If Gateway casino goes away, Western Fair District would be in 'a difficult spot,' CEO says
Hugh Mitchell wants them to stay, but casino operator is playing hardball over new lease
If he's somehow able to strike an agreement that can secure the future of London's Western Fair District while satisfying his tough-talking new gaming partner, Hugh Mitchell will have hit the deal-maker's equivalent of a triactor.
In horse racing a triactor ticket only pays off if the bettor can pick the top three horses and the exact order they'll finish. It's a difficult trick to pull off, one that requires both skill and luck. But as the Western Fair District boss and longtime horse-racing industry advocate knows, the payoff can be huge.
"We're hopeful that at the end of the day we can work out an arrangement whereby all three parties benefit," he told CBC News in an interview Wednesday. "And most importantly, the community and the region benefits."
Mitchell is the CEO of the Western Fair District, the not-for-profit agricultural society that plays landlord to a sprawling, disparate group of entertainment facilities in the city's east end.
The District includes everything from a comedy club to a set of ice rinks, a horse racing operation and the much-loved annual Western Fair.
If that isn't enough to manage, the Western Fair District has a mandate as an agricultural society and partner of the city to provide cultural benefits that go beyond the bottom line.
It's a multi-headed monster, one that depends on the 24-hour slots casino on site. Last year, the Ontario Lottery and Gaming Corporation handed the site's gaming operations over to Vancouver-based Gateway Casinos.
Almost immediately, Gateway made it clear the status quo at the London site wouldn't work for them. While the company wants to spend $140 million to triple the size of the casino and add a hotel and restaurants, they've also threatened to move if they don't get their way on a number of issues. Topping Gateway's wish list is a cheaper lease than the one they inherited from OLG, which expires in 2020 and comes with a $6.2 million annual payment.
The casino helps the Fair District support horse racing and keep up with other costs.
Gateway has said they're committed to London, but will leave the Fair District if the lease agreement doesn't improve in their favour.
Mitchell says he understands.
"I get their perspective," he said. "They need to find all the ways to achieve that and get a reasonable return. I'm sensitive to their goals. At some point though, just like it may not make sense for them to be here, it may not make sense for us to have them here. So it works both ways. It's in our interest to find a mutually agreeable solution, no question. They could move, but I'm hopeful and optimistic it won't get there."
Complicating the talks further is that the city has a significant stake in the casino and with it, a seat at the negotiating table.
The city collects $4.5 million a year in slots revenue from the casino and a little over $600,000 in rent from the Fair District, which sits on land it jointly owns with the city.
So far, Gateway has shown no interest in supporting horse racing.
So where would a Gateway departure leave the Fair District? Mitchell admits he isn't sure.
"It would put us in a difficult spot to be brutally honest," he said. "Six million in lease revenue is pretty critical to us. More importantly, it's really critical to racing. Without a gaming tenant on this site, it's really difficult for me to see racing exist long term and that's troubling for this organization as an agricultural society who's had a longstanding commitment to racing and who wants to continue that commitment."
Despite the complexity, Mitchell believes there's a deal to be made that can keep Gateway at the site.
"We need to reach an understanding on a long-term business arrangement where each party has a win," he said. "I'd like to see [Gateway] stay here and expand and grow their gaming. And develop accommodations and see our racing flourish. I'd like to see the complex become a state-of-the-art facility."
Gateway's threat to move may be, at least in part, a negotiating tactic. The Fair District site comes with room to expand, ample free parking, and proximity to the downtown core. But perhaps the biggest draw is that the site is already zoned for gaming. Finding another site in London that ticks all those boxes won't be easy.
And if a deal can't be reached? Mitchell says the Western Fair District and the City will need to come up with a way to "reinvent itself."
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