© Photo special to The Guardian
The Opposition Tories have asked the auditor general to launch an investigation into the P.E.I. Lotteries Commission over concerns regarding the province’s $4 million stake in the online lottery game GeoSweep.
The president of Atlantic Lotto says he believes the corporation’s $8.7-million investment into the company that owns the failed GeoSweep game is sound.
When asked by P.E.I.’s public accounts committee Wednesday to provide detailed financial data to justify this confidence, ALC balked, citing privacy concerns.
Atlantic Lottery Corporation (ALC) president and CEO Brent Scrimshaw said despite GeoSweep’s failure in the Atlantic market, he believes there is money to be made with this game.
“The performance of one version in one market doesn’t dictate the performance of the investment,” he said.
Scrimshaw and ALC’s chief financial officer Patrick Daigle were called to public accounts to answer questions about the failed online lottery game GeoSweep, which ALC dropped in June due to poor sales.
The $8.7 million investment was not in the game itself, but in its parent company Geonomics Global Games Ltd. As such, ALC says the investment has not been lost.
Prince Edward Island and New Brunswick are the only two Atlantic provinces that agreed to back the investment into Geonomics. P.E.I.'s share was $4.3 million.
Both Scrimshaw and Daigle attempted to clarify what Liberal backbench MLA Buck Watts called misinformation about this investment.
They explained P.E.I. did not give ALC $4.3 million for the GeoSweep game. But by signing a shareholder agreement, the province assumes responsibility for that amount if it is one day lost. In the meantime, P.E.I. is responsible for paying interest charges on the investment, which have totaled $137,000 to date for 2012 and 2013.
The agreement also means P.E.I. will get a share of any future Geonomics profits.
A German company called Tipp 24 has since purchased £10 million pounds worth of shares in Geonomics and plans to soon re-launch a new version of the GeoSweep game.
Scrimshaw says Tipp 24’s investment and the company’s plans to rework and re-launch the game is part of what gives ALC confidence its investment remains sound.
Opposition Leader Steven Myers and MLA James Aylward asked for financial documentation to prove this and also for documents provided to the province’s Lotteries Commission when ALC first made the pitch to P.E.I. to sign onto GeoSweep, but the ALC officials cited confidentiality agreements signed with the company, as well as Freedom of Information concerns.
The committee informed the officials it has powers to compel information that trumps Freedom of Information legislation.
Scrimshaw and Daigle then agreed to provide as much information as it can in writing, once they review their non-disclosure agreements.
Myers pointed to the fact GeoSweep failed in Atlantic Canada and he is concerned a new iteration of this game could have the same outcome and leave P.E.I. taxpayers on the hook for $4.3 million.
“Whether or not it’s going to be a good investment, it hasn’t paid off for us yet,” Myers said after the meeting.
“It was a terrible risk for the finance minister to take at a time he calls a poor fiscal climate.”
Scrimshaw defended the investment and repeatedly told the committee ALC needs to offer more online games like GeoSweep.
Revenues from traditional lottery offerings are trending down and in the meantime, Atlantic Canadians are increasingly turning to unregulated online gaming.
“We need to be an innovator in the gaming sphere and to make alc.ca the go-to place for online gaming in this region,” Scrimshaw said.
“To that end, as any other business does, we have to take educated risks.”