Shift in drinking, gambling trends on MLL’s radar

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WINNIPEG — Manitoba Liquor & Lotteries is keeping a close eye on changing trends in alcohol consumption and online gambling that could affect the Crown corporation’s bottom line.

President and CEO Gerry Sul identified the decline in booze consumption as one of the biggest headwinds facing the entity that raises revenue to fund Manitoba’s social programs, during a legislature committee meeting to discuss MLL’s 2023-24 annual report.

“Consumers are drinking differently. They’re drinking less,” he told the committee Wednesday. “As an organization, this is what we’re focused on. How do we navigate through that? How can we pivot through that? But, of course, always in a socially responsible way.”

Tories Trevor King, Kelvin Goertzen and Konrad Narth posed questions to Sul and Brandon East NDP MLA Glen Simard, the minister responsible for the MLL, during the two-and-a-half-hour meeting.

The annual report shows revenue from liquor and beer sales — despite the six-week strike in summer 2023 — fell by 1.1 per cent, to $873.5 million. Beer sales were down 1.6 per cent while wine sales dropped 3.2 per cent. On the flip side, sales of ready-to-drink products went up by 7.4 per cent, or $8.3 million.

MLL transferred $732.5 million to the provincial government for the year ending March 31, 2024. The figure is down from $740.9 million in 2022-23.

Sul said media messaging around the link between alcohol consumption and cancer and the global downward trend in drinking could decrease revenue generation.

“I think those things will weigh on consumers’ minds and have them question (the) amount of alcohol that they consume,” Sul said.

He did not say what the Crown corporation could do to address the decrease in sales due to a change in drinking habits.

In terms of gaming, which accounts for 52 per cent of MLL revenue, the concern relates to competition from online gambling on third-party applications. Online gaming revenue dropped by about $500,000.

PlayNow.com, MLL’s online gambling website, has registered 150,000 players since it launched in 2013.

The Crown corporation spent $4.5 million on advertising, most of which was targeted at combating illegal online gaming sites.

“The biggest implication to the problems in Manitoba is that when people are playing on these online sites, you’re funnelling money into offshore companies, these monies that would be more rightfully served to serve Manitobans,” Sul told the committee.

“I think the second aspect is consumer protection. So when you think about the risks that people don’t understand about when you deposit money into an account in Antigua, Malta or Gibraltar, and you run into some difficulties with the organization and how you get your money back,” he said.

Revenue from Winnipeg casinos increased by $16.7 million during the last fiscal year to a record $246 million.

Sul told the committee the appeal of traditional scratch tickets continues to decline. In 2023-24, the share of the profit of the Western Canada Lottery Corp. considered to be part of the lottery operating segment was $53.5 million, a decrease of $6.9 million.

The provincial Crown corporation will work with WCLC to explore how to revive the old-school gambling cards, Sul said.

In terms of cannabis, sales continue to grow in the province. Revenue jumped $22.7 million to $153 million in 2023-24 and the number of private retailers increased to 205 from 177.

Sul said when the industry was established, it was able to compete with a street value of $10 per gram of dried cannabis. Today, the catalogue price of cannabis is around $2 per gram.

“That kind of helps attract the customer,” he said.

With edible forms of cannabis rapidly expanding and retail stores continuing to see strong sales, the president said it’s up to the consumer as to when the industry would stop growing.

Meanwhile, the 2023 strike cost the Crown corporation $10 million, Sul said. Revenue losses were calculated to be about $20 million but were offset with savings on labour costs and benefits to unionized employees.

Operating expenses, which rose $23.6 million over the previous fiscal year to $262.6 million, were affected by higher employee costs related to new collective agreements.

» Winnipeg Free Press