Casino News

Auditor General Criticizes OLG’s Choice for Niagara Casinos Operator

Last week, Ontario Auditor General Bonnie Lysyk issued her annual report, which managed to stir the pot in the province’s gambling industry. Her report alleges that in 2019 the Ontario Lottery & Gaming Corporation awarded the keys to Niagara Fallsview Casino Resort and Casino Niagara to their current Mohegan Gaming & Entertainment, despite better bids from other applicants.

In the report “Value-for-Money Audit: Ontario Lottery and Gaming: Casinos, Lotteries and Internet Gaming.”, Ms. Lysyk points that the two other bidders – Hard Rock and Caesars Entertainment. came up with better terms and would have provided significantly higher direct capital investment. However, the OLG opted for Mohegan Gaming & Entertainment.

Further Findings

The report stated that the OLG selected MGE based on criteria mainly focused on having an operator offering the highest present value of cash flow through guaranteed minimum commitments and revenue share to the Crown over the first 10 years. The OLG explained that it the City of Niagara Falls would benefit from the bid, due to MGE’s view to increase economic development and maximize profits.

But Ms. Lysyk revealed that the city was not involved in the selection process. Representatives of MGE and Niagara Casinos refused to comment on the matter. Meanwhile, OLG’s Tony Bitonti, claimed that the Niagara region benefits from having a world-class casino operator in the face of MGE, which back then evaluated the market potential and established realistic projections.

Mr. Bitonti continued by saying that the Auditor General is comparing MGE’s projection to an outdated business case that did not reflect significant gaming expansion in the GTA. Since becoming the operator of the two Niagara Falls casinos, the gaming company has invested over CA$32 million to upgrade the properties, said the OLG statement.

In her report, the Auditor General also wrote that she organized a sting operation to probe anti-money laundering protocols at four Ontario casinos. Ms. Lysyk did not provide the names of the properties but said one of them correctly identified the deceptive activity and refused the patron’s request for cheques. It even issued trespass orders, which banned the client from all gaming sites operated by the company.

Her report does end here, and also looked at slot-machine payouts, which by law should return 85% of wagers as winnings over the life of each machine. She claims that neither the OLG nor the Alcohol and Gaming Commission of Ontario monitor the payouts, and instead they are entrusted to casino operators to report any problems.

Input on the iGaming Sector

Earlier this year, Ms. Lysyk also reviewed Ontario’s brand-new iGaming market for third-party operators. In her report, Auditor states that in its first three years of operations, the new regime will bring in approximately CA$75 million in revenue for the province’s reserves. Additionally, a small portion of the iGaming revenue is expected from sales tax.

Source: Spiteri, Ray “Auditor general questions OLG awarding of Niagara casino operation to MoheganNiagara Falls Review, December 2, 2022