Ontario's share of gambling revenues would shrink dramatically under a proposal calling for the city of Toronto to receive at least $100-million a year in return for hosting a new casino.
Toronto's city manager says in a report released Monday that Toronto's share of gambling revenues should equal those of the province and that the city should receive an annual guaranteed minimum of $100-million.
The report estimates that a casino in Toronto could generate $1.2-billion in revenues and hosting fees ranging from $111-million to $148-million.
By comparison, the Ontario Lottery and Gaming Corp. paid municipalities with casinos and slot facilities a total of $112-million in hosting fees in the fiscal year ended March 31, 2012.
Toronto is seeking roughly five times as much as the city would collect under the standard formula proposed by OLG, which is based on a percentage of revenue.
Premier Kathleen Wynne has stipulated that there must be one formula for the entire province. If OLG were to apply the model proposed by Toronto's city manager provincewide, it would reduce Ontario's share of the revenue pie and undermine the rationale for expanding gambling operations.
The Ontario government asked OLG to modernize its operations, a process that includes building a new casino in the Greater Toronto Area, to help the cash-strapped province generate more revenue.
Ontario's lottery operations contribute the single largest source of non-tax revenues to the province. The resort casinos pay the province annual fees equivalent to 20 cents of every dollar in gambling revenues.
In the fiscal year ended March 31, 2012, gambling contributed $1.88-billion to the province's coffers, including $258-million in a "win contribution" from the resort casinos.
Under the modernization plan, new casinos will not have to pay 20 per cent of their gross revenues to the province, OLG chief executive officer Rod Phillips confirmed in a recent interview.
The win contribution for existing resort casinos, he said, helped to compensate the province for the fact that taxpayers paid for the bricks and mortar. But OLG plans to use financing from the private sector to build new casinos.
As a result, Mr. Phillips said, "there is no win tax built into that."