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OLG Plays Hard(er) to Get

In a speech yesterday the OLG president warned that a casino may net the provincial government even more money if they put it outside Toronto.

In a speech to the Canadian Club yesterday, Ontario Lottery and Gaming Corporation president Rod Phillips tried a new tactic in the ongoing attempt to get us to sign on to a new casino: the well-maybe-we’ll-just-go-to-Markham gambit.

Much of Phillips’ speech (the full text of which is online [PDF]) is dedicated to laying out OLG’s hopes for modernization in the province overall. Toward the end, however, he takes a slightly stronger tone, specifically when it comes to the discussion about putting a large entertainment complex in Toronto:

[W]e believe this is a significant opportunity for Toronto. We are encouraged that the City of Toronto is going through its own process right now to arrive at an informed decision on whether they feel a downtown gaming entertainment centre is right for the city.

However, it is important to remember, OLG is not wedded to Toronto. We are open to the broader GTA.

Mississauga, Markham and Vaughan, are also evaluating the potential to host the new GTA site. A new facility in one of these communities would also represent a significant opportunity.

After detailing the job-creation prospects of a facility in one of those other sites (and skipping over the fact that Markham has already rejected one), Phillips continues:

If OLG’s new gaming entertainment centre is launched outside of Toronto, it will be very successful. In fact, a facility outside downtown Toronto could drive more profit to the province.

Consider that there would be lower capital investment in land. The bricks and mortar costs would be significantly less—as much as $1 billion dollars less. A facility outside of Toronto would be easier for customers to drive to. Lower costs combined with greater convenience could mean more direct profit for the province–as opposed to the broader economic benefits of greater employment, capital investment and tourism that are all part of an iconic downtown facility.

But at this point, it is really up to the communities in the GTA to decide if they want a facility.

The calculations here are a bit opaque, since a private developer is expected to bear the expense of buying the land and building on it, rather than the government. Afterward, Phillips explained to reporters (we were not present but were provided with a recording) that OLG’s perspective was that while a Toronto casino would certainly have a larger overall economic impact (in terms of GDP and job creation), the direct benefit to the government might work out differently: “while there would likely be more revenue from a downtown casino…the lower costs in some of the other areas would make it possibly more profitable to be in one of the other locations.” Later, he added: “although it’s private money involved [in building the casino], the amount of money left over for government is going to be different depending on the capital costs.”

This is at odds with what OLG said earlier this year, when it enthusiastically announced its hope to build a casino in Toronto—the rationale for which was precisely the cash it was going to generate for the provincial government. Phillips says that they haven’t done any new math since then, but that after conversations with prospective casino operators “our understanding has improved.”

Essentially, OLG is dating around, and it wants Toronto to know it’s keeping its options open. Toronto is clearly the leading contender, but there are other fish in the sea, so to speak. Whether the risk that we’d lose a casino to a nearby municipality is enough to get a so-far-unconvinced city to commit to the relationship is far from clear, however.

A schedule for public consultations will be released in the coming weeks, and city council will debate based on the results of that consultation in February or March.

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