Failure to Regulate Online Gambling in Canada cost PEI Taxpayers $1.1M

Keeping things quiet is one thing governments do best. For a long time, the highest ranking politicians in Prince Edward Island were able to lower the lid on what’s become known as the e-gaming” scheme. They were working closely with top business execs in an attempt to become the primary regulator of online gambling in Canada.

In the end, their efforts fell apart. As it turned out – after investing rather heavily in the concept – giving a single province the right to govern the entire country’s online gambling regulation was a direct violation of the Criminal Code of Canada.

Say la vie, say la va, right? Not so fast.
PEI Taxpayers foot Failed scheme for Online Gambling in Canada

Someone Has To Pay For It…

In the process of all this, the PEI government had to pay for the project. Rather, they had to guarantee that it would be paid for, eventually. That was done by promising a $950,000 loan from the province to the Mi’kmaq Confederacy of Prince Edward Island.

The contractual context of that loan – which has yet to be repaid – was a bit unusual, though. No matter what the outcome, the Confederacy would never be required to repay the money. Instead, that was supposed to come from future revenues generated by online gambling in Canada.

But of course, the e-gaming scheme never came to fruition. Thus, there will be no online gambling revenue to pay for it. And all this time, the loan has sat dormant, accruing interest.

In November 2016, the government decided to write-off that loan, then valued at $1,125,131. And we all know what a government tax write-off means – the people of Prince Edward Island get to pay for it.

New Disclosure of Loan/Debt Write-Offs

Had this happened a few years ago, we may have never known about it. The only reason the information was made public is because of a new law that now requires all government loan write-offs and debt cancellations be disclosed.

That new stipulation is the direct result of a complaint issued by Auditor General B. Jane MacAdam in a 2015 report concerning millions in annual write-offs that were secretly approved by Crown corporations. From here on out, all intended write-offs must be disclosed on a quarterly basis, and approved by a cabinet of officials.

In the first release of disclosures, it’s been revealed that Crown corporations have written off more than $13.4 million, with some of those debts dating as far back as 2001. That exorbitant figure include the loan for PEI’s failed attempt to regulate online gambling in Canada, and several others.

Among them were the collective $8.2 million in loans to aerospace manufacturing companies, Testori Americas Corporation ($6.1 million) and Wiebel Aerospace ($2.1 million). Another $1.3 million in loans were made to Quality Thermofoam & Packaging Co Ltd, plus $1.2 million more to Cabinetmaster Architectural Woodwork Ltd.

Each and every dollar of that was written off, and will thus be paid by the hard working taxpayers of Prince Edward Island.

PEI Online Gambling Expense Audit Continues

The auditor general is still conducting an audit of the e-gaming scheme, and believes the PEI government has spent at least $1.5 million on the failed project. However, she said Wednesday that this particular audit is unlike any other she’s ever conducted, due to the clandestine nature of the online gambling regulation scheme.

MacAdam said she’s had to rely more on emails than anything else to gather information, since all financial records and project files remain sealed, in the hands of McInnes Cooper. That’s the law firm hired by PEI for legal counsel on the matter. The firm has been largely uncooperative in the audit, claiming it has no obligation to hand over those files, due to attorney-client privilege.

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  • Trevor Hallsey

    Passionate webmaster, devoted card game enthusiast, and proud son of the Great White North. With over a decade of iGaming experience, Trevor has launched numerous web portals to share his passion for game theory and all things Canadian gaming. With this site, he acts as a fact checker and mostly writes at the intersection of gaming and finance. He aims to offer statistical insights and unique information that you might see lacking in similar sites.

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