Kim Carter

Ombudsman

for British Columbia

Contact:

1-800-567-3247

www.ombudsman.bc.ca

The British Columbia Ombudsman’s Investigation into the BCLC’s Prize Payout Process

A Presentation to the Alberta Gaming InstituteFriday, April 4, 2008

Role of the BC Ombudsman Since 1979Ombudsman Act - Section 10 (1) complaints about unfairadministrative actions of public authorities

2006 - Report of the Special Committee to Appoint an Ombudsman

“ … to generally oversee the administrative actions of government authorities with a view to upholding the democratic principles of openness,transparency and accountability.”

Investigation - Background October 2006, CBC aired Fifth Estate program,

Luck of the Draw that focused on OLG actions and high rate of retailer wins

Vancouver Sun filed an FOI request that asked BCLC for information on retailer wins

BCLC Investigation – Background BCLC’s response did not provide a reasonable

explanation for the apparently high rate of retailer wins of major prizes and stated could not determine number of retailers

Our investigation announced Dec. 18, 2006

focused on prize payout procedures

Investigative Process BCLC welcomed investigation and gave full

cooperation Investigation methods:

Visits Review of documents Interviews with BCLC staff and the Gaming Policy and

Enforcement branch Survey of retailers Input from public

Key Findings of OmbudsmanBCLC did not have processes in place to track and analyze

rates at which BCLC retailers and their employees were playing and winning

did not have effective procedures for checking the security of payouts for prizes under $10,000

internal watchdog procedures were inadequate for the purposes of reliably identifying suspicious activity by retailers and their employees

Key Findings of Ombudsman

BCLC did not have reliable procedures for recording, tracking

and responding to customer complaints

GPEB Nov-Dec 2006 investigation and report on the integrity of

BCLC’s lottery ticket retail network was inadequate

Key Recommendations of OmbudsmanBCLC

require all retailers and their employees to use a swipe card or enter a code before all purchases of lottery products in order to collect a prize

pursue the development of technological security enhancements to monitor self-checking machines, speakers and any other devices designed to alert customers of a win, and if these devices are disabled for any reason to suspend sales at that location until they are inspected and repaired

require tickets or “non-valid duplicates” to be returned to all ticket holders with appropriate markings to identify whether the ticket is not a winner; has been validated but not paid out; or is a winner and has been paid out

Key Recommendations of Ombudsman

BCLC

commit to moving toward implementing 100% coverage of Check-A-Ticket machines and Keno Self-Serve terminals as soon as possible

modify its internal watchdog system to ensure that multiple checks of the same ticket, multiple attempts to validate a scratch and win or similar product, and any other suspicious activity be identified, investigated, reported upon, acted upon and tracked for trends

develop an incentive program for retailers and their employees to identify gaps in post point-of-sale security procedures and report them to BCLC

Key Recommendations of OmbudsmanBCLC

where BCLC reasonably suspects that a retailer, its employee or any other person has committed a criminal offence, BCLC promptly pass on this information to the appropriate police force

have a clear, consistently enforced, process of progressive discipline for retailers and their employees for breaches of post-point of sale security including where appropriate termination of the BCLC contract

conduct regular, random and comprehensive audits of retail outlets to ensure compliance with its post-point of sale policies and take progressive disciplinary action for any breaches

Key Recommendations of OmbudsmanBCLC establish a position at the senior management level with responsibility for

all aspects of post-point of sale customer prize payout security

GPEB enhance its regulations of BCLC’s lottery prize payout procedures and

complaints handling processes: regular audits investigation of customer complaints ensuring compliance with reporting requirements independent investigations include these activities in annual report

Reactions Provincial Government BCLC Public

Operational changes list of all retailers and employees technological upgrades random audits self-checking returning tickets progressive enforcement

Attitudinal changes retailers and employees accepted as face

of corporation post point-of-sale security as important as

pre point-of-sale security obligation to player

Conclusion value of outside, independent review dangers of organizational thinking reliance on assumptions effect of cumulative, unconnected changes impact on sales by a government-

mandated monopoly

Questions?

CONTACT US:

1-800-567-3247

www.ombudsman.bc.ca

PO BOX 9039 STN PROV GOVT

VICTORIA, BC V8W 9A5