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HomeMy WebLinkAboutCS 17-07 --~-"._.~~.~.~.~,~..~~,~--~"....~-,-~".",,,--~.,.,~,,,....~._.~,_._~~..~_.'_._~--,. -...~- Citq c~ REPORT TO EXECUTIVE COMMITTEE ,." i""" ,-.. L:Ju 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 ". I") .,. U~.l $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. '-'.~"._..,,-~~, '~.'"''''"''''''''''''''''''-'''"~'-'~~"''''' ><'.,......"'~"._. .~~.'_'"'~'u~.__"-"~~. Report CS 17-07 Subject: New Bingo Revenue Model Date: April 10, 2007 Page 3 (' I)'''' 0~,:': 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. ,~ ') ,.., C,-,j 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: ~.b~ Debbie Shields Deputy Clerk I Debi A. Bentley City Clerk /:~..... "''-~-;~8''" _.-.- .?;~<~., "_. __.,.~ ". L./ "~"" Gillis A. Paterson . --- Director, Corporate Services & Treasurer Report CS 17-07 Subject: New Bingo Revenue Model Date: April 1 0, 2007 Page 5 ( ')') l..~ oJ 'f Attachments Recommended for the consideration of . Pickering City Co~nc;H //}I ij.:"--'<~ ,":',</ iJ-<J 1/- .\ .\l.....~.H.~ . \'l -fffir~,;':;>;-' < -,--- .,;~';ld;S~ k:::):r':~" Thomas J. Quinri,I,'RDMR;,CM~rvfll-I.;:-.. Chief Administrative Officer ,. "~" DRAFt l ATTACHMENT # I ATTACHMENT #1 THE CORPORATION OF THE CITY OF PICKERING TO REPORT #~~-(:il f\0r-- \..;..,,J 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 '~ I) '.~1' ) L. v( e (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. l" I) :'!,~1 V , 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. ___~~_..",.............-=,_,_".m,,,,,,.<"~~,,_,,,,,..~..",,,,,,,_~~"....__,_ BY-LAW NO r '. ') ~.~! 'I.. '" c.) Page 4 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 l'l r:> n ':.h1 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 r' ft ,... i.: "'J: V 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 C4:i ,.-I M ;";~;~:<; ,~.: cilc- -r~: Fg;- :_'~ -:;~ in': _:.ClI- ,: VL '_'c- ~;;!:- .' -C~:,: ~','"I :.-~ ,~ '. "",.-..<::., - G) "C o ::t G) :s c G) > G) c:: o C'I C .- co ...., c CU L. L. :s U ClI :s c III > III a: -Cl III ~ c..: .-. ~' .~ III C Cl :s III ~~ 1:1>- [t [J !ltr' . ~~I 1::16- 1::1<( ------.--.----.--,- .--. ~ <D c - CJ) "'0 o E Q) :J C (]) > CD s... II~ OJ > B~