Subsequently, the incident was treated as a labour relations issue and the three employees -- who worked in the surveillance monitoring room -- were "terminated" last spring, said MLC spokeswoman Susan Olynyk.
She said both the corporation's CEO and chairman were informed at that point and agreed with the decision.
She said there were "other issues" involved in the termination, but she couldn't specify what they were.
Olynyk added that when an MLC employee disclosed the existence of the change-room video in early 2003, "we were very, very disturbed by it."
"We took it very seriously," she said, and new procedures have been put in place to prevent another incident.
"Our surveillance equipment is to be used for the protection of our guests, the protection of our customers, our employees and our assets and, of course, to protect game integrity in all of our games."
The case -- which had been covered in the cloak of confidentiality that typifies human-resources issues -- only came to light now because of an anonymous letter about the incident that arrived at the Free Press this week.
Olynik said the decision not to proceed criminally was made because investigators couldn't locate the videotape.
But although MLC investigators reportedly scoured casino surveillance tapes for evidence, the residence of the man who confessed to making a spy-cam-style videotape was never searched.
Only police can seek and execute a search warrant in such circumstances. Nevertheless, MLC investigators kept the case to themselves.
"Due to the lack of evidence of criminal activity, it was deemed not appropriate to go to the police," Olynik said.
There is no legal onus on MLC to call police in -- or even report the incident -- but deputy attorney general Rob Finlayson said yesterday that would be the normal course of events.
"If you think something is not right, you report it to the police," he said, "and you let the police do their job."
Scott Smith, the minister responsible for the Manitoba Lotteries Corporation, ordered a full report of the case after he heard about it for the first time yesterday.
"I'm certainly asking for a lot more detail and what action was taken, or not taken, and why," Smith said.
MLC security chief Gerry Boose said yesterday his team of experienced retired police officers did a "thorough" investigation but weren't able to identify the victim or victims.
But in the letter that was dropped off at the Free Press by someone who called himself "a former MLC employee," the victim was given a name.
The "talented, good-looking" young woman that the letter says was at the centre of the incident would have been just 19 at the time that the unsupervised monitoring-room employees taped her changing costumes between acts.
She appeared with an ensemble of singers three times at Club Regent mainstage in 2000, the same year Boose says MLC investigators believe the tape was made.
The temporary change area is described as a screened area, about two metres square, that's open at the top to surveillance cameras that were supposed to be turned off during costume changes, the letter says.
"She goes into the screen several times to change," the anonymous informant writes, "but she is observed by the Club Regent surveillance crew in the monitoring room and photographed and recorded by techs... "
Here the writer names two men.
The following night, the letter continues, the screened changing room is "adjusted" by one of those involved "so they have a better frontal view."
Later, according to the writer, those involved "show their handiwork" to a pair of female casino co-workers.
The letter contains the names of both.
"One week later at a private party they show the video to guests."
While MLC investigators believe the video was destroyed, the letter-writer claims "copies have been seen just recently."
The anonymous informant doesn't say in the letter whether he has actually viewed the tape.
Olynik said she couldn't verify the accuracy of the information contained in the letter.
On Thursday night, the Free Press contacted one of those named in the letter as having been involved in the incident.
He confirmed that he had worked for MLC, but denied being terminated or having any involvement in the videotaping incident.
He then cut short the interview.
The letter-writer was obviously angry about how MLC handled the incident.
He suspected the young woman was never told she had been filmed, and he speculated that others may have been caught on tape.
He named names of those within MLC who knew about the case and who were involved in the investigation.
He identified a person who he said reported the incident.
He offered telephone numbers -- including cellphone numbers -- where MLC officials could be contacted.
"AND," in large typed letters he demanded to know, "WHY NO CRIMINAL CHARGES LAID?"
The MLC spy-cam episode has echoes of a case that happened a year before the casino videotaping incident is alleged to have occurred.
In early 1999, a 56-year-old Winnipeg man was found guilty of mischief for hiding a camera in the women's washroom of his family restaurant.
He was fined $3,000 and placed on three years probation, and ordered to take counselling and perform 200 hours of community work.
The maximum penalty could have been six months in jail.
At that time, Judge Bruce Miller called the videotaping despicable and said any right-thinking person would be outraged by the gross invasion of privacy the victims endured.
But there was something else that was gnawing at the anonymous letter-writer.
He also wanted to know who, specifically, was responsible for not taking the criminal-charge route.
Boose, MLC's vice-president of corporate security and a veteran of 30 years with the Ontario Provincial Police, said yesterday, "We met and consulted extensively internally. We had our management team along with HR (human resources). We had very, very seasoned investigators involved in this and consulted our legal counsel and concluded it was appropriate to deal with it as a labour relations matter."
The veteran police officer argued that someone confessing to what could be judged a crime isn't enough evidence to call in the police.
"You realize," he added, "the police have to get a search warrant. But the police have to have sufficient evidence to do so."
Asked about the confession, Boose said:
"There was a statement made that there was a tape produced and the tape was destroyed. So, therefore, there would be nothing to search for. I can assure you within our own premises we made a very rigourous search of all tapes and found no evidence that this tape existed."
David Deutscher, a law professor at the University of Manitoba, had a different view.
He said if police had been called in, "there's a reasonable possibility" that a warrant could have been obtained to search the home of the man who admitted making the tape.
Deutscher also said this of MLC's decision to keep it an internal labour relations issue: "I think realistically -- if you're looking at it -- they made a decision not to make this issue public. For whatever reasons."
To some degree, the law professor added, MLC is publicly accountable for that decision.
"And ought to be."