“First Nations people have been waiting a long time for an opportunity to realize the economic benefits from gaming ... Today’s announcement is the first step in ensuring that this province’s First Nations people have an opportunity to benefit from this activity.”
— Eric Robinson, minister of aboriginal and northern affairs, in a Sept. 7, 2001, press release announcing the construction of the Aseneskak Casino on the Opaskwayak Cree Nation.
“We’ve got about $15,000 since the casinos opened. The Pas (Aseneskak) finally made a little revenue, we’ll get a little dividend there.”
— Birdtail Sioux Dakota Chief Ken Chalmer, Nov. 9, 2012
The NDP government’s decade-long experiment with native-run casinos has failed to live up to the promise of financial aid to Manitoba’s First Nations.
And the latest unfortunate management deal between the Assembly of Manitoba Chiefs and Hemisphere Gaming Inc. regarding the construction of the $15-million Spirit Sands Casino near Carberry proves it.
In an exclusive story in Tuesday’s Brandon Sun, we published details of the management and advisory services agreement made between the AMC-owned Spirit Sands Casino Resort Limited Partnership and Hemisphere Gaming that showed the management company had negotiated millions of dollars in annual management, advisory and financing incentive fees that would eat at least half — if not more — of any profits made by the Spirit Sands Casino over the life of the 10-year contract.
Under the agreement, the casino owner agreed to pay Hemisphere an annual management fee of 22.5 per cent of the annual net income before management and licence fees are subtracted (EBITDA), an advisory fee of 12.5 per cent of EBITDA, and a licence fee of two per cent of the total gross revenues or each fiscal month.
That’s not including the financing incentive fee built into the contract on Hemisphere’s behalf, nor the fact that the casino owner has agreed to pay the management company’s out of pocket expenses and legal fees.
As a result, we are forced to conclude that the Spirit Sands management deal may even be worse than the contract Hemisphere negotiated for the management of the South Beach Casino, the province’s second First Nation gaming facility. It should be very clear to Manitoba’s First Nation communities that the AMC’s gaming chiefs either made a deal under financial duress or for under-the-table profit, or they simply have no idea what they’re doing.
Since the provincial government and the AMC first began talking about constructing a casino in western Manitoba, NDP officials have always touted the notion that the profits from the facility would go back to the AMC’s 64 member First Nations.
The simple fact remains that none of these casinos have delivered on the promise to help Manitoba’s First Nations. As Birdtail Chief Ken Chalmers notes above, after more than a decade in operation, native bands have received a paltry sum while management groups like Hemisphere walk away with millions. Aseneskak has barely turned a profit, and South Beach, for all its much-hyped expansions, has only paid out one small dividend.
And First Nations won’t get much more with Spirit Sands.
Yale Belanger, an associate professor of native American studies at Athabasca University who aided a CBC investigation into the finances of the South Beach Casino, says that the promised revenue distribution from Spirit Sands only looks good on paper. Casinos only do well, he says, within large urban centres, not along lonely highways like Highway 5.
“It’s located a fair distance from any significant urban centres, and in my experience across Canada studying this, the casinos that are located within cities do best,” Belanger told the Sun.
It’s time for the Manitoba government and the Assembly of Manitoba Chiefs to admit that the First Nation-run casino model in this province is seriously flawed, if not completely broken.
The NDP has never properly addressed some of the major stumbling in its aboriginal gaming policy — even after a 2003 report written by a two-person task force that eviscerated the provincial government’s policy for creating native-run casinos.
The report, which was written by an aboriginal councillor and a government gaming official, recommended the government back off its requirement that casinos be built on reserve lands, a factor that, as the Winnipeg Free Press reported at the time, scuttled three of five casino proposals that had been approved by the province in June 2000.
That report also said one large casino would have maximized profits for on-reserve aboriginals.
Whether the findings of that report were true or not, we will likely never know. But one thing’s sure, it’s time to rethink aboriginal gaming in Manitoba.