PEI

Atlantic Lotto pitched pandemic as 'opportunity' for provinces to raise millions through online casino

The Atlantic Lottery Corporation pitched the COVID-19 pandemic as an "opportunity" for the four Atlantic provinces to raise millions in additional revenues — but only if they acted "immediately, during COVID" by launching an online casino for the region.

'Unprecedented growth' in online gambling revenues led to hard sell from ALC for provinces to move quickly

The Atlantic Lottery Corporation told the four Atlantic provinces last April that the pandemic 'increased the scale of the opportunity' regarding its proposal to launch an online casino, along with the threat that if the provinces didn't act soon, they would lose more market share to offshore websites. (CBC)

The Atlantic Lottery Corporation pitched the COVID-19 pandemic as an "opportunity" for the four Atlantic provinces to raise millions in additional revenues — but only if they acted "immediately, during COVID" by launching an online casino for the region.

The information comes from a revised business plan sent to the P.E.I. government on April 23, 2020 — just over a month into the pandemic.

Part of that document was tabled in the P.E.I. Legislature this week by Liberal MLA Robert Henderson. It appears, from the document filed, that similar information was sent to the other three Atlantic provinces.

The document asks the provinces to go all-in, without delay on an idea ALC had been pitching for a decade — launching an online casino for the region.

New Brunswick was the first province to ante up, quietly launching a casino for its residents last August. Prince Edward Island and Nova Scotia are preparing to follow suit.

ALC calls document a shareholder update

The corporation responded to the exchange in the legislature by sending a statement to CBC News on Thursday afternoon.

"Atlantic Lottery regularly updates its shareholders on a variety of topics. This was particularly true during the early stages of the COVID-19 pandemic when our operations experienced significant changes," the statement said in part.

"The offshore unregulated gaming companies that already offer casino games to Atlantic Canadians have significantly increased their advertising since the onset of the pandemic. This raised the risk that more people in our region would be drawn to these sites, which may not offer the same level of player protection and do not keep revenue within Atlantic Canada.

"Atlantic Lottery knows the importance of offering its players a regulated, responsible alternative to the approximately 3,000 offshore sites that are currently operating illegally in this market," it added. "Atlantic Lottery would not introduce a game to Atlantic Canadians if it wasn't possible to do it responsibly."

Landscape for online gambling 'dramatically altered' by pandemic

Even in the early days of the pandemic, the closure of in-person casinos had led to "unprecedented growth" in revenues on Atlantic Lotto's website, the document tabled by Henderson says, with sales up by a factor of 2.5 over a period of just two weeks, and 34,000 new customers signed up during the first month of the pandemic.

"COVID-19 has dramatically altered the gaming landscape, as citizens are encouraged to stay home as much as possible while non-essential services have been suspended," the document states.

"Interest for in-home entertainment options are [sic] at an all-time high. Internet gambling is up across the globe."

Those developments increased "the scale of the opportunity and the threat" to the provinces in launching an online casino.

P.E.I. Liberal MLA Robert Henderson referred to ALC's proposal as a 'diabolical' plan to take advantage of Islanders stuck at home during the pandemic. (Legislative Assembly of P.E.I.)

The threat lay in the form of offshore gambling sites attracting new Canadian customers, market share the Atlantic provinces would struggle to win back once they eventually launched their own online casino games, according to the documents.

The opportunity lay in a 162-per-cent increase in projected revenues over the first seven years of operation.

Net profit estimated

Before the pandemic, in January 2020, ALC had projected its enterprise could earn a net profit of $89 million over seven years for all four Atlantic provinces.

Three months later, with customers confined to their homes leading to rapid market growth, the corporation said a website launched during the pandemic would net a profit of $233 million over the same time period.

P.E.I.'s bottom line was projected to increase from $4.8 million to $12.4 million over that seven-year time frame.

But an asterisk beside those projections warned the province it had to act fast.

"Opportunity will diminish if launch is post-COVID," the warning read.

Plan to 'exploit Islanders during this pandemic'

O'Leary-Inverness MLA Robert Henderson, who tabled some of the information in the P.E.I. Legislature Wednesday, described the proposal as a "diabolical home gambling plan" looking to "exploit Islanders during this pandemic while they were home."

"Did you inform Atlantic Lottery Corporation and your appointed board of directors that their efforts to exploit the pandemic were not merely distasteful, but simply wrong?" Henderson asked Finance Minister Darlene Compton during question period Wednesday.

In fact, Compton's initial reply to Atlantic Lotto had been tabled by the Liberals in the legislature on Tuesday.

"Our government is fully focused on helping Islanders weather a public health emergency. We are not interested in expanding access to gambling during this time," Compton wrote to former ALC CEO Chris Keevill on April 29, 2020, less than a week after receiving the pitch.

"I will contact you after the pandemic if we think it makes sense for Prince Edward Island to join the other shareholders in offering new products."

Not a change of mind, says minister

But on Dec. 22, P.E.I.'s cabinet provided its approval, allowing the provincial lottery commission to develop an enhanced digital platform to be operated by ALC.

Speaking to reporters Wednesday, Compton denied she had changed her mind.

"We were pushed quite, you know, quite hard by the former CEO [Keevill] to get on board. And that's one reason why I started the discussions with other finance ministers in Atlantic Canada, to see where they were at and how they felt about it and how we could move forward with this if and when we do."

ALC had initially said it hoped to launch new online casino games for P.E.I. and Nova Scotia by the middle of 2021. But Compton said there is no timeline for when her province will move forward.

P.E.I. Finance Minister Darlene Compton initially told Atlantic Lotto her province wasn't interested, and might reconsider after the pandemic. But before the end of 2020, P.E.I. had provided its blessing for the endeavour. (CBC)

Experts appearing before P.E.I.'s standing committee on health and social development, including provincial health officials, have raised concerns, saying the new site might be safer than similar offshore sites, but that it will also draw in new players and create risks of its own, and could exacerbate problems for the estimated 950 Islanders who have gambling problems.

On Wednesday, Compton said the goal is to repatriate Islanders who have turned to gambling on those offshore sites.

She said most Islanders who do gamble online would "prefer to have an ALC site where you know the profits that are made come back to the province to support all of the services that Islanders expect."

More from CBC P.E.I.

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