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HomeMiscellanyExclusive: NDP inherited de Jong’s casino deal, which emphasized revenue over security

Exclusive: NDP inherited de Jong’s casino deal, which emphasized revenue over security

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Bob Mackin

Under the BC Liberals, negotiations for the new long-term agreement with casino operators were intended on generating more revenue, not security. 

Last November, the NDP government announced it had reached a new 20-year pact with the industry to replace operating agreements that are set to expire in 2021. The NDP, aiming to capitalize on headlines about money laundering at casinos, issued a news release that mentioned new compliance and security clauses, and a requirement for annual business plans, in exchange for letting casino operators keep more of their profits in the hope that they would renovate or expand. The deal, however, was substantially complete before the BC Liberals ceded power to the NDP last July. 

BCLC CEO Jim Lightbody (right)

Documents obtained by theBreaker, via freedom of information, show that then-Finance Minister Mike de Jong hosted a roundtable meeting Dec. 15, 2016 with senior bureaucrats from his office, officials from the Gaming Policy and Enforcement Branch and B.C. Lottery Corporation, and executives from Great Canadian Gaming, Gateway Casinos, Paragon Gaming, Chances, and the B.C. Gaming Industry Association. The location of the meeting was censored for seecurity reasons, but theBreaker confirmed it was the downtown Vancouver cabinet office at Canada Place. Elections BC’s database shows $187,254.74 in donations from Gateway to the BC Liberals since 2005 and $114,704.65 from Great Canadian, whose River Rock flagship hosted de Jong’s roast in 2015.

To prepare for that meeting, BCLC CEO Jim Lightbody and GPEB assistant deputy minister John Mazure wrote de Jong’s speaking notes. It is not clear whether de Jong used the ones provided by Lightbody alone or the version co-prepared by Lightbody and Mazure. 

A Nov. 30, 2016 briefing note by Lightbody outlined the business case for the new agreements with casino operators. It said service providers invested $200 million less in facilities development than in each of the two previous five-year periods. “The continued success of our market model is contingent upon [service providers] willingness to continue to invest in existing and new facilities and BCLC’s relationship with SPs must evolve to achieve market view alignment.”

The briefing note also said the casino market grew by $230 million between 2011 and 2016, but 14 of the province’s 36 gambling venues experienced revenue declines. “Investments in facilities that are new or have undergone substantial renovation, however, have proven to generate incremental revenue.”

An agenda for de Jong’s meeting with industry players and regulators indicated rising costs were a major issue for the private sector companies that operate B.C. casinos. It said the service providers wanted to discuss compensation for free slot play promotions, lengthy timelines for capital recovery, the offloading of BCLC costs to service providers, and the desire by service providers for greater control over casino marketing and gambling equipment. 

They also wanted to discuss the availability of cash alternatives, such as electronic funds deposits, for high rollers, who were referred to as “Very Very Important Persons” in the report. 

Lightbody’s briefing note for de Jong said table games were a priority business segment for BCLC, but B.C. offered the lowest commissions in the country for table games. BCLC opted to increase the commission by 2.5% to retain large service providers’ focus on B.C. and to remain competitive with other provinces. “Table game management is the most labour intensive gaming product for SPs and the increase in commission responds to the higher costs of labour required to operate and manage the games, including security considerations and anti-money laundering SP responsibilities.”

That was the only mention of anti-money laundering in the documents released to theBreaker.

The new deal announced by the NDP includes a 5% facility investment commission, based on net win (or the amount gamblers lose) to replace the 3% facility development commission and 2% accelerated facility development commission. Slot machine commissions for operators remain at 25%, table commissions rise from 40 to 42.5% and poker 75% to 77.5%. Commission for high-limit table games stays at 40%. 

The NDP, under Premier Glen Clark, launched the incentive program in 1997. The parkade at the 2017-opened B.C. Place casino, Parq, was built with at least $32.5 million in BCLC stimulus funds. 

theBreaker asked for agendas and minutes from the Dec. 15, 2016 meeting and an earlier meeting held to prepare for it, plus copies of presentation materials and handwritten notes and the post-meeting summary. The ministry only provided briefing notes and internal correspondence to set-up the meeting. 

The documents were censored because the originals allegedly contain policy advice and could harm government finances if disclosed. The only information withheld for security reasons was the location where the meeting took place and the coordinates for a conference call. 

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MAG-2017-73941 BCLC OSA by BobMackin on Scribd

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