December 14, 2021

The AGCO has approved changes to stabilize and modernize the break open ticket (BOT) charitable lottery sector. These changes were developed in close collaboration with stakeholders to address financial pressures facing the charitable sector. Changes include increasing expense maximums and introducing a new revenue model for all new BOT types submitted to the AGCO for approval in 2022 and beyond.

An increase to expense maximums was announced today to enable ticket suppliers to continue to provide their services amidst rising BOT costs. These changes will provide stability to the BOT market while enabling the continued use of BOTs as a fundraising tool for charities and the communities they support. 

The increase to expense maximums applies to Gaming Equipment Suppliers (GES) and becomes effective as of January 4, 2022. The new expense maximums provide a variable expense rate between ticket types, as shown in the revised Schedule of Approved Break Open Ticket Types and Associated Expense Maximums chart below.

The AGCO has also approved a new revenue model for new BOT types submitted to and approved by the AGCO in 2022 and beyond. This change will modernize the way expenses are calculated by streamlining and simplifying the BOT administration process for charities. It will also protect the charitable share of BOT fundraising revenue.

BOT lotteries have served as an important fundraising tool for charities for many years. The reforms announced today have been developed by the Ontario Charitable Gaming Association (OCGA) and are supported by the Break Open Ticket Program Management Alliance (BOTPMA) as well as other Ontario charities.

Increases to Expense Maximums

Through the AGCO-approved expense maximums, some BOT sector participants may earn a defined percentage of the BOT “Win.” Effective January 4, 2022, the expense maximums for Gaming Equipment Suppliers will increase as per the chart below and as shown in the updated Schedule of Approved Break Open Ticket Types and Associated Expense Maximums.

The increase in expense maximums applies to Gaming Equipment Suppliers and existing ticket types. The changes highlighted below take effect on January 4, 2022.  Retroactive invoicing of boxes ordered before January 4, 2022 is not permitted. These changes will not affect charitable or municipal reporting.

Break Open Tickets Sold Through a Break Open Ticket Seller (Third Party Retailer)

All 50 cent tickets

Expenses specific to BN31 and SP44 Ticket types

All other ticket types

Gaming Equipment Supplier

(Former rate, to January 3, 2022)                                   

14%

15.75%

14%

Gaming Equipment Supplier

(New rate, effective January 4, 2022)

19.3%

20.05%

17%

Gaming Services Supplier                 

12.75%

14.36%           

12.75%

Break Open Ticket Seller                              

20.75%

25.31%

20.75%

Charity Administration Fee                            

0.75%

0.75%

0.75%

Dispenser                               

4%

4%

4%

New Revenue Model for BOTs

The AGCO is also announcing a new revenue model for the BOT to provide a more flexible, modern approach to expenses.

The approach will be applicable to all new BOT types developed by the sector and submitted to and approved by the AGCO in 2022 and beyond. The following new revenue model will apply to all new BOT types at any price point and prize board percentage:

  • “Net win” will be calculated as gross wager, minus prizes, minus ticket cost, to equal the net win:
    • “Gross wager” = ticket price multiplied by ticket count
    • “Ticket cost” = the actual and auditable manufacturer-invoiced cost of the tickets plus HST.  
  • The charity and suppliers will split the “net win” with 50% going to each party. Charities and suppliers will pay expenses out of their 50% portion of the net win.
  • Under the supplier 50% portion of the net win:
    • Separate expense lines, such as the GES category, are eliminated.
    • A variety of supplier expenses are paid (see the table below).
    • The seller portion of the expense maximums will be paid by the supplier.  Suppliers will have the business flexibility to negotiate seller commission directly with retailers.
  • Under the charity 50% portion of the net win:
    • Separate expense lines, such as charity administration, are eliminated.
    • The charity will pay for expenses, including administrative costs and the licence fee, from their 50% portion of the net win.

This table outlines the new revenue model for all new BOT types submitted to the AGCO for approval starting in 2022:

The supplier pays for the following expenses (from 50% of net win):

  • Supplier expenses
  • Seller commission (it becomes variable)
  • Shipping and other expenses
  • Dispenser-related costs

The charity pays for the following expenses (from 50% of net win):

  • Licence fee
  • Charity administration costs

 

Locations where BOTs are Sold

This model will apply to a variety of locations where BOTs are sold, including a break open ticket seller (third party retailer), the licensee’s own location, and non-pooling bingo halls.

For new BOT types submitted to the AGCO in 2022 and beyond, licensees who own the location where BOTs are sold or licensees in non-pooling bingo halls, will be able to collect up to half of the net win to cover their supplier costs.

Additional Information

This information bulletin highlights some aspects of the new framework for BOT expenses on new BOT types. The AGCO will provide more details on the application of the new revenue model in the winter of 2022, including additional information about any changes in reporting requirements, Terms and Conditions, and other supporting documents.

Quick Facts about BOTs:

  • The AGCO is responsible for regulating and overseeing licensed lottery events such as the sale of BOTs conducted and managed by eligible charitable and religious organizations to raise funds to support charitable purposes.
  • A BOT is a cardboard device that has perforated cover window tabs behind which symbols are revealed by tearing open the cover tab. The winning combination of symbols is specified on the back of the ticket. BOTs are also known as “Nevada tickets” or “pull tabs.”
  • BOT types are characterized by the number of tickets per deal, the price per ticket and the total value of prizes per deal.
  • For more information on BOTs, including how to apply for a provincial or municipal licence to hold a break open ticket event, please visit the AGCO’s BOT Licensing Overview page.
  • If you have questions regarding specific types of BOTs , please review the List of Approved Break Open Ticket Manufacturers for additional details.
  • See updated Schedule of Approved Break Open Ticket Types and Associated Expense Maximums and The New Revenue Model

For more information

  • Contact our licensing office at lotterylicensing@agco.ca
  • Submit an inquiry online via the iAGCO portal (an iAGCO account is not required)
  • Call AGCO Customer Service Monday to Friday from 8:30 am to 5:00 pm at 416-326-8700 or toll free 1-800-522-2876 
Line of Business: 
Number: 
105

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