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Ont. racehorse breeders suing OLG over slots program

Over 30 of Ontario’s standardbred racehorse breeders are set to sue Ontario’s Crown gaming agency for $65 million over the loss of the provincial Slots at Racetracks program (SARP).

The breeders, who filed their notice of action March 11 against the Ontario Lottery and Gaming Corp. (OLG) in the provincial Superior Court in Guelph, said in a statement their suit seeks damages “arising out of the manner in which (SARP) was cancelled.” [Related story]

From when SARP was established up until the province announced the program’s end, the breeders allege OLG and the province represented to them that SARP was a “long-term revenue sharing partnership,” any changes to be made would come with “reasonable notice (and) proper consultation,” and breeders would be compensated if SARP were to be terminated in a way that interrupted the horse production cycle.

The breeders involved in the suit said they’ve tried for two years to get “some form of fair compensation” from the province and OLG but both have “refused” to compensate standardbred breeders for any losses, while racetrack owners have seen over $80 million in compensation.

The suit calls for $60 million in damages for “negligence, negligent and/or intentional misrepresentation, breach of contract and unjust enrichment” and $5 million in punitive damages.

The province’s announcement in March 2012, that it would cancel SARP effective March 31, 2013, came “without prior notice, consultation or any offer of compensation to the plaintiffs,” the breeders said in their notice of action.

It also came in the middle of the standardbred breeding season, “a fact that the OLG and Ontario knew and deliberately or recklessly chose to ignore.”

SARP, the breeders said, was set up in 1998 as a partnership deal between the province, OLG and the horse racing industry, to place government-operated slot machines at racetrack facilities. In return, the industry would get a 20 per cent cut of slots revenue.

The breeders, according to their claim, agreed with OLG and the province that they would “ensure a steady supply of standardbred horses for the racetracks, in consideration for a share of the SARP revenue.”

That revenue, the breeders said, was directed to them through “a number of conduits” including OLG’s Horse Improvement Program (HIP) and the province’s Standardbred Improvement Program, which included the Ontario Sires Stakes program.

“Duty of care”

The breeders, in their notice, said the province and OLG made representations to them about SARP knowing full well that standardbred breeders’ breeding decisions involve at least five years of “time, effort and resources” before a horse even gets to a track.

Relying on such representations, the breeders claim, they made “long-term business decisions” involving “substantial resources” going into their operations as well as their surrounding rural communities.

Given those representations, the breeders claim, SARP brought them into a relationship with OLG and the province that “gave rise to a duty of care.”

The breeders allege they learned around 2009-2010 that SARP was being re-evaluated, but were again assured SARP was a “long-term revenue sharing partnership” and that breeders would be compensated if the program were to be shut down in a manner “contrary to the representations and the terms of the parties’ contractual relationship.”

Around October 2011, the breeders allege, OLG and the province knew they were about to terminate SARP but “expressly represented” to breeders that the program would continue for at least five more years, by providing an additional five-year projection of slots revenue in a HIP financial plan.

When SARP was officially put on the chopping block, the breeders allege, OLG and the province “resolved to compensate racetrack owners for their losses,” because unlike the horse breeders, the track owners “had substantial resources and could easily organize to assert claims” against OLG and the province.

The province last October pledged a five-year, $400 million funding package for horseracing industry development to replace SARP as its main means for funding racing. [Related story]

The funding, the province said, is to be tied not only to individual tracks but to “branding and marketing, responsible gambling, the Horse Improvement Program (HIP), animal welfare and business planning.” — Network


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