Canadian Gaming, Nance Minister John Manley, Pre- IGT, and Bally Gaming Are Subject Sented the Minister with Hs Recommen- to Both Bodies

ing NewsM

Issue 98 December 2002 Harold MacKay has a message

for ugaming On November 15, 2002 Harold Publicly traded gaming companies MacKay, a Special Advisor to Fi- such as Great Canadian Gaming, nance Minister John Manley, pre- IGT, and Bally Gaming are subject sented the minister with hs recommen- to both bodies. dations on a process to be used to Inherent to the responsibilities of determine the best securities regulatory each is an obligation, while ensuring system for Canada. Securities regula- the probity of their industries, to Ivan Sack tors being those agencies - such as the foster confidence by removing arbi- Complaints about direct costs in- Ontario Securities Commission, trariness; to basing decisions upon whtch each province and territory has curred in dealing with multiple ju- rules which are clearly laid out and risdictions; and to do background checks on, and en- interpreted; to identify and minimize sure the continued suitability of com- unnecessary impediments to com- the indirect costs which companies panies to trade on Canada's stock ex- merce; and to promote growth within incur as they set aside staff and changes. In particular, MacKay fo- the economy. travel to respond to regulators. cused his attention on a process Much of this will sound familiar to through which the minister could en- Security regulators operate in 13 provinces and territories. There are both operators and suppliers within sure that Canada has a modem and our industry and, we suspect, to many efficient securities regulatory system. self-funded and autonomous securities commissions in Quebec, On- gaming regulators. So why you ask, should someone tario, Manitoba, Alberta, and British While MacKay did not identify this, involved in the gaming industry care Columbia. The remainder are struc- we would add to the list of complaints about recommendations made to re- tured within, or report to government the exclusion of small entrepreneurs. form securities commissions? line departments. Wearing our other hat, that of confer- Because securities commissions and Within the gaming regulatory sector ence organizer, we every year invite gaming commissions do many of the there are self-funded and au- companies to exhibit their products on same things and have many of the tonomous commissions in Nova Sco- our exhibition floor. In our follow up same impacts upon their client groups. tia, Quebec, Ontario, Manitoba, calls we are often told by smaller com- Each has jurisdiction over a province Saskatchewan, and Alberta. Regu- panies that they would like to sell to or territory and each, since it performs lators in the remaining jurisdictions casinos and lotteries but that they can- a quasi-judicial role having been given are, like their securities colleagues, not afford the money and time it takes the right to make independent deci- structured within, or report to gov- to become registered without first hav- sions, is a gatekeeper into an industry. ernment line departments. ing an order in hand, and that no one Each writes its own regulations, does MacKay identified a range of prob- will commit to an order without their its own background checks, ensures lems with the present cross-country first becoming registered. compliance with its regulations, and system of securities oversight: For example, it costs $5,000 plus each establishes a fee whch its client Excessive cost and time delays background investigation costs to be- group must pay for the services which come registered in Manitoba and it performs for it. that flow from complymg with different laws, regulations, rules $15,000, plus investigation costs, to Both are also subject to many of the and policies. become registered in Ontario. Mani- same criticisms from their client toba refunds a portion of its $5,000 fee groups regarding cost, duplication, and Complaints about the different if its costs do not total this amount the time taken to make decisions. One interpretations which various while Ontario does not. hears the question of who regulates cornmissions give to regulations which appear the same. Many companies, large and small, also the regulators? complain about the open-endedness of -Page 2 Canadian GAMING News - the investigative process. About the paragraph which talks about how the Earth Future Foundation and the fact that, even after you pay your ini- casino, which by the way will hap- government keeping what was left tial fee you still have no idea of how pen to put millions into the govern- over. much extra you may be required to pay ment's pocket, will stimulate local Since PEI has a very small population, for the background check. industry. We then come across some this lottery would give it the ability to Canada's securities regulators were of these local companies and are told get around constraints associated with initially urged by their industry to rec- that they are not able to become only being able to sell tradtional lot- ognize one another's registrations - a involved. tery products into its own market. practice commonly known as reciproc- There is obviously a paramount need As this Internet lottery had the poten- ity. The advantage was that if your for gaming regulators to ensure the tial to poach lottery players from other background check was completed in integrity of games, operators and provinces, the Interprovincial Lot- Alberta and you were registered to suppliers. However, this is not the tery Corporation (ILC), on Septem- trade your company's stock on the issue here. The issue is will this ber 7, 2000, filed an application with Alberta exchange you, for example, integrity be ensured by regulators the Ontario Superior Court aslung for would not have to repeat this exercise operating independently of one an- a declaratory judgment to the legality to have your shares traded on the other (with an annual conference for of the Prince Edward Island lottery. Toronto exchange. informal exchanges); by separate When the government of PEI indcated Securities regulators, however, op- regulators who ease the burden for that it would also make a reference, posed this saying that they could not suppliers by reducing duplication, or the ILC placed its court action on hold delegate, or abdicate their responsibili- will this integrity be ensured by one pending a decision by the PEI Court of ties to the legislatures to which they national gaming regulator as may Appeal. happen in the securities industry? are ultimately accountable. Commis- Up until now all governments, PEI sions which considered themselves to Unlike in the securities industry, this included, have interpreted the Crimi- have 'high' standards also feared they decision will not be forced upon nal Code to mean that only provincial might be forced to accept information gaming regulators and politicians by governments, or their agents, can op- from others they considered to have multi-billion dollar companies erate 'lottery schemes' in Canada. 'lower' standards. threatening to walk away. Quite the They have also agreed that Section Regulators are also very strong profit contrary. Most politicians with 207 (3) (c) prohibits all governments centres for government. Virtually ev- gaming responsibilities are not there from using computers to conduct ery regulator in the country collects long enough to initiate such a move draws, and have agreed that provincial fees which exceed its operating costs. and it is unhkely that it will come governments can only sell within their Each government would lose a portion from large suppliers since the exclu- own boundaries. The Interprovincial of this if companies could shop juris- sionary nature of the present system Lottery Corporation was then created dictions and go to the lowest bidder. works to their advantage. In our to sell tickets, such as 6/49, across all system, a call for change can only jurisdictions. Despite opposition from the regulators, come from the regulators them- some politicians, including Mr. Man- selves. Forward looking individuals On April 24, 2002 the PEI Supreme ley, are today seekmg to move in the who would perhaps agree to create Court, in an unanimous decision, de- direction that industry wants to go - their own Wise Person 's Committee cided against the Earth Lottery with one national securities regulator. to make recommendations as to how that province's Minister of Finance, They are considering a national securi- regulators can do more to open up the Honourable Pat Mella saying that ties regulator, not because they have access to the Canadian gaming in- 'the province will live with the ruling'. become centralists, but because large dustry. All thought this meant that this initia- corporations are threatening to give up tive was dead. their registrations on Canadian stock PEI still pursues Not so. The province had a 30-day exchanges and move to the New York period to file a motion of appeal with and NASDAQ exchanges. Internet lottery the Supreme Court of Canada and it By the way, we hope that Mr. MacKay Last fall and winter we wrote of a dld this on May 24. has not been paid a lot to write his proposal by the Government of In its motion it has requested that the report as, having identified the problem Prince Edward Island and Lottery Supreme Court review two issues. quite succinctly, all he has done is Management Inc., to create an In- The first is if the Internet lottery would propose a WisePerson 's Committee to ternet lottery. The lottery would be be conducted and managed in Prince study it further. And then again, there known as the Earth Lottery. Edward Island and the second is if the are times when thls can be considered lottery would be operated on or an achievement. As we understand, the government would contract with Lottery Man- through a computer. Virtually every government announce- agement Inc. to operate the lottery The Supreme Court will hear this ap- ment of another casino begins with a with 5% of its profits going to the peal March 11,2003. -Canadian GAMING News Page 3-

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- Canadian GAMING News Page 5 - This is therefore obviously a guess though we think our membership represents about two-thirds of Internet gaming operators. There appears to be a consensus that the market is about $4 billion today and estimated to grow to about $10 billion in 2006. Keith Furlong, is Vice President with Sack: Where are the major Internet the Catania Consulting Group, a gov- gaming jurisdictions? ernment relations consultancy with We advocate the adoption of strong Furlong: The Isle of Man is a more extensive experience in gaming issues. government regulation which we see recent jurisdiction with high profile He is also Deputy Director of the as an important step towards getting Interactive Gaming Council. licensees - MGM, Mirage, Rank, and rid of unscrupulous operators. For Action On-Line. Alderney, another Prior to joining Catania he was, for example, we submitted written testi- U.K. island, has also issued licenses to jve years, Legislative Liaison for the mony to legislators in New Zealand Littlewoods, Wagerworks, and Ritz In- New Jersey Division of Gaming En- and the United Kingdom and are ternational, the operator of the Ritz forcement. lobbying in support of regulated In- Hotel chain. ternet gaming in Wash~ngton and Sack: What is the Interactive Gaming Nevada. Most recently, we for- Antigua is the major Internet jurisdic- Council? warded a submission to FATA re- tion in the Caribbean followed by the garding their 40 Recommendations island of Curacao which is near the Furlong: The IGC is an international Netherlands Antilles. non-profit trade association. It repre- on Money Laundering and engaged sents about 75 companies from around in consultation with the U. S. Federal Australia is a leading regulator though, the globe that are involved with the Trade Commission. because of uncertainty stemming from interactive gaming industry. Our federal government intervention and members account for approximately Sack: How does the public, once it restrictions placed on casino style two-thirds of the online business. has signed on to a site, know it is one games, no domestic wagers are permit- of your members and that this mem- ted. It primarily regulates online The Interactive Gaming Council was ber is adhering to your code? sportsbooks and has only one or two created in 1996 as an affiliate of the Furlong: Each of our members dis- online casinos that offer gaming off- Washington DC-based Interactive Ser- shore. vices Association. It was incorporated play our association logo on their in Canada in 2000 and is headquar- sites. A member's name and its And then of course Canada has the tered in Vancouver. associated sites are also displayed on Kahnawake First Nation in Quebec. the IGC Members page. The Kahnawake have the distinction of Sack: What is required to join your being the only jurisdiction in North association and to remain a member in Sack: But do people know what America which operates Internet gam- good standing? your logo means and will they look ing. The Kahnawake, who have li- for it? censed their own regulator, are consid- Furlong: Each operating member of Furlong: Public awareness is a key ered a reputable operator as they do the IGC must be licensed to lawfully extensive background checks on all the conduct interactive gaming from the component of an ongoing IGC cam- paign to educate key industry stake- companies they license. They are also jurisdiction from which it operates and one of the few Internet sites to use agree to abide by the IGC's Code of holders and consumers. We also receive e-mails from consumers who broadband. This greatly enhances Conduct, a copy of which can be found their quality and speed of access. on the IGC7sweb site. are seeking clarification on the membership of certain sites. Sack: What of Nevada? Sack: What is the mandate of your association? Sack: I've heard many estimates Furlong: Nevada got a lot of attention about the size of the Internet gaming when it introduced legislation authoriz- Furlong: Our mandate is to provide a market. How big is it? ing its Gaming Commission to regulate forum to address issues and advance Internet gaming. The federal Depart- common interests in the global interac- Furlong: No one really knows since a significant portion of Internet gam- ment of Justice, however, provided an tive gaming industry. We also estab- opinion that casino-style games, and lish fair and responsible trade guide- ing is still conducted in non- regulated environments with no re- not only sports wagering, contravened lines, and practices that enhance con- the Wire Act. sumer confidence in interactive gaming porting requirements. As well, In- ternet companies come and go con- products and services. We serve as the Sack: Why did it contravene +is act? industry's public policy advocate and stantly. -Page 6 Canadian GAMING News - Furlong: DOJ said that Internet gam- online auction where there is no au- tives passed in November. It wasn't ing is conducted at two locations - on a thentication of the product sold for passed by the Senate and will die when player's computer and on the host the price paid and where there is no the new Congress begins in January. server. This position was recently scrutiny as exists with gambling. Rep. John Conyers last week intro- over-turned by the US. Fifth Court of duced a bill to create a commission to Appeals which ruled that the Wire Act Sack: How do players transfer make recommendations as to how fed- does not extend to casino-style gaming. money to and from their accounts eral and state governments might regu- It said that legislators could not have without using credit cards? late Internet gaming. This is what we intended that this be covered since In- Furlong: PayPal has been used have been advocating and we strongly ternet gaming did not exist when the though it has been purchased by support this. It will also dle when the Act was passed. e-Bay which has stopped the prac- new Congress begins though Rep. Conyers has said he will reintroduce Sack: How do you rate the regulators? tice, in part because of inquiries being made by New York State Attor- his bill in the 108th Congress. Furlong: The Isle of Man, Alderney ney General Elloit Spitzer. Net and Australia would appear to have the Teller and Citadel are now most Sack: Can any one jurisdiction effec- strongest regulations. Costa fica and frequently used. tively block Internet gaming? Belize, which simply sell licences with- Furlong: It would be a failed experi- out any regulatory requirement, would Sack: Who protects players from ment just like prohibition. Even HR be amongst the weakest. being cheated and who ensures that 556 did not make it a criminal offence they are paid their winnings? Sack: I'd like to explain to our readers for U.S. citizens to play Internet how an Internet gaming company oper- Furlong: This is a big concern for games, it only said that servers could ates. Companies such as Canada's us. We encourage players to bring not be on U.S. soil. This would simply Chartwell Technologies and Crypto- their complaints to us though it is have driven Internet gaming off-shore Logic design the software which is difficult for us to do much. We have and created an environment opposite to then sold, or licensed, to a company just updated our website with infor- that being sought - a safe, regulated which becomes the operator. The op- mation on things which players alternative with high standards of con- erator mounts the software on its own should watch for. For example, does sumer protection. servers, or pays a fee to mount it on a gaming site display basic informa- someone else's servers, with the public tion such as a telephone number and Sack: A big concern is underage gam- then accessing the operator's sitc an address? We of course also tell ing. How can anyone guard against through its own computers. Players them to look for our logo. Further thls? then open accounts with the operator suggestions to assist consumers can Furlong: As I said earlier we favour from which bets are debited and win- be found on the IGC website - the strong regulation. This would include nings credited. Is this a fair descrip- Helpful Hints link on the IGC's a rigid process requiring that, before tion? Opinion Page at being allowed to open an account, a Furlong: It is. http:www.igcouncil.org/opin- player had to provide an operator with ion.php. information to verify a player's age, Sack: Is most Internet gaming casino residence, and identity. Each time a gaming? &ck: You mentioned legislation to player wished to participate online, a regulate Internet gaming. Where Furlong: Casinos predominate though verification process, for example a does this stand? bingo is becoming popular as are lot- password or PIN, would be required. teries and sports betting. Furlong: There were two pieces of This is similar to the process used with legislation before the U.S. Congress. ATMs around the world. Sack: Credit cards have had a big role HR 32 15 basically prohibited online in Internet gaming since players used gambling though it was watered Sack: Why have companies such as them to credit and debit their accounts. down to exclude horse racing, lotter- Harrah's created 'play-for-fun' sites? Why are many banks now preventing ies and certain other games. They Furlong: It's mostly a marketing tool. people from using their credit cards? were exempted because they are a People who register to play on the site Furlong: Mostly they feel pressure source of tax revenue for the states. are, for example, added to data bases from legislation pending in the U.S. The second was HR 556. This bill and encouraged to visit their land- Many have also had problems collect- sought to prevent the use of banlung based casinos. ing losses from card holders which is a instruments, credit cards, to pay for more significant problem in North unlawfil Internet gaming. Sack: Many thanks! America than elsewhere. Interestingly, you can still purchase porn and hate Sack: Will these bills pass? Drafts of our interviews are material using credit cards. You can reviewed by our guests also use them to purchase from an Furlong: They were rolled into one before publication bill which the House of Representa- - Canadian GAMING News Page 7 -

r While Premier Doer repeatedly said \ Premier to he would not attempt to Influence the Canadian Gaming review First municipalities, he now says that the Summit government has failed to 'put the Nation casino plan puck in the net' and has agreed to & Exhibition meet with the Grand Chief. Grand Manitoba Premier Gary Doer agreed, Chef White Bird is expected to ask November 13, 2002 to meet with the government to drop the require- Grand Chief Dennis White Bird, ment that the casinos be built on Leader of the Assembly of Manitoba reserve land. Thls would give First Chiefs, to discuss the failure of that Nations more flexibility when select- province's First Nation casino pro- ing casino sites. There is also specu- gramme. lation that replacement sites could be In the runup to the 1999 election which announced. Doer and his New Democratic Party The chief met with Manitoba's gam- Wallace R Barr won, Doer made a commitment to open ing minister, the Honourable Tim Wallace Barr, President & C.E.O., up to five small First Nation casinos. Sale at the end of November though They were to be tools for economic Park Place Entertainment Corpo- no date has been set for hs meeting ration will be a Key Note Speaker development with half the profits from with the Premier. each casino going to the First Nation at the March 10-12, 2003 Cana- which owned the casino and half going Grey Cup bonus dian Gaming Summit & Exhibition. into a First Nation development fimd. The largest casino operator in the The contents of the fimd would be lottery draw world, Park Place Entertainment shared by all remaining First Nations Corporation owns, manages or has TV viewers of the November 24, in that province. an interest in 29 gaming properties 2002 Grey Cup football game be- S, Following his election, and now as tween Edmonton and Montreal at operating under the Bally Cae- premier, he followed through on hs Edmonton were treated to some lot- sars, Paris, Flamingo, Grand promise. There were, however, two tery drama as part of the Half-time Casinos, and Hilton brand names. conditions. The first was that the Show - and we are not referring to These properties include casinos in casinos be built on First Nation re- the excitement surrounding Shania six U.S. states, Australia, Uruguay, serves or on urban reserves. An urban Twain's appearance. South Mca, and Casino Windsor, reserve being a piece of city land which Casino Hal* and Casino Sydney a First Nation has purchased and then As part of its 20th anniversary cele- in Canada. had converted to reserve land. brations associated with the introduction of its 6/49 lottery draw in Park Place properties have a total of The second condition was that the mu- 1982, the Interprovincial Lottery 2 million sq. fi of gaming, over nicipality where the urban reserve Corporation held a draw for a spe- 28,000 hotel rooms, and approxi- would to be located had to agree. cial $6.49 million prize. As forty- mately 58,000 employees. Since most First Nation reserves are five pre-selected lottery challengers One of the most influential and re- too far from urban centres to be good gathered on the football field one spected executives in casino gaming casino sites themselves, their casinos member of the group was selected at today, Mr. Barr joined Caesars At- were therefore at the mercy of the random as the winner of the grand lantic City in 1979 as Casino Con- municipalities. prize. The remaining 44 shared a troller, and then Administrator. While the Opaskwayak Cree Nation secondary prize of $2 million. Two years later he joined Bally's succeeded in gaining approval and LOTTO 6/49 is a joint venture of Park Place as Corporate Controller built a casino in the Town of The Pas, five of Canada's provinciallregional and Treasurer and was promoted to three other proposals - those for Bran- lottery corporations: Atlantic Lot- Senior Vice President. don, Headingley, and Thompson were tery Corporation, Loto-Quebec, Following Hilton Hotels Corpora- defeated by municipal votes. A fifth Ontario Lottery & Gaming Cor- tion's purchase of Bally's he was proposal, for a casino to be built by the poration, Western Canada Lottery promoted to Executive Vice Presi- Brokenhead First Nation, near the Corporation, and the British dent, Eastern Region. He subse- southern tip of lake Winnipeg, remains Columbia Lottery Corporation. quently held this same position with at the develo~mentalstage. Park Place Entertainment Corp un- Since its introduction on June 12, til being named Chef Operating All of this means that Manitoba's First 1982 there have been 1,915 draws Officer in July 200 1. In November Nations are not receiving the economic with jackpots having been won on benefits which were implied at the time 2002 he was appointed President & 1,229 occasions. 6/49 prizes to date C.E.O. of the origmal announcement. total $16 billion. -Page 8 Canadian GAMING News - per share. The initial purchasers I ~anadianGaming I also received a 30day option to pur- Additional casinos chase an additional $25 million worth of notes. add to earnings The market did not welcome this On November 12, 2002 Great announcement as concerns over Canadian Gaming Corporation share dilution and the below market announced its financial results for conversion price caused the shares to the nine months ended September drop from $1 1.34 at the time of the 30, 2002. During the most recent announcement to $9.95 at the end of period gross revenue increased by 4.96 CryptoLogic Inc the month. 47% to $70.2 million whle net (CRY) I On November 8 CryptoLogic re- profit increased 7 1% to 12.2 million. 0.06 Dion Entertainment ported lower third-quarter profit. Earnings per share from continuing The Toronto-based company said 1 (DIO) 1 operations for this nine-month pe- that net income fell to $1.3 million, riod increased to $0.60. This is up 3.75 Great Cdn Gaming or $0.1 1 per share, from $4.4 mil- an impressive 58% from the $0.38 1 (am2 lion, or $0.30 a share for the same per share which the company earned quarter last year. The company said during this same period last year. it nevertheless beat per-share expec- Networks (IGN) 2 The company attributes much of the tations from management of $1.2 increase to the opening of its Coquit- million net profit and $0.08 per lam and View Royal casinos. Each share. has 300 slot machines. 0.05 Jenosys Enterprises CryptoLogic7sshares jumped, how- (JET) 2 ever, when management welcomed a 1 November 27 decision by Represen- tative John Conyers of the U.S. CD-ROM Congress to introduce legislation to Canadian frst create a commission to make recommendations on how federal and state Loto-QuCbec announced November governments might regulate Internet 14, 2002 that its subsidiary, Ingenio, 0.12 Venture Pacific gambling. This initiative is, how- has reached an agreement with the I (WV) 2 ever, largely symbolic as it will die Western Canada Lottery Corpora- with the end of the current Congress. tion to sell its CD-ROM-based lottery Where traded: game - Solitaire Riches. This game Great Canadian announced its in- 1) TSE 2) CVE 3) NASD over-the-counter will be sold in Alberta, Saskatchewan tention to make a Normal Course and the Northwest Territory. Issuer Bid for up to 1 million com- Despite the fact that November was a This is the first time that a Canadian strong month for the Toronto and New mon shares for cancellation. The shares to be purchased represent less lottery other than Loto-Quebec will York exchanges, the majority of Cana- offer a CD-ROM lottery game. dian gaming stocks were unchanged. than 5% of total shares outstanding. Of the remainder, two stocks were up The company repurchased, and can- Loto-Quebec also took the opportu- and two down. The two companies celled 934,000 of its outstanding nity to announce that the Portuguese which gained were the two largest shares during the October 16, 200 1 lottery corporation Santa Casa de companies on our index - Crypto- to October 15,2002 period. Misericordia de Lisboa - Departa- Logic and Magna Entertainment. International Thunderbird an- mento de Jogos will launch Viagem Misteriosa. Viagem Misteriosa is the Magna started out strongly moving up nounced its financial results for Q3 ending September 30, 2002. Total Portuguese-language version of its from $9.33 at the beginning of the Mot Mystere CD-ROM lottery game. month to 11.5 0 by mid-month. On the gaming revenues were $4.2 million 19th the company announced that it compared to $4.4 million in the year- To date Ingenio's CD-ROM lottery would sell $50 million in convertible earlier period. The company games have been sold to state lotteries subordinate notes to raise money for recorded a loss for the quarter of in Iowa and Kentucky as well as to general purposes and debt repayment. $74,000 or $ nil per share. This Loterie Suisse Romande, in the The notes will have an annual interest compares to a gain of $94,000, or $ French-speakmg part of Switzerland, of 7.25% and be convertible into Class nil per share in the year-earlier quar- and to Belgium's national lottery cor- A subordinate voting shares at $8.50 ter. poration. -Canadian GAMING News Page 9 - that Loto-Qukbec contributes annu- 20,000 per day and go as high as Loto-Quebec's ally to the government. 35,000 per day on holidays. new operational1 Loto-Quebec's net profit for the About 650,000 of Casino de Mon- 2001-02 fiscal year was $1.448 bil- treal's visitors last year were from development lion. The plan projects subsequent outside the province. They represent net profits as follows: 2002-03 - about 10% of the total number of strategy $1.455 billion; 2003-04 - $1.455 visitors to that casino each year. Mr. On November 8,2002 Gaetan Frigon, billion; 2004-05 - $1.455 billion; Frigon has set an objective of increas- President & CEO, Loto-Quebec un- 2005-06 - $1.525 billion. ing the number of visitors from outside of Quebec to 20% of total visitations * veiled a strategy which, if adopted by 2. IntensiJL measures to help com- the Government of Quebec, will see pulsive gamblers. during the next five years. Loto-Quebec make a major shift in its 4. No overall increase in gaming in policy focus and operations. In the past five years Loto-Quebec ! has contributed $5.3 million in re- Quebec. Gaming in Quebec: A Necessaly Re- search grant for studies conducted This is a continuation of the policy organization is an action plan for the by McGill University,the University now in place. corporation during the 2003-2006 pe- of Montreal, the University of Que- riod. The plan aims to sigtllficantly Highlights of the announcement are bec and the Fernand Skguin Re- asfollows: reduce the accessibility of VLTs to search Centre. further combat compulsive gambling. Major changes in the VLT It also proposes investments of nearly The corporation has also provided programme $600 million to expand, upgrade and financial support (no figure provided) for the creation of the Quebec Reduced access to video lottery reposition Quebec's three commercial terminals and measures to encour- casinos. Centrefor Excellence in the Preven- tion and Treatment of Compulsive age responsible gaming The plan includes intensified efforts to Gambling. The centre is affiliated 41% reduction in the number of develop and market new and tradi- with Lava1 University. bars and taverns equipped with tional lottery games - for example, the VLTs, from 3,180 to 1,861. This corporation's CD-ROM lottery games. Loto-Quebec will now allocate $20 million a year for scientific research represents a total decrease of While the plan appears not to include 1,659 establishments since 200 1. any new measures to assist bingo in and for the prevention and treatment of compulsive gambling. In the Bars and lounges losing their that province, it does make mention of VLTs will be compensated to the the fact that, effective April 1, 2002, 1999-2000 and 2004-2005 period this will amount to $86 million. extent of one year's commission. Loto-Quebec has given up what was $60 million has been earmarked its share of network bingo profits. In In May 2001 Gaming Minister for compensation. 2001-02 non-profit organizations re- Pauline Marois also announced a ceived $8.8 million form Loto-Quebec- lo%, or $2.4 million reduction in A reduction of 3,370 - or 24% of operated linked bingo games. Follow- Loto-Quebec's lottery sector adver- the total number of VLTs in bars ing the change, charities will receive tising and a reduction in the number and taverns. This will bring the $12 million in 2002-03. of VLTs to 14,300 from 15,300 by total number of VLTs withdrawn since May 2001 to 4,370; In our October lead article we wrote the end of November 2002. (See that thls review was underway and box for addiction avoidance features introducing a policy under which placed it within the parallel context of included on Quebec's new VLTs). bars and taverns can have a maxi- Mr. Frigon, who asskned his responsi- 3. Increase the number of tourists mum of 10 VLTs. This will affect bilities th~spast February, having also visiting casinos from outside of about 60 establishments which i undertaken a major realignment of ex- Quebec. have multiple liquor licenses and have come to style themselves as ecutive responsibilities. When Casino de MontrCal opened I mini-casinos. What is becoming more apparent is in October 1993 it anticipated 5,000 that when Mr. Frigon was given the visitors per day - the average for that Between January and July 2003 it leadership at Loto-Quebec, he was also first year turned out to be 12,000 per will replace existing VLTs with given a mandate to bring in significant day. With the 32,000 sq. ft expan- newly ordered second-generation change. sion of the gaming floor in 1997 into equipment. The 2003-2006 Action Plan lists the what was called the Quebec Pavil- Proposal to transfer VLTs to horse following as primary objectives: ion, and the addition of progressively racing tracks more gaming positions over the Loto-Quebec does not have the au- 1. Maintain the level of net income years, visitations today average Know someone deserving of recognition? See page 16 -Page 10 Canadian GMING News - thority to make decisions regarding performance hall with at least gaming at horse racing tracks though it 1,250 seats in part of the space Addiction avoidance has presented the government with two vacated in the parking garage. features on QuCbec's options for the possible transfer of This new facility would replace new VLTs additional VLTs to the four tracks that the casino's present 500-seat Le a clock is displayed on the already have them. This would be Cabaret showroom; screen at all times; very popular with the tracks. As we moving the portion of the the player must choose a playing wrote in October, they presented a casino's gaming floor which is time (15, 30, 45 or 60 minutes). position paper to the government out- now located in the former When time is up play stops and lining the fact that they were no longer Quebec Pavilion (this is the the player must reset the clock; able to compete with the purses offered 32,000 sq. ft of gaming area into credits are displayed in dollars in Ontario. which the casino expanded in to give players a better sense as Loto-Quebec is proposing to relo- 1997) to part of the space va- to how much money is involved; cate 1,570 VLTs to the four horse cated by the closing of the in- racing tracks that now have them. door parking lot; chrome parts will be replaced by black to make the machmes less Including the 430 VLTs already at redevelopment of the Quebec attractive; there, this would give them a total Pavilion, including the area now of 2,000 VLTs. occupied by Le Cabaret, into an the entire upper part of the ter- If the government decides not to give international section of the minal will display a warning and the horse racing tracks more VLTs, casino. Thls international sec- the number of the addiction help Loto-Quebec has given it the option of tion would include a smaller, line. The faceplate on the lower placing this same number of VLTs at high-end gaming floor and dedi- portion of the unit will provide bars and restaurants which currently cated on-site accommodation the unit's payout average; have 4 to 6 VLTs. and dining for comped high-end the number of games available Casino de MontrCal players. More of premium play- will be reduced to 10 from about redevelopment ers are expected to come from 23; outside of Quebec. Loto-Quebec Loto-Quebec says its new proposals points out that, while premium rate of play will be reduced for Casino de Montreal are intended players represent only 0.5% of slightly; to equip the casino with the services it current total annual visitations, the maximum bet per game ses- requires to better compete for premium these players generate about sion will be reduced to $60 from players. High-income players accus- 20% of that property's annual $100. tomed to being pampered by other gross revenue. casinos - particularly those in the mar- The remainder of the casino will though we are told it will approxi- ket the casino is now targeting for mate the size of Casino de expansion - the northeastern states. be redesigned to alleviate over- crowding; Charlevoix (800 slots, 22 tables); Consistent with the above, and in addi- there would be an addition of 0 co-located with a major North tion to the proposals below, Mr. American ski resort; Frigon set the stage this past summer 500 restaurant seats and 250 bar for the introduction of the casino's seats; would be marketed mostly outside premium player strategy by raising bet purchase of a share in a presti- of Canada; limits for high-stakes players from gious golf club in the Montreal offer international tour packages; $5,000 to $25,000. area. 40% of this casino's clientele are Initiatives announced on the 8th for New monorail expected to be out-of-province and to contribute 60% of total revenue. Casino de Montreal include: construction of a monorail to a $470 million price tag; link the off-site parlung area to $10 million for Casino de Charlevoix closing half of the casino's current the casino (a four-minute ride). This would be the second expansion indoor parking area. This would This is included in the $470 mil- undertaken at Casino de Charlevoix. reduce the number of parking lion figure. No separate figure In 1998-1999 Loto-Quebec expanded spaces from 1,973 to 1,008; has been provided for the cost of and refurbished this casino while a the monorail. consortium composed of Loto-Quebec, construction of a 4,000-space Fonds de solidaritd of the FTQ, and multi-level parking facility on the New casino for Mont Tremblant ski resort CP Hotels spent $140 million to con- site of the former Autostade and vert the Manoir Richelieu into an ele- next to the Bonaventure autoroute; estimated to cost $75 million (no gant hotel complete with large health development of a new world-class projection has been made for the spa. number of slots and tables -Canadian GAMING News Page 11 -

The casino's gross revenue has corre- Americas and Casinos Mundial. 7th annual spondingly increased from $25 million, Casinos Americas is a subsidiary Canadian the year the expansion began, to $43.2 created to operate and perhaps as- million thls past year. Loto-Quebec sume an equity position in Mexican Gaming Summit now proposes to: casinos should they be approved. & Exhibition build a multi-functional facility The Caisse de d6pBt et de place- March 10-12, 2003 which would be used for shows ment du QuCbec, a Quebec-based and banquets, capable of holding pension fund with assets well in ex- Welcome Reception 600-800 people; cess of $135 billion would provide March 10,2003 50% of any such investment with Ballroom, Chateau Laurier Hotel . construct a new clubhouse at casino's golf course. The new Loto-Quebec providing the remain- Exhibition Floor, Workshops clubhouse would round out an ex- ing 50%. Breakfasts, Luncheons March 11, 12,2003 + pansion of the course, already con- Casinos Mundial has been created sidered one of the best and most to market and sell Loto-Quebec's Ottawa Congress Centre beautiful in the country, which be- casino and lottery expertise interna- Ottawa, Ontario gan thls past summer. tionally. The Caisse de depdt et de Canadian Gaming Industry enhance facilities at Hdtel Fair- placement du Quebec does not have Awards Dinner mont le Manoir Richelieu. an involvement with this. Reception While Loto-Quebec would not un- March 11, 2003 New Tradeshow Centre adjacent to Casino du Lac-Leamy Casino du Lac-Leamy dertake the above review of its operations and marketing strategy with- Gatineau, Quebec Project includes: out an advance understandmg that Conference brochures go into the undertaken in partnership with the the government is prepared to con- mail January 2,2003 private sector with Loto-Quebec sider what it has to say, it empha- investing a maximum of $20 mil- sizes that, for the present, this is only cost $60-$70 million depending on lion; a proposal. the site; 400,000 sq. fi facility to be built The government imposed a Ereeze on have 750 slots and 40 tables, and; on land adjacent to existing casino gaming expansion in 2000. While expect 2 million visitors annually; complex; Loto-Quebec has been careful to create 1,026jobs; targeting of government agencies, point out that its new VLT strategy embassies; does not include any additional have a $35.8 million annual pay- VLTs, in accepting this proposal the roll, and purchase of a share in a presti- government would have to agree to gious local golf club. contribute $102.4 million in direct expand casino gaming. and indirect benefits to that city. The proposal to purchase shares in No date has been set for the govern- local golf courses in both Montreal and We also pointed out that nothing would ment to respond though we hear thls happen until the Saskatoon Tribal Gatineau provides both Casino de is expected this winter. Perhaps, and Montreal and Casino du Lac-Leamy Council tabled its formal proposal we would hope, in time for Gaetan with the city and the city decided if it with guaranteed access for their high- Frigon7sKey Note Speech to atten- end players. Given that Casino du wants the project to go ahead. The city dees at the March 10-12, 2003 was given a veto over casinos as part Lac-Leamy had to abandon plans to Canadian Gaming Summit & Exhi- of an agreement which the Federation build its own golf course this past bition. spring, this approach would appear of Saskatchewan Indian Nations innovative and practical. (FSIN), the umbrella group for all Saskatoon casino First Nation activities in that province, Loto-Quebec's says its revenue from Last month we wrote of the Saska- and the Government of VLTs would decline by about $40 toon Tribal Council and the Saskatchewan signed on April 25, million a year beginning in fiscal 2003- 2002. 2004, and that the $50 million in addi- Saskatchewan Indian Gaming Au- tional revenue expected from the rede- thority (SIGA) having jointly re- FSIN7scasino arm, SIGA, would op- velopment of Casino de Montreal, and leased plans for a destination casino erate the casino with the tribal council the building of Casino Mont- to be built in the City of Saskatoon, owning the site and the complex. Saskatchewan. More accurately, Tremblant, would not materialize until As has been done with other SIGA fiscal 2006-2007. they released a baseline casino projection and three possible sites and casinos, the Saskatoon site, once pur- To compensate for this short-fall, it designs for the complex. chased, would be converted to reserve would emphasize international sales land. The proposed casino would: through subsidiaries Ingenio, Casinos As part of this initiative, SIGA would -Page 12 Canadian GAMING News - also take over the operation of the est for a 'new casino development in commercial return for the services Emerald Casino (100 VLTs, 32 ta- the Edmonton area'. This is for a whlch the sites provide. bles) which is owned and operated by traditional casino. Many within the industry, however, Saskatoon Prairieland Exhibition. On August 23 it also said that it had immediately saw this as a pretext for Once a new casino was built, the received three First Nation expres- the government to increase its share of Emerald would be closed and its ap- sions of interest: one from the Enoch gaming profits. proximate 200 employees offered jobs with the new casino. SIGA would also First Nation, located on the western The review, conducted by Ernst & compensate Prairieland for lost casino edge of the City of Edmonton; a Young, was completed February 15, revenue. second from the Tsuu T'ina First 2002 and given to the commission. Nation; and one from the Alexis Saskatoon Tribal Council tabled its As part of the review, the consultant First Nation. The Alexis are located was to: proposal with the City of Saskatoon about 90 lun north west of Edmon- city council on December 2. A resolu- ton. obtain cost information on a com- tion requiring that a plebiscite be held parable basis across all 16 casino on the proposal has already been In a second statement that same day facilities that segregate the opera- tabled at council. As we understand, it also announced that it had received tion of slot machines, electronic council will vote on this resolution at an expression of interest for a new racing terminals, table games, its December 16 meeting. casino development in Grande craps, poker, and restaurant and Prairie and for a new casino in bar services; The proposal received a mixed recep- Lethbridge. Lethbridge is the most tion at the five public meetings held in southerly city in Alberta. obtain cost information from a October. Knowing this, and that it had representative sample of over to galvanize support for its proposal in Each of the AGLC press releases 1,200 video lottery retailer sites; was accompanied by the publication advance of the council vote, the propo- determine the relative profitability nents are using eleven billboards of notices in local newspapers alert- of different gaming activities and across that city to get their message ing the public that it had 90 days locations, to match compensation out. Quarter page ads are being run from the date of the announcement to with costs of services provided, for a week in the Star Phoenix, that file additional expressions of interest city's major newspaper, with informa- for the geographc areasin question. implement a process to monitor cost information on an ongoing tion also being dropped at 92,000 As the 90-day period has passed for homes across the city. basis to determine whether rates each of the expressions of interest we continue to be reasonable; are into step three of the eight step Alberta casino approvals process. identifjr relative business risks. update AGLC is now doing assessments to Commission officials have been study- determine if the applications have ing the report since February and are August 23, 2002 continues to be the now expected to make rewmmenda- last date on which the Alberta Gam- merit and meet basic criteria related to market demand and benefit to tions to the commission within the next ing & Liquor Commission (AGLC) three to four months. received new expressions of interest to charitable groups. It has not given build either traditional or First Nation us a date by which these assessments British Columbia casinos. will be complete though the expecta- tion is that announcements will be casino relocations On June 21, 2002 the AGLC an- come as each is completed. At that nounced that it had received an expres- point the target municipalities will be British Columbia's casino operators sion of interest to build a traditional informed and asked to approve. continue to wait for word as to the casino in the City of Calgary. Calgary British Columbia Lottery Corpora- already has five traditional casinos Compensation tion's plans with regard to the reloca- with this proposal catching many by tion of four casinos to municipalities surprise as most had expected that the review which will permit them to have slot Tsuu T'ina First Nation, located machines. The four casinos are the withtn Calgary's city limits, would be Following observations made by Al- Royal Diamond and Grand within the berta's Provincial Auditor, the Al- the first, and perhaps only group to City of Vancouver; Gateway Royal make a proposal for that city. berta Gaming & Liquor Commis- Towers in New Westminster, and the sion thls past winter undertook a Hollywood in Prince George. During the summer AGLC received six review of compensation rates paid to additional expressions of interest video lottery and charity casino li- As we wrote last month, an issue also bringing the present total to seven. censees. The stated objective of the remains as to how BCLC and the gov- On July 24 the commission announced review was to ensure that compensa- ernment will respond to a lawsuit it had received an expression of inter- tion rates represent an appropriate brought against them by the Great

Page 14 Canadian GAMING News - - Canadian GAMING News Page 15 - Canadian Gaming Corporation. The We are told that BCLC is likely to strongly anti-slots. latter, which already owns a casino go before the Treasury Board of without slots in the City of Richmond, Cabinet with recommendations in Ontario Lottery & is claiming a right to build a new December. Gaming Corp sued casino with slot machines with that T-, N~~~~~~~ I(j municipal elec- city though it has not been included on tions appear to have changed little. An Ontario real estate broker from the the list of those casinos which the The cities of Langley, Surrey and City of Markham, Constantin Di- govement has agreed Can relocate Richmond remain pro-slots whle the galakis, is suing the OLGC for $7 and have slots. , City vancouver has become more million. Mr. Digalakis claims that,

I Canadian Casino Revenue and Visitor Statistics I City Month Total Table Total Slot Gross $ Change Daily Change House Changc tables change slots change million gross attend attend $Wid House previous previous month previous previous Player $ Wid month month month month Player Alberta ( 19 floors ( Oct 1 353 1 / 5,962 1 +66 1 54.6 1 -10.3 128,270 -7,410 1 62.28 1 +1.63

Casino Halifax Halifax Oct 41 +l 720 -34 5.2 -0.2 4,839 -691 34.79 +0.49

Casino Sydney Sydney Oct 11 378 +I 2.1 +0.3 2,0861 +83 31.80 +0.73 Casino de Montreal Montreal Oct 127 3,061 42.8 +1.5 17,158 +798 80.48 -0.91 Casino de Charlevoix Pte-au-Pic Oct 22 800 4.3 -0.4 3,401 -303 40.82 -0.41 Casino du Lac-Leamy Gatineau Oct 64 1,875 +3 17.1 8,667 +86 63.73 -0.42

Casino Windsor Windsor Jun 89 +2 3,289 -22 52.8 +0.2 15,211 -380 117.29 +2.02 Casino Rama I Orillia I June 1 122 / / 2,213 +15 1 37.0 1 +2.3 / 10,848 (+1,090(112.44 1 -5.98 Casino Niagara Niagara June 140 +I 2,837 -4 53.6 +2.2 21,292 +1,359 82.99 -3.02 Falls Sault Ste. Marie SauISte I June 1 18 1 1 3.5 / +0.4 1 3,101 1 +357 1 36.85 1 -0.81 Marie Casino 1 451 I I I 1 /I I1 1 I I I I I Brantford Casino / Brantford June 1 50 1 452 10.1 -0.4 4,317 -465 76.87 +3.45 Point Edward Casino Point Ed- June 36 452 6.8 +0.6 2,981 +290 75.19 -1.61 ward Great Blue Heron Casino Port Peny June 50 452 7.8 +O. 6 n/a n/a n/a (slot operations onlyl ThunderBayCasino lh.mder June 16 452 4.6 +0.2 2,936 +I02 52.03 -0.11 Bay Thousand Islands Gananoque June 18 452 1.8 4,153 48.16

Club Regent Casino Winnipeg Oct 31 1,166 8.6 +O. 6 n/a n/a n/a n/a McPhillips Street Winnipeg I Oct 1 26 1 Station Casino Saskatchewan Indian N. Battlefordl Prince Albert1 Gaming Authority Yorktoni Carlyle ReginaIMoose Jaw Regin&. J

Note: For casinos where information is more than one month old, this is the most recent information available. -Page 16 Canadian GAMING News - even though he signed self-exclusion agreements which were to have barred 7thAnnual him from all of Ontario's casinos, he Canadian Gaming Industry Awards Dinner continued to be offered complimentary meals and limousine service. He says ward Nominations that he went bankrupt after losing March 11,2003, Casino du Lac-Leamy more than $250,000 owned by himself and his wife. Anyone working/volunteering within Canadian gaming may make a nomina- This is the first such suit against the . tion. When submitting nominations please follow these guidelines: OLGC. I) You may nominate only one person for each of the six awards. The OLGC, in its statement of de- 2) For each nomination, please forward a short statement (200 words or fence, stated that the self-exclusion less) saying why you wish this person considered. forms which Digalakis signed state 3) You must include your name, and telephone number with each nomina- clearly that the casinos are not legally tion. Also include aphone numberfor the person nominated. obliged to bar anyone and that they are are not liable if excluded gamblers 4) An independent panel will review all nominations and select a12 manage to get it. It says that Di- Jinalists. galakis, after signing an exclusion 5) The names of all nominees will be kept conJidentia1. Nominees agreement at Casino Windsor, dis- will be told of their nomination and the name of their nominator. guised his appearance and tried to 6) Each winner will be provided with a complimentary conference enter again. registration and dinner tickets for two. Other expenses will be borne After signing an exclusion agreement by the recipient / employer. at Casino Rama he was twice ejected, fined, and threatened with a trespass- Outstanding Contribution to the Canadian ing charge. Gaming Industry Award The OLGC says Mr. Digalakis is Nominees for this award (only one award) may come from any sector solely responsible for any alleged (casino, bingo, lottery, supplier, volunteer) and any position within that sec- losses or damages he and his wife may tor. The person nominated must be employedl a volunteer within the Cana- have suffered. No date has been set dian gaming industry at the time of nomination (not retired) and, through for a court to hear his claim. hisher work demonstrate an extraordinary contribution and commitment to It is important to point out that, unlike it. the ~rochucla& in Quebec, this is not a class action suit. Display of Excellence Awards One (1) award will be made in each of the following categories: 0 Casino - Class 1 (601 slots or 5 1 tables or more) Canadian Gaming 0 Casino - Class 2 (600 slots or 50 tables or less) 0 Bingo 0 Lottery is published monthly 0 Gaming Supplier 0 Volunteer To Subscribe Nominees for each of these awards may come from any position within each Tel: (905) 855-5370 of the above six sectors. Each person nominated must be employedla volun- Fax: (905) 855-1869 teer within the Canadian gaming industry and the sector for which helshe is [email protected] nominated at the time of nomination (not retired) and, through hisher work, demonstrate an extraordinary contribution to that sector. Editor: Ivan Sack Please send your nominations to: Address: Ivan Sack, Chair, Canadian Gaming Summit & Exhibition Fax: (905) 855-1869 E-mail: [email protected] 1690 Truscott Drive Mississauga ON L5J 126 All nominations must be received by January 31,2003 Canada Winners' names will be published in the March 2003 issue of ISSN # 1203-1623 Canadian GAMING News

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