HomeMy WebLinkAboutCS 17-07
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Report Number: CS 17-07
Date: April 1 0, 2007
From:
Gillis A. Paterson
Director, Corporate Services & Treasurer
Subject:
New Bingo Revenue Model
Recommendation:
1. That Report CS 17 -07 of the Director, Corporate Services & Treasurer be
received;
2. That the draft by-law included as Attachment 1 to provide for the licensing of
Bingos, Raffles and Other Lottery Schemes be enacted; and,
3. That the appropriate staff of the City of Pickering be given authority to give effect
thereto.
Executive Summary:
In accordance with Section 206 of the Criminal Code and Order-In-Council 2688/93, the
legal authority for the Alcohol and Gaming Commission of Ontario and municipalities to
issue lottery licences in Ontario, a by-law is being recommended to provide for the
appointment of a Lottery Licensing Officer and to provide for the licensing of bingos,
raffles and other lottery schemes.
Financial Implications:
Under the new Provincial Bingo Revenue Model the 3% maximum fee of the current
$5500 prize board no longer exists. Fees are no longer tied to the prize board and, in
this regard municipalities must develop a new licensing fee structure. Instead of 3% of
the prize board, municipalities must work on a per event basis and are not allowed to
charge more than $165.00 per event.
Previously the City of Pickering charged 0.75% of the prize board for licensing fees.
Under the old Revenue Model the average licence fee charged was $41.25, being
0.75% of the $5500.00 prize board. The 0.75% does not provide cost recovery to the
municipality in order to administer the licences issued. Understanding the charities'
concerns with regard to a significant increase in licensing fees to accomplish cost
recovery, the recommendation for licencing fees should be $60.00 per event, with an
annual review and increase of 25% yearly until the City reaches the maximum of
Report CS 17-07
Subject: New Bingo Revenue Model
Date: April 1 0, 2007
Page 2
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$165.00. In canvassing area municipalities, it was found that most municipalities were
charging the maximum 3% allowed under the Old Revenue Model and will continue to
charge the maximum $165.00 per event fee.
Sustainability Implications:
The charitable organizations that operate bingos in the City of Pickering are an integral
part of a sustainable community in the areas of a healthy society and healthy
community.
Background:
In the spring of 2005, the Alcohol and Gaming Commission of Ontario initiated a wide
scale public consultation on the modernization of charitable gaming in order to obtain
comments and advice from participants in the charitable gaming sector on strategic
changes. HL T Advisory, a Toronto consulting firm with extensive experience in gaming
research across Canada was hired to look at the current bingo revenue model and
make recommendations for a new Provincial model. The modernization consultation
showed consensus that a new revenue model was needed for bingo to continue as a
viable charity fundraising activity.
Bingo is one of the oldest forms of legal gaming in Canada and the industry has faced a
number of challenges over the past ten years. As other forms of gaming have been
implemented, bingo activity has generally been stagnant. This stagnant performance
has lead to a significant decrease in market share. In the late 1990's there were
approximately 220 bingo halls operating in Ontario and today approximately 102 bingo
halls remain in operation. HL T believes that this situation is indicative of both a
decrease in the appeal of bingo to its core demographic player base and its historic
narrow demographic appeal (ie. small group of core players) as compared to other
gaming sectors such as lottery and casino. For bingo gaming to maintain the current
level, let alone increase its market share, it must both increase its appeal and expand
its current player base.
The objectives of the new revenue model were to recommend and implement an
appropriate revenue model for Ontario. It has been recognized that an enhanced
revenue model with greater flexibility was required to meet the demands of the bingo
marketplace. The areas assessed included:
Bingo operating expenses by geographic location
"reasonableness" of expenses
bingo operation revenue streams
Prize boards and determining factors for same
viable business for operators
profits for charities.
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Report CS 17-07
Subject: New Bingo Revenue Model
Date: April 10, 2007
Page 3
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The New Bingo Revenue Model provides the following:
flexibility with games that match the market
(Under the new Model the customer is the driver. Flexibility of games to match
the market so the mix of games can be designed to appeal to the customer.
Municipal and Provincial games are combined, no restrictions on what types of
games can be played.)
prize boards set at a maximum average of 70% of wagering
(Prize boards are "too high" to sustain bingo. Prize board payouts are between
74% and 78% of the wager. Ontario pays the highest prize payout in Canada.
Average payout across Canada at this time is 64% to 65%. Under the Current
Revenue Model prize board fees are calculated at a maximum 3% of the
$5500.00 prize board. Under the New Revenue Model the prize board maximum
has been removed. Prize boards under the New Revenue Model will now be
calculated by the number of customers in hall playing the game and the types of
games played. The Province has capped all prize payouts at 70% to start and
they will be lowered as assessment of the new Revenue Model is reviewed. );
marketing fund established at 10% of bingo win with shared responsibility
between charities and operators
(A Marketing Trust Account has been established with 10% of the win (gross
wager minus prizes) set aside for marketing within the hall. The hall operator
and the charity organizations approve what the money should be spent on.);
all bingo hall revenues split between charities and operators
(Charities will now get a split of the snack bar, liquor sales if pilot project is
approved, dabber sales, lottery ticket sales etc.);
charities receive 45% of the win (gross wager minus prizes) and operators
receive 55%
(Operator expenses were looked at and it was the consensus during the
consultation that the split needed to be reviewed so that halls were viable and
profitable. Charity expenses are administration and licence fees and hall
operators are responsible for all other expenses.); and
A mandatory position of a "Hall Charities Association Administrator" has been
created
( The position was created in order to provide increased accountability. The Hall
Charities Association Administrator is hired by the Hall Charities Association and
must have an arms length relationship with the hall operator and the Charities
Association.).
The expected results of the New Revenue Model are:
new game schedules that will appeal to customers
additional revenues from reduced prize boards
operator profitability and viability will increase
charities will receive same dollars on average across Ontario
Report CS 17-07
Subject: New Bingo Revenue Model
Date: April 1 0, 2007
Page 4
model has inherent incentives to grow the business
long term adaptability.
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The Municipal Licensing responsibilities are to conduct eligibility reviews and maintain
current core eligibility files, review lottery applications, reports, financial statements,
ensure that proceeds applied for and raised are accounted for and used for the delivery
of the licensee's charitable mandates. The Lottery Licencing Officer enforces and
ensures compliance with any lottery licence that is issued.
Under the new Revenue Model, the Alcohol and Gaming Commission of Ontario has
streamlined licencing, financial reporting and Terms of Reference processes.
Additional requirements to submit information to the Province requires that the Charities
be more accountable and gives the Municipality additional Provincial support.
Analysis:
Customers are the business driver for bingo gaming. Bingo is successful when it
appeals to the customer and is managed profitably. Bingo has a narrow appeal and
must increase its customer base in order to remain profitable. If Bingo Halls continue to
close, charity fund raising opportunities disappear.
The City of Pickering issues licences to 44 charity organizations. Over the last few
months the Province and the Municipality have met with representatives from the
charity organizations to review and train them on the New Revenue Model. All parties
agree that changes had to be made and are hoping that the new Revenue Model will
improve this area of lottery gaming.
Attachments:
1. Draft By-law for Lottery Licencing Fees
2. Current Bingo Revenue Model Chart
3. New Bingo Revenue Model Chart
Prepared By:
Approved I Endorsed By:
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Debbie Shields
Deputy Clerk
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Debi A. Bentley
City Clerk
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Gillis A. Paterson . ---
Director, Corporate Services & Treasurer
Report CS 17-07
Subject: New Bingo Revenue Model
Date: April 1 0, 2007
Page 5
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Attachments
Recommended for the consideration of
. Pickering City Co~nc;H
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Thomas J. Quinri,I,'RDMR;,CM~rvfll-I.;:-..
Chief Administrative Officer ,. "~"
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ATTACHMENT #1
THE CORPORATION OF THE CITY OF PICKERING
TO REPORT #~~-(:il
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BY-LAW NO.
Being a by-law to provide for the Appointment
of lottery Licensing Officer and to provide for
the Licensing of Bingos, Raffles and Other
lottery Schemes
WHEREAS by Order-in-Council 2688-93 dated October 27, 1993, municipal councils
are empowered to issue a licence authorizing any charitable or religious organization to
conduct and manage a lottery scheme;
AND WHEREAS section 20 of the said Order-in-Council provides that where a
municipal council is satisfied that it is in the best interests of the community to do so, it
may refuse on reasonable grounds to issue a licence for a lottery scheme and in so
doing may take into account such factors as the number of licences issued and the
playing locations already in existence in the community;
NOW THEREFORE THE COUNCil OF THE CORPORATION OF THE CITY OF
PICKERING HEREBY ENACTS AS FOllOWS:
DEFINITIONS
1. In this By-law:
(a) "Charitable Object or Purpose" includes any object or purpose for:
i) the relief of poverty;
ii) the advancement of education;
iii) the advancement of religion; or
iv) other charitable purposes beneficial to the community.
(b) "Charitable Organization" and "Non-profit Organization" includes an
organization which is created primarily for a charitable object or purpose in
Ontario, is operated not for profit, and includes a religious organization.
(c) "Licence" means a licence issued under the authority of the Lieutenant
Governor in Councilor City of Pickering to conduct or manage a lottery
scheme.
(d) "Licensee" means a person to whom a licence is issued.
BY-LAW NO
Page 2
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(g)
(h)
"lottery" means a scheme that involves a prize, a chance to win a prize,
and includes a regular and special bingo lottery, a media bingo lottery, a
raffle lottery, a bazaar lottery, or a break open ticket lottery (Nevada).
(f)
"Lottery Event" means a single occasion at which a lottery scheme is
conducted.
"Lottery Licensing Officer" means any employee or representative of the
City Clerk, including his/her designate who have been authorized to
administer licences.
"Person" means a corporation, organization, association or partnership,
including a charitable organization.
"Registrar" means The Registrar of Alcohol and Gaming Commission of
Ontario under the Alcohol and Gaming Regulation and Public Protection
Act, 1996.
APPOINTMENT AND AUTHORITY
(e)
2. Appointment of Lottery Licensing Officer.
(a) The City Clerk is appointed as Lottery Licensing Officer for the purpose of
regulating and enforcing the provisions of this by-law and shall exercise all
the authority, powers and rights and shall perform all the duties and
obligations which by statute or by-law are or may be conferred or imposed
upon the Lottery Licensing Officer.
(b) Notwithstanding 2(a), the Lottery Licensing Officer may assign his or her
duties with respect to this by-law to any person or persons designated by
him or her, and in such case, the person or persons designated shall be
responsible for the administration of this by-law.
APPLICATION
3. An application for a licence to conduct and manage a lottery scheme shall be
submitted to the Lottery Licensing Officer who shall determine if the application
complies with Order-in-Council 2688/93, any regulations, and the provisions of
this by-law.
4. Applications for a first licence, shall be made to the Lottery Licensing Officer no
later than 30 days prior to the date of the lottery event.
5. A licence issued under this by-law is not transferable.
BY-LAW NO
Page 3
6.
In addition to the eligibility requirements of the Gaming Control Act and
Regulations, applicants for Lottery Licencing must provide services to the
residents of Pickering and be based in Pickering or provide services within the
Durham Region to a significant number of Pickering residents.
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7. Notwithstanding section 5 of this by-law, all charities not in the geographic
location of Durham Region that are licenced as of the passing of this by-law with
the City of Pickering will continue to be licenced by the City as long as the charity
continues to have a licence in good standing with the City of Pickering.
8. Applications for City approval of Provincially licensed events shall be exempt
from the requirements of section 5 and shall be approved provided the
requirements of the Gaming Control Act and/or Regulations are met.
LICENCE FEES
9. The charitable organization shall pay to the City, at the time of issuance of the
licence a fee in the amount set out in Schedule "An to this by-law.
TERMS AND CONDITIONS
10. In addition to such terms and conditions as may be imposed by the Registrar,
each licence shall be subject to the following terms and conditions:
(a) The licensee shall comply with sections 206 and 207 of the Criminal Code
of Canada;
(b) The licensee shall comply with the provisions of Order-in-Council 2688/93;
(c) The licensee shall comply with all the terms and conditions set out on or
attached to the licence;
(d) the licensee shall comply with all provincial and municipal policies and
procedures; and
(e) The licnesee shall conduct or allow to be conducted only the type of lottery
event or events provided in the application and the licence.
(f) No person shall conduct or permit or cause a charitable organization to
and no charitable organization shall conduct or manage a bingo lottery, a
break open ticket lottery, a raffle lottery, or a lottery scheme held at a
bazaar without a valid licence in respect thereof.
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11. In addition to such special terms and conditions as may be imposed by the
Registrar, any building or premises registered, where a charitable organization
proposes to conduct and manage any bingo lottery event or events shall
prominently display information regarding responsible and problem gambling and
information on where people can get help.
REFUSAL TO ISSUE OR SUSPENSION/CANCELLA TION OF LICENCE
12 Where the Lottery Licensing Officer determines that the application does not
comply with Order-in-Council 2688/93, any regulations, or provisions of this by-
law, the Lottery Licensing Officer shall not issue a licence, but shall give notice of
the decision not to issue a licence by mail to the charitable organization within a
reasonable time thereafter.
13. If the licensee fails to comply with any of the provisions of this by-law, the
provisions of Order-in-Council 2688/93 and amendments thereto, the terms and
conditions applicable to such licence, or section 206 and 207 of the Criminal
Code of Canada, the Lottery Licensing Officer may suspend or cancel such
licence. Upon suspension or cancellation of a licence, the Lottery Licensing
Officer shall give notice to the licensee by mail within a reasonable time
thereafter.
14 Where a licence has been suspended or cancelled, the licensee shall be entitled
to a refund of a part of the licence fee proportionate to the unexpired term for
which the licence was granted.
ENTRY
15. The Lottery Licensing Officer and such officers as the Registrar or the Lottery
Licensing Officer may appoint and all peace officers shall, at all reasonable
times, have direct and unencumbered access to the building or premises wherein
a lottery event is taking place, to enquire into the nature, management and
conduct of the lottery event or events for which the licence has been granted,
either prior to, during, or after the conclusion of such lottery event.
POSTING OF LICENCE
16. Where the licence applies to premises or a building wherein a lottery event or
events are taking place, the licensee shall keep the licence posted in a
conspicuous place.
17. Where the licence does not apply to premises or a building wherein a lottery
event or events are taking place, the licensee shall produce the licence upon
demand.
BY-LAW NO
Page 5
SHORT TITLE
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18. This by-law shall be known as the "Lottery Licensing By-law".
REPEALED
19. By-laws 44n4, 3929/92 and 5972/02, are hereby repealed.
EFFECTIVE DATE
20. This by-law comes into force and effect on May 1, 2007.
BY-LAW read a first, second and third time and finally passed this 16th day of April,
2007.
David Ryan, Mayor
Oebi A. Bentley, City Clerk
BY-LAW NO
Page 6
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SCHEDULE "A"
LICENCE FEES
The following shall be the prescribed per-event lottery scheme licensing fees under this
by-law:
Bingo Lottery Licence
$60.00 per event
Media Bingo Licence
$60.00 per event
Break Open Ticket Licence
1.5% of the total value of
prizes to be awarded
Bazaar Licence
1.5% of the total value of
prizes to be awarded with a
minimum of $15.00
Raffle Licence
1.5% of the total value of
prizes to be awarded with a
minimum of $15.00
I ATTACHMENT # ~
TO REPORT # c~? J~-07
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