A new audit of sa国际传媒鈥檚 lottery corporation suggests the people who run our games of chance have been carrying on as if they won the jackpot. A government review of the Crown corporation made 25 recommendations and found significant flaws in its operations. To their credit, the government and the agency are implementing all the recommendations. But it appears things have been out of control for a while.
The finding that has many taxpayers grinding their teeth is the one about an attempt at downsizing that backfired badly. The corporation tried to reduce operating costs by $20 million by offering early retirements or severance packages to employees age 50 or older.
The goal was to cut 68 positions without having to terminate anyone from its workforce of 900. Instead, the buyouts turned out to be wildly popular, with 142 people jumping at the chance to leave. Some employees got 18 months鈥� pay as severance, regardless of how long they had worked for the lottery corporation.
To achieve a saving of $20 million, the plan cost $25 million.
Finance Minister Mike de Jong cited that fiasco as a 鈥渟hining鈥� example of the need for management improvements at the corporation.
鈥淎ll in all, the report reveals and confirms that there were some important failings within the HR management section of the corporation,鈥� he said.
But there were problems with more than just human resources management, according to the review.
The corporation鈥檚 operating expenses have increased faster than its 鈥渘et win,鈥� the amount left over after paying out winners. Staff numbers rose 25 per cent in five years, which the corporation attributed partly to meeting recommendations from the ombudsman office.
A test by the province鈥檚 gaming regulator found that 40 per cent of lottery retailers sold tickets to minors. It鈥檚 bad enough that 75 per cent of the adult population participated in lotteries and other games of chance in the past year. We don鈥檛 want to start picking the pockets of children.
The report adds to the suspicions that were awakened this year by the departure of former lottery head Michael Graydon, who took a $125,000 severance package when he left to join a private gaming company. A review determined that Graydon had been in a conflict of interest because he was negotiating for the new job while still employed by the lottery corporation. He repaid $55,000 in salary.
sa国际传媒 Lottery Corp. handles a lot of money. The corporation has revenues of $2.1 billion after it pays out the winners. According to chairman Bud Smith, that makes it the third most profitable company in sa国际传媒, and it expects to hit a revenue record this year.
British Columbians are addicted to lotteries and games of chance 鈥� and British Columbia governments have become addicted to the revenues they get from lotteries. More than $1.1 billion worth of lottery revenue goes to pay for education, health care and social programs in the province. Those addictions make it unlikely that the games will go away.
The review of the lottery corporation prompts the question of why the government is running lotteries at all. The province can tax them heavily, but does it have to own them?
The games must be run efficiently and with a sense of social responsibility. The first might be done better by a private company, while the government watches over the second.
