Keno gaming model could fund arena, save taxpayer money: Smith

EDMONTON, AB (January 3, 2013): Alberta should examine using revenue generated from a rebranded KENO lottery game in order to fund sports arena projects, including the proposed downtown arena in Edmonton, Wildrose Official Opposition Leader Danielle Smith said today.

With the deadline for an Edmonton arena deal looming, Smith said it’s time to start considering new and creative ways to get the facility built. She said the existing KENO game could be rebranded and remarketed by Alberta’s NHL teams as a means to generate revenue for arena projects. In Edmonton, it could fill the $100 million funding gap in the downtown arena project within five years while avoiding the use of tax dollars to fund the project.

“We believe this could be a solution that makes sense for everybody involved,” Smith said. “The City of Edmonton would get a magnificent downtown facility, the Edmonton Oilers would get a new home and Alberta taxpayers wouldn’t be on the hook for any of it. Wildrose believes the downtown arena is an important part of Edmonton’s future and we hope the province and the city will consider our proposal.”

KENO is a digital gaming program that raised just over $3.1 million in revenue last year in Alberta where it is featured in 88 bingo halls, casinos and gaming rooms. However, in British Columbia, KENO generated nearly $235 million in revenue last year and is played in about 4,000 locations, including sports bars and pubs.

Based on similar revenues for other sports gaming programs between BC and Alberta, Wildrose calculates that if KENO was NHL hockey branded and installed in 1,000 sports bars and pubs across Alberta as well as the current 2,200 lottery outlets, it could generate $196 million a year in revenue, broken down as follows:

Payout to winners $137 million
AGLC administration $5 million
Payout to hosting locations $5 million
Proceeds available for use $49 million
Total: $196 million

Of the $49 million, $40 million would be split evenly between the City of Edmonton and the City of Calgary for their arena projects. At a rate of $20 million a year, the City of Edmonton would have raised $100 million in five years.

The remainder would be dedicated to charity through the AGLC’s lottery fund and the NHL teams’ respective charities – the Oilers Foundation and the Flames Foundation.

Smith acknowledges that her proposal will require significant cooperation between the Alberta Gaming and Liquor Commission, the Cities of Edmonton and Calgary and their respective NHL franchises in order to promote KENO across Alberta.

“The arena funding debate has been going on for years and we still don’t have an agreement in place. It’s time to start talking about other ways to get this done,” Smith said. “These projects are too important to our major cities not to explore every option. We believe this could be the solution that fills the funding gap while respecting taxpayers at the same time.”

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 SPEAKING NOTES

Edmonton’s downtown arena project is reaching a critical stage.

Mayor Mandel has indicated he is working toward a deadline for a deal to be done by the end of this month. Despite rounds of proposals and nearly five years of debate, Edmonton is still without the state-of-the-art entertainment facility it needs.

First, we must acknowledge the importance of these types of facilities to Alberta cities. Some will argue they are merely hockey arenas built so millionaires and billionaires can play a game and make money. In reality, they are much more.

They are essential to the future growth and advancement of our cities. They spur development, help generate revenue and invigorate local businesses. Yes, they ensure the viability of our beloved NHL franchises – and that is a big part of why they are necessary. But more than that, they say to the world that we in Alberta are major players.

I believe Edmonton and Calgary are major players – and in order to keep pace with other world-leading cities, core municipal infrastructure must be built.

The question that has stumped politicians and business leaders the last five years is how.

In Edmonton’s case, there remains a $100 million funding shortfall as governments are quite rightly reluctant to kick in public dollars. In Calgary, new arena discussions aren’t as far along, but it’s safe to say the same concerns about taxpayer contributions to the project will become a factor.

Wildrose remains steadfastly against provincial tax dollars going towards these facilities, especially given the bleak fiscal hole we are in.

Any funding agreement for new arena facilities must reflect the current fiscal reality as well as the public’s opposition to having their tax dollars pay for them.

With that in mind, Wildrose today proposes a revamped, rebranded and remarketed version of an existing gaming program to come up with additional revenues for these projects.

It’s called KENO. KENO is a bingo-style game in which players select numbers on a board that contain numbers 1 through 80. They place a wager, choose the amount of numbers they want to bet on and the numbers themselves, and then 20 numbers are drawn.

KENO is remarkably underutilized in Alberta today. It’s played in just 88 locations across the province and brought in a total of $3.1 million in total revenue last year. Compare that to British Columbia – where KENO is played in over 4,000 sports bars, pubs and lottery centres and where it brought in nearly $235 million last year.

To understand how it could generate similar revenues here, consider this: In 2012, BC Sports Action – the standard sports betting game in BC – generated almost $54 million. In Alberta, the identical game, Sport Select, generated $56 million. And that’s with four fifths of BC’s population.

If applied here in Alberta on the same scale as it is British Columbia, we believe KENO could generate that missing $100 million for the Edmonton arena project within five years, and contribute the same amount of money in the same time frame for Calgary.

Assuming roughly the same comparative rate as the Sport Select example, Alberta would generate $196 million annually if KENO were installed in 1,000 sports bars and pubs as well as Alberta’s 2,200 licenced lottery outlets.

After administration costs and winner payouts, $49 million would remain for charitable purposes and arena funding. $40 million would go to the Cities of Edmonton and Calgary for arena funding and the remaining $9 million would go to charities through the AGLC lottery fund and the Oilers and Flames charitable foundations.

At $20 million annually for both cities, both would raise $100 million in five years.

It’s important to note that not a dime would flow through to the NHL franchises themselves. As I mentioned before, we believe the benefits of these facilities go well beyond just hockey – and that’s why the money would go the cities themselves.

After that five-year period, we could re-evaluate the arrangement and consider whether or not to maintain it as a revenue source for municipalities.

This type of arrangement will take co-operation between the Alberta Gaming and Liquor Commission, the cities of Edmonton and Calgary and their respective NHL franchises. But we believe a branded KENO game promoted by the Oilers and Flames and administered on a large scale by the AGLC could be the solution that makes sense for everybody.

In Edmonton’s case, the City of Edmonton would get the magnificent downtown facility they require, the Edmonton Oilers would get a new home, and the amount of money of money given to charity by their foundation would more than double. And, of course Alberta taxpayers wouldn’t be on the hook for any of it.

The revenues generated would be completely voluntary. Indeed, the passionate fans of our two NHL teams may be even more compelled to play if they know their proceeds will help keep their teams around.

We believe this is the kind of new and innovative idea that should be given serious consideration at this point in the debate. And it’s what Albertans can expect more of from the Wildrose Official Opposition.

Thank you.