Not a single new casino has been built yet in Ontario, but government plans for increasing the number of gambling establishments have slashed the financial worth of existing casinos, resulting in the loss of millions of tax dollars for several municipalities.
Figures provided by the Municipal Property Assessment Corp., a provincial agency that reviews land and building values every four years, show that five of Ontario's eight non-aboriginal casinos are worth substantially less today than in 2008. Both small and big casinos are taking a hit, from a drop of $12-million (50 per cent) in Sault Ste. Marie to $40-million (20 per cent) at Caesars Windsor and $173-million (38 per cent) at Fallsview Resort in Niagara Falls.
For some Ontario casinos, the slide in value started years ago. A higher loonie, tighter border security and a proliferation of casinos south of the border have severely eroded their American customer base. Now, though, casinos proposed for the Greater Toronto Area, Ottawa, North Bay and elsewhere, part of a government bid to transform the province into 29 gaming zones, are also darkening their financial picture – even as cities such as Toronto grapple with whether they want to play host to a glitzy gambling resort.
In all, nearly $260-million in value has been wiped off the books at five Ontario casinos, all built with public dollars.
"They're very special-use properties," noted Larry Hummel, the province's chief assessor. "They can't easily be adapted or repurposed, so you have to be very, very aware of what's happening in the marketplace and what is going to happen."
Some municipalities are balking at the diminished valuations, which will mean lower property tax revenue for civic coffers and for some school boards. It's one of many flash points in Ontario's aggressive gambling makeover, among the biggest privatization efforts in provincial history. Several communities are divided over proposals for new casinos, while an Ontario Lottery and Gaming Corp. plan to give Toronto significantly higher hosting fees – potentially tens of millions of dollars more than other municipalities – sparked an uproar among mayors of smaller communities last week. The furor prompted Premier Kathleen Wynne to pledge that Toronto will not get a special deal if city councillors approve a casino.
The province's chief assessor insists the latest casino property assessments are not speculative and are based on "a high degree of certainty." To determine the casinos' current financial worth, the Municipal Property Assessment Corp. (MPAC) reviewed their revenue history as well as confidential projections from OLG, the provincial agency spearheading the gambling expansion.
The message MPAC received on plans for new casinos was very clear, Mr. Hummel said: "In terms of the statements by government and OLG, it's not a question about when. It's a question about where."
The OLG, which has routinely appealed property assessments in the past because it felt they were too high, will not appeal the latest valuations, said spokesman Tony Bitonti. He noted the gaming agency provides other economic benefits to municipalities that have casinos, including hosting fees and jobs. Nearly 9,400 people work at the eight casinos that underwent assessment reviews. (MPAC does not assess Casino Rama and Great Blue Heron Casino because they're located on first nation land.)
The casinos whose values have dropped are all near the U.S. border. Aside from Fallsview, Caesars and Sault Ste. Marie, the other gambling centres affected are in Point Edward near Sarnia, which shed $13-million (28 per cent), and Casino Niagara, whose value has fallen by 31.5 per cent: it's worth $17-million less today than in 2008.
Three casinos are faring better: Thunder Bay, Brantford and Thousand Islands in Gananoque. The assessment values of the latter two have more than doubled since 2008, with Brantford rising to $144-million and Thousand Islands to $104-million. All three casinos are farther from the border and their gambling markets aren't saturated, Mr. Hummel said.
In Niagara Falls and Windsor, the diminishing value of their casinos has had a significant impact on municipal budgets. Not long ago, Caesars Windsor was the biggest taxpayer in Windsor, netting the beleaguered motor city nearly $13-million in tax revenue in 2008. These days, however, it is no longer the top contributor. Windsor's chief financial officer, Onorio Colucci, said the casino will deliver just under $5-million to the city in 2013.
"That's where we took a huge, huge, huge whack this year," Windsor Mayor Eddie Francis said. The city, though, does not plan to appeal for a higher assessment. "We think that's the best we can get," the mayor said.
While Windsor has decided against an assessment appeal, the City of Niagara Falls is preparing its case. Chief administrative officer Ken Todd believes proposed casinos in the Toronto region and Hamilton should not have factored in to the current property assessments, noting municipal politicians could still curtail Ontario's gambling expansion. In Toronto, the casino issue will go before Mayor Rob Ford's executive committee some time this year. A council vote is expected to follow.
"In all reality, there is going to be an impact if a casino is built in Toronto," Mr. Todd acknowledged. "But that should be something we have to deal with when it's built."
The drop in the assessed value of both Niagara casinos will mean about a $9-million annual revenue loss, split between the city, region and local school board. Niagara Falls is now assessing how to make up its portion of the shortfall, Mr. Todd said.
Niagara suffered another tax blow recently. This month, the city and region reached a settlement on OLG's appeal of Fallsview's and Casino Niagara's 2004 assessments. The two gambling facilities will receive a $16-million property tax refund. The city's share of the bill, about $5-million, will be covered by a reserve account.