i- Gaming,Canada and the Integrity of Sport

1. i-Gaming,Canada and the Integrity of Sport Presented By: Morden C. Lazarus

2. Canadian Gaming Landscape • Gaming in general is an area of concurrent jurisdiction, in that both the Provincial and Federal governments are involved in its regulation. • However, authority rests with the Federal government of Canada, which continues to govern all gaming related activities as per their exclusive jurisdiction over Criminal Law. • The effect of the “Gaming Provisions” found in sections 197 through 207 of the Criminal Code of Canada make most gaming activities “illegal”, unless such activities are first approved, regulated and/or governed by the Provincial authorities. • In addition, Canada has granted certain Aboriginal Rights, as per s.35 (1) of the Constitution Act of 1982, to the Native and/or First Nations’ people, such as: • - Partnerships with Provincial Governments (ex. Great Blue Heron Casino, First Nations Casinos in Saskatchewan and Casino Rama in Ontario); and • - Unilateral participation by the assertion of their constitutional rights (ex. Mohawks of Kahnawake)

3. Aboriginal Right to Gaming • Aboriginal gaming dates back to well before the arrival of the “European Whiteman” and has historically formed an “integral” part of their native culture. • Over the years, the Aboriginal gaming sector, which ranges from the eastern Maritime provinces to the western province of British Columbia, has brought in hundreds of millions of dollars to native communities, providing funding for countless community projects and services, from hospitals, to schools, and bringing a new spirit of dignity and economic self-sufficiency to First Nations in Canada. • In Ontario, the government operates the Casino Rama, since 1996, and distributes the “net revenue” equally amongst the province’s First Nations. • In Quebec, presently, any and all gaming matters are governed and regulated by the Kahnawake Gaming Commission (KGC), which grants gaming licenses to entities wishing to conduct gaming solely on the reserve; so far, only Bingo and online Poker is permitted.

4. I-Gaming Legal Landscape: • Global market for I-Gaming alone is between $16-$20 billion, with Canada representing approximately $1 billion of that market. • iGamingin Canada is governed in the same way as is land-based (or “brick and mortar) gaming – by the provisions of the Criminal Code of Canada. • Provincial governments, over the past few years, have realized the lucrative potential of online gaming, and are taking advantage of abovementioned provisions by developing their own online offerings: • - Maritime Provinces: ALC • - British Columbia: BCLC • - Quebec: LotoQuébec • - Ontario: OLG

5. Foreign Operators: • The current provisions of the Criminal Code fail to secure a provincial monopoly for iGaming, as it does for land-based gaming. This is due to what has become known as the “Foreign Operator Principle”. • The jurisdiction of the Criminal Code of Canada is restricted to within Canada’s borders as to its application. As a result, operations emanating from outside cannot be regulated by it. • This is how large and credible operators such as, Party.Bwin and William Hill, enter the Canadian market, and accept Canadian players – the totality of their operations is outside of Canada, offshore, and thus, is therefore considered not to be in breach of the anti-gaming provisions of the Criminal Code. • With the ever so fast growth of online gaming, including Sport Betting, the Canadian government felt that it would suffice to take the legal framework, currently in place, and, therefore, subject online operators to the provisions of the Criminal Code. However, because of the “Foreign Operator Principal”, this has become quite difficult, if not impossible.

6. Competition and Liquidity: • As the Criminal Code of Canada grants provincial authority over gaming related matters, including iGaming, the provincial governments take the position that each province can only accept customers that are physically located within the said province. • How then, can provincial corporations compete with online “Foreign Operators” that offer their casino and poker offerings on a global level? • BCLC, ALC and LotoQuébec announced that they plan to join together in a “Consortium”, thereby combining their markets and providing inter-provincial play. But will this really provide sufficient liquidity, enough to compete in the iGaming world, against operators that have existed for over a decade? • Should provincial governments, rather, take a step back as an online operator, and a step forward as an online regulator?

7. Competition and Liquidity • The provincial governments take the position that provincial lottery corporations should not and cannot accept bets and/or players from foreign jurisdictions in order to provide liquidity. • This comes following the Supreme Court of Canada’s decision in the Earth Future Lottery matter, where the PEI Court of Appeal held that a proposed iGaming operation, which was conducted & managed by a charity, could not accept customers outside PEI (or from the world at large),as it would be contrary to ss. 207(1)(b) of the Criminal Code.

8. Competition and Liquidity: • The rationale for geographic restrictions in the Criminal Code of Canada [s. 207(1)(a)] was to prevent inter-provincial competition, not international competition. • Case law already sees provincial government gaming differently than charitable gaming as the public is presumed to be protected whenever governments are involved. • Do these factors merit consideration to allow a legal basis for the international reach of Canadian iGaming Provincial Operations?

9. Integrity of Sports Betting • What is the logic behind prohibiting the betting of single-game sport events (i.e. fights, horse races, hockey, football, etc.)? • - Match-fixing? • Is this logic still valid today? • Does a ban on single-sport betting accomplish these policy goals? • Could working cooperatively with international sports books better protect against match-fixing than a complete prohibition?

10. Integrity of Sports Betting • What would it take to change the Criminal Code of Canada to permit single-game sports betting? • The last amendment to the Criminal Code of Canada with respect to gaming was to permit “craps “ to be played in land based casinos and allow lotteries to be conducted on international cruise ships sailing inside Canadian territorial waters, both of which occurred in 1999. • What were the forces behind such a change? (Loto-Québec) • How can these amendments receive the support of policy makers and/or the public? When answering, we must consider the following:

11. Integrity of Sports Betting • Ineffectiveness of the Current Law • - The logic of the restriction dates back to 1985, when the integrity of sport and prevention of “match-fixing” could be achieved by via land-based restrictions. • - However, at present day, the reality of offshore online sports betting, provides ample opportunity to bet on single sporting events, and circumvent these restrictions. • - If the aim of the policy is to be achieved by these means, what other measures can be taken?

12. Conclusion • Sports betting has been around for years, whether through underground bookies, or regulated provincial schemes (i.eMise-en-Jeu in Quebec). • In order to ensure that sports betting is conducted legally, the Canadian government has in place strict provisions that prevent such activity in the Criminal Code of Canada; simply put, unless you are the government, or have been granted authorization from them, you cannot engage in sports betting. • iGaming presents a unique problem – because of the its ability to transcend borders • the Criminal Code’s applicability is limited solely to the jurisdiction of Canada. Therefore, “Foreign Operators” have been using this “loophole” as way to provide their sports betting offerings to Canadians. • Until the Canadian Government or Provincial Governments draft extraterritorial gaming legislation focused on iGaming , “Foreign Operators” will continue to operate as they are without any legal consequences, since it cannot be alleged that they are breaking Canadian law.