Special Report: Casino

More OLG Games: The House Always Wins

The Hamilton Casino debate is far from over. Thanks to broad, vague and unaccountable escape clauses in the OLG lease at Flamboro Downs, the operator will have plenty of leverage to move a new casino downtown.

By Mark Richardson
Published August 05, 2013

Hamilton, did you know that the Ontario Lottery and Gaming Corp (OLG) and the Great Canadian Gaming Corp (GCGC) still have not signed a lease to allow gaming at Flamboro Downs?

I only found out about the unsigned lease after filing a Freedom of Information (FOI) request to see the lease. My request was put on hold because OLG's legal department would not allow the unsigned document to be put in the public's hands.

Tony Bitonti from the OLG announced some of the lease's terms in articles in the CBC and the Hamilton Community News on March 11, 2013.

Here's where and why you should question what the OLG is negotiating for Hamilton behind our backs.

According to Bitonti in the Community News, "The lease follows the terms of the other lease arrangements OLG has made with track owners across the province at between three to five years. In addition, there is a 'transfer' clause within the agreement that will allow private business that takes over the gaming facility lease to relocate the venue to another location, including downtown Hamilton."

Also from the same article, "Under Hamilton council's recently approved motion, Flamboro Downs remains the preferred location for a gaming facility. But if that facility proves financially not viable, the gaming facility could be located to another location within the city, possibly in the core."

I've requested to see a copy of the lease because I think all of Hamilton has the right to know what criteria the OLG has negotiated, that allows any new operator to move gambling operations in our gaming zone from Flamboro Downs.

What auditable formula is in the Flamboro Downs lease to determine the "facility proves financially not viable"?

Unfortunately Hamilton has been given the answer from Bitonti again, this time from the CBC, "Once selected, that operator will decide how viable Flamboro Downs is as a long-term gaming facility."

Bitonti is also quoted stating, "That private sector operator will decide [based on their business plan] whether or not they want to stay there...once the private sector operator is chosen, a discussion about location will emerge."

So really, there we have it right from the OLG itself. Here is the sequence of events, past, present and future. OLG has negotiated a lease with Great Canadian Gaming Corporation (GCGC) that includes gigantic, vague and unaccountable escape clauses from the location mandated by City Councillors.

OLG will be issuing Requests For Proposals (RFP) for a company to take over the lease OLG signed with GCGC sometime in early 2014. If GCGC does not win the bid process then another company of OLG's choice will be the tenant of Flamboro Downs, renting from GCGC.

If for any reason the new operator of Flamboro Downs does not feel the racetrack is a 'viable' location for a Casino, that operator is allowed the right by the OLG move the Casino.

Bitonti makes vague mention of consulting with the City on relocation, but he clearly states that a discussion about location will emerge immediately once the OLG has chosen its preferred operator.

The operator puts a gun with OLG bullets in it against our heads again, holding the City of Hamilton and its citizens hostage to the operator's desire to locate a Casino downtown.

My questions to the OLG:

Premier Kathleen Wynne will be in Hamilton for the Provincial Liberal Party convention September 13-15, 2013. Perhaps she can answer this list of OLG questions then!

This chapter in Hamilton's history is only going to heat up over the coming months. Stay tuned.

Mark Richardson has lived in Hamilton since 1993. He is a Stationary Engineer and is one of Hamilton's many Industrial Nomads. He currently is employed at US Steel.

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By Gabriel (anonymous) | Posted August 05, 2013 at 16:15:33

It will not be financially viable due to the lack of building options the legislated Greenbelt Act has constructed.

Greenbelt Act>No hotel>No Flam Casino>Hello Downtown

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By LindsayG (registered) | Posted August 05, 2013 at 16:47:42

Gabriel, the hotel is a red herring; it is used by self-interested casino promoters in Hamilton to tout the fantasy of a resort casino downtown drawing destination gamblers and spurring economic development. Check out Steve Buist's recent Spectator article for details: Ontario's resort casinos are in trouble; visitors and revenues are down, and an astonishing proportion of gross revenues are spent on loyalty programs and perks to big (and probably pathological) gamblers. It is the bare-bones racetrack facilities that are actually most profitable. If people won't travel to Niagara to spend their money (or at least, not in sufficient amounts to satisfy the OLG), why would they be drawn to Hamilton? The interest in dropping a casino smack dab in the downtown is not about attracting people for shows, concerts and a jolly little hotel stay. It is about providing easy access and availability to gambling to Hamilton residents, particularly those in the young, densely-populated downtown neighbourhoods.

Comment edited by LindsayG on 2013-08-05 16:54:05

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By Kiely (registered) | Posted August 06, 2013 at 11:10:20 in reply to Comment 90617

Indeed, the OLG has done their market research and they know where they need to be located to get their hooks into potential problem gamblers. They don't like admitting it but those gamblers are local, economically at risk and the OLG needs those problem gamblers in order to make money. The OLG is preying on the weak and vulnerable to fill government coffers. It is shameful, vindictive and cynical economic policy.

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By LindsayG (registered) | Posted August 05, 2013 at 17:04:53

Mark, this is a very informative, but terrifying, piece. It is extremely unfortunate that City Council kept the back door open for the OLG, giving them another opportunity to foist their agenda on us behind closed doors. It is particularly telling that it is the OPERATOR who gets to decide on the financial viability of the location. As was sadly predictable, it's hard to see what teeth Council's support of Flamboro when a) the OLG chooses the operator and b) the operator apparently chooses the site. We need to press Council hard on this.

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By mrjanitor (registered) | Posted August 05, 2013 at 19:52:33

Gabriel, you are VERY misinformed. Please read on page 18 of this City of Hamilton Staff Report Flamboro Downs is currently only using about 150,000 square feet of the 931,000 square feet they are allowed to develop, there is an allowance for over 780,000 more square feet to be constructed. Definitely no hotel under the Greenbelt Plan Act, but anything else related to the current operations is allowed.

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By Gabriel (anonymous) | Posted August 06, 2013 at 10:29:22 in reply to Comment 90619

Maybe you can inform me then what the relevance of this is -

As the Flamboro Downs lands fall within the “Protected Countryside” of the Greenbelt
Plan, and are designated “Prime Agricultural” in the Rural Hamilton Official Plan,
non-agricultural uses (including hotels) are not permitted. As a result, no new
non-agricultural uses are permitted on the Flamboro Downs lands.

So, please do tell how they will casino-ize the remaining 780,000 sq ft?

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By mrjanitor (registered) | Posted August 06, 2013 at 11:56:13 in reply to Comment 90633

Simple Gabriel, a Casino is not considered a new use at Flamboro. This is right from City Staff, please feel free to contact them and debate the report they prepared and presented to council.

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By Gabriel (anonymous) | Posted August 06, 2013 at 12:14:13 in reply to Comment 90641

So, do you think a private enterprise is going to go all out for a casino proposal that only includes buildings for slot machines?

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By mrjanitor (registered) | Posted August 06, 2013 at 12:28:11 in reply to Comment 90642

RockHammer Troll, an operator can build a facility 5 times bigger than the current slot operation without ever losing revenues... And continue to use the current facility.

What don't you understand? Once again, read the report and have a debate with the Economic Development Department if you don't agree with them, or are having a hard time understanding what they wrote.

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By Gabriel (anonymous) | Posted August 06, 2013 at 12:40:13 in reply to Comment 90643

I read the minister's order, and it specifically states 'slot machines', so you can keep hammering away about the viability of a potential expanded Flamborough location, but really it's a nightmare for downtown.

Talking to Liberals during the last leadership round, all of them agreed that there would be no modification to the GreenBelt Act.

The municipality does not have the authority to add any additional uses to the Flamborough lands.

SLOT MACHINES ONLY.

or am I missing something?

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By closethebackdoor (anonymous) | Posted August 06, 2013 at 03:58:54

could city council not simply amend the rest of the city zoning to exclude a casino?

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By Gabriel (anonymous) | Posted August 06, 2013 at 10:33:05 in reply to Comment 90627

They could, completely. But then they lose the revenue if Flam fails for whatever reason, and you think the bloodsuckers are giving up a source of revenue?

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By Croupier (anonymous) | Posted August 22, 2013 at 08:50:53

The Greenbelt Act comes up for review in 2015. The current OLG leases expire 2016-2018.

Despite the hankering for intrigue, this contractual "change" was visible to anyone who cared to read the news, as Mr. Richardson points out. Hamilton Community News:

Mar 11, 2013: "OLG spokesperson Tony Bitonti said the preliminary arrangement will allow OLG to be the tenant of Flamboro Downs, and Great Canadian Gaming Corporation the landlord of the property. The current lease arrangement between the two entities is set to expire March 31, 2013. 'If we didn’t get this done, (OLG) would have been in an illegal position with the owners,' said Bitonti. Bitonti couldn’t provide financial details of the tentative arrangement until it is finalized. The idea is to have an agreed upon deal by March 25. He did say the lease follows the terms of the other lease arrangements OLG has made with track owners across the province at between three to five years. In addition, there is a 'transfer' clause within the agreement that will allow private business that takes over the gaming facility lease to relocate the venue to another location, including downtown Hamilton." http://goo.gl/5iwWmS

This was was telegraphed during an OLG open session on Nov 9 2012: "The City enters into an amended Municipality Contribution Agreement (MCA) with OLG (same agreement, with different location address if the facility moves)" http://goo.gl/1LQ2b7

And incidentally, it's not just Hamilton. The "transfer clause" appears to be as standard as the OLG's 3-5 year operating license.

Oct 19, 2012: "Under the government’s plan to modernize the gaming industry, sites like Grand River Raceway could see an appointed operations contractor choosing to move to another location and municipality which would effectively end the revenue stream for the Township." http://goo.gl/PyhmiD

Oct 19, 2012: “We’re trying to get a short-term lease – two to three years – that will be transferrable to the private sector operator,” Bitonti said. “We’re very confident we’ll get it. So when the private-sector operator is chosen, we can say to them, ‘OK, the lease is now yours.’ They can decide whether they want to keep (the temporary facility) at Sudbury Downs, or move it to another location closer to Sudbury.” http://goo.gl/1fE0Y2

Nov 1, 2012: “This doesn’t mean that it’s the end, right?” he asked the mayor. Dunlop responded to the agreement with OLG is a fairly strong indication of the provincial body’s desire to keep the slots in Hanover, allowing for the outside chance that the private group that will take over day-to-day operations of the casino sometime in the next two years could want to move to a different location. http://goo.gl/167XPD

Jan 11, 2013: "The OLG’s lease with the Elora racetrack ends March 31, and after that they’ll operate on a short-term revenue sharing agreement that promises to be less lucrative for the raceway. Eventually, that lease may be sold to a private operator who can decide to keep running the slots operation, expand it, or move to another location within the gaming zone." http://goo.gl/eigUCR

Feb 28, 2013: "Whoever is chosen to run Ajax Downs would 'take over operations at Ajax Downs. They would be the day-to-day operators,' Mr. Bitonti said. The operator would make the decision on where a facility would be, he added. 'They could stay in Ajax, expand in Ajax or they could relocate,' he said. There is a process if the operator decides to relocate, Mr. Bitonti noted. The operator would have to ensure the move is feasible, as the operator would be paying to construct a new facility. The municipality where the facility would move to would have to be a willing host, and 'the OLG would have to put the final stamp of approval on it. All three parties would have to be in agreement for anything to be moved or to happen,' Mr. Bitonti said."

Mar 30, 2013: "Bitonti said a company could purchase the slots at Kawartha Downs and opt to keep the facility as it is. He also said it was also possible for the company to move the slots to another location, pending the approval of a business plan and with the blessing of the municipality in question." http://goo.gl/uQkRa7

In fact, it is an open question whether the ability to move the facility is even a new contractual provision.

Nov 30, 2012: "Gaming Zones are geographic areas where qualified service providers will be permitted to operate a single gaming facility. The design of these Gaming Zones is intended to manage competition between facilities and ensure a sustainable and efficient gaming market in Ontario. The makeup of each proposed Gaming Zone is subject to change. Within each Gaming Zone, service providers will be permitted to operate the existing facility, establish a new facility if one does not currently exist, or relocate the existing facility within the boundaries of the Gaming Zone, all subject to approvals.... Nothing has changed for municipalities included in the Gaming Bundles issued in the first wave of RFPQs. The rules around existing and new sites, *as well as the potential for service providers to move existing sites* has not changed." http://goo.gl/O43Zfv

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By mrjanitor (registered) | Posted August 25, 2013 at 12:27:34

This is an excellent summary of statements made by the OLG. For me, the real questions underlying the movement clauses are:

-Why is the OLG engineering these movement clauses when cities have already decided on allowed locations?

-Does the OLG even have the legal right to allow relocation after a City Council has already voted and decided where the Casino is to be?

-Where is the legislation specifically that gives the OLG legal right to negotiate relocation, effectively vetoing a City Council's decision making authority?

-Will the citizens of Ontario cities have to take the Provincial government to court in order to protect the powers of City Councils?

Comment edited by mrjanitor on 2013-08-25 12:30:23

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By Double Down-town (anonymous) | Posted September 12, 2013 at 09:41:01

"Premier Kathleen Wynne will be in Hamilton for the Provincial Liberal Party convention September 13-15, 2013."

OLP convention this weekend? Supercrawl will be lousy with politicians and spin doctors!

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By Double Down-town (anonymous) | Posted September 26, 2013 at 17:47:13 in reply to Comment 92084

Ontario Liberals' Provincial Council takes place September 27-29, 2013 at the Hamilton Convention Centre.

"...have the opportunity to engage directly with our team at Queen's Park as they take your questions in a Caucus availability session."

http://fred.ca
http://www.ontarioliberal.ca/GetInvolved/FindanEvent.aspx

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