Privatization plans stack odds against OLG’s base
Ontario’s ill-fated scheme to privatize gambling keeps running into trouble.
Now it is the northern city of Sault Ste. Marie that’s nervous about the provincial government’s grand plan to privatize Ontario Lottery and Gaming Corp., the body responsible for legal gambling in the province.
Technically, OLG is headquartered in the Soo. I say technically because, since 1998, the Crown corporation has been quietly moving jobs, including those of senior executives, to Toronto.
Still, about 560 of OLG’s roughly 950 head-office employees call Sault Ste. Marie home. And for a small place, that’s a big chunk of people. The Sault Ste. Marie Economic Development Corp. reckons that when spinoff jobs are included, about five per cent of the city’s workforce depends on OLG headquarters.
Development corporation head Tom Dodds says all these jobs are now at risk.
The reason has to do with the grandiose plans hatched in 2012 by former OLG head Paul Godfrey to “modernize” gambling in Ontario.
The plan hinged on three elements: opening more casinos, particularly in Toronto; centralizing slot-machine gambling in those casinos so they’d all make money (its four biggest don’t); and privatizing the whole shebang — including lotteries.
Under the Godfrey plan, OLG would shrink into a small regulatory body charged with overseeing private casinos, lotteries and all other legal gambling operations.
Dazzled by Godfrey’s vision of huge revenue windfalls, the government of then premier Dalton McGuinty quickly bought in.
But since then, the scheme has steadily unravelled.
First, portions of rural Ontario went ballistic over OLG plans to terminate the racetrack slot machines that support horse racing. The government was forced to backpedal somewhat.
Then, Toronto city council nixed OLG plans to put a new, moneymaking casino in the city.
Then, Kathleen Wynne became premier and fired Godfrey.
Yet she and her government remain strangely wedded to the most dubious element of the Godfrey plan, which is privatization.
So far, no one at Queen’s Park has been able to answer the fundamental question: Why would private gambling monopolies provide more revenues to government than publicly owned enterprises?
Indeed, U.S. evidence suggests that privatization doesn’t deliver the goods. In 2011, Illinois became the first state to privatize its lottery.
But, as the Chicago Tribune reports, the private operator has consistently failed to deliver the revenue it promised and now wants the state to grant it $556 million in extra concessions.
Dodds says Sault Ste. Marie initially tried to make the best of OLG’s urge to privatize.
Boosters pointed out the advantages of keeping a full-scale head office — whether public or private — in the city.
But over time, he says, the Soo side realized that the real problem it faced was privatization itself. Wynne has promised that the gambling authority’s head office of record will stay in Sault Ste. Marie. But neither she nor anyone else in government has been willing to say how many real head-office jobs will remain. Indeed, says Dodds, private gambling operators might well centralize their head-office functions outside Canada. “We don’t have a lot of confidence that what will happen will materially improve benefits to Ontario and we certainly don’t have any confidence it will do anything for Sault Ste. Marie,” he told me. Still, the Soo has a couple of things going for it. First, Philip Olsson, the man slated to take over as chair of OLG, is open to public ownership. As the former Ontario Liquor Control Board head told a legislative committee last year, public enterprise can be — and often is — as efficient as its private counterpart. Second, Wynne’s fragile minority government is reluctant to make an enemy of anyone, particularly with an election possible next year. Sault Ste. Marie has been a solid Liberal seat since 2003. But it wasn’t always so. Thomas Walkom’s column appears Wednesday, Thursday and Saturday.