90% of 6%

Introduction

The following information has been written exclusively by Terrance Nelson. I take personal responsibility for all the information. Other research that was to have been done in this gaming site is incomplete. The following is being uploaded before it is complete due to imminent danger that Dakota Tipi faces from an armed intervention by the R.C.M.P.

I made news in 1991 on gaming but was involved with it in various capacities from 1985 on. I wrote to the provincial government in 1987 asking to work together with the province in order to avoid the very confrontation that has occurred between First Nations and the provincial government. The government of Premier Gary Filmon has been nothing but underhanded and blatantly racist in dealing with First Nations on all issues.

I have been involved in a gaming court case since 1993 and as such have access to information from Manitoba Lotteries that is not normally available to the general public, some of that information, I will now make public. Currently there are approximately 5,700 VLT machines in Manitoba There are 331 machines on reserve or about 5.8% of the total (5700) machines in Manitoba. The Filmon government has constantly used the fact that First Nations have use and control of 90% of the gross profit of VLTs on reserve and has built up a public misconception that all First Nations in Manitoba have VLTs.

There are in fact only 15 First Nation sites out of 62 First Nations in Manitoba or 24% who have machines, 76% of the First Nations in Manitoba do not have any machines.
The 15 sites are

First Nation

# of machines

Gross Profit April 1st 96 to March 31st 1997

on and off population Stats Canada 1996

Buffalo Point	20	$105,292.	34	46	80	42%
Chemawawin	10	$498,502.	736	344	1104	66%
Crane River	20	$262,725.	286	341	629	45%
Dakota Plains	6	$34,117.	201	44	249	81%
Ebb and Flow	10	$479,971.	884	717	1603	55%
Fairford	10	$258,839.	1140	917	2058	55%
Grand Rapids	20	$783,166.	454	635	1097	41%
Nelson House	10	$630,742.	1954	2030	3992	49%
Norway House	20	$1,447,965.	3563	1338	4908	72%
Opskwayak	40	$2,570,405.	2292	1270	3564	64%
Peguis	40	$2,420,078.	2761	3476	6244	44%
Pine Creek	40	$513,180.	806	1037	1844	44%
Roseau River	20	$338,726.	837	869	1717	49%
Sandy Bay	25	$690,506.	2820	1230	4051	70%
Waywayseecappo	40	$795,712.	1193	520	1717	69%
Totals	331	$12,233,214.	19,961	14,814	34,857	57%

The province takes 10% of the VLT revenue on reserve or $1,223,321. leaving a total gross profit to the fifteen First Nations of $11,009,892 for that year. Based on that information, in the last four years approximately 44 million dollars gross profit has been made in the fifteen First Nation VLT sites in Manitoba. Please remember that 76% of First Nations do not have VLTs. They are forced to play in provincial sites, which do not see any return to the First Nations.

According to Statistic Canada 1996, there is a total First Nation population in Manitoba in 1996 was of 95,113. The on reserve population using VLTs on the 15 sites was 19,961 or 21% of the First Nation population. That means that 79% of the First Nation population in Manitoba either didn't play VLTs or played on Provincial machines with no return to the First Nation community.

Per machine gross profit on First Nations averages in the year April 1st 1996 to March 31st 1997 were:

Buffalo Point	$5264.64	7% of the highest per machine average
Dakota Plains	$5,686.17	8% of the highest per machine average
Pine Creek	$12,829.50	18% of the highest per machine average
Crane River	$13,136.28	18% of the highest per machine average
Roseau River	$16,936.31	23% of the highest per machine average
Waywayseecappo	$19,892.81	27% of the highest per machine average
Fairford	$25,883.95	36% of the highest per machine average
Sandy Bay	$27,620.25	38% of the highest per machine average
Grand Rapids	$39,158.33	54% of the highest per machine average
Ebb and Flow	$47,997.15	66% of the highest per machine average
Chemawawin	$49,850.25	69% of the highest per machine average
Peguis	$60,501.96	84% of the highest per machine average
Nelson House	$63,074.28	87% of the highest per machine average
Opaskwayak	$64,260.14	89% of the highest per machine average
Norway House	$72,398.28	100%

Obviously the reason Minister Dave Newman advocates for Buffalo Point being the southern First Nation casino site speaks for itself. Buffalo Point VLTs are the lowest producing VLTs in the province hence no threat to the provincial cash cow.

The 1996 on reserve population according to Stats Canada was 58,276. The fifteen First Nation with VLTs have a combined total of 19,961 on reserve population or 34% of the on reserve First Nation population in Manitoba. Sixty-six percent of the on reserve population has no access to on reserve VLTs, therefore either do not play or travel to provincial sites.

If all 62 First Nations had VLTs there should be approximately 36 million dollars in gross profit on reserve in Manitoba, or three times what is currently being made now. In the last four years alone First Nations have lost gross profit of 96 million dollars, some of it to the province but some of it not played because there was no machines to be played, especially in isolated First Nations in northern Manitoba. Some First Nations do not want VLTs and no one is forcing any First Nation to take VLTs. The point is that the First Nations aren't being given any option to make a choice.

The First Nation Casino Issue

Gary Filmon's government has made consistent roadblocks to First Nation casinos. One demand made by the Filmon government is that the First Nation who gets a provincially licensed casino has to share revenue with all the rest of the First Nations. This is totally unreasonable if one researches the numbers especially when Filmon dictates that there will only be 150 VLTs per casino. Let's look at those numbers.

Realistically, a casino in a prime location with 150 machines will generate an average of about $40,000.00 to $50,000.00 per machine or a total of approximately, $6,000,000. to $8,000,000. With restaurants, hotels, table games etc, staffing requirements would be around 200. Other revenue from table games, restaurants, hotel etc would not exceed three million per year. An average year would see gross profit of about nine to eleven million dollars.

An average wage of $800.00 per staff member x 200 staff would create a payroll of $160,000.00 every two weeks. $160,000.00 x 52 weeks =$8,320,000. At the very best circumstances net profit would not be more than $700,000.00 to $2,700,000 per year to be split amongst 62 First Nations. Not taking into account that there will be a huge mortgage on the building and for the first ten years the interest rates paid to the bank will be very substantial.

Mr. Filmon's government seems to be bend on insuring that the southern First Nation casino is not in a prime location even though they have insisted that there will be a cap of 150 machines in the casino. This is vastly different from how Mr. Filmon's government has treated hotel owners in the last eight years. There has been a system in place in Manitoba in which gaming kickbacks to the Conservative Party have been taking place.

There are approximately 320 hotels in Manitoba. In the 1995 Manitoba election the Hotel Owners Association donated $45,000.00 to the Conservative Party re-election fund. They also urged their members to donate $1,000.00 each to the Filmon re-election campaign. In 1999, Mr. Filmon's party is flush with gambling money and is spending enormous sums on ads extolling the fiscal responsibility of his party. Do you know how Mr. Filmon's party is financed?

The Hotel Owners

In 1991 most of the Hotel owners in Manitoba were in serious financial trouble. Despite the fact that three vices, cigarettes, alcohol, and sex shows (fully nude dancing) were all legally licensed in Manitoba hotels, many hotel owners were near bankruptcy. In 1991 you couldn't even sell a hotel in Manitoba at a reasonable profit. Enter Mr. Filmon.

The logic was that rather than spending millions building casinos to house VLTs they would put them in hotels, give the hotel owners 20% of the revenue and not require the hotel owners to invest in the cost of the VLTs. In other words, the hotel owner got a sources of revenue put into their hotel beverage rooms with little or no extra cost. Of course in 1991 only rural hotels were eligible for VLTs and certainly not 40 machines per site. It is only a few years later when the urban Hotel owners started pressuring for VLTs that the real money started to flow.

Due to time factors, our research is not complete. We have to give estimates. There are approximately 2500 VLTs in the hotels in Manitoba. At a rate of $45,000.00 per machine per year, the gross revenue from hotel VLTs would be about 100 million dollars per year. That means that for the last five years the hotel owner have received 20 million dollars per year or (X five years) 100 million dollars from gambling revenue. In the same time span the fifteen VLT sites on reserve had a maximum 55 million dollars.

The difference is that the Hotel owners got money from the general public, the VLTs on reserve generated money from the First Nation population. Most of the revenue on reserve is generated from the First Nation population itself. It is our own money and the province gets 10% of our money, they do not give us 90% as they have led the public to believe. They take 10% of our money.

We are getting 90% of 6% and we are getting 90% of our own money on the 15 sites that we have on reserve. The province got not only 10% of that revenue but they also charged the First Nations $5650 per VLT. That means that the 15 First Nations were forced to pay one million, eight hundred seventy thousand, one hundred fifty dollars (1,870, 150) for the 331 machines on reserve but, the First Nations have absolutely no legal title to the VLTs. Similar to the hotel owners, the First Nations have to bear the cost of housing the VLTs and the cost of staffing etc. but unlike the First Nations the hotel owners paid nothing for the cost of the VLTs.

In 1998 Manitoba demanded an extra $150.00 for every VLT in Manitoba. An extra $50,000 was taken from the First Nations profit margin. There is no legal recourse for anyone to oppose this arbitrary decision. That was already on top of having paid $5650 per machine.

Greasing the Wheels

In British Colombia Premier Glen Clark was attacked constantly for months on end in the media for the allegation that his government may have given special consideration to one of Clark's friends in a provincial casino license. In fact the R.C.M.P. took action against the Premier and searched his home for evidence that the premier's friend was "greasing the wheels" in order to jump the queue. The difference on how things are done in British Colombia and Manitoba is unreal.

A First Nation skeptic like myself would think that it had to do more with the fact that Premier Glen Clark was doing something most white people in B.C. hated. That is to finally settle centuries old injustices with the original owners of the land, by pushing the Nisga Treaty. Would the R.C.M.P. or the Crown attorney even dare consider doing what they did to Premier Clark and applying that to the Premier of Manitoba?

Here in Manitoba Premier Filmon has not been investigated to any great extent on gambling issues. The press has treated Mr. Filmon as the teflon premier. Time and time again First Nations have accused Mr. Filmon of being a racist; something that the general public has always felt was unfair. Mostly because the press in Manitoba hasn't done the research and don't report to the general public the basis of that accusation.

With the advent of VLTs in the urban hotels, some hotels have quadrupled in market value in the last five years. Where some hotels were available five years ago for 2 million dollars, revenue statements now dictate that those same hotels have a market value of 8 million dollars. By the same token, ask the farmers how much the market value of their farms has increased within the same five years? Have they quadrupled the market value of their farms like some of the hotel owners.

Out of the approximately 320 hotels in the province, there are definitely not 320 different owners. The VLT revenue has attracted buyers and many hotels are now chains owned by a single corporate entity. One of the arguments made by the provincial crown attorney in Nelson vs. the Queen was that the province did not want anyone to personally profit from gambling revenue. This is a double standard given the evidence of what the province has done for the hotel owners.

The purpose of this research is not to find fault with the owners of hotels; it is to point out the difference in the treatment of First Nations and some of the hotel owners. This government has been using a double standard in its treatment of First Nations. Take for example the following case.

The CANAD INNs

Leo Ledohowsky is the president and CEO of Hospitality Corporation of Manitoba Inc. Mr. Ledohowsky is apparently an aggressive, hard working man, who is also a smart businessman. Everyone we talked to, spoke highly of him. The issue isn't Mr. Ledohowsky personally; it is his contributions to the Conservative Party and how the Provincial government treats him differently than not only the First Nations but also other hotel owners.

Hospitality is the corporate owner of Canad Inns, a chain of hotels located in Winnipeg. Although we have heard rumours of his personal relation with the premier, we have no solid evidence to make such an accusation. As stated earlier our research was cut short in order to meet the deadline of uploading some gaming information into the website.

According to our limited research Canad Inns has 165 VLTs and two simulcast betting venues.

1.) Canad Inns Express Fort Garry
1792 Pembina Highway
which has 30 VLTs

2.) Canad Inns Fort Garry
1824 Pembina Highway
which has 24 VLTs

3.) Canad Inns Garden City
2100 McPhilips Avenue
which has 24 VLTs

4.) Canad Inns Transcona
826 Regent Avenue West
which has 30 VLTs and simulcast betting

5.) Canad Inns Windsor Park
1034 Elizabeth Road
which has 30 VLTs

6.) Polo Park Inn
1404 St. Matthew's Avenue
which has 27 VLTs and simulcast betting

The Polo Park Inn was purchased this spring by Hospitality and has yet to undergo renovations. It has yet to achieve the status of a Canad Inn. The Canad Inn Express Fort Garry and the Canad Inn Fort Garry are located side by side separated only by a Winnipeg street.

Unlike First Nations, which are restricted by Manitoba policy to only one site agreement per First Nation, hotel owners may have as many site agreements as they have hotels.

Manitoba Lotteries considers these hotels to be two separate sites, each having their own site holders agreement and therefore qualifying for the maximum allotment of VLTs. The Canad Inn Fort Garry, which opened up this spring, received 14 VLTs from a bankrupt Flin Flon Hotel and another 10 more from somewhere else. The source of the 10 VLTs is not known.

Hospitality will build two more hotels, one near the Winnipeg International Airport and one attached to Club Regent Casino. The hotel at Club Regent was apparently chosen by Manitoba Lotteries through an Invitation for Proposals system, not by open tender. There is no word on how many VLTs will be in these new hotels.

As stated earlier, hotels do go bankrupt even with VLTs in the revenue stream. Example: the Flin Flon Hotel. The evidence of the actual earnings per machine on First Nations is proof that the location of the site is extremely important. Buffalo Point is the lowest earning revenue of $5,264.64 per machine per year and Norway House is the highest at $72,398.28 per machine per year. This is proof positive that machines in Winnipeg, the highest population center in Manitoba has to be at the high end of the scale.

Getting the permission to move 14 VLTs from Flin Flon to Winnipeg makes good economic sense for Hospitality Corporation. The 165 VLTs located in Hospitality sites have to be earning a minimum of $50,000.00 per machine per year. An estimated revenue of eight million two hundred and fifty thousand on the 165 VLTs is not unrealistic, in fact it is quite likely higher. That does not take into consideration the simulcast betting for which no source of revenue estimates are available to us. Nor is there any firm evidence of what the percentage agreement between Manitoba and site holder is on simulcast betting.

An estimate of ten million dollars per year maybe a little high but at 20% of the take, Hospitality is likely in the range of two million dollars a year gross profit from the current site holder agreements it has with the province. Again, we want to state that we have no grievance with Mr. Ledohowsky, all power to him, he is simply a good businessman but we as First Nations want similar treatment from the provincial government. Dakota Tipi First Nation has been denied any VLTs by the province for the last 8 years.

The issue is whether money greases the wheels in Manitoba decisions. First Nations do not make contributions to the Provincial Conservative Party, Hospitality and Mr. Ledohowsky does. The following is the political contributions, Leo Ledohowsky and related companies made from 1995 to 1998 but not including election contributions which would drive the number up higher.

Progressive Conservatives

1995 - Hospitality Corporation gave $5,387.50
1996 - Hospitality Corporation gave $4,056.25
1997 - Hospitality Corporation gave $3,011.25
Leo Ledohowsky gave $1,000.00
1998 - Hospitality Corporation gave $5,387.50
Leo Ledohowsky gave $1,715.00
A total of $18,920.00

Liberals

1995 - nil
1996 - Hospitality Corporation gave $750.00
1997 - Hospitality Corporation gave $750.00
1998 - nil
A total of $1,500.00



New Democratic Party

1995 - Hospitality Corporation gave $1,000.00
1996 - nil
1997 - nil
1998- Leo Ledohowsky gave $375.00
A total of $1,375.00

What we need to know is if hotel owners are against First Nation casinos. Are hotel owners dictating Manitoba government policy on First Nation casinos? One hundred million dollars in the last five years and quadrupling market value for hotels makes a powerful incentive for some hotel owners to keep First Nations out of the money.

Hotel owners make significant contributions to the Manitoba economy. They employ people; they run restaurants, beer parlors, hotels, etc. They pay taxes, collect taxes. We have no axe to grind with the hotel owners, but we want the same kind of fair treatment from the province. Hospitality Corporation has 165 VLTs, and 2 simulcast betting venues. If they continue to generate revenue as they have they will make millions of dollars in the next ten years. How is the profit from those VLTs going to be split up? Is Premier Gary Filmon asking them to share the net profits with the rest of Manitobans?

How many millions of dollars will you get from the gambling industry in Manitoba? According to Filmon, we have to share our net profit with 100,000 people. That's why we call Premier Gary Filmon a racist. He doesn't ask the same of his white supporters.

The Sweet Heart Deals

Over a number of years, certain businesses have been getting the lions share of government contracts in Manitoba. We didn't complete our research on the companies who received the contracts to build the extensions to McPhilips and Club Regent.

Two companies that have been doing work for the province are Pollard Banknote and Bazzaar Novelties. They have been in the gaming industry for some time. One making breakopen tickets and the other supplying bingo paper. VLT suppliers like AGT, Ballys, etc have made big money in the province.

Again we didn't complete the research on the contributions made by major business companies that can be traced back to the Conservative Party. Will that kind of research be available prior to the fall election?

All we can say is that we are working on it!

Anyone that has verifiable information can contact us.

The bottom line for us that we don't want to be part of the problem, we want to part of the solution, but we won't quietly live in economic apartheid.