After surviving an elimination round that saw at least three other highly qualified contenders pack up and leave the fight, it appears as if Malaysia’s Genting Group, Caesars Entertainment, and Canada’s Brookfield Asset Management, LP are the last concerns in the running to take control of the Ontario, Canada gaming market. Toronto-based Brookfield Asset Management gave up a bid in 2014 to buy the former Revel Casino Hotel in Atlantic City after winning a preliminary $110 million bid on the property that cost $2.4 billion to open just two years earlier.
The Globe and Mail is reporting that the Ontario Lottery and Gaming Corp (OLG) is preparing to turn over casino properties and operations in the lucrative Ontario gaming market to one of the companies and give them exclusive rights to four casinos for the next 22 years. The winner will earn a minimum of CAD72 million (US$57.43 million) annually for the 22 year-long deal term, and as much as 70 per cent of gambling revenue. Reports indicate that casinos in the Greater Toronto Area alone took in almost $1 billion in revenues in 2016.
Earlier reporting in trade media suggested that the OLG was considering handing over operations at Toronto’s Woodbine Racetrack, Ajax Downs, and the Great Blue Heron Casino in Port Perry to one of six potential suitors. That list also included Great Canadian Gaming, a B.C. based company that already won OLG’s “east” bundle; the Mohegan Tribal Gaming Authority who own and operate Mohegan Sun in Connecticut; and Penn National Gaming. Also mentioned earlier but not in later reports was Falls Management, operators of two casinos in Niagra.
In addition to an “aggressive” marketing campaign required of the winning bidder to increase revenues at the existing facilities, the winner will be allowed to open a fourth casino in the Toronto area if they can find a willing host community.
However, Woodbine, if approved by the city council, would likely be the focus of most redevelopment, including a full casino to replace the current slot parlor at the racetrack. The facility is located close to Canada’s busiest airport, the Toronto Pearson International Airport and operators could possibly add table gaming and thousands of slot machines along with other visitor amenities to increase footfall and revenues.
“The OLG’s modernization plan is the catalyst for Woodbine Entertainment to unlock the value of the Woodbine lands to sustain horse racing on our 680-acre site and bring real economic development to Rexdale,” Woodbine spokesman John Siscos said.
Labor issues would eventually need to be resolved as more than 400 workers at Woodbine have picketed saying they were locked out of the facilities in July after a collective bargaining agreement failed to materialize.
According to Sunday’s Globe and Mail report, the OLG has been on a mission to increase revenues and profitability and has sold off almost half of its casinos to private operators over the last couple of years in an effort to modernize operations. Slots at Kawartha Downs in Fraserville and Casino Thousand Islands in Gananoque were sold for $46.9 million in late 2015, but sales prices for slot machines and casinos sold in other areas have not been revealed, according to the report.
Taxes aside, the OLG is largest economic engine churning money for the Ontario government with more than $2.3 billion in profits for the 2015-16 fiscal year. Once the outsourcing process is completed, the OLG plans to generate an additional $900 million each year beginning in 2021.