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OLG Estimates $50–$100 Million in Hosting Fees for a Downtown Casino

City launches online public consultation about a potential casino, with some new revenue figures included.

The City of Toronto has just launched its online consultation about the prospect of opening a casino in Toronto (the in-person consultations start next week). As part of that public consultation process, the City has put out a short primer on the various casino options [PDF], with a number of financial, health, social, and city-building factors detailed.

On page six of that primer, a new and important number: $50–$100 million. That’s how much the Ontario Lottery and Gaming Corporation now estimates the City of Toronto would make in annual hosting fees, if we decided to allow an “integrated entertainment complex” at Exhibition Place, the Port Lands, or in the convention centre area. (An earlier report from Ernst & Young estimated hosting fees as high as $168 million—though as we wrote at the time, the basis on which they did so was always unclear.)

It’s a substantial sum, but in the scheme of Toronto’s $9.4 billion operating budget, it’s hardly a deal-maker.

The now-cancelled vehicle registration tax brought in about $49 million a year, for instance, and newly elected mayor Rob Ford had no difficulty convincing councillors to cancel that in December 2010. Even for the fiscal conservatives on council, policy considerations were more important than the amount of money involved in that case. Similarly with a casino: while the amount of money is non-trivial, it also isn’t overwhelmingly large. There’s certainly recently political precedent for saying that other goals can outweigh it, and many councillors have indicated they will be arguing just that in March, when they make a decision on the matter.

There are other potential impacts on Toronto’s economy if we permit a casino: increased property taxes and some job creation are also discussed in the report. Those will weigh less heavily in council’s debate, however, since they are both harder to predict and would, to at least some extent, accompany any other development in the same parcels of land. It’s the hosting fees that make casinos distinct as a revenue-generating tool for the City, compared with other economic development options in the same areas.

Before council makes any decisions though, and informing their debate, the public will have a chance to weigh in. Residents can fill out an online survey anytime between now and January 25, and there are several public meetings taking place this month as well.


ONLINE CONSULTATION
Take the City’s survey.


PUBLIC MEETING SCHEDULE


Timeline for Casino Debate

November–December 2012

  • City held “significant and serious discussions” with the OLG regarding hosting fees and location options. Those discussions produced the number we now have—the $50–$100 million estimated hosting fee.

January 2013

  • Public consultations are held online and in meetings across the city.

February–March 2013

  • We get a final, exact number—the specific hosting fee the OLG would give to Toronto if council approved a casino.
  • Staff prepare a report for city council, summarizing the public consultations and including the results of discussions with the OLG. The report will also include staff’s recommendations regarding the preferred location of a potential casino, and how much revenue they think is enough to make the whole prospect of a casino worthwhile.
  • Once the report is issued, the matter will come back for discussion at the executive committee, and ultimately, to city council as a whole

Related Reading:

The City of Toronto’s report on a casino: [PDF]

Ernst & Young’s report: [PDF]

The Medical Officer of Health’s report on the impacts of gambling expansion: [PDF]

OLG’s modernization plan: [PDF]


Comments

  • Anonymous

    How about starting with a baseline that pays for the revenue that will leave the City first then add on a lease fee? Remember this whole thing is not about doing anything for Toronto, its about raising cash for Queens Park. 100 Million? A joke.

    • assumptions

      This assumes that some revenue will leave the city. Why is that so?

      How is $100 million a joke?
      Put the casino by the convention center, as proposed. It’s all offices during the day and tourists by night down there. It’s a perfect place.

      • Anonymous

        Sorry I cant do your research for you. Dollars spent in local businesses will tend to stay in the City. The majority of dollars value spent in a casino will go to Queens Park; THAT is the whole point of the casino in the first place, to make money for Queens Park. It is well documented that casinos drain money from the surrounding business. Look it up.

      • Anonymous

        The leading players that stand to operate the casino are American/multinational: MGM, Sands, etc. That’s revenue that will leave the city. The province’s cut — that will leave the city and be spent elsewhere. As scottld points out, casinos cannibalize other businesses. That’s money leaving the city.

        On top of that, consider the additional costs — roads will have to be built, transit will be needed, geared-to-income housing will be needed (because let’s face it, casino jobs don’t pay top dollar and the employees will have to live somewhere, and they won’t be paying market rent), increased policing to address increased crime.

        All told, even the pie-in-the-sky $100 million a year that the OLG are pulling out of their arse will be a pittance compared to the costs to the city and local business owners.

  • Anonymous

    You can say you don’t want a casino at all, but half the questions on the survey assume a casino/complex is inevitable, so answering those questions can be construed as compromise on that fundamental position – there will be a casino, they just want to know what carpet pattern appeals to you most.

  • Anonymous

    I’m sorry, but, just, no. $50-100M is pie in the sky. The most profitable casino in the province is in Windsor (where it has the nominal benefit of at least capturing poor people’s money from Detroit), and Windsor receives about $3M/year in hosting fees. We are being conned, plain and simple.

    • assumptions

      The Windsor – Toronto comparison is laughable.

  • Jim Sampson

    Mckindford,

    How can you compare a casino in Windsor to one in Toronto. Toronto has one of the biggest economies in North America and is a very affluent city with a huge tourist/business industry coming in and out of the city everyday day. Windsor? not so much.

    • Anonymous

      In a city with a healthy economy, a casino isn’t needed. In cities facing economic challenges, I’d venture that more people patronize casinos because they’re peddling the dream of financial independence — something the local economy can’t provide.

      • burke

        then why do a whole host of international cities have casinos? paris, barcelona, sydney, munich.
        London has one on every block it seems.

    • Anonymous

      There is one, maaaaybe 2, destination gambling cities in North America: Vegas and depending on your definition, Atlantic City (although it is a poor poor cousin of Vegas). People will not come to Toronto because it has a casino. It is certainly possible that tourists will frequent a casino if you put one here, but nobody is coming to Toronto because it has a casino. Contrast that with Windsor – people do come to Windsor because of the casino, because you can be across the border in 5 minutes.

      That isn’t to say that Toronto’s casino won’t be more profitable than Windsor, because obviously there is a much larger market here. Having said that, keep in mind that there are already avenues for toronto gamblers: Woodbine, Orillia and Niagara Falls. So it’s worth remembering that a Toronto casino will cannibalize revenues from those 3 places.

      My point is not that Windsor is the same as Toronto. My point is that a Toronto casino will absolutely not be paying out 30x in hosting fees what the casino in Windsor is.