Modernization of Land-Based Gaming
OLG’s modernization of land-based gaming is nearing completion.
In the last 18 months, OLG has transferred the day-to-day operations of 11 gaming facilities to the private sector. Service providers now operate gaming in the East, North and Southwest and are investing in sites so that ongoing and new costs are borne by private capital, not public dollars.
Modernization is bringing new jobs and investment to communities across the province.
In May 2017, OLG announced HR Ottawa, LP as the service provider for the Ottawa Area Gaming Bundle. HR Ottawa LP’s vision includes a potential investment of more than $320 million to support major expansion of the site. If approved, the plan will create up to 2,000 permanent jobs and 1,900 construction jobs.
Last December, the service provider for the East Gaming Bundle, Ontario Gaming East Limited Partnership (OGELP), opened a new site, Shorelines Casino Belleville. OGELP invested $40 million in new capital in the project, which created 300 jobs. OLG made its first payment under the Municipality Contribution Agreement to the City of Belleville for $575,000 last April. These payments will continue on a quarterly basis as long as gaming remains in Belleville.
In the Southwest Gaming Bundle, the service provider, Gateway Casinos and Entertainment Limited recently announced a $26 million capital refresh of an existing casino in Point Edward.
By the end of 2018, the remaining Gaming Bundles will be awarded.
With returns of more than $2 billion every year, OLG provides the Ontario government with its largest source of non-tax revenue to fund provincial priorities such as health care. These returns will grow under modernization to nearly $3 billion annually.
Modernization will deliver more jobs, more investment in communities, and more revenue to the Province.
Service Provider for the GTA Gaming Bundle
OLG is continuing its procurement process to modernize gaming in Ontario by selecting Ontario Gaming GTA LP (OGGLP) as the service provider for the GTA Gaming Bundle.
OLG has entered into a Transition and Asset Purchase Agreement with OGGLP, which sets out the customary closing conditions to be satisfied for OLG and OGGLP to enter into 22-year Casino Operating and Services Agreement (COSA) for the GTA Gaming Bundle.
Under the COSA, OGGLP will take over day-to-day operations of the gaming sites in the bundles.
What is the Casino Operating and Services Agreement?
Currently, OLG and OGGLP are operating under a temporary transitional agreement that allows the two parties to work together to share knowledge and help position OGGLP for success. This transition period is expected to end in early 2018.
Once the transition is complete, OLG and OGGLP will sign the Casino Operating and Services Agreement (COSA). This agreement allows OGGLP to assume responsibility for the day-to-day operation of the sites.
OGGLP is the service provider for the GTA bundle, subject to customary closing conditions and pending the execution of the COSA.
What are Gaming Zones?
In order to effectively manage gaming in Ontario, OLG identified Gaming Zones where existing or new gaming facilities would be permitted, subject to required approvals, including the provincial government.
Gaming Zones are geographic areas where a single gaming facility may be located. The location and design of these Gaming Zones is intended to ensure a sustainable and efficient gaming market in Ontario.
The boundaries of Gaming Zones across the province were determined by a gravity model—an analytic 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 customer demand for a gaming facility, including:
- Proximity of a Gaming Zone relative to other Gaming Zones and gaming facilities
- Proximity of a Gaming Zone to current and potential customers
- Distance a customer is willing to travel to reach a gaming site
Within each Gaming Zone, service providers will assume day-to-day operations for an existing facility and may propose expand the site, 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 is permitted within each Gaming Zone.
What are Gaming Bundles?
To enable OLG to more effectively manage gaming in Ontario, OLG grouped some Gaming Zones into Gaming Bundles—each representing a separate bidding opportunity.
Gaming Bundles are intended to create opportunities for service providers to be more efficient by operating multiple facilities in a given region.
Communities and OLG’s Modernization
Municipal and community choice is an important element of OLG’s modernization. OLG will only locate gaming facilities where there is support to do so from the municipal Council or the First Nation Band Council, as applicable. OLG respects decisions of municipalities or First Nation Band Councils regarding hosting a new gaming site or relocating a gaming site, as well as adding table games to a site that currently has none.
When it comes to gaming facilities, OLG’s approach to potential and current host municipalities and host reserves across Ontario has been consistent.
The municipal Council or First Nations Band Council must pass a resolution confirming their interest in hosting a gaming facility.
Where a municipal Council or First Nations Band Council 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 has ensured that proponents are aware of such conditions during the RFP phase of the procurement process.
The municipal Council or the First Nations Band Council then works with the selected service provider to determine the location of a new gaming site, if one is proposed and permitted.
Adding table games at a gaming site that currently has none, relocating a current gaming site or building a new gaming site can only occur where there is municipal Council or Band Council consent. Also, a viable business case must be put forth by the service provider and subsequently approved by OLG.
Any new gaming site, introduction of table games at a gaming site that currently has none, or proposed relocation of an existing gaming site is subject to final approval from the Ontario government.
Leading Responsible Gambling Program
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 was ranked number one in the world by the World Lottery Association in 2014.
OLG will also require service providers to follow the Responsible Gambling policies and program that OLG has developed.
OLG is working with the horse racing industry and the Ontario government to build the foundation for a more sustainable industry in Ontario.
OLG is supporting the horse racing industry by:
- Helping the industry become self-governing
- Providing responsible gambling expertise
- Providing marketing strategy expertise
- Measuring key performance indicators to help the industry make fact-based decisions
- Providing advice to the Province of Ontario regarding horseracing
In addition, OLG is distributing around $93 million in funding from the Government of Ontario to racetracks to support close to 950 race dates in 2017-18.
OLG is also continuing to work with the Ontario government and the industry on a funding arrangement that will help to build a sustainable future for horse racing in Ontario.
OLG’s Conduct and Manage Role
OLG will continue its role in the conduct and management of land-based gaming in Ontario.
To fulfill this role, OLG will retain control over gaming, but will expect service providers to deliver many of the services related to the day-to-day operation of gaming.
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For more information contact:
OLG Media Line