Are The OLG and Liberal Government Flying By The Seat Of Their Pants?

This modernization plan by the Ontario Liberal government and the OLG is starting to remind me of a Jackie Mason monologue: Do you know whats going on with slots and the racetracks? I don't know but someone else must. Where can I find this someone else? Start with Dalton McGuinty, he seems to know most of what needs to be known. But does he know everything? Not everything, maybe the OLG knows everything. They don't seem to know everything either. I think they thought they knew everything, but they don't know everything anymore. How about Finance Minister Dwight Duncan? He seemed to know everything too, but he doesn't know everything now, except maybe when it comes to donuts.

To make sense of the above, we'll have to look at some real information and real laws that are now coming out of the woodwork.

First, in my previous post, I stated that slots were taken away rather quickly from Fort Erie, Hiawatha and Windsor race tracks because it is the OLG's goal to sell the nearby casinos, so by taking away the slots from the tracks, the bottom line revenues for the casinos would go up making them more attractive to buyers.

Looks like I was wrong as it is illegal for a private company to both own/lease and operate a casino in Ontario according the Criminal Code of Canada, unless exceptions are made. Exceptions are not a gimme when there is a minority government whose popularity has shrunk since getting elected only 5 months ago.

These laws throw a monkey wrench when it comes to the idea that racetracks can have privatized gaming. The racetrack right now owns the property that the OLG is leasing from them. If a racetrack or even another business were to take over the operations on the tracks, that would mean that the OLG is neither leasing, owning or operating the casino. This is against the Criminal Code, unless a loophole exists that they can get away with just leasing gambling equipment to make it a go.

So in Fort Erie's case, lets say that the $30 million in revenues a year caused a break even for the OLG after operating expenses and the amounts paid out to the track, horsemen and municipality. Even if $5 million of that makes its way over to Niagara Falls, that is $5 million more bottom line for the OLG and the operators of the Niagara casinos.

Now by taking away the slots without giving a privatization option to these border tracks, the province and OLG have declared these tracks as nothing but competition. And I'm sure they are hoping the tracks close down completely so that if any gambling is done, it will be on OLG product. It sounds slimy, but heck we are talking about McGuinty here.

The biggest news that came out today is that McGuinty has stated that Municipalities can hold referendums when it comes to introducing new casinos (like in Toronto). Well, according the OLG Act of 1999, a referendum MUST be held. With the recent poll that shows 60% of Torontonians against a new casino, the likelihood of a yes is far from a sure thing. Unless, those bottom dwelling Liberals can pass new legislation regarding a referendum having to be held (and I wouldn't it put it past them).

In fact, the way the laws are written now when it comes to bringing in a new casino, there are quite a few hoops to jump through.

It appears right now that the Liberals and OLG have written a check their asses can't cash. Who knows, maybe they'll decide to leave well enough alone. For the racing industry, its many direct employees, and the many businesses these employees support or help support, one can only hope.

UPDATE: McGuinty has said that the provision to have a mandatory referendum has lapsed. So that means McGuinty has one less hoop to jump through. He can bully a new casino through in Toronto now, and even if the majority of Torontonians want a referendum, politicians can do what they do best and lie or come up with an excuse for not having to do a referendum.

Bottom line, no one has even mentioned what the split will be on the new privatization deal, and this reinforces my belief that there isn't a person who knows everything yet.

CANADIAN POLITICS NOTE

For my American readers who might be confusing Ontario or Canadian Liberal Parties with political liberals in the USA, every political party in Canada is to the Left of the US Democratic Party. The Federal Conservatives and the Ontario Progressive Conservatives are to the right in the Canadian political spectrum, with the Liberal Party on the Left, and the New Democratic Party closer to the Far Left.

Personally, I'm a social liberal (by American standards), while fiscally I'm close to the centre (center in American language).

One final note: Kim Craitor, the Liberal representative for the Niagara Region (including Fort Erie) has had threats against his life and now fears to set foot in Fort Erie. Craitor, took a lot of credit (whether he deserved it or not) when a deal was made to save racing at Fort Erie three years ago, but he was nowhere in sight when an OLG gunslinger came to town last week to take away the keys to the slot machines at the track.

Politicians don't need to have their life jeopardized (besides the fact that one can get jailed for doing the threatening). You get even with them by voting them out.

Lets Recap What The OLG Is Really Doing

The Drummond Report came out recommending that the Ontario government revisits the slots deal it has with racetracks.

It didn't take long for Dalton (Norman Bates) McGuinty and his sidekick Dwight (Have Another Donut) Duncan to start lying about the relationship between racetracks and slots (calling slots revenues tax dollars and stating they were subsidies to the tracks) and then hinting that racetracks may lose all or some of their slots revenues.

In what seems the time it took to read the Drummond Report, border Racinos in Fort Erie, Hiawatha, and Windsor were told that their slots were going to be eliminated by April 30th this year, but that the government will make sure tracks are able to operate and purses accounts will be (close to) maintained for another year as long as these tracks race.

Of course, more lies were used by the collective PR of the OLG and Ontario Liberal Party, stating these Racinos were losing money. Revenues are way down, but the only track that is close to break even is Fort Erie, and it is doubtful that the OLG was losing a dime there.

OK, so the macro reason for the slots closures has to do with the budget, or so they claim. But why close them so quickly? Because the main agenda item is to prop up the revenues for the 4 stand alone casinos (Niagara has two) that are very close to proximity to the 3 Racinos that had the slots taken away. The goal by the government is to sell these casinos (before online gambling erodes these numbers down again), and the reality is that these casinos actually do lose money.

The fact that the government is paying lots of severance to slots employees and lots of money to the three tracks for the lost slots revenues over the next year shows that immediate deficit reduction is what this move is all about, nor is it about changing the ratio of what tracks get to keep on slots revenues.

In fact, the government has made it clear that it wants to privatize all slots and casino operations within the next year or so, which means that the OLG will not have to worry about paying slots employees, maintaining machines, etc. The gaming operator will now take over that function. The question again is what will the new cut be if a track takes over the operation, and what will be the deal with expanded slots as well as online gaming which is expected in the near future.

The government is attempting to get out of paying for the expenses of gambling, and they are looking to sell their assets (by the way, someone should clue in Puppet Progressive Conservative leader Tim Hudak that what he wants is what the government is looking to do).

This isn't really what the Drummond Report said to do, but this is the new direction the government is taking. Let gambling competition run amok, and tax the gambling company as much as it can (without having no gambling companies interested in doing business with an untrustworthy government in Ontario).

Hudak meanwhile, is not getting the big picture. The government is looking to put slots anywhere and everywhere, which means that Fort Erie and the other tracks should have had the opportunity to keep them. But the selling of the casinos is the reason they were taken away abruptly.

I wonder if Fort Erie, Hiawatha, and Windsor have a legal case by having their rights denied to compete to have slots, and the way in which this was done (especially if it turns out that the other tracks will be given the choice to operate slots).

Down the road, once the government decides what their new cut is going to be on slots and how and for what price they will sell the location rights, the rest of the tracks that have slots will make their decision as to whether to operate or not. Once the Niagara Falls casinos as well as those in Windsor and near Sarnia are sold, Fort Erie may have the opportunity to buy the rights to operate slots, unless part of the sale of the casinos will have a clause that no other gambling operations can be put up within a 25 mile radius, for example.

I have to say though, Duncan, McGuinty, and Paul Godfrey make me sick with their lies and misrepresentations. Hudak, if he wasn't so clueless and wasn't so badly managed, could have been the Ontario leader right now, and one thing is for sure, this wouldn't be going down like it is right now. I also believe that there would be no closures either, nor would racing be destined to die at any location in the near future either.

The next stage in the game for the Ontario Liberal Party and OLG is to believe they are entitled to have gamblers gamble with them. It won't work as long as they maintain their Pro-Line odds mentality. See "Is Horse Racing in Ontario the Fall Guy For Government Mismanagement?"

Note: The photo above is circulating on Facebook (where I happened to come across it). McGuinty has pissed off quite a few people. Even I find the message a bit harsh but decided it fit in well with the blog piece.