Canadian Gaming News

Issue 54 November, 1998 Lotteries dominate as gaming industry grows The lead-off article in our October poration and the Saskatchewan issue provided a chart highlighting the Gaming Corporation. The idea here fact that, in the period between now was that while the lotteries were and the next 18 months or so, $1 lumbering, control-oriented bureau- billion worth of new gaming related cracies, the casino corporations, construction could well be underway through the contracting out of their in Canada. As usual, we have tried to operations to experienced casino Ivan Sack err on the conservative side in that we operators (Saskatchewan's operator distancing themselves from the day- did not include dollar figures for On- has been phased out), were to have to-day fray, opted to either cloak their tario's four new charity casinos, the more flexibility to respond to the casinos with the respectability of construction of slot floors at horse market and attract the brightest, the their lotteries or tuck them, as de- racing tracks, the 2 or 3 still to be best and the most expensive. viants in need of constant supervi- announced destination casinos for While the lotteries, which many sion, firmly under the arms of their British Columbia or expansions to ex- members of the public do not even senior ministers. isting casinos in Alberta to accommo- consider gaming corporations, have While this was done, ostensibly, to date more slots, dining facilities and always been the quiet achievers at entertainment venues there. assure the fairness and integrity of the front of the class, the casino casino gaming, it became quickly ap- As we pointed out, the continuing corporations quickly became the parent that the politicians were also evolution of casino gaming in Canada restless pranksters at the back of the there to control the flow of informa- is taking our casinos to a new level - a room. They offended the public tion which further contributed to un- level where market forces, rather than when they did something right be- dermining the credibility of the casi- government policy is dictating what cause they were 'too slick7,and they nos. happens. We find it somewhat frus- offended the public when they did trating that, while people are aware of something wrong because they were This past June the British Columbia growth in their own back yard, there immoral, money grubbers and so Lottery Corporation took effective tends to be less recognition of the fact on. control of the operation of that province's privately-owned casinos that the entire picture is getting big- Unlike the lotteries which have had ger. Another point which appears to in an attempt to placate a judge who time to build up credibility and in- had ruled that the government could be missed is the growing involvement gratiate themselves with the public of lotteries in casino gaming. not, under Section 207 (I) (b) of the through good works (i.e. grants for Criminal Code, share in casino prof- Lottery corporations have been the community centres, sporting events, its. This brought to three the number operative arm for commercial casinos co-marketing with McDonalds), the of lottery corporations operating casi- in Manitoba and Quebec since the casino corporations were born in nos though still left Ontario, beginning. Yes, Quebec created the legislative acrimony, thrust into the Saskatchewan and Nova Scotia with Socidtt? des casinos du Qudhec, but it public glare without anyone having separate casino operations. has always been a wholly owned and explained what casinos are, and had controlled subsidiary of Loto- their profits used to balance bud- On November 25 the Government of QuCbec. gets. Ontario announced that Ron Bar- baro, Chair & CEO of the Ont~~rio In Ontario, Nova Scotia and The casino corporations were also Casino C'orporution had been ap- Saskatchewan, separate government- immediately handicapped by the pointed Chair of the Board of Direc- fact that governments, rather than owned casino corporations became tors of the Ontario Lottery C'orportr- the rage in the mid-nineties with the ask for a minor amendment to the tion and that the Vice Chair of the Criminal Code which would have creation of the Ontario Casino Corpo- Board of the OLC, Thorn Bennett, ration, the Nova Scotia Gaming Cor- allowed them to simply regulate casinos and reap the profits - thus had been appointed to the newly cre- -Page 2 Canadian GAMING News - ated position of Vice Chair of the up his share of the project's estimated Board of the Ontario Casino Corpo- Big Plans For $140 million start up cost, his immedi- ration. It never made sense that the ate contribution will be his credibility OLC was given responsibility to set 'the other' and his ability to influence the New up and operate four 'charity' casinos Niagara Falls York political circle that Cogan has while its designated casino operator, been lobbying (his meetings with the OCC stood nearby. October's Feature Interview with church officials and others), to get While neither the OLC nor the office Richard Schulze, President of New York Governor Pataki to sign a Falls Management Company, dealt of the Minister responsible for both . gaming compact with the local Seneca with Falls Management's plans to corporations, the Honourable Chris Native band. build a $500 million plus casino, Hodgson, could tell us whether Ron retail, hotel, convention, and tourist The compact would allow the Seneca Barbaro or OLC President, Garth complex at Niagara Falls, Ontario. to build a casino in Niagara Fall's core Manness will be the OLC's Chief Ex- and, given that Cogan's agreement ecutive Officer, the very strong view Just as the success of Casino Wind- with the city requires only that the on the street is that Barbaro, in a sort sor drove Detroit to approve casi- $140 million be spent over eight of reverse takeover of the OLC, will nos, so the success of Casino Nia- years, could mean that the casino, be calling the shots. As part of his gara, and Richard Schulze's plans rather than Cogan or Milstein, would mandate, Barbaro is seen as having for an even more elaborate casino pay for the city's redevelopment. been asked to lead each of the boards complex in Niagara Falls, Ontario, is driving plans for a casino and An impediment is that NFRC does not he chairs in the preparation of formal yet have an agreement with the Seneca merger strategies. This now leaves massive downtown redevelopment in Niagara Falls, New York. and the Seneca do not yet have an only Nova Scotia and Saskatchewan agreement with the state. The gover- with separate casino operations. What is interesting is that Niagara nor won re-election November 3, and Given that the Atlantic Lottery Corpo- Falls Redevelopment Corp his office says he continues to talk ration operates the lotteries of all (NFRC), the company which has an option to purchase and redevelop with the Seneca about a Niagara Falls four Atlantic provinces, including casino and possibly a second casino in 180 acres in the downtown core of those of Nova Scotia, and given that Niagara Falls, NY was, until the Buffalo. A sticking point is his insis- the Government of Nova Scotia is sale of a 50% interest to New York tence that a portion of casino profits unlikely to want to turn control of its City billionaire, Howard Milstein, go to the state - something the Seneca two casinos over to this pan-Atlantic the brain child and property of are rejecting. Another hurdle for NFRC is our expectation that, should corporation, change is unlikely here. Toronto deal maker Eddie Cogan. The same goes for Saskatchewan the Seneca be allowed to go ahead, it where the Western Canada Lottery Cogan first briefed us on his plans almost assuredly would not be the Corporation operates the lotteries in for Niagara Falls, NY about a year only group courting them. that province. ago. The meeting was arranged by Aubrey Zidenberg, owner of The Speaker of the State Assembly We made reference to governments in Casino Amusements of Canada and and other assembly members have Manitoba and Quebec having been the now a part of Cogan's Gaming Im- also said they will take the governor to first to wrap their casinos in the re- plementation Strategy Team. It court if he signs a gaming compact spectability of their lotteries. When would have been easy to dismiss without assembly approval - shades of the Government of ontario gave the the drawings, meetings with Native Native gaming in Arizona. OLC responsibility for Ontario's four groups, church officials, and the As we see it, Cogan's project, despite charity casinos it, belatedly, signed on talk about lining up hundreds of Milstein's billions, hinges upon the to this philosophy. millions of dollars as wishful think- Seneca's ability to get a casino and While the extension of the British ing by someone who, by his own upon their willingness to sign on with Columbia Lottery Corporation's man- admission, has won and lost mil- NFRC. While the proponents may date to include that province's casinos lions. Perhaps reading our thoughts, well be serious about the downtown was ostensibly to get around the court Cogan asked that we wait until he redevelopment and synergies with On- decision, the prestige of this corpora- had more to say. tario's Casino Niagara, the downtown tion again helped sooth public con- This happened late-summer when redevelopment is a tool to sell the cerns. Cogan announced that Howard Mil- casino to those who may feel resentful stein, co-owner of the New York about Native casino profits not being In addition to traditional lottery prod- spread around. It also gives casino ucts, we now have lotteries owning or Islanders hockey team and scion of a billionaire New York City family, supporters a 'non-casino' reason for planning to build hotels, golf courses, wanting a casino. For now the issue hiring rock bands, as well as running had purchased a 50% interest in his company. of how much gaming market there is horse racing tracks and major online and how many times you can slice it systems. How things change! While Milstein may be ready to anti up appears secondary.

-Page 4 Canadian GAMING News - American market? Feature Interview Cargnello: TST provides premium testing services. In Canada and Aus- John Cargnello,Managing Director tralia, government involvement in Technical Systems Testing Pty. Ltd gaming means that much emphasis is placed on security and fairness and all John Cargnello has a Masters of Cargnello: In of the testing, such as central monitor- Business Administrationj-om Monash the early 1990s ing, necessary to achieve this out- University and Diplomas of Business I saw that electronic gaming, which come. Studies in Electronic Data Processing had previously been restricted to In Canada, central monitoring of slots and Accounting from Victoria College large Australian social and sporting and VLTs represents the state of the in Melbourne, Australia. He is also a clubs in one state was rapidly ex- art in gaming security. This allows Chartered Accountant, a member of panding into other states. Given my you to verify the integrity of machine the Securities Institute of Australia background in the security of elec- software via an online communica- and a Registered Company Auditor. tronic systems, much of it gained in tions link. This makes fraudulent ma- He spent his Jirst seven years follow- the finance sector, I already had nipulation virtually impossible. Es- ing graduation with major accounting many of the skills relevant to high sentially, when a particular game is and consuItingJirms in Australia and tech gaming environments. These the United States. This was followed skills were recognized by the regu- tested and approved for use we make by Jive years with Philip Morris Inc. latory authorities who had previ- a 'signature' of the software that can in Australia and New York. ously been dealing with one com- be, and is verified remotely many pany that had a virtual monopoly times each day. If someone ever de- After returning to Australia he joined cides to manipulate the software, or Ernst & Young where he undertook over all electronic game testing done in Australia. As monopolies some critical component fails, the ma- specialist information technology and chine can be disabled from the central audit consulting in addition to estab- usually charge too much for too little, the time seemed right for me site. This is both effective and effi- lishing that Jirm S local Disaster Re- cient. Consider the time and cost covery Consulting sewice. to start competing and so I, along with two other partners who I subse- involved in verifying integrity manu- In 1993 he founded Technical Systems quently bought out, started TST. ally. You'd have to go to each ma- Testing Pty. Ltd. (TST) which is de- We quickly picked up contracts in chine, take out the EPROM's, test voted exclusively to the testing of elec- the State of Victoria and New them and replace them. It can take tronic gaming equipment, game eval- Zealand and, before long, TST was you months to do what a system can uation, integration testing of elec- a viable operation. do in seconds. While central monitor- tronic gaming equipment of the casino ing is very much the standard across floor and gaming consulting. Sack: And what prompted TST to Canada, it is not a requirement in Through TST and its wholly owned come to Canada two short years many U.S. jurisdictions including subsidiary, TST Technical Systems after it was created? Nevada. Like Canada, central moni- Testing North America Inc. (TSTNA), toring is extensively used in Australia. Mr. Cargnello has been involved in Cargnello: We came to Canada for many of the same reasons that I saw It's in the testing of these more com- the development of technical stan- plex systems that TST has its exper- dards for electronic gaming in Aus- a place for my company in Aus- tise. tralia, New Zealand,Canada and test- tralia. One company, Gaming Lab- ing of gaming equipment and software oratory International, from New We have also been called upon to in four continents. Jersey, dominates the market in the write technical standards in several United States and, because of its Canadian provinces. Our knowledge Sack: I have to begin by asking you proximity to Canada, was set to of central systems in Australia com- what 'Pty', in your company's title, dominate the Canadian market. bined with my background in encryp- stands for? Since the North American elec- tion and other security measures that tronic gaming market was growing banks use when they transfer vast Cargnello: Pty is an abbreviation for as rapidly as that of Australia and Proprietary. In Australia this indi- given that this market is larger, I amounts of cash and confidential in- -- cates that Technical Systems Testing saw a natural opportunity here. As formation over remote links has put us Pty. Ltd, is privately held, as opposed well, the Canadian market, more so in a prime position to both devise tests to a publicly traded company. than the American market, was and write technical standards docu- ready for the quality and type of ments for these systems. Sack: Electronic game testing and service which TST provides. Sack: Could you run us through the evaluation is obviously a very special- process TST uses to test a slot ma- ized field. How did someone with no Sack: Why was the Canadian mar- chine? gaming background end up forming ket more ready for this than the an international company to do this? Cargnello: First we undertake an - Canadian GAMING News Page 5 - extensive series of tests on a prototype the RNG, the greater the likelihood Europe. of the machine and its games - that is, that someone will be able to antici- Cargnello: Gaming in Europe is not both its hardware platform and its pate a given result. If you can highly regulated and testing standards software. For example, if we were anticipate the result you can beat the there are less rigorous than those in asked to test an IGT Red White & Blue machine. An inappropriate RNG the jurisdictions we've talked about. slot for a Canadian regulator, we may also result in some outcomes This means that in Europe gaming is would first bring one of the machines never occurring. Imagine playing a probably more open to abuse and less b into our laboratory in Vancouver and keno game on a machine where it is fair to the player. run hundreds of tests on it. For exam- , mathematically impossible for your ple, we do over 300 different security particular number to come up. Sack: Your company was founded in tests on the hardware and computer There are also vast differences in 1993 - 5 years ago. While this is a boards, 300 to 500 tests on the soft- terms of what different regulators relatively short period of time, what ware, over 200 tests involving the re- demand from RNGs. Top quality changes have you noticed in the test- calculation of the games theoretical RNG's are expensive in terms of ing industry since you began and return and verification of mathemati- both design and testing so it's a what are some of the trends that you cal calculations and so on. In total we trade off. As a result, unwanted see emerging during the next several would usually do over 2200 tests. situations have occurred. A recent years? Following the laboratory tests we con- example involved a RNG that had Cargnello: I think people are becom- duct further evaluations in a test bed been tested and approved by an- ing much more demanding in terms of with tens or even hundreds of ma- other laboratory. However, it what they expect from electronic chines so as to replicate a true life emerged that a bright individual was casino games and will become even gaming environment. This is a neces- able to predict and gain significant more so as the kids who play the sary prerequisite to recommending ap- financial advantage. sophisticated computer games on the proval. Subsequently, we test each Another example of the difference market today start entering casinos separate slot machine in the province attitudes which gaming regulators and VLT bars. Also, the multiple sta- to ensure that it is performing just like have toward gaming is illustrated by tion touch screen games already in the protype. All testing is normally the way they respond to the concept casinos have brought a whole new done against both the standards con- of 'near miss' in a slot or VLT level of complication to game and tained in the technical standards docu- game. To explain, let's say you online system testing. Testing will ment for the particular province as need three oranges to win the jack- become more, rather than less de- well as our IS09000 certified test pot and two oranges stop on the manding as technologies such as hard scripts and procedures. payline while the third comes very disks, flash ROM and CR ROM re- Sack: You work for the regulator close to it. The adrenaline rushes place traditional EPROM based when you do your tests. Looking at and in goes another coin. You think games. this from the inside, but without dis- 'I almost won' but you may not be Additionally, I believe Internet gam- closing confidences, what are some of as close as you think. Games can be ing inevitable. Most Australian regu- the variables in terms of what regula- designed to create this impression lators who are opting to regulate tors will and will not accept? even though in reality the player is rather than ban Internet gaming share not close to winning. This is ar- Cargnello: One of the most important this opinion. Several Australian ju- guably misleading to the player but risdictions have already legalized In- jobs which any regulator does is deter- it depends on how the regulator sees mine what is fair and equitable for the ternet gaming and more will follow it. Regulators in Nevada, for exam- shortly. This process is bound to public in terms of game design and ple, allow game designers to use the game manufacture. The platform for spread to other jurisdictions and this near miss much more than most too will bring a whole new set of most slot and VLT games, that's the Canadian or Australian regulators. physical apparatus upon which the challenges for regulators, manufac- games run, is fairly standard. What turers and companies, such as TST, Sack: Any particular reason for who test the games. .- makes one slot or VLT game different this? from another, apart from different There will be all kinds of new oppor- Cargnello: I think it probably rep- faceplates and colour graphics, is the tunities to cheat and we will have to resents a higher comfort level with software that runs the games. develop even more demanding tests gaming there. At the heart of all game software is a to prevent this. random number generator or RNG. A Sack: We've talked about testing Sack: Thank you and all the best! well-designed game based on a good and regulatory requirements in Aus- RNG will be virtually unpredictable. tralia, Canada and the United States. Final drafts of our interviews The more mathematically predictable Tell us a bit about game testing in are reviewed b-Y our guesfs before puhlicufion. -Page 6 Canadian GAMING News -

Canadian Gaming Summit & Exhibition Hodgson, Nelson, 3rd Annual Awards Dinner Nominations Hargrove to speak Ontario gaming minister, the Hon- April 8, 1999, Ballroom, Casino Windsor ourable Chris Hodgson, Alberta gam- ing minister, the Honourable Patricia When submitting nominations please follow the guidelines below: Nelson, and Buzz Hargrove, President I) You may nominate only oneperson for each of the six awards. & C.E.O. of the CAW, which is moving 2) You are not required to make nominationsfor all six awards. aggressively to certify casino workers, will speak at the 3rd Annual Canadian 3) For each person nominated, please fm a short statement (200 Gaming Summit & Exhibition, to be held words or less) saying why you wish this person to be considered. in Windsor, Ontario April 8-1 0, 1999. 4) You must include your name, address and telephone number These influential decision-makers will with each nomination. join a blue ribbon list of Canadian and 5) An independent panel will review all nominations and select all international workshops participants who finalists. will speak on our conference theme - marketing, as well as current issues, 6) The names of all nominees will be kept confidential. Nominees trends and developments in Canadian will be told of their nomination and the name of their nominator. gaming during the next 2-3 years. Nominees' employers will be told of their employee's nomination. With the 65 booths on our exhibition 7) The Canadian Gaming Summit & Exhibition will provide each floor already committed and 800 industry winner and a guest with complimentary registration and dinner executives expected to attend, the Sum- tickets. Other expenses will be borne by the winner / employer. mit will fill the Cleary International Cen- Outstanding Contribution to the Canadian Gaming Industry Award tre and its adjacent Hilton and Radisson Hotels. It will be second in size only to Nominees for this award (one award) may come from any sector World Meet which brought lotteries from (casino, lottery, horse racing, bingo, supplier) and any position around the world to Vancouver in 1996. within that sector. The person nominated must be employed within the Canadian gaming industry at the time of nomination (not retired) International Game Technology (IGT) and, through histher work demonstrate an extraordinary contribution and Mikohn Gaming will host lun- and commitment to promoting the ideals of the Canadian gaming cheons. Williams Gaming and Bally industry. Gaming will host breakfasts. When governments announced the intro- Display of Excellence Award (Total of Six Awards) duction of casinos several years ago, the One award will be made in each of the following sectors: first paragraphs of these statements her- Casino - Class 1 (601 slots or 41 tables or more) alded the jobs they would create. Casino - Class 2 (600 slots or 40 tables or less) 5 1 companies have committed to exhibit Horse Racing their services and products in Windsor. Lottery This is up from 33 in Montrkal and 17 in Bingo Niagara Falls. While we welcome the Gaming Supplier support of the biggest names in gaming, we are proud that the Summit will give Nominees for each of these awards may come from any position national exposure and opportunity to a within each of the above six sectors. Each person nominated must number of smaller, high quality compa- be employed within the Canadian gaming industry and the sector for nies which, until now, have been con- which hetshe is nominated at the time of nomination (not retired) fined to regional markets. Those press and, through histher work, demonstrate an extraordinary contributior releases promised more jobs. We are and commitment to promoting the ideals of that sector. proud to be a part of the follow through! Please fax your nominations to: Our conference brochures will go into the Ivan Sack, Chair, Canadian Gaming Summit & Exhibition mail in early January. Fax (905) 855-1869 All nominations must be received by January 15,1999 Remember to fax in your Winners' names will be published in the March issue of Awards Dinner Canadian GAMING News nominations today !! - Canadian GAMING News Page 7 - from its three Panama casinos ex- Canadian Gaming ceeded its expectations. It states Casino de Montreal that gross revenue from its three Stocks Fiesta Casinos was US$1.4 million for October; net was US$240.000. Name Nov 30 Applied Gaming Solutions an- nounced November 3, that most of Applied Gaming its lottery staff is now in Vietnam. Solutions (AGC) 5 The lottery centre in Hanoi is being prepared for the installation of lot- Dion Entertainment tery equipment. The game software (DIO) I being customized by its partner, Great Cdn Gaming AWI is near completion while AGS Jacques Grilli (GCD) 3 Vietnam has appointed a General Grilli has been confirmed as Director. AGS also reported that ~enkralManager of Casino de Mon- Int'l Hospitality Inc the gaming & Liquor Commission tre'al having acted in this position (1WIN.U) 2 of Ontario has approved the table since December 15, 1997. He suc- game Spanish 21. AGS owns the ceeds Joanne Drapeau who has been Internet Global exclusive rights to market the game named President, Socie'te' des lote- Networks (IGN) 3 in Canada and has already games ries vidko du Que'bec. Int'l Thunderbird pending to casinos in Ontario and Mr. Grilli joined Casino de Mon- (MB) I Nova Scotia. tre'al in 1993 and was promoted to Stuart Entertainment has an- Director of Security before sewing Lake City Casinos nounced the appointment of as acting General Manager. Prior to (LCG) 3 Lawrence Taylor as executive Vice joining Casino de Montreal, Mr. Grilli sewed with the RCMP. Network Gaming president & Chief Financial Officer. Gorp WQ)3 He replaces Paul Tunink. Stuart PlayStar Corp has also an- (PSCK) 2 nounced the pur- chase of all the -g hs an authorized sales and representativefor Starnet voting stock of (SNMM) 4 Bingo Systems Stuart Entertainment and Supply Inc., a (STUA) 4 prominent distrib- utor of charitable Trim Equities fund raising prod- (TEQ) 3 ucts. Bingo Sys- tems and Supply is Venture Pacific Dev located in Mis- (VPV) 3 souri. Lake City Gam- ing Corp an- 1) TSE 2) CDN Unlisted 3) VSE nounced 3-month gross revenue for the period ending L After several months of extreme t volatility, our stocks appear to have September 30 of ! quieted down. $4.7 million. Af- Y ter expenses and International Thunderbird gained income tax, net in- on the news that it opened a third come was Panamanian casino with its fourth due $933,13 1 or $0.08 to open in early December, 1998. The per share, fully di- Dunant Street * Moncton, N.B., CANADA company also reported on November luted. Free: 800.966.4448 506.858.8049 25 that the first full month revenue' -Page 8 Canadian GAMING News - do soon. lowances. Casino Opening Lake City Casinos, the vast major- Casino Regina, on October 20, 1998 Lake City Casinos ity of its VSE traded shares owned also received the Aboriginal Govern- by Fred Glasgow, is also being ment Employees Network of On December 15, 1998, Lake City watched. Lake City has a strangle- Saskatchewan 's Indian Industry opens it's newest casino in Ver- hold on the prosperous and rapidly Award of Excellence in recognition of non's Village Green Hotel. The growing Okanagan interior, is in the the casino's efforts to open up career $2.5 million, 12,000 sq ft casino - process of relocating to classy opportunities for aboriginal people. (8,000 sq ft of gaming), will offer venues and will soon add a destina- 52% of Casino Regina's 550 staff are 180 slots and 12 table games in tion casino at Penticton. Right now aboriginal; 33% of management is addition to the hotel's 150 rooms, it must share the Penticton market aboriginal including two officers at lounge, dining room, pool and gift with Sodak Gaming which has also the level of vice president. shop. A large parking area will also been given the right to open a desti- Casino Regina ensure maximum convenience for nation casino there though this may all guests. All the best! be about to change. Rumours per- (April I - September 30, 1998) sist that Sodak will bow out of Pen- $ millions ticton. Sodak will only say that it is Anyone discussing the project with its part- For Sale? ners. Revenue: While none of the above companies Table games During the past month we have had Slot Machines 18.16 two international casino operators could be taken over without the agreement of their majority owners, Ancillary services ::I and two domestic operators ask us about acquisition opportunities in the thinking on the street is that 24.27 British Columbia and Alberta - some of the owners may be ready to Less Promotional 0.47 Scout's honour! cash out or to reposition themselves for retirement and estate planning Total Revenue 23.80 Vancouver-based Gateway Casino's purposes. We don't know the tim- Cost, Expenses: acquisition of Edmonton's Palace ing yet though some 'informal' con- Casino & Admin Casino this past summer caught their versations have taken place and the Contractual attention. As the casinos become stage may already be set. Ancillary more lucrative with the introduction of slots, dining facilities and enter- Casino Regina tainment venues, there is increasing Our chart to the right provides earn- Earnings before interest in how profitable Alberta and interest, taxes, British Columbia casino operators ings and expenditures for Casino Regina for the six-month period amortization, profit are, their growth potentials, who sharing owns them, and who are the weak and ending September 30, 1998. Unlike strong operators. the Ontario Casino Corporation Interest whose six-month report contained In our Feature Interview last month, only averaged monthly gross rev- Taxes Great Canadian Gaming's Ross enue and attendance figures (no ex- Amortization McLeod stated that Great Canadian penditure itemization or net profit might consider an acquisition in the figures), Casino Regina has pro- Consulting/profit new year. The word we get is that vided a full accounting of its activi- sharing Great Canadian lacks the money to ties. So complete is the report that Total 4.88 make an acquisition, is undervalued the Provincial Auditor and the Pub- in terms of the potential worth of its lic Accounts Committee of that Net Income 1 7.82 franchise should British Columbia's province's legislature both congrat- new gaming legislation allow its Van- ulated the casino on its disclosure couver casinos to have slots, and and success in turning the casino's Push To Unionize could become a target itself if major- weak performance around. Our ity owner, McLeod, could be con- own congratulations to Twyla Continues vinced to sell. Meredith, Vice President of Fi- We wrote last month of the Cana- Gateway Casinos, wholly owned by nance & Administration, who over- dian Auto Workers (CAW) union, Ray McLean will benefit once it is saw the preparation of the report. Canada's largest union with over allowed to place slots in its soon-to- Total revenue was up 12% and net 220,000 members, having succeeded open Burnaby casino, something income 37% in part because of the in certifying casino employees at Burnaby city council is expected to large decrease in promotional al- Great Canadian Gaming's Holiday - Canadian GAMING News Page 9 - Inn casino and Gary Jackson's Royal stant change within their industry, Diamond Casino, both in the City of by repeated government vaccila- Casino Regina Vancouver. tions on gaming policy, and by the Concern that the CAW would move series of court challenges which on to other properties appears well have gone against the industry. founded with Lake City Casinos They see themselves as helpless and having been notified of the CAW'S their employers as unable to protect intention to certify employees at its them. Kamloops casino. While rumours. persist that Lake City's casinos in Nova Scotia Kelowna and Vernon will also be targeted, Lake City says it has not Gaming Corp received notice to this effect. An We understand that no decision has Gord Staseson unsuccessful attempt was made to been made yet with regard to an Saskatchewan Gaming Minister, unionize Kelowna five years ago. executive search firm to select a Joanne Crofford announced, Octo- new president for the corporation. Great Canadian has been notified that ber 2, that Gord Staseson, who has the British Columbia Government been Acting President & C.E.O. of Employees Union (BCGEU) is sell- British Columbia the Saskatchewan Gaming Corpora- ing union cards to employees at its Frank Rhodes, the advisor brought tion since October, 1996 has been newly opened Nanaimo casino. If in by the Government of British appointed to these positions. His BCGEU is successful, Great Cana- Columbia to review its casino and appointment will extend until July dian will have to negotiate with the bingo gaming strategy and to write 3 1, 1999 whereupon Joe van Ko- CAW at its Holiday Inn casino and draft gaming legislation is expected everden will become President & the BCGEU in Nanaimo. It has not to submit his recommendations to C.E.O. received notice of any attempts to the government 'hopefully' before unionize its remaining five casinos. To allow for an orderly transition, Christmas. There is an expectation van Koeverden will begin working In Alberta, employees at ABS Casi- that this legislation will give the at Casino Regina as President- nos' Casino Edmonton and ABS government the right to set aside designate on February 1, 1999. Mr. Downtown Casino will vote Decem- court decisions that have prevented van Koeverden currently works in ber 5-6 on whether or not they want the British Columbia Lottery Corp Toronto as the National Tourism to join the Canadian Union of Pub- from placing slot machines in Van- and Trade Co-ordinator for Aborigi- lic Employees (CUPE). couver, Surrey and Burnaby casi- nal Business Canada, a division of In both British Columbia and Alberta, nos. We will have a better sense of the federal government's Industry labour regulations require that, once direction once the draft legislation Canada ministry. an employer has been served notice is released and we learn of the gov- of a union's intention to sell member- ernment's attitude toward it. City of Vancouver has the right to pass ships, it cannot interfere. Additional Destination Casinos zoning which prohibits the placing of While employers are abiding by this, The Government of British slot machines in casinos located within there is concern, for obvious reasons, Columbia has so far announced that city. that unions not certify dealers and seven destination casinos for that In a second case, the City of Surrey security staff as part of the same bar- province. Recommendations went has convinced the judge who decided gaining unit. This has happened at to Cabinet late last summer for what that the government could not share in Royal Diamond Casino. is thought will be another 2-3 facili- bingo and charity casino profits under Alberta and British Columbia casi- ties although nothing has happened Section 207 (1) (b) of the Criminal nos, because of their close involve- since. This has prompted rumours Code, that BCLC's response to that ment with community charities, have as of late that the government has decision should be the subject of a full a reputation for progressive employee decided not to approve more facili- judicial review. BCLC had expected relations offering, as they do, health ties. We are told the recommenda- that its response to the decision would and dental plans in addition to a host tions remain before Cabinet and be reviewed by the judge in chambers. of other mandated employee benefits. that, so far, Cabinet has not said Given the judge's decision, BCLC's There are therefore questions as to there will not be more casinos. response will now go to court with why their employees would want to Court Cases each side being able to call witnesses unionize. In midJanuary a superior court will and experts to buttress its arguments as A reason which we hear most often in consider the British Columbia Lot- to whether or not the corporation's British Columbia is that casino em- tery Corporation's (BCLC) appeal response is consistent with the crirni- ployees feel threatened by the con- of a lower court decision that the nal Code. This is expected to take at -Page 10 Canadian GAMING News -

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Canadian Head Office: 6810 Kitimat Road, Unit 4, Mississauga, Ontario, L5N 5M2 CUMMINS Tel: 1-800-499-6191 Fax: (905) 81 4-61 82 CUMMINS-ALLISON INC. Montreal Calgary Vancouver - Canadian GAMING News Page 11 - least a year and, once again focuses and address local issues; and a slot facility will open before Christmas attention on Frank Rhode's draft leg- implementation team is advising the though no date has been announced. islation. OLC on equipment, procedures and While this is somewhat later than the issues surrounding the placing of October 1 opening date set last July Ontario slots at the casinos and horse racing by gaming minister Chris Hodgson, Development Team tracks. by all accounts, the gaming floor will The Ontario Lottery Corporation Sault Ste. Marie Interim Casino not disappoint. and the Ontario Casino Corpora- Expect the Board of Directors of the Several reasons are being cited for the tion have formed a joint Develop. Ontario Lottery Corp to very delay - time taken to write procedural ment Team which will be responsible shortly announce its decision with and operational regulations and manu- for advising the OLC on issues sur- regard to the location for, and size als; to train staff (initially without the rounding its building and operating of Sault Ste. Marie's interim casino. benefit of these manuals); and settle a four charity casinos. The Board is expected to go along disagreement between the OLC and The team, as we understand, is actu- with the City's recommendation other gaming bodies as to who would ally composed of three separate teams that the casino be located in what employ the track's approximately 300 - a technical team compose of David was the Woolco Building. No date employees. Maddocks and Roger Floyd from has yet been set for this casino to Piecing together the exchange, we the OCC and Reich + Petch Archi- open though late-Spring, 1999 is gather that the OLC wanted all Wind- tects will review and make recom- often mentioned. sor Raceway gaming personnel be its mendations on site issues and build- Windsor Raceway employees - this may have stemmed ing issues, a liaison team from the The 712 slots are in place, testing is from the Morris Rose Ledgett legal OCC and OLC is working with each underway, and we understand the opinion. The other side responded of the four communities to identify that the Windsor Raceway staff total,

Commercial Casino Revenue and Visitor Statistics

Month Slot Daily Change $Win/ change attend attend Player previous previous previous month month month month dI 1 Sheraton Casino Halifax Halifax Oct Sheraton Casino Sydney 1 Sydney / Oct Casino de Montreal 1 Montrkal 1 :3 Casino de Charlevoix Pte au Pic

Casino de Hull Hull

Casino Windsor

Casino Rama

Crystal Casino I Winnipeg :I Club Regent Winnipeg

McPhillips Street Stn Winnipeg

Saskatchewan Indian N. Battlefordl Jul Gaming Authority Prince *Ibert/ 1 Ynrktoh 1 I Carlyle I Casino Regina 1 Regina I Sep

Notes: (1) Fimre is based uuon the ~uarterlvaverages provided by the Ontario Casino Corporation. -Page 12 Canadian GAMING News - multiplied by the number of tracks to Manitoba Lotteries Corp 1 Gaming Manager Position receive slots, would wipe out most of Pit Manager 1 Shift Manager the staff reduction gains which the ($ millions) 1998 1997 government had achieved since tak- Diamond Tooth Gerties Casino in Daw- ing office. The Premier's Office Net Revenue: son City, Yukon is recruiting a Pit Man- ager / Shift Manager. Candidates should came down on the side of those want- Video Lottery have a minimum of 5 years table gaming ing the tracks to employ gaming staff. Lottery experience, a working knowledge of slot All management staff will be em- department operations and exceptional ployed by the OLC - General Man- . McPhillips 8.9 9.3 interpersonal and supervisory skills. ager, Cage & Coin, Slot, Security, Club Regent 1 6.5 1 7.1 1 The position is 6-7 seasonal months in Survaillence and Marketing Man- duration. agers as well as four Site Auditors. Crystal Salary Range: $5,000 - $6,000 per month Slots at the Tracks BeneJits : Subsidized Housing, Still no date or indication as to when Other income Travel Allowance, the OLC will announce slot alloca- Health & Welfare tions for Ontario's horse racing Plan, RRSP tracks. Administration Competition Closes: January 15, 1999 Manitoba Lotteries Net Income 60.5 58.6 A Detailed Job Description is available upon request. Earnings Reduced All inquiries will be kept confidential. During the April - May, 1998 period Interested candidates should contact: Manitoba Lotteries Corporation Pari-Mutuel Tax? Denny Kobayash i, net income increase 3.3%. Net VLT The British Columbia Ministry of Executive Director revenue went up 0.4% and lottery Klondike Visitors Association revenue increased 24.0% while total Employment and Investment has Box 389 net revenue for MLC's three casinos hired Price Waterhouse to provide Dawson City YT YOB 1GO analysis and recommendations with decreased 2.5%. While revenue for regard to requests from that Phone: (867) 993-5575 McPhillips Street Station and Club Fax: (867) 993-64 15 province's horse racing industry E-mail: [email protected] Regent decreased, the Crystal that the provincial tax on pari- Casino's net revenue increased by mutuel bets be reduced. 24.1% - maybe they should keep it opment's plans to build a new, $1 I0 open! Bingo and breakopen revenue The government currently levies a million racing complex at the Calgary increased 16% to $85 1,000. 7% tax on pari-mutuel bets but airport. The complex will include a channels half (3.5 percentage 718 and a I-mile track, 350-room hotel, points) of this back to the industry 18-hole golf course, soccer fields and via contributions to the Horse Rat- a slot parlour. While Calgary is not in ing Improvement Fund and a further direct competition with Hastings Park, 0.5% to the Research and Facilities we understand there is competition be- Fund which allocates money to the tween the two for horses to run stakes tracks for capital improvements. events. These contributions amount to about $10 million of the approxi- New Canadian mately $16 million the government collects. Beyond this, 2.0% of Office simulcast and 1 .O% of teletheatre John Huxley of London, England has wagering also goes to the Research opened a Canadian sales office in Oril- and Facilities Fund. lia, Ontario. Brad Broderick, (705) While the main competition for 327- 1202, Huxley's new Canadian Hastings Park in Vancouver is Sales Executive, will be responsible Seattle's Emerald Downs, the in- for sales and direct operational support dustry is also looking toward Al- for Huxley products. These include berta with its 5% pari-mutuel tax Huxley's Chipper 2000, roulette (all this money goes back to the wheels, table games and furniture, industry) and at Resort Point Devel- cards, chips and layouts.