New casino operational services agreement strengthens accountability and investment23/11/2017
BCLC has updated its operational services agreement (OSA) for casino and community gaming services, setting the course for greater accountability, long-term private-sector investment and sustained revenues to the Province and communities.
The current OSA and commission structure has been in place since BCLC was mandated to oversee and manage casinos in B.C. in 1997; a number of these agreements will expire over the next few years. In accordance with the 2014 Crown Review recommendations, BCLC reviewed the OSA and through third party and industry consultation, developed a new OSA and commission structure.
“The gambling market has evolved significantly since BCLC first took on the role of managing casinos in 1997,” said Jim Lightbody, BCLC President & CEO. “The new OSA sets the course for the long-term success of the industry in B.C. by working with service providers to create and commit to an investment plan and hold service providers accountable for those plans and for maintaining the security and integrity of gambling.”
As the Crown corporation responsible for managing gambling in the province, BCLC will continue to determine where casinos and community gaming centres are located and contracts with private-sector companies to build and operate the facility. These private sector service providers earn commissions similar to a revenue share as a financial incentive for their investments in operating and growing the business.
Specifically, the terms of the new OSA will require service providers to submit annual business plans which will include commitments to capital and operating investments in properties over the term of the contract. This new agreement provides a framework for BCLC to hold service providers accountable for investment commitments and service standards which will ultimately drive growth and new amenities. A critical component includes our commitment to responsible gambling practices.
In addition, the OSA enhances accountability measures that will strengthen BCLC’s oversight in the areas of compliance and security including escalation mechanisms and progressive discipline measures.
In return for these commitments, service providers will earn a five per cent (based on net win from gambling) Facility Investment Commission (FIC) which replaces the current three percent Facility Development Commission (FDC) and two percent Accelerated Facility Development Commission (AFDC) programs. If investment commitments are not met, BCLC has the option to suspend payment of the FIC.
Operating commissions for slots will remain the same at 25 per cent of net win. Currently, BCLC offers the lowest table commissions in North American and table games have the highest labour costs to operate. The new OSA includes new incentives for service providers to offer greater availability of lower limit table games, which is an initiative to support BCLC’s casino strategy to create a greater player experience. Operating commissions for regular limit table games will be 42.5% and 77.5% for poker. This is an increase from current commissions of 40% and 75%. For high limit table games, the commission will remain at 40%. For bingo games, commissions will be 90% on the first $10,000 and 45% above $10,000 on weekly bingo revenue after prizes paid. This is an increase from a former tiered commission structure of 60% / 40% / 25%. The increase will provide greater incentive to smaller service providers to offer more frequent bingo sessions.
The new OSA will be a 20 year agreement and BCLC will begin signing agreements with service providers in due course.