$893 Million To Bingo Operators?

Published: November 14, 2012 01:09 pm EST

While speaking to the Canadian Club of Toronto on Tuesday, Rod Phillips, President and CEO of the Ontario Lottery and Gaming Corporation, spoke glowingly about the OLG’s Modernization plan. In doing so, he has revealed the staggering amount he expects Ontario’s Bingo Operators to take home as part of the Modernization strategy.

According to the written transcript (available here) Phillips said:

“Our plan also includes expanding charitable gaming with new electronic bingo games in halls across Ontario…OLG launched a revitalization of Ontario’s Charitable Bingo and Gaming industry with a commitment to re-invigorate the traditional Bingo experience. By doing so, we expect to deliver $475 million dollars in much-needed funding directly to Ontario charities.”

According to the OLG website, this $475 million will be payed to charities over the next eight years as the program is expanded to bingo halls across the province.

The new profit-sharing model – as explained in OLG documentation, sees charities and the OLG each receiving 25 per cent of profits while operators retain 47 per cent of profits, with the remaining three per cent payed out to host municipalities.

If Phillips expects $475 million to go to charities (as their 25% share) over eight years, the OLG is in turn expecting total Bingo profits in Ontario to be $1.9 billion over that period. Thus the Operators of Ontario’s bingo parlours are in line to receive $893 million - 47 per cent - from the OLG as part of the deal, or $111.6 million per year, averaged over the period of the rollout. Phillips indicated that there are 61 bingo halls in Ontario, meaning that each bingo hall owner is now in line to receive, on average, $14.64 million over that period as their share of profits, with the early adopters earning a much greater share.

Earlier this year, Dwight Duncan and Dalton McGuinty spoke passionately about how Ontario could not afford the partnership with the province’s horse racing industry because it meant returning $345 million to the industry. While the industry has failed, to this point, in convincing the government to continue its extremely successful Slots at Racetracks partnership, the organization representing bingo halls has been very complimentary of the government’s decisions regarding charity bingo. On the website of the Ontario Charitable Gaming Association, in an open letter (posted here), Executive Director, Lynn Cassidy says the following:

“I would like to thank the Premier’s Office, Minister Dwight Duncan and his staff and, of course, Mr. Paul Godfrey for hearing the concerns of our members and for their sincere interest in supporting charities and non-profits in Ontario in their fund-raising efforts.

A major difference in the current approach from the previous E-bingo initiative is that there will be a range of options that will potentially offer benefits to all areas of the bingo industry. The approach will continue to be one of choice by charities and by operators and expansion of E-gaming sites, with electronic bingo enhanced with new products and technology, will be a substantial part of the initiative…”

It is not clear how many people will benefit from the $893 million expected to be paid to the 61 bingo hall operators, however it is clear that there are common ownership links among several of the halls. The first six pilot bingo balls to roll out electronic gaming are Boardwalk Gaming Centre Barrie, Treasure Chest Bingo, Delta Bingo Peterborough, Boardwalk Gaming Centre Sudbury, Breakaway Gaming Centre Windsor and Paradise Gaming Centre.

According to the OLG, pilot bingo centres have already raised almost $43 million (as of the end of May 2012) in proceeds for charities. Based on the funding formula, this means that the six operators have received $80.84 million, or $13.5 million per bingo hall. While there is no projection offered regarding the ongoing profits once the program is fully implemented, based on the revenues already flowing to bingo hall owners, the number would likely far exceed the current estimates.

Larry Tanenbaum’s Boardwalk Gaming owns an interest in three of the six facilities involved in the pilot program.

Tags
Have something to say about this? Log in or create an account to post a comment.