ALC review of win rates and retailer-player processes released



    NOTE TO EDITORS: Mike Randall will be available to media at 11:30 am,
    today, March 14, at ALC Corporate Office, 922 Main Street, Moncton, NB.

    MONCTON, NB, March 14 /CNW/ - The Atlantic Lottery Corporation released
information today that statistically confirms retailers claimed more prizes
than would be expected in the six year period between January 1, 2001 and
December 31, 2006.
    "To date our reviews have not demonstrated any wrongdoing by retailers,
but rest assured, if our procedures reveal that any retailer is purposefully
dishonest, we will immediately terminate our relationship with them and hand
the matter over to the appropriate local authorities," said Mike Randall, Vice
President, Social Responsibility and Communications.
    The internal review, which was statistically verified by Dr. Jacques
Allard, Maritime Statistical Analysis Inc., shows that retailer owners win
more often than the general public, and based on their self-reported spending
and playing habits, they won 10 times more often than the statistical
probabilities indicated they should have during the period in question.
    During the six years between January 1, 2001, and December 31, 2006,
there were 44 wins by retailers and 25 wins by retail employees out of a total
of 1293 wins of $25,000 or more.
    Of the 44 retailer wins, 34 were prizes won by retailers alone, seven (7)
were prizes by retailers acting as proxy, and three (3) were prizes won by
retailers as part of a group. Of the 25 wins by retail employees, 22 were won
by employees alone, and three (3) were won as part of a group.
    "All of these prizes won by retailers or their employees totalled
approximately $7.5 million and account for less than 0.5% of the total prizes
paid out to Atlantic Canadians during that time," said Randall.
    "While ALC continues to believe that the majority of our retailers are
honest and professional in their interactions with players and that they work
hard to uphold the same level of integrity that ALC brings to its operations,
we needed to ensure that our processes were sound, and that our decisions were
based on a complete analysis of all the information," stated Randall.
    "For that reason, we have spent considerable time in the past number of
months reviewing the rate of retailer wins in Atlantic Canada and ensuring
that we have a solid set of procedures to protect our players. As improvements
were identified, changes were made immediately, and that process continues."
    As a result, today ALC is announcing a series of measures that have been
completed or are underway which strengthen its player protection and
verification procedures. Included in those measures are a number of items that
directly involve players and what they can do to protect their play:

    
    - Continued education for players about the importance of treating every
      ticket as a potential winning ticket including signing the back.
    - Educating players to ask for validation slips at retail and working
      with retailers to consistently show the validation slip to the
      customer.
    - ALC regularly reminds players to check their tickets to determine if
      they are winners. Winning numbers reports are available at retail, on
      ALC's website and in many newspapers.
    - Lottery terminals make a different sound to differentiate between
      winning and non-winning tickets.
    - Self-validation devices (ticket checkers) are available which display
      the amount won.
    - A complete "consumer tips" strategy was implemented in January and
      February:

        - 400,000 ticket wallets containing consumer tips and Responsible
          Gambling messaging are currently available at retail locations
        - www.alc.ca has been redesigned and now includes consumer tips
        - Top of ticket messaging continues to be used on a regular basis
          informing players to sign the back of their tickets

    Since November ALC has reaffirmed a number of other policies and
procedures related to retail locations and prize claims, and are in the
process of implementing others.
    In addition to the list above these include:

    COMPLETED:

    - We have modified the winners' release form and affidavit to clearly
      identify retailers, retail employees and their families to ensure we
      are tracking all retail wins.
    - All retail wins of over $10,000 are fully investigated by our internal
      auditing team and our security and compliance team to ensure wins are
      legitimate.
    - Messaging was added to 17 lottery sites that currently have digital
      signage. These displays now provide consumer tips on signing all
      tickets, checking validation slips, etc.
    - December's newsletter to retailers (Loto-Action) included tips on
      keeping full bins of breakopen tickets, and a new policy that requires
      retailers to keep bins full to a pre-determined Fill Line is currently
      being implemented to increase the security and integrity of this
      lottery product.
    - Our field team has been regularly reminding retailers to encourage
      their players to sign the back of tickets and to return/show the
      validation slips.
    - We have initiated a daily process at our Lottery call centre that
      provides our security and compliance team with an immediate summary and
      an overview of potential issues from the field including any complaints
      received regarding retailers.
    - We have increased monitoring of all retailer activity via security
      personnel, security processes and internal audit.
    - Self-serve machines across Atlantic Canada that allow players to check
      their own tickets before bringing them to the retailer for verification
      now display amounts won.

    IN PROGRESS

    - ALC will add customer facing screens on lottery terminals which will
      show the amount won as the ticket is being checked by the retailer.
      These will be in place by the end of June. In progress
    - We are investigating the option of performing background checks on all
      retailer owners. In progress
    - We are examining the possibility of establishing a retailer risk
      assessment panel to identify opportunities to increase protection for
      players. In progress
    - We are updating our enterprise risk management assessment for key areas
      of our business beginning in March. In progress
    - We have almost completed a complete redesign of our winners' database
      to ensure real time cross-referencing of winners and retailers.  Our
      current system has not allowed this function - requiring manual cross
      references. In progress
    - We are re-examining the redesign of our validation slips to clearly
      show players that the validation slip is connected to their unique
      ticket - allowing them to ensure they are receiving the prize to which
      they are entitled. In progress
    - We are working with our vendors to examine other innovative solutions
      that may bring new best practices to the industry at large.  We have
      already started dialogue with some of our key vendors on "thinking
      outside the box" on technical solutions to continue to enhance player
      security. In progress

    ONGOING

    - We retain external auditors on an annual basis to review system
      processes pertaining to security, monitoring, and control to identify
      potential issues and provide recommendations that can be implemented.
      Ongoing

    "It is important for a corporation like Atlantic Lottery, which is owned
by the residents of the four Atlantic Provinces to remain transparent and
accountable," said Randall. "We are committed to ensuring our corporate
integrity by reviewing our operations with due diligence, so that we can
continually reaffirm what works well and what needs to be updated or changed.
This is a business best practice, and one to which ALC will continue to
adhere."


    Appendix A

                       Player Safety and Security Steps

    -------------------------------------------------------------------------
    Measure                              Current Status             Timeline
    -------------------------------------------------------------------------
    Prior to November 2006
    -------------------------------------------------------------------------
    Education on how to treat winning           Ongoing         Past 10 years
    ticket (including signing back of ticket)
    -------------------------------------------------------------------------
    Lottery Terminals make different sound     Complete            Since 1999
    to differentiate between winning and
    non-winning ticket
    -------------------------------------------------------------------------
    Winning numbers reports are available      Complete            Since 1999
    at retail-printed directly from the
    lottery terminal
    -------------------------------------------------------------------------
    Media outlets (newspapers) provide         Complete            Since 1976
    winning numbers
    -------------------------------------------------------------------------
    ALC Website provides winning numbers       Complete            Since 1995
    -------------------------------------------------------------------------
    All identified retailer wins of over       Complete            Since 2004
    $10,000 are fully investigated by
    our internal auditing team and our
    security and compliance team to ensure
    all wins are legitimate.
    -------------------------------------------------------------------------
    Self-serve machines across Atlantic        Complete            Since 2005
    Canada allowed players to check
    their own tickets before bringing
    them to the retailer for verification
    -------------------------------------------------------------------------
    We have strong technology security          Ongoing            Since 2000
    practices in the areas that encompass
    diverse firewall protection, automated
    exception detection and the segmentation
    of our gaming system from other
    corporate systems.
    -------------------------------------------------------------------------
    Since November 2006
    -------------------------------------------------------------------------
    Self-serve machines across Atlantic        Complete   Since November 2006
    Canada that allow players to check their
    own tickets before bringing them to
    the retailer for verification now display
    amounts won.
    -------------------------------------------------------------------------
    We have modified the winners' release      Complete   Since November 2006
    form and the affidavit to clearly
    identify retailers, retail employees and
    their families to ensure we are
    tracking all retail wins.
    -------------------------------------------------------------------------
    Messaging was added to 17 lottery sites     Ongoing   Since November 2006
    that currently have digital signage. These
    displays now provide consumer tips on
    signing all tickets, checking validation
    slips, etc.
    -------------------------------------------------------------------------
    Top of ticket messaging continues to be     Ongoing   Since November 2006
    used on a regular basis informing players
    to sign the back of their ticket
    -------------------------------------------------------------------------
    www.alc.ca has been redesigned and now      Ongoing    Since January 2007
    includes consumer tips
    -------------------------------------------------------------------------
    December's newsletter to retailers          Ongoing   Since December 2006
    (Loto-Action) included tips on keeping
    full bins of breakopen tickets, and a
    new policy that requires retailers to
    keep bins full to a pre-determined Fill
    Line is currently being implemented
    to increase the security and integrity
    of this lottery product.
    -------------------------------------------------------------------------
    Our field team has been regularly           Ongoing   Since November 2006
    reminding retailers to encourage their
    players to sign the back of tickets
    and to return/show the
    validation slips
    -------------------------------------------------------------------------
    We have initiated a daily process at        Ongoing   Since November 2006
    our Lottery call centre that provides
    our security and compliance team with
    an immediate summary and overview of
    potential issues from the field including
    all complaints regarding retailers
    -------------------------------------------------------------------------
    We have increased monitoring of all         Ongoing  Since November 2006
    retailer activity via security personnel,
    security processes and internal audit.
    -------------------------------------------------------------------------
    To be Completed
    -------------------------------------------------------------------------
    We are investigating performing             Ongoing            March 2007
    background checks on all retailer owners.
    -------------------------------------------------------------------------
    ALC is adding customer-facing screens       Ongoing             June 2007
    on lottery terminals which will now
    show the amount won as the ticket is being
    checked by the retailer. These will be in
    place by the end of June and will display
    the amount won.
    -------------------------------------------------------------------------
    400,000 ticket wallets containing consumer  Ongoing         February 2007
    tips and Responsible Gambling messaging
    are available at retail
    -------------------------------------------------------------------------
    We are examining the possibility of         Ongoing            April 2007
    establishing a retailer risk assessment
    panel to identify opportunities to
    increase the protection for players
    -------------------------------------------------------------------------
    We retain external auditors on an annual    Ongoing            March 2007
    basis to review system processes
    pertaining to security, monitoring,
    and control to identify potential issues
    and provide recommendations that can
    be implemented.

    We regularly update our enterprise
    risk management assessment for key
    areas of our business with the next
    update beginning in March.
    -------------------------------------------------------------------------
    We have almost completed a redesign of      Ongoing            March 2007
    our winners' database to ensure real time
    cross-referencing of winners and retailers.
    Our current system has not allowed
    this function - requiring manual
    cross references.
    -------------------------------------------------------------------------
    We are re-examining the redesign of our     Ongoing        April/May 2007
    validation slips to clearly show players
    that the validation slip is connected to
    their unique ticket - allowing them
    to ensure they are receiving the
    prize they are entitled to.
    -------------------------------------------------------------------------
    We will work with our vendors to examine    Ongoing        April/May 2007
    other innovative solutions that may bring
    new best practices to the industry at
    large. We have already started dialogue
    with some of our key vendors on "thinking
    outside the box" on technical solutions
    to continue to enhance player security.
    -------------------------------------------------------------------------


    Appendix B

                  Atlantic Lottery Corporation Backgrounder
                             Rate of Retailer Win
                       Source:  Jacques Allard, Ph.D.,
                     Maritime Statistical Analysis Inc.

                     January 1, 2001 - December 31, 2006


                                                           Atlantic Canada

    Population Total 2003                                        2,285,000
    Population 19+ 2003 (approximate)                            1,760,000
    Total Number of Wins                                             1,293
    Number of Retail Locations                                        3584
    Estimated number of retail-owners                                 2688
    Estimated retail-owner Gaming Intensity Factor
     (CRA, ALC)
    (Self-reported retailer spend/play)                               1.76
    Expected number of retail-owner wins                               3.5
    Wins by retail-owners acting as proxy                                7
    Wins by retail-owner only                                           34
    Wins by groups including a retail-owner                              3
    Total number of wins by retail-owners (excl. proxy)                 37
    Estimated number of excess retail-owner wins                      33.5
    Estimated value of the excess wins based on
     $220,000 average retail-owner win                          $7,375,000
    Number of Employees - Lowest Estimate                            17920
    Number of Employees - Highest Estimate                           25088
    Number of Employees - Midrange Estimate                          21504
    Estimated Employee Playing Factor                                 1.49
    Expected number of wins by retail-employees                       23.5
    Wins by retail-employee alone                                       22
    Wins by groups including a retail-employee                           3
    Total number of wins by retail-employees                            25
    Estimated number of excess retail-employee wins                    1.5


    Appendix C

    Definitions

    The following definitions are used:

    - Retailer: ALC appoints the Retailer as a vendor entitled to sell
      Authorized Lottery Tickets and to provide Authorized Services. The
      Retailer agrees to comply with, and to ensure that its employees,
      representatives and agents comply with, its agreement with ALC,
      including ALC Policies and Operating Instructions, and with all
      applicable laws, as amended from time to time.  A Retailer can be a
      person or a legal entity.
    - Retail-owner: A person who is a Retailer or owner of one or more
      Retailers.
    - Retail-employee: An employee of a retailer involved in the retailer's
      lottery related activities.
    - Major wins: Wins of lottery prizes of $25,000 or more.
    - Retail-owner-only wins: Wins by a retail-owner only.
    - Retail-owner group wins: Wins by a group including a retail-owner.
    - Retail-owner proxy wins: Wins claimed by a retail-owner on behalf of a
      third party.

    Note: Proxy wins occurred in 2001 and 2002 when retail-owners acted on
behalf of winners not residing in the ALC jurisdiction, a practice terminated
by ALC in 2002.

    - Retail-employee-only wins: Wins by a retail-employee only.
    - Retail-employee group wins: Wins by a group including at least one
      retail-employee.
    




For further information:

For further information: Media Contact: Mike Randall, VP, Social
Responsibility and Communications, (506) 867-6190

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Atlantic Lottery Corporation Inc. (ALC)

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