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Canada – Complicated ownership structure ‘adds a heightened level of risk’ to Casino Rama

By - 5 December 2018

Canadian casino operator Gateway Casinos and Entertainment, the new force behind Casino Rama in Ontario, says the casino’s ownership structure ‘adds a heightened level of risk’ to its operation.

In a filing with US Securities and Exchange Commission Gateway details how the casino’s complicated lease arrangement and recent policy changes at Rama First Nation will make reporting criteria difficult to meet.

Gateway invested $89.3m to buy the ‘Central Bundle’, which includes Casino Rama, Georgian Downs, which has been renamed Gateway Innisfil. The deal also provides the licence for a new casino in Wasaga Beach.

It said: “Given the unique ownership structure and the number of interested parties with various rights, including approval rights and rights to consultation, we are likely to encounter more extensive reporting obligations than we do at our other properties and will be required to address the rights held by interested parties, which may result in delays or other issues when making major decisions regarding the operation or development of this property a heightened level of risk.
“The main parcel of the Casino Rama Resort land is subject to a lease between Casino Rama Inc., an affiliate of Rama (First) Nation, and the Government of Canada pursuant to a commercial ground lease,” it explained. “On May 1, 2018, the Chippewas of Rama First Nation Land Code came into effect, which transferred land administration for these lands from the Government of Canada to Rama (First) Nation pursuant to the First Nations Land Management Act (Canada).

“The Casino Rama Resort property is subleased by Casino Rama Inc. to the Ontario Lottery and Gaming Corporation (OLG). The OLG, in turn, sub-subleases the Casino Rama Resort property to us. Certain adjacent lands are also owned by Rama and leased directly to OLG, and the OLG then subleases this land to us. Certain rights and obligations of Casino Rama Inc., Rama Nation and the OLG are documented in other ancillary agreements.”

“Delays or impediments to effecting operational or development decisions with respect to the Casino Rama Resort property, or an inability to enforce our rights against one or more interested parties, would have an adverse effect on our business, financial condition and results of operations,” the document outlined.

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