Quebec budget: Loto-Québec needs to find optimization cuts

March 14, 2024 8:25 PM
Photo: Shutterstock
  • Mark Keast, CDC Gaming Reports
March 14, 2024 8:25 PM
  • Mark Keast, CDC Gaming Reports

Quebec Finance Minister Eric Girard is looking at government-owned enterprises, such as Loto-Québec and Hydro Quebec, to help find CA$1 billion [US$739 million] in savings as the province strives to get to a balanced budget by the end of this decade.

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The two companies will be asked to come up with the $1 billion through “optimization efforts,” according to the minister, in the 2024-2025 budget tabled Tuesday, which projects an $11 billion deficit for the next fiscal year.

CDC Gaming Reports has attempted to get some clarity on exactly what “optimization efforts” will mean to Loto-Québec, but the crown corporation hasn’t responded.

Last month, Loto-Québec reported its latest quarterly financial-report data.

According to the crown corporation, through Q3 FY 2023-2024, from April to Dec. 25, 2023, they posted $2.11 billion in total revenues and a net income of $1.076 billion, decreases of $113.2 million (5.1 percent) and $128.4 million (10.7 percent) compared to the same period in the year previous.

Results by sector for the fiscal period, according to Loto-Québec: Lottery product revenues amounted to $668.8 million ($724.1 million the same period the previous year), casino and gaming-hall revenues totaled $797.9 million ($829.2 million the previous year), and gaming-establishment revenues amounted to $659.3 million ($686.4 million the previous year.

The Quebec Online Gaming Coalition followed the budget news and organization spokesperson Nathalie Bergeron sent this statement. “As the Minister of Finance tables a budget marked by a record $11 billion deficit, the Quebec Online Gaming Coalition deplores the fact that the Quebec government has decided to deprive itself of substantial tax revenues by refusing to regulate the online-gaming market on its territory.

“Since its launch, the Coalition has been offering a concrete solution to help the Quebec government counter the effects of the budget deficit. Regulating the market for private online-gaming operators would enable the Quebec government to obtain additional royalties estimated at a minimum of $230 million annually.

“This sum would be in addition to the revenues already provided by the Crown Corporation. These revenues could be reinvested in key sectors of the Quebec economy, such as health and education, to the benefit of all Quebecers.

“In addition to royalties, regulation would create many well-paid jobs here in Quebec, while generating significant public revenues, as is currently the case in Ontario. The Ontario model has contributed $523 million in revenues to provincial and municipal governments, and nearly $1.6 billion to Ontario’s GDP during its first year of operation.”

The Coalition, composed of Betway, Bet99, DraftKings, Entain, Flutter, Games Global, and Rush Street Interactive, partnering with Apricot Investments, is committed to working with the Quebec government and local stakeholders to develop a new regulatory framework for the province, and break up the monopoly currently held by Loto-Québec.

“At a time when the government is asking Crown Corporations, including Loto-Québec, to optimize and increase efficiency in order to find savings, Quebec cannot afford to deprive itself of significant sources of new revenue,” Bergeron said. “The Minister must review Loto-Québec’s mandate and set up an independent regulatory body to ensure that gaming in Quebec is properly supervised. After all, the Crown Corporation’s mission is to offer both safe gaming to Quebecers and contribute to public revenues. Our recommendation meets both these objectives.

“Recommendations in favor of a licensing and tax system for private operators and the creation of an independent regulatory body have been issued since 2014, notably by the Task Force on Online Gaming. Since then, Dr. Sylvia Kairouz, Research Chair in the Study of Gambling at Concordia University, the Institut national de santé publique du Québec (INSPQ), and the Direction régionale de santé publique de Montréal have all recommended the creation of a body to oversee all gaming in Quebec, including Loto-Québec.

“The Minister missed an opportunity to send a clear signal in his budget, following Alberta’s example last week, to take action towards implementing regulations that would protect Quebecers while boosting government revenues,” she said. “Instead of listening to the experts, who have been calling for regulation of the online gaming market for over 10 years, Quebec prefers to protect Loto-Québec’s monopoly, to the detriment of public services and the Quebec society that receives them.”