Government program allows Great Canadian to recoup various capital costs

Pete McMartin and Larry Pynn, Vancouver Sun April 19, 2011

For the first time, documents recently leaked to The Vancouver Sun give a fascinating look at facility development commissions (FDCs) and the wide latitude of their eligibility rules.  Those documents show FDC claims made by Great Canadian Gaming Corporation for the construction of the River Rock Casino Resort in Richmond in 2004-05.  One such claim shows an approved FDC of $922,120.78 for “pre-operating cost — gala.”  That gala was staged in tents outside the casino before its official opening. Under the provincial government’s criteria, opening costs are FDC-eligible.  Another approved claim was shown as “Theatre Memorable” for $44,123. The vendor listed in the claim was Point Blank Entertainment, a company once owned by Howard Blank, Great Canadian’s vice-president for media, entertainment and responsible gambling.  When first contacted by The Sun, Blank said the FDC was paid out for theatre and show business memorabilia he had collected over the years. Point Blank Entertainment, he said, sold the memorabilia to Great Canadian after the memorabilia had been appraised. He said the memorabilia was then put on display in the casino.  (more)
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From a Jan 27, 2008 Post:
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.
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.
Accordingly, beginning with the opening of the new casino in late spring 2008, the Fund will receive total FDC for Burnaby equal to 5% of the gross win from the new casino. Once all approved eligible costs have been recovered, FDC will accumulate at a rate of 3% of gross revenue, to be applied against future eligible approved expenditures. Management anticipates that the implementation of AFDC will reduce the recovery period on the Burnaby redevelopment by approximately five years.