Great Canadian Gaming stock trading halted ahead of OLG gambling takeover news

User Rating: 0 / 5

Star InactiveStar InactiveStar InactiveStar InactiveStar Inactive
 

Trading in the shares of Great Canadian Gaming Corp. was halted by regulators last week because of “pending news,” ahead of a provincial announcement about who will run gambling in the Greater Toronto Area.

The Ontario Lottery and Gaming Corp. (OLG) is expected to select a business within days to take over operations at its casino and thousands of slot machines in the GTA for the next two decades. It’s a lucrative privatization deal that includes the Woodbine racetrack, considered the crown jewel of the Ontario gambling business. B.C.-based Great Canadian Gaming is one of the country’s largest casino operators and has bid for the contract.

The company’s stock rose nearly 5 per cent in four days last week and closed at $25.43 on Thursday, just short of its all-time high. Seventeen minutes after the end of trading on Thursday, the trading halt was announced by regulators at the Investment Industry Regulatory Organization of Canada (IIROC). The freeze was not lifted on Friday. It is uncommon, though not unheard of, for a stock to be halted for that length of time because of an imminent release of news.

The company’s shares were halted pending news and we can’t comment further at this time. However, we do anticipate further developments regarding this news imminently. To be clear, this action was in no way precipitated by any regulatory breach on the company’s part,” said Chuck Keeling, vice-president at Great Canadian Gaming.

Ontario’s plan to privatize gaming in the province and drive a gambling boom has drawn the attention of foreign casino operators attracted by the promise of fast profits in Toronto. As previously reported in The Globe and Mail, at least three companies were in the final round of the contract bidding process, including Malaysia’s Genting Group and U.S.-based Caesars Entertainment. Canada’s Brookfield Asset Management and Great Canadian Gaming also submitted a bid, The Globe has learned.

The government agency could not comment yet on the GTA developments because the final contract had yet to be signed. “OLG is in the process of selecting a service provider for the GTA Gaming Bundle. Once we select the service provider and finalize an agreement, we will be in a position to announce the successful proponent,” OLG spokesman Tony Bitonti said.

Officials from Genting, Caesars and Brookfield declined to comment when contacted by The Globe.

The winning bid will take over the gambling at Toronto’s Woodbine racetrack, Ajax Downs and the Great Blue Heron Casino in Port Perry, Ont. The winner will earn a minimum of $72-million annually for the 22 years of the deal, as well as up to 70 per cent of gambling revenue, according to the OLG. The company will only begin collecting money once a certain amount of revenue has been collected by the province; however, the OLG has refused to reveal at what level it has set that threshold.

The agency’s properties in the GTA earned nearly $1-billion in revenue last year. However, OLG has said in reports that it believes Toronto’s market is still largely underserved, with slots at two horse-racing tracks and a rural casino an hour away from downtown. The sale would allow a private operator to rebuild the three sites as full-fledged casinos and add a fourth gambling establishment, though those changes require municipal approvals.

Located at the north end of the city near Toronto Pearson International Airport, Canada’s busiest, Woodbine is the greatest prize. A new operator could transform the site with a casino, adding thousands of slot machines and gambling tables.

An official with knowledge of the transaction told The Globe that gambling operators in the province have expressed concern that a full-fledged casino within Toronto city limits could severely impact revenues at other gambling establishments in the province by redirecting traffic.

Great Canadian Gaming has already purchased casinos from the OLG under a privatization deal. In September, 2015, the company snapped up some of the first properties sold off by the public agency, buying the Casino Thousand Islands and slots at Kawartha Downs for $46.9-million. The company also manages horse racing at Flamboro Downs and Georgian Downs.

More than half of Great Canadian Gaming’s 2016 revenue of $566-million came from its home province of B.C., where it operates a number of gambling properties, including the River Rock Casino. The company also operates casinos and racetracks in New Brunswick and Washington State.

The OLG is the Ontario government’s largest source of non-tax revenue, turning over $2.3-billion in profits to the province in the 2016-17 fiscal year. The agency wants to provide an extra $900-million annually by 2022 once its outsourcing process is over.

While the OLG will continue to have an oversight role at the private casinos, all day-to-day operations and property will be transferred to the private operator. Local municipalities will also continue to receive a share of revenue.

Editor's Note: An earlier version of this story contained incorrect information about the OLG's contribution to the Ontario government's revenues. This version has been corrected.

https://www.theglobeandmail.com/news/national/regulators-halt-great-canadian-gaming-trading-ahead-of-olg-news-on-gambling-takeover/article35896335/