Canadian Gaming News, Issue 23 (1996, March)

              Issue 23 March, 1996
Casino Rama:
A promise broken!
What do you do when a government tells
you that it intends to ignore an agreement
you made with it? This is the question
which many are asking in light of the Har-ris
government's abrupt and unilateral de-cision
to halt construction at Casino Rarna,
and to rewrite the profit sharing arrange-ment
which it has with Ontario's 13 1 First
Nations. The Ontario government's ac-tions
have sent shockwaves through First
Nation communities across Canada and are
causing major casino operators to cast a
nervous, and questioning eye toward Nia-gara
Falls. What prompted the government
to act as it has, and what happens now?
Despite the government's ' official spin'
about missing legal agreements being the
cause for Rama's shutdown, the ' real is-sue'
is not the legal agreements but rather
the government's decision to grab the esti-mated
$ 83 million which Casino Rama's
' win contribution' ( for some reason they
don't want to use ' win tax') would have
contributed to a First Nations fund for so-cial
and economic development initiatives.
Casino Rama: Page # 1
Promise Broken
Agathe Riverin Page # 3
PsychoGestion Inc
Developments Page # 4
to Watch
International Page # 5
Thunderbird
Monthly Stats Page # 6
This $ 83 million represents about half the
money which Ontario's First Nations
would have received from the casino in its
first year of operation and was intended to
compensate Ontario's First Nations for
the phasing- out of other assistance pro-grammes.
With regard to the halt of con-struction,
we know of two rumours mak-ing
the rounds and which may explain the
government's actions though we do not
assign much credibility to either.
As the first story goes, A1 McLean, the
local member of the Legislature, discov-ered
that some legal agreements had not
been signed and the government, upon
hearing this horrific news, immediately
blew the whistle. Nice try but no cigar.
We know the Ontario Legislature well
enough to know that MPPs do not have
that lund of influence. As we explain
later, Mr. McLean may have had a differ-ent
role in this story than he expects.
The second rumour, which started the
rounds in mid- January, is that someone
did somethmg bad in the award of a con-tract
to a Rama sub- contractor. While
there may well be things here that we
don't know, to the extent that we have
been able to research thls rumour we have
found that the decision in question was
made by a panel of five people, and not
solely by the person identified in the ru-mour.
As this rumour undoubtedly trav-elled
in several circles, some businessmen
may have brought it to the attention of
some politicians. We did at first think
that this was the cause of the govern-ment's
actions as a politician close to the
decision had told us, the day after the an-nouncement,
that the halt was the result
of some businessmen raising complaints
with some politicians. But things still
I Ivan Sack I
didn't add up because, surely, even if the
rumour was relayed and an investigation
begun, this could have been done without
shutting everything down. This then
leaves the government's official explana-tion,
that some legal agreements were not
in place, as the only reason for its actions:
When a government first gets wind that a
major project has gone off the rails, its
usual first course of action is to ask some
questions of the project managers. Only if
it is still not satisfied would it then even
consider shutting down a project which
will, within months, create 8,000 direct
and indirect jobs. We understand that no
concerns were raised with the project man-ager,
Rama, and that they were given no
advance notice of the government's an-nouncement.
As to the absence of legal contracts, we
hear that not all the legal agreements are
signed. ' Letters of understanding' were
exchanged though by the principals at the
outset of the project so that work could be-gm
while the lawyers caught up. Things
were moving smoothly to the extent that
everything was to be in place by mid-
March. This is the same approach that
was successfully followed with Casino
Windsor with a slight difference.
In an effort to ' fast- track' construction at
Casino Windsor's interim casino, the Art
Gallery of Windsor, which owned the in-terim
casino building, had ( along with its
contractor) financed an estimated $ 23 mil-lion
worth of construction start- up costs.
The gallery was then reimbursed by Wind-