The ambitious casino and entertainment project Durham Live, which is expected to open in 2019 in Pickering, remains to be a controversial topic in the town of Ajax. City Council has now voted in favour of a motion which calls for an investigation and for “dumping” the idea to close the Ajax casino and relocate its operations in Pickering.
In the past few months, there has been a conflict between the Town of Ajax and the City of Pickering over the future of gambling in the area and, in particular, the new, full-fledged casino, which is set to open in 2019. Both communities are located in the Durham Region in Southern Ontario and are part of the Greater Ontario Area (GTA). And local politicians in both communities want the casino. The debate between the two towns started several months ago when the newly appointed operator of the slots parlour at Ajax Downs announced that it would relocate it in Pickering as part of its gambling expansion plans.
The operator, Ontario Gaming GTA L.P. (OGGLP), plans to develop a large gambling, hospitality and entertainment complex at Bayly and Church streets in Pickering. Along with the casino, the project includes hotels, an indoor water park, and events and convention space. The company is, in fact, a partnership between Toronto-based Brookfield Business Partners and one of the largest gambling operators in Canada, Great Canadian Gaming Corporation. Last year, the OGGLP was chosen by the Ontario Lottery and Gaming Corporation (OLG) for the service provider of its GTA gaming bundle, which includes Casino Woodbine, Great Blue Heron Casino, and Casino Ajax.
Now Ajax councillors want to “investigate” the planned closure of the Ajax site. They passed a motion which urges all provincial parties to publicly challenge the agreement for the GTA bundle. According to the Council, this was a “bad deal” for Ontario taxpayers. Wards 1 and 2 regional Coun. Shaun Collier claims that the deal was not transparent and that the new casino would not bring in the expected revenue to the municipality. According to the agreement, the Great Canadian will be responsible for all gaming operations in the region in the next 22 years.
Ajax Concerns Fueled by Reports in Media
The motion passed during the Ajax council meeting refers to an opinion column by David Zarnett, who has a PhD in Political Science from the University of Toronto. The analysis, published on May 17 in The Globe and Mail, criticizes the deal for the GTA bundle, claiming that the casinos were sold to Great Canadian for much less than initially expected. The cost of $158 million, the author says, is less than one times the annualized earnings before interest, taxes, depreciation and amortization (EBITDA) of the bundle. Its actual enterprise value is $1.7 billion, according to Zarnett, which means that the OLG lost $1.5 billion in the deal.
As the OLG is a Crown Corporation owned by the Province of Ontario, its assets, including the casinos, are ultimately public. The conclusion from the opinion piece is that with that deal, all taxpayers in Ontario lost a lot of money. The OLG responded almost immediately, however, saying in a May 18 statement that Zarnett had significantly undervalued the financial value of the GTA bundle. According to the corporation, the author describes the transaction as a simple one-time asset sale, whereas it is rather the 22-year “lease” of the gaming equipment and properties. Great Canadian, the OLG explains, is authorized to operate the bundle while being responsible for all capital and operating costs.
Indeed, the price is just one of the many components that make up the actual financial value of the bundle. According to the agreement, the OLG “retains all future gaming revenue”, while the operator will need to start and pay for the modernization process which requires an investment worth millions of dollars. The official OLG statement also cites figures provided by the Financial Accountability Office of Ontario (FAO), which estimates the total financial benefit to Ontario at $34.5 billion over a period of 22 years. In the meantime, it is unclear whether Ajax councillors have seen OLG’s statement, which is available on its official website, and how they would comment.