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I Am Skooter
So here's us, on the raggedy edge.
If your life is a leaf / that that the seasons tear off and condemn They will bind you with love / that is graceful and green as a stem
— Leonard Cohen, Sisters of Mercy
August 28, 2004
Online Lottery Ticket Sales for Charities are Banned

The Synergy Newsletter published by the Alliance for Arts and Culture in Vancouver had this note the other day:

2. Online lottery ticket sales banned
In other gaming news…
According to a recent report in The Vancouver Sun, BC gaming regulations have changed to prevent the sale of lottery tickets through the internet. The article reported that the Pacific National Exhibition, with its famous PNE Prize Home Lottery, expected to lose significant revenue as online sales accounted for 20 percent of total sales last year.

This, of course, is extremely interesting to me because of my involvement with the Earth Future Lottery which was intended to raise millions of dollars doing this very thing.

The note goes on to say that:

Derek Sturko, assistant deputy minister of the BC Gaming and Enforcement Branch said in the article that Canadian law doesn’t permit charities to conduct raffles or “other forms of gaming” through the use of computers, which includes the internet, and that “It has never been the case that they could sell lottery tickets online.”
Charities can advertise lotteries and raffles online, as well as provide info on how to get tickets, but cannot conduct a financial transaction (ie, purchase) via a computer, therefore eliminating the use of the internet. This regulation is part of Canada’s Criminal Code, section 207(4)c, which states that lotteries operated by charities can’t be “operated on or through a computer.”

When the Earth Future Lottery (EFL) was founded, an argument was made that the Lottery would be legal based on a technical reading of the “on or through a computer” aspect of the law, as well as the point of sale aspect.

It appears, in this case, that the B.C. government has decided to take the broadest possible view of this definition, in order to shut down what they perceive to be a problem: the online sale of lottery tickets. In fact, this decision may have a much more serious impact on charitable lotteries.

The lotteries that are being impacted here aren’t being criticized for trying to sell beyond their borders (one of the real and potential impacts of selling online); instead, the B.C. government is essentially arguing that the sale of tickets constitutes the operation of the lottery.

In the 21st century (and the late 20th, of course) virtually every charitable lottery ticket sold is entered into a computer database: simply put, the PNE keeps a record of the fact that you bought a lottery ticket and - particularly in the case of so called ‘registration lotteries’ - the ticket number. For lotteries that are well run, this database gets mined next year as a source of first round ticket sales; for many of these lotteries, more than 30% of tickets can be sold to the previous year’s purchasers. This is the power of database marketing.

By including ticket sales in the definition of operating a lottery and suggesting that the use of computers is not appropriate, the government may in fact be making this very activity illegal. Essentially, a definition this broad may mean that any charity running a lottery of any sort has to keep records on pen and paper only: welcome to the new world.

This isn’t really an exaggeration: a registration lottery means, essentially, that you don’t have to physically keep your ticket. Instead, you provide the lottery operator your contact information which is used - if you win - to both contact you for notification and to verify your identity. Better register with accurate information!

What this means, of course, is that looking up your information in the registration database is an essential part of ‘operating the lottery’; at least as essential as selling you your ticket. If this is so, then what’s the difference?

At the EFL we viewed the definition of operating as the actual conduct of the lottery drawing itself: in other words, a charitable lottery can conduct the rest of its operations as it sees fit, but cannot select the winning number using a computer. There are a number of reasons that this is valid, but suffice to say that choosing a random number on most computers isn’t truly random - in most cases, it’s based on clock cycles and so can potentially be manipulated, although it would be difficult to do so. Since it would be impossible to audit every line of computer code on every charitable lottery, best to prohibit this act. These guys know quite a bit about making things really random they’re Vancouver based too.

This is quite reasonable: it leaves charities with a large number of cost-effective methods of choosing winning numbers and/or tickets ranging from throwing tickets into a rotating drum to renting the type of ball selection machines that are common in state lotteries. These physical draws are easier to audit, and ensure that winner selection is fair.

The B.C. government has chosen too broad a definition here to be realistic and has created an enforcement nightmare for itself - the loser is the charitable lotteries in B.C. who may be faced with an administrative nightmare in their attempts to raise money. Lotteries will likely continue - they make far too much money not too - but our government gains nothing by creating such an unrealistic (and unenforceable) reading of how technology fits into our world today.

Posted by skooter at 8:48 PM This entry is filed under Politics.
This entry is tagged: Charities, Lotteries, Technology

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