Three major players are officially in the high-stakes game to win Ontario’s prized $3.3-billion-a-year lottery business, the Star has learned.
Rogers Communications, the Ontario Teachers’ Pension Plan, and GTECH-Scientific Games are the only qualified bidders in the now-closed auction for Ontario Lottery and Gaming’s lotto, sources say.
It had been thought Rogers’ main telecommunications rival, Bell, may also make a pitch , but the Canadian corporate giant did not enter the bidding before it closed last month.
Finance Minister Charles Sousa was tight-lipped about the bidders, whose identity is not supposed to be made public until November next year.
“I’m not going to comment on any of them. The proponents are out there doing their work. They have a year. We’ll make a decision in the fall of 2015 — they’re working closely with the OLG,” Sousa said in an interview.
“They’re going to put forward the best bid that they can get. I’m not even getting involved with who they are and where they’re at because then it would be inappropriate to also have that access. We really want to keep this thing independent,” the finance minister said.
“It’s a big play.”
Sousa did say “there’s a lot of interest” in Ontario’s lucrative lottery.
“It is one of the items at OLG . . . that makes money and is a huge dividend to the province.”
Asked if an Ontario-based bidder is preferred, Sousa said: “Again, I’m not going to comment too much on what . . . the parameters or the conditions that are coming forward, but, certainly, the best price is one of them and the best service and ability to deliver the goods — I mean, we want reliability.”
On September 8, OLG issued request-for-proposal (RFP) documents to the three “pre-qualified service providers.”
The winning bid will run the day-to-day operations of Ontario lotteries, which include Lotto 6/49 and a slew of other games.
Industry insiders estimate OLG could make up to 25 per cent more money off the lottery by boosting online and smartphone ticket sales and expanding its customer base.
Given that in 2012-13 the lotto generated $883 million in profits — on revenue of $3.3 billion — the potential windfall is significant.
For a government saddled with a $12.5-billion deficit, signing a contract with a private operator appears to be a gamble worth taking.
OLG’s Tony Bitonti said the Crown agency can say little about the highly competitive bidding war now underway.
“The integrity of the procurement system is such that I cannot comment on how many proponents other than to say that we are in the RFP,” Bitonti said in an interview.
“We are starting the discussions with the proponents in terms of the contract negotiations. Any one of the proponents, we’ll be happy to work with them. Again, the announcement will be made some time in the fall of 2015,” he said.
“What we’re doing is we’re going through discussions with them and working on contracts. There’s a lot of due diligence.”
The would-be lotto operators were all similarly tight-lipped.
“At Teachers’, we don’t comment on transaction speculation or rumours generally and that would be the situation in this case as well,” said Andrew Kondraski, a spokesman for the plan that had $140.8 billion in assets as of last Dec. 31.
Sources say Teachers’ bid is being handled by its subsidiary, Camelot Group, one of the world’s biggest lottery operators.
Camelot runs the U.K. National Lottery, the Irish National Lottery and provides consultancy and management services to the Interprovincial Lottery Corporation of Canada, the New York State Lottery, the Massachusetts State Lottery, the Texas State Lottery, and the Kentucky State Lottery.
Also in the hunt is a joint venture by GTECH, an Italian company formerly known as Lottomatica Group S.p.A., and U.S.-based Scientific Games (SG).
SG spokesman Mollie Cole said from Chicago that “it’s an open procurement process and we’re just not going to comment on it.”
In Italy, GTECH officials did not return repeated messages from the Star.
Even though GTECH and SG compete with one another in some lotto markets, they jointly operate the New Jersey Lottery in partnership with the Ontario Municipal Employees Retirement System (OMERS) under the name Northstar.
At this point, OMERS, which had $65.1 billion in assets as of last Dec. 31, is not involved in the OLG play.
The lone newcomer to the lotto business is Rogers Communications, though the telecom titan’s network of mobile phone, internet, and cable television customers is a potential gold mine for selling lottery tickets, insiders say.
In an email, Rogers’ director of communications Allison Fitton said: “We don’t respond to rumours or speculation.”
Sources say Rogers is expected to partner with an overseas lottery operator if it gets the green light.
While there is much excitement at Queen’s Park over the prospect of new revenue streams, a new poll suggests Ontarians are not sold on selling off the lottery.
The Forum Research survey found 70 per cent of those oppose the scheme while 16 per cent approve and 13 per cent didn’t have an opinion.
“It’s clear Ontarians don’t want, by a very wide margin, their government to divest an asset they see as a money maker,” said Forum president Lorne Bozinoff.
Using interactive voice response phone calls, Forum surveyed 1,079 people on Sept. 30 and Oct. 1 with results considered accurate to within three percentage points 19 times out of 20.
Three bidders vying for Ontario's prized $3.3B lotto | Toronto Star