Great Canadian Gaming, Brookfield Business win bid to run 3 casinos
Group sees underserved market in Toronto area, ‘strong growth potential’
Great Canadian Gaming Corp. and Brookfield Business Partners LP won a bid to operate gaming facilities in the Toronto area that generate revenue of more than $1 billion as Ontario moves to modernize gambling in the province.
The Richmond, British Columbia-based casino operator and Brookfield Business, the privateequity unit of Toronto-based Brookfield Asset Management Inc., were selected by the Ontario Lottery & Gaming Corp. to run three casinos for 22 years, according to a statement released by the two companies on Monday.
The properties include more than 4,000 slot machines, 60 table games and more than 2,200 staff.
Financial terms of the agreement weren’t disclosed.
Toronto Area concession, the largest by OLG, includes the Slots at Woodbine racetrack, Ajax Downs and the Great Blue Heron Casino in Mississauga, Ont.
Great Canadian Gaming opened the Shorelines Casino in Belleville, Ont., in January after winning a bid in 2016 for $51.3 million.
The group could invest about $1 billion over the life of the concession and plans to expand gaming offerings while adding conference, hotel and entertainment facilities, said Brookfield Business Partners CEO Cyrus Madon.
“The market is currently underserved so there is pretty strong growth potential there,” Madon said on a conference call. “We believe with improvements and expansions, and the addition of things like table games, the amount of gaming revenue to be had will be very substantial to where it is today.”
Ontario is giving control of some of its gambling operations in the Toronto area to a private businesses as Premier Kathleen Wynne seeks to boost casino gambling revenue in the province.
Madon said the rights are effectively a monopoly in the Greater Toronto Area, and are a stable business with consistently growing cash flows despite having limited capital and attention. Returns will fit comfortably within Brookfield’s targets of between 15 to 20 per cent, he said. The agreement may lead to additional opportunities with Great Canadian Gaming, he added.
Great Canadian Gaming and Brookfield will invest through a newly formed partnership, Ontario Gaming GTA LP, with Great Canadian Gaming and Brookfield each holding a 49 per cent interest, according to the statement. Clairvest Group Inc. will hold a two-per-cent interest.
“Being partnered with Brookfield, considering their size and breadth of experience, is a huge milestone for the company,” said Chuck Keeling, a spokesman at Great Canadian Gaming.
Keeling declined to provide details on the group’s plans, saying it will need to consult with local, provincial, First Nations and third-party stakeholders first.
Even so, he expects pushback from groups opposed to expanding gambling in the province.
“To the significance and the scale of what we will end up proposing, sure, there will be stakeholder groups that will not be in favour of it, irrespective of what we would propose,” he said.
Great Canadian shares surged 15 per cent to a record $29.23 at 12:33 p.m. in Toronto, the most intraday since March 2015. It closed at $30, up 17.97 per cent on Tuesday.