Caesars Entertainment continues to operate the casino in Windsor under an earlier agreement. But the contracts included detailed requirements on business operations and tensions over these unwieldy agreements would eventually factor into the sidelining of the OLG on igaming. It seemed to many like the opposite of private-sector efficiency to generate more tax revenue. Around the time of modernization, the AGCO introduced a more hands-off approach to regulation. Instead of spelling out exactly how to run things, the AGCO focused on outcomes it wanted to achieve, such as keeping minors off casino floors, and largely left it up to operators to accomplish those ends.
For example, the AGCO eliminated a requirement that operators seek approval to move gaming equipment, such as a slot machine, but the OLG reintroduced that requirement. Sources said under his tenure the organization became increasingly focused on compliance, and relations with its casino partners grew adversarial. And outright hostility soon developed between the OLG and AGCO, a situation multiple sources described as unprecedented and surprising.
Against the backdrop of this swirling conflict, the province announced in the spring of that it planned to legalize online betting. After early meetings to gather industry feedback, the writing was soon on the wall for the OLG and its role in the new market.
Bureaucrats from both the departments of finance and the attorney general were in attendance and just before the meeting began, Attorney General Doug Downey himself arrived. David Pridmore, a senior vice-president at the OLG, was also on hand, and private casino operators, offshore online gaming companies and gambling technology providers were also represented either in the room or on the conference call line.
One of the first questions raised was about who should conduct and manage the new market. It seemed innocuous enough, a point of almost arcane procedure necessary to ensure compliance with the federal law. But according to multiple sources involved in the meeting, the answers were polite — it was awkward with Pridmore in the room, one source said — but consistent: not the OLG. For one, with its own online betting platform, the OLG would be a competitor in the new market, and no one wanted to hand over customer or business information to a rival.
The amount the Canadian Gaming Association estimates Canadians spend each year on illegal bookmaking operations, but the criminal element makes this amount difficult to verify. The amount H2 Gambling Capital estimates Canadians spent on unregulated sports betting websites in , after accounting for prizes and winnings paid out.
Total spending by Canadians after prize money on regulated sports betting websites in After the Frost building meeting, the AGCO took the lead on further consultations with the industry, and the decision was formalized in the provincial budget last November: the government would create a new subsidiary of the AGCO to conduct and manage the igaming market. The new subsidiary, iGaming Ontario, was officially established in July and will manage commercial agreements with online gambling operators.
So far, it is a small agency with a separate board from the AGCO itself, which will continue to regulate the industry and license private operators. The provincial government did not comment specifically on the decision to give the AGCO responsibility for the new market. When it does make the papers, the OLG is often tied to some sort of controversy, such as fraud allegations over lottery insiders claiming winning tickets or a scandal over internal spending.
That dividend is worth roughly the same to the province as the gas tax or alcohol sales from the LCBO, and industry insiders say this has long helped protect the OLG politically. Yet, the OLG is likely to face renewed scrutiny later this year and could struggle to justify its size — and public gaffes — as the online market takes off.
Earlier this year, OLG board chair Peter Deeb quietly left his post and the Toronto Sun reported his departure was tied to a police investigation in which he was later cleared.
But it is not clear how this justifies the final sale price. The public would have been better served by OLG either holding on to the casinos, given how well they were performing, or by selling them to a bidder whose offer reflected their real value. Lastly, the government might suggest that the low sale price saves public money by having the OGGTA pay for the modernization of the casinos rather than the taxpayer.
But this is short-term thinking. In effect, the government has denied the public considerable revenue had they paid for the low-risk investment themselves.
As former Ontario premier Mike Harris did with the sale of the , Kathleen Wynne may use the deal to suggest that the government is taking concrete measures to rein in the provincial debt. But if true, the money received will be little more than a drop in a multibillion-dollar debt bucket, raising further questions about the reasons for the sale. Continued poor-decision making by the Ontario Liberals, especially when it comes to protecting taxpayer dollars, only serves to fuel anti-government, anti-establishment views in the province.
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