Page 43 - SIGA Annual Report 2013

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Saskatchewan Indian Gaming Authority Inc.
Notes to the Financial Statements
year ended March 31, 2013
43
1.
GENERAL INFORMATION
Saskatchewan Indian Gaming Authority Inc. (“SIGA”) is incorporated under the
Nonprofit 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 completed
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 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.
SIGA was incorporated under the
Nonprofit Corporations Act, 1995
and is not subject to income tax under the provision of paragraph
149(1)(l) of the Income Tax Act. SIGA pays Goods and Services Tax and Provincial Sales Tax to government agencies and claims input
tax credits on its ancillary operations.
SIGA is a corporation domiciled in Canada. SIGA’s head office is located at 103 Packham Avenue in Saskatoon, Saskatchewan, Canada,
S7N 4K4.