Backgrounder - Modernizing Lotteries in Ontario
June 7, 2012
Purpose for the Lottery Request for Information (RFI)
OLG is interested in exploring opportunities to assign functions to regulated private-sector service providers for the lotteries in Ontario, specifically:
• The possibility of regulated private-sector service providers operating segments of the lottery value chain within Ontario.
• The possibility of regulated private-sector service providers assuming responsibility for capital assets for operational purposes and making any necessary capital investments going forward (e.g., upgrades to terminal network).
The RFI is non-binding and the answers provided by respondents have no influence in the evaluation of any potential future formal competitive process. At OLG’s sole discretion, respondents may be invited to participate in further presentation sessions.
Lottery Procurement Process – Target Dates
It is anticipated that the procurement process will be made up of various stages that may include the following:
• Request for Pre-Qualification (RFPQ) – target release late summer 2012.
• Request for Proposal (RFP) – target release fall 2012.
Modernizing Lotteries in Ontario
As part of the Ontario government’s new direction to the OLG in July of 2010, OLG conducted a comprehensive strategic review of lottery and gaming operations. The result of the review was three key recommendations:
1. Become more customer-focused.
2. Expand regulated private sector delivery of lottery and gaming services.
3. Renew OLG’s role in oversight of lottery and gaming.
These three recommendations have implications specific to the lottery business, where OLG is looking to accomplish several goals:
a) Increase operational efficiencies by engaging the private-sector to assume responsibility for upgrading and daily operation of OLG’s network of existing lottery terminals.
b) Introduce a new sales channel for lottery products, by developing a solution that allows in-lane sales at major retail outlets (e.g., grocery stores, drug stores, big box stores, etc.).
c) Enable further innovation in lotteries, allowing more rapid development and deployment of new lottery games and leveraging the capabilities of the lottery network for non-lottery purposes, which will enhance value-for-money and also benefit existing and future retailers.
This initiative does not contemplate the introduction of VLTs, nor does it include the expansion of lottery into the hospitality sector.
OLG’s Role within the Modernized Lotteries
OLG will continue to be the agency responsible for conducting and managing lottery in Ontario, but will no longer be directly developing all games or deploying terminals. Rather, OLG’s role will focus on conducting and managing lottery in Ontario through a number of functions essential to serving as the Operating Mind of the business:
• OLG will control the lottery offering in the province.
• OLG will own the transaction with the customer.
• OLG will be the sole owner of all customer information.
• OLG will deliver enterprise-wide Responsible Gaming program.
• OLG will set policies and manage performance and agreement compliance of service providers.
Financial Benefit to the Province of Ontario
At the completion of the modernization exercise in 2017-18, OLG will be a modern, sustainable organization, which will increase Net Profit to Ontario by an additional $1.3 billion a year — all while upholding responsible gaming standards.
This proposed reform could see key public priorities like healthcare and education benefit from the additional annual Net Profit to Ontario of $1.3 billion by 2017. Over the six-year transformation period, OLG will provide an additional $4.6 billion to the Ontario government. Employment will grow by over 2,300 net new jobs in the industry (in new gaming facilities and related amenities, as well as in digital gaming design and management). An estimated 4,000 service sector jobs will also be created in the hospitality, hotel, restaurant, entertainment and retail industries.
OLG is committed to ensuring that its modernization is the result of a process that is, and is seen to be, fair and transparent to all relevant stakeholders. Accordingly, OLG intends to structure the modernization process so that it includes various procedural safeguards such as the use of independent, third party fairness and integrity monitors.