Industry Development Funds For Charitable Gaming

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Industry Development Funds for Charitable Gaming


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Many industries have centralized funds that are used for industry coordination and strategic initiatives. In Ontario, numerous options for central funds for charitable gaming have been explored over the years from encouraging private sector contributions to the consideration of mandated contributions to provincial funds.

The first sector in Ontario to have a central fund created was the Break Open Ticket (Nevada) industry in 2003. At the time, the ticket manufacturers had requested that the Alcohol and Gaming Commission of Ontario (AGCO) allow an increase in the then controlled price of Break Open Tickets. Charities across the province recognized the potential opportunities that a development fund offered and agreed that with the price increase, an additional .001 cent would be added to the cost of the tickets in order to set up a provincial Break Open Ticket Development Fund.

The Break Open Ticket industry in Ontario is very fragmented with thousands of small retail locations, thousands of charities, two manufacturers, a small number of service supply companies, and regulation at the provincial and municipal levels making it difficult to coordinate a strategic approach for the industry. With this small fund (about $400,000 annually), we have been able to carry out extensive consumer and market research and develop a provincial ‘brand’ for the product – “Pocket Slots” trademarked in Canada. Geo-demographic mapping has been done to show the industry where the potential customers are and where the most promising areas are for selling the product. Consumer research has resulted in dismissing the myth that this charity product competes with lottery products, confirmed that existing consumers like the product and even has the potential to attract new consumers. The research has also proven to be a sound foundation to work through needed regulatory changes. Tool kits for service suppliers were developed and extensive free point of sale materials were made available for on-line ordering to increase exposure of the product. Most recently, the fund has been using the assistance of Deloitte to break into the tier one (large chains) retail sector. These are all initiatives that simply were not possible without a consolidated fund. An industry committee manages the fund with representation from charities, manufacturers, and service suppliers with the regulator participating in an advisory capacity.

For the Bingo industry, it was a longer process to establish a central provincial fund. The AGCO implemented a new revenue model for bingo in May 2007 and one of the key elements was to mandate that a portion of the proceeds be set aside for marketing and promotion. The Registrar directs that 10 percent of win be set aside for marketing and promotion with 2 percent of these monies being directed to the Ontario Bingo Development Fund. This fund has been structured as a separate non-profit corporation with a Board of Directors representing charities and bingo hall owners. The regulators (AGCO and municipalities) provide advisors to the Board. This fund is significant with a little over three million dollars a year being accumulated. A strategic plan for the fund was developed and incorporation has recently been completed. Initiatives are just now underway with the all important consumer and market research beginning. This piece will be key in shaping the work plan for the coming year. The fund organized a major game event for the industry in November to bring the industry together and demonstrate the marketing and branding potential that we have through this collective process. Sixty-two bingo centers were linked together for a large $200,000 jackpot game financed by the fund. The spokesperson for this event was Don Cherry and the fund provided significant media coverage across the province, as well as point of sale materials. Many bingo centres took the opportunity to build on the provincial promotions and there are great ideas to be shared across the industry.

As far as we are aware, this concept of an industry development fund for charitable gaming is unique in Canada. It is critical to make sure you have an appropriate governance structure with balanced representation and ongoing opportunities for stakeholders to have input and receive regular communication. The challenge, always, is to manage expectations and to find ways of encouraging and supporting the industry to use the tools, resources, and information effectively. The Ontario experience has been that centralized development funds can be of tremendous benefit to the charitable gaming industry. By pooling industry resources, there are significant opportunities to implement strategic initiatives and carry out research that will benefit everyone. This process has greatly fostered the building of cooperation and collaboration between charities, the private sector, and the regulator. We have had the luxury of having our provincial regulator, the Alcohol and Gaming Commission of Ontario, very much at the forefront of this concept and based on our experience to-date, would highly recommend this approach to any charitable gaming jurisdiction.

By Lynn Cassidy, Executive Director of the Ontario Charitable Gaming Association