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‘OLG made commitments and projections that it could not deliver on time and as envisioned,’ a report by Ontario Auditor-General Bonnie Lysyk says.

Moe Doiron/The Globe and Mail

As many as 3,500 lottery and gambling sector jobs were set to vanish in Ontario under the former McGuinty government's plans to overhaul the industry – a grim statistic that was not revealed to the public, the province's auditor says.

Ontario also stands to reap just a fraction of the profits initially promised from what the auditor has called "overly optimistic" financial projections, casting fresh doubt on the government's goal to erase the provincial deficit by fiscal 2018. The deficit will be revealed in this Thursday's budget.

The modernization plan unveiled by the province's lottery corporation two years ago was an "ambitious best-case scenario," Auditor-General Bonnie Lysyk concludes in a 70-page report released on Monday.

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In one of the largest privatization efforts in Canadian history, the Ontario Lottery and Gaming Corp. aimed to raise an extra $1.3-billion annually for the province by fiscal 2018.

The agency was to turn to the private sector for employees to do everything from financing new casinos to serving drinks and dealing cards.

But much of that plan is now in tatters.

"They were very aggressive and overly optimistic on the whole plan," Ms. Lysyk told reporters.

The OLG said building new casinos in Ontario and privatizing many of its operations would result in an additional $4.6-billion in net profits for the province over a six-year period beginning in April, 2012, and $1.3-billion a year after fiscal 2018. It has since slashed that forecast by nearly half. But the auditor's report says uncertainty remains around the revised forecast, given that many municipalities have blocked proposed new casinos.

"This money was baked into their fiscal plan, and is further evidence the Liberals have no plan to balance the budget," said Progressive Conservative finance critic Vic Fedeli.

Finance Minister Charles Sousa said on Monday that he adjusted the expected profits to $600-million, to reflect that "those revenues are not being recognized as quickly as we'd like."

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The OLG also boasted that the modernization initiative would create 2,300 new jobs in Ontario. But the auditor's report criticizes the lottery agency for not being transparent about the importance of a now rejected casino in the Greater Toronto Area to its job projection.

The OLG did not disclose that its projection depended on a casino in the GTA creating 3,300 new jobs. In the rest of the province, however, 1,000 jobs would disappear, the report says.

The auditor also says neither the OLG nor the government told the public about a study done by the Finance Ministry, revealing that cancelling a revenue-sharing program for the horse-racing industry would result in thousands of job losses. All told, the auditor's report says, the province would be left with net job losses of between 1,200 and 3,500.

The former McGuinty government's sudden cancellation of the slots-at-racetrack program in 2012 stunned the horse-racing industry. The program generated $4-billion for racetracks and just under $10-billion for the province's coffers since 1998.

Premier Kathleen Wynne rolled out $500-million in new funding over five years this year, in an attempt to quell the backlash that erupted in rural Ontario, where standardbred racing has deep roots.

The Globe and Mail has reported that executive incentives and employee profit-sharing plans at Woodbine Entertainment Group were key factors in the McGuinty government's decision to scrap the program. Woodbine CEO Nick Eaves is believed to have earned just over $1-million before his pay was rolled back last year to $549,185.

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About the Author

Karen Howlett is a national reporter based in Toronto. She returned to the newsroom in 2013 after covering Ontario politics at The Globe’s Queen’s Park bureau for seven years. Prior to that, she worked in the paper’s Vancouver bureau and in The Report on Business, where she covered a variety of beats, including financial services and securities regulation. More

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