27 April 2012

Will Bingo Halls Get The Pulled Slot Machines In Ontario

Barring a last minute miracle, April 30th is the last day slot machines will be played at Fort Erie, Sarnia, and Windsor Raceway.

These three locations were selected because of their proximity to non racetrack casinos, as the OLG appears to be either helping the big casinos show a profit and/or they are attempting to prop up the numbers in those casinos for potential sales or to entice operators to get involved at other locations.

The Ontario government and the OLG needs to attract gaming operators to take the risks in building new locations, expanding old locations, and taking the burden of employee expenses and maintenance off their hands.  In other words, the government is kissing the butt of American companies like Caesars and MGM all at the expense of the Ontario horse racing industry, and all the jobs and  the economic impact that the industry creates within Canada, numbers that the government don't seem to know  (Minister of Finance Dwight Duncan's mindless questioning of the industry claim of 60,000 people who are either employed full or depend partially on horse racing) or if they do know, they don't care about it.

Andrea Horwath and her NDP Party voted for the death of the horse racing industry on Tuesday by having her Party not vote against the Liberal budget.  A vague concession of transitional aid for the racing industry was agreed on, but nobody has a clue what that means, except that possibly the best case scenario, it could buy another year before we see the major repercussions of losing close to half of the industry's work force, and the impact on businesses that somewhat depend on the racing industry as well.

The OLG is not going to let those slot machines rot, as each is a potential money maker.  Their destination is unclear, but speculation on this topic has uncovered some interesting ideas, and possible implications that the end of slots at racetracks deal was something that was in the cards for some time.

Bingo halls have been in the news of late.   Earlier this week, the Bingo Hall in Sudbury announced that they will start expanding their gaming in May.   Two days ago a headline read: Mississauga to Participate in Charitable Bingo and Gaming Revitalization Initiative.

Further investigation lead me to an OLG press release from a year ago, explaining the expansion plan:

"The collaboration of OLG, the OCGA and the CGAO heralds plans for an expansion in the number of Gaming Centres offering an array of new electronic games. The new games will allow Gaming Centres to be more competitive and appealing to a broader demographic, while providing a different gaming entertainment experience from traditional casinos or slots at racetracks. This initiative is intended to offer players an interactive environment, a new way to play bingo and charitable social games and enhanced customer service."

Another interesting thing...I'll report, you decide....one of the major players in the Charity Bingo Industry is Boardwalk Gaming and Entertainment, a private investment holding company controlled by Larry Tanenbaum (The Kilmer Group).  

Tanenbaum is best known as the Chairman of Maple Leaf Sports and Entertainment, but his ties to the Liberal Party and Ontario Premier Dalton McGuinty are undeniable, and his other ties with the city of Toronto makes him a potential huge benefactor as a possible casino operator in Toronto:

"Larry Tanenbaum served as National Revenue Chair of the Liberal Party of Canada during Prime Minister Paul Martin’s term of office. He currently serves as a member of the Ontario Investment and Trade Advisory Council, and recently served on the Independent Fiscal Review Panel of the City of Toronto and the Mayor’s Economic Competitiveness Advisory Committee of the City of Toronto. He is a member of the Advisory Council, Toronto Board of Trade and is an Honourary Co-Chair of the Greater Toronto Marketing Alliance."

The Charitable Gaming initiative apparently goes back 5 years, started at one of Boardwalk's Bingo Halls, but it started to gain legs around a year ago.

The OLG and Ontario Liberal government seem to be one and the same with their "there is the door" approach to Municipalities when it comes to trying to convincing them to expand gaming.  "If you don't want gaming, there are plenty who do."  Mississauga recently heard that pitch, which also included the threat of closing the Bingo Hall in the near future due to declining numbers.

And then you have Oakville, a town that apparently wants Charity Bingo, but doesn't want slots machines and VLTs.  The thing is that OLG won't agree to expand Bingo there without allowing for the possibility of bringing in machines the town is against.  Again, threats that the Bingo Hall will possibly shut down without the agreement are being used to convince Oakville Town Council.

Seems to me like the government and OLG and Ontario government is using a Mafia How To Handbook in order to get this Modernization of Gaming Plan of their to work.

Also, doesn't it seem odd that the government and OLG is going out of their way to help declining Bingo businesses, and casinos that are losing their operators money, while ending a business partnership with racetracks that was beyond successful?

For a real eye opening read, check out Item 3 in the Mississauga Corporate Report for April.   There is a discussion of the real decline in Bingo, and the Gaming Revitalization Initiative.  I found it interesting that according to projections the Bingo Hall, the government and the Charities will all wind up making more money.   Wait a sec, does that meant the government is subsidizing Bingo Halls?  Anyway, the responses by the OLG on page 44 shows they are playing hardball on many issues, and at the same time, not guaranteeing the Bingo Hall will in fact not lose money.

It does appear from looking at the projections that the OLG will net a higher percentage of revenues from Bingo Halls than they do currently from the racetracks, with less risk as well.  And assuming they can capture the same amount of degenerate slot players to play in the Bingo Halls instead of racetracks, they will come out way ahead.  But to me, that is a huge unnecessary risk the OLG and Government is taking on.

Mississauga accepted the deal with the Devil.   It probably opens the door for a full scale casino there if Toronto says no to one.  The big question is will both Toronto and Mississauga need a referendum to build a new casino.  We might have a good idea about that when a Private Members Bill is vote on May 3rd.  The PCs are definitely on board with making referendums mandatory.  This gives Andrea Horwath a chance to redeem herself as well, she stated publicly that municipalities should have referendums before a new casino is built.

If I am right and slot machines and VLTs are on their way to Bingo Halls, it will not bode well for racetracks who will be in search of a new deal next April.  More competition will not create many new addicts, but it will attract some of the addicts to sites outside of racetracks, which means less revenues no matter what the new deal looks like.

The OLG should have just stuck with privatizing gambling at racetracks, giving the racing industry the ability to partner and make around the same as before while expanding gaming on the racetrack grounds, grounds that are completely acceptable to majority of people in Ontario.  Instead the inept Dalton McGuinty and his Minster of Propaganda Dwight Duncan are hell bent on destroying jobs, families and a thriving industry.  What is motivating them to take this unnecessary risk?   It is either political favours or a vendetta against perhaps the now marginalized OHHA, or most likely both.

19 April 2012

Hasty Decision To End Slots Program Must Be Reversed

The horse racing industry in Ontario is now in the homestretch regarding the slots at the racetrack program that has been in place since 1998.  Even though, the Liberals and the OLG have already decided to end the program, the official sign won't be posted until next week when the budget is voted on.

The fate of thousands in Ontario who rely on the horse racing industry to butter their bread is in the hands of NDP leader Andrea Horwath.  Horwath seems hell bent on making a deal with the Liberals to get the budget through and avoid another provincial election, that many Ontarians would love to have, but many would like to avoid.

One of the deal pieces is the slots at the tracks deal.  This morning, Horwath already conceded giving up on the removal of HST on home heating bills, one that won't cost her any votes.  However, she stands to gain a lot of popularity if she can get the government to increase income taxes 2% on those making more than half a million dollars, something that over 70% of Ontarians agree on.

The racetrack deal is probably second or third demand left on her list (which also includes not accepting a wage freeze on public sector employees, most of whom are overpaid to begin with).   The racetrack deal is crucial to her to win future votes from the Liberals, and stay true to her party's line which frowns upon destroying livelihoods and cutting the job force.

Since Tim Hudak and his PC Party has opted out of negotiations regarding the budget, the horse racing industry is relying on Horwath to get the decision to cut slot revenues out of the purse structure equation to be reversed, or if not reversed to vote against the budget and cause an election soon.

Poll numbers indicate that the PC's would win a minority government, but the NDP is a very close second, and depending on how this comes down, they could very well win the election, as the PC's have shown zero personality throughout this process.  One thing is for sure, the Liberals would finish third, and Finance Minister Dwight Duncan's political career would be over.

Horwath has to realize something the Liberals don't seem to get, that the Liberals are not a majority, so everything that they proposed is not carved in stone.

Hasty Decision
The decision to end the slots program looks like it was made by someone with a vendetta, and not a responsible decision.  There is even speculation that McGuinty was pissed off at the OHHA for campaigning against him last election.

How in the world does OLG President and CEO, Rod Phillips, not know why the successful slots program was cut?   It was obviously not his move, nor was the ending of the program recommended in the Drummond Report (only that it should be re-examined on a track to track basis).

No, this has vendetta and/or corruption written all over it.

Minister of Finance Dwight Duncan has come across as either a liar or an idiot or a mixture of both with his statements regarding the slots partnership with the racetracks, first by calling the revenues tax dollars (when anyone in Ontario pays income taxes or GST, not one dime goes to the tracks), to calling it a subsidy (if MGM gets a casino in Toronto, will their profits after cutting in the Ontario government and paying expenses, be considered a subsidy too?).

But the biggest thing that makes Duncan look like an inept fool is doubting the industry and government claim that there is 60,000 jobs in Ontario that either rely fully or rely somewhat on the horse racing industry.  Whether that number is 1, 60,000, or 250,000 I think it would be expected that a government that "makes a tough choice" would know exactly how many jobs would be affected and what the impact on the communities would be as well.   Especially the Minister of Finance.  The government is supposed to weigh in maximizing revenues versus social impact and job creation.  Duncan or the Liberal government doesn't have a clue how much social hardship, unemployment and welfare ending the slots deal will create.

Duncan has completely alienated himself from his home riding in Windsor, and thus killed his political career regardless how this plays out.  I doubt he could even get a job mucking stalls at Flamboro Downs after the dust clears.  He might be in line to get back in the rehab business especially with all the casino gamblers he is hoping to create.

The Modernization of Gambling In Ontario plan is full of holes and questions.  This is another reason why ending the slots deal makes very little sense.

First some background.  Last year over $1.7 Billion dollars was lost at Racinos in Ontario.  Tracks and Horsemen received 20% in total, municipalities around 5%.  The remaining $1.28 billion was left for the OLG to pay casino and OLG wages, and casino and OLG expenses and upgrades, etc.   The balance is used for a variety of government expenditures.

As for the tracks portion, many tracks in Ontario are non profit which means they are mandated to reinvest the monies back in the track (monies that go back in the economy).  The Horsemen share mainly goes towards purses, most of which stay in Ontario.  A misconception (attempted to be perpetuated by the Liberal Spin Boys) is that the monies go to rich owners.  First off, there are many owners who in the middle class, and secondly, even with slots monies inflating purses, most horse owners (outside of trainers who own their own) lose money.  In fact, because  they collectively lose money, they contribute more money to the economy than they receive in purse monies.

True, there are international (mostly American) outfits which come to Ontario to race, but they spend a lot of money here, and conversely, Canadian owners and trainers frequently bring back monies from the USA, or at least receive and spend money in the USA too.

The plan going forward is to privatize gaming in Ontario.  In other words, the OLG will no longer pay for slot employees, casino expenses, etc.   Personally, I have no problem with privatization.  The government should not be involved in the gambling business, though that is not exactly what is happening here.

Privatizing will take away from the OLG's risk going forward, and the new slots operator to start anew when it comes to employee wages, something that appeared to be getting out of hand at racetrack casinos.  Still, I would expect the new operator who assumes the risk would expect the equivalent of around 20% of all revenues to make it worth their while.

The OLG and Liberal government are hoping for RFPs (Requests for Proposals) from private businesses (which can include racetracks) to take over or move slot operations.  They are also looking to have the new operators add table games, and perhaps sports betting.  However, there is no real mention of how much of a take they expect from the new operators.  There has been speculation that the OLG wants 100% of the slots revenues.  Meanwhile, at Caesar's in Windsor, the OLG takes 20% of total revenues (the revese of racinos), and the casino operators still lost money last year.

What I'm stating here is that in order to attract non fly by nighters to operate casinos who are willing to build and expand, the OLG must offer them a significant chunk of the total gaming revenues including slots.  Table games are very expensive to operate versus slots.

I'm not even sure if anyone can say, what the heck, I'll operate a casino.  I'm sure there are some regulations that make it that a company must have a strong balance sheet and assets before entering an agreement to run a casino.   There is also the question of who assumes the risk of problem gamblers who may turn around and sue because they put themselves on the self exclusion list.  That could cost a casino operator a pretty penny just to defend such a case.

And then there is government uncertainty.  Just as an inept government can come along and end the slots program, a new government can come along and start it up again.

How would you like to be a casino operator and have the government change the rules on you with one stroke of the pen?  It happens.  And don't kid yourself, it will be part of both the NDP's and PC's platform come next election, whenever that is, if the slots program officially ends.

Let not forget that most municipalities will vote against a casino that is not at a racetrack if a referendum is called.  This includes Toronto, which is speculated to be a major reason for the governments quick movements to end the slots program.  Racetracks are the only places deemed acceptable for casinos in most instances, that is why they got the partnership deal in the first place.

What this all means is that the government will have to give their new partners far more than 20% of the slots revenues they are giving to tracks today (again, the idea it is a subsidy is laughable).   And there is no guarantee they will find partners dumb enough to do business with them either, or locations they can either move to or start up in.

The government could easily make less money bottom line with this new initiative, and regardless, they will never live down the job losses caused or the social hardship that this "tough choice" will create.  Economics 101 suggests that the deficit will actually increase if the decision isn't reversed.

See also Sportsman: Fight For Our Future  and Pull The Pocket: Strategic Problems and Bad Policy

13 April 2012

Around The Horn


I was getting into it.  It looked like it was going somewhere.  Character development was occurring rapidly.  Then a horse flipped and died.  A fluke accident.  Show was canceled.  A fight to keep it going would have occurred if not for the below par ratings.


Breakdowns have always been an unfortunate part of the racing game.  Intrigued about them when I was a kid at the track, but I've learned to hate them, and I actually become very uncomfortable watching a horse breakdown now.  I hate watching steeplechase racing, I find it almost barbaric.

That being said.  The industry needs to shut up trying to defend itself from the Times article.  Move on, and reduce breakdowns as much as possible.  End of story.


Written about drugs in horse racing many times.  The Times article is going to force federal regulation, and I think that is necessary as the industry is too dysfunctional to get together and say enough is enough and Horsemen who seem to constantly defend the use of drugs are hurting the game immensely.  Again, apologists for drugs, shut up.  Lets get this game to grow.

We need uniform drug testing in every racing jurisdiction.  Cheaters need to be treated as criminals.  There needs to be a major deterrence to use those who experiment with drugs not being tested for. The appeals process needs to take days, not years.   Woodbine seems to be on the right track.

Track Takeout

We've seen takeout start to edge down recently.  Some tracks need to be applauded (Hastings, Charles Town, Beulah to name a few).  Still a long way to go to compete with other forms of gambling and grow the game properly.  Check out HANA's 2012 Track Ratings for Takeout info.

New Carryover Blog

Just about every thoroughbred and harness racing carryover can be found here.  Lots of good links too can be found on the sidebar.

New Horse Racing News Aggregator

Check out Goatzapper  Links to what is currently happening in the horse racing world.  Updated usually at least a couple times a day.

1 April 2012

It Is Easy To Have Zero Respect For McGuinty and Duncan

The Ontario Liberal government and the OLG is plowing ahead in their efforts to kill off Ontario's horse racing industry. Notices were sent out to at least 3 more tracks (and perhaps all the remaining tracks) on Friday, which stated that site holder agreements between racetracks and the OLG will end March 31, 2013.

So unless things change, tracks and other entrepreneurs/businesses will now get to compete for the right to house slot machines. The OLG will be looking at who will give them the best deals (making the OLG the most money) in each municipality. The biggest change is that slots will not be operated by the OLG anymore, so the only expense the OLG will now have is the cost of buying machines (the way I understand it), which they will lease out to the new private casino operators, or make it part of the deals.

What the OLG is hoping for is a bigger cut from the $1.7 billion in gross revenues that slots produces a year. Part of the problem with the OLG operations was due to paying for too many employees and upgrading casinos, and these expenses were mounting each year at an accelerated level. And of course, there is the issue of $345 million that was being earned by tracks and Horsemen for having slots compete with parimutuel betting at the racetracks. Lets be clear, that $345 million isn't going to be cut to zero, because anyone who operates slots is going to take the risk if a healthy profit can be realized as many risks are involved.

For example, dealing with a government that seems to be able to do what they want when they want is sure to scare off any potential partners. The other big thing is that the government has stated they will get into internet betting this year, which means that slot players will have the ability to lose money from home. This is sure to cannibalize slots wherever they are physically located. I believe the government will probably settle on giving out $150-$200 million (based on past years total revenues) in potential profit to the new private slot operators in total, I think any number lower than that is unrealistic. Tracks may be able to live with that, but will they get the chance?

Distrusting the Ontario Liberal government as I do, I am sure that they know they have offers on the table right now in many cases that they find acceptable right now (most likely friends or friends of friends that are going to get favors from the McGuinty gang). The way the government has acted so far, tells me that there are quite a few dirty deals looming, as the Drummond Report which came out barely a month ago stated to review the racetrack slots deals on an individual basis....and this obviously has not happened:

Recommendation 11-11: Review and rationalize the current provincial financial support provided to the horse racing industry so that the industry is more appropriately sustained by the wagering revenues it generates rather than through subsidies or their preferential treatments.

Recommendation 17-4: Re-evaluate, on a value-for-money basis, the practice of providing a portion of net slot revenues to the horse racing and breeding industry and municipalities in order to substantially reduce and better target that support.

But then again, the Drummond Report also recommended closing a Niagara Casino (didn't happen), closing an OLG office (didn't happen), and cut out all day kindergarten (didn't happen).

As for all day kindergarten, to me, it shows that the government isn't really serious about reducing the deficit. All day kindergarten costs Ontario taxpayers (yes, it is paid for out of tax dollars, unlike the slots revenues which is after tax monies lost by casino gamblers) $300 million a year. It is simply glorified day care. I remember half day kindergarten and the only thing I learned was not to eat paste, and the only thing I remember is getting a mat to have a 15 or 20 minute nap each morning. All day kindergarten is a luxury that saves parents day care money. It was an easy thing to cut, regardless of what they do regarding horse racing.

The freeze on public sector workers is OK, but not nearly enough. If the government was really going to get tough, they would cut the pay of 95% of the 79,000 on the Sunshine List (those who make over $100,000) in times when the government can't afford them. My reason is pretty simple, most of the people on this list couldn't get anything close to the same type of money and benefits if they were in the private sector. This is simply the government's ineptness in allowing salaries to get out of hand. Cut their pay 5%-10%, other than doctors whose pay I wouldn't touch, nobody would quit their jobs if this was done. If a government was serious about balancing the budget, this would be a no brainer.

Instead, the Liberal government went on a propaganda campaign, rivaling that of Hitler's Germany, pitting all day kindergarten and health care against the horse racing industry.

Calling the revenues the tracks and Horsemen received subsidies was the first big lie. To quickly refute it, if the government does end up privatizing the casinos, is the money that the new operators (in some cases it will be racetracks) make a subsidy? Of course not. It is money made due to a business deal with the government. It isn't tax dollars, as Goebbels Duncan tried to make it, but after-tax-dollars, that the government was sharing with their business partners.

The Biggest Reason Why McGuinty and Duncan Can't Be Trusted

Where is the job and community impact report on what happens to those who make their living or most of their living in the horse racing industry or the communities that have horse racing?

You'd figure that a government about to kill an industry would know how much unemployment it would cause, how many people are exactly in the industry, how much impact potential job losses would have on businesses within the communities affected, etc. This does not to even appear to be the case in any shape or form.

Goebbels Duncan recently spewed out:

'the employment figures showing 60,000 people are employed directly or indirectly by horse racing are "grossly exaggerated," and that "nobody" buys that number.'

I'll admit that I find that number to be high, unless one is talking about things like restaurants that may lose 15-20% of their business, as well as similar types of scenarios, however it appears that the Liberal government themselves put out reports in 2004 as well as 2008 which pegged the number of those employed directly or indirectly to be upwards of 55,000 people.

How can a move to cut this many potential jobs without at least an attempt at due diligence? Of course that propaganda machine spins it another way, McGuinty and Duncan, are promising the creation of 2,100 to 3,000 jobs from this "modernization" plan, but fail to address the destruction this plan will cause.

How much due diligence was put in on their new plan? I have zero faith that it was very much.

OPSEU is demanding answers from McGuinty regarding the rumours that Ontario Place will potentially house a casino.

It seems that within only a few months since getting elected, McGuinty as done a complete about face regarding gambling in Ontario, not enough time to have a concrete plan, making their decisions regarding the horse racing industry appear very hasty.


A referendum on new casinos in Toronto or anywhere close to a track would be a death knell for McGuinty's casino plans. In almost every instance, if not all instances, the people would vote against it, especially if a racino already exists.
McGuinty has stated that the law that makes it MANDATORY to have a referendum (public vote) that was in the OLG Act of 1999 has expired. It may be true, it may not be. As we've seen, everything McGuinty or Duncan needs to be fact checked...I wouldn't trust them if they said that the earth revolved around the sun.

According to this article, a referendum is still needed unless the Ontario government has changed the rules. If a referendum is required, it could put the tracks in a powerful position if they acted together, as they would be the only places (outside the non track casinos that exist right now) that can legally house slots and casino gambling. The tracks can dictate a similar type of deal that the government has ripped up.

If a mandatory referendum isn't required. It is time to put pressure on Hudak and Horwath to make it required again. Both were recently quoted saying they believed it should be required:
"Both Horwath and Hudak say the province should re-implement mandatory referendums for new casinos."

I don't know what the hurdles are that are required in making a referendum mandatory again, if they aren't mandatory now, but the way things are going, either playing the card against McGuinty which trades off allowing him to open a Toronto casino without much of a hassle or playing hardball and preventing a Toronto casino from opening altogether seems to be the only good options available to the racing industry in Ontario right now.

I'm all for privatization of the casinos. But I also think that they belong at racetracks and I think that a deal where tracks and Horsemen wind up with 60-75% of what they used to get would be the fair thing to do.