OLG Announces Changes To Lottery Modernization

TORONTO, Sept. 23, 2016 /CNW/ - The Ontario Lottery and Gaming Corporation (OLG) has cancelled the current Request for Proposals (RFP) for Lottery in favour of a revised modernization approach. Through the Lottery modernization, OLG has been seeking a way, in partnership with the private sector, to unlock the opportunity to create greater value for Ontario.

After a period of due diligence and consultation with globally-experienced proponents, OLG has determined that the selection of a single service provider would not provide sufficient value for the Province.

"Today, OLG's Lottery business performs well; 2015-16 sales were a record $3.8 billion," said Stephen Rigby, OLG's President and Chief Executive Officer. "However, in order to unlock the full potential of the business, our approach to Lottery modernization is evolving. Under a revised approach, we will seek to enhance our capabilities in technology and innovation through partnerships with the private sector. This approach will leverage our skilled Lottery operations, headquartered in Sault Ste. Marie."

The investments in research, due diligence and market capacity that OLG has made to date will inform OLG's approach going forward. "OLG's mandate is to continually improve the business," said Rigby. "Our research reveals there is untapped revenue potential in the market. We are now adjusting our approach and remain committed to providing increased revenue to the Province."

In the meantime, it is business as usual. OLG will continue to operate the Lottery business. Customers and retailers will see no disruption in service and the modernization of land-based gaming continues.

At more than $2.2 billion annually, OLG provides the Ontario government with its largest source of non-tax revenue. Modernization helps OLG provide more money to Ontario for key government services.

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 $42 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.

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Backgrounder
OLG Lottery Modernization

A Record Year

In 2015-16, OLG provided a record return to the Province of more than $2.2 billion—it is the government's largest source of non-tax revenue.

It is OLG's obligation to continually and responsibly improve the business for the benefit of Ontario.

Changes to Lottery Modernization

Through modernization, OLG has been seeking a way to responsibly create greater value for Ontario. In March 2012, OLG announced that the modernization of lottery and gaming businesses would begin. The Lottery Request for Information was issued in June 2012, and closed in August of that year. It garnered strong market reaction with more than 30 respondents providing advice on the market opportunity.

In December 2012, OLG issued the Lottery Request for Pre-Qualification (RFPQ) seeking a service provider to:

  • be responsible for operating the day-to-day lottery business;
  • recommend strategies to maximize the growth and success of the lottery business; and
  • develop products and marketing plans, as well as process and cost optimization.

For this phase, too, OLG received substantial response from the market.

OLG issued the Lottery Request for Proposals (RFP) in September 2014, noting that the RFP would enable OLG to select one service provider to run specific day-to-day operations of the Lottery business in Ontario. Since then, OLG has conducted three sets of Commercially Confidential Meetings with pre-qualified proponents.

After a period of due diligence and consultation with globally-experienced proponents, OLG has determined that the selection of a single service provider would not provide increased value for the Province.

OLG had a specific mandate through its lottery modernization process to ensure value for the Province. OLG asked proponents to commit to a level of business growth, but proponents indicated that they would have difficulty meeting the conditions of the Request for Proposal to provide sufficient value to the Province. As a result, OLG has cancelled the current procurement.

To unlock the full potential of the business, OLG is evolving its approach to lottery modernization. It will seek to enhance its capabilities in technology and innovation through partnerships with the private sector. The investments in research, due diligence and market capacity that OLG has made to date will inform its approach going forward.

Gaming Modernization Continues

Modernization is proceeding in Eastern Ontario. A service provider (Ontario Gaming East Limited Partnership) has been operating the gaming facilities in the East Gaming Bundle for more than eight months. A new gaming site in Belleville—Shorelines Belleville—is under construction and has commenced the hiring process.

OLG's land-based gaming procurement process is continuing. RFPs for the North, Southwest and GTA Gaming Bundles are all in the market and proceeding with high proponent engagement. In addition, the RFPQ for the Ottawa Area Gaming Bundle has closed and the RFP will be released shortly. OLG has also announced its intention to add the two Niagara Casinos—Fallsview Casino Resort and Casino Niagara—to its modernization procurement process to improve fairness and competition across the regional gaming market.

Modernizing lottery and gaming helps OLG provide more money to Ontario for hospitals and other government priorities.

"We remain committed to the intent of modernization: to provide increased revenue to the Province and the people of Ontario."

—   Stephen Rigby, President and Chief Executive Officer

Ontario Lottery and Gaming Corporation

 

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