OLG offers Toronto special deal that would double its casino take

TORONTO — The Globe and Mail

Blackjack dealer Rebecca Lehman at the St. Eugene Casino in Cranbrook which was a former residual school February 20, 2013. (John Lehmann/The Globe and Mail)

Ontario’s lottery corporation is promising a special deal to Toronto that would give the city a generous slice of gambling revenues from a downtown casino.

Toronto would receive fees for hosting a casino that are more than double those offered to other municipalities. The higher fees are in recognition of the fact that a casino in Toronto would be a much more ambitious venture than anywhere else in the province, said Ontario Lottery and Gaming Corp. chief executive Rod Phillips.

Story continues below ad

A casino entertainment complex in Toronto would attract about $2-billion in construction financing from the private sector, create new jobs and make the city a bigger draw for tourists, he said.

OLG officials signalled in January that Toronto would not get the standard formula for other municipalities when they announced that the city would receive $50-million to $100-million in hosting fees.

“This is due to the broader economic benefits from that kind of private investment,” Mr. Phillips said in an interview Thursday.

According to estimates from one industry player, if the same formula were applied to Toronto that is being offered to other municipalities, the city would collect roughly $20-million a year in hosting fees.

Many industry players support OLG’s decision to single out Toronto as unique.

The Crown-owned agency is calling for a total of five new casinos in Ontario and every region but Toronto has thrown its support behind the gambling expansion.

“Let’s be honest,” said one player who asked not to be named. “Toronto is a special case. It’s a different beast.”

But the mayor of an Ontario border community, already worried that a casino in Toronto would squeeze revenue in his city’s gambling operations, said there should not be a “favoured nations clause” for any region.

Niagara Falls Mayor Jim Diodati said he is watching the discussions around the hosting fee for Toronto “with great interest” and wants the same deal for his city. Niagara Falls receives $3-million a year in hosting fees for its two casinos.

“We don’t think anyone should receive preferential treatment,” Mr. Diodati said in an interview on Thursday.

Windsor also receives an annual hosting fee of $3-million for its casino, plus funding for 20 police officers, said city treasurer Onorio Colucci.

“OLG has been good to us,” Mr. Colucci said, adding that the city uses the money to build roads and for other capital projects.

Mr. Phillips said OLG released the hosting figures in January to “support” the City of Toronto’s public consultation process on a proposed casino.

A casino executive who asked not to be named said the hosting fee for Toronto is designed to improve OLG’s chances of getting the green light from city councillors for the casino.

“It will be what they think they need to give the city to win over the councillors to vote for it,” he said.

A highly anticipated report to Mayor Rob Ford’s executive committee on the controversial question of new gambling operations in Toronto was not released this week. City staff have not provided reasons for the delay, beyond a statement last Friday saying they were waiting for “outstanding information” from OLG.

“Part of it is a negotiation and a process,” City of Toronto spokeswoman Jackie DeSouza said Thursday. “It’s not just a simple little thing.”

The decision to hold off on the report has some councillors questioning whether politics is playing a role.

Councillor Paula Fletcher, a critic of a downtown casino, said she hopes Mr. Ford is not trying to “impose” his vision on the city manager and staff. “I am a little worried that that might be the case,” she said.

Councillor Ana Bailao, who is waiting for the staff report before making up her mind on the casino, said she is leaning to the “no” side and is also troubled by the report’s delay. “Clearly something is wrong,” she said Thursday.