Aug. 31 (Bloomberg) -- The Ontario Lottery and Gaming Corp., the government corporation that regulates gambling in the province, was sued by an energy company that accused it of breaking power-supply contracts at the Windsor Casino Hotel.

Buttcon Energy Inc., operator of the gas- and diesel- powered Windsor Energy Centre, filed the lawsuit in Ontario Superior Court on Aug. 27 accusing the corporation of breach of contract, deceit and misrepresentation. The employee-owned company, based in Concord, Ontario, said it’s seeking C$355 million ($324 million) in damages from Ontario Lottery and two executives -- including one who was fired today.

Buttcon built the Windsor Energy Centre with the understanding it would own the facility and sell power to the government-owned hotel, the company said. Those agreements haven’t been signed, and without them Buttcon can’t get financing to purchase the plant, the company said.

“Buttcon followed all the rules of public process, but OLG management broke those rules and made up its own,” Michael Miller, a lawyer at Aylesworth LLP, said in a statement. “They cost the public an additional C$30 million in the Windsor Energy Centre project alone.”

More details on the allegations will be filed next week, Miller said in an e-mail. Don Pister, a spokesman at Ontario Lottery, declined to comment on the lawsuit. He said a hearing is scheduled for Sept. 3.

New Leadership

Buttcon announced the suit today after Ontario Finance Minister Dwight Duncan accepted the resignation of the chairman and all members of the board. A replacement board immediately fired Chief Executive Officer Kelly McDougald, Duncan said. McDougald was also named as a defendant in the Buttcon lawsuit.

Duncan released expense claims from Ontario Lottery, which showed employees charged the corporation for personal items including a C$7.70 pen refill, C$1.12 for a cloth grocery bag and C$487.50 for child-care while an employee attended meetings.

“Some of these expenses are unacceptable,” Ontario Lottery said in a statement today. The agency said it agreed with Duncan that it must do a better job to protect taxpayers’ money.

In a separate statement, the former board members said they and the chairman were responsible for operations at the corporation and agreed to resign.

“This cleanup at the OLG is long overdue,” Miller, the lawyer, said in his statement.

The case is Between Buttcon Energy Inc. and Ontario Lottery & Gaming Corp., CV-99-385931. Ontario Superior Court of Justice (Toronto).

To contact the reporter on this story: Joe Schneider in Toronto at jschneider5@bloomberg.net.

Last Updated: August 31, 2009 18:18 EDT