New Brunswick

Atlantic Lottery learned from GeoSweep flop, CEO says

The CEO of the Atlantic Lottery Corporation has told a legislative committee that the company has learned from its GeoSweep mistakes.

Investment in lottery company cost New Brunswick and Prince Edward Island taxpayers millions

Atlantic Lottery Corporation CEO Brent Scrimshaw told a legislative committee that the company is a better one since learning from the GeoSweep failure. (CBC)

The chief executive officer of the Atlantic Lottery Corp. has told a legislative committee that the company has learned from its GeoSweep mistakes.

But Brent Scrimshaw wasn't clear on exactly how those lessons would be applied in the future.

Scrimshaw spent almost two hours before the Crown corporations committee of the New Brunswick Legislature, taking questions about ALC's last three fiscal years.

That period includes the GeoSweep episode, in which the corporation invested millions in a U.K. company that developed the game.

The failed investment in GeoSweep cost New Brunswick and P.E.I. taxpayers $8.9 million. (CBC)

The game failed to capture the interest of gamblers in Atlantic Canada, and earlier this year ALC wrote off its $8.9 million investment in Geonomics, the company that developed GeoSweep.

That cost was passed on to taxpayers in New Brunswick and Prince Edward Island.

"We are a very different company. We are a better company," Scrimshaw said.

"We've grown not just as a result of Geonomics, but certainly that was an element in that growth."

Questioned by Green party leader David Coon about the fact only two of the four Atlantic governments that own ALC agreed to the investment, Scrimshaw suggested that was a key lesson.

"When you go forward with two out of four, your questions are fair ones," Scrimshaw told Coon. "We've seen the result that delivers when you have two, because you put two on the firing line."

The Atlantic Lottery Corporation spent nearly $2 million on advertising and promotion for the GeoSweep lottery game in the region. (CBC)

But the CEO told reporters after the hearing ALC would not necessarily apply a new four-province approval threshold to future investments.

"Clearly, definitely, [it's] preferable," he said. "I'm not prepared at this point to say that will be the level we always have to have."

N.B., P.E.I. took the loss

New Brunswick and Prince Edward Island each ended up with half of the $8.9 million on their books. Nova Scotia and Newfoundland and Labrador, which took a pass on the investment, lost nothing.

ALC is owned by all four Atlantic governments. Atlantic Lottery still owns its shares in Geonomics. It's a privately held company and so there are few potential buyers to whom ALC could sell the shares. ALC is required to keep them until next year.

Coon says ALC should require the approval of all four of its government owners before it launches new investments.

"I think it would be wise," Coon said.

"It's one way of providing checks and balances, when the Crown corporation is responsible to four ministers, rather than one."

CEO 'extremely disappointed'

Scrimshaw told the MLAs the corporation was "extremely disappointed with the results, but when I look at that versus the batting average of the company, I would hope you would keep that in context."

ALC hit its profit target of $368 million last year, despite writing off the GeoSweep investment.

He pointed out ALC hit its profit target of $368 million last year, despite GeoSweep.

Scrimshaw also defended the company's decision to take a chance on a new product because, he said, gamblers are increasingly demanding new games.

"We will continue to take informed, calculated risks in game design, development, and market launch," he said.

"This world is changing so quickly. Our players are looking for new products that are social, that are interactive."

Scrimshaw argued ALC wasn't alone in seeing the merits of GeoSweep.

It had been ranked as the third-best new product "on the planet" by the World Lottery Association in 2012, he said.


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