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Ontario's lottery agency is hedging its bet on a Toronto casino, suggesting now that a location outside the city might produce more profit for the province.

The province is in the midst of a major push to expand and modernize its gambling system and establishing a new casino in or near Canada's largest city is central to that plan. Both Provincial Finance Minister Dwight Duncan and Paul Godfrey, chair of the Ontario Lottery and Gaming Corp., have been clear they favour a new complex in the city's core, ideally on the waterfront, that would become a magnet for tourists and boost Toronto's convention business.

Against that backdrop, OLG chief executive Rod Phillips told the Canadian Club if Toronto Tuesday there could be advantages to building the new facility in Vaughan, Mississauga or Markham, the three area communities that also are in the running for the casino site.

"It is important to remember, OLG is not wedded to Toronto. We are open to the broader GTA," Mr. Phillips said.

While he estimated a downtown site could triple convention visits and generate $2-billion in capital investments and 12,000 permanent jobs, he said lower capital costs and ease of accesses for drivers could mean a casino outside of Toronto would bring more "direct profit" to the province.

The new argument, he explained later to reporters, comes as plans evolve for a new casino and conversations with potential operators continue.

"There are great opportunities from an economic development point of view, from a tourism point of view, from a capital development point of view that are unparalleled in Toronto," he said. "From a purely profitable perspective, the facility outside Toronto might be the better choice."

The OLG estimates a GTA casino would generate about half as many construction jobs as a downtown site and about 9,500 full-time positions. But he said the extra costs associated with building a facility in Toronto will be reflected in the share of profits that flows to the province.

"The point we are making is one we have made all along," he said. "There are choices that OLG and the province have. We want to make sure that [Toronto] and the other cities understand the dynamics of those choices. If a facility costs twice as much in Toronto than it has to make a lot more money and so we want to keep that in front of everyone so they are not surprised."

The prospect of a Toronto casino has generated interest from several major U.S. operators. So far, preliminary plans have been unveiled for a revamped Metro Toronto Convention Centre that would include some of the tallest skyscrapers in the country and a hotel complex anchored by a multi-level casino. Exhibition Place and the Port Lands also have been listed as possible casino sites.

The province has said it will not force a casino on an unwilling community. Last week Mayor Rob Ford's executive committee agreed to begin public consultations on the controversial issue, with a vote by council expected in February or March of next year.