Ontario says no to special casino deal for Toronto

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The Ontario government has stipulated that the same funding formula for casinos will be used everywhere, derailing a lottery corporation arrangement that was attacked for appearing to treat Toronto preferentially.

Premier Kathleen Wynne is adamant that she would not approve special terms for Toronto in the event city councillors approve a casino, a government official told The Globe and Mail on Sunday. "The hosting formula for Toronto will be the same as the one for other communities," the official said.

"All municipalities will be treated fairly so they can all share in the benefits."

Controversy has swirled around the funding for Toronto since last week, when The Globe reported that the Crown-owned Ontario Lottery and Gaming Corp. would give the city fees for hosting a casino that are more than double those offered to other municipalities.

The mayors of Ottawa, Windsor and Niagara Falls have complained, saying they want the same deal for their cities.

Those cities and their surrounding small communities are strategically important for Ms. Wynne as she attempts to repair the damaged Liberal brand in rural Ontario.

Anger over wind turbines coupled with frustration from farmers who felt their concerns were ignored by the government cost the Liberals seats in the 2011 provincial election. The Liberals face a by-election race later this year in Windsor-Tecumseh to fill the seat vacated by former finance minister Dwight Duncan.

OLG's CEO Rod Phillips last week said his agency is promising Toronto higher hosting fees in recognition of the fact that a casino downtown would be a much more ambitious venture than anywhere else in the province. He said Toronto would receive fees based on the amount of capital invested in a gambling complex and the economic benefits it generated, including job creation. Every other municipality would receive fees based on a percentage of net revenues.

Mr. Phillips was unavailable for comment on Sunday. But an OLG spokesman released a statement that appeared to contradict the organization's earlier position. "There is no change of policy and no special deal offered to anyone," the statement read. "OLG has taken a consistent approach to municipal hosting fees since (plans to expand the province's casino operations) launched a year ago."

OLG officials have said Toronto would rake in anywhere from $50-million to $100-million in hosting fees, depending on what kind of casino is built and where it is located. A report prepared by Ernst & Young last fall said a casino in Toronto could generate up to $1.4-billion in annual revenue.

Using that revenue projection, Toronto would receive hosting fees of $20-million a year under the standard revenue-based formula, according to estimates done by an industry official. The formula is based on a sliding scale of net revenues for casino and slot operators.

The statement from the government clarifies Ms. Wynne's position on the matter. In a statement on Friday, she said there will be no "special deal" for Toronto. However, she also appeared to support the stance taken by OLG by saying the hosting fee for Toronto would reflect the size of the gambling complex that is possible.

"If the same capital investment and job potential are possible elsewhere, the same hosting fees would be generated," she said in her earlier statement.

Sources said there is a different attitude to a Toronto casino under Ms. Wynne, who is reluctant to do anything that would alienate other communities, especially those in rural Ontario. The provincial government has final authority on the matter.

Mr. Duncan and OLG chairman Paul Godfrey were very much of one mind in pushing for a casino in Toronto. Mr. Duncan, who resigned last month, talked about a "golden mile" along the city's waterfront.