The Ontario Lottery and Gaming Corporation and Great Canadian Gaming Corporation agreed over the weekend to a tentative lease arrangement to keep slots at Flamboro Downs for about five years.
OLG has provided Flamboro Downs, and Georgian Downs in Innisfil, nearBarrie, with letters of intent, outlining the general business arrangements to keep the slots, and any other future gaming operations for OLG at the Flamborough location.
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.
The provincial government’s slots-at-racetrack program is scheduled to end March 31, 2013, saving about $345 million. Under the arrangement, OLG provided 10 per cent of its revenues to the owner, and 10 per cent to the local horse-racing industry. Hamilton received this year about $4 million from the slots revenue.
“This is excellent news for our residents,” said Mayor Bob Bratina in a statement. “The city can now be assured of stable OLG funding through 2015, employment payroll, and likely a return to the previous higher taxation revenue on the Flamboro Downs property.”
Bitonti said the lease arrangement establishes a framework for a private company to take over the gaming operations at Flamboro Downs. 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.
Bitonti said when OLG selects its preferred gaming facility operator, expected early in 2014 the company will take over from the OLG the lease agreement at Flamboro Downs.
He emphasized that any discussion about relocating a gaming facility from Flamboro Downs will be done in consultation with the city, and OLG. Bitonti said when the operator is chosen, they will be urged to talk to city officials about the operation.
“We are not walking away,” said Bitonti. “(The discussions) are not done in a vacuum. This is similar to when a major development comes into town. All the parties will come together to discuss it.”
OLG will still be involved in overseeing gaming operations, ensuring gaming integrity, marketing, and responsible gambling is maintained, he said.
But the future of the Flamboro horse-racing remains unclear.
On March 8 Premier Kathleen Wynne announced funding for six of the eight provincial horse-racing tracks this year. Talks are continuing with the remaining eight tracks, including Flamboro Downs. The six tracks that signed the agreement are all not-for-profits or fair boards, and don’t expect to make a profit.
Great Canadian Gaming in a weekend news release stated it has had discussions with theOntariohorse racing panel, created by Hamilton Liberal cabinet minister Ted McMeekin, but no arrangement has been made about further transition funding for the industry. The panel last fall said the government’s $50 million funding over three years was too little.
GCG stated, though, that a new lease agreement will pave the way for securing more stable funding for horse racing.
“We also are extremely pleased to have now concluded our negotiations with the OLG and look forward to continuing to work with them through these lease arrangements,” stated Rod Baker, Great Canadian’s president and chief executive officer.
Once the lease arrangements are signed, GCG officials stated it “may need to record long-lived asset impairment reversals for Georgian Downs and Flamboro Downs.” It stated the company expects to see a “decline” in earnings before interest, taxes, depreciation, and amortization compared to last year.
Bitonti said there could be an announcement soon about further agreements with other race tracks.
“I anticipate more announcements,” he said.
