1. 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 Institute Friday, April 4, 2008

2. Role of the BC Ombudsman Since 1979 Ombudsman Act - Section 10 (1) complaints about unfair administrative 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.”

3. 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

4. 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

5. 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

6. Key Findings of Ombudsman BCLC 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

7. 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

8. Key Recommendations of Ombudsman BCLC 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

9. 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

10. Key Recommendations of Ombudsman BCLC 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

11. Key Recommendations of Ombudsman BCLC 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

12. Reactions Provincial Government BCLC Public

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

14. 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

15. 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

16. Questions? CONTACT US: 1-800-567-3247 www.ombudsman.bc.ca PO BOX 9039 STN PROV GOVT VICTORIA, BC V8W 9A5