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$893 Million To Bingo Operators?

Published: November 14, 2012 1:09 pm ET

Last Comment: November 17, 2012 2:14 pm ET | 17 Comment(s) | Jump to Comments

While speaking to the Canadian Club of Toronto on Tuesday, Rod Phillips, President and CEO of the Ontario Lottery and Gaming Corporation, spoke glowingly about the OLG’s Modernization plan. In doing so, he has revealed the staggering amount he expects Ontario’s Bingo Operators to take home as part of the Modernization strategy.

According to the written transcript (available here) Phillips said:

“Our plan also includes expanding charitable gaming with new electronic bingo games in halls across Ontario…OLG launched a revitalization of Ontario’s Charitable Bingo and Gaming industry with a commitment to re-invigorate the traditional Bingo experience. By doing so, we expect to deliver $475 million dollars in much-needed funding directly to Ontario charities.”

According to the OLG website, this $475 million will be payed to charities over the next eight years as the program is expanded to bingo halls across the province.

The new profit-sharing model – as explained in OLG documentation, sees charities and the OLG each receiving 25 per cent of profits while operators retain 47 per cent of profits, with the remaining three per cent payed out to host municipalities.

If Phillips expects $475 million to go to charities (as their 25% share) over eight years, the OLG is in turn expecting total Bingo profits in Ontario to be $1.9 billion over that period. Thus the Operators of Ontario’s bingo parlours are in line to receive $893 million - 47 per cent - from the OLG as part of the deal, or $111.6 million per year, averaged over the period of the rollout. Phillips indicated that there are 61 bingo halls in Ontario, meaning that each bingo hall owner is now in line to receive, on average, $14.64 million over that period as their share of profits, with the early adopters earning a much greater share.

Earlier this year, Dwight Duncan and Dalton McGuinty spoke passionately about how Ontario could not afford the partnership with the province’s horse racing industry because it meant returning $345 million to the industry. While the industry has failed, to this point, in convincing the government to continue its extremely successful Slots at Racetracks partnership, the organization representing bingo halls has been very complimentary of the government’s decisions regarding charity bingo. On the website of the Ontario Charitable Gaming Association, in an open letter (posted here), Executive Director, Lynn Cassidy says the following:

“I would like to thank the Premier’s Office, Minister Dwight Duncan and his staff and, of course, Mr. Paul Godfrey for hearing the concerns of our members and for their sincere interest in supporting charities and non-profits in Ontario in their fund-raising efforts.

A major difference in the current approach from the previous E-bingo initiative is that there will be a range of options that will potentially offer benefits to all areas of the bingo industry. The approach will continue to be one of choice by charities and by operators and expansion of E-gaming sites, with electronic bingo enhanced with new products and technology, will be a substantial part of the initiative…”

It is not clear how many people will benefit from the $893 million expected to be paid to the 61 bingo hall operators, however it is clear that there are common ownership links among several of the halls. The first six pilot bingo balls to roll out electronic gaming are Boardwalk Gaming Centre Barrie, Treasure Chest Bingo, Delta Bingo Peterborough, Boardwalk Gaming Centre Sudbury, Breakaway Gaming Centre Windsor and Paradise Gaming Centre.

According to the OLG, pilot bingo centres have already raised almost $43 million (as of the end of May 2012) in proceeds for charities. Based on the funding formula, this means that the six operators have received $80.84 million, or $13.5 million per bingo hall. While there is no projection offered regarding the ongoing profits once the program is fully implemented, based on the revenues already flowing to bingo hall owners, the number would likely far exceed the current estimates.

Larry Tanenbaum’s Boardwalk Gaming owns an interest in three of the six facilities involved in the pilot program.

November 17, 2012 - 2:14 pmThis is the precedent-setting

Lynne Magee SAID...

This is the precedent-setting case that Norm refers to that was won in the Federal Court of Appeal, 2011 and rightly so:

November 15, 2012 - 1:08 pmDonald you seem to miss the

Norm Brunet SAID...

Donald you seem to miss the point and have not interpreted the new tax laws acurately. You have to appreciate that owners pay grooms trainers blacksmiths tack shops feedman vets....and these people all pay taxes to the government which will be eliminated with the end of SARP.
Furthermore the $8750 (first $2500 and 50% of next to a max of $8750 )deduction is for "gentleman farmers" whom have other incomes. Horseman that do it on a full time basis are allowed 100% of losses just like a cow farmer.
The new tax law that went to the supreme court is determined on the time you spend at what occupation and not by where the income comes from which was the old way. The case that was appealed was by a lawyer whom was a parter in a law firm but did not actually practice law and received income from it but spent most of his time at the track where his horses were. Thus they determined that his primary occupation was the horse business thus he is allowed to FULLY deduct his main occupation.

November 14, 2012 - 11:44 pmHow can they get away with

How can they get away with this? They are simply feeding Larry Tannenbaum millions and millions of dollars and they are trying to spin this whole story with Billions going to charity. If this pans out, I hope someone out there will be investigating the recipient charities.

November 14, 2012 - 8:24 pmI think you hit the nail on

robert budd SAID...

I think you hit the nail on the head Joe Trainor. Best plan I've seen.
Racing absolutely needs SARP or similar. Racing should be central to a provincial strategy because its the only gaming vehicle that provides real benefit to society as a whole.
How could horse racing that runs on tens of thousands of self employed people, not be seen as vastly preferable to corporate casino's and bingo halls? Not only that but it has tangible landuse/agricultural benefits as well.
How the heck do casino's and bingo halls, complete with enhanced electronic gaming, stack up to horse racing in that regard? Not too well, and I think the public would be behind us big-time if, we can make it clear how lousy a deal the "modernization plan" really is for the province as a whole.
And we can't allow the so-called "sustainability plan" to gain credibility as it is just an attempt to make it look to the public, like the province is acting in racing's best interest. It ain't.

November 14, 2012 - 7:13 pmMr Fife. If the track owners

Tom Gibson SAID...

Mr Fife.

If the track owners tell the OLG to take a hike where do you plan on racing? The business is no longer sustainable with just the wagering from horses. How many tracks would be left? WEG circuit perhaps.

November 14, 2012 - 6:35 pmThe bingo parlor customers

The bingo parlor customers are almost all senior women...if they can't lose money fast enough playing bingo maybe they can with slots in the bingo parlors; and when Grandma loses all her life savings, the government pay to keep her in a senior home.

November 14, 2012 - 6:35 pmThis report is what we need

This report is what we need to show the people how crooked this goverment really is, anyone that knows nothing about horse racing or slots but does know somthing about simple math and logic will understand that larry tanuabuam and his liberal buddys and its not to hard for anyone to figure out who they are with very little research have put the risk of 60,000 plus jobs at risk over greed and money, this is to hard to even put into words, 20% which employs 60,000 people and pours money back into are economy or lets line the pockets of a few allready wealthy crooks who have liberal ties to the tune of 47% and what do these bingo halls have. Maybe 10 employees @ minimum wage this is just so wrong. In so many ways why not just leave the deal @ 20 % with the horseman and forget about the bingo tabs and the extra 27% this has to get out to the public and fast and let them smell how rotten this is. I would love to hear there explanation how anything they have preeched about in trying to call horse racing a supsidy to the citizens of ontario and how things needed to change things needed to chang allright. The only thing this goverment is trying to change is how they can legally get all this taxpayers money in there personal bank accounts and right now it looks like there well on there way. It makes me sick to my stomach at what a disgrace this is to are province and the people of ontario someone please help

November 14, 2012 - 6:28 pmKeeping in mind the editorial

Keeping in mind the editorial 'freedoms' exercised by Standardbred Canada; it would appear that thus far those employed in the horse racing/breeding industry have not fully grasped what the term "net basis" means when being used in a sentence or submission or proposal on context by government officials. This is with respect to the slots at the racetrack program versus the proposed income which may be derived from bingo halls etc.

Firstly, the "slots at the racetrack program" is what the government has indicated that they will be ending, not slots at the racetracks, those will continue at many of the remaining tracks, they just won't be propping up the purse structure. Secondly, on a 'net basis' it is more advantegous for the government to dissuade ongoing investment into the horse industry because unlike during the past 30 years, horse owners can now deduct all of the expenses they incur. Historically a horse owner was only able to deduct a maximum loss of
$ 8,750.00 annually despite incurring (for example)a $ 100,000 loss ...which is quite easy to achieve especially when the horse itself is a deductible expense.

The owners expenses/losses will be used to reduce the tax payable on other income the horse owner would typically have ... accordingly, if the government was to continue to promote horse racing in Ontario, they would in effect be advocating investment into a sport/business that causes them to lose hundreds of millions of dollars each year through the provincial portion of the federal income tax return.

The largest percentage of horses racing do so at 'B' and 'C' tracks. That is also where the largest percentage of owners incur losses. Accordingly, when the government speaks of "net basis" they are referring to the manner in which government investment yields the greatest return. In short, by keeping horse racing alive and well would negatively impact on the monies they receive through annual income tax returns amounts to hundreds of millions of dollars.

The typical owner who races at a B and C track will now weigh the reduced potential purse earnings, and the reduced race days and will simply conclude that it is not worth it to continue to shell out $ 30.00-50.00 dollars per day, per horse to a trainer when the anticipation or 'hope' of earnings has dramatically declined. But there are effective strategies available to the horse community to counter the not so well thought out government strategy of dissuading investment into horses.

A bingo hall owner/government relationship doesn't have to contend with any of this. The fact that a former cabinet minister became involved in bingo halls does not initself suggest any sort of wrong doing especially given that it was publicly announced in 2010 by the OLG that they would be removing slots at racetracks if there would or could be a competing interest from a casino. This also was a flawed decision given that the casino's in windsor, sarnia and niagara falls have not realised an increase in slot revenue since the slots at those tracks were removed.

The governments strategy to diffuse the recent Supreme Court Decision (that a horse owner can now write off all expenses) is terribly flawed from a financial (and moral) perspective; I'll leave it up to the legal beagles to argue whether a provincial government can intentionally roadblock a Supreme Court Decison from realising the intended remedy to the 30 years of reaping the spoils. Although I can fully appreciate the emotional sentiment associated with horses and people, the governments actions with respect to the slots program at the track is at best a knee jerk reaction that does not encompass all facts nor is the remedy well thought out. It might look good on paper, 'anticipated' earnings usually do.

I can tell you why but I think my time is up.

So when you hear Mr. Snobleton or any other government official referring to matters on a "net basis", they are referring not only to the monies they receive directly from a taxpayer who "invests" in slots or casino gambling but also (and more importantly) from the revenue they receive through the annual income tax returns.

I have carefully studied the content of this and find that it meets Standardbred Canada's commenting guidelines.

November 14, 2012 - 5:44 pmIn my opinion what need,s to

Rick Fife SAID...

In my opinion what need,s to happen is..ALL the owners, and I mean ALL the owners of the racetracks tell OLG to get the slot machines out NOW, as the government has re-neged on our contract..THX Rick Fife

November 14, 2012 - 6:33 pmThankfully it's in black and

Thankfully it's in black and white who we should "thank" for this travesty! Who holds the authority to hold them accountable?? It's obvious now why they kept on referring to the SARP as a "subsidy". Who do we turn to? There has to be a way to investigate this. How can a government remain in power??

November 14, 2012 - 3:25 pmPeople, please understand

Joe Trainor SAID...

People, please understand that Godfrey is just a shill for Tanenbaum (bingo!) and giant Vegas casino interests, and is or will be rewarded for lining their pockets with platinum. The OLG move to close slots at Fort Erie, Windsor and Hiawatha was an attempt to obscure casino losses in Niagara Falls, Windsor and Sarnia. The "asleep at the wheel" politicos (McGuinty, Duncan) who bought into this mess have disappeared and are now in the witness protection program. The entire key to our industry's survival in Ontario will be convincing the new Liberal leader to extend Slots-At-Racing for two years, as that will provide $2.2 billion in Ontario government revenue, while allowing cooler heads to prevail when working out a new deal. Negotiations to expand SAR to include a sports betting component will increase racing dates to 2,000+ annually within 5 years.

The REASON that slots are at racetracks is that NOBODY in Ontario wanted downtown casinos, as they tend to attract people who cannot afford to lose money, while those who can afford it will stay away. If the horse racing industry unites and says slots and sports betting at ALL 17 tracks or at none, then OLG would have NO CHOICE but to say OKAY, DONE DEAL.

November 14, 2012 - 3:15 pmIf you look at the OLG Web

Georg Leber SAID...

If you look at the OLG Web site under charitable gaming, it is written that through a pilot program in 6 Bingo Halls, 43 Million has been raised for charities. That means the Bingo Halls got 80.84 Million as their 47%.

Referring to the numbers above, the Bingo halls will make over 893 Million. Is that a subsidy? Horseracing can't get 20% but Tannenbaum can have 47%. This stinks of friends helping friends.

HUDAK and HORWATH are absent again. Who will save us from the OLG? They can't be stopped by anyone except the current government who seems to be fine with all of this.

Georg Leber-ICR Racing

November 14, 2012 - 2:46 pmThe OLG have been doing that

Norm Brunet SAID...

The OLG have been doing that all along, throwing numbers out there that are unrealistic and not substantiated. It's just a matter of time before they lose whatever credibility they have left. To me it shows how desperate they are getting and all at the expense of the Ontario taxpayer.

November 14, 2012 - 2:40 pmSo, let me get this

So, let me get this straight.... the OLG is giving away 47% to bingo operators while horse racing at present, only gets 20%. This makes no sense. If this is McGuinty's and Duncan's vision of how to pay down the current deficit and prosper Ontario, not withstanding the fact that the municipalities now only get 3% instead of the current 5%, it is quite apparent that both failed business math. I also think the Auditor-General needs to do a full investigation and put an immediate freeze on this whole process pending that investigation. It doesn't take rocket science to figure out that the citizens of the Province are getting the short end here, and sacrificing horse racing in the process. It makes me wonder if the decision to end the SAR program was made over a martini at the Canadian Club in Toronto as well, betwween McGuinty, Duncan, Godfrey and Tenanbaum??

November 14, 2012 - 1:57 pmWonder where all the new

Bobbi Morley SAID...

Wonder where all the new bingo players are coming from? One of the reasons that Larry could buy bingo halls up so cheap is because so many of them were sitting empty and derelict.. sort of like our government. With SARP, they had a steady, proven income, earning 75% of the take, and the balance providing money to host municipalities and paying the wages of 60,000 agriculture related jobs and business.
On the upside, it appears that some of the media is finally taking note.

November 14, 2012 - 1:55 pmhow many new jobs for the $1

how many new jobs for the $1 billion gift?

November 14, 2012 - 1:32 pmOk, so lets get this

Rob MacKay SAID...

Ok, so lets get this straight. Less money for Queen's Park. More money for Larry T. And a devastated industry facing massive unemployment and horse mortality. No wonder the province is financially bankrupt. We're being led, and abandoned, by a morally bankrupt gov't...

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