First Class Action Suit Goes to Court in April We Wrote That Jean Brochu, a the Expectation Is That This Will Hap- Quebec City Lawyer Would Appear Be- Pen This Fall

Issue 93 June 2002 First Class Action Suit Goes to Court In April we wrote that Jean Brochu, a the expectation is that this will hap- Quebec City lawyer would appear be- pen this fall. fore a judge in that city to request the What happens next could be of enor- court's permission to bring a class mous significance to both gaming action suit against La SociCtC des lo- and addicts. teries du QuCbec, a wholly-owned subsidiary of Loto-QuCbec. The suit Were Brochu to win, Loto-Quebec Ivan Sack would be on behalf of Quebecers who would almost certainly have to pay . . . . in bars, beer saloons and other suffer a VLT adhction, and would out many millions of dollars in set- public places'. claim that La Societe des loteries du tlements and perhaps have its activ- Quebec had not done enough to alert ity - at least as this relates to VLTs, He also wrote that 'The main ques- the public to what Brochu says is the curtailed. If this happened in tions, in fact and in law, to be collec- adhctive nature of VLTs. Quebec, it would almost assuredly tively dealt with are the following: only be a short time before VLT We also wrote that Brochu is seelung operators in other provinces, and in a) each member of the . . . (class to have the court order that La Sociefk the United States, faced similar action) . . .group is a pathological des loteries du Quebec provide addi- suits. The same could also apply to gambler and therefore suffers from an tional funding for VLT addiction pre- VLT manufacturers such as Spielo illness; b) each member of the group vention and treatment. No dollar and VLC. Given that much of the suffers from this illness as a conse- amount has been set for damages. settlement money would go to ad- quence of the respondent's fault; c) each member of the group is entitled to Judge Roger Banford heard Brochu's dicts and to addiction treatment the payment of an indemnity to be claim April 15 17 and handed down agencies, this case also has the po- - determined and, d) the respondent's his decision May 6, 2002. fis deci- tential to significant impact them. extra-contractual liability'. The judge sion related not to the merits of the Brochu and his colleagues are also defined 'extra-contractual liability' to claim but to whether it qualified as a taking a significant risk (gamble?) in mean: 'a) is the respondent . . . (La class action according to Quebec's that, should the next judge decide not Socidtt des loteries du Qutbec) . . . Civil Code and was therefore entitled to hear their case, or to hear it and under the obligation to warn the users? to be heard by a subsequent court. In then decided against them, a prece- and, b) if so, was the obligation ful- deciding that the suit qualifies, the dent will have been set. A precedent filled?,. judge has opened to door for what we whlch will make it much more diffi- believe to be the first anti-gaming class cult for others to bring similar ac- Because this is an action which seeks action in North America, and perhaps tions against gaming corporations. to speak for an entire class of people the world. (pathological gamblers), the judge also In handing down his May 6 decision, made provision for people to exclude It is important to note that the suit is Judge Banford set out the parame- themselves from it. To this end, he restricted to those who play VLTs and ters for the subsequent court's con- instructed that ads be placed in all does not include those who play at sideration of the suit. major Quebec newspapers informing Quebec's three commercial casinos. He wrote that the class action would the public of his decision and of its In handing down his decision, Judge apply, as requested by Brochu, to right to be excluded. These ads ap- Banford stated that it did not obligate '. . . every person who, since 1993, peared May 22,2002. the next judge to hear Brochu's case. has become a pathological gambler The second judge could decide it is Those wishing to be excluded must while using the lottery-video termi- send a certified letter to the court clerk without merit and set it aside. nals put at her (his) disposal and stating their name, address and their No announcement has been made as to maintained by the respondent, . . . wish to be excluded. They have until when the claim will be heard though (La Societt des loteries du Quebec) July 15,2002 to do this. -Page 2 Canadian GAMING News - mile we understand the judge's wish and semi-conductors take on lives of to give people an opportunity to opt their own and become much more On the Move out of the class action, the methodol- sinister than their individual compo- ogy he has selected is flawed. To be nents would indicate. He will have Casino Windsor excluded one will have had to have to prove to a judge that these boxes Ron Thacker, Senior Vice Presi- read the ad, decided that the subject have the ability to overcome an un- dent Gaming Operations has left to applied to them, had the initiative to suspecting player's own better accept a similar position with write a letter and have it certified, and judgement and to lead himher on a Flamingo Las Vegas (formerly the then send it. We fully expect the self-destructive course. A tall order Flamingo Hilton). HISposition has Brochu action will speak for many we thmk though one whlch will not been eliminated and his duties as- who are not even aware that they are get in the way of the sensational sumed by other Vice Presidents. part of it. media stories and the hype which Thls could be significant as the judge accompanies such cases. was left to Loto-Quebec. points out that members of the group A Toronto Star reporter recently Last month we had an article which who have not requested to be excluded asked us about this case and why gave highlights from the speech given may be summoned by the respondent lottery corporations were placing by Harrah's C.E.O., Phil Satre at the ' . . . to be examined on discovery or ceilings on their VLTs and, in some Canadian Gaming Summit & Exhibi- for a medical examination'. Some- cases, cutting back? We were asked tion. While he admitted that some thing which could come as an unwel- if this was not an adrmssion that would see his opposition to VLTs as come shock for some. VLTs are addictive and harmful? self-serving given that he operates casinos, he stated that he opposes any This class action is not likely to be We said that while we were not party form of gaming that undermines public resolved soon. Whatever is decided, to the decisions, our sense was that confidence in our industry, and got there are bound to be appeals. they were often prompted by opera- applause. tors responding to political concerns From our perspective, the judge has That VLTs are controversial cannot be placed a sipficant burden of proof that VLTs are too accessible. An honest answer which also happened disputed. New Brunswick and Prince upon Brochu by requiring that he Edward Island have cut back substan- prove that 'each' member of the group to help shleld operators from claims that they know their VLTs are addic- tially. Quebec has cut back. Alberta is a pathological gambler; that the ill- has imposed a cap while Ontario and ness of 'each' is La Societe des loter- tive. This said, Brochu should serve as a wakeup call for gaming policy British Columbia announced VLT pro- ies du Quebec's fault and, with regard grammes and then cancelled them to the societe's extra-contractual liabil- makers and VLT operators to do more out of the box thmkmg when it when the public objected. Only ity, that one exists and that, under it, Saskatchewan, which on March 22 the societe had an obligation to warn comes to the hreof their VLT programmes. added 400 to take its VLT network up users and that it failed to do this. to 4,000 has increased its commitment. The prevalent thinking across our What, for example, constitutes a warn- Sensing a change in the wind, New ing and how does one determine industry today appears to be that the VLTs were here when I got the job, orders for VLTs in Nova Scotia and whether a warning was sufficient to the Quebec have included options to help need? And what of the free will of the the government expects us to turn over $x millions this year, and the players detect an addiction to VLTs individuals - at what point did they and to help sensitize them to the extent stop being responsible for their actions politicians can worry about the public and the media. of their play. New orders in Alberta and at what point &d the soci&e be- and Saskatchewan will also likely con- come responsible? And, was thls point This works to the extent that the tain similar requirements though no the same for all members of the group, politicians who nominally run our one knows if they will work. A follow if not why not, and was it reasonable to gaming corporations understand up study in Nova Scotia - the first expect the soci&e to know all these VLTs and are prepared to defend province to adopt them, will hopefblly C thmgs? and support them. However, when provide some hard data soon. And then of course Mr. Brochu will was the last time you heard a politician go beyond talk of job creation While these initiatives offer hope for have to turn his attention to the VLTs the future of VLT gaming, the Brochu themselves. He will have to move and giving money to charity to make an impassioned speech in support of action deals with the past - what was beyond the empty, shock rhetoric of known, or should have been known and claiming that they are the crack co- VLT gaming? Our count begins, and ends with Alberta's Pat Nelson. done between 1993 and now. As out- caine of gambling and prove that these lined above, its very early and we think metal and glass boxes, held together While April was only a hearing, no Brochu will lose though what will VLT with screws and hinges and housing politician took the stand to support operators do if he wins? video screens, cabling, bill acceptors, Quebec's VLT programme. This

-Page 4 Canadian GAMING News - - Canadian GAMING News Page 5 - Power: The new Trillium's budget has Feature Interview always been $100 million. I have no indication that we will get more Rob Power money. Chair, Board of Directors Sack: How much of thls goes for Ontario Trillium Foundation grants and how much for admmstra- tion? Rob Power was born in Ottawa and ments are raised in British Columbia. A law for a shorter period. Power: About 10% goes to adminis- graduate from Dalhousie University tration though more than the remaining in Hallfax, he is Chief Executive with Sack: Are these full time appoint- $90 goes out in grants. We also get the law jrm Power Budd and Senior ments and how much are you paid to $4-$5 million in interest which means International Partner with CMS be a member of the board and chair? that each year we really give out about $95 million. Cameron McKenna. Power: They are part-time appoint- He was appointed Chairman of the ments and we volunteer our time. I am proud of the fact that we just Ontario Trillium Foundation in 1998. received a Gold Medal from the U.S.- Sack: What are your responsibilities based Council of Foundations for our Sack: How do you go about being as Chair and how many hours would published Guidelines for Grant- appointed Chair of the Ontario Tril- you spend on board work? Seekers. lium Foundation? Power: As foundation Chair and Sack: Congratulations! How difficult Power: I was approached by the board President I work with our Chief Ex- is it to give away $95 million a year? in 1998 and asked if I wanted to be ecutive Officer, who the Board ap- Power: Giving away grant money in a Chair and oversee its expansion into points, to oversee the operation of way that ensures a strong economic what is today referred to as the new the foundation and to ensure that all and community impact is not easy. Ontario Trillium Foundation. After I grants are given out, audited, and Many applications get turned down as agreed, my name was submitted to an accounted for in a way which is we work to identify the strongest pro- all-party committee of the Legislature consistent with our policies and proposals submitted to us. where I was reviewed, and my appoint- cedures. ment approved. As for the time I spend on foundation Sack: Who decides what groups re- work, it was many days during the ceive how much? Sack: You just said new Trillium. early years. Now I probably spend What do you mean by thls? about 20 to 25 hours a month on Power: We have a very highly trained Power: The Foundation has been in foundation work. staff of about 100 who are responsible place since 1983 though it was a much for receiving applications, assessing smaller foundation with an annual Sack: When was the foundation their strengths and weaknesses, work- grant budget of about $10 million. created and what are its objectives? ing with the volunteer groups to fine Following the government's decision to tune their proposals, and evaluating the Power: The new Ontario Trillium submissions. Staff recommendations wrap up the Monte Carlo casinos, it Foundation was created in 1998. committed to increasing Trillium's are approved by the Foundation's vol- Simply put, its mandate is to build unteers. funding to $100 million a year. This healthy, caring and economically money came out of the profits of the strong communities through volun- Sack: What criteria do they use to do g four charity casinos which the govern- teerism. their evaluations? ment had just announced. There was therefore a need to restructure and Sack: To whom does it report? Power: Two fundamental criteria .. .. strengthen the foundation, its staff, and guide staff and our decisions. The Power: The foundation reports to applicant must be a not-for-profit, vol- its procedures and I agreed to help do the Minister of Culture, Minister this. unteer organization, First Nation, Dave Tchbouchl,. Metis Charter community, or a collab- Sack: For how long is your appoint- orative organization. A collaborative Sack: Your $100 million budget group is two or more organizations ment? comes from the profits of Ontario's Power: Board appointments are for working to acheve a common goal. four charity casinos - which works The application must also fall within three year terms. When I say three out to $25 million from each. Given years I qualify this to the extent that one of our four core funding sectors: that a fiRh charity casino opens Arts and Culture, Environment, Hu- board terms are staggered which shortly, will your budget increase? means that, on occasion, some appoint- man and Social Services, and Sports -Page 6 Canadian GAMING News - and Recreation. support? Do you check with the This established, we then move to the federal Department of Foreign Af- Responsible next level of evaluation which is to fairs, for example, to get a better seek the best value for the dollar and to reading on some of these groups? Gaming Officer evaluate how a grant will help the Power: We do not necessarily check On May 15 Bev Mehmel was ap- community and promote volunteerism. out groups with Foreign Affairs. We pointed Responsible Gaming Offi- Also very important is the capacity of do always evaluate reputation and cer with the Manitoba Lotteries the organization making the applica- historical operations through third Corporation. Ms. Mehmel is on tion to deliver the product. party checks. secondment from the Addictions Staff also monitor the use of the Foundation of Manitoba. Sack: Does pour board make all grant- money through audits and tie In addition to co-ordinating staff ing decisions? progress payments to performance. training and sensitization, she will Power: Yes. The Board of Directors There are instances when we have oversee the development and imple- approves all province-wide applica- not made payments, or have with- mentation of initiatives related to tions. This totals approximately $18 held payments. greater public adddon awareness. million a year. The remainder are One of her first responsibilities will considered by 16 regional Grant Re- Sack: Do you give 'ball park' con- be to establish a Responsible Gam- view Teams, or GRTs as we refer to tributions to charities to be used for ing Committee within MLC. Thls them. GRTs are regionally and com- general purposes or is all funding committee, of whch she will be a munity based and are composed of tied to specific initiatives? member, will have representation from 12 to 20 members each. GRT Power: No. Funding must be clearly from all areas of the corporation. volunteers are drawn from a variety of tied to a programme or activity. The committee will ensure that the backgrounds and reflect the commu- When we fund a capital activity, Responsible Gaming Policy and nity. such as a renovation to permit dis- Guidelines announced last Novem- abled access, we require a complete ber are implemented and main- Sack: You say they make recommen- accounting of all expenditures. tained. The committee will also dations? undertake research whch will in- Sack: Are there any criteria which clude: Power: That's correct. They make say how much a Trillium funded recommendations to the Board which group can spend on hstration? Working cooperatively with the in- then grants all final approvals. dustry to develop Responsible Power: We do not have a single Gaming Messaging for cash ma- Sack: Are there maximum and mini- number because the needs of volun- ches at VLT sites. A study of the mum limits for the grants you give? teer groups can vary sigmficantly. feasibility of having an Addictions We do have a strong interest in en- Power: There are no minimum limits. Foundation of Manitoba problem Our maximum grants are $375,000 in suring that the maximum amount gambling counsellor at MePhillips the community grants programme, and possible is used for direct pro- Street Station Casino and Club grammes. $1.25 million for province-wide Regent Casino during peak periods, grants. and the implementation of responsi- Sack: Can charities 'doubledp' in ble gaming software in new MLC the sense of obtaining funding from Sack: Do you have a moral code of gaming machines, where possible. Trillium and other sources? conduct in terms of the types of initiatives Trillium will fund? Power: This is one of our eligibility lower: No we do not. Power: We do not have a moral code criteria. We do not want a group to become too dependent upon us and Sack: Are there limits in terms of how though we do adhere to the guidelines much, or how little any one organiza- whlch the federal government has es- we encourage them to develop other fundmg sources. We are moving in tion can receive? Y tablished for charitable and not-for- profit organizations. a direction where we will be able to Power: There is an annual cap of use our grants to better leverage $250,000 per year at the top end. At Sack: How about ethc associations other funding for the recipient chari- the bottom the limit is as low as a and groups, some of whch have ties to ties. couple thousand dollars. groups and organizations in other Sack: As one of your criteria do you countries? Is money given to these Sack: Thanks and all the best! groups and, if so, how do you ensure have a rule which says that Trillium Drafts of our interviews are that Trillium money is not channeled will not contribute more than x % of a charity's total income? reviewed by our guests outside of the country and into some- before publication. thing the people of Ontario would not - Canadian GAMING News Page 7 -

r We wrote several months ago that Additional gaming there was discussion to the effect Government of that Woodbine would repay the floor above loan as predetermined profit Ontario The Ontario Lottery & Gaming Cor- milestones were met though we poration, which operates gaming gather that this is not part of the final floors at 15 Ontario horse racing deal. tracks, is in talks to open another. While we have no information as to The first set of talks is with the Elora the impact which 113 year-old Hast- I Agricultural Society in the Town of ing~Park will have upon Wood- Elora. Elora, located north of the City bine's bottomline, from a strategic of Guelph, does not now have a horse perspective it will be a strong addi- , racing track. As we understand, dis- tion for Woodbine. Hon. David Young cussions relate to the society building a We wrote in our January 200 1 (Issue Ontario's Attorney General, the horse racing track with the OLGC then 77) lead article that racing today is opening a gaming floor there. Munici- Honourable David Young, was all about simulcast signals - buying given responsibility for the Ontaric pal zoning is in place though talks are and selling them so that you can continuing with the society on a lease- Lottery 8: Gaming Corporation on make money by offering your own, April 15,2002. holder agreement. No timeframe is and someone else's patrons more available. choice at more times of the day. A graduate of Osgoode Hall Law Woodbine says, for example, that School, Mr. Young began hs legal Woodbine buys 75% of its pari-mutuel revenue career in 1981 with the law firm comes from simulcast with only 25% Benson McMurtry. Hastings Park coming from live racing (people bet- In 1991 he was elected as a Trustee After a long courtship, Woodbine En- ting on the horses actually running for the North York Public School tertainment of Toronto (formerly the around your own track). Board where he served until 1997. Ontario 2ockey Club) and the Pacific Hastings Park is a major door Mr. Young was elected to the On- Racing Association on May 1, 2002 through which Hong Kong signals tario Legislature in June, 1999 and signed an agreement whereby Wood- enter Canada and North America. served as Parliamentary Assistant tc bine will purchase Hastings Park While Woodbine already carries the Ministers of Education and Fi- Racecourse. Hastings Park races Hong Kong signals, instead of buy- nance. He was appointed Attornej thoroughbred horses on a 518 mile ing them from Hastings it will now General and Minister Responsible track and employs about 500 people. own them. The Hong Kong simul- for Native Affairs in February. Woodbine will hold Hastings Park cast signals start coming into 2001. through a wholly-owned subsidiary Toronto and other eastern tracks at Hastings Entertainment Inc. 10:30 pm and continue through to Teletheatre Network which operates While Woodbine purchased Hastings 3:OO am. 25 teletheatres across the Great Park for a nominal amount, it accepted In addition, the time difference be- Toronto Area (pop: 5.3 million). We responsibility for a $5.8 million debt tween Hastings Park and eastern understand that it has been given gov- whch the Pac$c Racing Association tracks will work in Woodbine's ernment approval to expand th~snet- owed to the Government of British favour in terms of marketing Hast- work across the lower mamland. The Columbia. We understand that Wood- ings' own signals. Woodbine has fact that this region is not already 9. bine will also undertake renovations at already cancelled Hastings' Wednes- served by a teletheatre network is due Hastings Park with discussions related day evening race dates and added to Hastings Park fearing it would com- Pete with its own on track racing. u to thls now underway. more post times on Saturdays and Sundays. The signals from the Woodbine apparently does not share Significantly, the renovations will not this concern. include the construction of a gaming Wednesday evening races amved in floor. Over the last several years there Toronto too late in the day. Hastings While already available in British has been talk that Hastings Park would Park's first post times on Saturdays Columbia, we understand Woodbine relocate to a neighbouring municipality and Sundays will now be 2:23 pm will also place additional emphasis whch would permit it to have a slot whch becomes 5:23 pm in Toronto. upon marketing its Pay-For-View The gaming floor similar to that of many Thls allows Hastings' simulcast sig- Racing Network in that market. The Ontario horse racing tracks, though we nals to come in just after Woodbine Racing Network (TRN) cames tele- understand that ths will not happen. has run its own races on those days. vised horse racing with bets placed via Woodbine also owns the Champions telephone. -Page 8 Canadian GAMING News -

unable to find a quote for the com- I ~anadianGaming ( pany or any reference to its progress. Annual We will therefore no longer follow it. Stocks May was a quiet to slightly down gaming profits month for gaming stocks with five Each spring we carry tables which Name down, one up, and five unchanged. present sector-by-sector and total It was a difficult month for Crypto- net and gross gaming profits for Canadian gaming. Chartwell Tech Inc. Logic in that even though it released (CWH) 2 a slew of potentially positive an- Our tables normally appear in our nouncements last month. its shares February or March issues. We have CrlvptoLogic Inc fell by $3.43, or 17% to $16.87. been delayed this year by the fact (CRY) I that the Ontario Lottery & Gam- On May 15 it announced the renewal ing Corporation has yet to release Dion Entertainment of its Normal Course Issuer Bid for (DIO) I its annual report for the year ended up to 5% of its 12,068.435 outstand- March 3 1, 200 1 and by the fact that ing common shares. The shares will Great Cdn Gaming the British Columbia Lottery Cor- (GCD) 2 be purchased between May 17,2002 poration has just released its report. and May 19.2003. This despite the fact that Loto- Internet Global On May 22 CryptoLogic announced Quebec, for example, will release its Networks (IGN) 2 that it has been ranked #1 in the annual report for the year ending Int '1 Thunderbird Profit 100, a ranlung of hgh-growth March 3 1,2002 midJune. (m)1 companies. The Profit 100 ranks Governments run and own gaming firms on percentage sales growth corporations to ensure public ac- Jenosvs Enterprises over five years with the 2002 rank- (JET) 2 countability and to protect the public ings based on the change in gross interest. We fail to see how releas- Lake City Casinos revenue between 1996 and 2001. ing one's annual report to the public (LCG) 2 During thls period, CryptoLogic's 15 months (and counting) after the revenue grew by 26,18 1%. close of the year contributes to thls Magna Entertainment The company, on May 30, an- objective. (MIE.A) 1 nounced the launch if its bingo soft- Network Gaming ware in German, Spanish and to $15.3 million, or $0.19 per share corp WGQ! 2 Japanese while, the following day, it during the year earlier period. announced that its investment in a Significant events during this quarter Venture Pacific long-term licensing agreement with included the re-branding of its national (VPV) 2 online gaming business SCG Enter- account wagering platform as Xpress- prises Ltd may be impaired. SCG Where traded: Bet,, On January 25 XpressBetmwas 1 Enterprises is a subsidiary of granted a license to conduct account I 1) TSE 2) CVE 3) NASD over-the-counter I Sports.com Ltd whlch is now under wagering in California. In February the control of a court appointed ad- We have removed Applied Gaming the company also entered into a joint ministrator. Last month Crypto- venture, Racetrack Television Net- Solutions from the list of companies Logic announced that Sports. com that we follow. Calgary-based Ap- work, that will telecast horse races on Casino was now fully launched and a private satellite horse racing service. plied Gaming was an upstart company ready for the World Cup soccer which, for a short period of time, cap- games. On May 23 Jenosys Technologies tured attention by having won a con- announced that it has received $1.6 I tract to manage and conduct, as well as On May 3 Magna Entertainment million in orders from the British ! provide the equipment for Vietnam to Corp announced financial results for Columbia Lottery Corporation for conduct its first government sanctioned the three months ended March 3 1, the supply and installation of elec- lottery. 2002. tronic bingo systems. These systems The industry was always puzzled as to During this period the company's are to be shipped and installed during how a company with little history and gross revenue, excluding the sale of the next 90 days. no gaming background managed to ob- non-core real estate increased to With the installation of these orders, tain such a contract. We do not have $248.2 million as compared to BCLC will have Jenosys supplied net- an answer though we can say that, for $218.4 million during the year ear- worked bingo systems installed in 17 the last several months, we have been lier period. Net profit was $18.4 of the 37 commercial bingo halls in million, or $0.22 per share compared British Columbia. -Canadian GAMING News Page 9 - powers or statutory powers of deci- that are presently without slot ma- Casinos Austria's sion, and breach of the duty of fair- chines; Surprise bid ness arising out of the decision of the g) an injunction preventing any or Defendants made on or about march Casinos Austria, whch operates 43 other community casino operators 26, 2002 to permit all of the Plain- from relocating a casino to a munici- landbased. and 19 shipboard casinos tiffs' competitors to relocate and up- across Europe and around the world, as pality in which the plaintiffs operate grade their community casinos to one of their seven community casinos; well as the Great Blue Heron Casino include the operation of slot main Ontario, has made a bid to purchase chines while denying the Plaintiffs h) special costs: Edmonton's Baccarat Casino. the right to do so. I) such further and other relief as to We wrote last month that Gateway As a result of the wrongful actions of thls Honourable court seems just'. Casinos had, in early April, signed an the Defendants. or either of them, the The decision of the previous Clark agreement to purchase the Baccarat. Plaintiffs have lost or will lose in the government to give municipalities a Casinos Austria confirms that it has future the ability to operate four of veto over the location, and relocation made a non-binding offer to purchase its community casinos. of casinos and a veto over whether or the Baccarat. We do not know if the In addition. as a result of the wrong- not they would be able to have slot agreement which the Simon Lee group, ful actions of the Defendants. the machines, is one of two factors which the casino's current owner, has signed Plaintiffs have lost, or will lose some has contributed to Great Canadian with Gateway will permit it to consider or all of the benefits that were in- Gaming bringmg this claim against the another offer. tended to flow to them during the 19 government and the British Columbia Lottery Corporation. Whde we understand the Alberta year term of the COSAs with respect Gaming & Liquor Commission will to four of the Plaintiffs' community Just several days before Premier Clark, not have to preapprove the sale and casinos. who was under intense pressure to purchase, it will, once a deal is com- In addition, the Plaintiffs have suf- resign because of his alleged role in the pleted, do background checks prior to fered loss as a result of past expendi- selection of a casino operator, faced an the vlnner being granted a casino li- tures incurred, at the request of the annual party conference, he gave mu- cense. defendants, for the purpose of up- nicipalities in that province a veto over grading and relocating the four com- gaming activity within their bound- Great Canadian munity casinos. In the future, the aries. Wlethis gave him a one day plaintiffs will lose substantial profits headline, he still lost hs job and hs, Suing BCLC that would flow to them but for the and the subsequent government, lost a wrongful actions of the Defendants'. portion of their control over gaming. On May 21, 2002 kchmond-based Great Canadian Gaming Corpora- 'The Plaintiffs claim: Vancouver, Victoria and Surrey, all communities where Great Canadian tion and its wholly-owned subsidiary, a) damages for breach of contract. Great Canadian Casinos Inc. filed a has, or had casinos, immediately de- breach of fiduciary duty and negli- clared that their casinos could not have Statement of Claim with the Supreme gent misrepresentations; Court of British Columbia wherein it slot machines while other communities listed the Government of British b) specific performance of the in this same market, such as Burnaby, COSAs dated March 1,2002; Columbia and the British Columbia agreed. There were now two classes of Lottery Corporation as defendants. c) aggravated and punitive damages casinos in that province - those with as a result of bias and breach of the and those without slots. Needless to (Ed. Note: The text in quotations duty of fairness; say, casinos with slots were suddenly which follows is taken directly form the making substantially more money than Statement of Claim as filed by Great d) a declaration that the defendants' were casinos without them. Canadian Gaming. We have, while decision was arrived at in an unfair maintaining the exact wording of the andlor an unlawful manner; A second factor contributing to the Great Canadian suit was the present text, broken it down into paragraphs to e) a declaration that the Plaintiffs make it easier to read and understand). government's decision to freeze all have a subsisting and enforceable casino expansions or relocations ex- The Statement of Claim seeks unstated right to apply for and receive permis- cept for that of four casinos - Holly- damages for ' . . . breaches of Casino sion to relocate their four community wood Casino (Prince George), Grand Operational Services Agreements casinos that presently are without Casino (Vancouver), Gateway (New (COSAs) entered into between GC slot machines; Westminster), and Royal Diamond Casinos and the British Columbia Lot- f) an injunction requiring the Defen- Casino (Vancouver). These casinos: tery Corporation dated March 1, 2001; dant BCLC to consider and approve it says, will be allowed to relocate breach of fiduciary duty, misrepresen- applications for relocation of the because they were already in discus- tation, bias in the exercise of statutory Plaintiffs' four community casinos sions with the previous government. -Page 10 Canadian GAMING News - Ontario racetrack slot statistics (January - March 2002)

Change Average Change $ House Change Daily Visits Daily month1y Monthly winlvisit $ house Visits gross Gross win/player/ ($ millions) visit Windsor 750 2,282 +242 4.8 +.6 70.1 1 +4.33 Hiawatha 452 1,578 -70 3.6 +.2 75.34 +8.79 -- -- 750 3,473 -199 12.6 -0.6 12 1.25 +5.91 Fort Erie 1,200 4,549 +427 13.8 +1.9 101.36 +8.47 Western Fair 307 2,822 +163 6.2 +O.O 72.84 -2.38 Kawartha 380 2,386 +371 4.9 +O. 1 68.92 +8.40 Sudbu? 33 1 1,509 -107 3.5 -0.1 76.58 +4.12 Rideau Carleton 1,250 4,886 +5 8 7.7 +O. 1 52.53 +1.95 Woodbine 1,702 11,855 -224 37.7 -0.3 105.90 +0.43 Clinton 100 455 -30 0.7 +O.O 5 1.28 +4.72 Flamboro 752 3,978 -295 9.2 +1.9 77.09 +12.89 Hanover 100 75 1 +2 1.O +O.O 44.38 +1.31 Dresden 100 538 +46 0.7 +O.O 45.43 -2.43 Woodstock 100 770 +2 7 1.1 +O.O 47.62 +1.17 Georgian Downs 40 1 2,791 -695 5.5 -0.7 65.69 +8.32 TOTALS 8,675 44,623 -3,017 113.0 +5.6 84.41 e.44

No one disputes that the four, whch was invariably a costly and frustrat- would have been done at a new, $100 were given the right to move on March ing exercise. million location. The government re- 26, should be given this right. Great BCLC has not said which communi- fused to allow this which left Gate- Canadian, we expect, will however ties, or perhaps First Nations, it has way's relocation plans in limbo. make the argument that since it always targeted for the four casinos though With Gateway's plan having failed, objected to the previous government's we understand more may be said ABS Casinos, which owns the Royal right to give municipalities the right to midJune. City Star, has just signed a 2-year limit its right to have slots, or to move extension to its original 3-year water- to municipalities which accept them, Rumours abound as to what it has in mind given that most likely only the front lease with that city. It has no that it too was in previous discussions lease commitment beyond this. and should be allowed to relocate. two grandfathered Vancouver casi- Great Canadian knows that, once these nos will be looking for new homes on We understand Gateway still wants to additional four casinos are allowed to the lower mainland. relocate its New Westminster casino relocate and have slots, its casinos Hollywood Casino, located in Prince so as to have room for 300 slots (it without slots will be at an even greater George, already has 220 slots and now has 190), though we are not cer- disadvantage than they are now. will almost certainly want to relocate tain of its plans at this point. BCLC has the responsibility to inter- to a property with that city with As for new sites for the two grandfa- face with, and obtain the approval of space for the maximum permitted thered Vancouver casinos - the Royal each of the municipalities to which it 300 slots. Diamond Casino and the Grand wants the four casinos to relocate. Be- Gateway Casinos had planned to Casino, the City of hchmond's city fore BCLC assumed this responsibil- co-locate its City of New Westmin- council, where Great Canadian al- ity, about two years ago, individual ster casino with that city's Royal ready owns and operates a casino re- operators had to play this role which City Star Riverboat Casino. This stricted to tables, voted May 28 to have a second casino with slots locate -Canadian GAMING News Page 11 - there. ing a final re- As things stand, the government's sponse to Wins SIGA jacket March decision prohibits Great Cana- BCLC. Coun- &an's Richmond casino from becom- cillors rejected ing that second casino - the one with this option at slots. Even though Great Canadian their May 28 has for many years had a casino in that meeting which city and wants slots to remain competi- means that the tive, it would have to step aside whle city remains without slots. n BCLC relocated one of the two grandfathered Vancouver casinos to its mar- A full service ket and gave it slots. Its court action is native casino, its response to this possibility and we the Silver P think the reason for Item (g) in it's Reef Casino, Claim For Damages. has opened on While Great Canadian moved its the Lummi casino out of the City of Surrey and Native Re- into the City of Coquitlam because serve about Surrey refused to give it slots, we hear 10 miles south Five lucky- people- - who attended the Welcom,e Reception Surrey may now reverse itself and ac- of the British whch the Saskatchewan Indian Gaming Authority hosted cept slots. If this were to happen, this Columbia - as part of the Regina's Canadian Gaming Summit & Exhi- city would also become a possible Washington bition had their names drawn and received beautiful leather casino site. State border. coats. With 28,000 Coquitlam, as we just wrote, already sq. ft of gam- While we unfortunately do not have the name of the winner hosts one of Great Canadian's two ing, 300 slots, pictured above, making the presentation are (lef) Kelly recently built casinos. Were this city 12 tables and Atcheynurn, Assistant General Manager, Gold Eagle Casino to approve a second casino, Great craps it is an and Kevin Tootoosis, (right) General Manager, Gold Eagle Canadian would, as in bchmond, lose easy commute Casino. a portion of its market though in thls form Vancou- Located in North Battleford, the Gold Eagle Casino (159 case it would remain competitive with ver and also slots, 11 tables, 1 roulette), is one of four casinos owned and the additional casino as it already has offers addi- operated by the Saskatchewan Indian Gaming Authority. slots. tional comve- And then of course, there is the City of tition for that city's casinos. succeed in gaining control of Lake City Vancouver. Following the govern- We referred earlier in this article to since, in addltion to its own 17% inter- ment's decision to relocate Royal Dia- our having been told that BCLC will est, it also has commitments that mond and the Grand, BCLC wrote to provide more information in June on Great Canadian Gaming Corpora- the city to confirm its position with its plans for the four grandfathered tion will tender its 10% interest and regard to slot machines. casinos. We have not been able to that Fred Glasgow, the company's In a May 24,2002 report to city coun- obtain cornmeconfirm hsthough we founder, will tender the 59% interest cil, city staff stated that the city re- t . Great Canadian's court chal- whch he owns, directly and indmectly, ceived $3.6 million from its five, tables lenge may cause BCLC to suspend in the company. While ths gives only casinos during the 2001 fiscal action on ths front until hsissue is Gateway an 86% stake, it will need at year. The report estimates that, were resolved. least 90% of the company's the two casinos whch are about to 12,429,660 shares to take it private. leave the city allowed slots, the city Lake City would receive $10 to $12 million annu- Absenteeism ally. On the other hand, the report Purchase Big Problem points out that should the two casinos As mentioned last month, Gateway leave that city, leaving it with only Casino's April 30, 2002 offer to Casino Windsor has long been known three casinos, the city's casino revenue purchase all the outstanding shares for its, at times, difficult labour envi- would drop below the $3.6 million of Lake City Casinos expires June ronment. Union contract negotiations level. Two of the three remaining 4, 2002. The company has offered have either been accompanied by a casinos are owned by Great Canadian to pay $3.25 per common share for strike (the first contract) or by the and one by Gateway. The staff report all the Lake City shares which it last-minute threat of a strike (the last concluded by recommending that coun- does not already own. contract). Absenteeism was a big part cil hold public hearings prior to mak- of the last contract negotiations with There is no doubt that Gateway will -Page 12 Canadian GAMING News - the C.A.W., the union which repre- We cannot comment upon these rea- There were also political claims that sents Windsor's non-management em- sons beyond saying, with regard to Funk and others had overspent on the ployees, conceding at that time that the role of management, that one expansion of the Club Regent and there were abuses and that steps would would expect absenteeism to be hgh McPhillips Street Station Casinos be taken to address this. at all times, and not just on, for without government approval. Funk Well the problem has not gone away. example, long weekends and after told us that the government had been On a recent weekend about 450 of the pay day, if moral was low because of kept ~nformedthough the new govern- approximately 2,500 employees who management practices. ment (there had just been an election were to have worked a shift reported in In mid-May management brought in and a change in the political party sick. This represented close to 20% of two programmes - Attendance at forming the government), appeared not the total. While Windsor requires a Work and Innocent Absenteeism to accept hs. doctor's note after 3 days away, th~sis which are to address the problem. Because Funk had been a senior gov- not an impediment as most of the ab- They outline a policy of progressive ernment official, a special prosecutor sences are for one or two day periods. discipline and a number of other was appointed to determine if there The casino has no complaint about the items whch relate to frequent and was a basis for criminal charges. The performance of the 75% of its staff repeated absences. prosecutor concluded, 22 months after who report regularly, though it is seek- As readers know, the Ontario Lot- Funk had been fired and his reputation ing to come to terms with those who tery & Gaming Corporation has, badly damaged, that there was no basis book off sick following pay day, on for a long time, been considering an for charges and the case was dropped. sunny days, and on long weekends. addition to Casino Windsor. While We have not been able to reach Mr. Every operator who maintains tight plans remain at the conceptual stage, Funk though understand he is before a control over the staff component of its Chairman & CEO Ron Barbaro has court seehg damages. operational budget knows that, when revealed that the OLGC is looking at 20% of staff fail to show, this cuts a $150 million expansion which Alberta First directly to the core of the service it is would include a hotel (we do not able to provide, and to the bottomline. know if this would be an expansion Nation casino It impacts the floor, back of the house, to the existing hotel or a second food & beverage, and valet parhg - hotel), an entertainment facility, a update every aspect of a property's opera- bus reception area, and a pedestrian Since the moratorium on casino gam- tions. bridge which would cross the street ing expansion was lifted this past separating the new from the present February, there has been speculation What is equally crucial for Casino complex. Windsor is that it is still recovering as to which First Nations have, or will from the disruption caused by Septem- As the decision to go ahead with an submit casino proposals to the Alberta ber 11. Each day it competes with expansion is obviously tied to Gaming & Liquor Commission. three Detroit casinos which used the Casino Windsor's performance, Mr. The first stage of the approvals pro- Barbaro has warned that the absen- fear of border delays caused by the cess requires that anyone wanting to teeism is not helping matters. This I lth to market themselves and to sign build a casino must send a letter to the up player loyalty members. They are message is hopefully will resonate with the C.A.W. which stands to commission informing it of the appli- today significantly more formidable cant's interest and identifying the com- competitors than they were several gain members if the expansion goes ahead and additional staff are hired. munity where the casino is to be built. years ago, and they appear not to be As part of stage two, the AGLC will having an absenteeism problem. The Funk case advertise the applicant's interest to same goes for Casino Niagara and gwe other parties an opportunity to Casino Rama. Each tell us their levels dropped compete, and advise the targeted mu- of absenteeism remain within normal, nicipality. Stage three has the AGLC and acceptable levels. In May 2000 Bill Funk was fired as going through the proposal to deter- There are various theories as to why President & CEO of the Manitoba mine if it has merit and evaluating Windsor is having these problems - it Lotteries Corporation. The claim projections for the target market. is a union city where people do not against Funk, and two Vice Presi- While we hear the names of First Na- want to work, employees are not paid dents who also lost their jobs, was tions rumoured to have an interest in enough (even though tips, at least up that they had overspent on business casinos, the AGLC has not released the until recently, surpassed those of every trips, overcharged MLC for ex- names of any applicant whlch would other Canadian casino), and that man- penses, and sold MLC vehicles to agement is insensitive. senior executives at below market inlcate that none have yet gone to step rates. two of the application process.

-Page 14 Canadian GAMING News -

Manitoba Lotteries Corporation first in Canada to install EZ Pay cashless gaming system.

(Winnipeg MB) A benchmark for the Canadian Gaming Industry has been set with the installation of IGT's EZ Pay Ticket System by Manitoba Lotteries. Operational in both McPhillips Street Station and Club Regent Casinos, the EZ Pay system represents the latest in ticket in -ticket out

technology. Commemorating the first EZ pay System in Canada are (L-R) Tim Shortall, IGT Regional Sales Manager, The coin dispensing function of traditional slot machines is Peter Hak, Senior VP and C.O.O., Manitoba Lotteries, replaced by a ticket in ticket out system. Tickets produced by Owen MacNeil, President, Hi-Tech Gaming a slot machine can be redeemed for cash or inserted -just like currency - directly into another machine. EZ Pay tickets can also be redeemed at a properly equipped cashier station.

"EZPay provided the perfect solution for our properties" says Manitoba Lotteries Senior Vice President and C.O.O. Peter Hak. "As we expected, player reaction to the tickets has been very positive, and I am pleased that we are able to offer the latest in gaming innovations to our customers."

Owen MacNeil, President of Hi-Tech Gaming, has nothing but praise for the implementation team. "This was a massive project with very tight time lines. Our Winnipeg staff worked hand in hand with MLC to meet an aggressive schedule".

Machines selected for this project were IGT's multi-game Game King slant top machines. Chosen to specifically compliment the unique layout requirement of the two casinos, the curving banks of machines present a I welcoming area for customers to play. By configuring the games for player selectable-denomination play, MLC has added yet another player favourite. With this feature, players no longer experience the frustration of searching for their favourite game on a machine that accepts the denomination they want to play.

EZ Pay Slots at Club Regent Casino -Canadian GMINGNews Page 15 - The following four First Nations ble of holding 500. The bingo hall The Tsuu Tina First Nation of Cal- would appear to be the most advanced would be slightly smaller than the gary have an agreement with Casinos though this is not necessarily an exclu- one presently in use. They were Austria which also led in the develop- sive list. talking with Paragon Development, ment and provided much of the financ- ~h~ samsontree ~ ~ at ~of Lasi Vegas, ~ though ~ are now , talking for 0htario7s Great Blue Heron Hobbema, 45 minutes south of ~d-ing with several other operators in- Casino which it also operates. monton, already have architect draw- 'luhg Louis of Montana and The Onion Lake First Nation, near ings for a complex which would in- expect to make a decision soon. The Lloydminster, has been worlung on a decision has been dude a hotel (60-rooms), small con- by band ca, proposal for the past ~0 years. vention facility, and a bingo hall capa- COU"C~' which took place They are with an Edmonton May 27. Canadian Casino Revenue and Visitor Statistics

City Month Total Table Total Slot Gross $ Change Daily Change % Win/ tables change slots change million gross attend attend Player previous previous month previous previous month month month month Alberta 18 floors Mar 353 5,305 +434 60.2 +7.8 32,320 -1,360 60.13

British Columbia 18 casinos Apr 381 +5 2,996 -3 53.4 -3.0 29,767 -2,319 59.81

Casino Halifax Halifax Apr 40 688 5.2 +0.2 4,644 +2013 37.22 Casino Sydney Sydney Apr 20 350 2.5 +0.2 2,279 +I42 37.35 Casino de Montr6al Montkal Apr 126 3,060 +5 36.3 -4.2 15,562 +1,529 73.84 Casino de Charlevoix Re-au-Pic Apr 22 793 +4 2.2 -0.7 2,724 +549 40.04 Casino du Lac-Leamy Gatineau Apr 64 1,863 -1 13.3 -3.3 8,536 +516 62.85

Casino Windsor Windsor Mar 87 -6 3,311 +39 52.6 +7.6 15,211 +2,192 115.27 Casino Rama 1 Orillia I Mar 1 122 1 / 2,198 1 -43 / 34.7 / -4.0 1 9.758 1 -1.307 1 118.42 I I I I I I I 1 I I I Casino Niagara Niagara Falls Mar 139 2,841 +44 51.4 +4.8 19,933 +214 86.01

Sault Ste. Marie Casino aeMarie Mar 18 451 3.1 +0.1 2,744 +84 37.66

Brantford Casino Brantford Mar 50 +1 452 10.5 -0.3 4,782 -67 73.42

Point Edward Casino Point Edward Mar 36 452 6.2 +0.8 2,691 -381 76.80 Great Blue Hem. Casino 1 Port Perry I Mar 1 50 / (slot operations only) Thunder Bay Casino Thunder Bay Mar 16 I 1 1 1 1 452 / / 4.4 1 -0.1 1 2,834 1 -27 1 52.14 Club Regent Casino Winnipeg Apr 31 1,166 8.8 +0.5 8,322 36.46 McPhillips Street Winnipeg Apr 26 1,143 8.8 -0.3 8,737 33.15 Station Casino Saskatchewan Indian N. Battleford/ Jan 41 Prince Albelv Gaming Authority Yorktonl Carlyle Casino Regina 1 Regina 1 Apr 1 37 1

Note: For casinos where information is more than one month old, this is the most recent information available. -Page 16 Canadian GAMING News - law firm to prepare their proposal as with the governor nor with the U.S. This 11-year commitment includes a well as with New Buffalo Gaming, Bureau of Indian Affairs. The gov- new five-year contract with three two- from Arizona. and Paragon Develop- ernor may be hesitant to sign the year extension options. ment. They are being delayed by the compact as a court decision several Spielo first entered the Delaware mar- time taken to have a piece of land years ago requires that it be ratified ket four years ago. The PowerStation located along the Yellowhead High- by the legislature. Given the many 51~games are equipped with an ad- way, which will be the site for their conflicting forces at play, the gover- vanced technology whch provides en- casino, designated as reserve land. nor may be biding his time. hanced graphics and sound capabili- The land has already been given to We do not want to pick on the mayor ties. Onion Lake as Treaty Entitlement though her response is typical of the Land though they expect it will take answers one gets when tallung with Gaming heats up another 6-12 months to receive Ot- the Seneca, the City of Buffalo, and tawa's approval that it become part of Albany about the status of the Na- in Yukon the reserve. Onion Lake will hold tive casinos which the governor has During the past month we have been elections for chief and council mem- announced for Niagara Falls and bers June 17. The outcome is not approached by two groups requesting Buffalo, New York. No one knows information on gaming opportunities expected to affect the casino initiative. what is happening, and those who in the Yukon. In the Yukon all bingo Paragon Development also has an ar- mnk they do appear not to. events must be charitable, non-profit rangement with the Enoch First Na- The Seneca are considering several with volunteers filling all positions. tion. Paragon will provide a portion of sites for their City of Buffalo casino The Town of Watson Lake is looking the financing and will also serve as including one in Stattler Towers and for a contractor to operate a bingo on operator. The Enoch have plans for a another on the waterfront though no the Labour Day weekend. Prize conference centre in addition to a decisions have been made and they money would total about $100,000. casino. are not yet near construction. The Champagne Aishihik First Na- NY Casinos On May 14 the Seneca held a refer- tion has also made an inquiry with endum which saw casino gaming regard to establishing a platform for The Mayor of Niagara Falls, NY tells approved by a 101 vote margin out the operation of Internet casinos. The us that the casino which the Seneca of 'several thousand' votes, though Aishihik have been following the activ- plan to open in that city's conference its validity is being challenged. ities of Quebec's Mohawk First Na- centre will open by the end of this year. The Seneca say they will offer election which, two years ago, created its However, Her Worship did not know tronic gaming but are unable to tell own gaming commission and operates how the Seneca planned to overcome us where they will purchase the constitution restrictions against slots. Internet casinos on servers located on games. Nearby Turning Stone its reserve. She was also unaware that the Seneca Casino uses electronic gaming ma- have not yet signed a gaming compact chines which the Oneida themselves Another mega developed as no established manu- facturer will compromise its license win Canadian GAMING given the constitutional restrictions. In September we camed an article about a second Casino Niagara patron is published monthly Spielo Expands having had a $1.3 million MegaBucks Delaware Contract win. The first cheque was also for To Subscribe: $1.3 million and we asked what the On May 29 Spielo Gaming Inter- odds were of the third jackpot also Tel: (905) 855-5370 national of Dieppe, NB announced being won at Niagara? Fax: (905) 855-1869 that it had signed a contract to oper- We received our answer April 8 when Editor: Ivan Sack ate 760 new VLTs for the Delaware Casino Windsor announced that one State Lottery. Address: of its Michlgan patrons had won a $1.8 270 of Spielo's PowerStation STM million MegaBucks jackpot. 1690 Truscott Drive games will be installed at Dover There are 105 onedollar MegaBucks Mississauga, Ontario Downs Racetrack, 290 at Delaware slot machines in Ontario - 45 at Canada Park, and 290 at Harrington's Casino Niagara, 24 at Casino Rama L5J 126 Raceway Midway Slots. and 36 at Casino Windsor. I The reproduction of this publication, or the information contained herein, is prohibited