Gamblor’s World

Les Leyne, Times Colonist, Wednesday, May 30, 2007

It’s not the lax security, slapdash auditing and utter absence of skepticism about retailer wins at the B.C. Lottery Corp. that is most galling.

It’s the misleading stream of nonsense they peddled just six months ago, when the issue first arose publicly, that rankles the most. The corporation was presented then with the suggestion of a chronic problem at the most vulnerable part of its system, the ticket kiosks, bars and other retail outlets.

Instead of taking a hard look at the evidence, it airily dismissed the allegations and cavalierly assured everyone all was well.

Until ombudsman Kim Carter came along and did what BCLC should have done. She dug into the situation and painstakingly tried to determine the seriousness of the problem.

In doing so, she punctured the corporation’s bloated sense of its own integrity and shredded the patronizing assurances in December that all was well.

Her report yesterday makes it clear that every single BCLC statement after the initial concern arose is false.

“The retailer win rate for prizes over $10,000 was within statistical norms,” the corporation said.

Wrong. Its data were unreliable. It can’t reasonably explain the win rate and the retailer win rate might be even higher than estimated, because the requirement for retailers to identify themselves is a joke.

The corporation said the system has the highest level of integrity and “would not pay out a major prize if there was anything irregular.”

Wrong. It pays out without a second thought to just about any retailer who submits a ticket.

BCLC said it scrutinized all prize claimants, but especially retailers who claimed prizes.

Wrong. Let’s face it. Human ingenuity being what it is, a lottery-ticket seller routinely handling thousands of tickets a day who claims to be holding a winning ticket should set off alarm bells throughout the BCLC system. But Carter found retailers routinely winning big and undergoing only the most cursory checks before getting their cash.

BCLC told the world its procedures and security checks were supported by internal and external audits.

Wrong again. Part of their audit was to figure out a “normal” win rate for retailers. They did so by hiring a statistician and feeding him data based on estimates plucked out of thin air.

Carter concluded that the lack of data and the paltry number of payouts actually checked makes it impossible to factually explain the retailers’ rates of winning.

“BCLC, in not having a procedure in place to collect this information, has failed not only its players who have reasonable questions, but also honest retailers who have faced the brunt of player suspicion,” the report notes.

She said the procedures and checks at each level of the validation process are inadequate.

Lastly, BCLC cited the minimal number of customer complaints and the tiny percentage of investigations that found anything crooked going on.

Wrong, misleading and false.

Complaints about suspected retailer fraud are minimal because BCLC does not even categorize them.

And customer service employees routinely blow off anyone who does complain by lecturing them about the need to sign their tickets, “leaving the implication that the player had been negligent and there was nothing BCLC could do.”

The few complaints that did get entered as such were rarely passed on to security.

And if BCLC’s security department does end up fielding a complaint, it rarely has the means to investigate them.

So an arrogant, complacent Crown corporation is so busy functioning as a cash cow for the government that it can’t be bothered to introduce some rigour into the process of checking what is obviously the weakest part of its system.

And when it’s suggested the corporation might have a problem, it immediately tries to whitewash the issue, instead of looking into it.

Given all that, the most surprising thing about yesterday’s revelations was that the chair and the $442,000-a-year CEO of the corporation are still around to apologize for the corporation’s shoddy performance.

Just So You Know: One small anecdote shows how susceptible BCLC’s vaunted security and validation process is to abuse. If a winning ticket is fed into a terminal to check, an audible alert is supposed to sound — the machine plays a few bars of the jingle You’re in the Money.

This was considered an important security measure that was emphasized by the corporation.

Except it wasn’t programmed to play in certain circumstances for smaller wins. And there’s a volume control knob, meaning the jingle could be turned off by the retailer. (”I’ll tell you what you won,” one retailer told a customer.) And the audio wire could be cut without BCLC knowing.

Some of those problems have since been fixed, but only after retailer wins became a public issue.

lleyne@tc.canwest.com

© Times Colonist (Victoria) 2007

© 2007 CanWest Interactive, a division of CanWest MediaWorks Publications Inc.