TORONTO – The Ontario Lottery and Gaming Corporation (OLG) is today taking another important step forward in modernizing the province’s lottery and gaming industry by issuing the Request for Information (RFI) for the regulated private-sector participation in Ontario’s lotteries.

The OLG is seeking input from potential providers as part of its strategic plan to modernize lottery products and distribution within Ontario.

“By shifting the day-to-day operation of Ontario’s lottery system to a regulated private service provider, Ontario lottery players will experience more innovative and entertaining games,” said Rod Phillips, OLG President and Chief Executive Officer. “For the eight million Ontarians who play lottery games responsibly every year, a modernized system will also be more convenient as we look to expand sales options at grocery and retail checkout lanes.”

The RFI process will:

• Help determine the range of options available in the market and assess potential vendor interest.
• Provide OLG with valuable information to assess and determine how to best engage regulated private-sector providers to assume responsibility for upgrading and daily operation of OLG’s network of existing lottery terminals.
• Examine ways to introduce new sales channels for lottery products by expanding options for sales to include multi-lane checkouts in grocery and big box stores.
• Enable further innovation in lotteries by allowing more rapid development and deployment of new lottery games and increasing responsiveness to customers.
• Once the requirements are determined, OLG will issue a Request for Pre-Qualifications (RFPQ), which would ask vendors interested in the Request for Proposals (RFP) to submit evidence they are qualified and are compliant with OLG and Alcohol and Gaming Commission of Ontario requirements.
• Following the RFPQ process, OLG will begin the RFP process as early as fall 2012.

OLG is engaging an independent fairness monitor to ensure the overall procurement process is carried out fairly and transparently.

“In the future, OLG will continue to retain complete oversight and responsibility for Ontario lottery,” said Mr. Phillips. “Critical components of the business will remain with OLG, including the draws operations, draws audits, prize redemption, responsible playing, approval of game rules and marketing plans.”

OLG will only engage with service providers for lottery services who comply with OLG’s Responsible Gaming program.

By modernizing lottery, as well as gaming, OLG will in five years contribute an additional $1.3 billion a year to key public priorities and usher in $3 billion in private-sector capital investment in Ontario. In addition to 2,300 net new jobs in the lottery and gaming industry, the initiative would help create an estimated 4,000 jobs in the hospitality, hotel, restaurant, entertainment and retail industries.

This is the second RFI OLG has recently issued to modernize the province’s lottery and gaming sector. The first RFI, issued on May 17, is seeking private-sector input for modernizing Ontario’s gaming sector. Both RFIs are available on MERX (www.merx.com/olg).

OLG Background documents on OLG’s Modernization Procurement Process and a summary of the Lottery RFI are also posted on www.OLG.ca.

OLG is a provincial agency responsible for province-wide lottery games and gaming facilities. Since 1975, OLG lotteries, Casinos, Slots, and Resort Casinos have generated more than $34 billion for the benefit of the Province of Ontario. Gaming proceeds support Ontario’s hospitals, amateur sport, recreational and cultural activities, communities, provincial priority programs such as health care and education, and local and provincial charities and non-profit organizations through the Ontario Trillium Foundation.

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The Ontario Lottery and Gaming Corporation (OLG) plans to engage regulated private-sector providers to expand and possibly operate lottery in Ontario. The process will begin with a multi-stage, competitive and transparent procurement process that includes a Request for Information (RFI) followed by a Request for Pre-Qualification (RFPQ) and a Request for Proposal (RFP).

 

Purpose for the Lottery Request for Information (RFI)

OLG is interested in exploring opportunities to assign functions to regulated private-sector service providers for the lotteries in Ontario, specifically:

• The possibility of regulated private-sector service providers operating segments of the lottery value chain within Ontario.
• The possibility of regulated private-sector service providers assuming responsibility for capital assets for operational purposes and making any necessary capital investments going forward (e.g., upgrades to terminal network).

The RFI is non-binding and the answers provided by respondents have no influence in the evaluation of any potential future formal competitive process. At OLG’s sole discretion, respondents may be invited to participate in further presentation sessions.

 

Lottery Procurement Process – Target Dates

It is anticipated that the procurement process will be made up of various stages that may include the following:

• Request for Pre-Qualification (RFPQ) – target release late summer 2012.
• Request for Proposal (RFP) – target release fall 2012.

 

Modernizing Lotteries in Ontario

As part of the Ontario government’s new direction to the OLG in July of 2010, OLG conducted a comprehensive strategic review of lottery and gaming operations. The result of the review was three key recommendations:

1. Become more customer-focused.
2. Expand regulated private sector delivery of lottery and gaming services.
3. Renew OLG’s role in oversight of lottery and gaming.

These three recommendations have implications specific to the lottery business, where OLG is looking to accomplish several goals:

1. Increase operational efficiencies by engaging the private-sector to assume responsibility for upgrading and daily operation of OLG’s network of existing lottery terminals.
2. Introduce a new sales channel for lottery products, by developing a solution that allows in-lane sales at major retail outlets (e.g., grocery stores, drug stores, big box stores, etc.).
3. Enable further innovation in lotteries, allowing more rapid development and deployment of new lottery games and leveraging the capabilities of the lottery network for non-lottery purposes, which will enhance value-for-money and also benefit existing and future retailers.

This initiative does not contemplate the introduction of VLTs, nor does it include the expansion of lottery into the hospitality sector.

 

OLG’s Role within the Modernized Lotteries

OLG will continue to be the agency responsible for conducting and managing lottery in Ontario, but will no longer be directly developing all games or deploying terminals. Rather, OLG’s role will focus on conducting and managing lottery in Ontario through a number of functions essential to serving as the Operating Mind of the business:

• OLG will control the lottery offering in the province.
• OLG will own the transaction with the customer.
• OLG will be the sole owner of all customer information.
• OLG will deliver enterprise-wide Responsible Gaming program.
• OLG will set policies and manage performance and agreement compliance of service providers.

 

Financial Benefit to the Province of Ontario

At the completion of the modernization exercise in 2017-18, OLG will be a modern, sustainable organization, which will increase Net Profit to Ontario by an additional $1.3 billion a year — all while upholding responsible gaming standards.

This proposed reform could see key public priorities like healthcare and education benefit from the additional annual Net Profit to Ontario of $1.3 billion by 2017. Over the six-year transformation period, OLG will provide an additional $4.6 billion to the Ontario government. Employment will grow by over 2,300 net new jobs in the industry (in new gaming facilities and related amenities, as well as in digital gaming design and management). An estimated 4,000 service sector jobs will also be created in the hospitality, hotel, restaurant, entertainment and retail industries.

OLG is committed to ensuring that its modernization is the result of a process that is, and is seen to be, fair and transparent to all relevant stakeholders. Accordingly, OLG intends to structure the modernization process so that it includes various procedural safeguards such as the use of independent, third party fairness and integrity monitors.

(Disponible en français)

OLG plans to engage regulated private-sector providers to expand lottery and gaming in Ontario. The process will begin with a multi-stage, competitive and transparent procurement process that includes a Request for Information (RFI) followed by a Request for Pre-Qualification (RFPQ) and a Request for Proposal (RFP).

Request for Information (RFI)

What is an RFI?

• An RFI is used as a first step in planning a complex change to how we purchase goods and services.
• The RFI is a commonly used information-gathering tool. There is no guarantee that any of the information gathered will be included in future planning.

What is the purpose of an RFI?

• The RFI will enable OLG to gather valuable information from potential regulated providers.
• The RFI will pose a number of questions about elements of our business that will allow operation by regulated private-sector providers.
• The information gathered through the RFI will provide ideas to help inform decisions in the coming months.
• OLG will collect valuable data from potential vendors to help:
  • determine the range of options;
  • clarify business requirements;
  • identify and assess project and procurement risks;
  • determine project costs and/or price structures;
  • and identify potential vendors.
• The RFI will be posted on the MERX tendering system (www.merx.com), a national electronic tendering website, where any interested vendor may access them for a small fee.

What happens after an RFI?

• When the RFI closes, we will review the information we receive. The information will help determine how to engage regulated private-sector providers.
• The findings will help OLG launch a Request for Pre-Qualification and then a Request for Proposal (RFP). These next two stages are more formal.

Request for Pre-Qualification (RFPQ)

What is an RFPQ?

• OLG will conduct a Request for Pre-Qualification (RFPQ) to determine the abilities of potential respondents.
• Interested vendors will be asked to submit information on their financial and technical capabilities, including proof of experience with similar projects.
• They must also have submitted an application for certification by the Alcohol and Gaming Commission of Ontario (AGCO).
• The RFPQ process will allow OLG to create a list of companies eligible to receive the RFP documents.
• The RFPQ will be posted on the MERX tendering system (www.merx.com), a national electronic tendering website, where any interested vendor may access them for a small fee.

Request for Proposal (RFP)

What is an RFP?

• The RFP is an opportunity for pre-qualified vendors to bid on a specific product or service through a competitive and transparent procurement process.
• The RFP will only be distributed to pre-qualified vendors.

What is the purpose of an RFP?

• The RFP will identify the services within the new Gaming model and the new Lottery model that we want the private-sector vendors to bid on.
• It will ask potential private-sector providers to make formal bids on an opportunity to operate specific aspects of our business.
• Evaluation will be based on various criteria, not just price.
• The RFP will not be public. It will only be released to pre-qualified vendors.

What happens after the RFP closes?

• When the RFP process is complete, we will then select the vendors to become the regulated private sector providers for gaming and lottery.
• By then, in 2013, OLG will be able to announce its transformed business structure (within the conduct and manage framework) as well as the new regulated private sector providers.

OLG is committed to ensuring that its modernization is the result of a process that is, and is seen to be, fair and transparent to all relevant stakeholders. Accordingly, OLG intends to structure the modernization process so that it includes various procedural safeguards such as the use of fairness monitors.

(Disponible en français)

For further information: OLG Media Relations, 1.888.946.6716, www.OLG.ca

Summary of Lottery RFI