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Can gambling profits support the newspaper business? The company that owns the Toronto Star is betting on it.
Torstar Corporation announced Tuesday that it would launch an online casino brand later this year, pending approval by the Alcohol and Gaming Commission of Ontario.
'As an Ontario-based media business and trusted brand for more than 128 years, we believe Torstar will provide a unique and responsible gaming brand that creates new jobs, offers growth for the Ontario economy and generates new tax revenue to help support important programs in our province,' Torstar Chief Corporate Development Officer Corey Goodman said in a statement.
The Ontario Lottery and Gaming Corporation is currently the only approved operator of online gambling in the province, but Ontario's government has pledged to open the market to other outfits, the Star notes.
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Paul Rivett, the chair and co-owner of Torstar, cited two reasons for the media company's unusual new business venture.
The first, he said, is to ensure that an Ontario-based company is represented in the new marketplace, 'so that more of our players' entertainment dollars stay in our province.' Ontarians spend more than 500 million Canadian dollars a year ($396 million) on online gaming, but most of their money is spent in 'unregulated, grey-market offshore websites,' according to Torstar.
The second is a more novel argument: the funds will help prop up its news business. '[D]oing this as part of Torstar will help support the growth and expansion of quality community-based journalism,' Rivett said.
In addition to the Toronto Star, which is Canada's largest daily newspaper, Torstar owns six regional daily newspapers in Ontario and more than 70 weekly community newspapers in the province. It has also made a number of digital investments.
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Until recently, Torstar had been controlled by a trust of the families who founded the Star. The newspaper has operated under what are known as the Atkinson Principles, which hold that a 'progressive newspaper should contribute to the advancement of society through pursuit of social, economic and political reforms.' The principles were established by Joseph Atkinson, publisher of the Star from 1899 to 1948.
Last year, Torstar was bought by investment company NordStar Capital, also co-owned by Rivett.
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At the time of the sale, John Honderich, the chair of Torstar's board, described the Star's efforts to innovate and succeed as 'an uphill struggle.'
'In this new digital era, with Facebook and Google taking the lion's share of all digital advertising, media outlets have been going under across North America. The COVID-19 crisis has made the situation even worse,' Honderich wrote.
Jim Warren, a gaming industry consultant hired by Torstar, told the CBC that it's not yet known how much revenue the online gaming business would generate.
'What we do know is that Torstar is looking at diversifying the revenue model of how we fund and pay for reporters, columnists, and editorial staff,' he said.
View the discussion thread.
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