Straight from the OLG's mouth

This morning, SooToday.com received copies of email correspondence issued to employees from Rod Phillips, OLG president and chief executive officer, dated March 12 and March 14.

In the March 14 email, Phillips announces the closure of three OLG Canada-U.S. border slot facilities; OLG Slots at Windsor Raceway, OLG Slots at Fort Erie and OLG Slots at Hiawatha.

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Dated: March 12, 2012, 10:35am

Good Morning,

Today will be both an exciting and challenging day for OLG. I wanted to let you know that our report on modernizing lottery and gaming in Ontario will be released during a news conference later this morning.  Chair Paul Godfrey will join the Minister of Finance to discuss the report just before 11:00 a.m. today.  The report and supporting materials will be available on OLG.ca and InsideOLG at that time.

As you know, following a request from the Government of Ontario, OLG has been working on a review of all our operations and business for the past year. The report we have submitted to the Minister is called “Modernizing Lottery and Gaming in Ontario”.  It includes recommendations on how the province can modernize lottery and gaming in Ontario and create jobs in the industry.

For the first time in a long time, OLG was asked to consider new policy, new approaches – and to do so in a responsible manner.  OLG’s current business model is unsustainable and there is an urgency to enact change.

A number of factors, including the increased popularity of offshore gaming websites, declining border traffic and limited lottery purchasing options, are putting OLG financial contribution levels to the government at risk. When it comes to lottery and gaming, Ontario has fallen behind most jurisdictions in Canada. The strategic business review and resulting report is our opportunity to fix that.

We are confident that our recommendations provide a blueprint for how we can build the OLG of the future, an agency that will meet the changing needs and conditions of our marketplace.

“Modernizing Lottery and Gaming in Ontario,” outlines OLG’s recommendations in three key areas 1) Becoming more customer-focused; 2) Expanding regulated private sector delivery of lottery and gaming; and 3) Renewing OLG’s role in oversight of lottery and gaming.

The government has given OLG approval to move forward with these recommendations with the direction to maintain strict oversight and a gold standard of responsible gambling. I have included at the end of this message the outline of our recommendations.

In 2017, OLG’s plan to modernize the industry, together with initiatives currently underway, is projected to result in an additional $1.3 billion annual contribution to the Province of Ontario. It will improve how lottery and gaming products are delivered in Ontario and help launch $3 billion in new private capital investment in the Ontario economy.

The focus of the announcement today will be on jobs and change. As a result of increased private sector engagement in the operations of gaming in Ontario, 2,300 new jobs will be created directly in the gaming industry as a result of expanded private sector engagement.  An additional 4,000 jobs in the service sector across the province are also forecasted. 

An important part of our new direction impacts those of you working at OLG Slots and Casino sites. Becoming more customer-focused, recommendation number one, requires OLG become more sensitive to the number of customers using our facilities. This means there will be a change in the number, and potentially the location of some sites. New sites will open, some sites will close. I can’t elaborate on that point today, or answer questions about it. Out of respect to our employees affected, we will speak to them first before making the full details of those closures public.

Another significant impact will be the expanded use of regulated private sector operators.  As you know, most of the gaming employees in Ontario (about 60%) currently work for regulated private operators at Rama, Casino Niagara, Fallsview, Great Blue Heron and Caesars Windsor.

In the future, the role of regulated private sector operators will be expanded to the rest of our gaming sites. 6,000 positions at gaming sites will move to regulated private sector operators who will manage all OLG sites. We anticipate, in the next 12 – 18 months, 100% will be employed by the private sector.

I understand that many of you are concerned about how these recommendations will impact your positions. In many cases decisions are still required as we redefine OLG’s mandate and role for the coming months and years.

We are committed to providing you with updates as decisions are made to assist you in understanding and managing change that impacts you personally. If you have any questions, please do not hesitate to speak with your manager directly.

Thank you for your continued commitment to OLG and for your contributions in making this change happen.  Updates will be available on InsideOLG on an ongoing basis.

Regards,

Rod

Key Report Recommendations

OLG’s report includes three recommendations:

Become More Customer-Focused

    · Improve lottery offerings: allow for multi-lane sales at large retail outlets like supermarkets and big box stores.
    · OLG would identify distinct zones where existing or new gaming sites (with municipal approval) would be permitted.
    · In order to be able to change, move or create new sites, OLG should be able to expand slot facilities beyond horseracing racetracks. This would mean ending payments of approximately $345 million annually to racetracks. OLG does plan to continue offering slots at some racetracks where there is customer interest.
    · Lottery terminals and gaming sites should be where customers are—the supply should be near the demand.
    · Subject to municipal approval, allow new gaming sites in convenient locations where there is customer interest and, tourism potential.
    · Close or relocate facilities that are underperforming. Some could move to locations within their regions that are closer to customers.
    · Allow up to one new casino in the GTA, subject to an OLG business case and municipal approval.
    · To improve the ability to offer a mix of games at sites, implement a consistent fee model for host municipalities to allow OLG to place gaming sites where there is customer interest.

Expand Regulated Private Sector Delivery of Lottery and Gaming

    · To modernize both lottery and gaming options in Ontario, OLG would expand the engagement of the private sector to build and run the day-to-day operation of existing and new sites and to develop new technology and games for lottery terminals.
    · This will mean some $3 billion in new private capital investment—a benefit to the Ontario economy.
    · In addition to 2,300 net new jobs in the lottery and gaming industry, this initiative would help create an estimated 4,000 service sector jobs in the hospitality: hotel, restaurants, entertainment centres and retail industries.
    · 6,000 positions at gaming sites will move to regulated private sector operators who will manage all OLG sites. Currently, 60% of gaming employees in Ontario work for private operators – the resort casinos which are overseen by OLG.  In the next 12-18 months, we anticipate 100 % will be employed by the private sector.
    · OLG would maintain strict control and oversight of the business—including maintaining the integrity of lottery games.
    · Regulated private sector providers would be responsible for funding, building or improving new and existing sites (upon recommendation by OLG with approval by the Minister and the host municipality).

Renew OLG’s Role In Oversight  of Lottery and Gaming

    · OLG would continue to maintain direct responsibility for all critical decisions related to the operation of lottery and gaming.
    · OLG would continue to manage the lottery and gaming market and provide net profit to the government of Ontario—and if this proposal is accepted, increase that contribution.
    · OLG will become a smaller organization focused on market management, the oversight of private operators and responsible gambling.
    · Ontario will continue to be the North American leader in problem gambling programming. Ontario dedicates over $50 million dollars to the prevention and treatment of problem gambling – the highest funding level on the continent.
    · OLG will ensure that responsible gambling resource centres and facial recognition technology are established at all gaming sites to mitigate the risk of problem gambling.
    · OLG recommends the expansion of research and treatment support for problem gambling.
    · OLG would also commit to increasing environmental practices in any modernization of lottery and gaming options.

Copies of “Modernizing Lottery and Gaming in Ontario” are available at www.olg.ca

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Dated: March 14, 2012, 9:15am

Today is a difficult day. We are announcing important changes to three of our OLG Slots facilities that will impact our colleagues.

Due to impact of changing customer demand over the past decade, three U.S. border slot facilities will be permanently closed as of April 30, 2012: OLG Slots at Windsor Raceway, OLG Slots at Fort Erie and OLG Slots at Hiawatha.

I am in Windsor today to deliver this message in person. Other members of the executive leadership team will be in Fort Erie and Sarnia.

Today’s announcement is part of OLG’s overall modernization of Ontario’s lottery and gaming sector, which has been accepted by the government and was made public this week.

This decision was not made lightly, but it was necessary for our business. In the past decade, there has been a steep decline in U.S. visitors to our border sites, a loss which has been reflected in our revenue stream. In 2001, border casinos returned a net profit of $800 million dollars a year. Now, that profit is less than $100 million dollars and falling.

As we announced Monday, to be more aligned to current customer demand for gaming OLG will close some sites and consider relocating sites or opening new sites where there is a good business case.

These three site closures are a very difficult first step. It was important to move as quickly as possible with today's closures to minimize the uncertainty for both those directly impacted today and for the rest of our gaming site employees.

The development of detailed business cases and discussions with key stakeholders regarding potential relocations or new facilities will begin shortly. We will continue to keep employees up to date as this work progresses.

I sincerely regret the impact that this will have on our current staff in Windsor, Sarnia and Fort Erie. I want to extend my personal thanks to each of them for their hard work and dedication to customer service.

By modernizing the gaming industry, we will help create new opportunities and new gaming jobs in Ontario through a revitalized industry.

If you have any questions or concerns, please do not hesitate to speak directly with your manager.

Regards,

Rod Phillips

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