KINGSTON – The way the mayor of Gananoque sees it, the casino location issue has swung back in her town’s favour.
At the end of November, the Ontario Lottery and Gaming Corporation announced it would “bundle” the northern and eastern gaming zones it had created only last spring.
The upshot is that any private casino operator coming to eastern Ontario (excluding Ottawa) will have to set up in three zones — in the Peterborough area, Belleville and either Kingston or Gananoque.
It’s all or nothing.
So how would this benefit Gananoque as it vies to maintain its casino hosting status over Kingston?
For starters, a casino company would only have to build two new casinos if they took over the existing Thousand Islands Casino that straddles Gananoque and the Township of Leeds and the Thousand Islands.
They would have to invest in a third facility if they chose Kingston.
“An investor looking at this bundle will actually build a casino in Belleville,” said Erika Demchuk. “It’s a large expense for any investor to come in and totally rebuild all three zones.”
There’s also the issue of proximity — Belleville is only 45 minutes from Kingston, and Gananoque another half hour away, meaning there’s more distance between locations if the company opts for Gananoque.
More geographic area is covered and there is less direct competition between the casinos.
Of course, all of this is speculation.
Demchuk knows that.
“Even before Kingston became involved it still boiled down to the investor. It’s always been about investors in the end,” she said.
“With the bundling it works even better for us. It’s been about who the investor was and wooing. That’s why we built a business case.”
Earlier this year, the OLG announced it was creating 29 gaming zones around the province and would allow private casinos operators to bid on them.
Most casinos in Ontario, like Thousand Islands in Gananoque, were built 10 years ago by OLG.
The government, however, wants to get out of the gaming business, yet retain control over licensing, how they operate and where they set up. Oh yes, and take in about $3 billion a year in profits.
Kingston city council voted this fall to stand as a host community.
That means casino operators can build business proposals for Kingston and consult with local officials.
“The bundling concept came about through the request for information process. We got information back from a hundred companies,” explained OLG spokesman Tony Bitonti.
“They came back with the idea of bundling to provide better economies of scale in terms of how they operate their businesses.”
In other words, if you’re purchasing food for one casino in eastern Ontario it makes better economic sense to purchase for three.
Advertising expenses would also be reduced, Bitonti said, because they wouldn’t be “marketing against themselves.”
“The bottom line is we want all these sites to succeed,” he said. “We know they want to do this. When we put out these zones we didn’t know about bundling.”
Demchuk said Gananoque officials working on the casino file got wind of the bundling plan before it was even announced.
“We have a pretty good group of people working with us. We hired professionals and they said there was talk of the bundling,” she said.
Gananoque and its partner township have since hired a consulting company to advocate on its behalf. Demchuk said she didn’t agree with spending taxpayers’ money that way, preferring to do the work in-house.
About a half-dozen casino operators have been in Gananoque checking out the town and the facilities.
What Gananoque may have against its case is that casinos strategically placed to bring in U.S. gamblers, like Thousand Islands, have experienced declining revenues in recent years.
A Kingston casino would have the advantage of a larger local population to draw from.
But Demchuk still sees the Gananoque casino as a winner.
“Ten years ago, all the casinos did better than they are now,” she noted. “But they’re still making a lot of money. This casino was built with expansion in mind. So it is do-able”
Demchuk said it’s unfortunate that Kingston and Gananoque have been pitted against one another.
At times it has even been portrayed as a feud between herself and Kingston mayor Mark Gerretsen.
“We were put in this position by the province,” said Demchuk. “It doesn’t mean I can let my guard down or he can let his guard down. I don’t want to get into a battle created by someone else. I don’t want to create bad feelings with Kingston.”
On March 7, the period ends for casino operators to put in their bids to become pre-qualified for consideration in the request for proposal (RFP) part of the process.
Casino licences will be awarded some time in 2013.
While the competition will remain fierce between Kingston and Gananoque, the OLG’s Bitonti said they have a warning for all municipal officials in their dealings with casino operators: It is the OLG that makes the final selections.
“We told the municipalities don’t hitch your trailer to one star,” he said. “Be as open as possible. Don’t say we’re going with you because in the end they may not.”
And what of Kingston council’s stipulation that any casino must not go in the downtown business district?
Bitonti was asked if the operator’s desire to go downtown in Peterborough, Belleville and Kingston could prevail in the end.
“If a gaming operator comes foward and that’s their only plan – and it’s downtown, downtown, downtown – then they haven’t done their homework,” he said.
“I don’t think anyone would come forward with a proposal that doesn’t respect the will of the community.”