"Dishonest".

"Unscrupulous retailers".

"Rude and inept".

"Hanky panky".

"Turning a blind eye".

"Retailers have been stealing for one good reason - because they can."

Those are just some of the phrases featured prominently in an Ontario ombudsman's scathing report about the flaws in the province's lottery system.

Andre Marin's long awaited conclusions follow allegations that some lottery kiosk clerks have been winning much bigger jackpots more often than the odds would suggest is reasonable.

He maintains many retailers, or so-called lottery "insiders", are guilty of making bogus claims over the past eight years, and contends the Ontario Lottery and Gaming Corporation was "hopelessly conflicted" and so "fixated on profit rather than public service,'" they couldn't or wouldn't fix it.

"Without the trust that whoever has lady luck on their side will actually pocket the jackpot, confidence in our lottery is shattered," Marin alleges.

"Ultimately, everyone feels the domino effect as gaming in Ontario is an important source of revenue for hospitals, social programs and all sorts of good works in communities across the province."

Making the problem worse: customers who call to report their suspicions are often turned away by "rude and inept" phone representatives who are  unwilling to process their claims.

The findings come three days after Lottery Corporation CEO Duncan Brown stepped down.

Marin's three month-long probe was exhaustive and intensive and didn't mince words.

It followed claims that some winners were cheated out of thousands or even millions of dollars by a small number of conniving retailers, who allegedly pocketed the winnings for themselves.

"The OLG has paid out millions of dollars in prizes making dishonest claims," Marin concludes. 

An example?

Between 2003-2004 OLG identified five suspicious major wins by retailers or "insiders". The prize money ranged from $250,000 to $12.5 million.

But only one was actually denied the money. 

Then there's the infamous case of Bob Edmonds, a Coboconk senior who was convinced a clerk took advantage of his win and cheated him out of a $250,000 jackpot.

Marin examined that case, too, and charged OLG did everything in its power to make the 78-year-old Edmonds go away quietly.

The feisty senior was overjoyed that he'd been right all along.

"I'm glad that dad was vindicated in the report and I'm glad that he was taken as a truth-telling citizen, good citizen of Canada," reveals his son, also named Bob.  

"The little man can win a battle with the help of the media, the police and telling the truth," his other boy Don exulted after the report was released.

His father was too ill to attend the press conference but the family insists the confirmation will go a long way to making him feel better. 

Marin has issued 23 recommendations he expects OLG to follow.

At the top of the list: an independent body to regulate the corporation and ensuring criminal background checks are conducted on all retailers. (To see some of the other key suggestions, see below.)

Opposition leaders argue Brown is being made the scapegoat in this case and want to know more about what kind of severance package he may have received.

Conservative Leader John Tory suggested that the public deserved more details.

"I think Mr. Brown's departure is an attempt on the part of [Premier] McGuinty to hope this all goes away and we can say 'Well it was all his fault -- Mr. Brown's that is -- and, therefore, we can all rest easy and sleep well knowing that the man whose fault it was is gone,'" Tory maintains.

NDP Leader Howard Hampton drew comparisons with last year's sudden departure of Hydro One CEO Tom Parkinson, who received a $3-million severance package following a report critical of the corporation's billing practices.

"This sounds a lot like Tom Parkinson," Hampton charges

"'Here's a few million dollars. Please avoid embarrassing us politically and say nothing. But I think the indications are already that there was a very serious problem there."

Brown was paid $720,000 to leave and the opposition insits he's being set up to take the fall.

According to Marin, Brown told lottery officials who brought up questions about suspicious claims in 2003 and 2004, "Sometimes you hold your nose."

The report also slammed the Ontario government for becoming "addicted to gambling revenues" of $6 billion a year, one-third of which comes from lotteries.

However, Marin says he won't consider banning lottery retailers from playing.

"Some might argue that the simplest solution would be to ban lottery retailers from playing, period," he writes. "I am not prepared to go this far, for three reasons:

"First, only one jurisdiction that we looked at - Argentina - has gone this route.

"Second, I am persuaded that there is some unfairness in preventing thousands of retailers and their employees from participating in an activity that can be enjoyed by everyone else.

"Third, I believe that if the recommendations made in this report are taken up, the Ontario lottery industry will be made safe enough to preserve public trust, in a way that minimizes the risks."

Similar investigations are occurring in Atlantic Canada and British Columbia - the ombudsman of New Brunswick is looking into a report that hints retailers have won more then $25,000 over six years. That figure is reportedly 10 percent more often than is probable.

And in B.C., a probe began after it was determined lottery ticket sellers were winning six times more than members of the public were.

Will you still play the lottery?

Recommendation: OLG should appoint someone to ensure the recommendations are carried out.

OLG Action: OLG appoints its senior vice-president to ensure compliance.

Recommendation: Because of the appearance of possible impropriety, OLG should treat all its sellers as Insiders and adopt a 'zero tolerance policy' when they come to redeem winning tickets.

OLG Action: OLG now tracks clerk wins of between $1,000 and $9,999 or any big prize claims. All will be treated as Insiders and subject to the new "Inside Win Policy".

Their contract will be terminated if anything untoward is discovered, and retailers will lose the ability to sell tickets if they or their employees are charged with any crimes, involving theft or fraud or any "game related offenses."

Recommendation: Retailers and employees claiming prizes of $1,000 or more will have to identify themselves before cashing the ticket.

OLG Action: This policy will be in place by June 30, 2007.

Recommendation: OLG must track complaints about apparent prize improprieties involving retailers and kiosk clerks to make it easier to track what happened.

OLG Action: Corporate Security and Surveillance is now keeping track of all complaints that come into OLG from players. A full database will be in place by June 30, 2007.

Recommendation: OLG investigators should be trained in better procedures and be required to keep all their notes when a probe is ordered.

OLG Action: Investigators are now being trained through the Ontario Police College and will complete thier classes by Sept. 30, 2007.

Recommendation: OLG hasn't been keeping stats on the frequency of unusual prize claims by retailers or clerks.

OLG Action: Win histories will now be tracked statistically by April 30, 2007.

Recommendation: OLG must cross check prize claimants with insider winners.

OLG Action: All Insider winners over $1,000 are now checked out against their previous winning records.

Recommendation: OLG must submit a report on a quarterly basis on the progress of the recommendations, with a commitment to ensuring all are fulfilled.

OLG Action: The first report is due June 28, the next Sept 27, the third on Dec. 21, all 2007 with a fourth status report due a year from now, March 27, 2008.

To read the full report, click here. (.pdf file)

The scandal led OLG to introduce new measures to fight fraud. Here's a look at the way they told consumers that they tightened the rules:

The Seven Point Plan

1. Self-Serve Ticket Checkers

Every lottery terminal location in Ontario will have a device enabling consumers to electronically check their own tickets, and instantly determine if they've won and the size of their prizes. They'll be available without the need to involve a retailer. Consumers can simply place the barcode on their tickets under the scanner to determine whether their ticket is a winner and if so, how much they've won.

2. Enforce Correct Retailer Validation Procedures

Lottery retailers will be permitted to check tickets only for those customers who have been asked to sign the back of their tickets. There will be escalating penalties for retailers who fail to follow correct validation procedures, up to and including the removal of their lottery terminals.

3. Customer-Facing Screen Improvements

Customer-facing video screens at lottery terminal locations in Ontario will tell players if they've won and if it's a big prize after they have retailers check their tickets. Larger, bold characters appear on the screen to clearly indicate whether the customer has won. In the case of winning tickets, loud music plays and the prize amount is prominently displayed on the screen. Major prize wins of $50,000 or more trigger a different winning tune and a special message on the screen.

4. Public Education Campaign

OLG will conduct a public education campaign to make consumers aware of ways they can better protect themselves. The campaign will employ point-of-purchase signage and other forms of communication to inform consumers about the steps they can take, including:

Always sign the back of your ticket;
Check your numbers yourself here or on the winning numbers lists available at all retail locations; or by calling a toll-free line; 
If your ticket has won a prize larger than the retailer is able to pay make sure to retain your ticket and the validation slip

5. Solicit Consumer Input

OLG's special toll-free telephone line will allow consumers to provide OLG with ideas on additional security measures. Call 1-800-387-0098 if you have any questions. OLG has also established an e-mail address that consumers can use to provide OLG with ideas. All suggestions will be documented and taken into consideration. Email playwithconfidence@olg.ca for more information or click here to find out the specifics of what should be in your letter.

6. Lower Investigation Threshold for Retailer Wins

OLG will use an expanded team of professional investigators to probe every win of $10,000 or more by lottery retailers and their employees, compared to the current $50,000 threshold. Each retailer win will be thoroughly investigated, including interviews with the retailer, and verification of purchasing information and previous playing statistics. If OLG believes there's a serious concern with a retailer lottery prize claim, the police will be contacted immediately.

7. Enhanced Complaints Process and Investigation Procedures

OLG's toll-free telephone line will allow for easier reporting of lost or stolen lottery tickets.  Improved complaint investigation processes will ensure all accusations are received appropriately and taken seriously.

For more on combating lottery fraud, click here.