It takes about 10 seconds for Kevin Harrigan to lose three times on a Dynamite Diamonds machine, his 40-cent wager quickly disappearing each time as jangly electronic music plays on repeat and candy-coloured reels of kings, queens, wild cards and jewels flash by.

A few minutes later, he wanders away from a bank of Cleopatra machines with their sleek, curved glass screens and sits down by a cluster of Wheel of Fortune machines, each with a retro bronze arm on the side that you can pull down to place a bet (though it’s easier and faster just to tap the “play” button).

Harrigan, a slot machine expert and newly retired professor of computer game design at the University of Waterloo, is surprised you can bet up to $9 on every spin. At a nearby machine, Fortune Charm, you can wager up to $12 per play.

“I’m kind of stunned that they’re allowed to have that limit,” Harrigan said, pointing out that over time, players lose an average of about 10 per cent of the money they bet on such machines. “Say you’re doing 10 spins per minute, you’d be losing $12 per minute on average.”

Harrigan is shocked not only by the amount and speed at which gamblers can lose, but by the fact that these machines are here at all. After all, this is a bingo hall, not a casino.

Delta Bingo & Gaming, on St. Clair Avenue West, is a cavernous, carpeted space filled with tables for the bingo crowd, who can play on traditional paper cards, tabletop computer touch screens, or both. It also has a separate space with rows of “Vegas-style gaming machines,” almost 200 in total.

It’s one of four locations with electronic betting machines in Toronto. There’s another Delta location in Downsview with almost 100 machines, plus Dolphin Gaming and Rama Gaming House in Scarborough, both of which have more than 100 machines. The owners market them as a taste of Sin City (“Bringing Vegas to you!” says the Delta website).

These venues are licensed as bingo halls, but a Star investigation has found that dozens of locations across Ontario have quietly become de facto casinos, some containing well over 100 betting machines that look like and operate much like slot machines. Provincial law prohibits slot machines in bingo halls and the gaming machines are not harmless — one expert said they may actually be more risky for problem gamblers than casino slots, as they run faster, allowing users to lose money at a quicker pace.

In total, 37 bingo halls have been “modernized” under a program led by the provincial gambling manager, the Ontario Lottery and Gaming Corp. (OLG).

The OLG says the bingo halls — it calls them “charitable gaming centres” because a portion of the revenue goes to 2,200 local charities around the province — support communities, follow the law and have been approved by the provincial and municipal governments.

But with 2,900 gambling machines (in the standup cabinet style typical of slot machines) in venues across the province, they now seem to resemble casinos more than the bingo halls of yesterday.

Like casinos, they have dozens of machines designed to part gamblers from their money — and the odds of losing are roughly the same as on slot machines.

Like casinos, they can attract problem gamblers, who self-report worse health and mental health than other gamblers, and account for a vastly disproportionate amount of gambling revenues.

Like casinos, they have the potential to become a target for money laundering — but they have not been following federal rules aimed at tracking the proceeds of crime (just this week, Canada’s financial intelligence agency, Fintrac, said they should be).

They also appear to break earlier promises the OLG made to the city of Toronto and other municipalities, which said in no uncertain terms they didn’t want slot machines in bingo halls.

These modernized bingo halls have not made money for the province. In fact, according to an audit by the provincial Ministry of Finance, they have actually been a drain on Ontario’s finances, although OLG spokesperson Tony Bitonti says a new business model implemented just before the pandemic is expected to help the program break even.

For all of these reasons, some say it’s time to put an end to slot machines in bingo halls.

Back when the modernization project was still in its early days, Harrigan warned about the addictive features of the new machines in a paper he co-authored for the International Journal of Mental Health and Addiction.

Sitting outside the Delta Bingo this summer, he says he was struck by the size of bets you can place, the modern graphics and sound systems, and the rapid pace of play, all of it miles away from an hours-long bingo session in a church basement.

“Now, people can do things like lose their mortgage or their house or have suicidal thoughts because of all the money they’re losing. Now, you can lose a lot of money in a hurry,” Harrigan said.

“These bingo halls clearly weren’t set up to have slot machines. I think they should be banned immediately.”

The business of bingo was already in decline by the early 2000s, and as with many legacy industries, its boosters believed technology could come to the rescue.

At first that seemed like a strange idea for a game so tied to its physical artifacts — the paper cards, the colourful dabbers and the lucky charms regulars laid out in front of themselves after claiming their favourite seats. And a computer wouldn’t flirt or joke around with the crowds of mostly older women.

But they had to try something.

The province’s smoke-filled bingo halls, often staffed by volunteers from the local charities and seen as an important revenue source for those organizations, were facing new competition from casinos that had opened over the previous decade.

And then came the indoor smoking bans, first on a city-by-city basis and then Ontario-wide in 2006, dealing another blow to the industry.

By 2012, the number of bingo halls in the province had dwindled to 65 from 230 a decade earlier. In Toronto, there were just six halls remaining, down from 23.

“Bingo halls — populated disproportionately by the old, the poor, and the Indigenous (although admittedly skewed female) — (were) heavily impacted by smoking bans,” Kate Bedford, a law professor at the University of Birmingham, wrote in a 2018 paper.

Smoking bans, Bedford said, “created incentives to automate gambling, via introducing more slot machines in bingo environments so as to recoup profits.”

Two groups led the charge on that front — a coalition of bingo hall operators and an organization of local charities, now known respectively as the Commercial Gaming Association of Ontario (CGAO) and the Ontario Charitable Gaming Association (OCGA).

They spent years lobbying the gambling authorities, including the OLG, and the provincial gambling regulator, the Alcohol and Gaming Commission of Ontario (AGCO).

By 2005, they had a model they piloted at six bingo halls in five cities (Barrie, Sudbury, Kingston, Peterborough and Windsor) and in 2010, the province approved an expansion of what was referred to as a “modernized” version of bingo.

Along with improving the “overall ambience” of the halls to attract new players, that meant introducing computerized bingo cards so patrons could play along with live games virtually instead of using paper cards and dabbers, as well as new “play-on demand” bingo games on hand-held or tabletop devices.

But they still needed municipal approvals. Lynn Cassidy, executive director of the charity association, and Peter McMahon, CEO of the commercial operators group, led an effort to get host cities on board.

“Peter and I (travelled) around the province trying to sell the idea of, you know, we can’t survive on just traditional bingo, but we need to introduce technology,” Cassidy said during a panel session at the Canadian Gaming Summit in Toronto in June.

As part of this push, the OLG repeatedly assured concerned city councillors and city officials that the new modernized bingo halls would not allow either slot machines or video-lottery terminals (VLTs). Instead, it said, the province would bring in new machines that were simply electronic versions of the traditional paper-based games already played in bingo halls.

“The direction OLG received from government was … clear: slot machines will not be included in the modernization of charitable gaming,” the OLG told Toronto city staff in a March 2012 letter.

The city’s bureaucrats took the OLG at its word.

“The gaming centres will feature electronic games designed to complement, not replace, the current paper games,” read a 2012 city report on the proposal, which pointed to that letter and said, “It is important to note that the OLG … confirmed that slot machines will not be included in this initiative.”

(The OLG would not agree to an interview for this story but spokesperson Tony Bitonti responded to the Star’s questions in lengthy emails.)

Under the OLG’s standard charitable gaming (or “cGaming”) contract, bingo hall operators would receive 47 per cent of net revenues, local charities and the OLG would each get 25 per cent, and the city would get about three per cent.

The new model would mean less money for the city from licensing fees paid by the charities, but it would help save dying businesses and support charities.

By the summer of 2013, Toronto city council approved the proposal to let interested bingo halls “offer electronic bingo and other electronic games in bingo halls, excluding slot machines.” (Councillors added the reference to slot machines on the day of the vote.)

The decision came just weeks after the city had rejected a downtown casino following a bruising political fight and warnings by public health experts on the risk of increased problem gambling with more options readily available.

Similar debates over bingo halls unfolded in other parts of the province, but with the help of the OLG, the charities and the commercial operators got their way.

By early 2015, 29 bingo halls in 25 communities had been transformed into modern cGaming centres.

But fairly soon after the program launched, two things became clear: Basic electronic bingo alone was not enough for the operators and charities — and this new initiative was much more expensive than the OLG had anticipated.

Traditionally, gambling has been a somewhat controversial, but reliable, source of cash for the province.

Before the COVID-19 pandemic, lottery, casino gambling and slot machines at racetracks and other venues typically brought in more than $8 billion in annual revenue, and after expenses, added more than $2 billion in profit to provincial coffers.

An initial estimate projected the charitable bingo program would eventually add $400 million in gross revenue to that tally each year.

But the OLG was responsible for investing in the new gaming equipment at bingo halls — and that didn’t come cheap. Within the first three years, the OLG had already lost almost $135 million on the program, including $47 million in costs in fiscal 2014 and 2015 combined that were immediately written off as they stood no chance of being recouped.

An audit of the OLG’s operations, conducted by the provincial Ministry of Finance and published last year, concluded that the bingo initiative has been losing money from the outset and it’s ultimately the province that has been propping it up.

The program was meeting only half of that $400-million annual revenue target by fiscal 2020, the audit found, and the OLG lost a total of $182 million on the business from 2013 to 2020.

“Despite embracing a strategy that is designed to transfer financial risks to the (bingo hall operators), OLG has been the entity losing monies since the start of the cGaming modernization strategy,” the audit said.

The OLG needed to pump the brakes. It delayed five new bingo hall conversions in fiscal 2016 and began to talk in its annual report about negotiating a new deal with the charities and the bingo hall operators.

Yet, with the OLG shouldering the capital costs, the operators and charities were seeing a turnaround in their dying industry.

By then, electronic bingo games had evolved to include TapTix machines, which the OLG described as a version of a classic lottery game offered in bingo halls, but with an “interactive display screen.”

The machines were driving revenue growth, and the CGAO and the OCGA wanted more.

“The industry started to stabilize, but we weren’t growing,” the OCGA’s Cassidy said at the Canadian Gaming Summit, adding that the sector needed “new technology and innovation.”

Richard Schwar, director of operations at the OCGA, asked her how the cGaming centres went from “basically electronic bingo” to “where we are today with the venues and the product mix and the cabinet games and all that.”

Cassidy’s answer was blunt: “Begging. Begging for more technology.”

By the spring of 2019, the OLG and its partners had a new model for charitable gaming that would give the bingo centres just that.

The OLG said it would save money under the deal by transferring the cost of new gaming equipment and supplies to the bingo hall operators (the hope is to “move the program into a revenue neutral position,” Bitonti said).

In exchange, the bingo hall operators were given more freedom to purchase new machines.

In fiscal 2020 alone, the OLG’s annual report said 1,000 “new electronic products” were added to the province’s charitable gaming centres.

Earlier this year, for example, major international slot machine manufacturer IGT launched a version of its Wheel of Fortune machines designed specifically for Ontario’s bingo hall market. Banks of those machines now feature in Toronto bingo halls.

But it’s not clear that the cities that host the centres were aware of the terms or impact of the new agreement. The city of Toronto told the Star it “has no information as to OLG consulting directly with the city regarding any changes to arrangements with operators.”

Bitonti said the OLG meets with staff from host municipalities for an annual briefing on cGaming led by Cassidy’s charity group.

They provide updates on the performance of the program, the products offered, the charities involved and the roles that volunteers play, Bitonti said, adding, “OLG is not aware of any municipal concerns related to the paper and electronic games offered in cGaming centres.”

But he did not answer a question about whether the OLG consulted specifically with municipalities on the new business model.

And even under the new arrangement, the program “is not financially sustainable” for the OLG, the Ministry of Finance audit said.

The audit predicted the pattern of losses would persist, with annual losses of up to $28 million until at least 2024.

“OLG is unable to cover its operating costs and bears the risk of continuing financial losses.”

Crowds of bingo patrons still gather to smoke in the parking lots outside charitable gaming centres during breaks in play. There are still regulars who cling to their lucky seats and fervently follow their favourite bingo callers.

But the bingo business is being propped up by the electronic machines, which drive most of the charitable gaming revenue growth, according to multiple OLG annual reports.

The OLG maintains that the program does good, because of the money that goes to local charities. Bitonti gave the example of B’nai Brith groups sending out 140 emergency food boxes per week to seniors thanks to money raised by the Downsview Delta Bingo.

“OLG’s charitable gaming (cGaming) program supports and invests in charitable causes that make communities across Ontario stronger,” he said, adding that the idea was “to provide a stable and consistent source of support.”

Bitonti said more than $345 million has gone to charities since 2005, when the pilot project launched, and municipalities have received $41.8 million in host fees over that 17-year period.

But on the other side of the ledger — and far more difficult to put a figure on — is the risk of social and financial harm to the people who gamble on all these new machines. Experts say electronic gaming machines are among the most addictive forms of gambling.

“The people who are most likely to come into treatment for gambling problems are people who are playing on gaming machines,” said Nigel Turner, an independent scientist with the Institute for Mental Health Policy Research at the Centre for Addiction and Mental Health.

Yet, as the number of gambling machines steadily expanded over the years, the program has received remarkably little scrutiny. No research has been done on the public health impact of electronic gaming machines at bingo halls.

Asked by the Star how the OLG could justify installing thousands of these machines after the promises it made to municipalities, Bitonti said the program has been approved by the province at all stages, the machines are tested and approved by the AGCO and that the “paper and electronic games in cGaming centres fall within the games” permitted by legislation.

He also cited a technical distinction in the math behind the machines. While slot machines use a random number generator each time someone makes a bet, the results at the bingo-hall machines come from a finite number of preprogrammed outcomes.

Those outcomes are based on games that were historically legal in bingo halls, including bingo itself and break-open-tickets, cardboard tickets with perforated covers that pull back to reveal prizes.

The idea is that when you bet on one of these machines, you’re really playing bingo or buying a break-open ticket, which is meant to comply with the law around what “lottery schemes” a charitable organization can conduct.

So what you see displayed on the big screen, the flashing cherries and jewels and playing cards, is just an “animation of the bingo or break open game results,” according to the OLG’s website. It’s “for amusement only.”

“They’re making it seem like you’re technically or legally playing bingo on those modern slot machines,” Harrigan said, noting that when you spin on certain machines, a small digital bingo card flashes on a screen near the bottom of the console.

“That’s really a mind-twisting thing. How could you possibly be playing bingo if you’re seeing a slot machine run by reels and hearing Cleopatra’s voice?”

The machines at the bingo hall are made by the same big manufacturers and use the same sophisticated strategies employed by casino slot machines to keep gamblers engaged, including fast and continuous play, bonus rounds and reels that suggest you almost won (that extra wild card was just one row away!).

And they often disguise losses as wins: Bet $1 and you might lose 80 cents but get treated to sounds and visual cues celebrating a “win” of 20 cents.

The odds of winning are also roughly the same. Slot machines in Ontario must pay gamblers back an average of at least 85 per cent over time, though casinos are free to set that higher. The machines in bingo halls average between 88 and 92 per cent, according to the Responsible Gambling Council (Bitonti said the payout for cabinet-style games in bingo halls is “about 92 per cent”).

Shelley White, CEO of the Responsible Gambling Council, said one important difference between the charitable gaming machines and slot machines is the speed of play. In fact, machines at bingo halls “operate at a much faster rate than slot machines.”

“(Players are) going to spend that $20 much more quickly on a TapTix machine than they are on a slot machine,” she said. “In terms of the appearance, unless you’re a savvy player who’s aware of that, you wouldn’t know there’s a difference, because the skin of the equipment looks exactly the same.”

“When you walk into a cGaming facility and you see the number of electronic gaming machines, if you haven’t been in a cGaming facility before or you haven’t been in a while, it can be surprising,” White said.

Turner, the mental health researcher, who took his own trip to a bingo hall in Pickering recently, put into words the common-sense conclusion that almost any neutral observer would make: The new machines at bingo halls may have originally been conceived to emulate the traditional paper games, but they are now “virtually indistinguishable from slot machines.”

Money launderers don’t tend to care if some of the proceeds from the slot machine they’re using to “clean” cash tied to criminal activities goes to charity or not.

Yet, Ontario’s bingo halls have not been following federal rules designed to alert Canada’s financial intelligence agency to illegal activities at casinos.

That’s about to change. The Financial Transactions and Reports Analysis Centre of Canada (Fintrac) told the Star this week that it has wrapped up a months-long review of the charitable gaming centres and concluded that the bingo halls should in fact be following those rules.

“Fintrac has concluded its assessment and has determined that the operations and business models of these gaming centres are subject to the obligations under the Proceeds of Crime (Money Laundering) and Terrorism Financing Act,” spokesperson Renée Bercier said in an email.

That legislation applies to casinos, which are defined as venues with 50 or more “slot machines or similar electronic gaming devices,” and it requires them to set up compliance programs, which includes submitting suspicious transaction and large cash transaction reports to the federal agency and keeping rigorous records.

In an earlier email when the review was ongoing, Bercier noted that historically, the charitable gaming centres “only offered lottery type activities, such as bingo, that are not covered under the (federal rules).”

But she added, “At the same time, if a business meets the definition of a casino, we would expect them to put a compliance program in place.”

Bitonti said on Thursday that it was the OLG itself that sought clarity from Fintrac in April on whether the federal anti-money-laundering rules apply to charitable gaming centres.

“Within 24 hours of receiving the new interpretation (on Tuesday of this week), OLG contacted the cGaming industry to provide prompt notification of the revised interpretation, with a view to developing a joint action plan, building on what we already have in place,” Bitonti said this week, noting the bingo halls already follow other measures mandated at the provincial level.

Those include a $3,000 limit on the amount any individual can insert into a game at a bingo hall and a maximum cash payout of $1,999. Winners have to show ID to collect larger prizes, and winnings over $1,000 trigger a check with the provincial government to see if the winner owes child or spousal support, Bitonti said, noting that “mitigates against anonymous payouts.”

Raymond Kahnert, a spokesperson for the AGCO, said on Thursday that the gambling regulator is “fully committed to supporting Fintrac, OLG and the charitable gaming sector as they work to respond to this recent guidance.”

If you visit a cGaming centre, you might find a sign with the slogan “Charitable gaming, community good” next to a rack of pamphlets on responsible gaming.

The words surround a turquoise-blue heart floating over a drawing of a house, a wholesome image designed by the charity bingo lobby group.

It’s clear that the OLG also wants the public to focus on the charitable destination of the funds collected — not the social harms inflicted by electronic gambling, the millions of dollars the province lost through the program, or the clear and possibly broken promises to municipalities that slot machines would not be part of the bingo hall project.

Bitonti pointed to the “mission-critical support” bingo halls provide for charities, arguing many “would have declared bankruptcy without other sources of funds” (he did not provide any support for that assertion), and said the decline of the bingo sector left “the charities nowhere to turn for critical stable funding.”

“During the original cGaming consultations, some municipal leaders voiced concerns about not wanting to shoulder the cost of supporting these charities if the cGaming plan was rejected,” Bitonti said.

Asked about the impact of increased gambling options tied to the bingo halls, Bitonti said the OLG has responsible gambling programs (run by the Responsible Gambling Council) in all of the cGaming centres.

Cassidy and McMahon, of the charity and commercial operators organizations, both declined interviews and directed questions to the OLG. But in brief emails they, too, highlighted the money raised for charities and local employment the businesses generate.

Delta Bingo, which owns 17 cGaming centres, including the two in Toronto, also declined an interview and referred the Star to the OLG. In an email, the company’s chief financial officer, Leo Perri, also mentioned the charitable fundraising and Delta’s ties to local communities after operating for more than 25 years in most locations.

“We have a long history in our communities and know our customers well,” Perri said.

(The Star wasn’t able to reach the owners of Dolphin Gaming or Rama Gaming House.)

The province “could have chosen to set up a transfer payment” to support the charities, Bitonti said. But he added, “The advantage of the existing cGaming program is the job creation, community activity and payments generated for host municipalities.”

Toronto has received about $5.3 million in payments tied to cGaming since June 2014, while charities in the city have received $45.7 million, he said. That’s just under $6 million per year on average for the charities.

But Harrigan argues that given the high financial and social cost of this method of fundraising, it’s time for the OLG to drop the “facade of pretending these machines are not slot machines” and just give money to charities directly.

“The amount of money that goes to the charities is, by OLG revenue standards, a trivial amount of money.”

Toronto city Coun. Mike Layton, who lobbied hard against a downtown casino almost a decade ago, agrees. He says he doesn’t see the gaming centres as a net positive for the city, pointing to people who spend money at a rapid pace at the machines.

“It’s not adding to the economic generation of the community. It’s just taking from it,” he said.

“There used to be a day when we didn’t allow slot machines in these types of facilities,” Layton said. “At some point that line got blurred and these massive businesses and the gambling industry were able to sneak in with these VLTs.”

Layton said the city should not accept that slot machines in bingo halls is the only way to help local organizations.

“We need to find other ways of supporting charities. I think we can.”

If you need help with mental health, addiction and problem gambling, you can contact ConnexOntario at 1-866-531-2600.

Christine Dobby is a Toronto-based business reporter for the Star. Follow her on Twitter: @christinedobby