Gamblor’s World

Dec. 16, 2006. 01:00 AM, Toronto Star

There can’t be many fields where someone earns a salary of $100,000 and picks up $82,500 worth of severance pay when he gives up his job voluntarily. There must be even fewer employers who would immediately rehire that person as a “consultant” in exchange for $350,000 over two years.

Oh, and by the way, for those who might find these conditions not quite enticing enough, note that on top of that amount, the employee received a $7,500 “standby fee.” It’s a paying proposition, standing by.

No, we’re not in the wonderful world of advertising, sponsorships and the federal government in the good old days of Chuck Guite and Alfonso Gagliano.

Welcome to the Quebec horse-racing industry, as revealed this week by Quebec’s auditor general, Renaud Lachance.

I’ve always been a little stunned to see how well that moribund industry succeeded, year after year, in getting grants by the cartload, without ever managing to dig itself out of the hole.

Are we dealing with a strategic industry? No. Breeders and a few jobs in the stables are what get financed. Is this an activity that attracts tourists? Apparently not. It doesn’t even attract gamblers under 65 anymore — they’re over at the casino.

Year after year an aging public turns up, despite the best efforts to make this a “family activity.”

And, in fact, why would the government finance gambling, which used to be called a vice? The only reason for the government to involve itself in gambling is to get its hands on revenues, revenues that would otherwise go to organized crime. But to give this industry money?

Nevertheless, back when Bernard Landry was finance minister under the regime of Lucien Bouchard, he succeeded in persuading the government to provide massive support for the Société nationale du cheval de course (SONACC), an organization created in 1999 to manage Quebec’s four racetracks and to “boost” the industry.

Result: Between 1999 and 2005, Quebec pumped $260 million into the horse-racing industry, $184 million in direct “financial assistance” and $76 million in revenues from video poker terminals installed in the racetracks by the government.

What was that money used for? Mostly for increasing the purses for races ($181 million). Also for improving infrastructure ($32 million). Highly debatable from the standpoint of principles, but completely regular in terms of management, said the auditor general. This is a gladdening bit of news because we know that certain SONACC directors own racehorses themselves and, therefore, have an interest in the purses.

But that’s not the object of the auditor general’s criticism. The problem, he says, is not the money and what we know it’s been wasted — sorry, spent — on. That’s a political choice. The auditor’s problem is the money that disappeared.

Because this non-profit corporation was so badly managed that $15 million quite simply vanished from the accounts. Unjustified bonuses of tens of thousands of dollars, golf tournaments reimbursed, meals (more than $1 million) and other unsubstantiated expenses are all part of the “open bar.” An operation that enjoyed its finest years under the Parti Québécois, from 1999 to 2003.

This week, the Liberal government, of course, was only too happy to say it had referred the matter to the provincial police.

“Only a judge can decide whether there has been fraud,” said Lachance. “I have suggested to the government that they take steps to recoup the money.”

SONACC is effectively a PQ creature, and its former president part of Landry’s circle. He is in no way targeted by the report, but he can certainly be reproached for not having put a control mechanism in place.

At the same time, one can’t help but notice that to resolve the industry’s problem, Quebec “privatized” the racetracks — installing gambling salons containing 1,900 video poker terminals, which will bring the private firm $36 million in annual revenues for 25 years. It can be asked why the government is turning over this money to the racetrack operator, rather than to hospitals or to the development of some other industry. This is once again a way, albeit indirect, of conferring special status on horse racing.

But it’s all according to that well-known government logic: We’ve put so much money into it, we can’t let go now!

That’s also what gamblers tell themselves very late at night, when they’ve lost almost everything: Let’s keep going, things will turn around.

Copyright Toronto Star Newspapers Limited.