Canada’s online gambling front

With US Supreme Court’s recent order paving the way for legalising sports betting in the country, many observers are curiously watching Canada’s gambling scene. But the indications from the country suggest that it may be going in the opposite direction. Canada’s gambling industry has created an income of $17.3 billion CAD last year. It is expected to be higher this year.

Canata online gambling front

The legislation is such that it is legal to bet online, provided the online casino or poker site does not have a physical facility in Canada. Obviously, the provincial casinos, like, Espacejeux, and PlayOLG, have been finding this hard to accept.

The lawmakers are also concerned with this as online gambling results in revenue loss for the state. In 2016, the Quebec legislature passed Bill 74 which, among other things, included a provision to force Internet Service Providers (ISPs) to block international online casino operators.

Loto-Quebec, the provincial gambling body in Quebec, operates, an online casino that requires all players to be residents of Quebec. More importantly, EspaceJeux’s profits are passed on to the provincial government just the same as lotteries and land-based casino profits, which are also regulated. As Simon Stern from explains, up until 2016, Loto-Quebec has stated on the record that they were taking too much of a cut, meaning their Return to Player (RTP) was much lower than competing internationally based casinos. They were unable to grow rapidly enough to be sustainable due to players having easy options to play online where they had a better chance of winning. Since then, Espace Jeux has increased their RTP but are subsequently not meeting their profit goals as the margins tighten. Competition is fierce internationally and the largest online casinos have huge revenues to offer huge welcome bonuses and excellent RTPs. The answer for Quebec was to simply introduce legislation to eliminate the competition by forcing ISPs to block these websites. Bill 74 was passed with exactly that provision in 2016.

How is Quebec Bill 74 supposed to work? Loto-Quebec is to give a list of over 2000 gambling websites that ISPs in the province should block. They are also supposed to offer a tender to international online casinos to become partners with EspaceJeux where they will redirect registered players to these casinos through EspaceJeux but Loto-Quebec will maintain the customer information and take a cut of revenues. Some of the most visited sites from Quebec include PokerStars, and LeoVegas and these parties may be candidates for approval. The law was given many months to set up the appropriate framework to accomplish this goal. All other online casinos will be blocked in the province and the responsibility to block them will be with the ISPs. The ISPs, which include some of the largest corporations in Canada, do not want to take on this burden and civil rights activists are concerned that this action leads the country down a slippery slope of allowing the government to restrict free speech and an open internet.

The consortium of ISPs, the Canadian Wireless Telecommunications Association (CWTA), formally filed complaint to the national body governing telecommunications, the CRTC, who is formally the only organisation who legally have jurisdiction in this case. The CRTC came back with a recommendation that the law was unconstitutional and that they alone, along with the Government of Canada, have jurisdiction but they will await the court’s decision. Thus, the law introduced by the provincial Government of Quebec should not be implemented. The CWTA immediately filed suit in Quebec Superior Court to block the law from being implemented, where it stands today. The court case was delayed until March 2018 where a ruling still awaits. The general consensus among legal scholars is that the law will be rejected on constitutional grounds but will likely head all the way to the Supreme Court of Canada.

What if the law is able to stand? A ruling in favour of Bill 74 would be the first such case that would allow provincial governments to restrict what their residents can view on the internet. The immediate result would be that Quebec residents would be unable to play at international online casinos and poker sites that are not licenced through EspaceJeux and Loto-Quebec. The implications are far-reaching in that it opens the door for similar laws to restrict other facets of a free internet and for other provinces to do the same.