Gateway Casino's plan to spend $55.5 million on a new casino in Sudbury is at risk because of the legal fight aimed at stopping the Kingsway Entertainment District, according to documents filed in the U.S.
The documents, filed with the U.S. Securities and Exchange Commission, also reveal Gateway paid $79,349,000 for the Northern Bundle, which includes casinos in Sault Ste. Marie and Thunder Bay, and plans to build in North Bay and Kenora.
In Sudbury, Gateway has a lease at Sudbury Downs in Chelmsford that expires in March 2020, when the new Kingsway casino was expected to be completed.
“While we have received initial municipal approval for the relocation of this property, an appeal of that decision has been filed in the Local Planning Appeal Tribunal by certain individuals and community groups which, if successful, would delay the proposed relocation pending further appeals or court challenges,” the document says.
“Subject to extension by the tribunal, a first hearing is expected in summer 2019 with a decision due (at the earliest) by September 2019. There is no certainty over whether these individuals and community groups will be partially or wholly successful in obtaining the relief sought.”
Because of the uncertainty, Gateway lists the Sudbury casino in the part of the documents listing development plans that are at risk and “may not be completed on a timely basis, on anticipated terms or at all.”
While the LPAT was initially expected to make a decision on the appeal by June of next year, the stiff legal fight put up by opponents, and the fact the legislation is new and untested, the timeline for a decision has been put on hold. The tribunal is expected to receive motions from both parties next month, and to wait for a decision by a divisional court on another case, which will set a precedent for Sudbury.
The document also gives an overview of the state of the casino industry in Canada, and how the casinos in the northern bundle will take shape.
The industry has changed, the document says, and is moving away from destination casinos --which relies primarily on tourists – to ones that rely on the local market for customers.
“Locals-driven markets generally attract a more consistent flow of casino patrons over time, leading to greater stability as measured by total wagers net of prizes paid,” the document says.
These casinos offer a wider range of entertainment other than gambling – concerts and other events -- the document says, giving Gateway a wider revenue base.
The company says the Sudbury casino would be part of its Starlight Brand, which are focused on urban communities. For context, that's their second-largest casino, one below their premium Grand Villa Casino brand. It would include 600 slot machines, 21 gaming tables, as well as a sports bar, steakhouse and a buffet.
Read the full report here.
