Gamblor’s World

November 27, 2006

Dear Mr. Marin,

This is further to my correspondence to you on October 26, 2006 and my subsequent discussions with Grace Chau. I’m concerned because I have not heard back from your Special Ombudsman Response Team. I’m a recognized leader in the fields of problem gambling and electronic gaming, but my concerns about gambling in Ontario have been consistently ignored or dismissed by OLG and others who have a vested interest in gambling revenues. I’m hoping that your Office will see the validity in my concerns and conduct a thorough investigation into my concerns and why they have been dismissed in the past.

Over the past few weeks the CBC and The Fifth Estate has revealed lottery retailers may be involved in lottery ticket fraud by stealing customers’ winning tickets or pin-pricking scratch tickets to try to discover winning tickets and keep them for themselves. There’s no doubt that there may be a few dishonest retailers. But, these allegations have really tarnished the good reputations of the majority of hard working and honest store clerks. The Fifth Estate has also disclosed how the Ontario Lottery & Gaming (OLG) badly treats those who complain. This has resulted in you, as the Ontario Ombudsman, rightfully launching an investigation into the lack of trust for OLG lotteries.

The Fifth Estate revealed that they discovered, through a Freedom of Information request, that too many lottery retailers have been winning jackpots than is statistically possible. In fact, about 150 major jackpots have been awarded to lottery retailers than is statistically possible. I believe The Fifth Estate jumped to the conclusion that retailers must be stealing the winning tickets from customers who naively and trustingly give to the retailers to check for them. This may or may not be true. But, it also may be an indicator of other more serious problems with the electronic lottery draw systems. It’s been rumored for the past year that some lottery systems may have been compromised or "hacked" because there are simply too many winners overall, not just retail winners, than is statistically possible. The major mega-jackpot lotteries haven’t been "performing" as anticipated with frequent wins of the top jackpot before they have time to build to astronomical proportions, like they should be doing. This may be an indicator of a serious breach in security of the electronic lottery systems and may account for why too many retailers have won. So, instead of accusing the retailers of fraud, the obvious place to start is to have an independent statistician openly analysis all the past lottery draws for any anomalies that would reveal any compromises in the lottery systems’ security.

Along with focusing on possible retailer fraud, your investigators need to look at the possible deceptive trade practices within all the OLG operated systems and games and within the OLG itself. Here are some issues I have raised over the years that have been dismissed or ignored.

When the top prizes are won on instant scratch tickets and no longer available, OLG lets retailers continue to sell the tickets even though there is absolutely no chance of winning the jackpot. But, the tickets and their website continue to advertise the top prizes, without disclosing there is 0% chance of winning the posted prize? This is false and misleading and an unconscionable representation. It most likely contravenes the Ontario Consumer Protection Act

and criminal laws. If the OLG wishes to continue to sell these tickets after the top prizes are won, they have a "duty to inform" each potential purchaser that they have no chance of winning the top prize. Otherwise, it’s deceptive. But, to be fair, you can find out if the top prizes have already been won by phoning OLG "Excellence Centre" toll-free: 1-800-387-0098. But, the onus is on the player and they must provide the OLG with the specific game number in order to find out which prizes are still available. The onus needs to be on the OLG to inform customers which prizes are still available before they purchase instant scratch tickets.

OLG routinely pulls batches of instant scratch games (game lots) when they please, even if no one has won the jackpots. How prevalent is this practice? Where does the unclaimed money go?

Also, progressive slot machine "jackpots" are reset during "regular maintenance". Again, where does the accumulated jackpot pool money go that 1000s of players paid into trying to hit the jackpot? The jackpot money also disappears when these progressive slot machines are "retired".

Advertising jackpots that are not available or misappropriating jackpot monies is unacceptable! As a consumer I have a right to know if the jackpots are no longer available. Also, if I feed a jackpot pool by playing a game and they pull the game without paying the jackpot I contributed to, I have a right to get my money back. The "expectation" is that the jackpot pool will be distributed back to the players. In fact, Ontario Gaming Regulation seems to imply that players have a right to their money back if they still have their tickets:

Cancellation, etc., of a Lottery Scheme

(2) The Corporation may impose such conditions on the suspension, recall, withdrawal or cancellation of all or part of a lottery scheme as it considers appropriate. O. Reg. 198/00, s. 14 (2).

(3) Upon suspending, recalling, withdrawing or canceling all or part of a lottery scheme, the Corporation shall not pay to any participant in the scheme an amount greater than the amount the participant paid to a vendor in order to participate in the scheme. O. Reg. 198/00, s. 14 (3).

(4) Upon suspending, recalling, withdrawing or canceling all or part of a lottery scheme, the Corporation is not liable to reimburse a participant in the scheme unless the participant’s ticket or such other evidence of his, her or its participation or attempted participation as the Corporation may require is returned to the Corporation. O. Reg. 198/00, s. 14 (4).

Also, OLG calculates the "return to player percentage" of each game based on the fact the jackpot should eventually be won. If they are not, players are simply not receiving the full payback percentage of the games advertised by OLG. In the case of slot machine progressives, the OLG must return at least 85%. This is impossible if the jackpots are not paid out. The players are being cheated and OLG is contravening gaming regulations by misappropriating jackpot money and not paying back the minimum return to progressive slot machine players.

Further, OLG refuses to disclose the identity of slot machine jackpot winners. This is counter to their policy on lotteries that state:

Also, there have been persistent rumours for years that cheating teams are consistently winning slot machine jackpots and that OLG is using secret "bonusing systems" that can target jackpots to specific players and machines.

Here’s a list of laws I believe the OLG are blatantly contravening by operating deceptive slot machines and continuing to sell tickets after the jackpots have been won without disclosing this to each and every player who goes to purchase tickets thinking they have a chance of winning a jackpot when they do not:

False, misleading or deceptive representation

Examples of false, misleading or deceptive representations

(2) Without limiting the generality of what constitutes a false, misleading or deceptive representation, the following are included as false, misleading or deceptive representations:

…14. A representation using exaggeration, innuendo or ambiguity as to a material fact or failing to state a material fact if such use or failure deceives or tends to deceive

Unconscionable representation

(2) Without limiting the generality of what may be taken into account in determining whether a representation is unconscionable, there may be taken into account that the person making the representation or the person’s employer or principal knows or ought to know,

(a) that the consumer is not reasonably able to protect his or her interests because of disability, ignorance, illiteracy, inability to understand the language of an agreement or similar factors;

Cheating at play 209. Every one who, with intent to defraud any person, cheats while playing a game or in holding the stakes for a game or in betting is guilty of an indictable offence and liable to imprisonment for a term not exceeding two years.

 

1. (a) makes a representation to the public that is false or misleading in a material respect;

    

   (6) In proceedings under this section, the general impression conveyed by a representation as well as its literal meaning shall be taken into account in determining whether or not the representation is false or misleading in a material respect.

   
   

   74.06 A person engages in reviewable conduct who, for the purpose of promoting, directly or indirectly, the supply or use of a product, or for the purpose of promoting, directly or indirectly, any business interest, conducts any contest, lottery, game of chance or skill, or mixed chance and skill, or otherwise disposes of any product or other benefit by any mode of chance, skill or mixed chance and skill whatever, where (a) adequate and fair disclosure is not made of the number and approximate value of the prizes, of the area or areas to which they relate and of any fact within the knowledge of the person that affects materially the chances of winning;

In light of a legal opinion (attached) the government received in 1996, I also have grave concerns that the use of "private operators" to conduct and manage casinos, sell lottery and Nevada tickets, is described as a "scheme calculated to circumvent provisions of the Criminal Code" and are unlawful. Also, why does the AGCO regulate casinos and slot machine operations when OLG is left to regulate their own lottery games?

I also have grave concerns about the arrangements between OLG and "Slots at the Tracks", where the horse racing industry in Ontario has already received over $2 billion in slot machine revenue with no overall benefit to the agricultural sector in Ontario.

All these concerns have been raised with the OLG, AGCO, and various governments and politicians over the years, always fallen on deaf ears, indifference and inaction. If the private sector sold such products to consumers and behaved like OLG and their regulator, the Attorney Generals would shut them down and call their operations a scam. I believe that in order to restore real trust in the OLG their needs to be a full and open public inquiry into the OLG and all their operations and practices and to ascertain why the OLG doesn’t abide by consumer protection laws and why AGCO hasn’t insisted the OLG abide by all laws, especially federal laws in regards to casino operations and slot machines, which protections supersede provincial gaming laws and regulations.

I’m available to assist your investigation team with my expertise and extensive knowledge of lotteries and electronic gaming machines.

Respectfully,

Roger Horbay, HSC President Game Planit 

Posted with permission from author.