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Saskatchewan Indian Gaming Authority
Year Ended March 31, 2010
Saskatchewan Indian Gaming Authority Inc. (“SIGA”) is incorporated under the Non profit Corporations Act, 1995 of Saskatchewan
as a Charitable Corporation. The Federation of Saskatchewan Indian Nations (“FSIN”) owns the only issued Class A Membership
in SIGA. Class B Memberships in SIGA were issued to each of ten Tribal Councils in Saskatchewan that are recognized by the
Saskatchewan Indian Gaming Commission of the FSIN as well as one independent member. The Government of Saskatchewan and
the FSIN made a Framework Agreement in 2002 that authorizes SIGA to operate casinos. SIGA operates six casinos in accordance
with the 2002 Casino Operating Agreement (“Agreement”) with Saskatchewan Liquor and Gaming Authority (“SLGA”). SLGA is
responsible for the overall conduct and management of the slot machines in those casinos as required under The Criminal Code
of Canada. Under the Agreement, SIGA is entitled to withhold the casinos’ operating expenses, incurred in accordance with the
operating policies and directives approved by SLGA, from slot machine revenues. SIGA is required to deposit the remainder into
a trust account for SLGA in accordance with the procedures and formulas specified in the Agreement as outlined below. Under the
Agreement, SIGA is entitled to recover, in any year, any net loss from the operation of licensed table games and ancillary operations
from the net income earned from the operation of slot machines. The Agreement provides for SIGA to use any net income from the
operation of licensed table games for charitable or religious objects or purposes. The Agreement expires on June 10, 2027.
The Agreement also provides for SIGA to remit to SLGA the net income from the operation of the slot machines in the SIGA casinos.
More specifically, net income from the operation of slot machines is remitted to SLGA in accordance with a formula as defined in
the Agreement. This formula provides for SIGA to remit to SLGA, on a weekly basis, one-half of the amount by which actual slot
machine gaming revenue exceeds one-fifty-second of SIGA’s annual budget. Shortfalls in weekly slot machine gaming revenue as
compared to budget are recoverable against future remittances. The remaining one-half of the amount determined above is remitted
to SLGA within one-hundred and eighty days of the applicable week. Pursuant to the Agreement, if, at the end of any operating year,
SIGA has not been fully reimbursed for amounts to which it is entitled for the operation of casinos, such amounts may be recovered
from future operations. SIGA is allowed to retain $5,000,000 as a capital reserve for the sole purpose of acquiring capital assets.
Also, under the Agreement, SIGA has granted a first charge security interest on all its present and after acquired assets to SLGA
to secure contractual obligations of SIGA under the Agreement. However, the Agreement requires that upon joint written request
by SIGA and its lenders, SLGA shall postpone such security in favour of the lenders who require a prior charge relating to funds
lent to SIGA for the financing of its operations carried out in accordance with the Agreement.
On June 11, 2002, the Government of Saskatchewan and the FSIN signed a new gaming Framework Agreement which expires
on June 10, 2027. The Government must distribute, in accordance with the provisions of the Framework Agreement, the income
remitted to SLGA. Under the provisions of the 2002 Framework Agreement, the Government of Saskatchewan, as represented
by the Minister responsible for SLGA, is entitled to recover its proportion of expenses that SLGA determines are not in accordance
with the approved operating policies and directives from the future amounts payable to the First Nations Trust Fund.
Effective for the year ended March 31, 2008 and subsequent years, the Casino Operating Agreement between SLGA and SIGA was
amended to exclude unrealized gains and losses on interest rate swaps from the calculation of net Casino profits payable to SLGA.
Effective for its fiscal year ended March 31, 2010, SIGA adopted the Canadian Institute of Chartered Accountants’ (“CICA”) new
recommendations for disclosures relating to fair value measurements. Section 3862 Financial Instruments – Disclosures has been
amended to require enhanced disclosures for fair value measurements recognized in the balance sheet. SIGA is required to classify
and disclose fair value measurements using a three-tier fair value hierarchy based on the lowest level input that is significant to that
fair value measurement. As a result of adopting this amendment, new disclosure is provided in Note 20.