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Casino Rama: The Long Road This is a Chiefs of Ontario Special Report on Casino Rama. May 1, 1998 |
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Contents: |
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Everybody's Watching Discussions Winding Down Casino Closure 20% Win Contribution The Lovelace (Metis) Case 63%-35%: First Nation Concerns Increased Gaming Competition Maintain, Protect, Enhance Revenue Sharing Report: Cabinet Rolling Draft Summary What Is To Be Done? Final Word For More Information |
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Everybody's Watching Since opening, all eyes have been on Casino Rama to see how Canada’s largest First Nations casino would fair. First Nations are interested because they want to ensure its success as a Native-run venture. They are also eager to get underway with much needed community development projects that could become a reality through revenue sharing arrangements. Almost two years have passed and the casino has performed beyond everyone’s most optimistic assumptions. It has been estimated that 1997-98 has seen well over 4 million patrons pass through the casino doors leaving behind in excess of $350 million in gross revenues. In its first year, Casino Rama grossed $223.2 million. The Province of Ontario has, since opening day, taken 20% of gross revenues as a win contribution - about $115 million so far. Approximately $90 million in net revenue is now sitting untouched in a First Nations Fund. Plans for a hotel next to the existing casino site are underway and may soon be finalized. The hotel will contribute to the overall success of the casino bottom-line by attracting overnight patrons. The casino is also the largest employer of Aboriginal people in Canada with over 400 people representing 52 First Nations. Training programs are underway and the upward movement of Native employees into middle management continues. |
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| Discussions Winding Down Discussions between
First Nations representatives and the Province of Ontario are in
the final stages of negotiation. Mechanisms for transferring revenues
and the establishment of trust funds are being fine-tuned. Revenue Sharing negotiations, called off during the Metis Appeal, resumed last July and for a time some progress was made. The appointment of chief government negotiator Ian Binnie to the Supreme Court of Canada did not stop the discussions and, during the last three months, considerable finetuning of the final document to be sent to Cabinet has taken place. Lawyers for COO, Mnjikaning and Ontario are in constant communication. Chief McCue (Georgina Island First Nation) chairman of the Revenue Sharing Committee has suggested the committee has completed its task and should be disbanded. If so, it remains important that a First Nations implementation committee be struck to ensure the process continues to move forward while First Nations interests are protected. There is still much to be done. |
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Casino Closure Following six months of relative inaction on the Operating Agreement, while money flowed toward the building of the new casino, the province moved to shut down construction in February 1996. After spending almost $40 million on the interim site, Ontario attributed their actions to the lack of a signed Operating Agreement. Opposition from COO, Mnjikaning, delegations of elected, and other, officials from Simcoe County, rallies and letters of support from across the province convinced the government to relent and allow construction to resume in March. |
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20% Win Contribution However, Attorney General Charles Harnick, while announcing the resumption of construction, indicated a shift in government policy. Mr. Harnick claimed Ontario was to take a 20% win contribution from the gross revenues. He added that Mnjikaning had agreed to this decision. Mnjikaning and COO objected immediately and at almost every Revenue Sharing Committee meeting since, Chief Bill McCue has raised the issue. The committee has been told the issue must be dealt with between politicians and chiefs at the Cabinet level, not at the revenue sharing table. Cabinet has not yet agreed to a meeting. COO has filed a Notice of Intended Action, and the case now rests before the courts. In the almost two years since Casino Rama opened, Ontario has realized about $126 million from the 20% win contribution. |
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The Lovelace (Metis) Case During the summer of 1996, Judge Cosgrove ruled in favour of the Lovelace (Metis) claim to an equitable share in the net revenues from Casino Rama. While the Metis had not expressed an earlier interest in competing for a casino along with the First Nations of Ontario, by the summer of 1996 they had decided they wanted a share of the profits. Both the province and COO opposed this decision and filed an appeal in July 1996. The courts decided that until a ruling on the appeal was given, no decision regarding the distribution of net revenues could be made by the Revenue Sharing Committee without Metis input. Discussions ceased for one year. In June 1997, almost one year after the meetings stopped, the Ontario Court of Appeal ruled in favour of COO. Revenue Sharing discussions resumed the following July. However, the Metis appealed to the Supreme Court of Canada in February 1997. As reported in New Directions (April 21, 1998) the Metis now have until August 1998 to gather documentation and submit their case to the courts. From that date, the province and COO will have two months to do likewise. The case is complicated for COO because at least one of the plaintiffs is a "Near Band" - recognized and supported by COO in its quest for band status in Ontario. In addition, the Supreme Court will be cautious in its deliberations since the issue will most likely involve Charter of Rights arguments, specifically Section 15 (Sub. 2) dealing with Equality Rights. Discussion has taken place regarding cash flows in case the Supreme Court decides to hear the Metis appeal. It is almost certain the Metis will request funds be frozen pending their appeal. It has been suggested that an interim arrangement can be reached whereby revenues can flow to the First Nations Fund for distribution while the appeal remains before the Supreme Court. However, an agreement would be needed to ensure a 25% share of First Nation Fund revenues, as well as from those earmarked for Mnjikaning, be set aside for re-direction to the Metis should a ruling be made in their favour. This accommodation is under discussion by legal counsel for COO, Mnjikaning and Ontario. |
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65-35%: First Nation Concerns It was clear at the Saugeen All Ontario Chiefs Conference (1996) that some First Nations had concerns about the 65-35% revenue sharing split. Everyone agreed a considerable amount of revenues were to go to Mnjikaning and some PTO’s wanted assurances that the money was going to be used primarily for economic development to enhance casino revenues. At the next Revenue Sharing Committee meeting the province also stated it did not agree fully with the 65-35% split. However, before any further negotiations could take place, Judge Cosgrove made his fateful ruling in the Lovelace (Metis) Case and all discussions ceased. Mnjikaning decided to take advantage of the break and meet with PTO’s to hear their views. They also spent considerable time listening to others who had been involved with revenue sharing discussions and had expressed concerns with the revenue sharing split. Special presentations were made to the Union of Ontario Indians at their 1997 Annual Assembly in Sarnia and with Nishnawbe-Aski Nation at Deer Lake later that summer. A meeting with AIAI took place in London, while reports were also made to PPC. Both AOCC meetings endorsed the 65-35% Revenue Sharing split but added that the agreement would be subject to a review and re-evaluation within five years. NAN had spearheaded this compromise while AIAI stated its main concern continued to be taxation issues and governance. |
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Increased Gaming Competition Throughout the meetings, Mnjikaning talked about the increased competition from other casinos in Ontario and the United States. The Ontario gaming industry had changed dramatically, and unless Casino Rama adapted, it stood to lose a great deal of revenue. This would drastically cut all monies set aside for the First Nations Fund. In 1995, when Casino Rama was announced, only one other casino existed in Ontario. The interim Windsor Casino and its floating sister, the Northern Belle, were very successful but the First Nations had been promised by the NDP government that no others would be built for five years. This would give Casino Rama an opportunity to establish its market. However, the new Progressive Conservative government announced Casino Rama would face another competitor - Casino Niagara. And within four months of Casino Rama’s opening, the third casino in Ontario came on line. Another casino had already opened in the Ottawa-Hull area and suddenly the field was getting crowded. Shortly thereafter, the province announced it was going to close the roving Monte Carlo charity casinos in March 1998 and open 44 charity casinos in their place. Seventeen of those new casinos were to be placed in the greater Toronto area, between Casino Rama and its major market. In addition, it was announced 20,000 VLT’s would be introduced into the province. This has since been revised to slot machines and the VLT’s have been discarded. But, there was more news. Talk of three casinos in Detroit and another in Buffalo would mean new and very stiff competition for Windsor and Niagara. They would begin looking to Toronto for new customers - Casino Rama’s market. In fact, Windsor has recently hired Bobby Yee, formerly with Casino Rama as its new CEO. He is enormously popular in the Toronto Asian community - about 40% of Casino Rama’s market. Government assurances of a five year window of opportunity and no additional competition, had disappeared within four months of opening. It’s clear that in 1998 Casino Rama has to compete in a dramatically different market from the one it had been prepared to meet in 1995. The loss of revenues to this competition plus the loss of the 20% win contribution to Ontario has drastically curtailed the casino’s revenue generating capabilities for First Nations. |
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Maintain, Protect, Enhance Mnjikaning put together an economic development team to examine its options. It decided it had to ensure Casino Rama could maintain its market share of the gaming dollar. It also had to protect its investment and it had to work to enhance the bottom-line. Initial plans indicated that gaming patrons would stay longer if ancillary developments and other site amenities could be provided.It was obvious a hotel would be essential to the continued success of the casino. While discussions continued with Carnival Hotels and Casinos (CHC) and the Ontario Casino Corporation (OCC) regarding the hotel, it was clear that major developments were underway at Niagara Falls and Casino Windsor. Vast amounts of money, estimated as high as $1 billion at Niagara Falls and $500 million at Windsor, will be injected into those communities for permanent casinos, hotels, promotion and the development of other amenities. Evidence from American casinos that failed to develop adequately in the face of increased competition indicates that failure is only a matter of time if action is not taken. Simply having a casino will not guarantee success. All First Nations in Ontario must be concerned about ensuring the continued success of Casino Rama. This will include winning the Metis Case, developing and enhancing the casino site and challenging Ontario on the 20% win contribution. |
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Revenue Sharing Report: Cabinet The First Nations Revenue Sharing Committee team resumed its meetings with the province following the June 1997 court ruling which overturned the Cosgrove decision on the Lovelace (Metis) Case. But when newly elected Regional Chief Tom Bressette met with the province, he had with him a more unified team and a different negotiating style. At a First Nations strategy session in early July, it had been revealed that Ontario might be working on a formula to have 100% of the net revenues from the casino set aside for economic development among the First Nations. Apparently it did not agree with the 65-35% revenue sharing formula but instead seemed intent on assuming control of the First Nations Fund and its distribution to all 134 First Nations in Ontario. The government had clearly rejected the will of the First Nations meeting at the AOCC (1996 and 1997). At the July Revenue Sharing Committee meeting with Ontario, COO argued that discussions had gone on long enough and it was time the province paid attention to the revenue sharing formula as proposed by the First Nations. Chief Lorraine McRae presented Mnjikaning’s "maintain, protect and enhance" position papers and explained how it proposed to make use of its 35% share of net revenues. The government negotiator admitted to being interested in the economic development aspects of the presentation but was concerned about any per-capita distribution of funds. He was assured the chiefs had no plans for a simple distribution of revenues to all First Nations members but were formulating criteria and strategies for development and other initiatives. Throughout the summer and fall meetings continued. It was clear, especially during meetings held at Casino Rama, that support for the 65-35% formula existed among the First Nations. Finally, at a Jan. 1998 meeting, the provincial negotiators agreed to include Mnjikaning’s 35% share of the net revenues in its final recommendations. |
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Rolling Draft The final report of the Revenue Sharing Committee, referred throughout negotiations as the Rolling Draft, but now described by Ontario as the Summary of Discussions is now in COO offices and was to be signed off by PPC at their meeting this Wednesday, April 29/98. Unfortunately, the meeting was cancelled. The Rolling Draft will be presented to PPC at their next meeting (date: TBA) The Rolling Draft must be reviewed, and an Approval-in-Principle signed by PPC before it will be possible to set a date for a meeting with Cabinet. In the interim, understanding the need to release funds to First Nations as quickly as possible, COO submitted a proposal to Ontario for funding to host a special All Ontario Chiefs Conference to discuss, make recommendations and suggest revisions to the Rolling Draft and the formula for the distribution of revenues, prior to AOCC. COO was notified at a meeting with ONAS last week that funding was not available. The Rolling Draft must be taken to AOCC this June at West Bay First Nation for a full review. Only after submission to Cabinet and approval by all parties, can the revenues from the First Nations Fund be released by OCC. |
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Summary The last two years have posed tremendous challenges for First Nations. No one foresaw the closure of construction at the site in February 1996 nor could it be predicted that the government would suddenly claim a 20% win contribution. The Metis Claim was unsuspected while the incredible proliferation of new casinos throughout the province also came as a surprise. Few people in 1995 could have foreseen the difficulties involved with negotiating a revenue sharing split that had, for all intents, been agreed to by the Site Selection Committee in December 1995. The process whereby net revenues could be released to the First Nations has proven to be problematic and the negotiations protracted. In fairness, there is a great deal of money involved. Complete transparency and accountability must be assured. The First Nations as well as the people of Ontario should expect nothing less. Yet, it is paramount that Mnjikaning and the First Nations receive the net revenues as agreed upon by the chiefs at two All Ontario Chiefs Conferences. Meanwhile, Mnjikaning and the casino management are on track with an internal training program for First Nations employees. Close to 500 First Nations employees from at least 52 different communities work at Casino Rama. At least 41 employees have been elevated to management-type positions and a system for tracking staff progress is being implemented. Job shadowing plans are underway and excellent training programs have been introduce. Mr. Ted Williams, former chief at Mnjikaning, and one of the driving forces behind the development of the casino proposal for the community, has been appointed new V.P. Human Resources leaving his old position as V.P Corporate Affairs open. |
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What is to be done? 1) The Rolling
Draft should be reviewed and signed off by PPC quickly. Then, all
parties must agree as soon as possible to release the revenues from
the First Nations Fund to the First Nations so they can get on with
much needed economic and other development projects. In return,
First Nations, including Mnjikaning, will agree to set aside 25%
of the revenues received into a fund. This money will be transferred
immediately to the Metis should they be successful in their appeal
to the Supreme Court of Canada. |
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Final Word Clearly, if the First Nations are allowed to utilize Casino Rama net revenues in a fiscally responsible manner and for economic development projects - everyone wins. The province will have lived up to its promise while encouraging economic development among the First Nations, Mnjikaning will benefit from its tremendous efforts over the past five years and it will continue to develop, create jobs and bring prosperity to the area. Most important, all First Nations will receive a much needed economic shot-in-the-arm. |
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For More Information Contact Our Branch Office: Suite 602, 344 Bloor Street West, Toronto, M5S 3A7 Tel. (416) 972-0212 Fax (416) 972-0217 systems@chiefs-of-ontario.org |
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