Failed GeoSweep game cost Atlantic Lottery Corporation $2 million, documents reveal

Steve Mertl
National Affairs Contributor
Daily Brew

Lotteries are a pretty reliable cash cow for the provinces but sometimes a little bit of the milk does not make it into the pail.

Take GeoSweep, the Atlantic Lottery Corporation's (ALC) online map-based game, which was shut down late last June.

The game, also played in Britain and developed by U.K.-based Geonomics Global Games Ltd., was offered in Nova Scotia, New Brunswick, P.E.I. and Newfoundland and Labrador. But after a year of operation with no one winning the $250,000 jackpot, the ALC pulled the plug, the Charlottetown Guardian reported last June.

CBC News now reports ALC spent almost $2 million to advertise and promote the game before cancelling it.

[ Related: Geosweep could return, says ALC ]

The broadcaster said the corporation wouldn't discuss the promotions budget for the game or its sales. But documents obtained under access-to-information legislation show that between January 2012 and July 2013, the ALC paid out slightly less than $2 million to external suppliers to produce and buy space for TV ads, billboards and logos on transit buses.

ALC officials weren't commenting but defended the spending in an emailed statement.

"The marketing expenditure for GeoSweep was in line with what is invested in any game launch," spokeswoman Courtney Pringle-Carver wrote to CBC News. "As all four provinces offered the game, the amount was divided among each."

Figures on GeoSweep sales were still not available but evidence suggests they weren't great.

GeoSweep seems like a cool idea at first glance. The daily online game divided Atlantic Canada into 2.3 million little squares, with GeoSweep players paying $7.50 to own a Geo square for 30 days. Players could give it a personal twist by picking their house or some other favourite place.

CBC News noted the only guaranteed prize is a $1,000, awarded based on Geos that are actually owned. The $250,000 jackpot, however, is based on all Geos, occupied or not. That prize was never paid out, suggesting not enough squares were in play, CBC News said.

The ALC also invested $8.7 million into Geonomics, CBC News noted, with Nova Scotia and Newfoundland and Labrador opting not to participate.

[ Related: Riches to rags: Why most lottery winners end up broke ]

In its story last June, the Guardian noted GeoSweep also suffered from poor sales in Britain and Geonomics planned to relaunch it.

ALC chief financial officer Patrick Daigle told CBC News in July the demise of GeoSweep had not upset the lottery corporation's expansion strategy, including investments like Geonomics and looking for lottery action in places as far afield as Albania.

Provincial lottery corporations have faced a number of problems, such as the fraud and insider-winners scandal that hit the Ontario Lottery and Gaming Corp., costing two senior executives their jobs in 2007.

The province's Ombudsman, Andre Marin, issued a report alleging officials were ignoring widespread fraud as ticket-sellers, their employees and family members, wrongfully claimed millions of dollars in winnings.

A similar scam plagued the B.C. Lottery Corp., undermining confidence in the system, B.C. Ombudsman Kim Carter said at the time. CBC News reported the Western Lottery Corp., which serves prairie provinces, also had a disproportionately high number of its ticket-sellers claiming lottery prizes.

In 2009, CBC News also reported the Ontario lottery system settled with a player who thought he'd won $135,000 on some misprinted scratch-and-win tickets.

A Brampton man's tickets had misaligned symbols and were initially ruled void. But when he called an information line he was told he would be paid anyway. Lottery officials later backpedalled and said he was entitled only to a new ticket.

He was later paid an undisclosed sum.