Gateway Casinos & Entertainment Wins North and Southwest Gaming Bundles In OLG Modernization Process

Gateway Becomes Canada's Largest and Most Diversified Gaming Company

Ontario Expansion is Next Chapter in Gateway's Successful Growth Strategy 

BURNABY, BC, Dec. 13, 2016 /CNW/ - Gateway Casinos & Entertainment Ltd. ("Gateway") is pleased that OLG (Ontario Lottery and Gaming) has selected Gateway as the service provider for both North and Southwest Gaming Bundles in its modernization of Ontario's gaming industry.  The Ontario expansion will bring eleven new properties (nine existing and two planned new builds) to the Gateway portfolio when fully implemented, making Gateway the largest and most diversified gaming company in Canada with properties in British Columbia, Ontario and Alberta.  

The North Gaming Bundle includes OLG Casinos in Thunder Bay and Sault Ste. Marie along with OLG Slots at Sudbury Downs. In addition there are planned new builds in Kenora and North Bay.  The Southwest Gaming Bundle includes OLG Casino Point Edward along with OLG Slots at Western Fair District in London and OLG Slots at Clinton, Dresden, Hanover, and Woodstock Racetracks. Under the guidance of Gateway Chief Executive Officer, Tony Santo, the Ontario expansion will be led and implemented by a seasoned team of gaming executives based in Ontario.

"We are very excited and pleased to partner with OLG in the modernization of Ontario's gaming industry.  In Northern and Southwestern Ontario, Gateway will work with host communities to bring our unique brands and experiences to customers. On behalf of the 4,000 Gateway employees, we look forward to welcoming OLG colleagues to our team," said Mr. Santo.

The awarding of the Gaming Bundles in Ontario is the next step in the continued evolution of Gateway. In 2010, Catalyst Capital Group Inc. ("Catalyst"), Gateway's ownership group, took Gateway and its 9 properties under management to rebuild and restructure the company.  A focus on growth and redevelopment will result in Gateway's portfolio having grown to include 29 properties, once the North and Southwest Gaming Bundles are fully implemented.  Central to Gateway's success has been the development of exciting proprietary casino brands and signature restaurant brands that have dramatically improved the gaming customer experience while generating important, new customer segments among non-gamers. 

"Our Ontario expansion marks an important next step in Gateway's growth strategy – a strategy that has seen us successfully rebuild properties, develop proprietary brands and grow into new markets," said Gabriel de Alba, Gateway's Executive Chairman.  "We have made significant investments in jobs and capital in the communities where we operate in BC and Alberta.  In Ontario, we look forward to continuing to invest, build and grow."

Gateway has signed a business transition and asset purchase agreement with OLG on December 12, 2016 and, subject to customary closing conditions, is committed to subsequently signing a 20-year casino operating and services agreement when the acquisition closes next year.

About Gateway Casinos & Entertainment

Gateway Casinos & Entertainment Limited (Gateway) is one of the largest and most diversified gaming companies in Canada.  Operating in Western Canada, Gateway has over 4,000 employees and operates 18 gaming properties with 222 tables and over 6,700 slot machines.  With business partners, Gateway operates 43 restaurants and 1,000 hotel rooms.  Gateway is undertaking an exciting redevelopment strategy to dramatically improve the customer experience and attract new gaming customers.  This includes the development of proprietary food and beverage offerings like Match Eatery & Public House and Atlas Steak + Fish.   In 2017, Gateway will celebrate 25 years in the business of gaming and entertainment in Canada.  Further information is available at www.gatewaycasinos.com.  

About The Catalyst Capital Group

The Catalyst Capital Group Inc., a private equity investment firm with more than $6 billion in assets under management founded in 2002, is a leader in operationally focused turnaround investing. The firm's mandate is to manufacture risk adjusted returns, in keeping with its philosophy of "we buy what we can build." Catalyst's Guiding Principles of investment excellence through operational involvement, superior analytics, attention to detail, intellectual curiosity, team and reputation are key to the firm's success. The Catalyst team collectively possesses more than 110 years of extensive experience in restructuring, credit markets and merchant and investment banking in Canada, the United States, Latin America and Europe.

 

 

OLG selects service provider for North and Southwest Gaming Bundles

TORONTO, Dec. 13, 2016 /CNW/ - Following a competitive procurement process, Ontario Lottery and Gaming Corporation (OLG) has selected Gateway Casinos & Entertainment Limited (Gateway) as the service provider for the North and Southwest Gaming Bundles.

"Today's announcement of a service provider for the North and Southwest Gaming Bundles is a significant step forward in OLG's modernization," said Stephen Rigby, OLG's President and CEO. "The investments Gateway will make in the bundles will help ensure the best possible gaming experience for customers while OLG continues to deliver on its commitment to the people and Province of Ontario."

"We are very excited and pleased to partner with OLG in the modernization of Ontario's gaming industry," said Tony Santo, Gateway's Chief Executive Officer. "In northern and southwestern Ontario, Gateway will work with host communities to bring our unique brands and experiences to customers. On behalf of the 4,000 Gateway employees, we look forward to welcoming OLG colleagues to our team."

"In 2017, Gateway will celebrate 25 years in the business of gaming and entertainment," said Gabriel de Alba, Gateway's Executive Chairman. "Expanding into Ontario is truly an exciting and significant way to mark this important milestone in our company's history."

OLG has entered into a Transition and Asset Purchase Agreement with Gateway for each of the North and Southwest Gaming Bundles, which set out the customary closing conditions to be satisfied for OLG and Gateway to enter into a 20-year Casino Operating and Services Agreement (COSA) for each of the bundles. Under the COSAs, Gateway will take over day-to-day operations of:

Southwest

  • OLG Slots at Western Fair District
  • OLG Slots at Clinton Raceway
  • OLG Slots at Dresden Raceway
  • OLG Slots at Hanover Raceway
  • OLG Slots at Woodstock Raceway
  • OLG Casino Point Edward

North

  • OLG Casino Thunder Bay
  • OLG Casino Sault Ste. Marie
  • OLG Slots at Sudbury Downs

OLG expects that the service provider will take over day-to-day operations in spring 2017. 

In addition, as the service provider for the North Gaming Bundle, Gateway will have the opportunity to build two new gaming and entertainment facilities, one in the N4 Gaming Zone (Kenora area) and one in the N5 Gaming Zone (North Bay). The proposed new facilities will be subject to required approvals, including the provincial government.

OLG employees will transfer to the new service provider and OLG will work with Gateway to ensure they have as smooth and seamless a transition as possible. This includes a requirement for the service provider to retain employees for a period of no less than 12 months in their current position and geographic location, and to provide eligible employees with benefits and a registered pension plan.

While Gateway will be responsible for the day-to-day gaming operations in the bundles, OLG will continue to:

  • Conduct and manage gaming in the bundles
  • Require compliance with applicable regulations set out by the Alcohol and Gaming Commission of Ontario (AGCO)
  • Be the owner of key player information
  • Uphold the standards of its Responsible Gambling program through the service provider, including the self-exclusion program
  • Distribute Contribution Agreement payments to host communities

Gateway is required to follow all applicable laws and regulations, as well as AGCO standards and rigorous Responsible Gambling standards.

To OLG, the integrity of its procurement process is of the utmost importance.

Throughout the procurement process, OLG has engaged the services of a Fairness Monitor to provide oversight and advice.

Gateway Casinos & Entertainment Limited (Gateway) is one of the largest and most diversified gaming companies in Canada. Operating in Western Canada, Gateway has over 4,000 employees and operates 18 gaming properties with 222 tables and over 6,700 slot machines. With business partners, Gateway operates 43 restaurants and 1,000 hotel rooms. Gateway is undertaking an exciting redevelopment strategy to dramatically improve the customer experience and attract new gaming customers. This includes the development of proprietary food and beverage offerings like Match Eatery & Public House and Atlas Steak + Fish. In 2017, Gateway will celebrate 25 years in the business of gaming and entertainment in Canada. Further information is available at www.gatewaycasinos.com

OLG is the Ontario government agency that delivers gaming entertainment in a socially responsible manner. OLG conducts and manages gaming facilities, the sale of province-wide lottery games, PlayOLG Internet gaming, the delivery of bingo and other electronic gaming products at Charitable Gaming Centres and is leading the integration of horse racing into the provincial gaming strategy. Since 1975, OLG has provided nearly $44 billion to the Province and the people of Ontario. These payments to the province support the operation of hospitals, amateur sport through the Quest for Gold program, local and provincial charities and problem gambling prevention, treatment and research.

All for Here - 100 per cent of OLG's proceeds are invested in Ontario

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Backgrounder 
Service Provider for North and Southwest Gaming Bundles

OLG is continuing its procurement process to modernize lottery and gaming in Ontario by selecting Gateway Casinos & Entertainment Limited (Gateway) as the service provider for the North and Southwest Gaming Bundles.

OLG has entered into Transition and Asset Purchase Agreements with Gateway, which set out the customary closing conditions to be satisfied for OLG and Gateway to enter into 20-year Casino Operating and Services Agreements (COSAs) for the North and Southwest Gaming Bundles.

Under the COSAs, Gateway will take over day-to-day operations of the gaming sites in the bundles. 

Gaming
Bundle

Gaming
Zone

Current OLG Gaming Site

Host Community

North

N1

OLG Slots at Sudbury Downs

Sudbury

N2

OLG Casino Sault Ste. Marie

Sault Ste. Marie

N3

OLG Casino Thunder Bay

Thunder Bay

N4

Proposed new facility

Kenora area

N5

Proposed new facility

North Bay


Southwest

SW3

OLG Slots at Woodstock Raceway

Woodstock

SW4

OLG Slots at Western Fair District

London

SW5

OLG Slots at Clinton Raceway

Central Huron

SW6

OLG Slots at Dresden Raceway

Chatham-Kent

SW7

OLG Slots at Hanover Raceway

Hanover

SW8

OLG Casino Point Edward

Point Edward

 

For more details on OLG's procurement process for the modernization of lottery and gaming, including Gaming Zone maps, visit: http://about.olg.ca/modernization-project-status-rfp/

What is the Casino Operating and Services Agreement?

Currently, OLG and Gateway are operating under a temporary transitional agreement that allows the two parties to work together to share knowledge and help position Gateway for success. This transition period is expected to end in spring 2017.

Once the transition is complete, OLG and Gateway will sign the COSAs. These contracts allow Gateway to assume responsibility for the day-to-day operation of the sites.

Gateway is the service provider for both bundles, subject to customary closing conditions and pending the execution of the COSAs.

OLG's Modernization

In July 2010, OLG was asked by the Ontario government to complete a comprehensive, strategic review of the lottery distribution network and land-based gaming sites. The review resulted in a report to government called Modernizing Lottery and Gaming in Ontario. In March 2012, OLG announced its modernization plan.

OLG is engaging the private sector to help build a new model for lottery and gaming in Ontario. OLG's modernization will expand private sector participation in the industry, which will ensure greater efficiencies because:

  • Service providers will be able to focus on delivering certain day-to-day operations, while OLG maintains control and accountability
  • Capital costs of expanding, improving and maintaining gaming facilities will be taken on by the private sector, not the government

Through modernization, OLG will:

  • Become more customer focused
  • Expand the regulated role of the private sector in the day-to-day operations of lottery and gaming
  • Renew its role in the conduct and management of lottery and gaming

Under section 207 (1) (a) of the Criminal Code of Canada, only OLG (as an agent of the Province) is permitted to conduct and manage gaming in Ontario. That is why OLG will continue its conduct and manage role and will remain the operating mind behind the delivery of gaming and lottery in Ontario.

As service providers take over certain day-to-day operations of lottery and gaming, OLG will continue to:

  • Conduct and manage lottery and gaming
  • Require compliance with applicable regulations set out by the Alcohol and Gaming Commission of Ontario (AGCO)
  • Be the owner of key player information
  • Uphold the standards of its Responsible Gambling program through service providers, including the self-exclusion program
  • Distribute Contribution Agreement payments to host communities.

Once modernization is fully implemented, it will provide additional revenue to the Province to support vital services Ontarians rely on. At the same time, Ontario will continue to be a North American leader in responsible gambling, supporting the research, prevention and treatment of problem gambling.

OLG's Gaming Procurement Process

Modernization is a significant transformation of a government agency. The plan is ambitious and complex.

OLG's modernization procurement process will lead to long-term contracts with service providers. OLG needs to ensure proper due diligence in order to select service providers from among the best and most qualified proponents.

Since its initial launch, modernization has evolved in response to further consultation with industry experts through the Request for Information (RFI) and Request for Pre-Qualification (RFPQ) processes, collaboration with municipalities across Ontario and public policy adjustments.

OLG has made significant progress by:

  • Completing an RFI process for lottery and land-based gaming
  • Issuing RFPQs for lottery and land-based Gaming Bundles
  • Successfully procuring a service provider for iGaming and launching the PlayOLG online gaming platform
  • Launching the revitalization of charitable gaming
  • Working with the horse racing industry and government to build the foundation for a more sustainable horse racing industry in Ontario
  • Completing the RFP process for the East, North and Southwest Gaming Bundles and launching the RFP process for the GTA, West GTA and Ottawa Gaming Bundles
  • Issuing the RFPQ for the Niagara Gaming Bundle and the RFP for the Niagara Falls Entertainment Centre

On September 9, 2015, OLG announced it had selected Ontario Gaming East LP as the service provider for the East Gaming Bundle. Ontario Gaming East LP took over certain day-to-day operations of OLG Casino Thousand Islands and OLG Slots at Kawartha Downs on January 11, 2016. 

What is a Request for Pre-Qualification (RFPQ)?

RFPQs help OLG determine the skills and abilities of potential service providers.

Through a public tendering system (MERXTM), interested proponents are asked to submit information on their operational experience, financial and technical attributes and capabilities, including proof of successful experience with similar projects. In addition, the proponents must provide information on business and other relationships that they have had with First Nations and First Nations communities.

Interested proponents must also register with the AGCO or have submitted an application for registration.

The RFPQ process results in OLG identifying pre-qualified proponents eligible to receive the RFP documents—the next step in OLG's procurement process.

What is a Request for Proposal (RFP)?

In the RFP stage, pre-qualified proponents are invited to bid on a specific opportunity through a competitive and transparent procurement process. RFPs are confidential and only distributed to the proponents that are pre-qualified during the RFPQ stage.

The RFP process will result in OLG selecting a service provider for each Gaming Bundle, subject to customary closing conditions and pending the execution of the COSA.

What are Gaming Zones?

In order to effectively manage the gaming market in Ontario, OLG identified Gaming Zones where existing or new gaming facilities would be permitted, subject to required approvals, including the provincial government.

Gaming Zones are geographic areas where a single gaming facility may be located. The location and design of these Gaming Zones is intended to ensure a sustainable and efficient gaming market in Ontario.

The boundaries of Gaming Zones across the province were determined by a gravity model—a business tool commonly used for modeling supply and demand within a given geographic area. The model looked at a number of factors to determine where there is customer demand for a gaming facility, including:

  • Proximity of a Gaming Zone relative to other Gaming Zones and gaming facilities
  • Proximity of a Gaming Zone to current and potential customers
  • Distance a customer is willing to travel to reach a gaming site

Within each Gaming Zone, service providers will be permitted to assume certain day-to-day operations for an existing facility and possibly expand the site, establish a new facility if one does not currently exist, or relocate the existing facility within the boundaries of the Gaming Zone, all subject to approvals.

Only one gaming facility is permitted within each Gaming Zone.

What are Gaming Bundles?

To enable OLG to more effectively manage the gaming market in Ontario, OLG grouped some Gaming Zones into Gaming Bundles—each representing a separate bidding opportunity.

As a result, for some gaming RFPQs, potential proponents have been asked to demonstrate their ability to operate multiple facilities in a given region or geographic area of the province.

Gaming Bundles are intended to create opportunities for service providers to be more efficient by operating multiple facilities in a given region.

What are the next steps for the remaining Gaming Bundles?

OLG expects to release procurement documents for the remaining Gaming Bundles in the coming months.

Interested proponents who pre-qualify through the RFPQ process will be invited to participate in the RFP stage of the procurement process. The successful service provider for the applicable Gaming Bundle will be selected from this group.

Communities and OLG's Modernization

Municipal and community choice is an important element of OLG's modernization. OLG will only locate gaming facilities where there is support to do so from the municipal council or the First Nation band council. OLG has always been clear that it will respect the decision of a municipality or First Nation band council regarding hosting a new gaming site, or relocating or expanding an existing one.

When it comes to gaming facilities, OLG's approach to potential and current host municipalities and host reserves across Ontario has been consistent.

The municipal council or First Nations band council must pass a resolution confirming their interest in hosting a gaming facility.

Where a municipal council or First Nations band council has included conditions as part of its resolution for gaming in its community, such as restrictions on the movement or expansion of a gaming site, OLG will ensure service providers are aware of such conditions during the RFP phase of the procurement process.

The municipal council or the First Nations band council then works with the selected service provider to determine the location of a new gaming site, if one is proposed and permitted.

As has always been the case, adding table games at a gaming site that currently has none, relocating a current gaming site or building a new gaming site can only occur where there is municipal or band council consent and a viable business case put forth by a service provider, which is subsequently approved by OLG.

Any new gaming site, introduction of table games at a gaming site that currently has none, or the proposed relocation of an existing gaming site, is subject to final approval from the Ontario government.

Horse Racing

OLG is working with the horse racing industry and the Ontario government to build the foundation for a more sustainable industry in Ontario by:

  • Creating a business model that is focused on stability
  • Providing advice to the government on long-term funding
  • Partnering with the industry to optimize branding and build public awareness about horse racing
  • Developing new horse-themed lottery and gaming products

OLG is also providing provincial support by sharing its expertise and helping to direct the industry to adopt a Responsible Gambling program.

The Government of Ontario has extended support to the horse racing industry, formerly known as the Horse Racing Partnership Funding Program, by two years. The extension will provide up to $100 million annually to the industry.

Ontario Racing is currently holding consultations with the industry, which will result in recommendations to the government on a long-term funding arrangement.

Ensuring a strong future for horse racing is a priority for OLG and a key part of modernization.

OLG's Conduct and Manage Role

OLG will continue its role in the conduct and management of gaming in Ontario.

To fulfill this role, OLG will retain control over lottery and gaming, but will expect service providers to deliver many of the services related to the day-to-day operation of lottery and gaming.

World's Best Responsible Gambling Program

OLG will continue to work within the Province's overall problem gambling strategy to contribute to the prevention and mitigation of problem gambling through its Responsible Gambling program, which was ranked number one in the world by the World Lottery Association in 2014.

OLG will also require service providers to follow the Responsible Gambling Standards that OLG has developed.

Ensuring a Competitive Procurement Process

OLG is following the Ontario government's procurement guidelines to ensure that its procurement process is fair and competitive.

OLG has engaged an impartial Fairness Monitor throughout the process to provide oversight on the integrity and fairness of its procurement process.

 

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SOURCE Gateway Casinos & Entertainment Limited

For further information: Media Contact: Gateway: Carrie Kormos, Senior Vice President, Marketing and Communications, 416.456.5606, ckormos@gatewaycasinos.com; Catalyst Capital Group: Gagnier Communications, Dan Gagnier, +1.646.569.5897, dg@gagnierfc.com; OLG Media Line, 1.888.946.6716

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