Over the past 15 years, provincial governments across Canada have consistently demonstrated their willingness to expand the availability of gambling (Campbell et al. 2010). Most recently, the Ontario Lottery and Gaming Corporation (OLG) unveiled expansion plans that included eliminating 17 slots-at-race track venues and replacing them with 29 casinos nested more closely to population centres. The singular driving force for expansion is government's quest for non-tax revenue, largely in response to an ideologically based disaffection for tax increases. The trade-off is that, without precedent, government becomes directly involved in providing an activity that knowingly harms the population it is elected to serve. This fact alone demands unique policy consideration in relation to how government implements and manages its gambling agenda (Smith and Rubenstein 2009). Using the current Ontario initiative as a case in point, this article explores several of these considerations.
Three core principles frame the context for policy consideration:
Gambling is addictive. As with drinking, gambling involvement occurs along a continuum from problem free, at one extreme, to very harmful at the other. Unique to gambling, however, is that the harm can include extreme financial duress that may profoundly affect family well-being over the long term, if not permanently.
In Ontario, there are about 330,000 problem gamblers of moderate to high severity (Wiebe et al. 2006). About 20% quit or substantially cut back each year, largely due to financial duress, and are replaced by an equal number of new gamblers (Schellinck and Schrans 1998; Single and Wiebe 2002). This rate of "churn" produces as many as one million "lifetime" problem gamblers over a decade.
All gambling is loaded against gamblers. This fact guarantees that the more gamblers play, the more they will lose (Hannum and Cabot 2001). Thus, gambling's primary function is to extract money from patrons (Adams 2008). Despite this reality, Ontario has no evidence-supported mechanisms in place to limit patrons' losses or to stop foreseeable harm (Williams et al. 2012).
Loyalty program data show gamblers playing 26 days a month, 24 hours a day, betting up to $15,000 per hand, losing more than $100,000 per day and losing more than $700,000 in a year (Priest 2005, October 5), none of which has been subject to any intervention whatsoever.
Government assumes all significant roles. It simultaneously acts as legislator, regulator, operator, profit taker and guardian of public health. This creates an inescapable conflict of interest, parallel to the "perverse incentive" faced by licensed premises, where maximizing profit necessarily increases harm to patrons (Hancock et al. 2008).
Thirty-five percent of all revenue comes from problem gamblers, with even higher rates of revenue from slot machines (60%) and horse racing (53%) (Williams and Wood 2007). Loyalty program data from Australia show that 0.5% of members generate 50% of all gambling revenue (Banks 2011, March). Although easily identified through loyalty program data and observation, the only response to mounting losses is to introduce increasingly powerful incentives to gamble more ("comps").
In light of these principles, the overriding policy imperative should be to embrace all possible measures to prevent harm to gamblers. Moreover, prevention should be operationally defined as measurably reducing known risk factors, including motivations for gambling, erroneous cognitions and loss-inducing gambling practices (Williams et al. 2012). In addition, gambling providers should be required to monitor patrons and intervene when early signs of foreseeable harm appear. Sadly, despite assertions of being world leaders in "responsible gaming," the record of Ontario and other Canadian provinces in adopting evidence-supported prevention measures falls substantially short of global leadership (Williams et al. 2012).
Eight Steps to Effective Prevention
Should provincial governments decide to effectively minimize harm from the provision of gambling, they should start with the following eight promising measures.
Make Loyalty Programs Less Harmful
Current loyalty programs actively fuel the transition to problem gambling and maximization of harm. Four changes will help contain the damage:
- Set an annual spending threshold (e.g., $1,000) after which the points awarded are substantially reduced. (The median expenditure for all slots gamblers is about $450 per year [for casino and slots-at-racetrack venues] and $650 per year for all casino table gamblers [Wiebe et al. 2006].) Gamblers who exceed a second threshold (e.g., $5,000) should receive no further points. Excessive gambling should be neither encouraged nor rewarded.
- Send past-month and past–12 month statements to all members. Using the whole membership as the base, provide normative feedback using percentiles and median values for frequency of gambling, duration of gambling and monthly expenditure.
- Require casino staff to intervene when gamblers exceed thresholds for (a) frequency of gambling, (b) duration of sessions, (c) average bet size and (d) cumulative losses. Loyalty programs currently track these measures to calculate inducements to gamble more.
- Eliminate inducements (comps) that directly encourage more gambling. Examples include limousine transport, coupons (which can reach $500) to prime gambling, offering overnight stay during play and making last minute offers (e.g., free rooms and/or tickets for entertainment).
Automated teller machines (ATMs) should be removed from the gambling floor, if not from venues. OLG tells gamblers to "know your limit, stay within it," yet it places ATMs within reach of all gamblers. Such placement fulfills heat-of-the-moment impulses for more money to chase losses. An overlapping approach is to limit ATM withdrawals to $250 per day, as recommended by the Australian Productivity Commission (Banks 2011).
Modify Slot Machines
At 16.4%, slots have the highest rate for problem gambling (Wiebe et al. 2005; Williams and Wood 2007) due in part to the many built-in features that induce excessive play. Three harm-inducing features include these:
- Near misses. Slots are programmed to show winning outcomes above and below the pay line 12 times more often than actual wins occur (Dixon et al. 2011). Gamblers are led to believe the machine is "close to winning" or "due for a win any time now" and play beyond their limits.
- Stop buttons. The outcome of any spin is determined the moment it starts; the stop button merely reveals this outcome. But, the button (a) gives the illusion that gamblers have control over the outcome and (b) speeds up play and losses (Harrigan and Dixon 2009).
- Losses disguised as wins. As much as 66% of the time, bells and noises sound announcing a win when the amount "won" is less than the amount bet (Jarick et al. 2012). This practice constantly reinforces patrons' beliefs that wins occur far more frequently than they in fact do (Dickson et al. 2010).
Without cool-down time, heavy/problem gamblers will play all night, every day (24/7) and binges of two or more days go unchecked. A minimum six-hour daily closing is needed.
Between 2000 and 2009, Ontario casinos extended more than $86 million in credit to patrons (Priest 2005, October 2). There is no defensible reason for casinos to offer credit, given that the odds of every game are stacked against the gambler. Credit accounts, which can reach $100,000, are a sure way to increase losses and debt.
Reduce Recruitment Budgets
Ontario spends well over $500 million annually on advertising, marketing and promotions (not including an estimated $250 million by the four commercial casinos) to encourage more gambling. If gambling is such an enjoyable a pastime and government has a monopoly, why is this necessary? Halving these budgets would transfer an additional $375 million to public coffers.
Reduce Maximum Bets
Casinos allow bets up to $20,000 per hand at table games (T. Trinci, personal communication, December 18, 2010). Some hands, as in baccarat, take barely a minute to play. Why would any entertainment involve such incredible risk? Maximum bets should be substantially lower. In addition, the Australian Productivity Commission recommended limiting maximum bets on slot machines to one dollar (Banks 2011).
Eliminate Holding Accounts
"Front-end" accounts at casinos let gamblers store large amounts of money (often well in excess of $100,000) to draw from during play, ostensibly to "eliminate the inconvenience" of continuously transporting money from home. They also facilitate gambling until all deposited money is lost.
Further Suggestions and Conclusion
Two additional measures should be contemplated. First, government should adhere to the precautionary principle before introducing any change to gambling delivery (Hancock et al. 2008; Banks 2011). This principle, as with the introduction of new drugs, requires research showing that, as a condition for adoption, proposed changes will not increase harm. Drugs can be harmful, as can gambling, and parallel approval procedures are warranted.
Second, it is a little-known fact that consumer protection laws currently exempt gambling. There is no reason why an enterprise that explicitly incorporates deceptive and exploitive practices should not be subject to the same standards and oversight as any consumer product. A body independent of government influence, such as the provincial ombudsman, should be charged with monitoring compliance and initiating remedial action as necessary (Smith and Rubenstein 2009).
From a policy perspective, gambling is a unique and glaring departure from accepted standards and principles (Smith and Rubenstein 2009). An enlightened policy framework would establish a standard of care by which gamblers would be protected from exploitation and harm. Unfortunately, there appears to be no mechanism to persuade governments to embrace such a framework and forgo substantial revenue accrued from those being harmed.
In the absence of effective action by government, it will be left to individual gamblers who have suffered harm to turn to the civil courts for redress (Sasso and Kalajdzic 2007). As occurred in 1973 in relation to the sale of alcohol, a precedent-setting ruling that gambling operators owe a duty of care to their patrons may be the last option for social justice (Sasso and Kalajdzic 2007). Failure by government to adopt voluntary standards of care is short sighted and opens the way for more stringent standards to be imposed by the courts. As the legal community is wont to say under such circumstances, "Govern your actions accordingly."
About the Author
Robert I. Simpson was the chief executive officer of the Ontario Problem Gambling Research Centre from its inception in 2000 until 2010. He is not against gambling but stands squarely against gambling harm. He served as co-editor of the journal International Gambling Studies from 2005 to 2010 and has written extensively on problem gambling. He co-authored the definitive document Prevention of Problem Gambling: A Comprehensive Review of the Evidence, and Identified Best Practices (Williams et al. 2012), which was prepared for the Ontario Problem Gambling Research Centre and the Ontario Ministry of Health and Long-Term Care. Much of the content for this article was drawn from this document, which can be accessed at http://hdl.handle.net/10133/3121.
Adams, P. 2008. "Gambling as an Extractive Industry and the Moral Jeopardy It Generates." In The Alberta Gaming Research Institute Conference, April 2008. Edmonton AB: Alberta Gaming Research Institute. Retrieved September 25, 2012. <http://www.abgamblinginstitute.ualberta.ca/Events/EventsArchive/2008Conference/CompletedConference2008Program.aspx>.
Banks, G. 2011, March. Evidence and Social Policy: the Case of Gambling. Presentation to South Australian Centre for Economic Studies, Corporate Seminar, Adelaide, Australia.
Campbell, C., T. Hartnagel and G. Smith. 2010. "The Legalization of Gambling in Canada." In J. Mosher and J. Brockman, eds., Constructing Crime. Vancouver, BC: UBC Press.
Dixon, M., K. Harrigan, M. Jarick, V. MacLaren, J. Fugelsang and E. Sheepy. 2011. "Psychophysiological Arousal Signatures of Near-Misses in Slot Machine Play." International Gambling Studies 11(3): 393–407. DOI: 10.1080/14459795.2011.603134.
Dixon, M., K. Harrigan, R. Sandu, K. Collins and J. Fugelsang. 2010. "Losses Disguised as Wins in Modern Multi-line Video Slot Machines." Addiction 10: 1819–24.
Hancock, L., T. Schellinck and T. Schrans. 2008. "Gambling and Corporate Social Responsibility (CSR): Re-defining Industry and State Roles on Duty of Care, Host Responsibility and Risk Management." Policy and Society 27: 55–68.
Hannum, R.C. and A.N. Cabot. 2001. Practical Casino Math. Reno, NV: Institute for the Study of Gambling and Commercial Gaming.
Harrigan, K. and M. Dixon. 2009. "PAR Sheets, Probabilities, and Slot Machine Play: Implications for Problem and Non-problem Gambling." Journal of Gambling Issues 23: 81–110. Retrieved September 14, 2012.<http://www.camh.net/egambling/issue23/pdfs/06harrigan.pdf>.
Jarick, M., M. Dixon, K. Harrigan and C. Jensen. 2012. Unmasking Losses Disguised as Wins during Slot Machine Play Enhances the Feedback-Related Negativity Typically Associated With Losses. Guelph, ON: Ontario Problem Gambling Research Centre. Retrieved September 14, 2012.<http://www.gamblingresearch.org/content/research.php?appid=2771>.
Priest, L. 2009, October 2. "Casinos Spend Millions on 'Comps.'" Globe and Mail. Retrieved September 19, 2012. <http://www.theglobeandmail.com/news/national/casinos-spend-millions-on-comps/article1347579/>.
Priest, L. 2009, October 5. "The Million-Dollar Club: Losing Big, Losing Often." Globe and Mail. Retrieved September 19, 2012. <http://www.theglobeandmail.com/news/national/the-million-dollar-club-losing-big-losing-often/article1311827/>.
Sasso, W. and J. Kalajdzic. 2007. Do Ontario and Its Gaming Venues Owe a Duty of Care to Problem Gamblers? Guelph, ON: Ontario Problem Gambling Research Centre. Retrieved September 19, 2012. <http://www.gamblingresearch.org/content/research.php?appid=2206>.
Schellinck, T. and T. Schrans. 1998. 1998 Nova Scotia Video Lottery Player Study. Halifax, NS: Nova Scotia Department of Health, Addictions Services.
Single, E. and J. Wiebe. 2002. Secondary Analysis of the "Measuring Gambling and Problem Gambling in Ontario" Data: A Focus on Risk Practices and Consequences. Guelph, ON: Ontario Problem Gambling Research Centre. Retrieved September 10, 2012. <http://www.gamblingresearch.org/content/research.php?appid=2113>.
Smith, G. and D. Rubenstein. 2009. Accountability and Social Responsibility in Ontario's Legal Gambling Regime. Guelph, ON: Ontario Problem Gambling Research Centre, Guelph, Ontario. Retrieved September 19, 2012. <http://www.gamblingresearch.org/content/research.php?appid=2555>.
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Williams, R.J., B.L. West and R.I. Simpson. 2012. Prevention of Problem Gambling: A Comprehensive Review of the Evidence, and Identified Best Practices. Guelph, ON: Ontario Problem Gambling Research Centre and the Ontario Ministry of Health and Long-Term Care. Retrieved October 1, 2012. <https://www.uleth.ca/dspace/handle/10133/3121>
Williams, R.J. and R.T. Wood. 2007. "The Proportion of Ontario Gambling Revenue Derived from Problem Gamblers." Canadian Public Policy 33(3): 367–87.
Anton Hart wrote:
Posted 2013/08/02 at 11:39 AM EDT
Readership of this paper is excellent. Please consider it "open access" Let's republish it widely. (with attribution please)
Anton Hart wrote:
Posted 2013/08/02 at 12:04 PM EDT
Councillor McConnell on a Downtown Toronto casino. A letter to her Toronto constituents.
Toronto is consistently rated as one of the top cities in the world. I do not support any proposal that will diminish Toronto. I will not support a Downtown casino.
Over the last several months, I have spoken to many residents in Ward 28 and have received numerous calls and messages about the proposal to locate a casino in downtown Toronto. The vast majority of residents and business owners are very worried about a casino in Toronto and the resulting social impact and the affect on our community. I share these concerns, and I feel that the negative aspects far outweigh any perceived benefit.
One of the key arguments in favour of a casino continues to be the employment opportunities , with the promise of hundreds of jobs in both the construction and hospitality industries, along with various spin-off jobs. These jobs are very important to the city's economy and to our community. However, I feel that we can achieve this goal without relying on a casino as the catalyst. With the Pan and ParaPan Am Games, we are experiencing an exciting boom that is accelerating the build-out of the West Don Lands community. This development, along with the sporting event itself, will create substantial benefits in the years to come. We should continue to follow this model and work towards expanding our job base through attracting events, investment, and businesses that bring positive and healthy benefits to the city as a whole.
In addition, it seems unlikely that a casino will increase tourism. Toronto already has a strong tourist industry, based upon Toronto's vibrant arts, culture, and events, as well as attracting conventions to our various facilities. Events like Nuit Blanche, the Caribbean Carnival, and Pride attract visitors and bring tourist dollars from around the world, without the need for a casino. A casino would do little to add to this industry, and with a large number of casinos around the world, Toronto will never become a casino destination. The best way to increase tourism is to enhance marketing the city and our unique attractions.
A compelling argument in favour of a casino is the perceived financial benefit, but I feel that these have been greatly overstated. First, the majority of revenues generated by a casino will not stay inside the city, with a significant portion going to the casino operator. Second, the property tax revenue would come to the City regardless of the type of development on a site, and a casino would not necessarily increase the taxes received.
Meanwhile, the amount of funds that would come to the City through hosting fees has not been finalized and varies wildly, but it does not constitute a substantial windfall. In fact, the most relevant experience the City of Toronto has in this area is with the Woodbine racetrack, where the City's total take is only $18 million per year. Most recently, the Ontario Lottery and Gaming Corporation (OLG) refused to negotiate better terms with the City around bingos, which will see the City's share of revenue decrease while the OLG takes a larger cut. The $100 million to $200 million per year hosting fee that has been suggested has never been realized in any North American city, and it most certainly will not be the case here.
Finally, the City would only receive funds from land sales or leasing if it involved City lands. The question then becomes whether a casino is the best use of City property. Once this land is handed over - either in a sale or a lease - it will essentially be gone forever, and it will limit the types of development that can happen around it. The CEO of Waterfront Toronto has recently confirmed that a casino in the Port Lands will restrict the vision for the area; residential buildings will not be built in proximity and some businesses and other functions will not locate nearby. Also, the Chair of the CNE has publicly stated that a casino at Exhibition Place would essentially shut down all other uses, and that the proposal that has been put forward would have the same footprint equal to four times the Direct Energy Centre.
Meanwhile, I'm concerned that the negative impacts are being minimized. Problem gambling has severe repercussions on individuals -- in addiction, mental illness, and financial hardship -- which becomes a problem for the entire community -- including the social supports required to address the problems. I recently spoke to an individual, whose recreational gambling gradually became a full addiction, leading from financial security to being on the verge of losing housing. This heart wrenching story, like others I've heard, underscores the potential threat, and I strongly feel that we should not set "acceptable" thresholds to the social cost, or dismiss the harm because of some financial benefit.
The damage caused by a casino extends into the urban fabric . Along with the extensive parking requirements and the additional cars that would be added to our current congestion, by their nature, casinos do not add to street animation. These facilities are windowless and separated from the public realm, creating a wasteland on the street. With its size and configuration, a casino in the downtown would resemble a big box retail outlet.
Finally, residents have expressed frustration with the City's consultation process. Many felt that the open house format at the first consultation discouraged the sharing of comments and limited input. I was also concerned about the number of casino lobbyists that easily moved through the room, attempting to pressure residents into supporting a casino proposal. Following that first meeting, I pressed the City Manager to make changes to the meeting format, which was done for subsequent consultation sessions. I also expressed concern that the reliance on written feedback limits expression and creates a barrier to those who are not comfortable with written communications or do not have English as a first language.
Let us be very clear about what this casino proposal is all about. The OLG did not suggest a casino in Toronto as a way to help the City address any financial difficulties. This proposal is entirely about the provincial government grappling with its own finances. While Toronto -- like every other municipality -- is required to have a balanced budget, with borrowing for only capital expenses, the province is struggling inside a fiscal hole for operating costs. In other words, the City borrows only for its mortgage while the province is paying for groceries on the credit card.
The province wants a casino to work its way out of a $11.9 billion deficit. After downloading child care, affordable housing, and other social services onto municipalities, it is running out of ways for municipalities to cover the province's obligations. Without any other ways to feed off the City's property tax base, it is now seeking to feed off the City's property.
Toronto is consistently rated as one of the top cities in the world for investment, for livability, and as a tourist destination. A casino would add no value to what makes residents most proud of their city. On the contrary, the negative implications can only defeat all of the effort we have expended to create a vibrant city. And we need to ask ourselves what sort of city we want to leave for future generations. Do we want Atlantic City or New York City? Do we want Biloxi or Boston? Do we want Las Vegas or San Francisco?
I do not support any proposal that will diminish Toronto. I will not support a Downtown casino.
The role of government is to protect and promote the public good. The public good cannot be measured as a simple dollar figure on an account ledger's bottom line. The public good is about making smart and considered decisions that promote and enhance the health and livability of our communities - good planning, good programs, good services, good jobs. A casino does not fit inside this equation.
Government should never be about exploiting weaknesses for financial gain, and governments must do better than simple subtraction to determine if the benefits outweigh the drawbacks. Does the health and well-being of families and communities matter less than a sum of money?
I encourage everyone to consult with your own councillor in preparation for the March 2013 Executive meeting. Your input is vital to ensuring that our Toronto continues to prosper as a vibrant and diverse world-class city.
Neil Seeman wrote:
Posted 2013/08/03 at 02:18 PM EDT
This is a fascinating article and I learned a great deal -- thank you. I have a suggestion and a disclosure of bias. I believe state-sponsored gambling, especially as advertised in Ontario, is morally reprehensible. I believe in free-markets and freedom, but this is anti-thetical to freedom and free-markets and the spirit of healthcare in all ways. Vastly more intelligent and eloquent people than I have said this. **Herewith a contrarian suggestion to make a bold statement against this monstrosity: leaders of taxpayer-funded research units in gambling and addictions across Canada should shut themselves down. Yes, put yourselves out of a job. There is a shameful conflict of interest between researchers receiving legislated funding from the state when there is knowing complicity in the addictive nature of this activity, and the ways in which the state, ostensibly in support of equity in healthcare, winks at the trickery alluded to in this article. The suggestions in this article are sound and evidence-based. But to make a statement and a difference that is more powerful, the taxpayers should not support research that is paid for by morally dubious behaviour sanctioned by the state. If the taxpayer-funded research units stand together and do not accept dirty money, then the public will finally wake up to reality -- and the state will not be able to hang its hat on an absurd moral defence that it is reserving portions of winnings for research into the very behaviours it is is abetting.
Anton Hart wrote:
Posted 2013/03/19 at 11:15 AM EDT
Does your argument hold for taxes generated by the sale of cigarettes, booze and horse betting, and fines stipulated by the judicial system for bad behavior of another kind -- these cannot be used for research either?
Rob Simpson wrote:
Posted 2013/03/19 at 12:23 PM EDT
I am gratified to read the thoughtful commentary on my article. After its publication, I calculated the revenues that the proposed mega casino would extract from the local Toronto economy – it amounted to $1 billion annually. Using the “turn-over rate” currently realized in Ontario, only 35% will go to government and the remainder will be lost to operations. Profits, of course, are a component of operations and that is why the American casino companies are our new best friends.
Equally important is where the $1 billion will come from. The available evidence is that it is reallocated from other consumer expenditures, the most likely candidates being expenditures on entertainment and leisure activities. I was able to obtain a Statistics Canada table of entertainment and leisure expenditures for Waterloo Region ($840 million annually) and compared them to my estimate of annual revenue from the proposed casino ($180 million, net of current gambling expenditures). This analysis suggests that the proposed casino will extract 22% of current expenditures on entertainment and leisure, categories which include: performing arts, spectator sports, heritage institutions, amusement and recreation industries, accommodation services, food services, and drinking places. An extraction of this magnitude will certainly create substantial job loss and business failure, and is the real story behind the impact of gambling expansion.
This type of analysis is consistently concealed from public debate, where expansion advocates make unsupported assertions about job creation and economic stimulation without ever accounting for the offsetting harm. The correct analysis shows that far less is put back into the local economy than is extracted.
Finally, I’d like to respond to Neil’s point. I was the CEO of the provincial body charged with gambling research, which was set up at arms-length and courageously funded “inconvenient” research (e.g., the proportion of revenue coming from problem gamblers). There were two responses. First, the Centre was threatened with the cancelation of funding if it refused to allow more government control over research funding decisions. These threats were directly tied to my leaving. Second, the extensive body of research on how to reduce gambling harm was invariably disputed or simply ignored. In gambling, there is no such thing as evidence-based policy.
Neil Seeman wrote:
Posted 2013/03/19 at 04:06 PM EDT
Thank you Anton. I'm not aware that private cigarette companies donate to government-controlled research taking place in taxpayer-funded hospitals/ research units — except for rare one-off projects to private researchers, which of course need to be declared as clear conflicts in journals, etc. Not sure if gambling and addictions research units that are government-funded see themselves or present themselves as in conflict — which they are as per my comments.
Nor do I know how LCBO-apportioned taxes currently go to addictions-related research and the governance of LCBO currently is beyond my ken. Of course alcohol is different from cigarettes on the fundamental issue — you can enjoy some alcohol without any ill effects (at least this is the current dominant clinical view). It is, of course, a sliding scale: I personally do not agree with the concept of "recreational gambling".
More fundamentally, one has to think philosophically about how to answer these questions. It appears (I could be wrong) that Anton you take a cost/benefit/utilitarian approach; whereas I take an ethics-based approach. Others may take an autonomy-based approach. Whatever your approach will define your opinion on the correct, balanced policy answer. This is as much a bio-ethical issue as much as a policy issue.
With respect to gambling, a big problem is the way is the way it is advertised in Ontario. I prefer the NY lotto — more honest and transparent to taxpayers -- "hey, 'ya never know'"
And, perhaps most important, to Rob: you are a brave man. I will educate myself further on these matters and the history of this matter. Ironically, the civil service prides itself on being a "receptor" of evidence-based research.
Congratulations on your public statements and courage. And thank you for educating me.
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