TORONTO - Ontario may have to consider banning all retailers and other lottery insiders from playing unless "rampant fraud" is purged from the system within six months, provincial watchdog Andre Marin warned Thursday.

If the Ontario Lottery and Gaming Corp. can't show the problem is under control by that time, the outspoken ombudsman said he will ask the provincial government to stop ticket sellers and their families from playing altogether.

"Playing the lottery is not a God-given right in Ontario -- it is a privilege," he said.

"If retailers and insiders can't control their itchy fingers that demonstrate they're not responsible lottery players, then it's not worth the tens of millions of dollars to police them. We should just ban them outright."

His comments follow a sweeping forensic audit Wednesday that revealed lottery insiders in Ontario won prizes totalling $198 million over the past 13 years.

Marin said he was stunned by the "astronomical" sum and said the corporation still has a problem with dishonest lottery insiders that must be addressed.

"The insiders right now are in the purgatory -- they've got one last chance to get their act together," he said.

"If insiders, retailers prove that they're an ungovernable lot, then we should ban them from playing the lottery."

The agency has been trying to rebuild consumer confidence and enhance security since Marin accused unscrupulous retailers of collecting tens of millions of dollars in "dishonest" winnings -- and the lottery corporation of letting them get away with it.

At the time of his 2007 report, Marin praised the corporation for its co-operation in his investigation of insider wins.

Now it seems clear, he said Thursday, that the organization was not as open as it could have been.

Many of the senior managers have since been replaced, which has put the agency on the "right track," Marin said.

But it's impossible to gauge how much money insiders have won, he said.

The audit used very conservative numbers, and there's still a "whole bunch" of money unaccounted for, he added.

"So this could well become the half-billion-dollar fiasco," Marin said.

OLG chief executive officer Kelly McDougald said a ban on insiders hasn't been ruled out.

"We're seeing great progress in terms of some of the controls we've implemented," she said.

"But if that's not working, of course we'll consider that."

A spokeswoman for Energy and Infrastructure Minister George Smitherman wouldn't speculate on whether the government would ban insiders from playing.

But the ministry will consider any security-enhancing measures the OLG board proposes, said Amy Tang.

That's just not good enough, the opposition parties complained.

"There has to be someone who is going to step forward and control all of this, and it's the minister's responsibility to do that," said Progressive Conservative critic Frank Klees.

"I just think that even the ombudsman's response to this falls far short of the kind of accountability that the people of this province deserve and need."

The forensic audit by Deloitte and Touche found that $198 million in prizes claimed by lottery insiders made up 3.4 per cent of the total winnings claimed at prize offices from 1995 to 2008.

Prizes of more than $990 must be claimed at prize offices instead of retail locations. Before November 2003 that amount was $300.

The auditors couldn't say whether insiders had a disproportionately high number of wins.

The Ontario Convenience Stores Association said it wants the OLG to remove terminals and tickets from retailers who are found to have cheated customers or the corporation.

"The majority of lottery retailers are honest," association president Dave Bryans said in a statement.

"But the fact that more retailers than we thought may have defrauded the system is disturbing news and frankly makes the tens of thousands of honest, hard-working people in our industry angry."

The OLG said Wednesday the report and the data behind it are now in the hands of Ontario Provincial Police.

All insider wins have been directly investigated by the police branch of the Alcohol and Gaming Commission of Ontario since Jan. 1, 2008, and they have since laid several charges.