Gateway Casinos: Tough Future after Merger Cancellation

Gateway Casinos & Entertainment was poised to experience perhaps its best year in 2020.

The company celebrated its 25th anniversary in 2017. Just last year, Gateway Casinos employed more than 8,200 people and oversaw 25 gaming properties in Alberta, Ontario, and British Columbia. Those casinos housed more than 420 gaming tables, including 48 poker tables, more than 14,000 slot machines, more than 80 food and beverage outlets, and more than 560 hotel rooms.

And by the end of 2019, an agreement with Leisure Acquisition offered Gateway the opportunity to restructure and grow to the tune of a company worth C$1.46 billion.

While 2020 started well, with all systems go toward an April finalization of the deal, the coronavirus pandemic then swept through Canada and changed everything.

Emerging from Coronavirus Lockdowns

The coronavirus pandemic forced the closure of all Gateway Casino properties across Canada by the end of March 2020. The Canadian government, upon the advice of health officials, ordered all nonessential businesses closed indefinitely.

The goal was to stop the spread of Covid-19, but that task proved more difficult than anyone in the world anticipated. After months of closures, territorial governments began to allow phased reopenings of some businesses based on strict health protocols.

Gateway started with a select number of its signature restaurants in some casinos on a take-out basis only. Then there were some opening for dine-in service with limited capacity, first in Langley and Courtenay in BC in early June. Campbell River and Burnaby followed in mid-June.

By the beginning of July, plans took shape to open restaurants in Ontario and more in BC. Williams Lake and Kamloops, and Point Edward and Chatham followed.

Gateway VP of Food & Beverage Todd Pollack expressed excitement to reopen restaurants for employees and customers. “We want to thank everyone for their support and patience during these challenging times as we work diligently to safely return to operations.”

Leisure Scraps Merger

Several weeks ago, Bloomberg reported that the deal was off, that Gateway “failed in its bid to merge with Leisure Acquisition Corp. when the U.S. firm decided to scrap the deal.” It had been scheduled to close in April, but that was before the coronavirus pandemic.

Leisure is now tasked with finding a new business to take over the deal or return its cash to shareholders.

Catalyst Capital Group is the private equity firm that backs Gateway. A spokesperson for Catalyst, Dan Gagnier, told Bloomberg that a Leisure shareholder vote in March “negatively influenced their ability to complete a transaction that was favorable to all of the parties involved.”

Gagnier added, “Regardless, Gateway is an exceptional franchise and has been successful in building its business across Canada, creating long-term value for its various shareholders.”

Pandemic-Related Troubles in 2020

In May, as Gateway looked to schedule the reopening of its casinos, the company also faced issues with numerous renovation projects that had been put on hold.

The two projects discussed at that time were in Ontario, one being the Starlight Casino in South London and the other the new Cascades Casino in North Bay. Gateway Director of Communications Rob Mitchell said that the company’s focus had to remain on opening existing casinos. He gave no timetable for construction to resume on the new casinos.

The $60 million casino in the Kingsway Entertainment District is also on hold, and it also remains steeped in legal challenges. The Superior Court case involving Tom Fortin, the City of Greater Sudbury, and Gateway Casinos just heard oral arguments in June.

Union Protections for Workers

Unifor President Jerry Dias recently confirmed that Gateway and the union signed an agreement in areas like Sudbury to protect workers. “This agreement with Gateway Casinos is an important step in the right direction toward providing our members with certainty in these uncertain times,” he said.

This deal will extend benefits for employees negatively affected by pandemic-related casino closures, as well as more job security. Employees and members of Unifor can now choose a retroactive paid leave option that is partially funded by the Canada Emergency Wage Subsidy. Gateway CEO Tony Santo noted that the subsidy was put to good use to help Gateway employees.

It will likely be months before all Gateway casinos reopen to even 50% of previous capacity ranges. This indicates that a significant number of employees will remain unemployed for the foreseeable future.

Gateway is tasked with helping those employees, making decisions about new projects, and hoping that additional funds pour in, whether from the Canadian government or from a new business opportunity through Leisure before the deal expires in December.


Jennifer Newell

Jennifer Newell

Jennifer Newell has been writing about poker and gambling since 2004. From her days in the WPT offices to covering summers of WSOP tournament action, she also followed gambling legislation to Washington D.C. and women-only poker to the Bahamas. Meanwhile, she lived in Los Angeles and Las Vegas for many years before moving back to her hometown of St. Louis, Missouri. Now, Jen travels less, writing about poker and online gambling from her home with her two dogs watching her every move. In her spare time, she follows politics, works on her never-finished novels, and learns Italian in the hopes of retiring to Italy someday.

If you want to know more, you can follow Jen on Twitter @WriterJen


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