In Canada, it does; we pay income tax to the Federal Government first, then the Provincial Government second. Not sure how it works in the US.

Now your last statement may have merit, if you could point to a link showing that tax money has been appropriated for transfer to the Crown Corporation, that is if the Crown Corporation runs the lotteries. As I read your material, another corporation runs the lotteries, and this is a federal corporation. Just because it’s a federal corporation doesn’t mean that it has income from tax revenues.

“(1) In this Section, “PROVINCIAL Lottery” means the PROVINCIAL Lottery operated by Interprovincial Lottery Corporation, a body incorporated by the Canada Business Corporations Act.” from , and the Canada Business Corporations Act is (drumroll please) administered/enforced by the Federal Department of Justice.

Hmm, and according to this exemption:

“Exemption
156. The Director may, on application of a corporation, authorize the corporation to omit from its financial statements any item prescribed, or to dispense with the publication of any particular financial statement prescribed, and the Director may, if the Director reasonably believes that disclosure of the information contained in the statements would be detrimental to the corporation, permit the omission on any reasonable conditions that the Director thinks fit.

R.S., 1985, c. C-44, s. 156; 2001, c. 14, s. 74.”

So, the ILC MAY receive Federal funding, from somewhere within the Federal-Provincial Purse, or they MAY NOT…but they’re not making it very transparent, just who/what they are, or where their funding is coming from (one of the Crown Corp funding sources, I’m assuming, conveniently listed under “Other”, on the Ministry of Finance’s Crown Corp. expenditures pie chart for 2008-2009, which I now can’t find amongst the 50 tabs I’ve closed, shit.

Properties of the Canadian Business Corporations Act are covered under the Corporations Canada department. With no hits for the ILC. The only rules and regulations on the Net for the ILC is this, which is spectacularly unhelpful, and completely non-transparent.

From a site with an antivirus warning on it (so I won’t link to it here):

“The individual provincial organizations are wholly responsible for any marketing conducted for the national lottery games that fall within their own jurisdictions. The revenues generated by the operation of the lotteries are returned to the provinces. This return of revenues is done according to the proportion of generated sales.”

From here:

“1974-76: The Interprovincial Lottery Corporation was created through an act of the Ontario Legislature, and shortly after was federally incorporated with the western provinces. “ Emphasis mine. Which doesn’t surprise me. It must be buried somewhere in the Western Canada Acts….

Interprovincial Lottery Corporation (ILC)
“This organization joins together the five Canadian lottery corporations and operates Lotto 6/49, Super 7 and Special Event (Celebration). It was formed in 1976 by the Ontario Lottery Corporation (OLC) and the Western Canada Lottery Foundation (WCL). Loto-québec joined in 1978 and the Atlantic Lottery Corporation (ALC) in 1979.

“The ILC makes payments to the Government of Canada as a result of an agreement between the Provincial Governments and the Federal Government on the withdrawal of the Federal Government from the lottery field. The agreement requires the provinces, on a combined basis, to make ongoing payments of $24 million in 1979 dollars annually on an inflation adjusted basis [currently $58.4 million].” – Western Canadian Lottery Corporation Annual Report 2003″

What that means is, the Feds don’t subsidize the ILC/national lottery, but the part I’ve bolded above, indicates the Feds get a kick-back from the ILC for not doing so. Which still doesn’t mean the Provincial Gaming Commissions (that are members of the ILC, but are Crown Corporations in their own right) aren’t taking money out of the Federal pot from somewhere (because they’re Crown Corps). Also, don’t forget, the ILC was “federally incorporated in the western provinces”, which means it IS subsidized by Fed funding, as a Crown corp. But the WCLC (Western Canada Lottery Corp.) does not say straight out on their website they are “federally incorporated”, but given they indicate there are three provinces and two territories under their rubric, I can see why/how they could receive something from the Feds.

But here’s the WCLC annual report from 2009:

“The Interprovincial Lottery Corporation is incorporated under the Canada Business Corporations Act, and its shares are held by Her Majesty the Queen in right of the respective provinces.”

So it’s owned by the Feds, but it’s in that special “dead space” of Crown Corps, where both the provincial and the federal governments have their thumbs in the pie. For instance, the ALC is a provincial Crown Corp, in four provinces, but the revenues are split between the four provinces. No Feds in the picture there. The WCLC being incorporated federally, however, and being a member of the ILC, makes things a bit stickier.

More on Crown Corps, if you’re confused (I don’t think the USA has any equivalent):

“A central rationale of crown corporations is that the commercial activities of government, to be performed successfully, must be shielded from constant government intervention and legislative oversight. Hence, crown corporations enjoy greater administrative freedom than government departments. As government enterprises, however, their autonomy cannot be absolute and must be tempered by some public control over policy-making. The Canadian experience suggests that the imperatives of corporate autonomy, government control, and legislative oversight are often conflicting and difficult to reconcile.”

Such formal controls on crown corporations are buttressed by a range of informal processes and influences. In fact, the relationships between governments and crown corporations, like most political relationships, are sometimes fractious and often characterized by bargaining, negotiations, and compromise. “

Moral of the story, kids? Don’t buy lottery tickets. You’re never entirely certain just where the money is coming from…or going to….

*Thus the Airbus scandal, Shawinigate, and any number of other financial scandals surrounding Canadian governments, past, present, and likely future….