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.


Daryl G. Ezra said...

finally u wrote a great piece
however, border towns need a bigger cut.

Paul Turney said...

Regarding a referendum ... Those lobbying for our side should check out Winnipeg, where Assiniboia Downs has 140 slots and is still struggling although they have a better deal than we have in Ontario. There are a couple of full-blown casinos in the city but a vast number of bars, pubs, hotels and restaurants have slots. It is at these small venues that proprietors make thousands of extra dollars a month with their two, four, 12, however many slots, and the locals flocks to them to blow their pay cheques,savings and not a small number of them, their homes and families.

By all means we need a referendum! The racetracks are the only place for casinos.

A personal observation ... The blatant difference between the overbearing arrogance of politicians and the panic of their common-folk-constituents facing the loss of their pay cheques is making this all look like science fiction to me. It can't be happening!