B.C. government 'ill suited' to manage gambling, former lottery corp. chair tells inquiry

The former chairman of the board at the British Columbia Lottery Corp. says he advised cabinet ministers in two different governments to get out of high-end gaming where bet limits reached $100,000.

Bud Smith testified at the public inquiry into money laundering that former Liberal finance minister Mike de Jong and New Democrat Attorney General David Eby both ignored what he says was his "brilliant idea."

Smith, a former B.C. attorney general, says he expressed his views about getting the Crown-owned lottery corporation out of high-limit gaming to de Jong in 2015 and to Eby in 2017, shortly after the NDP formed government.

"It's my belief that government is ill-suited to be operating this high-level gaming business for a whole host of reasons," he said.

He says the potential for suspicious activities at gaming outlets has historically been present in B.C. and the government would be better suited as a regulator, while allowing other entities to run high-limit gaming.

The Crown-owned B.C. Lottery Corp., formed in 1985 to conduct and manage gaming in the province, has provided more than $23 billion in net revenues to communities.

'Lots of questions were being asked'

Smith, who served as board chairman from 2013 to 2018, said when he was appointed to the post, casino bet limits were already at $100,000.

"My opinion, whether they were good, bad or indifferent, when I came on wasn't sought. Those were the limits," said Smith, when asked by commission lawyer Patrick McGowan about the appropriateness of increasing bet limits at casinos to that amount.

McGowan asked Smith if he was aware of reports that in one month in 2015, B.C. casinos recorded $20 million in cash buy-ins in mostly $20 bills.

"Lots of questions were being asked about that sort of thing," said Smith. "It wouldn't surprise me at all that when you've got that much cash floating around, some of it is going to be sourced inappropriately, some of it is going to be used inappropriately and so on, and you can attach whatever names you want to that."

Smith said the board's mandate included continuing its anti-money laundering strategy based on risk assessments of players, their sources of cash and moving toward implementing alternatives to cash at casinos.

But he said the government never told him to drop the risk assessment program and focus primarily on cash limitations.

Smith described a meeting with de Jong at the legislature in Victoria where the former finance minister expressed concern about the large amounts of suspicious cash at casinos, and he called for more methods to control it, but a complete change in strategy was not ordered.

"I never found him to be shy about expressing specifically what he wanted done," said Smith. "He said, 'I do not want you to go to the dollar-specific approach. I want you to continue with your risk-based approach, but I want there to be more action to try to get a better handle on what's going on."'

In 2018, the lottery corporation implemented a source of funds policy requiring a receipt for cash buy-ins of $10,000 or more at casinos.

The NDP government appointed B.C. Supreme Court Justice Austin Cullen in 2019 to lead a public inquiry into money laundering after three reports outlined how hundreds of millions of dollars in illegal cash affected the province's real estate, luxury vehicle and gaming sectors.