Cancellation of Charity Casinos Cost the Ontario Lottery Corp. $50 Million in Compensation Payout

May 14, 1999 -- According to the Toronto Star, government documents show that the Ontario government did not have to pay any of the $50 million it gave in compensation after killing 44 charity casinos last year.

The newspaper said that payouts, to reimburse eight multinational casino operators for development costs and some lost revenues, were not required, according to the government's own bidding documents, issued on Feb. 18, 1997.

``The Government of Ontario is not liable to . . . reimburse or compensate proponents, or persons connected with the proponent, under any circumstances, including the rejection of any or all proposals, the cancellation of the request for proposal, the cancellation of the (charity casino) project itself, or the failure of the Gaming Control Commission, or the province to negotiate a contract with a proponent,'' the documents state.

Some of the multinational companies have high-profile Toronto Tories, Tory donors, former Tory political aides, and former government bureaucrats among their ranks.

One corporation is led by the Latner family of Toronto, which donated $110,000 to the provincial Tories between 1995 and 1997.

Despite several calls this week, Management Board chair Chris Hodgson, who oversees gaming issues, has refused to respond to questions about why the compensation was paid.

Spokespersons for the eight corporations receiving the payouts have been unavailable for comment over the past week as well.

Some of the companies were paid between $8 million and $10 million in compensation, some a little less, sources say.

Premier Mike Harris defended the payouts yesterday, saying the casino companies had spent money in development costs.

Harris said the $50 million was not taxpayers' money, but came from the Ontario Casino Corp., a crown company.

In fact, the crown corporation that paid out the money was the Ontario Lottery Corp., and the $50 million payout will reduce the annual amount in lottery winnings that the corporation contributes to provincial coffers.

Lottery spokesperson Jim Cronin also defended the payout yesterday. Cronin said he was aware of the provision in the request for proposal (RFP) initiating the bidding process which would have let the government off the hook.

``Understanding the period of time between the RFP being issued and the program being cancelled, costs had been incurred,'' Cronin said. ``We understood that and we committed we would cover those reasonable costs.''

Cronin said the Ontario Lottery Corp. is still ``sorting out details' ' of some of the settlements.

At the time of last year's cancellation, the eight casino corporations were still working out details of their deals and none had signed contracts with the government, Cronin said.

Originally announced by Finance Minister Ernie Eves in 1996, the charity casinos were to replace a network of roving Monte Carlo Charity Casinos operated by small companies.

The Monte Carlo operators, whose business was expropriated by the province to make way for the ``charity casinos'' have been refused compensation and are suing the province.

The permanent charity casinos were to spring up across Ontario, in cities like Toronto, London, Brantford, North Bay, Ottawa, Hamilton and Kitchener.

A bidding contest was held in 1997. Eight corporations were chosen as operators on Sept. 26, 1997. Each corporation was allotted between five and seven casino sites.

The corporations set about developing the casinos, hiring architects, consultants and spending money to acquire buildings and land.

Among the high-profile Tories involved with some of the corporations are Senators Trevor Eyton and Con Di Nino, and former federal cabinet minister Otto Jelinek. Among the former Ontario bureaucrats are former Ontario Casino Corp. president Domenic Alfieri.

Some former Tory political aides were also working for casino corporations. Among them: Paul Burns (former aide to Consumer Minister David Tsubouchi) and Bill Noble (former aide to Tory MPP Jim Flaherty and brother of high-profile Tory lobbyist Leslie Noble).

Public opinion was steadfastly against the concept. A Star story three months before the cancellation showed that 39 of the 44 proposed casinos were opposed by the communities chosen to host them.

Nine months after the eight corporations were selected, Hodgson cancelled plans for the casinos, saying in a news release on June 26, 1998 his decision was based on low public support for the concept.

SOURCE: Toronto Star