CANADA'S ATLANTIC LOTTERY WORKS AT IMPROVING CREDIBILITY

29 June 2007

Big Six audit firm hired to review controversial lottery operations

Canada's series of provincial lottery scandals, which have seen independent investigations of ticket retailer fraud across the British Columbia, Ontario and Atlantic Canada provinces, was in the limelight again this week with the appointment of Big 6 international audit company KPMG to carry out a "comprehensive review of the integrity of the Atlantic Lottery Corporation."

The Atlantic Lottery Corporation (ALC) is an organisation which operates lottery games in Atlantic Canada, and is owned jointly by the four Atlantic provincial governments: New Brunswick, Nova Scotia, Prince Edward Island and Newfoundland and Labrador. ALC's headquarters are located in Moncton, New Brunswick.

Canadian Press reports that the appointment of KPMG is designed to restore public confidence in a business many consumers have criticised (see previous InfoPowa reports). The audit by KPMG Forensic Inc. will be wide-ranging and take months to complete, a spokeswoman with the Nova Scotia Gaming Corp. said. The company won a contract worth about $220 000 plus expenses and began its review Wednesday.

Gaming Corp. vice-president Margaret McGee said the review won't duplicate a previous probe KPMG Forensic did after reports began to surface that lottery retailers in Atlantic Canada held winning tickets that exceeded mathematical odds.

After the previous investigation, Atlantic Lottery announced the KPMG team had found unethical and suspicious dealings between some retailers and ticket buyers in the region.

The initial study by KPMG, released last month, found retailers claimed 85 winning tickets, each worth at least $25 000. The total amount collected was $14 million, with the largest prize of $4.5 million picked up by a retailer in Nova Scotia. The corporation has turned over all the files to the police for an investigation.

In a release, McGee said the new review "will look at all lottery products at every key point along the creation, distribution and sales cycle." Among other things, the probe is designed to "determine if controls are in place to ensure that players receive the prizes due to them, prizes are as advertised (and) nothing can be done to influence the outcome of any game," the release said.

McGee said the study should be finished by the winter, but couldn't be more specific. "The scope of what they look at will also be affected by what they find," she said in a Canadian Press interview. "So at that point, we will have a better idea of exactly how long their work is going to take."

Once KPMG concludes its review, a report will be prepared for the four provincial partners in the lottery corporation, "and then our commitment is to make their findings public at that time," McGee said.

Canada's lottery sales operations have been under fire since a CBC-TV documentary last year showed a remarkable number of retailers in Ontario held winning tickets compared to lottery customers. Since then, probes have been ordered in other provinces and lottery agency policies have been changed in a move to improve security.

A total of 120 customer complaints were lodged with the Atlantic Lottery Corp. over five years, and they were directly related to disputed winnings, the earlier KPMG study found.

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