Long-Term Funding

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Long-Term Funding ONTARIO RACING LONG-TERM FUNDING REPORT ON HORSE RACING INDUSTRY CONSULTATIONS MARCH 2017 ONTARIO RACING 400 – 10 CARLSON CRT TORONTO ON M9W 6L2 WWW.ONTARIORACING.COM EXECUTIVE SUMMARY PURPOSE Ontario Racing, the new industry the preliminary version of this report association for horse racing in was posted for comment for a period Ontario, has been tasked with of 25 days. Phase Two also included consulting with horse racing industry a webinar presentation on the Letter stakeholders regarding a proposed of Intent and a leadership meeting. long term funding framework in This final report reflects the totality of support of a sustainable live horse Ontario Racing’s approach to seeking racing industry in Ontario. industry feedback and a comprehensive These consultations began in summary of what was heard. Fall 2016 with Phase One, which included a series of in-person This document provides an overview consultations and requests for of the methodology by which these written and online feedback. Phase consultations were executed and a One of consultations concluded with record of what was heard by horse the release of a Preliminary Long- racing industry stakeholders regarding Term Funding Consultation Report. the proposed framework and provides During Phase Two of consultations, recommendations. CONSULTATION PARTICIPATION AT-A-GLANCE Industry Leadership Phase One Webinar Meeting 25 Attendees 177 Phase One Submissions 75 Phase One Online Submissions Phase Two 59 Phase Two Webinar 216 Attendees 185 Phase One Consultation Meeting Attendees 260 Phase Two Submissions Phase One Industry 6 Leadership Meeting Attendees 28 2 WHAT WE HEARD: OVERVIEW • The horse racing industry is generally supportive and • A representative, transparent, and accountable appreciative of an annual $93.4 million contribution governance model for the industry is vital for ensuring from the government towards sustainability the concerns of all industry members, in all horse racing regions of the province, are considered • The proposed level of funding will provide continued certainty for investment, although concerns were • The horse racing industry is strongly committed to expressed about the impact of rising industry costs over considering and pursuing new and innovative options to time on a fixed annual funding amount grow employment, expand the customer base, increase wagering, and introduce horse-themed products • The industry is generally supportive of the length of term of seven years plus two five-year term options for • Woodbine Entertainment Group has performed well renewal if the metrics and key performance indicators in managing the success of the current Standardbred (KPIs), upon which renewals will be assessed, are Alliance of racetracks, however its own business realistic and developed with the industry objectives must be balanced with the overall best interests of the province’s horse racing industry if it is to • There was a consensus among consultation participants succeed as administrator of a new Racetrack Alliance. that the creation of a new Racetrack Alliance that invites all tracks to participate is an important component of • Concerns were raised by industry participants and this proposal racetrack operators about the nature of distribution of slot lease revenues, with a particular focus on how that • The industry supports the use of key performance revenue can be subject to “clawbacks.” indicators to ensure sustainability objectives are met, while conveying that performance measures account for parameters facing regional racetracks in smaller markets ATTENDANCE AT IN-PERSON CONSULTATION MEETINGS Ottawa 33 Port Perry 102 Milton 55 Toronto 30 Flamboro 37 London 45 Sarnia 34 3 SUMMARY OF RECOMMENDATIONS FUNDING: WOODBINE ENTERTAINMENT GROUP: • Ontario Racing recommends that the proposed funding • Ontario Racing recommends that Woodbine Entertainment amount of $93.4 million annually over 17-years serve as Group be responsible for management of the new a foundation for financial support, and be indexed to the Racetrack Alliance. consumer price index (CPI) to ensure that funding levels are not eroded due to inflation and rising industry costs. ADMINISTRATION OF THE FUNDING AGREEMENT: • Ontario Racing recommends that the criteria used to • Ontario Racing recommends that the funding agreement extend each funding term be based on transparent, require all parties to act in the best interests of Ontario’s achievable and reasonable performance indicators to horse racing industry, with remedies for addressing violation provide the utmost certainty and predictability for horse of any conflict of interest policies, or otherwise not meeting racing industry participants. their obligations and covenants under the agreement. ENHANCED HORSE IMPROVEMENT PROGRAM: TRANSPARENCY AND CONSULTATION: • Ontario Racing recommends that annual funding of $6.5 • Ontario Racing recommends that opportunities be given million continue to be provided over the proposed 17 for public consultations on all major and significant business year funding term for the Enhanced Horse Improvement and governance decisions made on behalf of the industry. Program (Enhanced HIP), and that this funding amount be indexed to the consumer price index. KEY PERFORMANCE INDICATOR METRICS: • Ontario Racing recommends that the Long-term Funding NEW RACETRACK ALLIANCE: Agreement clearly identify how key performance indicators • It is recommended that Ontario Racing be provided the will be developed, how these indicators will be used to tools to attain the financial esourcesr and the governance assess racetrack performance, and how the indicators will structure required to ensure the annual business plan be utilized to determine continued eligibility for funding and management decisions of the New Racetrack and funding term extensions. Alliance consider the broader interests and betterment of Ontario’s entire horse racing industry. ADDITIONAL REVENUE SOURCES: • Ontario Racing recommends that Ontario Lottery and Gaming develop an action plan to facilitate the sharing of revenue from new racing-related gaming products. LEASE CLAWBACKS: • Ontario Racing recommends that the lease clawbacks contemplated in the LOI be reconsidered and subject to further discussions between racetracks and Ontario Lottery and Gaming. 4 CONTENTS 2 EXECUTIVE SUMMARY 19 RECOMMENDATIONS 5 CONTENTS 21 APPENDIX A: COMPREHENSIVE CONSULTATION 6 INTRODUCTION PARTICIPANT LIST 7 OBJECTIVES 23 APPENDIX B: 8 METHODOLOGY 23 LONG TERM FUNDING FRAMEWORK PRESENTATION (USED AT INDUSTRY CONSULTATION SESSIONS) 11 SUMMARY OF LETTERS & SUBMISSIONS FROM KEY STAKEHOLDER ORGANIZATIONS 25 APPENDIX C: ONLINE PORTAL QUESTIONNAIRE 13 CONSULTATION FEEDBACK SUMMARY 26 APPENDIX D: INDUSTRY ORGANIZATION 13 FUNDING LEVELS & TERMS OF THE FUNDING SUBMISSIONS AGREEMENT 55 APPENDIX E: SOCIAL MEDIA PROMOTION EXAMPLES 13 CREATION OF A NEW RACETRACK ALLIANCE 56 APPENDIX F: LOI WEBINAR DECK 14 ALLIANCE MANAGEMENT BY THE WOODBINE ENTERTAINMENT GROUP 58 APPENDIX G: PHASE TWO LEADERSHIP MEETING DECK 15 INDUSTRY REPRESENTATION AND GOVERNANCE 6 15 SUGGESTED KEY PERFORMANCE INDICATORS 16 ONTARIO LOTTERY AND GAMING (OLG) AND HORSE RACING INTEGRATION 17 PHASE TWO CONSULTATION PERIOD 17 SUMMARY OF PHASE TWO CONSULTATION SUBMISSIONS 18 LOI WEBINAR 18 INDUSTRY LEADERSHIP MEETING Photo: New Image Media ONTARIO RACING5 INTRODUCTION Photo: New Image Media In Ontario, horse racing has a relates to a government proposal, available on the Ontario Racing significant economic footprint: represented by the OLG, for a website. Subsequently, seven in- with over 8,300 active race horses, longer-term funding agreement with person consultation sessions were 10,000 races and over 17,500 full- the industry. The agreement would conducted in the following locations: time employees, Ontario horse be subject to government approvals Toronto, Flamboro, Sarnia, Ottawa, racing generates an over $2 billion and negotiations, and would further Port Perry, Milton and London. contribution to the province’s GDP. support industry sustainability. Opportunities for online and written feedback were also provided. The Horse Racing Partnership Ontario Racing has engaged in a Plan, which was established on comprehensive public consultation A preliminary version of this April 1 2014, represented Ontario process to solicit industry feedback report was released and posted government's fiveyear planto regarding this proposed long- for public comment for a period invest up to $500 million to support term funding model. Hundreds of of 25 days. During the course the horse racing industry as it industry participants, representing of that time, Ontario Racing transitioned from the old Slots at horseperson groups, owners, sought additional feedback from Racetrack Program to a new and breeders and racetrack management industry participants, conducted economically sustainable model. and employees, have contributed to The plan reflects the hard work the findings detailed in this report. a second webinar, engaged and genuine willingness of many in industry leadership in conversation the horse racing industry to work Ontario Racing began public about recommendations and together and build a new partnership consultations on October 12, encouraged all racetracks and with government. 2016 with an industry leadership industry associations to submit meeting, which was attended by written feedback on the proposed The 2016 Budget announced that industry association and racetrack funding framework. This report now government funding
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