The operators of roving charity casinos have launched a lawsuit seeking the equivalent of $338 million in U.S. dollars from the Ontario government, which they claim legislated them out of business so the province could monopolize the $650 million annual charity casino business for itself.
In a statement of claim filed in the Ontario Court, General Division, each of the 16 former charity casino operators demanded $6.5 million for the "expropriation, taking, destruction or extinguishment" of their businesses.
A similar amount has been claimed as a remedy for the province's "unjust enrichment" of its revenues, and $130 million is claimed for the province's "negligent misrepresentation" in its dealings with the former casino operators before their operations, in effect, were shut down.
Jerry Levitan, lawyer for the Ontario Casino Operators Association, accused the government of taking over the gambling industry "that was established and built by my clients."
In changing the licensing of the casinos from a section of Canada's Criminal Code that allows only charities and religious organizations to operate casinos to another section that allows for the licensing of commercial casinos like those in Niagara, Windsor and Orillia, the government, in effect, has subverted the criminal law, Levitan said.
The government "is in a classic conflict-of-interest situation. They've created a monopoly. . . and made it impractical to run a charity operation in Ontario. They are, in effect, contravening the Criminal Code," he said.
Hillary Smith, press secretary to Chris Hodgson -- who, as chairman of the Management Board, oversees casinos in the province -- called the lawsuit "without foundation and totally groundless."
Charity casinos had been restricted to operate as roving enterprises that had to change their location every three days. But March 31, the government, in effect, shut down the floating gaming operations to make room for 44 permanent casinos it planned to set up around the province.
Widespread oppositions from local communities, however, blocked the plan. Since then, the government changed its strategy, announcing instead it would build four larger casinos in Brantford, Sault Ste. Marie, Thunder Bay and Sarnia. But those projects remain in the planning stages.
Though the government did not ban charity casinos, it imposed new conditions for licenses that will ensure the operators will fail, Levitan said.
The government took over the gambling business for demonstrable social purpose other than preventing the roving casinos from continuing in operation, he added.
The roving casinos generated an estimated $6.5 million a year for charities, and the province has pledged to replace that money with $26 million this year and $65 million every year after that even if the proposed casinos do not produce that amount.