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Written On 4/7/11 By Lenny Wasman :

Profits off-target at land operations, a possibly additional motivation to go online

The Canadian province of Saskatchewan may yet join British Columbia, Quebec and (next year) Ontario in venturing into online gambling, the latest Saskatchewan Gaming Corporation financial report reveals.

The province has been thinking about online gambling possibilities for the last year and the report confirms that this process is still active.

Saskatchewan Gaming Corporation land gambling revenues declined, but the provincial government-owned company still recorded a net income of Cdn$43 million in 2010, according to its report released this week.

However, the company’s net income was about 15 percent below target after a slow start in the early part of the year and a 53-day labour dispute. Net revenue for the year was down by about Cdn$7.8 million from the previous year, slightly offset by a Cdn$21,000 decrease in expenses.

Saskatchewan Gaming said casino revenues should be maintained in 2011, but the company's outlook for the future flags the significant growth being experienced in the online gaming industry.

Some provinces are getting into the online gambling business, but Saskatchewan is only studying the issue, Ken Cheveldayoff, minister responsible for the Corporation, said.

"That means the province doesn't capture the revenue generated by online gaming in the province," Cheveldayoff said, adding that it's too soon to say if the province will enter the online gambling arena.

"We won't be a leader in this area but at the same time we'll have to look and see what's happening and be cognizant of it taking place in our province today. What troubles me is that the profits are leaving the province and can't be reinvested in the good activities that the gaming corporation does," Cheveldayoff said.

The report comments that for now, it expects there to be little "market erosion" at its casinos due to online gaming.

Half of the Corporation's $43 million net income is distributed between the First Nations Trust, Metis Development Fund and Community Initiatives Fund.

Much of the remaining $21.5 million, or $19.3 million is being paid as a dividend to Crown Investments Corp. (CIC), the holding company for the province's commercial Crown corporations. CIC in turns pays a dividend into the government's general fund.

Most gaming revenue came from slot machines, with slot revenue of about $112 million.

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