Moving to a new bigger casino has been profitable for Lake City Casinos. The annual report from BC Lotteries shows revenues went from 29.4 million to 35.4 million. The City of Vernon's share went from 1.8 million to just over 2-million dollars. Councillor Bob Spiers says 253-million has been extracted from the local economy in the last ten years, and while the city got 15-million, the operator took 99-million, while Victoria's share was 138-million. As for the new plans for on online gambling? Mayor Wayne Lippert doesn't think it will effect casino gambling. Spiers disagrees, predicting the city will end up losing.
3 comments:
If the operator received 99 million over 10 years, what was the capital cost to earn same?
Below is the answer to your capital cost question. The Casino Operator gets 5% of the gross win set aside that he draws down from he provides his capital expenses. In effect he will get all his capital expenses back and ends up owning the casino and then can resell it at that time for his own bottom line profit.
A good posting of this that quotes the Australia Owners of the local casino is at http://vernonblog.blogspot.com/2008/01/casinos-that-want-to-upgrade-to-capture.html
But last month Australia's biggest gambling operator and a bank based there combined to buy Gateway Casinos, which has seven casinos in B.C. An Australian paper reported the bank liked the opportunity because B.C. was one of the only places in the world that offered casino operators a "free ride."
"A very nice kicker to this whole transaction is a dynamic that has been set up at the government level, whereby any capital expenditure you spend on your casinos is refunded by the government," a bank spokesman said.
"So there is, specific to this region of the world, a very attractive environment for a casino operator." Casinos that want to upgrade to capture more of gamblers' money usually pay the costs. In B.C., taxpayers take the hit.
16. What is the Facility Development Fund?
Under the terms of the COSAs with the BCLC, the BCLC deposits a facility development fee (”FDF”), equal to 3% of the total revenue generated from the table games and slot machines at each BC casino, into a trust account managed by the casino operator, for payout of additional compensation based on eligible capital expenditures. When Gateway incurs an eligible expenditure, it submits this to the BCLC for approval and, once approved, can draw the amount of the expenditure from the Facility Development Fund. Any funds not reimbursed accumulate in the facility development fund for future eligible expenditures.
17. What types of expenditures are eligible for additional compensation from the Facility Development Fund?
In general, all capital expenditures to develop a casino and all capital expenditures that improve the casino are eligible for additional compensation from the Facility Development Fund.
Facility Development Commission
Gateway’s agreements with the BCLC include a provision for additional compensation equal to eligible capital and operating expenses from Facility Development Compensation (“FDC”) equal to 3% of the total net win generated at the six B.C. casinos. This compensation is in addition to the fee paid for operating the casinos.
Accelerated Facility Development Commission
During the fourth quarter of 2006, the BCLC unveiled an initiative to improve the economic model of casino redevelopment in the province, which was developed in consultation with casino service providers to recognize the recent significant increases in development costs. The Accelerated Facility Development Commission (“AFDC”) provides for an additional amount equal to 2% of the gross win (in addition to the 3% FDC) to recover the capital costs of the redeveloped casino property, and is applicable to projects approved by the BCLC after July 1, 2006.
Thanks for the information.
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