Township approves new OLG agreement

by Mike Robinson

ELORA

Centre Wellington council has passed a new agreement with the Ontario Lottery and Gaming Corporation (OLG) that will see its portion of slots revenue from the Grand River Raceway remain unchanged.

On Oct. 22, councillors approved  recommendations from chief financial officer Wes Snarr and acting CAO Andy Goldie regarding a new Municipality Contribution Agreement.

They recommended council pass a bylaw authorizing the mayor and clerk to execute a new Municipality Contribution Agreement with the OLG.

The report noted the OLG is entering into a new Municipality Contribution Agreement with each host community under it’s Modernization of Lottery and Gaming in Ontario plan.

The plan includes a new municipal funding formula, and engagement of regulated private sector provider companies with experience and expertise operating gaming facilities.

The agreement comes into effect on the first day of April, 2013, the day after the site holder agreements between the OLG and the horse racing industry expire. The new agreement supersedes one approved by council in 2002.

The agreement provides for the continuation of payments for as long as the current site remains in operation. The township’s share of slot revenues under the existing agreement is 5% flat. Under the new agreement, the share is a sliding scale as follows (per annum):

- 5.25% for the first $65 million of net slot revenue;

- 2.3% of the next $135 million of net slot revenue plus;

- 2.5% on the next $300 million of net slot revenue; and

- 0.50% on the remainder of net slot revenue.

Given that annual slot revenue is approximately $44 million, and that the new agreement allows the OLG to follow International Financial Reporting Standards (IFRS) to determine the amount of slots revenue, there is no net impact of the 0.25% increase in the township’s share of slot revenues.

Some in the community were initially concerned the new IFRS could significantly decrease slot revenue for the township, but “that’s not the case” Snarr told the Advertiser.

He added the province’s decision to end the Slots at Racetracks program has not had an immediate financial impact on the Grand River Raceway.

The OLG last week issued a second-quarter (July to September 2012) non-tax gaming revenue payment of $573,391 to the Township of Centre Wellington for hosting OLG Slots at the Grand River Raceway.

As announced on March 12, OLG is modernizing Ontario’s lottery and gaming industry. Government officials say the effort will increase revenue for the province and create jobs while continuing to support municipalities through a new consistent funding model for towns and cities that host an OLG gaming facility.

“OLG gaming sites continue to provide substantial benefits to host communities and Ontario families,” said Dwight Duncan, Minister of Finance. “The modernization of Ontario’s lottery and gaming businesses will result in new employment opportunities, increased tourism and additional revenues for the province to protect important public services like health care and education.”

 The government says the OLG modernization effort will help create some 2,300 net new industry jobs and about 4,000 service sector jobs, as well as improve how lottery and gaming is delivered in Ontario, and expand OLG’s “high-standards approach” to responsible gambling.

In 2012-13, the province will allocate $120 million in gaming revenue to support charities through the Ontario Trillium Foundation. In addition, every year the Government of Ontario allocates funding to the province’s problem gambling prevention, treatment and research programs ($41 million in 2012-13).

OLG is a provincial agency responsible for province-wide lottery games and gaming facilities. Since 1975, OLG lotteries, casinos, slots, and resort Casinos have generated more than $36 billion for the benefit of the Province of Ontario.

Gaming proceeds support Ontario’s hospitals, amateur sport, recreational and cultural activities, communities, provincial priority programs such as health care and education, and local and provincial charities and non-profit organizations through the Ontario Trillium Foundation.

October 26, 2012