Lottery 'insiders' win big bucks

Odds of Ontario results are astronomical, investigation by CBC program reports

(Article published on the front page of the Globe and Mail, October 25, 2006, by Shannon Kari.)

More than two hundred lottery insiders have won prizes of $50,000 or more in Ontario since 1999, and more than two-thirds of these wins may have involved the deception of a customer who bought the ticket.

The allegation is made by the CBC program the fifth estate, after an investigation into the number of insider winsin the province in the past seven years.

A statistical analysis of the number of insider wins concluded that fewer than 60 insiders, such as ticket retailers or clerks, should have won major prizes during the period that was investigated.

The odds that the 214 insiders who claimed major prizes $50,000 or more since 1999 won as a result of pure luck, is one in a trillion, trillion, trillion, trillion, said University of Toronto professor Jeffrey Rosenthal, who conducted the analysis.

The program airing Wednesday night suggests this may be a problem across Canada and the United States.

Lax security measures and difficulties in tracking store owners and clerks who sell the lottery tickets could be responsible, the program says.

It shows how some customers, especially elderly ones, may be fooled by a retailer into thinking they have won only a very minor prize when they ask the store to check their tickets at a lottery terminal.

Retailers and clerks are allowed to play the lottery all over North America, said fifth estate producer Harvey Cashore. "I think we were a little naive and thought they would have been banned from playing."

Not only are ticket sellers allowed to play the lottery, there are very different policies for scrutinizing insider wins.

The British Columbia Lottery Corporation questions everyone who wins a prize of more than $3,000, whether or not the person is an insider.

The Western Canada Lottery Corporation, which regulates lotteries in Alberta, Saskatchewan and Manitoba, considers ticket sellers to be independent agents and has no formal insider-win policy. Retailers are subject to the same investigation as anyone who wins a prize in excess of $10,000.

The Ontario Lottery and Gaming Corporation conducts a mandatory investigation of insiders, including retailers and clerks, who win at least $50,000. (Until 1999, the inquiry was required for prizes of $10,000 or more.)

The Ontario Lottery Corporation is disputing the conclusions of the fifth estate and suggests they are misleading. Ontario is a leader in lottery security, spokeswoman Teresa Roncon said.

She pointed to recent measures that include screens on lottery terminals that display the amount won and an automatic freeze of a terminal when a major prize is redeemed. The corporation is introducing kiosks where customers can check their own tickets electronically.

In addition to the broader issue of insider wins, the fifth estate has uncovered new information about a case involving a now 82-year-old cancer survivor who said he was defrauded out of a $250,000 prize by a variety-store owner in Coboconk, Ont., and told he had only won a free ticket.

The lottery corporation settled a lawsuit with Robert Edmonds in March of 2005, just as the civil trial was about to be decided by the jury.

The lengthy legal dispute cost the lottery corporation more than $400,000 in legal fees, according to information disclosed in a freedom-of-information request.

An internal-occurrence report by a lottery corporation investigator in August of 2001 noted that it had concerns about the couple who owned the variety store and was claiming the $250,000 prize. After a follow-up interview, the prize was paid out that month.

In January of 2002, shortly after the Ontario Provincial Police began to investigate, an internal lottery corporation e-mail suggested the claims of Mr. Edmonds were accurate and he may have been the ticket owner.

It was not until Mr. Edmonds testified at the trial that the lottery corporation was able to conclude it was his ticket, which is why it entered into a settlement, Ms. Roncon said. She described the Edmonds case as isolatedand unacceptable.

The terms of the agreement remain confidential, and Mr. Edmonds is scheduled to be in court on Monday because his lawyer is challenging the right of a government agency to impose a publication ban in settling a civil lawsuit.

Confidentiality is a common practice, Ms. Roncon said, adding that it was in the public interest and provides closure for the lottery corporation and Mr. Edmonds.

The lengthy legal fight over Mr. Edmonds's claim remains a mystery, the fifth estate's Mr. Cashore said. "We wondered if the lottery corporation dug in its heels because it knew this story wasn't just about Bob Edmonds. If they admitted their investigators made mistakes, that the security system was flawed, logic would dictate they would have to go back and examine every major win in Ontario in the past seven years."

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