Ontario’s publicly owned resort casinos have gambled and lost $10 million on a program that gave house credit to hundreds of bettors who then walked out on their debts.

Since 2010, the four casinos have given millions of dollars’ worth of chips to 605 gamblers whose accounts are now in default — an average of $17,000 per unpaid account.

The four casinos are Casino Rama, Caesars Windsor, Fallsview Casino and Casino Niagara, run by private operators for the Ontario Lottery and Gaming Corp.

Social worker Lisa Pont of the Problem Gambling Institute of Ontario said house credit carries risk, possibly triggering a destructive cycle for problem gamblers.

“If those debts do not get addressed and there is no plan to pay them back, it can often keep people in the gambling cycle chasing their losses,” Pont said.

Providing house credit to gamblers is a controversial topic in the gaming world, according to a top Canadian problem gambling researcher who found casinos in other provinces and countries have frowned on the practice.

The Ontario Lottery and Gaming Corp. (OLG) does not know if any of the debts were left by customers with problem gambling behaviour. Paul Pellizzari, executive director of policy and social responsibility at the Crown corporation, said “data analytics” may, in the future, allow the casinos to better understand and learn from their past credit customers.

After “exhausting all lawful collection options, including the services of collection agencies” to pursue these bad debts, the agency now considers the $10.4 million to be “uncollectible,” OLG documents say.

The program, which OLG says responsibly offers house credit under strict controls, has approved up to $37 million in credit since 2010, though not all of this credit was necessarily accessed. The casinos do not advertise or promote the service, OLG said.

Not everyone who asks for credit gets it. OLG data shows that in the latest fiscal year, 59 of 171 gamblers were denied, but the data does not say why.

Customers using the service represent about one-quarter of 1 per cent of all customers, OLG said, adding that the amount of unpaid credit in fiscal year 2015-16 represented only 0.053 per cent of the $1.4 billion in total gaming revenue at all four resort casinos.

“We view it as tool of convenience … We don’t want people coming in with pockets full of money, from a customer safety and security (standpoint),” said John MacFarlane, vice-president of gaming at OLG. “It’s really primarily there for folks who, first off, demonstrate the wherewithal they can afford credit. There is a significant vetting process before granting credit.”

The OLG also says this customer service is offered by large casino resorts around the world.

The credit is short-term, interest-free and due within 30 days. Applications can be mailed in or filled out at the casinos, each of which has its own credit department that runs background checks.

On the Fallsview credit application form, it says: “No need to carry cash. No interest — no fees. Easy 24 hour access.”

To get credit, the gambler must provide a “countercheque,” which is like a postdated cheque. When the credit or “marker” comes due in 30 days, the casinos will try to collect from the account the gambler provided access to in the credit application. In the cases of the 605 unpaid accounts, a month after the credit was extended, there was no money where the gamblers said it would be.

The unpaid credit data — obtained by the Star under freedom of information legislation — shows that there are, on average, more than 80 new delinquent credit accounts each year.

“That’s concerning. It certainly does not sound stringent, especially if (the casinos) know they don’t get a chunk of the credit back,” said Pont, whose institute is part of the Centre for Addiction and Mental Health. “I would wonder if someone who was not just a recreational gambler, but an at-risk or problem gambler, would be more likely to access that service.”

For now, there are gaps in understanding the reasons for the $10 million in uncollectible debt. “We can’t speak to why some credit goes unpaid,” the OLG said in a written statement.

While resort casinos are prohibited from granting credit to individuals who display problem gambling behaviour, OLG’s Pellizzari said that although employees are trained to look for “red-flag behaviours,” they are not qualified to diagnose a gambling problem.

“Credit is not intended as a way for players to borrow money when they have no other means or cannot afford to play,” an OLG statement said.

Gambling expert Robert Williams, a professor at the University of Lethbridge and the Alberta Gambling Research Institute, said there is a reason his research has found casino operators in many other countries and provinces have historically not offered house credit.

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“Who are these gamblers likely to be? It’s reasonable to assume they’re the ones who don’t have easy access anymore to funds through the bank and have exhausted the amount of money they have brought (to the casino),” he said. “They are likely to be excessive gamblers who have exceeded their limits.

“The fact that a significant number of these credit accounts in Ontario remain unpaid provides further evidence that these are the types of people accessing this,” Williams said.

The Caesars Windsor credit application form asks the applicant to provide the credit amount requested, bank account number, details of employment income, other assets and debts, and whether the gambler has credit accounts at other casinos.

At the bottom of another Caesars credit application form is an advertisement for the PlaySmart Ontario Problem Gambling Hotline. And on the Fallsview and Casino Rama credit applications, it says, “Know your limit, play within it!”

OLG executives said it is important to remember that the gamblers are not getting credit in the form of cash.

“They’re just using our chips,” MacFarlane said. Gamblers can use these on the felt-topped blackjack, baccarat and poker tables, as well as to bet on the roulette wheel. “They have no value outside the casino property. You could not pay for a meal with casino chips. You could not pay for a hotel room with chips. You can only game at the gaming tables.”

“We’re not out any cash,” MacFarlane said of the unpaid debts. “It would (then) be written off as an expense.”

Lisa Pont of the Problem Gambling Institute points out: “The money is real when the person has to pay it back.”

The casinos report the gamblers’ debts to credit reporting agencies.

Unpaid credit peaked in 2013 and 2014, with a total of $4.3 million in debts accumulated over those two years.

The Star first asked for some of the data in February and was told to make the request under freedom of information (FOI) legislation. When the data was finally released, nearly three months after the FOI request was made, individual resorts’ credit numbers were not provided, only aggregate amounts from all four totalled together, with the OLG citing as a reason the “confidentiality and commercial sensitivities of the Resort Casinos.”

Pont said: “The message we want to convey is safety over convenience. While most people gamble without problems, for the folks that do, having access to funds increases risk.”

The OLG website states that $2 billion in profits goes to the province every year for hospitals and other priorities.

David Bruser can be reached at dbruser@thestar.ca or 416-869-4282.

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