The Ontario government called police yesterday after the province's ombud accused unscrupulous lottery-ticket retailers of collecting tens of millions of dollars in "dishonest'' winnings — and the responsible Crown agency of letting them get away with it.
Public Infrastructure Minister David Caplan asked police to look into Andre Marin's report probing a disproportionate number of jackpot wins by so-called lottery insiders — a report that amounted to a searing indictment of the Ontario Lottery and Gaming Corporation.
Marin showed no quarter to the corporation, which he said ignored allegations of widespread retailer fraud, "coddling'' retailers and front-line ticket sellers while playing "games'' with customers who complained they had been cheated.
"If he is alleging that there is a fraud, then it should all be turned over to the Ontario Provincial Police for their review and they'll take the appropriate steps,'' Caplan said after he came under heavy fire from the opposition benches in the Ontario legislature.
"I have directed OLG to turn over all of its files reviewed by the ombudsman, and any other relevant files, to (police) for review.''
Marin's report stopped short of recommending the province ban retailers from buying lottery tickets, but said the government-owned corporation has too cozy a relationship with the thousands of people who sell its products — and who happen to be among its best customers.
"It has lost sight of the fact that it is supposed to be the guardian of the trust of the public,'' Marin told a news conference.
"Without the trust that whoever has Lady Luck on their side will actually pocket the jackpot, confidence in our lottery is shattered.''
Between 1999 and 2006, retailers claimed about $100 million in prizes. Of that, Marin said it took investigators just 90 days to identify five cases where unscrupulous retailers fraudulently collected about $15 million.
Since the corporation doesn't track wins by retailers, the true total of fraudulent jackpots is probably much higher, he said.
"It's likely that over the course of the years it's tens of millions of dollars that have been paid to internal fraudsters, but we'll never quite know because OLG doesn't keep track of the number of retailers it has (or) of retailer wins.''
Minutes after the report was made public, the province pledged to implement Marin's recommendations, including handing responsibility for regulating lottery tickets over to the province's Alcohol and Gaming Commission.
Caplan also said the government and OLG would seek out those who lost legitimate lottery winnings and pay them the jackpot they were entitled to have. But the reverberations emanating from the Ontario scandal have already reached well beyond the province's boundaries.
New Brunswick's ombud is looking into whether he can launch a probe into Atlantic Lottery Corp. following an internal report showing retailers won a disproportionate number of prizes exceeding $25,000 over a six-year period.
The corporation has said despite the findings, there's no evidence to suggest any retailers have defrauded the system.
Another investigation was launched in British Columbia after the province's lottery corporation found retailers were winning six times more than the general public.
Caplan, the Ontario minister responsible for the corporation, said a new regulatory framework would be put in place to ensure "dishonest behavior is identified, and appropriately dealt with.''
On Friday, OLG's chief executive, Duncan Brown, abruptly resigned his post in what was widely seen as the government's pre-emptive response to the report. But opposition parties accused Caplan of making Brown his scapegoat and called instead for the minister's resignation.
"You cannot have people buying lottery tickets being ripped off . . .while the minister says 'I didn't know anything, I didn't hear anything,''' said NDP Leader Howard Hampton.
"Mr. Caplan has to go. He has no credibility.''
Opposition Leader John Tory called the OLG an organization "that is out of control,'' and said getting rid of Brown wasn't good enough.
"The integrity of Ontario's lottery system is in shambles, and (Premier) Dalton McGuinty has let that happen,'' said Tory.
Both Tory and Hampton said calling in police would allow the government to delay any further action or investigations into the lottery corporation for months, probably until after voters in Ontario go to the polls in October.
Marin said lottery officials who raised concerns about suspect claims by retailers in 2004 — including one $12.5 million prize — were told by Brown: "Sometimes you hold your nose.''
"The message has to be given from the top, and the message from the top of 'holding your nose' is not the message that you want to see,'' said Marin.
"This problem is deep within the bowels of the OLG.''
OLG chair Michael Gough said Monday that Brown would be paid $720,000 in severance, calling his resignation a "mutual'' decision between Brown and the board.
Gough said the insider jackpot scandal hasn't hurt the lottery corporation's bottom line since it broke last October with the case of Bob Edmonds, a 78-year-old who was cheated out of his winnings by a lottery retailer.
Edmonds, who asked a store clerk to check his tickets, was told he had won a free ticket.
In fact, his ticket had won $250,000 — a prize claimed by the clerk and her husband, who owned the store.