OLG selects service provider for GTA Gaming Bundle
Ontario Lottery and Gaming Corporation (OLG) has selected Ontario Gaming GTA LP as the service provider for the GTA Gaming Bundle, following a competitive procurement process. The Canadian partnership is comprised of Great Canadian Gaming Corporation and Brookfield Business Partners LP.
"OLG's land-based gaming modernization is bringing new employment and investment to communities across Ontario while improving our contribution to the Province," said Stephen Rigby, President and CEO, OLG. "OGGLP is a partnership that includes global leadership in infrastructure development combined with significant experience in world-class gaming, entertainment and hospitality development in Ontario and across North America."
"We thank OLG for the award of the GTA Bundle on behalf of the partnership," stated Rod N. Baker, Great Canadian's President and CEO. "Great Canadian has a long gaming history in Canada and Ontario and in collaboration with OLG and our partners to deliver gambling responsibly. We look forward to this historic opportunity to service Canada's largest metropolitan region."
"We are excited to have been selected by OLG to operate the GTA Bundle," said Cyrus Madon, CEO, Brookfield Business Partners. "We look forward to working closely with Great Canadian. We will bring our capabilities in operations, development and retail to the Partnership to deliver expanded gaming options and premier entertainment that will enhance the experience of patrons and contribute to the surrounding communities."
Great Canadian and Brookfield Business Partners will each hold a 49 per cent interest in OGGLP. Clairvest Group Inc. will hold a two per cent interest. Great Canadian will operate the gaming facilities within the GTA Bundle on behalf of the Partnership.
OLG has entered into a Transition and Asset Purchase Agreement with OGGLP for the GTA Gaming Bundle, which sets out the customary closing conditions to be satisfied for OLG and OGGLP to enter into a 22-year Casino Operating and Services Agreement (COSA). Under the COSA, OGGLP will take over day-to-day operations of OLG Slots at Woodbine Racetrack, OLG Slots at Ajax Downs and Great Blue Heron Casino.
OLG expects that the service provider will assume operations in early 2018. OGGLP is required to follow all applicable laws including AGCO's standards that require, among other things, rigorous Responsible Gambling (RG) policies and programs. OLG has an internationally recognized RG program and embeds its high standards for RG into the contracts it has with service providers.
Unionized employees will transfer to the service provider under the terms and conditions of their current collective agreement, per the Ontario Labour Relations Act. OGGLP will retain non-unionized employees for a period of no less than 12 months and will provide all eligible employees with benefits and a registered pension plan.
While OGGLP will be responsible for the day-to-day gaming operations in the bundle, OLG will:
- Provide strategic oversight of the GTA Gaming Bundle and Ontario gaming marketplace—including approvals related to material operational changes
- Conduct and manage gaming in the bundle
- Require compliance with applicable regulations and standards set out by the Alcohol and Gaming Commission of Ontario (AGCO)
- Be the owner of key player information
- Require service providers to uphold the high standards of OLG's Responsible Gambling program, including the self-exclusion program
- Make Contribution Agreement payments to host communities.
- To OLG, the integrity of its procurement process is of the utmost importance.
Throughout the procurement process, OLG has engaged the services of a Fairness Monitor to provide oversight and advice.
At more than $2.3 billion annually, OLG provides the provincial government with its largest source of non-tax revenue. Modernization helps OLG provide more money to Ontario for key government services.
Great Canadian Gaming Corporation is a Canadian based company that operates gaming, entertainment and hospitality facilities in British Columbia, Ontario, New Brunswick, Nova Scotia, and Washington State. The Company has 22 gaming properties, which consists of fourteen casinos, four horse racetrack casinos, three community gaming centres, one commercial bingo hall and four Diamond resort hotels in Richmond, British Columbia and in Moncton, New Brunswick. A key element of Great Canadian's business model is its commitment to social responsibility. "PROUD of our people, our business, our community" is Great Canadian's brand that unifies the company's community, volunteering and social responsibility efforts. Under the PROUD program, Great Canadian annually invests over $2.5 million in our communities, and in 2016, over 1,500 charitable organizations were supported by Great Canadian. In each Canadian gaming jurisdiction, a significant portion of gross gaming revenue from gaming facilities is retained by our crown partners on behalf of their provincial government for the purpose of supporting programs like healthcare, education and social services.
Brookfield Business Partners is a business services and industrial company focused on owning and operating high-quality businesses within Brookfield's private equity group that benefit from barriers to entry and/or low production costs. Brookfield Business Partners is listed on the New York and Toronto stock exchanges. Further information is available at http://bbu.brookfield.com. Important information may be disseminated exclusively via the website; investors should consult the site to access this information. Brookfield Business Partners is the flagship listed business services and industrials company of Brookfield Asset Management, a leading global alternative asset manager with approximately $250 billion of assets under management. For more information, go to www.brookfield.com.
OLG is the Ontario government agency that delivers gaming entertainment in a socially responsible manner. OLG conducts and manages gaming facilities, the sale of province-wide lottery games, PlayOLG Internet gaming, the delivery of bingo and other electronic gaming products at Charitable Gaming Centres and is helping to build a more sustainable horse racing industry in Ontario. Since 1975, OLG has provided nearly $44 billion to the Province and the people of Ontario. These payments to the province support the operation of hospitals, amateur sport through the Quest for Gold program, local and provincial charities and problem gambling prevention, treatment and research.
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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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Gaming Zones in the GTA Gaming Bundle
||Current OLG Gaming Site
||OLG Slots at Woodbine Racetrack
||City of Toronto
||OLG Slots at Ajax Downs
||Town of Ajax
||Great Blue Heron Casino
||Mississaugas of Scugog Island First Nation
C2 Gaming Zone
OLG Slots at Woodbine Racetrack opened in 2000. The site has more than 3,000 electronic games and employs 744 people (as of June 16, 2017).
The City of Toronto received more than $15 million in 2015-16 for hosting the Woodbine facility.
Since March 2000, the City of Toronto has received more than $240 million in hosting fees.
OLG's procurement process outlined a maximum of 5,000 electronic games and up to 2,400 live table gaming positions (up to 400 tables) for the C2 Gaming Zone. The site currently does not have any live table games.
On July 7, 2015, Toronto City Council passed a resolution granting conditional approval to expanded gaming—including the addition of table games—at Woodbine Racetrack, subject to the fulfilment of 21 conditions.
Council's resolution includes a compulsory report back from the City Manager. The City Manager will prepare a report that assesses how the service provider has met, or will contractually commit to meeting, the City's conditions. The City Manager will provide the report to City Council. Once Council receives the report, it will vote on whether to approve gaming expansion at Woodbine.
C3 Gaming Zone
OLG Slots at Ajax Downs opened in February 2006. The site currently has 800 electronic games* and employs 359 people (as of June 16, 2017).
The Town of Ajax received more than $7.3 million in 2015-16 for hosting the Ajax facility.
Since February of 2006, the Town of Ajax has received more than $61 million in hosting fees.
OLG's procurement process outlined a maximum of 2,500 electronic games** and up to 1,200 live table game positions (up to 200 tables)** for the C3 Gaming Zone. The site currently does not have any live table games.
There are three willing host communities in the gaming zone: Ajax, Pickering and Whitby. Each municipality has passed a resolution indicating their interest in hosting a gaming site located within their borders.
*The Town of Ajax's current by-law only allows for 800 slot machines at the site. Although the Town has rezoned for the lift of that cap and the addition of table games, that decision is currently being appealed to the Ontario Municipal Board.
** For the C3 Gaming Zone and the C8 Gaming Zone there is an aggregate cap: between those two zones there can be no more than 3,100 slot machines and 1,560 live table game positions (up to 260 tables).
C8 Gaming Zone
The Great Blue Heron Casino opened in 1997 on the lands of the Mississaugas of Scugog Island First Nation (MSIFN). The site houses more than 500 slot machines, 60 live table games and employs 1100 people (as of June 16, 2017).
Great Blue Heron Casino is currently operated by a third party gaming operator, Casinos Austria International and its local partners.
In August 2016, OLG announced that a number of agreements had been reached between the Government of Ontario, OLG, MSIFN and other parties. Great Blue Heron Casino was then added to the GTA Gaming Bundle during the procurement process.
OLG's procurement process outlined a maximum of 2,500 electronic games** and up to 1,200 live table game positions (up to 200 tables)** for the C8 Gaming Zone.
** For the C3 Gaming Zone and the C8 Gaming Zone there is an aggregate cap: between those two zones there can be no more than 3,100 slot machines and 1,560 live table game positions (approximately 260 tables).
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