Executive Summary of urbanMetrics Kingsway Entertainment District Economic Impact Report, March 12, 2018.

 
Downtown Sudbury is the City’s and Region’s Commercial Engine.

This is reflected in all of the City’s key Planning and Economic Development policies. These policies protect Downtown Sudbury and actively promote continued investment in the core. The Sudbury Community Arena is the largest visitor attraction to Downtown Sudbury and supports many downtown businesses. The relocation of the Sudbury Community Arena would be a lasting economic drain on Downtown Sudbury. It would likely cause the direct loss of businesses that rely on the arena and would significantly hamper the attraction of new investment to downtown Sudbury

• Downtown’s are the Preferred Location for Major Arena/Entertainment Complexes.

Major sports leagues including the NHL and CHL have recognized that their most successful franchises are in downtown locations, while the least successful franchises are on suburban sites. Municipalities, such as London, Kingston, Guelph, St. Catherines, Oshawa, and others, with downtown CHL arenas are seeing a surge in commercial and residential investment. The development of a new arena in Downtown Sudbury, would help to stimulate private investment in this strategic area.

• The PwC Report Confirmed Downtown as the Preferred Site for the New Arena.

PwC was engaged by the City of Greater Sudbury to undertake two reports examining the need for and the location for a new Arena/Entertainment complex. After examining eight key factors, PwC concluded that the Downtown was the preferred site for the Arena.

• Making a Decision Based on a Sub-set of the PwC Factors is a Flawed Approach.

Council directed PwC to make an assessment based on only three of the factors – Economic Impact, Cost, and Parking. While the Downtown site was rated highest from an economic impact perspective, it was rated behind the Kingsway site in terms of Cost and Parking. PwC used very generalized and preliminary cost information and, in our opinion, did not have sufficient information to rank the options based on cost in a supportable manner. The parking analysis left out a number of key factors that could have returned an alternative result if considered. Furthermore, it was based on a preexisting bias that an expansive suburban parking area was in someway superior to downtown parking options, without taking into consideration the amount of parking actually required to support a new arena. The analysis using only three of the eight factors is a flawed approach and should not take precedence over the analysis of the full range of factors, which resulted in the Downtown being the preferred location for the arena/entertainment complex.

• The Kingsway Entertainment District Would Redirect Business and Investment Away from Other Parts of Sudbury.

The current Kingsway proposal would include the relocated casino, the relocated arena, as well as, restaurants, and other recreation/entertainment uses and is also being promoted to include shops and a convention centre. Sudbury is not a large market and is projected to grow at only modest levels. In the absence of a major draw in the downtown to replace the arena, it is likely that the Kingsway Entertainment district could exist only by cannibalizing business from the downtown and other parts of the City, which are already identified in the Official Plan as being important commercial nodes the entire City and beyond.

• The Kingsway Proposal Would Jeopardize the City’s Planned Transformational Large Projects.

Following a public consultation process, City Council gave direction to proceed with two major projects – The Greater Sudbury Convention and Performance Centre and the Library/Art Gallery. The re-use of the existing arena was deemed the preferable location. In our opinion, it is likely that the proposed Kingsway Entertainment Centre could duplicate the function of the convention centre and events centre – by offering alternative performance venues, meeting spaces and convention facilities. In addition, by relocating the arena to the Kingsway site, the City would be losing all of the synergies that would exist between the convention centre and the arena, such as, attracting large scale events that would use both facilities, or by attracting a large convention hotel that could serve both arena and convention centre. In our opinion, the Kingsway development would seriously impact the viability of these important projects in the downtown core. And in fact, the Kingsway development is already being promoted for a convention centre to tie into the opportunities created by the relocated arena1.

• A Casino Would Not Significantly Affect Tourism to Sudbury and Would Draw the Vast Majority of Its Support from within the City.

The existing Sudbury tourismmarket is not large and not well oriented towards casino gaming, with about 70% of visitors coming to visit friends and relatives or for shopping and personal appointments. About 60% of visitors arrive from other parts of Northern Ontario. The current pleasure market comprises only about 21% of visits. The existing casinos in Northern Ontario – in Thunder Bay and Sault Ste. Marie draw between 85% to 95% of their visitors from within the local municipality. Licence plate surveys conducted at the Gateway Casino Sudbury (Former OLG Slots), confirm that the vast majority of customers are from Sudbury. Attracting tourists to a casino in Sudbury would require tapping into new markets not currently visiting Sudbury. This would be difficult to do because the Provincial and International gaming markets are already severely constrained by existing casinos, while the OLG modernization program will be bolstering this competition. In our opinion, additional gaming revenues that would be achieved by a new casino in Sudbury would be derived mostly from Sudbury residents, who would have transferred their spending from other commercial sectors elsewhere in the City.

• Casino Gaming Extracts Money from the Local Economy.

Casinos and slots facilitiestypically generate very high profits. In the case of the OLG Slots, this facility generated approximately $42 million in net gaming revenues in 2016/17, plus a small amount in food services. Local costs (wages and salaries, municipal revenue share, sponsorships, local purchases, etc.) comprised only about $12 million. The OLG Slots Sudbury faciltiy contributed approximately $30 million to the Province. With the vast majority of these revenues being derived from Sudbury residents, an estimated $20 to $24 million was effectively transferred from the City’s economy to the Province. While the Province invested money back into the City as part of its ongoing spending on health care, transportation, infrastructure, etc., there is no way of knowing whether this represents a gain or a loss for the City, or whether the Province would invest any differently if there were not casino in Sudbury. Effectively this money was being transferred from the City for discretionary spending by the Province. This situation will be less favourable for Sudbury going forward, in that future casino revenues will be shared between the Province and Gateway Casinos – a private BC company owned by a Toronto Investment firm, which would have no obligation to invest revenues back into the local economy.

• The Proposed Kingsway Entertainment District May Not Result in a Significant Number of New Jobs for the City.

While the proposed entertainment district will be a relatively large employer, most of the jobs will occur from transferring existing jobs from the arena and the slots facility. The employment gain from the new arena would be negligible and would likely be the same if the arena were constructed downtown. Gateway Casinos has announced that it will employ some 400 persons. These would replace approximately 190 jobs at the slots site. Based on our understanding of the Gateway concept, about two-thirds of these employees would be required for work in food services and retail outlets at the casino. It is likely, that at least some of these jobs will be transferred from existing bars and restaurants in the downtown and elsewhere in Sudbury, so that the net gain could be relatively small. Equally as important, is that due to their high profits, casinos do not generate a lot of employment per dollar earned. So that transferring revenues from establishments such as restaurants that require more staff per revenue earned, could actually result in employment losses for the City as a whole.

• Additional Revenues to the City from the Proposed Kingsway Entertainment Project May Not Be Significant.

The City currently receives about $2.2 million from the current slots facility through the Municipal Contribution Agreement with OLG. Based on a projected casino win from a current level of $42 million from the slots to between $75 and $80 million from both tables and slots, this would increase the municipal share by between $1.45 to $1.7 million. Additional revenues would also be available from property taxes, however, these will be highly dependent on assessment changes that are being reviewed by the Municipal Property Assessment Corporation in response to the OLG modernization program. These would result more from changes to how casinos are assessed than to where they are located. In other words, the assessed value of the facility will likely change regardless of whether Gateway Casinos moves to a new location. As a municipal facility, the Community Arena, is exempt from taxes. This is not expected to change with the proposed relocation to the Kingsway site. These net revenue gains will also be tempered by tax losses from the closure or downsizing of downtown businesses due to the relocation of the arena and competition from the proposed Kingsway development. Furthermore, taxes received from new development also come with a requirement for a municipality to provide public services, such as road maintenance, emergency services, administrative services, etc. So that much of the tax increase from the development of a new casino may be required to provide the necessary services to support it.

In conclusion, the Proposed Kingsway Entertainment District has many Economic Drawbacks for the City and it is likely that its Economic and Financial Costs would Outweigh its Benefits.

As a result, we would strongly recommend that a more detailed economic analysis be undertaken, before additional staff and financial resources are invested by the City towards this proposal.   CLICK HERE to Download Full Report

 

More CasinoFACTS......

Real data, and real experiences, of communities who elected to host full casinos.

Executive Summary ( We know you are busy!)

According to City of Sudbury projections, the new casino will result in $100-150 Million in gambling losses with $62-107 Million leaving the community. With no significant external population base to draw from, the patrons in this casino will be 90% locals, and the 10 percent that are visitors, will be people who were visiting Sudbury regardless of a casino. The difference is that they will be spending money in the casino complex and not in existing local businesses.

 Restaurants and charities will be particularly hard hit, ( casino will have 3 restaurants and one bar) but essentially, all local businesses will be effected. Bottom line, this casino, provided by our provincial government, and operated by a professional gambling company to maximize losses, will culturally and economically change Sudbury for the worse.

We stand to lose so much of what makes Sudbury unique, and a great place to live, work, and play.  This campaign may be the last opportunity for the business community to have a say in whether the Government of Ontario works with local entrepreneurs, or against. Endorse the campaign!

 

OK......here are the boring graphs and data nobody reads, followed by supporting data.

  Thunder Bay is an ideal example to study the effects of full casinos in northern communities as they opened a full casino in their downtown in 2000. There was great support for the casino when it opened as they expected a flood of tourists to come to the city to revitalize the economy after several large employers left the community. Further, there was a yearly drain of $25M in gambling losses to residents commuting to a US casino about an hour from Thunder Bay. Thunder Bay Ventures Corporation is a federally funded business development organization that surveys Thunder Bay businesses every year on a variety of subjects.  One of the subjects they added in 2000 to the survey was concerning the casino. The survey showed something went very wrong economically after the casino became embedded within the community, and many local businesses felt it.

What went wrong in Thunder Bay is that there was no external population base to draw in more tourists.  People from surrounding communities already visited Thunder Bay to shop and for entertainment.

As in Thunder Bay, there simply is no significant external population to support a casino in Sudbury.  The massive amount of money ($100-150 Million) that is expected to be lost in our new full casino will simply be offset by money not spent in existing establishments. This is what happened in Thunder Bay, and this is what will happen here.
  The largest misconception about casinos in Northern Ontario is that they will attract tourists to the host community.  Both Thunder Bay and SS Marie have had casinos in their cities for over a decade and data shows that they have not succeeded in attracting any significant numbers of visitors to their respective communities. Although Sudbury may have a slightly higher population base in surrounding communities it is obvious that a casino will only displace tourist spending in existing restaurants and attractions in our city.  The bottom line is the greatest proportion of people gambling in our casino will be from our community. Sudbury would not be special in any way if a full casino is built in our city. In fact, if we really want to be different we should say no to any type of expanded gambling facility in our city.
 
 
If casinos were beneficial to host communities it would translate to increased wealth for residents.  The facts are, that casinos produce relatively low-paying jobs, and remove so much money from communities that far more jobs are lost in the community than are gained in a casino. Virtually all communities with full casinos ( slots and gaming tables) are in the lower tier household income bracket according to the BMA 2016 Ontario Municipal Survey. Is this something we should aspire to as a community?

Average Household income in the 105 Ontario Municipalities ranges from a low of $60,587 up to $192,825.  The average of all municipalities is $97,825.


Niagara Falls has the largest gambling facilities in Ontario. Here is a short film about the area of the city outside the tourist/casino district.


 

In Sudbury, the gambling losses at the SLOTS at Sudbury Downs averages approx. $44M/Year. That works out to an average loss per patron/per visit of $88.

NOTE: We are not advocating for closure of the SLOTS in Chelmsford. We are advocating for no change to the present status of gambling in Greater Sudbury.  At the closure of this campaign we will issue a challenge to the entertainment/cultural  business community to offer alternative forms of entertainment for seniors. Further, we will encourage other efforts to encourage seniors re-engagement with the community.  This is both a challenge and an opportunity for existing and new entertainment and cultural efforts.

  
The $100-150 million lost to gambling every year in the propsed full casino will be offset by money not spent in existing businesses. The $62-107 million removed is enough to build a new Arena/Event Centre every year!

The magnitude of these numbers should shock you.

Consider the magnitude of money spent on some of our existing cultural efforts ( ticket sales).

Cinefest - $225K
LOL Festival $170K
Science North $1.3M
IMAX $705K
Dynamic Earth $431K
Sudbury Arena, all events ( Wolves and concerts) $3.2Million

(Updated Jan 6th, 2018 to reflect claim by operator of 250 new jobs +140 exisiting)

(Updated Nov 26th, 2017 to reflect new information regarding proposed casino)
 


If the Ontario Government wants to increase tax revenues they should consider allowing communities to develop without the impediment of a casino. These large complexes compete directly with local entertainment/dinning and cultural establishments. The same establishments that make every community different form each other and create the environment that makes each community a great place to live and work.  It is these types of communities that attract the type of educated workforce that creates businesses, spur innovation and fosters organic growth. This results in higher household income, more jobs, and more tax revenue.
  There are a few businesses that do benefit from casinos, however, it is a fairly tight circle of businesses, directly dealing with the casino. The economic benefit to this small group can be significant, however, it is far outweighed by the economic losses inflicted on the other businesses in the community.

The primary recipient of the money removed by the casino is the Ontario Ministry of Finance. The casino is, in essence, a tax collecting enterprise.


Next Step...Endorse the Campaign

Supporting Data

FACT #1 The primary data for this graph was compiled from the Annual Small Business Survey conducted by Thunder Bay Ventures which is a federally funded business development institution. The survey is sent our every year to business located in Thunder Bay with 35 employees or less.  The database of businesses is obtained from the Thunder Bay Chamber of Commerce.
On average, 108 surveys are returned from the 700 sent out to local businesses.    You can visit their website here:


On the website you can download the individual surveys which makes for very interesting reading as there are many comments on the evolution of general business conditions in Thunder Bay, before and after the casino opened in 2000.
The preamble data was obtained through communications with Ken Boshcoff, the Mayor of Thunder Bay at the time the casino was brought to the city. Gambling loss data ( 50.2 Million) was obtained from the OLG financial report for 2012. You can download the entire report here:



 


FACT #2 The average household income was obtained from the 2016 BMA Municipal Survey.  The survey is 500+ pages of data comparing all 105 municipalities in Ontario. The survey contains a treasure trove of information on many aspects of municipalities in Ontario.  It can be downloaded here:


FACT #3 Google Maps, 100 or so, google population searches, and five cups of coffee.

FACT #4 The patron survey information was extracted from a survey done by the Ontario problem Gambling Institute in 2006. You can download the entire survey here:



FACT#5
The data for the table in this ad is extracted from the OLG Financial Report for the year ending March 31st, 2014. The report can be downloaded here:



IMPORTANT: The Trillium Foundation claims $1.4 Million is returned to charites in Sudbury, however, they include payments made to many entities outside the City of Greater Sudbury.  When examining the Trillium Foundation data and removing the sponsorships outside of Greater Sudbury, the actual number works out to 850K  +/-5K for each the last 5 years. You can view the archives of where the Trillium money is spent in reports posted here: 



FACT#6 Operator compensation data extracted from the request for proposal ( RFP) documents sent out by the OLG . You can download the RFP for the northern bundle here:



The expected revenues are based upon the statements by the city outlining their expected revenue from the new casino. Recent statements make these numbers conservative. ( Updated Nov 26, 2017 )250 Jobs @ 55K per year = approx. 13M ,Commercial tax rate used 3.68%, Mortgage based on $60 Million dollar build.

FACT#7 Common sense.