05/12/2015 05:54 EDT | Updated 05/12/2016 05:59 EDT

Government-approved gaming changes mean B.C. taxpayers lose out: NDP

VICTORIA - Casino operators in British Columbia are the big winners while taxpayers lost out in gaming revenue-split changes quietly introduced by the government, says NDP Leader John Horgan.

Horgan said it appears that former B.C. Lottery Corp. chief Michael Graydon had a hand in making the changes before he left the Crown corporation last year for a similar job in the private sector.

A government audit last July found Graydon was in a conflict of interest for not disclosing that he was negotiating his terms of employment with Paragon Gaming Inc. while running the public lottery corporation.

The audit said Paragon was not given preferential treatment by Graydon, but the NDP said Tuesday it did not explore his role in the revenue-split changes and their potential benefits.

Finance Minister Mike de Jong said the changes to house splits at casinos were above board and are improving takes for gaming outlets and taxpayers.

"It's disconcerting that the minister was not able to give a direct answer as to why when an audit was done into Mr. Graydon's activity there was no mention of this deal that allowed operators of casinos to take more money from players and give less money back to the Crown," Horgan said.

"The business case was put together by Mr. Graydon. Mr. Graydon's company, Paragon, now stands to benefit greatly from that."

Gaming Control Act changes dated March 6, 2014 include a directive to the B.C. Lottery Corp., from the general manager of the Gaming Policy and Enforcement Branch. It includes amendments to the formula approving gaming revenue.

The changes mean casinos get 60 per cent of the take and the lottery corporation takes 40 per cent for both low-limit blackjack tables and low-limit roulette tables. Prior to the changes, the formula was the other way around, with the lottery corporation getting 60 per cent and casinos taking 40 per cent of the money.

De Jong said the new splits have contributed to more low-limit tables at casinos and a corresponding increase in customers and revenues, but he couldn't immediately provide the financial evidence.

"The process this for case was followed appropriately and a decision was made that would appear has served the interest of both parties," he said.

De Jong said casino operators approached the lottery corporation to change the revenue splits while Graydon was the chief executive officer, but the decision regarding the changes were made "long after Mr. Graydon left the lottery corporation."

In a statement last July, Graydon said he read the audit and accepted its findings and supported the recommendations.

"While the auditors found no evidence of my current employer receiving preferential treatment, and no evidence of any confidential information disclosed, I understand that a perception of potential conflict was created, and for this I apologize,'' he said.