BACKGROUNDER: GAMING REQUEST FOR PRE-QUALIFICATION

OLG is continuing its procurement process to modernize lottery and gaming in Ontario by issuing the remaining gaming Requests for Pre-Qualification (RFPQs), consisting of 10 Gaming Zones grouped into three Gaming Bundles.

Gaming Bundle Gaming Zone Current OLG Gaming Site Current Host Community
GTA C2 OLG Slots at Woodbine Racetrack City of Toronto
C3 OLG Slots at Ajax Downs Town of Ajax
C8 Great Blue Heron Casino (potentially) Mississaugas of Scugog Island First Nation (Baagwating Community Association)
Central C5 OLG Slots at Georgian Downs Town of Innisfil
C6 Casino Rama Chippewas of Rama First Nation Reserve
C7 No Current Gaming Facility No Current Host Municipality (Town of Collingwood and Town of Wasaga Beach are willing hosts)
West GTA C4 OLG Slots at Mohawk Racetrack Town of Milton
SW1 OLG Slots at Grand River Raceway Township of Centre-Wellington
SW2 OLG Casino Brantford City of Brantford
SW9 OLG Slots at Flamboro Downs City of Hamilton
 

For more details on OLG’s procurement process for the modernization of lottery and gaming, including Gaming Zone maps, visit: http://corporate.olg.ca/modernizing-lottery-and-gaming-in-ontario-project-status/

Interested service providers must respond to these RFPQs by March 13, 2014. The RFPQs are available on MERXTM (http://www.merx.com/olg).

 

OLG’s Gaming RFPQ Process

With the launch of the RFPQ process for the GTA, GTA West and Central Gaming Bundles, OLG is now in procurement for up to 25 Gaming Zones.

Following OLG’s procurement process, and at such time and on such terms as OLG may determine, following consultation with the Mississaugas of Scugog Island First Nation, the Great Blue Heron Casino in Gaming Zone C8 may become part of the GTA Gaming Bundle. This would represent the 25th zone.

No municipality in the GTA has expressed an interest in hosting a new gaming facility. The service provider for the GTA Gaming Bundle will be responsible for the day-to-day operations of gaming facilities in the bundle for approximately 22 years. If at some point during that time a GTA municipality expresses an interest in becoming a host for a gaming site, the service provider for the GTA bundle would have a right of first opportunity to become the service provider for that new gaming site.

In Gaming Zones SW10, SW11 and SW12, which include Casino Niagara, Fallsview Casino Resort and Caesars Windsor respectively, there are currently long-term contracts in place with service providers.

On November 30, 2012, OLG issued its first three RFPQs for nine gaming sites—one each for the Ottawa Area, Ontario East and Ontario North. Those three RFPQs closed in March 2013. Another RFPQ for the Southwest Gaming Bundle, which includes six sites, was issued on May 29, 2013. That RFPQ closed on August 8, 2013.

OLG has done its due diligence in reviewing the responses to gaming RFPQs that have closed and is currently considering service providers who will be eligible to receive the Request for Proposal (RFP) documents for each of these Gaming Bundles. OLG expects to begin the RFP process in the coming months.

 

What are the next steps for the GTA, GTA West and Central Gaming Bundles?

Once the RFPQs close, OLG will evaluate the submissions it receives for each.

Interested service providers who are pre-qualified through the RFPQ process will be invited to participate in the RFP stage of the procurement process. The successful service provider(s) will be selected from this group.

 

What is a Request for Pre-Qualification (RFPQ)?

The RFPQs will help OLG determine the skills and abilities of potential service providers.

Interested service providers are asked to submit information on their financial and technical attributes and capabilities, including proof of successful experience with similar projects. In addition, service providers must also provide information on business and other relationships that they have had with First Nations and First Nations communities.

Interested service providers must also have submitted an application for registration with the Alcohol and Gaming Commission of Ontario (AGCO).

The RFPQ process will result in OLG identifying qualified service providers eligible to receive the RFP documents—the next step in OLG’s procurement process.

 

What are Gaming Zones?

In order to effectively manage the gaming market in Ontario, OLG identified Gaming Zones where existing or new gaming facilities would be permitted, with municipal and other approvals.

Gaming Zones are geographic areas where qualified service providers will be permitted to operate a single gaming facility. The design of these Gaming Zones is intended to manage competition between facilities and ensure a sustainable and efficient gaming market in Ontario.

The boundaries of Gaming Zones across the province were determined by a gravity model—a business tool commonly used for modeling supply and demand within a given geographic area. The model looked at a number of factors to determine where there is maximum customer demand for a gaming facility, including:

  • Proximity of a gaming site to other gaming facilities; 
  • Proximity of a gaming site to current and potential customers; and 
  • Distance a customer is willing to travel to reach a gaming site.

Within each Gaming Zone, service providers will be permitted to operate and possibly expand the existing facility, establish a new facility if one does not currently exist, or relocate the existing facility within the boundaries of the Gaming Zone, all subject to approvals.

Only one gaming facility will be permitted in each zone.

 

What are Gaming Bundles?

To enable OLG to more effectively manage the gaming market in Ontario, OLG grouped some Gaming Zones into Gaming Bundles—each representing a separate bidding opportunity.

As a result, for some gaming RFPQs, including the GTA, West GTA and Central Gaming Bundles released today, service providers are being asked to demonstrate their ability to operate multiple facilities in a given region or geographic area of the province.

Gaming Bundles are intended to create opportunities for service providers to be more efficient by operating multiple facilities in a given region. Gaming Bundles will not result in the merging of current or proposed facilities, or of proposed Gaming Zones.

 

Municipal Choice and OLG’s Modernization

Municipal choice is an important element of OLG’s modernization. OLG will only locate gaming facilities where there is municipal support to do so. OLG has always been clear that it will respect a municipality’s decision regarding hosting an existing casino, a new casino or expanding an existing one.

When it comes to gaming facilities, OLG’s approach to potential and current host municipalities across Ontario has been consistent. That approach has three steps:

The first step is for municipalities to pass a resolution confirming their interest in hosting a gaming facility.

The second step is for OLG to choose a service provider through a fair and competitive procurement process.

Where a municipality has included conditions as part of its resolution for gaming in its community, such as restrictions on the movement or expansion of a gaming site, OLG will ensure service providers are aware of such conditions during the RFP phase of the procurement process.

The third step is for OLG to work with the municipality and the selected service provider to determine the location of a new site, if one is proposed.

As has always been the case, expansion of gaming offerings at a current facility, relocation of a current gaming site or planned development of a new gaming site can only occur where there is municipal consent, customer interest and a viable business case put forth by a service provider, which is subsequently approved by OLG.

Any new facility or the proposed relocation of an existing gaming site is subject to final approval from the Ontario government.

 

Future of OLG Gaming Sites at Racetracks

OLG has signed lease agreements with the site holder for its gaming facilities at Flamboro Downs and Georgian Downs.

OLG has also reached lease agreements in principle with racetrack site holders for its 12 remaining gaming sites. Leases range from three-to-five years in duration. Although these lease agreements have not been finalized, OLG anticipates that it will sign agreements with respect to each of these sites in the near future.

It is important to understand the complexity of decision making about moving a site—or building a new one. Not only does there need to be demonstrated customer interest and a compelling business case that results in increased revenue for the Government of Ontario, there also needs to be a willing municipal host and a proposal that makes sense for the horse racing industry.

Any new site or relocation of an existing site is subject to final approval from the Ontario government.

 

Integrating Horse Racing into the Provincial Gaming Strategy

On October 11, 2013, the Horse Racing Industry Transition Panel presented its final report to the Ontario government. On the same day, the government unveiled its five-year plan for Ontario’s horse racing sector.

Ensuring a vibrant horseracing industry is a critical consideration as OLG modernizes gaming. This change is a positive move for Ontario’s horse racing industry because, for the first time, all of the stakeholders are fully engaged in the effort to integrate horse racing into a provincial gaming strategy.

Maintaining successful slot facilities at race tracks is just one component of integration. New games, new pari-mutuel products, new marketing approaches are all part of what OLG and the industry are working on today—all with the objective of encouraging a vibrant and sustainable racing industry in Ontario for the long-term. OLG will also provide expertise in marketing and Responsible Gambling.

 

OLG’s Modernization

Modernization will enable OLG to provide additional revenues to the Province to help fund the operation of hospitals and other provincial priorities. To achieve this, OLG is focusing on three priorities:

  • Becoming more customer focused—being where our customers want us to be, offering products and services in their areas or in the ways they want to buy them;
  • Selecting qualified service providers for the specific day-to-day operation of lottery and gaming; and
  • Renewing OLG’s role in the conduct and management of lottery and gaming in the province.

OLG will be responsible for market management and providing a gold standard for its Responsible Gambling program for the people of Ontario.

Since its inception, OLG’s modernization has continued to evolve. Part of that evolution is the work OLG is doing with the Ontario government and the horse racing industry to integrate horse racing into Ontario’s gaming strategy.

 

OLG’s Conduct and Manage Role

OLG will continue its role in the conduct and management of gaming in Ontario.

To fulfill this role, OLG will retain control over lottery and gaming, but will expect the service provider to deliver many of the services related to the day-to-day operation of lottery and gaming.

OLG will continue to work within the Province’s overall problem gambling strategy to contribute to the prevention and mitigation of problem gambling through its Responsible Gambling program, which is recognized internationally by the World Lottery Association’s certification program. OLG will also require service providers to follow the Responsible Gambling Standards that OLG has developed.

 

Ensuring a Competitive Procurement Process

OLG is following the Ontario government’s procurement guidelines to ensure that the process is fair and competitive.

OLG has engaged an impartial Fairness Monitor and an Independent Fairness Advisor throughout the process to provide oversight on the integrity and fairness of procurement.

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BACKGROUNDER: GTA GAMING BUNDLE REQUESTS FOR PRE-QUALIFICATION