In July the Ontario Lottery and Gaming Corporation sent the City of Sarnia $83,437 for hosting Gateway Casinos Sarnia, covering the three months from April 1 to June 30. It was the sort of item that passes through a council agenda without much comment. It is also one of the few pieces of municipal income in this city that is tied to a single building.

The formula pays on the floor, not on the province

Host community payments are calculated the same way everywhere in Ontario, on a graduated scale tied to the gaming revenue generated at the site itself. Not provincial gaming revenue. Not what people in Lambton County spend. What comes off the floor of the specific property the municipality agreed to host.

The scale of the whole programme puts the Sarnia cheque in proportion. OLG paid $42,414,746 to 29 host communities for that same quarter, and says host communities have received more than $2.4 billion in non-tax gaming revenue since 1994, out of roughly $64 billion the corporation has generated for the province since 1975. Sarnia's share of one quarter of that programme is about two tenths of one per cent.

Locally the arrangement has still been worth a great deal. Since the site opened in May 1999 the city has taken in $28,497,414 in non-tax gaming revenue. The exchange is straightforward: the municipality accepts the facility, and the municipality gets a share of what the facility earns.

That works cleanly as long as gambling is something that happens in a building. That is the part that has been changing.

The part of the market the formula cannot see

Ontario opened a regulated online gambling market on April 4, 2022. Operators register with the Alcohol and Gaming Commission of Ontario and run under an agreement with iGaming Ontario, and the revenue from that market goes to the province. None of it produces a host community cheque, because no municipality hosts anything. A resident of Sarnia playing on a registered site at home on Exmouth Street generates provincial revenue and municipal nothing.

Money from gambling in this country is bounded three different ways at once, and Sarnia sits inside all three. By building, which is what the host payment pays on. By province, which is what the registered online market collects. And by licence, which is where the third boundary becomes visible from here. A national listing of casino sites in Canada that publish their payout times runs withdrawal windows from instant to about a week across its entries, and every one of those entries carries the same two lines: that the offers are not available to Ontario residents, and 19+. Those operators hold licences from regulators such as the Malta Gaming Authority or the Kahnawake Gaming Commission rather than an AGCO registration, and the page itself sends Ontario readers to a separate provincial guide. The wall around the Ontario market is not a figure of speech. It is printed on every row of the national list.

Why Point Edward's cheque is bigger than Sarnia's

The graduated scale produces results that look strange until you remember what it measures. In an earlier quarter the Journal reported that Sarnia received $91,746 while Point Edward received $429,150 for the same three months. Point Edward has a population under 2,000. Sarnia has more than 70,000.

The village is not being favoured. Starlight Casino Point Edward is simply a larger gaming operation than the Sarnia site, and the formula pays on revenue at the property. Point Edward has collected $53,511,410 since its site opened in April 2000, which is most of a municipal budget line that the village did nothing to earn except sit on the right side of a boundary drawn in the 1990s.

That is the logic of the whole system, and it cuts both ways. A host payment is not a reward for a healthy local economy. It is a percentage of a specific cash flow, and it moves when that cash flow moves.

What a city can plan around

Councils treat this money as reliable because it has been reliable. The cheques have arrived every quarter for a quarter of a century, the most recent one covering April through June, and the city has been folding them into infrastructure and services the whole time. This is also, by design, the least diversified revenue stream Sarnia has. It depends on one property, one operator, and the continued preference of people in this region for driving somewhere to gamble rather than doing it from the couch.

Nothing in the current numbers suggests a collapse. But the growth in Ontario gambling is happening in a channel that pays the province and not the municipality, and no formula change is being proposed to fix that. When councillors next discuss what the gaming cheque funds, alongside the other local economic development money moving through Sarnia-Lambton, the more useful question is not how large the payment is. It is what share of regional gambling it still represents.

Ontario sets the minimum age for casino and sports betting at 19+, and registered operators are listed publicly by the Alcohol and Gaming Commission of Ontario. Anyone worried about their own gambling, or someone else's, can reach ConnexOntario free at 1-866-531-2600, any hour of the day.