ALC's insider win rates appropriate, reports say

The Atlantic Lottery Corp. says two external reports have confirmed the number of insider wins is appropriate and it is taking the proper steps to control the number of those wins.

The two reviews were started after a CBC review of lottery wins, by what the ALC calls "non-arms length" players, showed the group won or shared 146 jackpots over $10,000 during the last four years worth a combined $58 million.

That's 8.3 per cent of all the jackpots over $10,000.

Meanwhile,the same group wononly 3.9 per cent of prizes below $10,000 during the same period.

Larry Doherty, the vice-president of finance and risk management at the Atlantic Lottery Corp., said the reports findings show the level of insider wins is acceptable but that some changes could be made.

"The reviews confirm that our prize claim processes are working. At the same time, they provide recommendations for improvement that we were glad to receive," Doherty said in a statement.

"These improvements will give additional assurance to Atlantic Canadians, and respond to the ever evolving nature of our industry and the technology which supports it."

One report was conducted by KPMG and the other report was done by Jacques Allard, a statistical consultant.

Acceptable range

The Allard report said the range of insider wins was "within the acceptable range of values."

Allard said the number of annual insider wins of prizes worth $25,000 or more of roughly 30between 2007and 2010 to 48 in 2010-2011 "was within the range of natural variation expected but near the upper limit.

"We recommend that close attention be given to the number of $25,000+ NAL [non-arm's length] wins for the next 12 months. If the number does not decrease, as would be expected fromrandom variability, further investigation would be required," the report said.

Meanwhile, the KPMG report said the lottery corporation is following industry standards for mitigating the risks around insider wins.

The KPMG report also said ALC may have counted more people in its insider wins total that it reported.

"Based on our sample this over-application resulted in an additional 40 NALWs [non-arms length wins] being included in their reported number and could be a contributing factor to the overall increase in NALWs in Atlantic Canada," the report said. KPMG did point out that some files were not tracked properly.

The report "noted some instances of incomplete or incorrect documentation within the winner prize files."