First Nations: The Casino Rama Revenue Agreement

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First Nations: The Casino Rama Revenue Agreement


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A prolonged legal battle between the Chippewas of Rama First Nation (formerly the Chippewas of Mnjikaning First Nation; now called Rama First Nation) and the Ontario Lottery and Gaming Corporation (OLG) potentially ended on January 22, 2010. At a much anticipated hearing, a three-judge panel of the Ontario Court of Appeal in Toronto affirmed a 2008 court ruling against the Rama First Nation. The terms of their 78-page decision will take effect on August 1, 2011.

The Rama First Nation launched its lawsuit in 2001, seeking a definitive answer to one key issue. Was there a permanent binding agreement that obligated the OLG to pay 35% of Casino Rama’s net profits to the Rama First Nation in perpetuity? The Rama First Nation position claimed this perpetual contract was established by a Site Selection Process prior to the 1996 casino opening. Opponents in the case claimed the early pact had a five-year term that expired in 2001.

The early 1990s distribution formula decreed that the casino would pay 20% of its gross revenues directly to the Ontario provincial government. From the remaining net total, the Rama First Nation would receive 35%; the final 65% would then be divided among the other 133 First Nations living within the province.

The lower court claimed that the Rama First Nation failed to prove its case in the 47-day trial. Refusing to accept the decision, Rama First Nation launched a two-part appeal in September 2008.

The first component was a reiteration of the charge that the Rama First Nation was entitled to continue receiving the 35% share of the net profits. However, it also accused the first judge of professional and personal misconduct, citing him with making numerous legal errors in overseeing the courtroom proceedings. The Appeals Court refuted both allegations.

The Rama First Nation leadership has held steady for years. Elected in 2000, Rama First Nation Chief Sharon Stinson Henry is now in her fifth term. She has forged ahead, believing that the successful management style of the Rama First Nation is what has created a profitable operation. She contends that since they have shouldered the bulk of the risks and responsibilities, they should also enjoy the majority of the financial rewards. Stinson Henry claims, “With much hard work, I am proud to say we are the most successful casino in Ontario.”

Stinson Henry states that the money the Rama First Nation has received over the years has ensured good governance. This community transformation has inspired them to pursue the case. “We have used the revenues to improve education, community and economic development, health and social services,” she says.

Casino Rama is the largest single-site Aboriginal employer in Canada. Of its 3000-member staff, 500 are Aboriginal. Casino Rama is also the only commercial gaming operation in Ontario that is located on a First Nation reserve.

Since the 1996 opening, Casino Rama has generated more than $5.2 billion in gross revenues. The financial and employment successes of Casino Rama have provided a better quality of life for everyone. Half of the Rama First Nation’s 1,500 members live on the 2,800-acre Rama reserve.

During the course of the litigation, the disputed revenues sought by the Rama First Nation have been held in a trust. At the same time, the 133 other First Nations have divided their 65% share.

In the interim, the Chiefs of Ontario, representing the 133 First Nations in the province, agreed in 2008 to forfeit the rights to Casino Rama revenues in return for $201 million and 1.7% of provincial revenues. Starting next year, their economic income is estimated to be worth $120 million annually.

Although somewhat disappointing, the Court of Appeal’s final decision also awards some future benefits. The Rama First Nation will enjoy a guaranteed 20-year host license to operate Casino Rama on the reserve near Orillia, 90 miles north of Toronto. At that time, the OLG will then have the sole authority to approve additional 10 and five-year renewal options.

This long-term landlord arrangement also mandates a revised revenue distribution formula. The Rama First Nation will collect a 1.9% share of the gross revenues generated by Casino Rama. The first year of the deal is expected to pay out approximately $8.8 million.

The Rama First Nation will also receive targeted lump sum payments for projects. For example, a one-time allocation of $2.3 million will be earmarked for a new training and development centre in Rama. Almost $9 million will pay for service contracts and parking construction; additional land and building leases will account for $6.5 million.

Stinson Henry stresses that the Rama First Nation has maintained positive relationships with the other 133 provincial First Nations. She confirms that any philosophical differences are with the provincial government. “We have litigated against Ontario, not the other First Nations,” Stinson Henry states.

Looking ahead into the immediate future, Stinson Henry and her community confront some time sensitive choices. Realistically, the Rama First Nation must determine the feasibility of taking the case to the next level within the legal system. Stinson Henry is committed to attaining the financial rewards that she believes her people have rightfully earned.

“Our counsel is exploring whether or not we should continue with our legal action. There is a 60-day window from the date of the court ruling to decide if we want to try the case before the Supreme Court of Canada. We strongly believe we have a solid case. The main concern is seeing that our people get what they deserve after 14 years of hosting this successful casino,” Stinson Henry says.

By Sharon Harris

Note: Canadian Gaming Business was unable to ascertain answers to the following questions. Will the money held in trust be distributed? Looking ahead, which formula will be used, and what payout arrangements have been specified for the next 18 months until the ruling takes effect?