Provincial Leaders Blast OLG

The recently “modernized” Ontario Lottery and Gaming Corp. made overly optimistic predictions about new casino revenues, and also cut racetracks out of the revenue stream from slots. That’s made some provincial politicians angry, including opposition leader Tim Hudak (l.).

Racetracks get the short end

A so-called “modernization” of the Ontario Lottery and Gaming Corp., which included dropping a racetrack subsidy program, has some Canadian government officials fuming. Ontario Progressive Conservative leader Tim Hudak criticized the “abrupt cancellation” of the racetrack program, which gave $347 million a year from slot machine revenues to horse tracks.

“Why would you close down jobs in that sector when the biggest issue is creating jobs?” Hudak asked. “I would park it permanently on the shelf. I don’t believe it’s in the interest of the province to open up 39 new casinos. Instead, I would build on what’s working.”

According to CTV News, Toronto Auditor General Bonnie Lysyk has also criticized the change. “OLG included projected profits from those casinos without first confirming that new casinos would be accepted, would be considered, in certain municipalities,” said Lysyk last week. “In fact, large Ontario cities such as Toronto and Ottawa rejected OLG’s proposals for constructing new casinos.”

Lysyk says that $2.8 billion the provincial government expects from an overhaul of its gambling agency could be at risk because of “overly optimistic assumptions” about things cities’ willingness to host new casinos and gamblers’ willingness to utilize a new internet gaming site. According to the Ottawa Citizen, that’s almost two-thirds of the $4.6 billion OLG’s modernization was supposed to bring in over six years.

OLG has failed to find an appetite for downtown casinos in Toronto and Ottawa. “We believe that this was partially due to the lack of a comprehensive underlying business case based on objective and comprehensive data, as well as to the lack of information on whether the various key stakeholders would support OLG’s plans,” Lysyk’s report said.

By opening new casinos downtown in major cities, OLG said, those downtowns would become tourist destinations for the young and affluent. But the cities weren’t interested. OLG Chairman Philip Olsson said in an open letter to Lysyk that modernization “is a multi-year plan, now in its third year, which, upon completion will deliver approximately $1 billion annually in additional net new profit to the province.” In the end, he said, it would increase the government’s take from gaming from $2 billion a year to $3 billion a year.

Meanwhile, one community is interested. OLG will choose among three to five contenders for a new casino license in the Eastern Ontario “bundle.” The new casino site will be located near Belleville, according to the Toronto Intelligencer.

Belleville Mayor Neil Ellis said it’s good news for the community. In anticipation of new development, the city has rezoned several parcels of land in the vicinity. “Any investor that’s coming to see us now will be serious,” Ellis said. “We expect to see investors come in and look at locations now.”

OLG spokesperson Tony Bitonti says the operator should be chosen by early 2015. “I am unable to tell you how many proponents are moving forward in the RFP as we don’t reveal those details as indicated in the release,” he said. “The next announcement we make will be who is the successful operator for the bundle.”