Liberals, lotteries need to face hide gambling and crime links

Sometimes you have to call people on the rubbish they speak. The B.C. Lottery Corp. scandal is one of those times.
Start with Michael Graydon, the $300,000-a-year CEO. After the news broke that the Crown corporation had been fined $670,000 under federal laws aimed at combating money laundering and terrorism financing, Graydon denied any real problem.
Nothing to see here, he said on Global TV. The fines were levied because B.C. Lottery filed reports late because of computer problems and others had minor technical errors.
That wasn't true. B.C. Lottery was fined for 1,020 infractions. About 40 per cent were for late filing - but 366 reports had errors and 227 lacked accurate information to detect criminal activity.
In eight cases, the most basic information wasn't collected when people walked out of casinos with more than $10,000. They were asked to come back with the information, a trusting approach by those charged with preventing money laundering.
B.C. Lottery was also fined for failing to introduce a program to help identify signs of money laundering.
Solicitor General Mike de Jong said he's worried about organized crime, casinos and online betting. "If some of these early reports are true, yes, it is troubling," he said.
But it's not de Jong's file. Housing Minister Rich Coleman is responsible both for increasing gambling revenue and enforcing the laws. That conflict should be ended immediately.
And if de Jong is only troubled now, he hasn't been paying attention to a string of warnings about criminal activity. The government's Gaming Policy and Enforcement Branch 2006 annual report, for example, revealed a crime explosion at casinos and mini-casinos. Investigations into offences such as money laundering and loan sharking more than doubled in a year.
Criminals like casinos. They are good places to move counterfeit money and launder the proceeds of crime. Buy $9,000 worth of chips with cash from a drug deal, make a few safe bets and leave with a casino cheque that legitimizes the money.
And desperate gamblers are good customers for loan sharks.
In 2008-9, the gaming enforcement branch launched 877 investigations into suspected counterfeiting, money laundering and loan sharking. Not a single charge was laid.
Despite the crime surge, the government last year shut down the specialized police unit created in 2004 to help fight gambling-related crime.
Coleman was next to weigh in, with a response much like Graydon's. Technical errors, minor problems, old news, the province will appeal, de Jong and everyone else who has concerns are wrong.
But the agency that levied the fines - the federal Financial Transactions and Reports Analysis Centre, or FINTRAC - said that was untrue.
Fines are only imposed for a "persistent, chronic failure to comply with the law" and when, despite intensive work with the offender, "they just don't get it." The agency had warned B.C. Lottery about problems with its anti-crime efforts in 2008.
These are serious failures. About one-fifth of the money laundering and terrorism financing cases discovered in 2008-9 took place in casinos, FINTRAC reports. Drug dealers and organized crime are the main groups using casinos to launder money.
Yet Coleman and Graydon persist in denying a real problem that almost everyone else - including the solicitor general - acknowledges.
Again, that's because they are in a conflict. Both are charged with increasing the number of gamblers in the province, the amount each one loses and the total take.
Making the effort to track transactions that could be linked to money laundering is a threat to those goals. Casinos fear that asking for information from big gamblers could drive away some of their best customers, who, for whatever reason, want to keep a low profile.
Critics have warned the Liberals have lost their way on gambling. Denying a serious problem in fighting money laundering by big-time criminals shows how far they have fallen.
Footnote: Coleman also insisted it is just a coincidence that the weekly loss limit for online gambling was increased from $120 last year to $9,999 - just $1 below the level that would require reporting transactions to FINTRAC to help prevent money laundering or activities aimed at funding terrorism. The claim is not credible.

Failing the test on gambling

The Times Colonist has a good editorial on the wretched performance of B.C. Lotteries and the government this week.

A really good idea

The Canadian Forces Pacific base is in Esquimalt and the capital region. It owns about 41 square kilometres, worth some $3 billion.
"Why not move the Pacific Fleet Base to Prince Rupert," asks Bernard von Schulmann.
The federal government could sell most of the land around Victoria, reducing the deficit and easing housing prices. Prince Rupert needs the jobs.
So why not?

Online gambling expansion off to shaky start

Another milestone. B.C. is now the best place on Earth, or at least in North America, to lose serious money gambling in your own home.
Drunk, desperate, addicted, the B.C. government is giving every citizen the chance to lose more than $500,000 a year.
The government launched full-scale Internet gambling last week, becoming the first jurisdiction in North America to decide that letting people bet from home was a good idea.
It's a good idea for government revenues, to be sure. Gambling losses - lottery tickets, slots and the rest - are a big cash source for governments.
Since 2001, when the Liberals were elected on a promise to halt gambling expansion because it was destroying lives, government gambling revenues - and British Columbians' losses - have doubled.
Adults in B.C. lose an average $590 a year betting against the government. (Organized crime gave bettors a better deal when it ran Vegas.)
But about one-third of us don't gamble or just spend a small amount in scratch-and-lose tickets. The average loss for B.C. Lotteries core customers is more like $890,
The prize customers are the gamblers that casinos describe as "whales," the people who will keep on betting as they lose huge amounts.
It's a great business model. Set yourself up as a monopoly supplier of an addictive product - drugs, alcohol, gambling.
And then wait for your most lucrative customers - affluent, out-of-control addicts.
The Globe and Mail did a fine series last year on gambling. The newspaper filed freedom of information requests about the B.C. Lotteries "Gold Players Card." That's a customer loyalty program designed to keep big losers coming back to lose more. The card lets casinos and the Crown corporation know where the whales bet, how much they lose and the snacks they like.
The FOI request revealed 10 B.C. gamblers lost a combined $11.7 million in the previous year. Eight people gambled away more than $1 million each.
The 100 biggest losers lost an average $270,000 in the previous year.
Some of them might have been able to afford to lose $5,000 a week.
But some are suffering because of their gambling. So are their families.
Like any addict, the government can't get enough gambling revenue. New casinos, mini-casinos in smaller communities, small-time online betting - they all introduced to take more money from British Columbians.
The first online casino in North America offers the chance for another big leap in the amount of money we lose.
The government thinks so. Online B.C. Lotteries losses were limited to $120 a week up until last year. The goal was help keep people from falling into addiction and disaster.
But then the cabinet decided to raise the limit so gamblers could lose $9,999 a week. (At $10,000, the transaction would have to be reported to the federal government because of concerns about criminal money laundering. B.C. Lotteries revealed this week it has been fined $500,000 this week for violating federal anti-money laundering laws.)
The new online casino crashed when it was launched last Friday. B.C. Lotteries had been offering cash incentives to get more people to bet; at first the corporation blamed the problems on high demand.
On Tuesday, it revealed that the site's security had broken down. Some 130 gamblers' accounts - some with sensitive information - could be accessed by others. B.C. Lotteries is hiring a security firm to see if hackers were at work.
Gambling Minister Rich Coleman justified the expansion into online gambling by noting some British Columbians were already betting on the Internet using unregulated site. Better to provide them with a controlled gambling opportunity and keep the money in the province, he said.
But that's not really what the government is doing. It's promoting online gambling heavily and hopes to triple the take, to $100 million, in three years.
Online gambling is just another way for government to recruit more gamblers and increase the average amount each person loses - both approved goals for the lottery corporation each year.
Footnote: Online gambling poses greater risks of addiction and big losses, according to the government's responsible gambling website. A study released last year found online gamblers "play"
more frequently and bet more aggressively than people who go to casinos.
Their gambling was easier to hide from friends and family.
About 35,000 British Columbians already have a severe gambling problem, according the B.C. Medical Association.

The new $17-million protected area (or $7 billion)

Back in February, the throne speech announced a ban on mining and oil and gas exploration in the East Kootenay Flathead Valley.
That was a big deal for people living across the border in Montana. The Flathead flows into the state and is an important river. The prospect of mining or gas development alarmed the Americans. Barack Obama even got involved.
It also meant some companies would get the boot after spending money to develop claims in the valley.
Then mines minister Blair Lekstrom said then that he didn't know if the provincial government would owe the companies compensation.
But Montana Gov. Brian Schweitzer was much clearer. The B.C. government was on the hook for a big compensation expense, he said, and the U.S. government should help.
Gordon Campbell has now made things clearer. The two companies most affected should get something like $17 million, the premier told the Flathead Beacon, a good Montana weekly.
Schweitzer praised Campbell as the key play in the agreement, "walking away from $7 billion" worth of economic activity in order to protect the Flathead.