We are pleased to submit to you the twenty first Annual Report of the Lotteries Commission of New Brunswick for the Fiscal year ended March 31, 1997.
J. E. Mallory
Commissioner
E. L. MacKinnon
Commissioner
The Commission has two broad areas of responsibility. It develops Provincial lottery policy and represents Provincial interests in the lottery field, particularly as it relates to government operated lotteries. The Commission is also responsible for regulatory policy relating to all privately operated gaming activities such as raffles and bingos. The Revenue Division of the Department of Finance provides licensing and enforcement services on behalf of the Commission.
The New Brunswick government does not directly operate lotteries but is a shareholder in the Atlantic Lottery Corporation (A.L.C.) and in the Interprovincial Lottery Corporation (I.L.C.). The Atlantic Lottery Corporation is a jointly owned corporation of the four Atlantic Provinces. In 1996-97 it offered video gaming, breakopen products and the regional ticket games; "Pik 4", "Auto Plus", "TAG", "Atlantic Choice", "Sports Lottery", "Festival of Dreams" and the $1 and $2 "Instant Games" in the New Brunswick market. The A.L.C. also handles and markets the products of the Interprovincial Lottery Corporation. The I. L. C. is a jointly owned corporation of the ten Canadian Provinces. In 1996-97, its products were; "Super 7", "Lotto 6/49", and "Celebration '97" - all nationwide lottery games.
Two Commissioners represented the Province on the Board of Directors of the Atlantic Lottery Corporation. The President & CEO of the NB Investment Management Corporation represented the Province on the board of Directors of the Interprovincial Lottery Corporation.
Licensing regulations govern the licensing of all bingos, raffles, etc., in the Province. They are designed, in part, to ensure that the money raised from these sources is used for community non-profit benefit and to ensure that the public is treated honestly and fairly. The Criminal Code of Canada requires that such activities be licensed by the Province.
A total of $24,175 was collected in licensing fees for the year in question.
The investigations can vary greatly in terms of complexity and duration. Some may involve a brief inspection of an approved video lottery, to assure that the site is in compliance with the rules and to assure that there are no illegal gambling products. Others may involve a lengthy site approval process or an in depth undercover investigation and background check arising from a complaint. These investigations can, at times, last a period of weeks. The unit must also complete routine inspections of bingo sites licensed to charitable non-profit groups and they must also investigate complaints in regard to these operations.
Close to eighty-five per cent of the investigations related to video lottery in relation to site inspection and approval. The rest related to investigation of complaints, background investigation of program applicants, charitable gaming activities and cooperation with police in regard to illegal gambling.
The unit adopted a new computer tracking system for their activities near the end of the year. It is expected that this will provide more detail on specific enforcement activities in future reports.
Earnings from two separate Instant types of games are earmarked for a trust fund in support of the Arts and a trust fund in support of Sport. In 1996-97, a combined total of $800,000 was deposited in these two trust funds. The first ten million dollars in video lottery earnings are earmarked annually for the Environmental Trust Fund.
New Brunswick's share of the 1996-97 net profit of the Atlantic Lottery Corporation was $87,026,000. This was an increase of 6.1% over the previous year. New Brunswick earned 30.3% of Atlantic Lottery Corporation profits.
Total A.L.C. lottery sales in New Brunswick in 1996-97 were $225.9 million. Video lottery accounted for 51.5% of the total while the "Sports lottery" game accounted for, 1.2%; "Auto Plus", 3.0%; "Super 7", 3.1%; "Atlantic Choice", 1.0.%; "TAG", 4.5: Lotto 6/49", 17.2%; "Pik 4", 0.4%; "Breakopen Ticket" games, 4.6%; the "$5.00" game, 0.7%, the "$20" game, 0.17%; and the "Instant $1 and $2" games, 3.2% and 9.5%.
I conducted my audit in accordance with generally accepted auditing standards. Those standards require that I plan and perform an audit to obtain reasonable assurance whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.
In my opinion, these financial statements present fairly, in all material respects, the financial position of the Commission as at 31 March 1997 and the results of its operations for the year then ended in accordance with generally accepted accounting principles.
K. D. Robinson, CA
Acting Auditor General
Fredericton, N. B.
8 July 1997
Approved by the Commission
_________________________________ Member
_________________________________ Member
The Lotteries Act provides that the Commission may pay the First Nations 95% of all profits received from the Atlantic Lottery Corporation Inc. for the operation of video lottery on reserves having agreements with the Province. Where these agreements are in place the Province also rebates all provincial earnings from the sale of breakopen tickets sold on reserves. As of 31 March 1997, four First Nations bands have signed agreements: Fort Folley, Oromocto, Woodstock and St. Mary's.
The investments in Atlantic Lottery Corporation Inc. and Interprovincial Lottery Corporation are carried at cost. Net profits of these corporations are distributed annually to the shareholders.
4. Statement of transactions with the Province of New Brunswick
Atlantic Lottery Corporation Inc. has declared that in the year ending 31 March 1998 they will be returning the investment in fixed assets to the Province. Therefore, it has been reclassified under current liability.
It is not possible to determine the amount of the settlement of the above court action. Any settlement resulting from this court action will be accounted for as a charge or credit to income in the period in which the settlement occurs.
NOTE: The province has two other agreements, Madawaska-Maliseet and Burnt Church, they do not receive any lottery revenues by way of the agreements.
