HomeMy WebLinkAboutLEG 15-22Report to Council
Report Number: LEG 15-22
Date: December 5, 2022
From: Paul Bigioni
Director, Corporate Services & City Solicitor
Subject: Amendment to the Municipality Contribution Agreement between Ontario Lottery
and Gaming Corporation and The Corporation of the City of Pickering
-File: L-4100
Recommendation:
1.That the attached Amendment to Municipality Contribution Agreement between Ontario
Lottery and Gaming Corporation and The Corporation of the City of Pickering be
approved;
2.That the Mayor and City Clerk be authorized to execute the said Amendment to
Municipality Contribution Agreement; and
3.That appropriate City of Pickering officials be authorized to take the actions necessary to
implement the recommendations in this report.
Executive Summary: The Municipality Contribution Agreement dated February 12, 2020
between Ontario Lottery and Gaming Corporation (“OLG”) and the City sets out the timing and
calculation of payments to the City out of gaming revenues of the Pickering Casino Resort.
OLG is now introducing new sports and other betting activities at the Pickering Casino Resort.
This will generate additional revenues which OLG proposes to share with the City. The
attached Amendment to Municipality Contribution Agreement (the “Amending Agreement”) will
provide the City with a share of new sportsbook revenues. City staff recommend that the
Amending Agreement be executed to increase Pickering’s share of gaming revenues.
Financial Implications: The Amending Agreement will entitle the City to receive 4% of
sports book revenue in each operating year of the Pickering Casino Resort. Sportsbook
revenues are defined in the Amending Agreement to be gaming revenues generated from
wagering on sporting events, competitive video games and other similar events. Pickering’s
share of sportsbook revenues will be in addition to the share of gaming revenues already being
paid to the City.
Discussion: The draft Amending Agreement is Attachment No. 1 to this Report. The
Agreement will govern the timing and calculation of payments to be made to the City out of
gaming revenues from the Pickering Casino Resort. The Agreement will remain in effect for as
long as casino games are conducted and managed by OLG at the Pickering Casino Resort
site at 1802 and 1902 Bayly Street and 2028 Kellino Street (North-west corner of Bayly Street
and Church Street).
-Cdt;of-
Pl(KER]NG
LEG 15-22 December 5, 2022
Subject: Amendment to the Municipality Contribution Agreement between
OLG and The Corporation of the City of Pickering Page 2
Pursuant to Paragraph 2 of the Amending Agreement, the City shall be entitled to receive
payment from OLG calculated as follows:
(a)During the Term and subject to the terms and conditions of this Agreement, the
Municipality shall be entitled to receive from OLG in respect of each Operating Year the
amount (the “Annual Contribution”) equal to the sum of (A) + (B) + (C), where:
(A)is the aggregate (without duplication) of:
(i)5.25% of the Electronic Games Revenue, if any, generated in such
Operating Year that is less than or equal to $65 million; plus
(ii)3.00% of the Electronic Games Revenue, if any, generated in such
Operating Year, that is more than $65 million and less than or equal to $200
million; plus
(iii)2.50% of Electronic Games Revenue, if any, generated in such Operating
Year, that is more than $200 million and less than or equal to $500 million;
plus
(iv)0.50% of Electronic Games Revenue, if any, generated in such Operating
Year, that is more than $500 million;
(B)is 4.00% of Live Table Games Revenue, if any, generated during such Operating
Year; and
(C)is 4.00% of Sportsbook Revenue, if any, generated during such Operating Year.
The Amending Agreement has been prepared by OLG, and contains OLG’s mandatory
provisions regarding the calculation and timing of payments to a gaming host municipality. City
staff recommend that Council approve the Agreement, and that it be executed on behalf of the
City by the Mayor and City Clerk.
Attachments:
1.Amendment to Municipality Contribution Agreement between Ontario Lottery and Gaming
Corporation and The Corporation of the City of Pickering.
Prepared/Endorsed By:
Paul Bigioni
Director, Corporate Services & City Solicitor
PB:ks
Original Signed By:
LEG 15-22 December 5, 2022
Subject: Amendment to the Municipality Contribution Agreement between
OLG and The Corporation of the City of Pickering Page 3
Recommended for the consideration
of Pickering City Council
Marisa Carpino, M.A.
Chief Administrative Officer
Original Signed By:
EXECUTED VERSION
OLG Internal
AMENDMENT TO MUNICIPALITY CONTRIBUTION AGREEMENT
THIS AMENDMENT TO MUNICIPALITY CONTRIBUTION AGREEMENT (this
“Amendment”) made as of the ___ day of ___________________, 2022 (the “Effective Date”),
BETWEEN:
ONTARIO LOTTERY AND GAMING
CORPORATION
(hereinafter referred to as “OLG”)
- and -
THE CORPORATION OF THE CITY OF
PICKERING,
with its administrative office located at 1 The
Esplanade, Pickering, ON L1V 6K7
(hereinafter referred to as the “Municipality”).
WHEREAS OLG and the Municipality (the “Parties” and each a “Party”) are
parties to that certain Municipality Contribution Agreement dated as of February 12, 2020 (the
Contribution Agreement”);
AND WHEREAS capitalized terms that are used but not defined in this
Amendment, including in the recitals hereto, have the respective meanings specified in the
Contribution Agreement;
AND WHEREAS pursuant to the Contribution Agreement, the Municipality is
entitled to receive from OLG in respect of each Operating Year an Annual Contribution, which is
defined and calculated by reference to a percentage of Electronic Games Revenue and Live
Table Games Revenue, subject to the terms and conditions of the Contribution Agreement;
AND WHEREAS OLG is willing to conduct and manage Sports and Other Betting
(as defined below) at the Location, if OLG’s service provider wishes to offer Sports and Other
Betting at the Location;
AND WHEREAS the Parties are entering into this Amendment in accordance
with Section 19 of the Contribution Agreement for the purpose of amending the manner in which
the Annual Contribution will be calculated if and when Sports and Other Betting is operated at
the Location;
NOW THEREFORE THIS AMENDMENT WITNESSES THAT in consideration of
the respective covenants and agreements of the Parties herein contained and for other good
and valuable consideration (the receipt and sufficiency of which are acknowledged by each
Party), the Parties agree as follows:
Attachment #1 to Report LEG 15-22
- 2 -
OLG Internal
1.Amendment to Section 1 (Definitions)
From and after the Effective Date, Section 1 of the Contribution Agreement is
hereby amended by inserting the following definitions in such Section in alphabetical order:
““Sports and Other Betting” means, (a) with respect to sports
betting, the making of a bet or placing of a wager on any actual
sport event or any other athletic contest, race or fight, and (b) with
respect to other betting, the making of a bet or placing of a wager
on (i) video games that are played competitively, (ii) any non-
sporting event (for greater certainty, other than Electronic Games
and Live Table Games) where real-world factual occurrences are
the contingency on which an outcome is determined (“Novelty
Events”), and (iii) any pay-to-play sport betting product that allows
participants to assemble a virtual team composed of real players
in a given sport and compete against other virtual teams based on
the performance of those players in real matches. The making of a
bet or placing of a wager on horse racing or on a computer-
generated presentation of a random number draw that provides
sport-like visual presentation for entertainment purposes only, so
that the outcome of the “event” is determined by a random number
generator rather actual sports, players or Novelty Events, does not
constitute Sports and Other Betting;”
““Sportsbook Revenue” means, for any period, the sum of net
revenue generated from Sports and Other Betting at the Location,
if any, calculated in accordance with International Financial
reporting Standards or such other Canadian generally accepted
accounting principles as OLG adopts from time to time in its sole
discretion. For greater certainty, the Sportsbook Revenue will only
include the net revenue generated from Sports and Other Betting
at the Location and will not include any revenue whatsoever from
other products or services provided by OLG at the Location;”
2.Amendments to Section 3 (Payments)
From and after the Effective Date, Section 3(a) of the Contribution Agreement is
amended by deleting the provisions thereof in their entirety and replacing them with the
following:
“3 Payments
(a) During the Term and subject to the terms and conditions of
this Agreement, the Municipality shall be entitled to receive from
OLG in respect of each Operating Year the amount (the “Annual
Contribution”) equal to the sum of (A) + (B) + (C), where:
(A) is the aggregate (without duplication) of:
- 3 -
OLG Internal
(i) 5.25% of the Electronic Games Revenue, if any,
generated in such Operating Year that is less than or equal
to $65 million; plus
(ii) 3.00% of the Electronic Games Revenue, if any,
generated in such Operating Year, that is more than $65
million and less than or equal to $200 million; plus
(iii) 2.50% of Electronic Games Revenue, if any,
generated in such Operating Year, that is more than $200
million and less than or equal to $500 million; plus
(iv) 0.50% of Electronic Games Revenue, if any,
generated in such Operating Year, that is more than $500
million;
(B) is 4.00% of Live Table Games Revenue, if any, generated
during such Operating Year; and
(C) is 4.00% of Sportsbook Revenue, if any, generated during
such Operating Year.”
3.Amendment to Exhibit A (Calculation of Annual Contribution)
From and after the Effective Date, Exhibit A of the Agreement is amended by
deleting the provisions thereof in their entirety and replacing them with Exhibit A attached to this
Amendment.
4.Effect of Amendment on Contribution Agreement
Except as modified by this Amendment, the Contribution Agreement remains
unchanged and in full force and effect.
5.Electronic Execution
Delivery of an executed signature page to this Amendment by either Party by
electronic transmission will be as effective as delivery of a manually executed copy of this
Amendment by such Party.
[The next page is the signature page.]
OLG Internal
IN WITNESS WHEREOF the Parties have executed this Amendment as of the
Effective Date.
ONTARIO LOTTERY AND GAMING
CORPORATION
CORPORATION OF THE CITY OF
PICKERING
Name:
Title:
Date:
Name:
Title:
Date:
(“I/We have the authority to bind the
Municipality.”)
by
Name:
Title:
Date:
(“I have the authority to bind OLG.”)
OLG Internal
EXHIBIT A
Calculation of Annual Contribution
For example and by way of illustration only: if the Electronic Games Revenue, the Live Table
Games Revenue and the Sportsbook Revenue for an Operating Year is $650 million,
$100 million and $10 million respectively and as further described in Table A below, then the
applicable Annual Contribution for such Operating Year would be $20,112,500.
TABLE A
Electronic
Games Revenue
(in millions)
Live Table
Games Revenue
(in millions)
Sportsbook
Revenue (in
millions)
Annual
Contribution
Quarterly
Payment (in
millions)
Operating Year
Quarter No. 1
(March 1 – June
30)
$100 $25 $2.5 [(0.0525 x $65)
+ (0.03 x $35)] +
[0.04 x $25] +
[0.04 x $2.5] =
$5.5625
Operating Year
Quarter No. 2
(July 1 –
September 30)
$175 $22 $2.2 [(0.03 x $100) +
(0.025 x $75)] +
[0.04 x $22] +
[0.04 x $2.2] =
$5.843
Operating Year
Quarter No. 3
(October 1 –
December 31)
$170 $23 $2.3 [0.025 x $170] +
[0.04 x $23] +
[0.04 x $2.3] =
$5.262
Operating Year
Quarter No. 4
(January 1 –
March 31)
$205 $30 $3.0 [(0.025 x $55) +
(0.005 x $150)]
+ [0.04 x $30] +
[0.04 x $3.0] =
$3.445
Total $650 $100 $10 $20.1125