Electronic Bingo (eBingo) - Chatham-Kent

MUNICIPALITY OF CHATHAM-KENT
CHIEF ADMINISTRATIVE OFFICE
LEGAL SERVICES
MUNICIPAL GOVERNANCE AND LICENSING SERVICES
TO:
Mayor and Members of Council
FROM:
Nancy Havens, Manager of Licensing Services
DATE:
November 29, 2013
SUBJECT:
Electronic Bingo (eBingo)
RECOMMENDATIONS
It is recommended that:
1. The Ontario Lottery and Gaming Corporation’s initiative on Charitable Bingo and
Gaming Revitalization (eBingo) be endorsed by Council’s support of Riverview Bingo
Hall Charities Association, Riverview Bingo Palace owner and its supported
charities.
2. The Municipality enter into a contract with the Ontario Lottery and Gaming
Corporation to participate in the Charitable Bingo and Gaming Revitalization
Initiative at Riverview Bingo Palace.
3. The Mayor and Clerk be authorized to execute the said agreement.
4. The Base Budget for Bingo License revenue be decreased by $129,000 as a result
of the new revenue formula under the OLG’s eBingo model.
5. Due to 30 slots being added at Dresden Raceway the additional slots revenue of
$67,500 be used to offset the reduction in base budget.
BACKGROUND
Ontario Charitable Gaming Association, Ontario Lottery and Gaming Corporation (OLG)
and Ontario Charitable Gaming Association have been working together collaboratively
on a charitable bingo and gaming revitalization initiative. It is a multi-year program that
should have significant impact in sustaining and growing charitable revenue.
In 2005, the first eBingo gaming test pilots were open in Barrie, Kingston, Peterborough
and Sudbury, then in 2009 Windsor –Breakaway, and in 2010 Windsor – Paradise. The
initiative has been designed to preserve and enhance charitable bingo revenue for local
Electronic Bingo (eBingo)
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charities by providing a lineup of new electronic (touch-screen bingo, electronic
personal pay games, and electronic break-open ticket dispensers) in addition to the
traditional paper games in bingo halls across Ontario.
Attachment A is a list of 23 municipalities that are/will be participating in eBingo. The
list does not include St. Thomas or Fort Erie who have since approved the
implementation of this initiative.
The bingo industry has been in a decline for the past decade with an average provincial
contraction of 8% to 10% year over year. A decade ago there were more than 6,000
charities raising funds at 200+ bingo halls; today there are just under 3,000 charities
fundraising in approximately 65 halls.
There are two bingo halls carrying on business in the Municipality of Chatham-Kent,
namely Wallaceburg Hometown Bingo Association and Riverview Bingo Palace.
Wallaceburg Hometown Bingo supports 25 local charities or nonprofit organizations,
and Riverview Bingo Palace supports 104. Licensing Services receives revenue from
the licensing fees of these two pooling bingo halls.
Riverview Hall Charities Association, the owner of Riverview Bingo Palace and the
associated charitable organizations are in favour of introducing eBingo in 2014 at its
current location at 497 Riverview Drive in Chatham. At the present time, Wallaceburg
Hometown Bingo Association and the Kinsmen Club of Wallaceburg, owner of the
Wallaceburg Bingo Hall, are not considering eBingo.
COMMENTS
Riverview Hall Charities Association executive and the owner of Riverview Bingo Palace
held an information meeting on June 25, 2011 with the charitable organizations it
supports. Following the meeting a vote was taken and a decision was made in favour of
the movement to eBingo.
Since then administration has had meetings and phone call discussions with OLG
representatives, and the new general manager of Riverview Bingo Palace.
On September 16, 2013 administration received a package containing the following:
• Attachment B - Letter from the General Manager of Riverview Bingo Palace
with supporting documentation
• Attachment C - Letter from the President of Riverview Bingo Hall Charities
Association
• Attachment D - 44 letters of support from various charities
Participation in the new model is one of choice for commercial operators, charities, and
municipalities. The first step in the process is to establish that all parties (municipality,
charity association and commercial operator) agree to the new initiative.
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For bingo players, eBingo will provide a new and exciting entertainment experience
through continuous refresh and delivery of new products. The intent of the new model is
to satisfy current players, but more importantly, attract new players.
Under Charitable Gaming and Bingo Revitalization, bingo hall owner/operators not only
provide the facility and renovations, but are responsible for day-to-day operations,
including costs such as capital improvement, facility maintenance, local advertising and
promotion, and all staffing.
For municipalities the administrative workload is focused on eligibility review and
ensuring appropriate “use of proceeds”. Revenue is paid by OLG for these services and
municipal revenue has the opportunity to grow as industry revenues improve.
The municipality will receive bingo licensing revenue to cover the costs related to
administering and enforcing the regulations set out in the Alcohol and Gaming
commission of Ontario’s Lottery Licensing Policy Manual.
Upon approval by Council and the signed contract, representatives from OLG will meet
with the Operator to discuss the work that must be completed prior to OLG arriving on
site. OLG’s best guess for implementation would be summer or fall of 2014.
Financial Model
Attachment E is a copy of the financial model depicting OLG’s estimate versus
administration’s estimate.
In the financial model under administration’s estimate you will see that the Net Win for
BOT (Break Open Tickets/Nevadas) dispenser was reduced to $765,000 in comparison
to OLG’s projection of $2,178,000. The reason for this reduction was based on
doubling the net wins of 2013 projected BOT sales at Riverview Bingo Palace. This is a
rough estimate. It really is hard to predict as currently BOTs are sold by sellers, and
under the new model there will be 30 dispenser units accessible throughout the hall.
BOT machines electronically dispense a paper BOT that gets scanned and appears on
the screen when it is being dispensed.
Also you will note that the OLG’s estimate in the new OLG Charitable Gaming Model
depicts the Municipality’s commission to be approximately $150,000 year 1.
Administration estimates the Municipality’s commission to be $111,000 year 1, and will
use this figure for budget purposes. The 2013 base budget for bingo revenues is
$285,000. The projected base budget for bingo revenues for 2014 will be reduced by
$129,000 to $156,000 ($111,000 from Riverview Bingo Palace and $45,000 from
Wallaceburg Hometown Bingo).
The actual revenue received from Riverview Bingo Palace has been approximately
$318,000 for the last five years. If the annual revenue received under the new model is
$111,000 from Riverview Bingo Palace it will be an actual loss of revenue to the
Municipality of $207,000.
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Differences in models
Current Model
New Model
• eligibility reviews
• issue permits (semi-annually)
• eligibility reviews
instead of licence
• issue licences (quarterly)
• review simplified monthly reports
Municipal
• review monthly reports including
including monitoring use of
Responsibilities
monitoring use of proceeds
proceeds
•
$118
per
session
licence
fee
•
3% of adjusted net win* received
Municipality’s
share
was received from charities
from OLG through contract
• dealing with game sales and
• Support role only -no
cash – conduct and manage
responsibility for cash or games –
promoting cause and customer
• minimum of 3 bona fide
care
members for approximately 3
• 2 bona fide members for 2 hours
Charities
hours
involvement
= 1 share
• 45% of net win** less municipal
and provincial licence fees,
Charities share
admin fees and HST
• 25% of adjusted net win*
• Still schedule charities but more
flexible
• Schedule charities
• No longer responsible for games
• Responsible for games and
and cash
cash
• Monthly distribution reports – but
•
Monthly
distribution
reports
simplified
Hall Charities
Association
• Charity Administrator
• Charity Coordinator
• Facility upgrades
• Staff training and development
• Retain direct relationship with
charity association
• Manage day to day operations –
facilities, games, finances,
• Employ restaurant staff and
advertising and promotion
managers for bingos
Commercial
• Blended average 47% from
Operator
• Operator share 55% plus HST
monthly adjusted net win
• 25% - OLG cost recovery (for
hardware to site set up including
gaming devices, product
software, IT help desk)
• Holds “conduct and manage”
responsibility through contracts
• 0.78% of gross revenues
with commercial operators,
OLG
charities and municipalities
*Adjusted net win is Revenue(cash sales) less prize payout less 7% marketing fund
** Net win is Revenue(cash sales) less prize payout
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Revenue
Bingo revenue for 2012 received from the charities of Riverview Bingo Palace
amounted to $318,954, and from Wallaceburg Hometown Bingo $42,952.
The Municipality’s revenue has been consistent for the last several years as under the
existing bingo model the Municipality is paid $118.00 per session. Riverview Bingo
Palace conducts on average 2,695 sessions per year.
Although the Municipality’s annual bingo licensing revenues will decrease, OLG predicts
that service clubs and charities can expect increased long-term revenues as bingo halls
evolve into charitable gaming centres and attract new players.
COMMUNITY STRATEGIC PLAN
The recommendations in this report support the following Council Directions:
Healthy, Active Citizens
Growth Through Variety of Post-Secondary Institutions
High Quality Environment Through Innovation
Destination Chatham-Kent!
Magnet for Sustainable Growth
Prosperous and Thriving Community
Has the potential to support all Council Directions
Neutral issues (does not support negatively or positively)
CONSULTATION
The following were consulted and agree with the recommendations in the report.
Carla Fox, General Manager, Riverview Bingo Palace
Mary Sue Glasier, Hall Administrator, Riverview Bingo Palace
Kelly Kirkman, President, Riverview Hall Charities Association
Michael McLaughlin, Bingo Stakeholder Liaison Manager, OLG
Bob Katsavelos, Director, Business Development, OLG
Budget & Performance Analyst
Solicitor, Legal Services
Executive Management Team
FINANCIAL IMPLICATIONS
The base budget for 2013 for bingo revenues (licence fees) is $285,000. It is estimated
that the revenue the Municipality will receive under the new OLG Charitable Gaming
Model will be approximately $111,000 as a result of eBingo at Riverview Bingo Palace,
and $45,000 from Wallaceburg Bingo Hall under the current model.
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Therefore, the 2014 base budget will be reduced to $156,000 (a reduction of $129,000)
should this recommendation to implement eBingo in Chatham-Kent at Riverview Bingo
Palace be approved.
OLG is installing 30 new slot machines in Dresden in 2014. OLG estimates that the
addition of these slot machines will accumulate annual revenue of approximately
$90,000 per year; for budget purposes administration used 75% of that total - $67,500.
4220-9035 Bingo Licenses (Revenue)
2013 Base Budget
2014 Base Adj due to eBingo
2014 Base Budget
4203-9854 Slot Machine Revenue
2013 Base Budget
2014 Base Adj due to new Dresden Slots
2014 Base Budget
Net Budget Impact
Loss of Bingo Revenue 2014 – ($129,000 /12)*3
Additional slot Revenue
$285,000
($129,000)
$156,000
$596,451
$67,500
$663,951
2014
2015
$32,250 $129,000
$67,500
$67,500
$35,250 ($61,500)
If eBingo is implemented in October 2014 the total bingo revenue for 2014 will surpass
the new base budgeted amount by $35,250. However, in 2015 it is projected to be a
loss in base budget net revenue of $61,500.
Prepared by: Reviewed by:
_______________________________
Nancy Havens, CMM III
Manager, Licensing Services
Reviewed by:
_______________________________
John Norton
Chief Legal Officer, Legal Services
_______________________________
Judy Smith, CMO, CMM III
Manager Municipal Governance/Clerk
Electronic Bingo (eBingo)
Attachment A: Charitable Gaming Initiative ~ Participating Municipalities
Attachment B: Letter from General Manager, Riverview Bingo Palace with supporting
documentation
Attachment C: Letter from the President of Riverview Hall Charities Association
Attachment D: 44 letters of support from various charities
Attachment E: Financial Model comparison
c. Kelly Kirkman, Riverview Hall Charities Association
Carla Fox, General Manager of Riverview Bingo Palace
Wallaceburg Hometown Bingo Association
Kinsmen Club, Hall Owner of Wallaceburg Hometown Bingo
Matt Torrance, Budget & Performance Analyst
Gail Whitney, Budget & Performance Analyst
Dave Taylor, Solicitor
Michael McLaughlin, Charitable Gaming Stakeholder Liaison Manager OLG
Bob Katsavelos, Director, Business Development, OLG
P:\RTC\Clerk_Municipal Governance\Licensing\2013\Electronic Bingo (eBingo).doc
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Charitable Gaming Initiative ~ Participating Municipalities
Municipality
Participating Hall (* - existing e-site)
Signed Agreement
Sudbury
Boardwalk Gaming *
Nov 2012
Sudbury
Valley Bingo
Aug 2012
Peterborough
Kawartha Club Bingo *
Dec 2012
Kingston
Treasure Chest *
Dec 2012
Kingston
Community Spirit
Sept 2012
Barrie
Boardwalk Gaming *
Jan 2013
Mississauga
Meadowvale Bingo
Aug 2013
Penetanguishene
Angel Gate Bingo
Oct 2012
Pickering
Delta Bingo Pickering
Nov 2012
Richmond Hill
Bingo World Richmond Hill
June 2014
Hawkesbury
Long Sault Bingo

Newmarket
Bingo World Newmarket
Oct 2013
Oakville
Delta Bingo Oakville
June 2013
Windsor
Breakaway Gaming Centre *

Windsor
Paradise Gaming Centre *

Owen Sound
Sound Bingo

Pembroke
Bingo Country
Feb 2013
Cambridge
Cambridge Bingo Centre
Sept 2013
Niagara Falls
Delta Bingo
May 2013
Brampton
Rutherford Bingo
July 2013
St. Catharines
Delta Bingo
Nov 2013
Leamington
Chances

Thunder Bay
Thunder Bay Charitable Bingo
March 2014
ATTACHMENT E