By ALEX WHALEN (AIMS Operations Manager)
• Journal-Pioneer, 21 December 2016
Alex Whalen discusses the recent revelations of P.E.I.’s e-gaming scandal and the audit of Atlantic Lottery. He concludes that with such disregard for taxpayer dollars, it is time for governments to divest from the gambling business.
P.E.I.’s e-gaming scandal and the recent audit of the Atlantic Lottery Corporation (ALC) raise serious questions about the role of government in gambling. We would be better served with privatization and a market-based approach.
Islanders will ultimately be on the hook for millions of dollars in the failed e-gaming initiative. Auditor General Jane MacAdam recently said that there was a lack of due regard for transparency and accountability, and non-compliance with legislation, policies and controls.
MacAdam said that civil servants were complicit. However, the former provincial treasurer led the operation. It is shameful that someone duty bound to responsibly manage taxpayer dollars was so reckless with our money.
There is a broader Atlantic Canadian story here. In October, the four Atlantic auditors general released a report on ALC. This was the first audit since 1996 – unacceptable in its own right, but especially given what the report revealed.
Like the characters from P.E.I.’s e-gaming boondoggle, ALC has exhibited disregard for the taxpayer.
It hosts lavish parties, pays inordinately high salaries and awards illegitimate bonuses. In addition, ALC lost $8.7-million on an e-gaming scandal of its own with a product called GeoSweep.
We must change the government’s role in gambling. As it stands, it is asked to wear too many hats, and conflicting incentives routinely lead to trouble.
The state at once plays the role of speculator, profiteer, regulator, monopolist and addictions counsellor. We need to adjust this mix to allow the actors in the system to do what they do best: government should regulate, businesses should invest, and the public should be free to consume with the benefits of competition and choice.
One might object that gambling is addictive and needs to be tightly regulated. But wouldn’t government be better served in its role as regulator if it held no profit motive? Government should set the rules of engagement and then get out of the way.
Folks from ALC will tell you that profits go back to charity, but this is totally disingenuous. As confirmed by the audit, overpaid executives are the first party enriched by ALC’s operations. The CEO of Atlantic Lottery makes almost double the salary of any of the premiers for whom he works. Only after the lavish Christmas parties and expensive bonuses does any money get returned to charity.
Further, what money that does go to charity amounts to a very poor form of redistribution: statistics show that the poor, the uneducated, and those on social assistance programs are disproportionate contributors to the profits of lotteries. By taking from people in need to ultimately give to charity, we are spinning our wheels.
Small businesses loathe dealing with the ALC — and why should they have to?
This industry and the risk-taking associated with the gambling business should be left to the private market. Privatization of gambling assets and the elimination of monopolies would remove the government’s incentive problem and better serve all constituents. The Province should immediately divest itself from the deeply flawed concept of Atlantic Lottery. It should take steps to privatize lotteries and gaming in P.E.I., leaving such activity to market forces with government involved only as regulator.
Finally, and most obviously, it should never again sanction the behaviour that led to reckless and irresponsible treatment of taxpayer dollars in both the GeoSweep and e-gaming scandals.
