Ontario casinos caught individuals attempting to launder money and set off an unexpected series of events last week. On Wednesday, Ontario Auditor General Bonnie Lysyk released her annual report that revealed she sent those individuals to the casinos in an undercover capacity. On Thursday, Premier Doug Ford characterized Lysyk’s actions as “jurisdictional creep.” He said she should “stay in her lane.”
In Ford’s opinion, gambling regulation isn’t Lysyk’s job.
Speaking at an unrelated event in Toronto on Thursday, Ford said Lysyk attempted to do the work of the Ontario Provincial Police (OPP), local police departments, and the Royal Canadian Mounted Police (RCMP).
The auditor general has to stay in her lane, you know, and focus on where there’s a waste of money. You can’t do a sting operation. You can’t all of a sudden deputize yourself and think you’re the secret service, going around doing sting operations that failed, by the way. And they were caught. Now these poor folks that they hired are now banned from the casinos.
So she needs to stay in her lane, focus on value for money. And I think she’s had a problem doing that over the last little while.
Auditor General at Odds With the Premier
This isn’t the first time Lysyk’s name has come up in a gambling context. It’s also not the first time she and the Premier have disagreed about it. It may not be the last, either.
Ontario launched a privatized market for online gambling this year, which is a first in Canada. It’s a plan that was several years in the making, but one which Lysyk warned might lose a federal challenge.
In December 2021, she offered her opinion that the new government agency, iGaming Ontario, wouldn’t be doing enough to qualify as “conducting and managing” gambling operations in the province, as required by federal law.
However, the Auditor General’s Office acts only in an advisory capacity and has no enforcement powers. Despite her warnings, the market went live as planned. On April 4, 2022, the first private operators launched in the Ontario online casino and sports betting space.
We have yet to find out who is right on that front. On Nov. 28, the Mohawk Council of Kahnawà:ke (MCK) filed a constitutional challenge against the provincial government. Its case hinges on exactly the aspect of the law Lysyk highlighted. However, it’s a battle that will take months to play out, at a minimum.
Ontario Casinos Caught ‘Mystery Shoppers’
Bonus didn’t find any references to the “sting” in the Auditor General of Ontario Office‘s annual report, its summary, or Lysyk’s Reflections today.
Casinos are popular targets for money laundering operations because they exchange large sums of cash for chips – and vice versa – on a regular basis. Regulated online casinos prevent this through Know Your Customer checks, and the transition to a cashless economy may eventually mitigate the problem in brick-and-mortar environments as well.
British Columbia casinos recently faced a decade-long money laundering scandal. It began in 2012 with an investigation by federal police and culminated in a public inquiry. The final report, which was released this summer, found that systemic failures in both the public and private sectors had allowed the money laundering to take place.
Notably, the same company – Great Canadian Gaming Corporation – operates casinos in both provinces. It’s possible that the report inspired Lysyk to test whether similar failures were taking place in Ontario.
“The purpose of the mystery shopper assignment was to test whether the casinos verified the mystery shoppers’ play and casino wins before issuing cheques of $3,000 or more,” Lysyk wrote in her report.
Lysyk said at two casinos the undercover operatives walked in with cash ranging from $5,000 to $11,000. With limited play and no proof of winnings, Lysyk said the shoppers were then able to cash out with casino cheques of $4,900 and $10,600.
“These funds could be considered ‘laundered’ because the cheque could be represented as casino winnings as the source of funds for deposit at a bank,” Lysyk wrote.
Fortunately, it appears that Ontario casino staff are paying closer attention now than their BC peers were ten years ago. Although the undercover gamblers were able to cash out, they were subsequently caught.
Bonus lead writer Heather Fletcher contributed to this article.
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