Torstar Corp. (TSX:TS.B), owner of The Toronto Star and Hamilton Spectator newspapers, is making a big bet – literally.
The newspaper publishing company has announced that it plans to launch an online casino to help fund its journalism ventures.
After decades of being controlled by the families who founded The Toronto Star newspaper in 1892, Torstar was recently bought by an investment company called Nordstar, which promised to maintain the company's focus on producing "world-class journalism."
However, Torstar's new owners say they are branching out to online gambling amid mounting financial losses at the print publications. Last week, Torstar reported a loss in its fourth quarter as revenue continued to decline sharply year-over-year — especially sales of print advertising.
Torstar said it lost $3.1 million in the three months ended December 31, or four cents per share.
That loss contributed to a $31.5-million loss for the full year (2020). On an adjusted basis, Torstar earned a profit of 15 cents per share for the quarter, down from 32 cents a year earlier.
The company cited government data showing Ontarians spend $500 million a year on online gambling, with the vast majority going to grey market websites domiciled outside of Canada, where there is less legal and regulatory scrutiny, and the revenue does little to stimulate the Ontario economy.
Under current rules, only the Ontario government itself is licensed to conduct online gambling, but the province's last budget opened the door to expanding the market to other companies some time this year. Torstar says its plans are contingent on the government plans proceeding.
The online gambling plan is the latest move by Torstar to diversify its business beyond newspapers and into new digital realms. In November, the company launched a parcel delivery service, and then in January partnered with retailer Golf Town.
The move into gambling has attracted critics who say that newspapers are critical to the functioning of a healthy democracy and a prominent newspaper chain should not be financially beholden to an outside business to keep its doors open, especially a casino.
