Gambling on Gaming in Innisfil

The Town of Innisfil has become used to a predictable quarterly windfall share of revenue from the slot machines at Georgian Downs racetrack. Since OLG announced its intention to relocate gambling away from horse racing facilities in Ontario, further revenues are in some doubt. Although OLG has ruled out any more closures of existing slot facilities, it hasn’t ruled out a possible relocation as far as I know:

“Slot facilities currently, with few exceptions, are not located near population-dense urban centres—where the majority of Ontarians live. … The requirement to locate slots at racetracks limits site locations and impedes OLG’s ability to serve customers closer to where they live and is therefore not responsive to customer interest. … OLG is also limited in the game mix it can offer to customers due to current municipal funding arrangements” (Modernizing Lottery & Gaming in Ontario)

The average gaming revenue per adult in Ontario was $459 in 2010. In Saskatchewan gaming revenue was $836 and in Alberta $739 per adult. Casino revenues have collapsed at border locations and have also declined at “resort casinos”. Lottery ticket revenues have reached a “plateau”, partly due to fewer younger players. OLG wants “more people playing a little”.  To achieve that, the OLG’s new strategy aims to make all types of gaming as close and convenient as your laptop computer or “mobile device”, adds more lottery outlets in supermarkets and big box stores, and locates slots on the main street of regional population centres. The strategic plan aims for an additional $1.3 billion in net profit for Ontario by 2017. This would be derived from:

Casino and slot facilities: $740 million

Lottery “innovation”: $180 million

Internet gambling: $100 million

Improve “efficiencies”: $260 million

That last item apparently refers to “private sector participation in the efficient, effective delivery of casinos and gaming products” as well as shifting “the day-to-day operation of its lottery network to a regulated private sector operator”. In other words, up to a quarter of a billion dollars in new profit will probably come partly out of compensation and benefits paid to existing OLG employees.

What does this mean for Innisfil and Georgian Downs? Possibly, not much will change in terms of revenue sharing. In 2010, Georgian Downs was one of the more successful gaming locations in Ontario, attracting more than 3,000 visitors a day. But it also hinges on whether cities like Barrie or Newmarket want to host a casino and, if so, how large of a private project might be proposed. Mississauga, for instance, is considering a proposal to convert a bingo hall to slots. A successful bid will be the operator that can pledge to wring the expected ‘efficiencies’ from a facility while attracting a consistently higher number of visitors. The plan also assumes that creating more gambling opportunities will mean more total revenue instead of cannibalizing existing revenue among competing private operators.

According to the OLG strategic plan document, “OLG should establish a fair and simple funding model that would supply a portion of slot machine revenue to host municipalities, independent of the type of facility. … The majority of host municipalities would continue to receive the same benefit under a revised formula.”

At the moment, all of these factors are unknown. How many other neighbouring municipalities will want to host gaming facilities? Who will operate casinos and slots? Where will they be located? Which private operators will bid for these? How will the public react to a new mix of lottery and online gambling options? How will the revenue sharing formula be modified?

“Once existing site holder agreements have been terminated, OLG will engage in negotiations on new arrangements for OLG and/or private sector vendors to occupy space at racetrack locations where there is customer interest.” (Modernizing Lottery & Gaming in Ontario)

Innisfil Council can only watch and wait, but as a contingency, it might be prudent to begin thinking about alternative uses for the existing slots facility at Georgian Downs as well as possible new sources of municipal revenue to offset any decline in gaming revenues to Innisfil.