Price to privatize Southwestern Ontario casinos remains a mystery – The London Free Press

It snapped up almost all the gambling operations in Southwestern Ontario in one fell swoop, a deal that made it Canada’s largest casino company.

What Gateway Entertainment and Casinos paid for the casinos at Western Fair District and elsewhere in the region, however, taxpayers were never told.

This is a cash cow for the provincial government

MPP Wayne Gates

Now, that number — or least part of it — is out, but it’s still not the full story, leaving critics wondering whether taxpayers were shortchanged by another privatization of an Ontario government asset.

Gateway paid $174 million to take over three casinos and six slots operations in northern and Southwestern Ontario, a number buried in the fine print on the last page of the Ontario Lottery and Gaming Corp.’s (OLG) latest annual report.

But both buyer and seller, the latter a provincial Crown corporation, refuse to release figures for each “bundle,” arguing that’s private, third-party information.

Without that breakdown of the sale announced in late 2016,  it’s tough to know whether taxpayers got a good or bad deal when Ontario got out of directly running gambling operations in the two regions.

“You should be open, you should be transparent, you should make sure the residents of the province of Ontario know exactly what these agreements are and how much we’re getting out of them,” said New Democrat MPP Wayne Gates, who’s advocated for the return of slots at the Fort Erie Race Track in his Niagara Falls riding.

The OLG maintains the price paid for gambling operations in Southwestern Ontario is “commercially confidential information.” The corporation has “fulfilled its financial disclosure requirements and obligations for the sale of these and other gaming assets” through the details presented in its annual report, spokesperson Tony Bitonti said.

It’s the latest in a series of provincial assets sold off to private entities, including the voter-alienating move by former premier Kathleen Wynne’s Liberals to unload a majority stake in Hydro One, the provincial electricity distributor.

Gates said it’s the same story losing nine of OLG’s assets.  In the wider London region, Gateway now controls all the legal gambling action except the giant Caesars Windsor Hotel and Casino.

Gates calls that a losing proposition for Ontarians.

“This is a cash cow for the provincial government,” he said. “This is essentially a licence to print money and we’re selling them to a private corporation at cents on the dollar, at the expense, quite frankly, of money that we need for health care, education and our roads.”

Last year, OLG operations generated $2.3 billion for the province.

The OLG still gets revenue from the sold-off operations — though exactly what that cut is, isn’t clear. After a certain threshold, what the OLG calls its “guaranteed amount,” but which is not spelled out for the public, any additional revenue is split 70-30 — with the lion’s share going to the private operator.

Josh Morgan, a London city councillor, earlier this year asked the OLG to make public the numbers behind that arrangement when council debated the prospect of expanded gambling at the Western Fair.

Morgan said if privatization brings in more money from gambling in London, the city — which, like all gambling sites already gets a piece of the action as a host city — should benefit more as well.

“I believe, and I know a majority of my colleagues on council believe, that the excess revenues generated in London should be returned as investments into the London area. Without knowing how much that is, it is impossible to know whether OLG is doing that,” he said Thursday.

In London, Gateway Casinos is still locked in negotiations with the Western Fair District and city hall over plans to expand the slots into a glitzy, $140-million casino and hotel complex.

Gateway has said it wants a better deal on its lease at Western Fair, or to buy outright the turf jointly owned by the city and Western Fair.

City hall recently described the negotiations as “continually progressing,” and a Gateway spokesperson confirmed the company is still in talks, but also pursuing other opportunities at other London sites as they arise.


Morgan said he can’t fault Gateway for trying to improve its bottom line, noting it’s a “private entity doing what they do best — buying an asset and making money from it.”

But he said he wants to see the agreements between Gateway and the OLG, to know Londoners aren’t being shortchanged by the privatization.

“This whole thing lacks transparency for residents. It’s impossible to tell how much more money is expected to be extracted from the London area and who is getting what amount of that money.”

Gates agreed.

“This makes absolutely no sense, and unfortunately, the residents of Ontario don’t really know what’s going on, because they won’t release the agreement. Show us the agreement, I think that’s what most people are saying.”


Price tag: $174,069,000

The broad strokes: British Columbia-based Gateway took over operations of casinos and slots across a wide swath of northern and Southwestern Ontario.

The fine print: The so-called “north gaming bundle” includes OLG casinos in Thundery Bay and Sault Ste. Marie, OLG slots at Sudbury Downs and two new planned casinos in Kenora and North Bay.

The “southwest gaming bundle” includes OLG Casino Point Edward and OLG Slots at Western Fair District, and at Clinton, Dresden, Hanover and Woodstock racetracks.