Keno Withdrawal to Cost Nova Scotia CAD$3.4 million

Despite being launched just over six months ago following five years of indecision over the game's social responsibility standards, Canada's Nova Scotia Gaming Corporation (NGSC) has now decided that it will no longer be offering its Keno game to customers within the province after revenues from the product fell 80% below budget expectations following its introduction in March.

The NSGC introduced the Keno game at approximately 180 sites in Nova Scotia earlier this year in March, most of which were at existing video lottery sites. The launch was accompanied by a research study to be conducted over the first year of operations to assess the social and economic impact of the game.

The launch followed five years of indecision by the NSGC regarding the game's social responsibility standards. Previously in 2004, the NSGC had decided against proceeding with the launch of the multi-draw Keno game as it did not meet the lottery's social responsibility standards, despite being recommended by the Atlantic Lottery Corporation, operator of all four Canadian provincial lotteries including Nova Scotia.

Later in 2007/08, as part of its normal business planning process, the NSGC explored new product options and returned to consider the launch of Keno.

The Keno game was then launched in 2009 only after the NSGC retained three social responsibility experts who recommended the inclusion of a number of fundamental changes in the game's mechanics and structure, leading experts to conclude that the Nova Scotia product was "the most socially responsible Keno game in the world". A rigorous evaluation component was also incorporated into the implementation.

In an assessment of the Keno game last month, the NSGC said there were a number of unknown factors that could materially affect the 2009/10 revenue estimate, the most significant were the size of the ticket lottery market, the impact of the responsible gaming elements incorporated into the product, and the impact of limited points of sale support, which exists with Keno games in other provinces except Nova Scotia.

At the time the NSGC said that actual revenues from Keno since March amounted to a mere $0.7 million, well below the budget forecast of $2.3 million. As a result the ALC embarked on an education and marketing programme to create greater awareness and interest in the Keno game at participating sites.

After consulting with stakeholders earlier this week however, the province has decided to put an end to Keno.

"Although the social responsibility assessment was careful and thorough, concerns persist among some stakeholder groups," said Graham Steele, Minister responsible for Part I of the Gaming Control Act.

"Even on its own terms, Keno has not been a success. Revenue has fallen 80 per cent below expectations and in order for the game to have even the possibility of breaking even, further spending would be required for capital and marketing.

"For all of these reasons, and after careful consideration, we have come to the conclusion that it's time to pull the plug on Keno in Nova Scotia."

The Nova Scotia Gaming Corporation will work with its operator, Atlantic Lottery Corporation, to exit the game by October 22nd, providing retailers with a 30 day notice period. It will cost the NSGC $3.4 million to exit the game, which will come out of general gaming revenues paid to the province. This includes the write-off of the capital assets including draw equipment, computer hardware and software, installation costs, lottery retail terminals and other equipment used at retail locations.