OLG seeks lease deal with Sudbury Downs

With its deal with racetracks expiring in the spring, the Ontario Lottery and Gaming Corporation is in talks with Sudbury Downs to keep the slots facility open until a casino is built in two or three years.

OLG spokesperson Tony Bitonti said rather than a revenue sharing agreement, the new deal would be a temporary deal where the Downs leases space in exchange for a fixed rent.

“We’re trying to get a short-term lease – two to three years – that will be transferrable to the private sector operator,” Bitonti said. “We’re very confident we’ll get it. So when the private-sector operator is chosen, we can say to them, ‘OK, the lease is now yours.’ They can decide whether they want to keep (the temporary facility) at Sudbury Downs, or move it to another location closer to Sudbury.”

The OLG is heading up a process in which new casinos will likely be built in 29 gaming zones across the province, including Sudbury. However, requests for concrete proposals to build the facilities won’t go out until early next year, meaning cities like Sudbury would theoretically be without gambling revenue for the two or three years it will take to build a casino.

Under the existing deal, the Downs and the horsemen splits 20 per cent of net slot revenue, the city receives five per cent and the province keeps the rest. After March 31, 2013, the city will receive 5.25 per cent of the first $65 million in gambling revenue, three per cent of the next $145 million, and 0.5 per cent of any revenue above that. The Downs and the horsemen will get none of the gambling revenue.

Bitonti said cheques will continue to be issued quarterly to municipalities, with the latest for Sudbury -- sent Oct. 19 – totalling $672,000 on slots revenue of about $13.5 million. To date, the city has received $28.1 million since program began in November 1999.

When asked what would happen if the OLG was unable to reach a deal with Sudbury Downs, Bitonti said it wasn’t something they were contemplating.

“I don’t want to speculate on that,” he said. “We’re confident we will reach an interim lease agreement. We’re one of the biggest clients for the Downs, aside from the horsemen. We have an excellent relationship with them and we’re confident we’ll get some sort of an agreement.”

As for putting together deals to build full-fledged casinos, Bitonti admitted it was a complex process. He said once potential operators are chosen in late fall or early winter, they will work with municipalities to find out what they want in a casino development. He said operators will want to be sure what they have in mind dovetails with the requirements of municipalities.

“They’re going to want to know what Sudbury wants,” he said. “We’ll choose the best one, and then that operator will go back and formalize things with the municipality.”

As far as he is aware, the current debate in Sudbury is whether to build the casino at Sudbury Downs or somewhere downtown. Once that debate is settled, Bitonti said potential casino operators can start coming up with site-specific proposals for Sudbury.

“And we’ve told the municipalities to not hitch their star to one proposal,” he said. “The agreement is between the OLG and the private-sector operator, not Sudbury and the private-sector operator ... But they will be able to work with these folks to make sure you can get what you want out of this whole deal.”

He said the OLG has communicated with potential casino operators based in Canada, U.S. and Europe.

“So worldwide, there’s a really good pool to choose from.”

When asked if signing a lease agreement with Sudbury Down would mean horseracing would continue for at least a couple more years, Bitonti insisted the two are not linked.

“The end of the slots program doesn’t mean the end of racing at Sudbury Downs,” he said. “It means that 20 per cent won’t be going to them.

“Racing in Ontario has a long history before the slots, and we believe it will continue long after the slots program is done.”

But Pat MacIsaac, who owns the Downs, said as of right now, the last night for horseracing in Sudbury will be Nov. 24. Anything beyond that date is speculation, he said.

“I can’t comment on that, because I don’t know what the OLG’s frame of reference will be with respect to any ongoing relationship,” MacIsaac said. “What we know to date is that they have severed the relationship that currently exists as of March 31 next year ... I don’t know whether their temporary leasing arrangement will allow for horseracing or not.”

While talks are in their early stages, MacIsaac said there’s no reason why a deal can’t be worked out.

“We’ve had a contract with the OLG now for 12 or 13 years, so we’re quite willing to discuss any matter with them that they want to discuss,” he said. “But no agreements have been reached by any stretch of the imagination … As it sits right now, there will be no more horseracing after Nov. 24 of this year.”

MacIsaac said he’s still focused on bringing the casino to the Chelmsford track, although he hasn’t participated in the processes the OLG has put in place to open the casino.

“We haven’t at this point, but that’s not to say that we won’t,” he said. “We think this is the right place.”

A request for an interview with city officials for this story was met with an emailed response that said the city didn’t expect to lose “significant revenue” when the current agreement with Sudbury Downs expires March 31, 2013. In the past, the city has said any operator that wants to buy city land as part of their proposal would have to include an arts and convention centre as part of their casino package.