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OLG Annual Report 2016-17 · PDF file2016–17 Annual Report ONTARIO LOTTERY AND GAMING ... against the global backdrop of a rapidly changing gaming business ... As the way we do business

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Text of OLG Annual Report 2016-17 · PDF file2016–17 Annual Report ONTARIO LOTTERY AND GAMING...

  • www.olg.ca

    SAULT STE. MARIE70 Foster Drive, Suite 800Sault Ste. Marie, ON P6A 6V2705-946-6464

    TORONTO4120 Yonge Street, Suite 500Toronto, ON M2P 2B8416-224-1772

    An Operational Enterprise Agency of the Province of Ontario

    OLG Support Centre - Customer Inquiries1-800-387-0098The Ontario Problem Gambling Helpline1-888-230-3505

    ISSN 1499 4887Ce rapport est galement publi en franais sous le nom de Rapport annuel 2016-2017 de la Socit des loteries et des jeux de lOntario. Il est disponible en composant le 1-800-387-0098.

    201617 Annual Report

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    52114 Form 1 AnnualReport2016-2017-Cover_English.indd 1-2 2017-10-31 3:08 PM

  • This Annual Report is printed in English and French on Canadian-made Rolland Enviro100 paper, which is manufactured from 100 per cent post-consumer waste bre, is Processed Chlorine Free (PCF) and uses BioGas in its production (an alternative green energy source produced from decomposing waste collected from landll sites) to reduce greenhouse emissions and ozone-layer depletion.

    Rolland Enviro100 saves the harvesting of mature trees, reduces solid waste that would have gone into landll sites, uses 80 per cent less water than conventional paper manufacturing and helps reduce air and water pollution.

    Certified ProcessedChlorine Free

    100% Post-ConsumerWaste Fibre

    Recyclable WhereFacilities Exist

    Green EnergySource

    52114 Form 1 AnnualReport2016-2017-Cover_English.indd 3-4 2017-10-31 3:08 PM

  • Message from the Chair _______________________ 2

    Message from the President and Chief Executive Ofcer ____________________ 3

    Economic Impact ____________________________ 4

    The Path Forward ____________________________ 6

    Overview ___________________________________ 11

    Financial Highlights _________________________ 12

    Board of Directors ___________________________ 13

    Executive Committee ________________________ 13

    Governance ________________________________ 14

    Managements Discussion and Analysis ________ 15

    Managements Responsibility for Annual Reporting ________________________ 36

    Independent Auditors Report _________________ 37

    Consolidated Financial Statements ____________ 38

    Notes to the Consolidated Financial Statements ________________________ 42

    52114 Form 2 AnnualReport2016-2017-Text_English.indd 1 2017-11-02 5:41 PM

  • OLG ANNUAL REPORT 2016172

    MESSAGE FROM THE CHAIRThe Board of Directors of the Ontario Lottery and Gaming Corporation (OLG) is comprised of a talented group of individuals. It has been a pleasure serving with them since becoming OLGs Chair in November 2016. Together, we are committed to ensuring a strong Net Prot to the Province while continuing OLGs leadership in Responsible Gambling programming. We also understand the important role we play, as part of our mandate, in enhancing regional economic development.

    We are supportive of the transformation underway at OLG and have condence in senior managements business and modernization plans. We look forward to fullling our governance role as OLG continues to build a strong lottery and gaming industry that will benet the people of Ontario for many years to come.

    On a personal note, I would like to acknowledge and thank my predecessor, Philip Olsson. Through his leadership as Chair and his dedication to OLG, Mr. Olsson has made many signicant and lasting contributions to the organization over his three-year term. I would also like to thank Wilson Teixeira for all he has done for OLG over his two terms as a member of the board.

    George L. Cooke Chair

    Stephen Rigby, President and CEO

    George L. Cooke, Chair

    52114 Form 2 AnnualReport2016-2017-Text_English.indd 2 2017-11-02 5:41 PM

  • 3MESSAGE FROM THE CHAIR AND MESSAGE FROM THE PRESIDENT AND CHIEF EXECUTIVE OFFICER

    MESSAGE FROM THE PRESIDENT AND CHIEF EXECUTIVE OFFICER I am pleased to present our 201617 Annual Report, which details a productive year at the Ontario Lottery and Gaming Corporation (OLG). It was a year marked by record nancials; signicant progress on modernization; and the development of a new vision, mission and strategic priorities to articulate where were going as an organization.

    OLGs vision is to develop world-class gaming entertainment for Ontario. Our mission is to generate revenue for the province, stimulate and enhance economic development, and promote Responsible Gambling all in the best interests of the Province of Ontario. In 201617, OLG delivered a record $2.36 billion in Net Prot to the Province to support key government priorities like health care, amateur athletics and problem gambling prevention, treatment and research. Hundreds of millions more went to host communities, First Nations, lottery retailers and local charities across the province, among other recipients.

    These are remarkable results for an organization that is balancing the needs of our current day business, while meeting the challenges of transforming for the future.

    OLG is making fundamental changes to the way lottery and gaming are delivered in Ontario, against the global backdrop of a rapidly changing gaming business and an increasingly digital industry.

    One of our strategic priorities is to continue executing the land-based gaming modernization plan, which will enhance gaming entertainment for our customers while maximizing the nancial and economic impact to the province. Since our last report, we made signicant progress on this plan including the transfer of the operation of sites within the North and Southwest Gaming Bundles to Gateway Casinos & Entertainment Limited and the release of Requests for Proposal for the Greater Toronto Area (GTA), West GTA, Central, Ottawa and Niagara Gaming Bundles. We expect to announce the successful service provider for each of these bundles in the 201718 and 201819 scal years.

    The year also saw the opening of the rst new casino in Ontario in more than a decade. Ontario Gaming East Limited Partnership, the service provider in the East Gaming Bundle, built and now owns and operates Shorelines Casino Belleville, which opened in January 2017.

    As we move forward with our land-based gaming modernization, we will continue to collaborate with key stakeholders and partners to ensure OLG is positioned for growth and innovation in a responsible manner. As new operators take over gaming sites, they will be required to adhere to the same rigorous Responsible Gambling (RG) standards and controls that are in place at OLG. For example, operators will be required to deliver the RG training that OLG developed in collaboration with the Centre for Addiction and Mental Health.

    The 201617 scal year also saw new developments in our Lottery business. Specically, OLG discontinued the Request for Proposal for Lottery in favour of a revised approach to generate more value from Lottery as a retained business. We have taken a number of steps this year to ensure our technology and product solutions are responsive to changing customer needs.

    In December 2016, we issued a Request for Information (RFI) on a new player platform. Information and advice received from the market in response to the RFI helped us nd out how upgrades to our current technology infrastructure can improve the ways we connect with customers. In February 2017, we released a Request for Pre-Qualication to help bring us closer to selecting a vendor to replace and update our existing lottery terminals and network to reach more customers across Ontario.

    As the way we do business changes, OLG must continually evolve. We have identied key cultural characteristics and behaviours that are guiding our efforts in talent management and will provide a foundation as we build out a new organization more nimble, agile and digitally-oriented that is driven by the pursuit of innovation and guided by an enhanced understanding of our customers. New analytic capabilities and capacity are being developed that will help us to continually assess our impact on customers and their experiences, using a fact-based approach.

    The greatest contributing factor to a companys success is always its people. Certainly the successes weve had this year would not be possible without the dedication and commitment of our own employees across the organization and those that now work with an expanding portfolio of service providers. My thanks to them for their continued efforts in serving our customers and their contributions to a record-breaking nancial performance.

    Stephen RigbyPresident and Chief Executive Ofcer

    52114 Form 2 AnnualReport2016-2017-Text_English.indd 3 2017-11-02 5:41 PM

  • OLG ANNUAL REPORT 2016174

    ECONOMIC IMPACTSince 1975, the Ontario Lottery and Gaming Corporation (OLG or the Corporation) has provided nearly $47 billion to the Province and the people of Ontario. OLGs annual payments to the province have helped support the operation of hospitals and other provincial priorities; problem gambling prevention, treatment and research; amateur sport through the Quest for Gold program; and local and provincial charities through the Ontario Trillium Foundation. OLG is also helping to build a more sustainable horse racing industry in Ontario. In scal 201617 alone, OLG contributed $2.36 billion in Net Pro t to the Province to support these programs.

    IN FISCAL 201617 ALONE, OLG GENERATED $4.1 BILLION IN TOTAL ECONOMIC ACTIVITY IN ONTARIO.

    *Net Pro t to the Province is the amount the Corporation returns to the Province of Ontario after stakeholder and other p

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