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Loto Quebec Online Strategy

1/20/10 - The Montreal Gazette carried an interesting article on Internet gambling this week, quoting Alain Cousineau, the outspoken chief executive of Loto Quebec, who recently stressed the need for Canada's government-sanctioned gambling industry to reinvent itself on the Internet.
 
Addressing the Montreal Board of Trade, Cousineau said: "Casino operations require a large workforce. We work in a saturated and almost mature market where operational costs rise more quickly than revenue.
 
"Our biggest challenge will be to maintain profit margins without sacrificing service quality because we are in the field of entertainment where customers want extraordinary experiences."
 
Cousineau has asked for government approval for Loto Quebec to get into online gambling via a partnership with B.C. Lottery Corp. (BCLC) and the Atlantic Lottery Corp.
 
Its sister agencies have already been nibbling - offering sports betting, bingo and poker-style lotteries online, the Montreal Gazette reports.
 
The partnership would logically jump into the big money ventures of online casino-style games, notably poker.
 
According to Michael Lipton, a Toronto lawyer specializing in gaming law, Quebec's participation is needed if the partnership is to offer serious competition to existing online sites such as those whose computer servers are on the Mohawk reserve of Kahnawake, on Montreal's South Shore.
 
Cousineau has done his sums, and claims that an estimated $675 million was spent on online gambling in Canada in 2008, with revenues expected to exceed $1 billion in 2012.
 
The newspaper opines that if he were to oversee the launch of Internet poker in Quebec it would be a coup, in part because of the high political hurdles to be jumped.
 
Loto-Québec won't discuss its plan to go online because the proposal is now before the provincial cabinet, a corporation spokeswoman told the Gazette this week.
 
"But preparations for the partnership's launch are nearing completion, according to Lipton, whose client list includes provincial corporations, gaming companies and industry associations," the newspaper claims.
 
Leading the charge is BCLC, which has lined up a software supplier and modelled its "technical rules" for the new form of gambling on those of Alderney, a Channel Island off the coast of Normandy.
 
Lipton, who would not identify the client interested in this matter, said that BCLC has "an arrangement" with Britain-based Orbis Technology Ltd. and that the software supplier is "being vetted by gaming regulatory authorities."
 
Orbis, which describes itself as the world's leading provider of integrated gaming and betting solutions, would not answer questions about projects in Canada when approached by the Gazette.
 
Under Canada's Criminal Code, only provincial governments have the power to conduct Internet gambling.
 
The limited online options now offered by BCLC or Atlantic Lottery, which covers the four Atlantic provinces of Canada, are available only to people residing in each corporation's jurisdiction. But a partnership involving the three lottery corporations could agree to provide casino-style games to residents of all six provinces, Lipton said.
 
That would be the best way to provide a relatively big pool of poker players and the liquidity needed to optimise the poker site, he opined.
 
Officially, BCLC and Atlantic Lottery have no new information to share with the media. At the end of August, BCLC said that its casino-style games would be available by March 31, 2010.
 
"At this point, there is nothing more to announce," BCLC spokeswoman Laura Piva-Babcock told the Montreal Gazette this week.



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