By Michael Lipton, Kevin Weber, and Jack Tadman

When the Ontario Lottery and Gaming Corporation (OLG) announced its plans to modernize gaming in Ontario on March 12, 2012, one of the most controversial aspects of its plan was the development of a casino in the Greater Toronto Area (GTA), which OLG preferred to locate in downtown Toronto.

On May 21, 2013, after more than a year of meetings, debates, reports, recommendations, and controversies, Toronto City Council voted overwhelmingly against the construction of a casino or any other new gaming facilities in downtown Toronto.

In December 2013, OLG released Requests for Pre-Qualification (RFPQ) for three more “Gaming Bundles” (defined geographic areas which contain groups of “Gaming Zones”), including the GTA Gaming Bundle. Gaming Zones are geographic areas where service providers will be permitted, on an exclusive basis, to continue to operate or relocate an existing gaming site or establish a new gaming site. A service provider will be responsible for all Gaming Zones within a Gaming Bundle.

The GTA Gaming Bundle has two Gaming Zones. Gaming Zone C2 is located in a market of approximately 6 million adults and is currently served by the OLG Slots at Woodbine Racetrack (approximately 20-25 minutes away from downtown Toronto by car). Gaming Zone C3 includes parts or all of Ajax, Pickering, and Whitby (three cities east of Toronto, approximately 30-45 minutes away from downtown Toronto by car) and is currently served by the OLG Slots at Ajax Downs. The downtown Toronto area had previously been classed as Gaming Zone C1; it is excluded from the GTA Gaming Bundle as a result of the decision of Toronto City Council. The successful respondent to the GTA Gaming Bundle will be required to enter into a Casino Operating and Services Agreement with OLG requiring it to service both Gaming Zones C2 and C3.

There are two notable features of this Gaming Bundle in addition to Gaming Zones C2 and C3 that make being selected as the successful respondent to provide services to these Gaming Zones highly desirable.

First, the RFPQ notes that OLG had planned to add a new gaming site in the GTA but no municipality was willing to host a new gaming site. The RFPQ provides that if, during the term of the Casino Operating and Services Agreement, a new gaming site is permitted in the GTA, the service provider will have a right of first opportunity to become the service provider for such new gaming site.

Second, the successful respondent may also, at such time and on such terms as OLG may determine, and following consultation with the Mississaugas of Scugog Island First Nation, become the service provider for Gaming Zone C8, which consists of the Great Blue Heron Casino in Port Perry, Ontario, which is approximately 70 minutes away from downtown Toronto by car.

Given the scope of the actual and potential opportunities contained in the GTA Gaming Bundle, competition for this Gaming Bundle will likely be between top-tier gaming services providers. The RFPQ submission deadline is March 13, 2014, and notification of pre-qualification is expected in the summer of 2014.