Executive Summary: Key Legal and Evidentiary Issues

• Century Mile Inc. and United Horsemen of Alberta Inc. sought judicial review of the AGLC Board's denial of their applications to convert Racing Entertainment Centre licences to casino licences.

• The AGLC applied a "best fit approach" under section 15.2 of the CTCOG, as no specific regulatory process existed for REC licence conversions.

• Applicants challenged the Board's broad interpretation of "community," arguing only views from the relevant municipalities (Leduc County and Rocky View County) should have been considered at Step 2.

• Regulatory Services identified concerns including potential financial impact of approximately $12 million per year of slot revenue and significant cannibalization (39%) of the proposed gaming revenues affecting existing gaming operators and charities.

• Twelve objections were received: two from individuals and ten from casino owners, Host First Nations, and related charities.

• The standard of review applied was reasonableness, assessing whether the decision was justified, transparent, and intelligible under the Vavilov framework.

Background of the dispute

On February 23, 2021, Century Mile Inc. and the United Horsemen of Alberta Inc. applied to the Alberta Gaming, Liquor and Cannabis Commission to convert their REC Licences to casino licences by adding ten table games at each racetrack. This request was novel. The AGLC had not previously addressed converting REC Licences to casino licences, nor did it have a specific process for such cases.

In the absence of a specific process for conversion of REC Licences to casino licences, the AGLC used a "best fit" approach under section 15.2 of the Casino Terms & Conditions and Operating Guidelines, which addresses casino facility expansion and is comprised of three steps: (1) Initial Assessment, (2) Community Support, and (3) Approval. The Applicants provided the AGLC with comprehensive written proposals as part of their Initial Assessment, including a detailed description of the proposed expansion, a market assessment, physical design information, and a three-year business plan as outlined in section 15.2.5 of the CTCOG.

The regulatory process and objections received

The AGLC's Regulatory Services reviewed the Proposals and provided their initial assessment in the Request for Decision dated June 11, 2021. Regulatory Services identified concerns relating to the potential financial impact and cannibalization affecting the AGLC, the Government of Alberta, other casino operators, and urban charities that would occur because of the REC licence conversions. Despite these concerns, Regulatory Services found that the Proposals "had merit," so the approval process moved on to Step 2 – Community Support.

The Applicants posted the required notices in newspapers in Rocky View County and Leduc County and received letters of support from both counties. The AGLC posted details of the Proposals on the AGLC website for a period of 30 days and emailed all existing casino operators in Alberta on June 23, 2021, to advise them that the Applicants would be posting public notices in the community. The AGLC received twelve objections to the Proposals: two from individuals and ten from casino owners, Host First Nations, and related charities.

On November 21, 2021, by way of letter, the AGLC Board Chair advised the Applicants the Proposals would not proceed to Step 3. The letter outlined the following reasons for its decision: financial impact of approximately $12 million per year of slot revenues to the AGLC and Government of Alberta; significant cannibalization (39%) of the proposed gaming revenues and resulting impact to existing gaming operators and charities; and a large number of objections from existing casino operators and Host First Nations, citing revenue loss from cannibalization of tables and slots.

The hearing and Board decision

The Applicants requested a hearing before a panel of the AGLC Board under section 94 of the Alberta Gaming, Liquor and Cannabis Act, RSA 2000, c G-1. Given the "best fit" approach followed, the hearing process followed was under section 15.3.27 (relocation of a casino facility, rather than expansion of a casino facility which does not allow for a hearing). The applications were heard simultaneously on March 18, 2022. The Board released its decision dated April 13, 2022, confirming the Decision to deny the applications. The Applicants seek judicial review of the Decision.

The Court received submissions from intervenors, namely Enoch Cree Nation, Mechet Charities Limited, and River Cree Enterprises Limited Partnership. Enoch Cree Nation is a Treaty 6 First Nation with reserve lands adjacent to Leduc County and the Century Mile REC. River Cree Resort and Casino is wholly owned by Enoch Cree Nation. Mechet Charities Limited holds the casino's charity licence.

The Court's analysis on interpretation of "community"

The Applicants argued that "community" is defined geographically in the CTCOG and the Regulation, and that only the views of the relevant municipalities (Leduc County and Rocky View County) should have been considered at Step 2. Both municipalities provided letters of support. They argued that the broad definition of "community" applied by the Board was unreasonable.

The Court found that a modern approach to interpretation suggests that the interpretation of "community" that is overly restrictive would be inconsistent with the purpose of the legislative framework. The Court noted that if a narrow interpretation of "community" was adopted, such that community can only mean the municipality in which the casino is physically located, this would effectively restrict the AGLC's ability to consider First Nations' concerns or any other parties' concerns that are located outside of the actual municipality even if they are impacted.

The Court emphasized that section 4 of the Regulation allows "any person" to submit objections, supporting the proposition that licensing decisions are matters of general public interest. The Board concluded that the AGLC has the authority to define "community" for licensing and to determine who may object, and found this authority to be supported by sections 3 and 4 of the Regulation. The Board's interpretation of "community" is reasonable, as it is consistent with the legislative framework and the broader regulatory powers granted to the AGLC.

The Court's analysis on the sequential process

The Applicants contended that the Board's process—allowing the AGLC to revisit and reconsider prior positive assessments at any stage—is inconsistent with section 15.2 of the CTCOG. The Applicants argued that having determined the applications had merit at Step 1, the Board was not entitled to revisit those same factors at Step 2 with more information available to them and to dismiss the applications.

The Court was not persuaded by this argument. The Court found that if the Board cannot make its own assessment, it would be bootstrapped into adopting any finding made by Regulatory Services. Accepting such an interpretation and a closed-circuit approach would nullify the powers specifically conferred to the Board by the Act. The Court noted that Step 1 is aptly named "Initial Assessment," and the wording of the section alone suggests that a further assessment will be undertaken. This interpretation is further reinforced by section 15.2.10 of the CTCOG where a proposal deemed to have merit shall not be considered or promoted as an endorsement by the AGLC of an expansion of the licenced casino facility.

The Court found the Board's use of section 15.2 of the CTCOG, tailored to a "best fit" approach, was reasonable because it provided a guideline for a structured process for evaluating the Applicants' novel Proposals in the absence of a specific regulatory process. This approach ensured that all relevant factors including market impact, community support, and objections were considered. The "best fit approach" aligned with the AGLC's mandate to regulate gaming.

Ruling and outcome

The Application for Judicial Review is dismissed. Justice M. Kraus found that the Board's interpretation of "community" demonstrates a rational chain of analysis and was reasonable in both outcome and analysis. The Board's decision to consider First Nations' concerns was reasonable and consistent with its statutory mandate and policy framework.

The Court concluded that the AGLC's approach—providing notice and considering concerns—was permissible under the Regulation, did not conflict with the Act, was not contrary to the CTCOG, and advanced a fair and inclusive process. This approach reflects good faith engagement and upholds the integrity of the gaming regime while respecting the unique position of First Nations in this sector. The successful party was the Alberta Gaming, Liquor and Cannabis Commission (Respondent) along with the Intervenors; no specific monetary amount was awarded in this judicial review proceeding.