Lotteries group scolded for VLT overpayments to First Nations

Auditor General Kim MacPherson is critical of the New Brunswick Lotteries and Gaming Corporation for knowingly allowing overpayment errors to First Nations to continue, and for its questionable decision to participate in Atlantic Lottery Corporations's Geonomics investment.

• Province potentially losing millions to illegal VLTs

In her report presented to a legislature committee on Tuesday, MacPherson said between 2002 and 2015, the gaming corporation overpaid seven First Nations $14 million due to an error in calculating net profits from video lottery terminals.

MacPherson also noted the efforts were discovered in 2013 and she said "disappointingly, have not ben corrected as of October 2015. 

"[The corporation] is knowingly continuing the overpayments at the rate of $172,000 per month," said MacPherson. "In my opinion, NBLGC should discontinue making unauthorized overpayments to First Nations immediately." 

MacPherson also was concerned that her 2013 fiscal audit revealed there were more than 300 unauthorized VLTs operating in New Brunswick. 

"This represents a potential reduction of revenue available to the province's consolidated fund to finance programs such as education and health care," she said.

New Brunswick lost approximately $4.3 million through participating in the lottery corporation's investment in a British-based online lottery called Geosweep.

MacPherson's recommendations include:

• Performing due diligence procedures for future investments similar to Geonomics.
• Discontinuing making unauthorized overpayments to First Nations immediately.
• Recovering the overpayments made to date.
• Monitoring and increasing compliance initiatives to reduce or eliminate unauthorized VLTs.