CORRECTION | A previously published version of this story stated incorrectly that Rideau-Carleton Raceway cannot host a new Ottawa casino. In fact the raceway can host the new casino. A letter from OLG to the City of Ottawa explains how a casino built at Rideau-Carleton Raceway would have a different funding model than the current raceway. CBC News regrets the error.

A new funding arrangement to be introduced by the Ontario Lottery Gaming Corporation would mean a casino built at the site of the Rideau-Carleton Raceway would not replace the old funding arrangement at the current raceway, according to a letter from the OLG.

In a letter to the city, OLG president and CEO Rod Phillips states the new funding plan, which comes into effect on April 1, 2013, would bring about $5.6 million to the city annually from OLG slots.

Phillips also said the Rideau-Carleton Raceway slots have brought about $4.4 million annually under the current agreement.

OLG's new contribution agreement calls for any city with a casino to receive 5.25 per cent on the first $65 million of net slot machine revenue, 3 per cent on the next $135 million, 2.5 per cent on the next $300 million and 0.5 per cent on any remaining net slot revenue.

The city said revenues from slots would be $196 million — based on OLG's expectations that they would be 40 per cent more than what Rideau Carleton Raceway currently brings in.

Based on that estimate, the city would expect to receive about $7.3 million per year.

That amount:

Some on city council, like Somerset Coun. Diane Holmes, have questioned whether the money would be worth it, should a new casino open.

Mayor Jim Watson has said even a few million dollars for the city is significant.

He said the casino would also bring jobs to the region.

"It's not the panacea for all our woes but it has helped in terms of job creation in other cities and has brought new revenue streams into the community," he said.

According to OLG and city solicitor Rick O'Connor, the current agreement with the raceway cannot be altered legally, meaning a new casino carrying the new funding arrangement could see the new facility built next to the raceway on Albion Road in south Ottawa.

Raceway hopes to bid

The letter from Phillips, addressed to City manager Kent Kirkpatrick, also said the payment formula for a casino "will not be changed" and a legal agreement will "remain intact."

Alex Lawryk, spokesman for Rideau-Carleton, said he believes the raceway is still in the running. He told CBC News the raceway will bid for the casino with a three-year plan that includes a lease agreement with an unnamed casino operator.

Rideau-Carleton will also adopt the new funding agreement as of April 1, 2013, he added, meaning it can still bid for the casino.

Councillors want Rideau-Carleton casino

The city sent a letter to OLG in October seeking a request for proposals for a new casino in the nation's capital.

Some councillors, notably Scott Moffatt and Doug Thompson, expressed hope that the Rideau-Carleton Raceway would remain open and in the running as an option for OLG.

Ottawa Mayor Jim Watson then notified OLG the city wanted the raceway to be given special consideration and to be pre-approved for OLG's shortlist of potential operators.

OLG has said it may have as many as five groups bidding for a casino in the Ottawa area, but the provincial gaming corporation would not identify the private operators or the locations being discussed.

Instead, OLG will present the City with its preferred candidate at its preferred location, and leave it up to the City to decide whether it is interested in pursuing the plan.

The City holds final approval on zoning for a gaming facility. It can also pass on a new casino if it deems that none of the proposals are attractive.

Ottawa - Kent Kirkpatrick - Nov 23-12.PDF

Corrections and Clarifications

  • A previously published version of this story stated incorrectly that Rideau-Carleton Raceway cannot host a new Ottawa casino. In fact the Raceway can host the new casino. A letter from OLG to the City of Ottawa explains how a casino built at Rideau-Carleton Raceway would have a different funding model than the current raceway. A casino could still be built at Rideau-Carleton's current address beside the current facility, city officials say. CBC News regrets the error. Nov. 24, 2012 | 11:10 a.m.