Monday, June 11, 2007

Problems at BC Lottery bigger than Poleschuk
June 8, 2007

Vic Poleschuk had to go.
Somebody had to take the fall at the BC Lottery Corporation over the issue of whether a few retailers are cheating lottery customers out of their winnings. The president of the corporation is an obvious choice.
But we’d be naive to think that the problem ends there. If we’ve actually set up a government-run gambling industry that tolerates the cheating of customers, we’ve got a lot more to worry about than can ever be addressed by just firing the guy at the top.
Poleschuk has worked in upper reaches of BC Lottery Corp virtually since its inception in 1985, first as vice-president and then as president.
During his tenure, the lottery corporation presided over a 500 per cent rise in gambling revenues, to more than $2.5 billion a year. That’s pretty impressive from a business perspective.
But the gambling industry isn’t just another business. Poleschuk talked on many occasions about that very thing, and the need for lottery operations to be above reproach.
Before a government can “ normalize” gambling in the minds of its citizens, it must first convince doubters that yesterday’s sin is today’s legitimate revenue stream. That can be a tough sell.
In terms of gambling, a government has to convince people that the system is honest. You may not win after a night of government-sanctioned gambling, but the theory is that at least you can rest assured that you lost fair and square.
It’s an issue that the Canadian gambling industry has worked hard on. And so it should. It’s an industry that very readily lends itself to corruption.
Poleschuk - a lottery man ever since stepping out of the University of Manitoba back in 1978 - knew that keeping the trust of British Columbians was paramount. He wanted to see gambling “normalized” as a regular and acceptable activity, as did others at a national industry conference in Vancouver last year.
“Why do we have so much anti-gambling (sentiment) rather than focus on what we do and how we should support our customers?” asked Ontario Lottery chief Duncan Brown at the summit. “Until we can better frame that policy debate, we’re never going to be accepted in the same way as alcohol.”
A little disturbing, but probably true. The transformation of gambling’s image from sinful and bad to a fun thing for the whole family will be complete when gambling and alcohol are equally acceptable in our culture.
Given the ongoing challenges around gambling’s image, how did BC Lottery Corp. miss the signs that a handful of retailers might be cheating people out of their winnings? Whatever the answer, it’s much bigger than Vic Poleschuk.
B.C. Ombudsman Kim Carter dug deeper after lottery customers complained to her, and found a retailer who won more than $300,000 in small batches over five years. A second retailer won $10,000 annually for four consecutive years. Two others collected $8,000-plus for three out of four years.
Every penny might have been legitimately won, of course. The lottery corporation contends that a high win rate among its retailers merely reflects that they buy more tickets.
That’s undoubtedly true. Most retailers aren’t cheating anyone. Carter’s findings overall are heartening proof that the vast majority of lottery retailers are honest folks.
But the bigger problem identified in the ombudsman’s report is that there’s no way to say for sure.
Insubstantial to begin with, the various systems and processes the lottery corporation uses to prevent retailer fraud appear to be just plain missing in action.
For instance, customers are supposed to know to listen for a certain song whenever a winning ticket is presented to a retailer for verification. If you hear that song - You’re In the Money - I guess you’re supposed to challenge the clerk if he tries to tell you you’re not a winner.
I’d have my doubts about any security strategy that boils down to leaving it to customers to listen for a song. But it’s truly pointless when retailers merely have to turn off the sound of the computer to thwart the process.
Should customers grow suspicious of a retailer and complain to BC Lottery, the worst that can happen is a retailer no longer having the right to sell lottery products. No further investigations are done unless the customer can convince the police to do it. No word on how often police say yes.
Part of Poleschuk’s job was to see the inadequacies in such policies. In the wake of the current scandal, he had to be jettisoned as evidence of a corporation dedicated to maintaining system integrity and public trust.
But where was everybody else as the ? We have an entire branch of government devoted to gaming enforcement, and a billion-dollar-a-year need for its profits. If a problem as obvious as retailers being tempted to cheat slides under the radar, what else goes unnoticed?
Possibly nothing at all. But with an audit soon to come, now’s the time to be sure about that.

1 comment:

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