The B.C. government will conduct an audit of the province's lottery system, following the release of a damning report Tuesday by the province's ombudsman that found it's open to fraud.

Ombudsman Kim Carter said the government-owned B.C. Lottery Corporation did not have adequate procedures in place to ensure that correct prize amounts were paid out to the rightful owners of winning tickets.

The ombudsman says the lottery corporation needs to track all wins by retailers.
(CBC)

In announcing the audit, Solicitor General John Les said Carter's report raises questions about how the system became vulnerable to fraud.

He said it defies belief that the lottery corporation didn't know there was likely criminal fraud going on against the public.

"You don't need to be a rocket scientist to put two and two together and figure out there's something fishy going on there. They should've gone down there like a rat down a drainpipe and figured it out."

Carter launched her inquiry after a CBC News investigation late last year found widespread problems in Ontario's lottery system.

Ontario's ombudsman concluded in March that province's lottery corporation was "fixated on profits rather than customer service."

B.C. ticket retailers won repeatedly

In her report on the B.C. situation, Carter said that a few retailers appeared to be winning unusually often, with 21 B.C. Lottery Corporation retailers or employees turning up as multiple winners.

She noted one retailer won 11 times in five years, collecting more than $300,000 in prizes.

Another ticket seller claimed $10,000 in prizes every year for four years, and a third person won 13 prizes worth more than $3,000 in a year.

"Most notable," she said, was the lack of scrutiny involving wins under $10,000.

Carter said the corporation, which is responsible for lotteries and gaming in B.C., should have been interested in finding out why some retailers were winning so much.

She also noted there was no process to track and analyze the rates of play and wins by retailers and their employees.

The B.C. Lottery Corporation did its own investigation late last year, but Carter said it was inadequate.

"At the beginning, in their first set of trials, when they sent out their mystery shoppers, they didn't send them out with winning tickets to check. They sent them out with ones that weren't winners. And that was one of the things the investigators from our office picked up on right away."

Carter says the best thing the lottery corporation can do is track all wins by retailers.

The lottery corporation says it accepts all of the ombudsman's recommendations.

So far, no one involved in the multiple winnings in B.C. has been charged with a criminal offence.

With files from the Canadian Press