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HomeMy WebLinkAboutCRPS-07-131 - Increase of Licensing Fees for Bingo EventsREPORT Report To: Councillor B. Vrbanovic, Chair and Members of the Finance and Corporate Services Committee Date of Meeting: October 15, 2007 Submitted By: R. Gosse, Director of Legislated Services/City Clerk Prepared By: Patricia Harris, Manager of Licensing Wards}Involved: Date of Report: September 27, 2007 Report No.: CRPS-07-131 Subject: INCREASE OF LICENSING FEES FOR BINGO EVENTS RECOMMENDATION: That the fee per bingo event being charged to organizations conducting bingo in Kitchener be increased from $90.00 to $130.00 for licences coming into effect January 1, 2008. BACKGROUND: In 2005, the Alcohol and Gaming Commission of Ontario began a process to review the rules and regulations regarding all types of lotteries in the Province. One of their key priorities was reviewing the bingo revenue model which had been in place since the early 1990's. The new revenue model came into effect on May 1, 2007 and is a significant shift from the previous model. On April 2, 2007, Council approved the recommendation in Council Report CRPS-07-045 to set a $90.00 licence fee per event, and that the fees be reviewed in April of 2008. Although there was nothing to base the proposed fee on, $90.00, was the average licence fee at the time and staff felt it would not be detrimental to the charities and would help give the bingo market some stability. Since then, there has been a significant change in the bingo market in Kitchener with the closing of one of the halls and staff felt it would be prudent to review the fees prior to 2008. REPORT: Two key changes resulted from the new revenue model. Each charity operating bingo now must obtain two licences; one from the municipality, the other from the Province. Prior to May of 2007 there were two types of bingo games, municipal games where the municipal licence fee was based on 3% of the total prizes and Provincial games. The Bingo Association for each hall obtained the licence for the provincial games and the Province retained the licence fees for these games. The municipality issued the licence for the municipal games which were capped at a $3,000.00 prize board. As the prize boards for municipal games decreased so to did licence fees. The second change is that municipal licences are no longer based on a percentage of the prize board, but a flat rate for each bingo event is permitted up to a maximum of $165.00 On July 31, 2007, Bingo Country at 1356 Weber Street East was sold to Pentagon Gaming Inc. who owns K-W Gaming Centre located at 501 Krug Street which resulted in the closure of Bingo Country on Weber Street. This had a significant impact on the city, the charities and the hall operator. All charitable organizations that were operating bingo at Bingo Country have been relocated to the hall at 501 Krug Street so their ability to raise much needed funds was not affected. In order to accommodate all the charities it was agreed that the charities would conduct 1- 2 bingo events per month instead of the usual 2-4 events that they had been conducting. There was concern from the charities that they would make less money, but this has not been the case. Staff believe that the changes in the revenue model and the closure of Bingo Country have contributed to increased revenues for the charities. Staff have seen a significant increase in the monthly shares to the charities in the past two months since the closure to the point that the charities are raising more money now than they have in the past few years. To exemplify this, the following chart shows the revenue received by a charity in 2006 before new revenue model, May, 2007 knew revenue model and before closure of Bingo Country} and, current earnings. Month Average Share Total for Month July, 2006 $296.75/event $1186.98 May, 2007 (new revenue model $378.00/event $1512.00 (4 events) August, 2007 (after hall closing $851.00/event $1522.00 (2 events) August, 2007 ($130.00 licence fee) $851.00/event $1442.00 (2 events) The current earnings show an increase of over $300.00 per month compared to a year ago. It is expected that the fall and winter months will be more profitable The closure of Bingo Country also reduced licensing revenue substantially. It is estimated that the loss of revenue for 2008 will be approximately $70,000 if licence fees are not raised. It should also be noted that there has not been an increase in licensing fees in several years as the licensing fees were based on 3% of the prizes that were to be awarded. In fact, in the past few years, as the prize boards decreased so did the licensing fees, yet costs continued to increase. The workload for licensing staff has not decreased significantly due to the closing of Bingo Country because the same numbers of charities continue to operate in Kitchener. Provincial Regulations' require charitable organizations to provide the City with: a report for each event; a monthly report; and, a year end report. This is an increase in reporting from the prior bingo requirements. Each of these reports require staff time to ensure that the information provided is correct and they are meeting all Provincial requirements. As well, all charities obtain a licence every four months and the applications must be reviewed to ensure that they are correct. The new regulations have also been confusing for the charitable organizations which have required more staff time to assist them in understanding the new requirements. It is estimated that approximately 55% of staff time is currently spent on Bingo lotteries. A recent survey of other municipalities indicate that licence fees range from $90.00 to the maximum $165.00 per event with a majority of municipalities charging the maximum fee. MUNICIPALITY LICENCE FEES CHARGED London $90.00 + $50.00 admin. Fee per licence Cambridge $100.00 per event Hamilton $165.00 per event Stratford $165.00 per event Windsor $165.00 per event Mississauga $165.00 per event Markham $165.00 per event Ottawa $165.00 per event FINANCIAL IMPLICATIONS: The financial impact to the charities will remain positive even if licence fees are raised to $130.00 per event from the current $90.00. Although their profits will decrease slightly, the charities total payout will still be higher than it was when they were running four events per month. It is expected that revenue will rise in the next few months, as fall, winter and spring months are traditionally the months were attendance increases in the hall. The Bingo Hall has seen a positive impact due to the new revenue model and any changes in the fee will not have any effect on their operations. A flat $130.00 licence fee per each bingo session will result in a budget increase of approximately $45,000.00 over predicted lottery revenue for 2008 and should help to stabilize lottery licensing revenue which has seen a significant decrease in the past few years. COMMUNICATIONS: A copy of this report has been forwarded to the Bingo Hall Association at K-W Gaming Centre. (MRS) PATRICIA HARRIS MANAGER OF LICENSING