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Does half a billion in revenue justify a Toronto casino?

Posted by Chris Bateman / April 8, 2013

toronto casinoA Toronto casino could net the city, province, and federal government $392 million in extra tourism revenue if it includes convention space, a hotel, and other recreation facilities, according to a new staff report released today. In total, it estimates an extra 130,000 new visitors would come to Toronto if the venue is built to the city's spec rather than to OLG's plans.

The report, which is intended to inform future council decisions, was released just hours after Rob Ford wrote an open letter to the people of Toronto expressing his support for a major gaming facility in the downtown core. Ford says he expects $150 million in direct annual revenue for the city, calling the chance to develop one of the proposed sites - probably the CNE or Metro Toronto Convention Centre - a "golden opportunity."

City Manager Joe Pennachetti says a casino, if built on the city's terms, would net around $111 to $148 million in hosting fees from OLG. The amount increases based on the overall size of the gaming floor, therefore the city would get the most money if it allowed a larger complex with a greater area dedicated to gambling. There would also be $19 million a year due in property taxes.

The lower amount is connected to the 135,000 square feet of gambling space recommended for the downtown core by city planners. OLG would rather see closed to 175,000 square feet.

In terms of jobs, a casino could generate roughly 6,200 to 7,000 building jobs and 10,070 full-time positions within the finished facility. A report from the Toronto Board of Health in February found that despite new jobs the casino would be unlikely to change the overall unemployment rate and could syphon cash from other businesses and attractions.

This latest staff report, which will be received by the city's executive committee next Monday and later debated at city council, also found 71 per cent of respondents were opposed to a Toronto casino. The areas that expressed the most support were all outside the downtown core.

Are the numbers convincing enough? Is it worth building a casino in Toronto for a chance at $148 million a year and a bump in tourism revenue? How do you think council will vote?

Chris Bateman is a staff writer at blogTO. Follow him on Twitter at @chrisbateman.

Image: Phil Marion/blogTO Flickr pool.

Discussion

33 Comments

jameson / April 8, 2013 at 01:46 pm
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the last sentence gives a lot of insight. the City should just build it in the community that expresses the most support.
YES / April 8, 2013 at 01:51 pm
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Does half a billion in revenue justify a Toronto casino? YES.
Casino / April 8, 2013 at 01:55 pm
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"The areas that expressed the most support were all outside the downtown core."

Why not Woodbine?
tdot / April 8, 2013 at 02:07 pm
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There may be a *total economic impact* of half a billion dollars, but that does NOT mean that the city will directly receive half a billion in revenues. The report says that the city will see a max of $150 million IF the province agrees to a special funding formula for the city. Premier Wynne has already stated that Toronto will NOT get a special formula. That means that the city will likely only see something in the range of $20-$40 million per year in direct revenues.

Guess how much subways cost? About $350 million PER KILOMETRE.
the lemur replying to a comment from tdot / April 8, 2013 at 02:14 pm
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Yep. The half-billion mooted by Ford is little more than a number plucked out of the air and there is nothing to suggest that a casino will be a steady source of revenue or that the city's cut will be significant.
Jeff / April 8, 2013 at 02:21 pm
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Wynne has already proven that she's acting in a way that's specifically intended to increase voter approval leading up to the next election. That's IT. She's shaking hands and kissing babies.

A casino, if done properly, would be a huge asset to the city. Look at cities like Paris and Monte Carlo - classy places hosting establishments that bring in BIG money while maintaining that class. That's the route we should be taking here, not the Vegas approach.

Everyone needs to cool down for a moment and remember that OLG is a government-run company with an objective to operate gambling that's in the best interests of Ontario. That means restricting the disastrous video gambling machines that are all over Alberta and making sure that organizations that work to support gambling addicts are given proper funding. It's a great system (as opposed to letting private companies do whatever they want) and we should let them do the jobs they're paid to do.

Rob Ford also needs to shut the F up.
Chris West / April 8, 2013 at 02:22 pm
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Why are we talking about funding subways from Casino revenue? Ford already said that money is coming from the private sector. you guys haven't even given him a chance!
scottd / April 8, 2013 at 02:22 pm
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Well first you have to believe the numbers. I dont. And how much revenue will drain from the Toronto tax base to Queens Park?
Gamblor / April 8, 2013 at 02:26 pm
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Casino me guy!
iSkyscraper / April 8, 2013 at 02:38 pm
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I think the city manager has done a good job here in laying out the conditions that would make a casino work. I suspect that the OLG most of the potential operators will make some kind of retching noise and run off to somewhere like Hamilton, where they will get much more free rein to follow their usual business model.

If it does happen in Toronto, it will definitely be at the Ex since they can have a larger floor plate there. Plus there is already a new hotel coming up and already the city's largest convention center on the site. That's all well and good -- Montreal's casino is on their old fair grounds, and London's is next to their Olympic sites, I don't really have a problem with this.

I just have a problem with Ford running his mouth with fake numbers and made-up stories about conventions and tourists. Kick him out of the room and let the adults sort out how to do a casino as intelligently as possible. It won't pay for a subway but it can contribute something to the bottom line.
Dave / April 8, 2013 at 02:39 pm
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Wait, so if the casino is practically just a sidebar to the fantabulous convention centre upgrade that would make us a top convention destination, bringing in hundreds of millions of dollars a year...why not just drop the casino distraction entirely and focus on the convention centre?

No one would object to that. We could get the shovels in the ground in no time.

Hundreds of millions of dollars a year in convention business! Why wouldn't the private sector want to invest directly in that?
RobK replying to a comment from Jeff / April 8, 2013 at 02:41 pm
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I agree. I just don't think that classy venue is anywhere downtown. I think, mostly because of the space, Woodbine is the more suitable place for a venture like this, and with expanded transit in the area to get people to the entertainment complex with ease (whether that is a shuttlebus that goes from Kipling to Pearson to the Casino, or extending the Finch LRT to Woodbine).

I also think a casino is part of the funding solution. I get the rationale (and agree with it) that taxes and tolls are the best way to raise the necessary revenue but we should also look at other ways of finding revenue. The $$ generated by a casino won't be enough on its own but can be part of the fix.
Alex / April 8, 2013 at 02:42 pm
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I don't think it will have an overall positive or negative impact. Plus those numbers are just estimates, you can't treat them as fact or even as close to what the actual value could be. If they can find somewhere to put the casino where it won't destroy any important buildings for it then I'm fine with it. I don't care if they vote no either, I just don't see it being that important.
Although my councilor (Matlow) emailed us a while ago to tell us that based on resident feedback he would be voting no for a casino, so there is one no vote. I respect that, I think a councilor should represent their residents, and if their residents are very vocal about their opposition then the councilor has to respect their wishes.
A Casino is not our saviour / April 8, 2013 at 02:53 pm
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Don't be fooled by big numbers folks. There are so many assumptions going into those projections, (such as a 'special deal' for hosting fees that has already been quashed by the Premier, among others) that its little more than pie-in the sky thinking. It's quite clear that City staff was ordered to reach a certain conclusion before they even prepared the report. Ford is hoping beyond hope that folks get wowed by the big numbers and don't bother to do any digging below - not an unreasonable belief, especially amongst Ford Nation.

I say this as someone who has no moral objection to casinos. I've been to Windsor, Niagara and Vegas and had a good time, at least in Vegas. In my view, casinos are no more morally problematic than bars. Besides, problem gamblers can squander their life savings from the comfort of their own homes - they don't need real-life casinos for that.

My issue is with the sense that a casino will "solve" our fiscal problems. The pro-crowd seems to be trotting out the casino as the way to pay for all of our future transit/infrastturcture needs going forward, which is nonsense, and dangerous. First of all, the best-case scenario in reveunes won't come close to dealing with the gap we have in transit, and secondly, "relying" on the casino crutch just means we put off tough decisions even longer, making the infrastructure gap even worse. In other words, people will simply point to the casino and say that no other revenue sources are needed - Ford is already making that case in his "open letter" (which, as an aside, smacked of desperation, especially since he released a copy to the Star).

If a casino makes sense, it has to make sense on its own merits, like any other entertainment option - not because it's seen as some financial saviour for the city. After all, look no further than Windsor, Niagara, Detroit, Atlantic City, to see how well that works out. It has to be viewed as nothing more than another entertainment option - seeing it as anything more is simply foolhardy, and more importantly will lead to the City entering a dumb deal borne out of desperation. Especially with this gang at City Hall that is a real and legitimate concern.

A casino, well done can be an interesting revenue stream for the City - but that's it. Nothing more. It won't build subways (at least not on its own), and it won't replace the need for real courage on the part of governments to recognize the infrastructure gap and do what they have to to solve it.

Jeff replying to a comment from RobK / April 8, 2013 at 02:57 pm
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I see the reason behind your suggestion for Woodbine but, for a major facility to happen, it needs to have a central location. Nobody goes to Woodbine for a reason. If this casino becomes a major tourist destination then having such a close proximity to Billy Bishop Airport will be a huge asset. Having it close to hotels, restaurants and everything else in the downtown core just might also help give the economy a boost. Tourists aren't going to want to get on the TTC to get to the casino and I shudder at the thought of a potentially significant source of revenue for the city being dependent on the TTC for survival.

RobK replying to a comment from Jeff / April 8, 2013 at 03:02 pm
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That's why revamped transit options are needed for that location. but, don't forget, you also have the 401 and 427 close by. Many people will drive. As I mentioned before, a shuttlebus service will not only improve the rocket express but can get people to the casino quicker. LRT can be extended on Finch from Humber to Woodbine. And, eventually, if the Crosstown makes it to the airport, that can be extended North to the casino.

I truly believe a casino needs to be a destination place. I get why downtown would be considered, but if you add convention space, a music hall, plus horse racing and card games, it's a win-win.
VadimM / April 8, 2013 at 03:17 pm
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Just like all of Fords remarks- lucks substance and understanding of a successful city building, and aimed on the "Ford nation" crowd that would say - yes, Ford is great, he cares about jobs, give him what he wants.

We don't need a casino in downtown Toronto, especially that the developers of such a place couldn't care less about the city, its cultural growth and value. Unfortunately the Mayor of this city is one of them.
CasiNO / April 8, 2013 at 03:29 pm
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no one visits Paris for the casinos. No one visits New York for the casinos. No one visits London for the casinos. Let's face it; great cities are not about casinos and figure out their finances without relying on scamming from the bottom of the barrel.
Aaron / April 8, 2013 at 03:38 pm
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I find it strange that the city report predicts $111-$148 million in hosting fees, based on a 50/50 revenue split with the province, when the province has made it very clear that this will never happen. $20 million is a more reasonable estimate. Those obviously wrong numbers throw the entire report into question.
That Dog Don't Hunt / April 8, 2013 at 03:50 pm
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Ford doesn't have the numbers to win the next election, why are we belaboring this point???

Same goes with this casino nonsense. It'll get killed in the same fashion the Spadina Expressway died. People will rise up only at the last second and ensure it dies because the people don't want it.
Gabe / April 8, 2013 at 03:50 pm
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Yes it does justify a Casino!

After most big events held in the city and city projects, they're always reported on as bringing X amount of visitors to our great city and a potential of $Y in tourism dollars. Whether its the Popes visit, Pan Am Games, Caribana, Gay Pride, TIFF, etc. etc. Why should the Casino be any different?

Toronto should get the Casino, or we'll sit back and watch as Markham, Brampton or Mississauga get's it instead and uses the money for their fair city why we still struggle...
the lemur replying to a comment from Jeff / April 8, 2013 at 04:04 pm
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Paris doesn't have a casino. There's a casino about 12 km outside of town, but not in the city itself.

Monte Carlo's casino is closed to locals.
Katie replying to a comment from A Casino is not our saviour / April 8, 2013 at 05:21 pm
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What a well said reply! I think you should send this to some newspapers for the letter to the editor. You have spoken my voice as well.
r / April 8, 2013 at 06:47 pm
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no way.
Toby / April 8, 2013 at 07:49 pm
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YES WAY! BRING IT!
Jay / April 8, 2013 at 09:07 pm
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Toronto does not deserve a casino or any other major venue that can generate revenue. Everyone with money should just move out of Toronto and leave it for social housing. Adam Vaughan would be in his utopia. Put all the social housing, needle exchange centers, homeless shelters, soup kitchens, etc. in the downtown core. That ways it's all in one place to be subsidized by the people who in live in Toronto proper. The rest of us can bug out and keep out money for improving neighbourhoods outside the core. That would suit Toronto just fine. And what tourist would ever want to visit that??
Wait / April 8, 2013 at 09:12 pm
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Since The mayor wants Casino so bad like Vegas, can we open a few bunny ranches in ward 2 to with it?
Todd replying to a comment from Wait / April 9, 2013 at 09:22 pm
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We already have plenty of Bunny Ranches in the downtown core, I've been to a few. What were missing is the casino...
Tony / April 13, 2013 at 07:29 pm
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No way. We don't need a casino downtown. We who live in the city will never see any of this alleged revenue the casino will make. Our cost of living isn't going to decrease, it'll only keep increasing. The city isn't going to build more subways or improve infrastructure, the money will go into the pockets of the provincial government. Hotels and restaurants aren't going to be making a killing because it's JUST ONE CASINO. It's not Vegas. Put the casino in the suburbs where they clearly want it more. We have enough issues with homelessness and/or addiction downtown and don't need another thing that will attract, encourage or create addicts.
Marco / April 17, 2013 at 10:04 am
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The province already said Toronto would get $20 million tops. And the big $392 million number doesn't take into consideration the revenue (and associated jobs) lost by actual Toronto business owners who will lose customers because they will be sucked by the Casino. AND a lot, if not most, of those "supposed" $392 million will go to the American company that will run the thing.
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potentimagination / August 11, 2013 at 09:09 pm
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You have to look at both benefits and losses.
It will create jobs, but it will kill other businesses in the area. It will attract money and tourism, but it will also take lots of money out of the pockets of locals, which is killing the local economy, and in the long run could be a huge problem. It will create traffic congestion, Downtown Toronto already has bad traffic, this would make it even worse. I want a casino because I play a lot of poker, but people like me can move nearer to an existing casino, so something in Vaughan or Maple or Missisauga wouldn't be bad.
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