Manitoba Liquor & Lotteries further in the black: annual report

Revenues were up overall for the Manitoba Liquor & Lotteries Corporation during the 2018-19 fiscal year, according to the Crown corporation's annual report, even though profits for both liquor and casinos were down.

And while MLLC reported a net income in its cannabis operations, the province says it lost money during the first months of legalized recreational cannabis.

According to Liquor & Lotteries' annual report for the fiscal year ending March 31, 2019, the company — which is responsible for the sale of liquor and gaming products, and for the supply and distribution of cannabis in the province — had a net income of more than $616 million in 2018-19.

That was up from net income of just over $610 million the previous year.

That also meant a drop in the amount of money allocated for social responsibility funding. Liquor & Lotteries is obligated to put two per cent of its forecasted net annual income toward social responsibility initiatives, which includes paying money to organizations such as the Addictions Foundation of Manitoba for research and programming.

Nearly $10 million was allocated to social responsibility funding for the 2017-18 fiscal year. That dropped to $8.2 million this year.

The Crown corporation predicts it will make $630 million in fiscal 2019-20, which means the amount spent toward social responsibility initiatives should increase.

Province loses money on cannabis

MLLC saw a new revenue stream as of October 2018, with the legalization of recreational cannabis.

The corporation saw a net income of about $3.4 million on almost $27 million dollars in total revenue from cannabis sales, according MLLC's report, which was released just before the Thanksgiving weekend.

However, according to the Manitoba government's 2018-19 public accounts, total gross revenue from cannabis was $5.3 million — and expenditures, including just over $4.1 million in one-time startup costs and annual costs of more than $3.6 million, totalled nearly $7.8 million, resulting in a $2.4 million loss for the government.

Liquor, casino revenues decrease

In 2018-19, MLLC made $278 million in profit from liquor and $74 million from casinos — respective drops of $5.5 million and $1.8 million the previous fiscal year.

According to the annual report, the dip in liquor profits is due partially to lower beer and wine sales than in 2017-18, while spirits sales remained steady. But less money was made from liquor licensees as well.

"Changing consumer patterns to favour socializing at home as compared to attending licensed establishments and a growing interest in low/no alcohol products have negatively impacted beverage alcohol sales at licensed establishments," the report says.

Meanwhile, the annual report said casinos experienced an increase cost of sales linked directly to "the operation and maintenance of electronic gaming equipment, table games equipment and the online gaming site," as well as costs associated with food & beverage and entertainment areas.

Increases in employee costs and social responsibility initiatives also contributed to higher expenditures.

Net income in lotteries was up from $53 million to $61 million in 2018-19.

Slight dip in video lotto contributions

Liquor & Lotteries spreads out percentages of the amount of money won from video lottery terminals (VLTs) amongst the places where machines are installed and operated.

In 2018-19, total contributions equated $116.1 million — a slight decrease of $1.7 million from the previous fiscal year.

The annual report says the drop is due to old machines that are starting to break down, and "game fatigue" from players — essentially, people getting bored with the available slot games and wanting something new.

According to the annual report, First Nations communities received $61.8 million, city siteholders received $30.6 million, and rural siteholders received $23.7 million.