Welcome





OCGA and Government work together to Deliver Big Wins for Charitable Gaming Industry


Revenue Models Adjusted to Help Ensure Ongoing Success for Bingo Charities and Third Party BOT Sector

I am very pleased to report that OCGAs work with the government has paid off. The changes just announced for Bingo and the Third Party Break Open Ticket sector by government will be beneficial to all. This is a very major win for our sector and I believe just the first of some very good news for the charitable gaming industry.

As you know, these changes come after many months of hard work by the OCGA advocating positively on your behalf. Through the many rounds of meetings, emails, and telephone calls with government officials we were pleased to find the government open to receiving our extensive research and financial analysis.

I have no doubt that as a result of the OCGA’s efforts, the government now better understands the needs and challenges of the charitable gaming sector and, as demonstrated by their recent action, is prepared to continue working with us to ensure our success.

Through the AGCO modernization changes just announced for the bingo revenue model and for revenue sharing for Third Party Break Open Tickets, the impact of recent changes to the taxation structure will be mitigated.

During this process, OCGA was at the forefront of advocating that we take advantage of these changes to address two important issues of concern for our members:

  • On the bingo side, some members have requested greater flexibility in determining how much money to set aside for advertising and promotion and we have achieved this flexibility with the changes announced by the Alcohol and Gaming Commission of Ontario.
  • For Third Party Break Open Ticket charities and their private sector partners, the multitude of individual expense schedules for each ticket type was complex and in some cases stifled product choice. We are pleased to announce that the AGCO has agreed to move to a “net win” model that will simplify administration and allow creative business decisions regarding product choice. Along with the significant regulatory changes announced in July, this should greatly assist the Third Party sector.

WHAT OCGA ACHIEVED FOR BINGO CHARITIES:

We asked for and got the following:

  • Complete relief on the 5% Provincial Fee – the full 5% Provincial Fee on BOTs sold in bingo halls is being returned directly to bingo charities (above the line). Charities will be able to use this full amount to offset additional expenses.
  • Greater flexibility to use advertising and promotion funds – The AGCO will now allow the A&P fund to be between 8% and 12%. HCAs and Operators may decide jointly to increase the A&P fund up to 12% of net bingo win as requested by some OCGA members. HCAs may decide on their own to reduce the A&P fund below 10% to as low as 8% if they believe the 10% ormore is not required. In these cases, the amount they have reduced A&P by (0% - 2%) will flow directly to the HCA trust account and these funds may assist them with increased expenses.
  • The reduction of the 5% BOT Provincial Fee in Bingo Centres to 0% will be retroactive to July 1, 2010, with monies already paid flowing back to source.
  • Implementation details of these changes are in the AGCO communication posted on our website, by clicking on Information Bulletin No. 64 English or Information Bulletin No. 64 French and Information Bulletin No. 66 English.

Please be sure to read through these very important AGCO Bulletins.

  • Please note that these changes do not apply to charities in our E-gaming sites, as they are not impacted in this way.

The impact of this change will obviously depend on the proportion of revenue derived from Break Open Tickets in a particular Bingo Centre. Analysis shows that charities deriving 15% of their revenues from BOTs should be able to offset most or all of the any increased expenses due to taxation restructuring through the 5% reduction. In some cases where BOT revenues are significant, this change will actually produce additional revenues for charities that will be their own.

We also recognize that there is a downside to removing money from A&P but there was no other viable option to assist charities with this additional cost. OCGA strongly recommends that A&P funds be removed only when absolutely necessary, in consultation with your operator, to address financial impacts of increased taxes, as the benefits of having dedicated A&P dollars are clear.

WHAT OCGA ACHIEVED FOR THIRD PARTY BREAK OPEN TICKET SECTOR:

OCGA asked that the government reduce the 5% Provincial Fee on Break Open Tickets in Third Party sites to address increased expenses for suppliers and retailers (approximately $1.7 M annually).

The government agreed to substantially assist the sector with what we understand is approximately $1.1 million annually:

  • The 5% Provincial Fee on Third Party BOT sales will be reduced by .54% to substantially but not fully address increased expenses for suppliers and Third Party retailers. The difference required for the offset will be shared between retailers, suppliers, and charities.
  • The AGCO has issued a new revenue model based on “net win” for the Third Party BOT sector that allows charities to allocate this additional money from a reduced Provincial Fee to suppliers and retailers. OCGA has lobbied for this change for some time and is pleased that a move to a consistent “net win” model is happening.
  • The reduction of the 5% BOT Provincial Fee for Third Party BOT sector to 4.46% will be retroactive to July 1, 2010, with monies already paid flowing back to source.
  • Implementation details of these changes are available by clicking on Information Bulletin No. 64 English or Information Bulletin No. 64 French . Please be sure to read through this very important AGCO Bulletin.

Although the Third Party sector will still experience some impact from taxation restructuring, partial relief on the Provincial Fee should stabilize the supplier side of the business and should maintain the retailer base for our charities.

Moving to a “percentage of the net” basis for charities, suppliers, and retailers will provide greater flexibility in product choice and position the industry to better manage the introduction of new product. There will be transition challenges ahead as new contracts will be required but these changes should stabilize the industry and position the sector to move forward with new ideas to grow the industry for charities. OCGA is very committed to continue as a proactive partner in this exciting process.

In Conclusion

This very intense lobbying effort by OCGA over the past six months has been challenging and no doubt has been a difficult wait for our members and for the industry. However, we once again have demonstrated that working constructively and patiently with government does pay off. OCGA continues to be well respected by our government partners and it is our privilege to continue to represent your interests at these important government tables.

I wish to thank the Premier’s Office, Minister Duncan, Minister Bentley, and previous Ministers, Wilkinson and Aggelonitis, for listening to the concerns of our members and for their interest in the continued and improved success of this essential sector. A sincere thanks to staff at the Ministry of Finance and the Ministry of Revenue for their support and their efforts on this important issue for charities. As well, I would like to give a very special thanks to Jean Major, CEO at the Alcohol and Gaming Commission of Ontario, for his support and to Kathy Klas, Director, Sector Liaison Branch, for her terrific leadership on the modernization changes. There was a tremendous amount of work on their part to bring about these recent modernization changes that will assist the industry.

Although this has been a lengthy process, I am very pleased that this issue has been successfully resolved. It’s another very good example of the work of OCGA and the successes we have achieved on behalf of our member charities and of the industry.
Your continued support and participation is critical to our success. Thank you so much for your patience and your encouragement over the last few months.

If you have any questions, please call Lynn Cassidy at 416-633-9635 / 1-877-716-7222 or send an email to lcassidy@sympatico.ca.


Bookmark and Share