Canadian Gaming News.

Issue 131 April 2006 Loto-Qukbec abandons plans for new casino in 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. . 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. said where they would be. The desig- ers. The government would then have As for what is now next on Casino nated municipalities were not con- reviewed everything and either killed de Montreal's agenda, we under- sulted and intervener funding was not or approved the initiative. stand Loto-Quebec will take some provided. We think that if the gov- This approach was consistent with time to review its options. ernment really wants this or a similar recommendations made by Mr. Cou- initiative to go ahead, it may have to Short of trying to find a less contro- revert its first approach. lombe. versial location for the casino, we company offriends

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V) K work with you in support of your many good causes. a w K a PRIMARY INSTANT PROVIDER' ------'The term 'prtmary' means the arav~dersupphes 80%or more ol the lottet)'~ lnstant games D3Z mas :::'m14 SCI ENilFlf GAMES' DELIVERING SERIOUS FUN! www.scientificgames.com - Canadian GAMING News Page 7 - 2006 Canadian Gaming Industry Award Winners The Canadian gaming industry is very fortunate to have within its ranks individuals whose imagination, energy and abilities have placed them at the forefront of our industry and earned them the respect and admiration of their peers. While it is impossible to recognize each and everyone, we asked you and previous award winners to tell us who was deserving of recognition at the April 27,2006 Canadian Gaming Industry Awards Dinner to be held at River Rock Casino Resort. We then passed on your nominations to our Selection Committee which was composed of three previous award winners: Bob Kozniuk (Display of Excellence Casino Award 2002), Ian Taylor (Display of Excellence Bingo Award 2005), and Glen Sawbill (Display of Excellence Casino Award 2003). We congratulate the Committee on its choices and extend our sincere congratulations to this year's winners!

Outstanding Contribution to the Canadian Gaming Industry Award Vic Poleschuk, Chief Executive Oficer, British Columbia Lottery Corporation

Display of Excellence Awards Volunteer Lois Cameron, Double 'B ' Bingo Association

Lottery Winston Hodgins, President & CEO, Manitoba Lottery Corporation

Casino Class 1 Howard Blank, Vice President, Great Canadian Gaming Corporation

Casino Class 11 Monique Wilbert Chief Operating Officer, Gateway Casinos Inc. -Page 8 Canadian GAMING News - nos it stated that $0.13 a share in the year-earlier quar- it would approve ter. For all of 2005 the company had a a maximum of net profit of $19.58 million, or $0.26 one of each in per share. This is down from a net of each of that $26.72 million, or $0.41 a share in province's Tour- 2004. The company also confirmed ism Destination negotiations to ensure a default did not Regions. occur. On March 27 the company announced When we ques- the successful conclusion of these re- tioned why it negotiations and that, in addition to had then ap paying a higher short-term premium $ proved the con- on its outstanding debt, it had pri- struction of two vately placed 6,206,361 additional casinos in this share units. Region (Alexis, I Cold Lake) and Priced at $12.89, the price at which is still consider- the shares were trading at the time, ing a third (the each unit comprises one common Samson Cree share and one share purchase warrant. Nation), were The company will receive gross pro- ceeds of $80 million from this. The we told the pol- company also announced that Chair- icy had been man & CEO Ross McLeod had pur- amended to per- chased $50 million of the units mit the construc- thereby increasing his interest in the tion of more company which he founded to 25.9%, than one First and to 28% after the exercise of his Nation casino. new warrants. We understand this amendment was Hobbema made to take into account the size The manner in which the units were of the geographic area covered by issued and their price continues to casinos this Region. draw comment from gaming analysts and the business media. Damir The Samson Cree Nation and the Gunja, Gaming Analyst with TD Louis BullIMontana First Nation, Controversy Newcrest, called the $12.89 per unit both with reserves near the community continues price 'rather sweet7 and was con- of Hobbema, are competing to build cerned that a 15% dilution will occur. casinos there. Only one will be ap- Great Canadian Gaming Corpo- He then lowered his 12-month price proved with the Samson in the lead ration continues to attract critical target for the shares to $1 1.00. having already received approval from media and analyst attention for the Robert Window, Gaming Analyst the gaming commission to begin con- manner in which it has awarded with Wellington West Equity Re- struction. new share units. search, citing a share dilution and the On February 13 the company an- need to 'rein in costs', lowered his Tsuu T'ina nounced that for a second quarter in target to $12.50 from $13.00. Stoney Nakoda a row its earnings would miss ex- Share dilution has been an ongoing pectations. This was followed by concern during Great Canadian's pe- Cold Lake the February 17 resignation of riod of rapid expansion. At the end of President & COO, Tony Martin. 2003 the company had 61.8 million I The above three have all As we wrote last month, David shares outstanding. At the end of / been given approval by the gaming McFadgen, Gaming Analyst with 2004, and following a private place- commission to begin building their Sprott Securities had warned, fol- ment of shares and the issue of incen- casinos. We have had difficulty con- lowing the earnings announcement, tive stock options, this total increased tacting them using co-ordinates pro- that the company risked defaulting 13% to 69,989,689. vided by the commission and will on its debt covenants. hopefully have more for you in our In 2005, and once again following the next issue. Great Canadian confirmed this in a private placement of shares and the March 20 press release wherein it grant of stock incentives, the number It is interesting that when the Alberta also stated that it lost $9.16 million, of shares outstanding increased by Gaming & Liquor Commission first or $0.12 a share during the final another 13%, to 79,449,720. This announced that it would consider addi- quarter of 2005. This compared most recent private placement and the tional traditional and First Nation casi- with a profit of $9.69 million, or addition of a yet to be disclosed num- THE ONTARIO LOTTERY AND GAMING CORPORATION (OLGC) is proud to sponsor the 2006 Canadian Gaming Summit & Exhibition. We would like to extend a warm welcome to all event attendees and exhibitors and our best wishes on an enjoyable show!

Ontario Lottery and Societe des loteries et Gaming Corporation des jeux de I'Ontario -Page 10 Canadian GAMING News - addition of a yet to be disclosed num- conducted ber of new incentive stock options 516 audits will again increase the total number of of licensed - 3.. ANNUAL - shares outstanding for 2006. gaming CANADIAN GAMING events and On April 4 Boston-based Highfields - EDUCATION FORUM 2006 Capital Management made public the use of letters it has written to Great Cana- gaming Presents accredited training from UNR / UNLV to dian's Board of Directors and to the grant pro- Winnipeg, Manitoba, Canada. ceeds; Toronto Stock Exchange. High- Session A - May 15 & 16 fields Capital manages $8 billion in audited half Casino Auditing Level 1 (2 days) fund investments and holds 3,338,000 of the bingo (Jim Fox, c I.A..c F.E.) Great Canadian shares, or 4% of its halls in the Continuing Professional Education Credits for CIA 's. total outstanding. The letters request province; Session B - May 15 to 18 that the exchange review the legality audited Crisis Management for the Gaming Industry of the Board's decision to grant Mr. every casino May 15 & 16 (2-days) McLeod, and others who purchased and commu- (Dr. Larry Barton) units, shares at what it claims is a nity gaming Identifying & Preventing Cheating in the 2 1% - 3 1% discount to market value. Slot Operation May 17 centre in the (Michael Crump) province; Slot Revenue Analysis "From Drop to Commission report conducted Financial Statement" May 18 2,839 inves- (Sue Johnson, c.~A.) released Earn credit hours toward UNR's - tigations in Gaming Management Certificate Program. The Gaming Policy & Enforcement response to Branch of British Columbia's Minis- allegations Networking, Breakfast & Lunch included. try of Public Safety and Solicitor of wrongdo- Dinner Presentation - May 15. General has released its annual report ing; Sue Bell MANITOBA for the year ended March 3 1, 2005. C,,,,+O. ~~~j~~ 204-985-0483 or e-mail distributed c'*,., 0. ..Cfll6*C. CORPOlrATION The branch performs a role equivalent almost $1 35 ,,.,.,..,.,,,.,,,,,., [email protected] to that performed by gaming commis- million in sions in most other provinces. Gaming in British Columbia was a over 5,900 community organi- Problem Gambling Statistics $2.3 billion industry in 2004-05. Dur- zations. ing the past year, B.C.'s gaming sec- Licensed charities also received $27 tor had: million through licensed gaming 13,350 direct employees and an activities such as ticket raffles, so- Total helpline calls 6,178 5,168 estimated 5,000 indirect jobs; cial occasion casinos, wheel of for- Calls specific to 3,127 3,353 about 7,000 licensed gaming tune, and independent bingo events. problem gambling events; Categories of investigations Problem gambling 2,373 1,15 1 1,000 different types of gaming initiated during the year referrals equipment; Theft 276 Counseling service 961 625 250 companies directly and indi- admissions rectly involved. Fraud 23 Number of preven- 1,56 1 1,006 The province has: Money launderinglloan 110 tion information 19 year-round casinos and sharking sessions delivered 1 seasonal casino; Counterfeiting 1,113 Revenue Sources ($ millions) 27 commercial bingo halls; 282.8 288.9 5 horse racing tracks, and Assaults & threats 149 Lotteries 19 horse racing teletheatres. Horse betting fees 1.9 N/A Gaming Act violations 279 During the past year, the gaming pol- Casinos 515.3 418.3 icy branch: Cheating at play 43 registered 3,92 1 gaming workers; Bingo registered 2,326 horse racing in- Other 516 Paper & electronic 15.8 20.3 dustry workers; Gaming centre slots 3.0 N/A certified 507 pieces of equipment; Total 2,511 Total 818.8 727.5 Games That Stand The Test Of

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- -- - Canadian Casino Revenue and Visitor Statistics

Total Table Total Slot Gross Change Daily Change House Change rbles change slots change $ gross attend attend $ House previous previous million previous previous Win/ $Win/ month month month month month Player Player

I Alberta I 20 floors I Jan I British Columbia 1 18 casinos 1 Mar 1 Casino de Montreal 1 Montrtal I Feb I Casino de Charlevoix / Pte-au-Pic I Feb I I Casino du Lac-Leamy Gatineau Feb I Casino Windsor ( Windsor / Sept I Casino Rama 1 Orillia / Sept Casinos Niagara ** Niagara Sept

I I I Brantford Casino 1 Brantford 1 Sept Great Blue Heron Casino Port Perry Sept (slot operations only) Point Edward Casino Point Sept Edward Sault Ste. Marie Casino Sault. Ste. Sept Marie Thousand Islands Gananoque Sept I Thunder Bay Casino I Thunder ( Sept I 1 Club Regent Casino Winnipeg 1 Feb McPhillips Street Station Casino Saskatchewan Indian Gaming Authority Battlefordl Prince

ReginaIMoose Jaw Regina/M.J Feb

* Above statistics are the most recent available ** Both Casino Niagara and Niagara Fallsview Casino Resort -Page 16 Canadian GAMING News - Canadian Gaming Industry Awards Dinner Gateway buys Cascades Gateway Casinos Income Trust announced April 4 that it has signed a Letter of Intent with a subsidiary of Gateway Casinos Inc, majority owned by Ray McLean who was also instru- mental in creating the trust, to acquire all the operating assets of Cascades Langley Casino and Vicki Gabereau Senator Larry Campbell Hotel located in Langley, B.C. Vicki Gabereau, host of CTV's very popular national daily TV talk show The trust will pay $106.3 million Gabereau Live, and Senator Larry Campbell, a former Mayor of the City of for the complex which opened a Vancouver, will play prominent roles at this year's Canadian Gaming In- year ago at a cost of $40 million. dustry Awards Dinner. The purchase will be made up of 4,692,689 Gateway trust units and Ms. Gabereau, who has become a household name for many will be Co- about $32.6 million in cash. The Master of Ceremony along with Great Canadian Gaming Corporation's cash portion will be composed of Howard Blank. Senator Campbell, who in addition to serving as mayor 5.35% extendible convertible de- was British Columbia's Chief Coroner, will talk about the municipal dy- bentures convertible up until June namics of gaming on the lower Vancouver mainland and of why he sup- 30,2011 at $19.10perunit. ports casino gaming. The trust concurrently announced This is the second year of a three-year September, bills itself as Canada': that its monthly distribution will undertaking with last year's Texas richest free-roll tournament. Thc be increased $0.1 195 upon clos- Hold 'Em tournament split between first prize will exceed $100,000 anc ing. River Rock Casino Resort and Niag- provide a chance to win an addi. Cascades' gaming floor offers ara Fallsview. tional $1 million. 500 slots, 25 tables, and 10 poker The tournament, which will air in TSN has expanded this year's pro- tables in addition to a 77-room prime time on TSN and TSN HD this duction, which last year attracted an hotel, 25,000 sq. ft. convention average audience of 318,000, to e, and 420-seat theatre. seven one-hour broadcasts - up Canadian Gaming from six in 2005. choice of 60 table games and 535 slot Tournament registration is free and machines. Newsm open to Canadians over the age of is published monthly This latest expansion also includes a 2 1 (excluding residents of Quebec) new non-smoking table games area and conducted on-line at offering one Pai Gow poker table, and To Subscribe www.degreepoker.com. one Spanish 21 table. This initiative Tel: (905) 855-5370 Unilever decided to associate its will permit the casino to provide non- Fax: (905) 855-1 869 Degree For Men brand with a poker smoking clientele with a comfortable [email protected] tournament as it sees a strong corre- table gaming experience. lation between its product and '. . . In addition to the smoke-free section, Editor: Ivan Sack the guy who isn't afraid to take a the casino has expanded the table area calculated risk . . .'. Address: of its gaming floor by adding four more tables, including two Texas 1690 Truscott Drive Great Blue Heron Hold 'Em tables, and two four card Mississauga ON L5J 126 poker tables. This gives a new total Canada expanding of sixty table games. ISSN # 1203-1623 Great Blue Heron Charity Casino For slot players the casino has added has added 10 gaming tables and 82 such games as Cash Express, Party www.canadiangaming.com slot machines to its gaming floor. Time, and Slotto-Popcorn. e-mail: [email protected] Great Blue now offers patrons a