoudakis that the poker tournament was held every Thursday in the summer months, and the inspectors also observed a large sign on the wall of the establishment which stated “Vivid Poker Tournament”. As such, the Licensee permitted the poker tournaments or unlawful gaming, in contravention of subsection 45(1) of the O.Reg.
Paragraph 202(1)(b) of the Criminal Code provides that “[e]very one commits an offence who

“(b) imports, makes, buys, sells, rents, leases, hires or keeps, exhibits, employs or knowingly allows to be kept, exhibited or employed in any place under his control any device or apparatus for the purpose of recording or registering bets or selling a pool, or any machine or device for gambling or betting.”

In this case, the Registrar is alleging that the Licensee kept in the licensed premises, a place under the Licensee’s control, two machines or devices for gaming.
Importantly, for the purpose of paragraph 202(1)(b), it is not necessary to show that the machines were actually used for the purpose of gaming or that anyone was gaming at the machines. Rather, it is enough, for the purpose of paragraph 202(1)(b), that the Licensee kept a machine or device, in a place under its control, that was a gambling device, and that the Licensee knew the device was a gambling device. Further, gambling or gaming must involve a chance of gain and a risk of loss.
Therefore, the fact that the inspectors did not witness anyone gaming at the two machines does not enable the Licensee to avoid liability, for the purpose of paragraph 202(1)(b).
The inspectors did not test the machines to confirm how they worked or that they were, in fact, gambling devices. Nevertheless, both inspectors testified that the Licensee’s manager admitted to them that players accumulated points on the machines, each point costing five cents, and that the Portuguese man who owned the machines handled the payout. As such, the manager admitted to the inspectors that the two machines, which were in the establishment, were gambling devices. Once again, the Licensee did not call any evidence to refute this evidence.
As such, based on the evidence of the inspectors, on a balance of probabilities, the Board is satisfied that the Licensee was keeping two machines or devices for gambling, contrary to paragraph 202(1)(b) of the Criminal Code and that the Licensee or its staff knew about the machines. Accordingly, in respect of the two video gaming machines, the Licensee also permitted unlawful gaming, in contravention of subsection 45(1) of the O.Reg.

Conclusion

Therefore, on the balance of probabilities, the Board FINDS the Licensee contravened subsection 45(1) of the O.Reg by permitting unlawful gaming to occur on the premises, in areas under the exclusive control of the licence holder.
Accordingly, the Board UPHOLDS Order of Monetary Penalty number 199 issued to Com. & .Play Café, Inc., operating as VIVID BAR LOUNGE, 1067 St. Clair Avenue West, Toronto, Ontario, M6E 1A6 liquor licence number 201775 and CONFIRMS the monetary penalties sought by the Registrar in the amount of $4, 000.

DATED AT TORONTO THIS 8^th^ DAY OF December , 2010

JACQUELINE CASTEL, BOARD MEMBER ALLAN HIGDON, BOARD MEMBER