The announcement on Monday of changes to the way Ontario Lottery and Gaming (OLG) operates is an assault on rural Ontario, according to a number of people involved.
The changes could particularly affect Wellington County, which has the largest population of horses per capita in the country.
The Ontario Horse Racing Industry Association (OHRIA) almost immediately issued a press release with the headline that Minister of Finance Dwight Duncan to cost Ontario 60,000 jobs with OLG gamble.
“We find it deeply irresponsible that the Minister of Finance plans to throw 60,000 Ontarians out of work and add $1.1 billion dollars a year to Ontario’s deficit. That is just what he will do if the OLG slots at racetrack program is cancelled,” said OHRIA president Sue Leslie.
She noted Ontario’s horse racing industry employs over 60,000 people, supports rural Ontario economies by spending more than $2 billion a year, and generates $1.1 billion per year in slot machine profits for the provincial government.
But that is not the way Premier Dalton McGuinty’s government and the OLG appear to see the issue.
The province’s press release stated, “By modernizing lottery and gaming and including initiatives already underway, in 2017 OLG will contribute an additional $1.3 billion annually to key public priorities; usher in $3 billion in new private sector capital investment in the province; and help create some 2,300 net new jobs across Ontario and an estimated 4,000 service sector jobs in the hospitality, hotel, restaurant, entertainment and retail sectors.”
Grand River Raceway general manager Ted Clarke said in a Monday interview officials are not yet sure what effect the government announcement will have on his situation. He said anything he might say “is just a guess. I’m not sure I can tell you. These are recommendations brought by the OLG to the province.”
The OLG oversees all legal gambling in Ontario.
Clarke said, “I’m not sure this program was created by a law,” which means the government can do pretty much what it wishes.
The plan, according to the OLG, is “modernizing lottery and gaming.” The government has directed the OLG to implement a number of the proposals, including:
– change the number of gaming sites and tailor the types of gaming activities made available at each site;
– launch multi-lane sales of lottery tickets at major retail outlets, including grocery stores;
– increase operational efficiencies by expanding the role of the private sector;
– stop annual payments to the horse racing industry by ending the slots at racetracks program on March 31, 2013, and allowing slot facilities to be located more strategically; and
– allow a new casino in the GTA.
‘Devastating’ rural Ontario
Centre Wellington Mayor Joanne Ross-Zuj has been working with Clarke and Wellington County Warden Chris White to lobby against the changes.
The Grand River Agricultural Society, as operator of the raceway, was supposed to have three five-year contracts for its slots facility. It opened in 2003. Before its second term is expired, it appears the province is unilaterally changing that agreement.
Clarke said the horsemen receive 10% of the slots profits to add to the race purses, which are substantially increased and thus attract people to the industry and the track. The agricultural society receives 10% but it had to borrow millions to build the facility. Clark would not say how much debt remains on that mortgage.
The township has received 5% of the slots profits for hosting the site – a total to date of about $15 million. Of that, Wellington County has received about $3 million as its share.
Clarke said to date, “There has been no indication how they will replace” the current agreement.
Ross-Zuj said the changes could be “devastating” to the horse industry in general, and this area in particular, although, like Clarke, she added, “In a nutshell, we’re not quite sure.”
She said, “The horse industry and the importance of the horse industry in our community is enormous.”
Ross-Zuj added the gaming component of the announcement is “a change in the way we do business.”
She has been talking with OLG officials and planned to talk with them this week. She is also meeting with 27 mayors of municipalities that host slots facilities.
She said of the sudden change to the agreement, “This has just pulled the rug out from under our feet. People have spent years to make this work. So many have invested and then the rug gets pulled.”
Ross-Zuj said there will be a heavy lobbying job to be done with the provincial government.
“We want to make sure they understand the impact it is going to have on us,” Ross-Zuj said. “It’s not pretty. People have invested their entire livelihoods into this [horse] market. This is a real hit to rural Ontario that goes beyond the gaming industry.”
What particularly bothers OHRIA officials is the current slots at raceway program is the most profitable form of gaming for the province, generating more profit than casinos and lottery tickets combined.
“It makes absolutely no sense for the government to continue to push less profitable forms of gaming, when over the last 14 years the horse racing industry has proven to be its best partner,” Leslie said.
“Tearing up that $1.1 billion in profit for the government to chase what will become a highly controversial and less profitable vision, just isn’t responsible.”
The announcement by the government stated that last year, more than 2.7 million customers visited OLG facilities. Last year, the OLG’s consultations with stakeholders revealed they felt the future of gaming should be determined by customers and the market, and expansion or closure of sites should be decided based on customer interest.
The OLG press release said stakeholders also suggested OLG use the private sector to reduce the burden of capital investment on the government and the taxpayer.
It said OLG would allow private sector providers to run day-to-day operation of gambling sites, while increasing profit to the province, and maintaining responsible gaming standards.
The report recommends the private sector expand its role, while OLG would maintain government control and oversight of the business. That would be accomplished by establishment of gaming zones.
Through “a fair and open competitive procurement process,” the private sector could bid on the rights to operate in a zone, the release said. Once those zones are established, there will be a determination about what is the best combination of offerings for a region.
Any new sites would require appropriate oversight and responsible gambling standards as well as OLG, ministry and municipal approval.
The OHRIA has launched http://value4money.ca to encourage Ontarians to write MPPs in support of the slots at racetrack program.
