Provinces on hook for estimated $7.6M in fees as ALC switches IT providers

The four Atlantic provinces will see an estimated $7.6 million taken away from their lottery revenues as a result of a change in IT service providers by the Atlantic Lottery Corporation.

• UPDATE | ALC says changing IT providers will save $4.5M, not cost $7.6M

Back in 2010 CGI Group, Inc. announced it had signed a seven-year IT services contract with Atlantic Lotto worth $125 million.

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However in September 2016 ALC terminated that contract ahead of schedule while switching to Bellas its central IT service provider.

According to ALC's audited financial statements, the early termination will result in associated contractual fees of approximately $7,617,000. That number is an estimate that ALC determined in March, based on its contract with CGI.

"Atlantic Lottery has a responsibility to return as much responsible profit as possible to shareholders," an ALC spokesperson said in an email statement provided to CBC.

"A successful IT model is a significant part of our business success. Our IT needs and requirements have evolved. An earlier transition to another supplier was an opportunity for us to reach our objectives sooner."

ALC didn't provide specifics about what its needs and requirements are or how the new provider will help it meet them.

Costs will be deducted from provincial profits

As with all common overhead and operating expenses, the $7.6 million in fees will be split on a 30-30-30-10 basis among the provinces. Prince Edward Island is responsible for 10 per cent, or $761,700. The other three provinces are each responsible for 30 per cent of the cost $2,285,100.

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Those costs are expected to be deducted from profit distributions sent to the four provinces in the current fiscal year.

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