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OLG just a tad upbeat about modernization: Auditor general

Monday, April 28, 2014   by: Staff




A 2012 plan to modernize the Ontario Lottery and Gaming Corporation (OLG) and generate higher profits for the province was "overly ambitious" and "overly optimistic," Auditor General Bonnie Lysyk said in a Special Report released today.

The Ontario Lottery and Gaming Corporation's Modernization Plan Special Report also found that the "abrupt cancellation" of a program that gave the horse-racing industry a share of slot-machine revenues at racetracks has had a significant impact on the industry.

"OLG developed its Modernization Plan without sufficiently consulting such stakeholders as municipalities and the horse-racing industry," Lysyk said. "The profit estimates should have been more realistic, and the abrupt impact on the horse-racing industry could have been mitigated had more people been consulted beforehand."

Lysyk also noted that the modernization plan anticipated that OLG could complete significant downsizing, restructuring and privatization within 18 months, a timeline she described as "overly ambitious."

The Legislative Assembly's Standing Committee on Public Accounts passed a seven-part motion asking the auditor general to look at various aspects of the modernization plan, including the cancelling of the Slots At Racetracks Program.

The modernization plan was approved by cabinet and made public in 2012.

The Modernization Plan, Lysyk found, presented an "ambitious best-case scenario," including a significant number of changes designed to raise OLG profits by a total of $4.6 billion between 2013 and 2018.

Delays, policy changes and the lack of several municipal approvals resulted in OLG having to dramatically reduce its profit projections.

For example:

  • As of March 31, 2014, OLG lowered its original projection of an additional $4.6 billion in gaming profits between 2013 and 2018 by 48%, or about $2.2 billion. Lysyk estimates the reduction could be "as much as $2.8 billion," or about 60% less than forecast.

  • The Modernization Plan depended on and assumed agreement from municipalities for construction of casinos within their borders. However, large Ontario municipalities identified as potential sites for the new casinos, such as Toronto and Ottawa, rejected OLG's proposals, which significantly lowered net profit projections.

  • The government was fully aware that cancellation of the Slots At Racetracks Program, which provided $347 million to racetrack operators and horse owners, horse breeders and others involved in horse racing in 2012, would have a significant impact on Ontario's horse-racing industry. Nonetheless, the program was cancelled with one year's notice, as allowed by existing agreements. Initially, there was no plan to provide any transition and support funding for the industry. After an outcry from the horse-racing industry and affected communities, the government introduced new transition and support funding.

  • The Modernization Plan's projections for jobs related to the gaming industry were overstated and highly dependent on a new GTA casino; there will likely be a net loss of gaming jobs in the province instead of the projected gains. In addition, the initial projection that the private sector would spend $3.2 billion in capital investment has been reduced to only about $940 million, most of which would be realized from the sale of OLG's existing gaming assets.  

  • A succession of Board and executive management changes since 2005, including the appointment of five Board chairs and seven Chief Executive Officers, as well as shifting reporting responsibilities among multiple ministries and ministers, have undoubtedly impacted OLG.

The Report also noted that OLG's procurement processes so far have been "fair, open and transparent" and that OLG has taken many steps to prevent and mitigate problem gambling.


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OrlandoFlorida 4/28/2014 4:08:47 PM Report

Now should the city believe anything they have been told by OLG executives regarding the "Head Office " staying in the Soo? Or that the number of gaming employees increasing. Hey if OLG has grossly over exaggerated all aspects of benefits to Ontario while under estimating impacts. I would have to say that this city is in for a rough future, wonder if we could sell the 70 Foster drive office building for another quick $60,000.
OrlandoFlorida 4/28/2014 4:40:07 PM Report

And the best part is we haven't found out how much this multi million dollar Modernization Plan has cost the Ontario Tax Payers so far. On a positive note hundreds of over paid, incompetent consultants have become rich, thank God for privatization, otherwise these people would be unemployed.
SuperiorGuy 4/28/2014 7:04:34 PM Report

All of the consultants involved on Modernization are likely still engaged and cashing their cheques. All of the highly paid OLG executives who were part of designing and advocating Modernization are still cashing their cheques and performance bonuses. In what other world would bonuses be paid for creating and recommending such a dramatically flawed plan?! And in what other world is this not exposed and repercussions result?
Steamboat 4/29/2014 7:43:26 AM Report

Gee, fictional numbers from the Liberal Government. I'm in shock!
ThinkAgain 4/29/2014 10:12:31 AM Report

When in history has our very own government done anything right for the taxpayer?
truenorth 4/29/2014 11:39:58 AM Report

When are we going to stop with the unless discussion on OLG headquarters remaining in the Sault - read the Auditor General's report people - not Orazietti and our corrupt government - it states jobs will be downsized - so ask yourself this question - how will the government dictate to a new private company to keep the jobs in the Soo after we are sold - they can't - once the Crown Corporation is sold to a private company - after a 1 year transition - they as the owners will do as they please - GET IT !!!
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