The Ontario Lottery and Gaming Corporation (OLG), has chosen the Ontario Gaming East Limited (OGEL) as the successful applicant for the East Gaming Bundle. The OGEL is a partnership group partly owned by the Great Canadian Gaming Corporation, to which the latter has 50.1% in shareholdings.
The OGEL partnership has already signed a Business Transition and Asset Purchase (BTAP) Agreement with the OLG, as a precursor to the signing of a 20-year Casino Operating and Services Contract (COSC). Currently, the BTAP is still in the process of meeting the standard closing conditions, including regulatory approval. Among the key conditions under the BTAP agreement, includes OGEL’s payment of CA$37.4 million to OLG, in exchange for all OLG gaming assets in the East Gaming Bundle. In addition, OGEL Partnership will pay the provincial lottery corporation an estimated CA$13 million as working capital for the gaming facilities included in the three East Gaming Zones.
The first gaming zone comprises the Cavan Monaghan Township and Peterborough City and its surrounding areas, in which the OLG gaming assets are the OLG Slots located at the Kawartha Downs. The second gaming zone furnishes a fresh opportunity to build a new entertainment and gaming facility that will benefit Belleville City and Quinte West. The third gaming zone currently serviced by the OLG Thousand Islands Casino includes Kingston City, Gananoque, and the Leeds and Thousand Islands Township.
The Ontario Gaming East partnership venture of the Great Canadian Gaming, will earn annual base fees under the 20-year Casino Operating and Services Contract (COSC), for running the gaming businesses in the East Gaming Zone. In addition, the OGEL partnership stands to gain seventy percent (70%) in gross gaming revenue (GGR), based on the amount exceeding the applicable projected amount of GGR established for each year of operation.
The annual projected GGR for each year will go to the provincial lottery corporation, representing OLEG’s annual guaranteed payment under the agreed COSC. Details of other agreements and conditions contained in the COSC are still unavailable for disclosure, pending completion of the procurement agreement for the East Gaming Zone.
Nonetheless, the OLG remarked that a smooth transition is expected to take place by the first quarter of 2016. By that time, OLG foresees that the OLEG partnership will have completed the asset acquisitions, and other undertakings specified in the BTAP agreement, including the signing of the final 20-year Casino Operating and Services Contract. –
Once the COSC has been signed, the provincial lottery corporation likewise intends to negotiate an Operations Management agreement and a Facility Development deal with the OGEL Partnership. Under such contracts, the OLG gets to earn fees for rendering operations management and facility development services.
Great Canadian Gaming Corporation’s President and Chief Executive Officer, Rod N. Baker, expressed appreciation for the opportunity to participate in OLG’s modernization of Ontario’s gaming industry. Mr. Baker conveyed that they are excited about the first gaming bundle awarded by the OLG. He said that they are looking forward to work with the OLG and the local communities in bringing stimulating entertainment experiences for the communities that OLEG will serve in the East Gaming Zone. He added that they welcome as well, the opportunity to work with the OLG employees located in the East Gaming area, once they complete the acquisition conditions by early next year.