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Canadian Gamingnews Canadian Gaming News. Issue 131 April 2006 Loto-Qukbec abandons plans for new casino in Montreal On March 10 Loto-QuCbec an- to chair a committee of senior offi- nounced that it has abandoned plans cials charged with providing it with to build a new $1.2 billion home for an independent analysis of the pro- Casino de MontrCal. The new com- posal did not challenge this. How- plex was to have been located in an ever, he points out that a change of area of the City of Montreal known as 10Y0 in the net profit of Casino de the Peel Basin. This is described as a Montreal has only a 1.3% impact 'rundown7 area of the city which both upon the total net profit of Loto- Ivan Sack wanted and feared economic renewal. Quebec. Taking this observation It wanted the jobs the casino could the a step further, one has to ask if strategy for Casino de Montreal. bring and feared that these jobs would this means that given its relatively With the government growing in- increase housing prices and drive out small, sequential impact' upon the creasingly sensitive to criticism from low income residents. corporation's total profit, a viable gaming opponents, Loto-Quebec has In an attempt to show how the casino option would be to leave the casino come to see attracting premium play- could be a force for renewal and to slide until it simply becomes an ers from outside of the province as a gain support, Loto-Quebec and its inconsequential 'locals' casino? way to impact casino profits while partner, Cirque du Soleil, last month Loto-Quebec pointed out that even mahaining the status quo at home. committed to introduce a preferential the status quo option comes with a hiring programme targeted to the un- price tag - it will need to spend $80 Proposed Capital Expenditures employed in this community. That million over the next three years Land this commitment will survive even just to maintain the present struc- though the initiative which prompted ture. Acquisition it is now dead makes Peel Basin resi- A second option advanced, and one Site decontamination dents perhaps the only ones to gain which the corporation also pre- Demolition anything from this exercise. ferred to avoid, was to spend $700 As to how the proposal for a new ca- million to renovate and expand the Construction and Facilities sino came about, in May 2004 Loto- existing complex with this figure Casino Quebec unveiled a broad gaming including revenue lost during a pro- Theatre strategy which included options for longed construction period. Hotel the future of Casino de Montreal. Loto-Quebec states that while this The first was to maintain the status would improve things somewhat, Quai des artistes quo. The corporation immediately the casino would still be poorly Parking rejected this option as it provides no situated and be unable to attract a additional economic benefits and sufficient number of new patrons Landscaping leaves the casino poorly located. It from outside of the province to im- Public transit highlights that during the past three pact its bottom line. It points out years attendance at the casino has de- that while premium players Off-site development clined from 6,755,000 visits in represent only 0.5% of the casino's Set-Up Costs 2001102 to 6,288,000 in 2004105, a total annual visitations they Project completion 6.9% decrease. Profits correspond- generate about 20% of its annual ingly shrank by $20 million, or 8.5%. revenue. It should be underlined Compensation Guy Coulombe, a businessman who here that attracting new, outside Off-site road construction patrons is a crucial part of the 2004 last Fall was asked by the government Pre-opening TOTAL Inside: The winners of awards to be presented at this year's Provided by Private Partners Canadian Gaming Industry Awards Dinner Provided by Loto-Qu6bec -Page 2 Canadian GAMING News - The third option was the one Loto- While Coulombe was generally think Loto-Quebec may eventually QuCbec wanted and which has now supportive and sometimes compli- opt for a version of the second option been dropped. This option had Loto- mented Loto-Quebec on the thor- outlined above. QuCbec and Cirque du Soleil build a oughness of its research, he con- In some ways this is the option ad- dramatic new casino. It was to have cluded that it would be 'premature vanced by Gaetan Frigon during his been a 'must see' complex with a for the government to make a final short time as C.E.O. at Loto-Quebec. vegetation roof, natural lighting, 300- decision' now. Instead he saw a He wanted to spend $470 million to room 'high-class' hotel, 2,000-m2 spa need for more information on such renovate the present structure. built under a waterfall, a 2,500-seat things as the impact the casino theatre, Cirque du Soleil performers, would have upon problem gambling Frigon too was targeting players from an artists' Quai, an outdoor theatre in the neighbouring community, a outside the province and saw a need with seating for 8,000 - 10,000, a ma- need to firm up private sector com- to offer them a level of pampering rina, a 3,000-space underground park- mitments, and a need for Loto- competitive with that offered by ing garage, and an exhibition centre. Quebec to substantiate its projec- casinos in Casino de Montreal's new A monorail would have also linked tions on visitations from outside of target market - the cities in the the complex to the city's tourist core. Quebec. northeastern states. Loto-QuCbec also said that it would As for the latter, Loto-Quebec esti- Mr. Frigon's proposal included: have borrowed all the money needed mated that in the new complex's closing half of Casino de Mon- to fimd its contribution to the cost of first year of operation (2011-12) treal's indoor parking area and building the new complex. Building a visitations by those from outside of building a 4,000-space multi- new complex therefore would not Quebec would go from 11.7% to level parking facility nearby. have impacted the profit it turns over 16.8%. It also projected that reve- nue from these visits would grow A world-class performance hall to the government each year - an im- with at least 1,250 seats would be portant practical consideration from by I I6%, from 10.8% of total gam- ing income to 18.6%. built in part of the vacated space the government's perspective. in the parking garage with the Interestingly, even though Cirque du While the decision to allow Loto- remaining vacant garage space Soleil was always described as a QuCbec to begin talks with the city converted to a gaming floor 'partner', it would not have had an was presented as good news, this is equivalent to the size of the space equity position in the complex. It and not apparently how Cirque du Soleil the casino now occupies in the Loto-Quebec would have had a fee- saw it. former Quebec Pavilion. for-service relationship. In addition We think Cirque du Soleil expected The Quebec Pavilion would be- to designing and branding the com- a more definitive reply and did not come an 'international section' of plex, Cirque du Soleil would have welcome an additional, and possi- the casino and include a smaller, contributed 'other services' which bly prolonged period of uncertainty. high-end gaming floor, dedicated would have included recruiting pri- While Mr. Coulombe gave the gov- on-site accommodation, and vate sector partners to pay for and ernment an opportunity to test mu- dining for high-end players. operate the hotel, spa, discotheque, nicipal support and to back away if monorail, theatre, and conference cen- the heat became too intense, he left The remainder of the casino, in- tre. It would also have helped market Cirque du Soleil and its reputation cluding its bars and restaurants, the complex internationally. to be buffeted by what was certain would be redesigned to reduce to be an intense municipal debate crowding and a monorail would The decision to cancel the initiative link the casino to off-site parking. came as a shock as only the day be- with the government perhaps pull- fore the Government of Qdbec and ing the plug later. Citing other pri- Early in his report Mr. Coulombe Loto-Quebec had used back-to-back orities Cirque du Soleil pulled out commented that '. ..controversy over leaving Loto-Quebec little choice moving Casino de Montreal to Peel press conferences to announce that but to do the same. the corporation had been given ap- Basin has now taken on a life of its proval to begin formal discussions We can only imagine how difficult own . .'. Given that selective oppo- with the City of Montreal. A process this must have been for CEO Alain sition to casino gaming has become a which was to have taken about 18 Cousineau. Having received notifi- fact of life in this city and will plague months with Loto-QuCbec setting cation of Cirque du Soleil's inten- every initiative, one has to wonder if aside $35 million to flesh out its con- tion around noon, he used a confer- any relocation will ever be approved. cept further. Another $300,000 was ence call to meet with his Board of When Qubbec's first casinos were to have been given to the local com- Directors and, at about 3:00 pm that announced the government simply munity to hire experts and interven- same afternoon, issued his release.
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