Article published on 13 June 2013

OLG Refunds Racetracks for Slots Program Losses

OLG Pays Ontario Racetracks $80m
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Ontario Lottery and Gaming, the Canadian gambling group, paid out over $80 million to local tracks to cover the cost of expenses they may have incurred due to the cancellation of the province's slots-at-tracks revenue sharing program.

Contracts between the OLG and Ontario racetracks stipulate that should the lottery corporation cancel the program, it needs to cover certain expenses.

Many of the 17 tracks had invested in the expansion of their facilities such as the construction of new buildings to house new slot machines, based on the contracts they had with OLG.

However, due to the lottery group's modernization plans, the slots-at-tracks revenue program has been cancelled and tracks will need to be refunded for their losses.

The Chief Executive Officer of Fore Erie racetrack, Jim Thibert said: "The $81 million seems to cover, not all, but a significant portion of what I would understand was their costs not met by the promise of more slots."

Fort Erie Track Won't Get OLG Payout

Jim Thibert confirmed that Fort Erie won't be getting part of the $81 million since it had not invested in the purchase of land or facilities to expand its slots offering. As such, it is not eligible for a part of the money. Rideau Carleton Racetrack near Ottawa also won't benefit from the $81 million payout.

Some tracks, including Fort Erie, have also reached a transitional funding agreement with the local government, with negotiations still ongoing among some of the locations.

The government would not reveal how much it would be transferring to Ontario racetracks.

"Because these racetracks incurred the cost to expand with no expectation that OLG would enter the modernization process, OLG and a number racetracks came to this resolution," noted a spokesman for the gambling group. "As these one time payments were an anticipated impact of modernization, OLG made a business decision that both respects the racetracks investments and provides OLG with the flexibility to optimize OLG's future operations."

Pressure to Improve Offering

As OLG refunds racetracks, tracks such as Fort Erie are under increased pressure to improve their offering if they hope to land another contract with OLG in 2014.

Fort Erie will need to work towards performance targets, attract more customers and bring down expenses significantly.

"We are seeking every opportunity to responsibly reduce costs, create efficiencies, and reinvest those savings back into racing as we have done these past four years," said Thibert.

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