Canada’s Long and Winding Path to Privatized Online Gambling

As part of a recent academic article, I dug into the path that sports betting took to legalization across Canada.

Online casino gaming has emerged on a track that’s largely parallel to online sports betting. For much of Canada’s history, gambling policy emerged rather uniformly, and gambling remotely with computers was the stuff of science fiction until relatively recently.

Single-game sports betting got the green light last year through an amendment to Canada’s Criminal Code. That was also the impetus needed for Ontario’s private online gambling market to take off. However, each of these was only a small step, the foundation for which was laid years ago.

The rise of regulated online gaming will hopefully prove to be a boon for provinces across the country. Along with it comes an effort to eliminate the longstanding gray market. Soon, there will only be white and black markets in Ontario. Some hope that this will be the beginning of a golden era of gaming in Canada’s history.

Where It All Started

Gambling in Canada predates the arrival of Europeans by many centuries, having been a cultural practice of First Nations. Europeans, however, brought with them puritanical gambling bans. However, exceptions were often made in the colonies, just as they were back in Europe. The first sanctioned horse race in what would become Canada reportedly took place in 1767, in Quebec City, a century before Confederation.

In 1845, lotteries were banned in both England and its colonies. The Act banning them even contained an early type of cooperation incentive. Those who testified against gambling house operators could receive amnesty for their own participation.

According to a 1983 research paper by Ronald Robinson of the Royal Canadian Mounted Police (RCMP), the 1845 language banning gambling houses made it into early versions of the Criminal Code of Canada.

Robinson notes that although many gambling activities were banned in England, the Crown benefited from them. He says that the Crown collected significant revenue through gaming licensing regimes up through the 19th century.

The First Criminal Code

The first Criminal Code of Canada became law in 1892. According to Professor Garry Smith, it contained various prohibitions on the operation of gaming houses, bookmaking, and cheating. The ban was not quite total, however. Smith notes that there were certain enumerated exceptions:

  • Pari-mutuel racing
  • Charity bingo
  • Lotteries
  • Low-stakes carnival-type games of chance

Unlike in the US, there was not an organized anti-gambling movement in Canada. However, even without such a movement, parliament was for a long time unable to pass a bill to create provincial lotteries despite 14 attempts from 1930 to 1963.

The Tide Turns in Favor of Lotteries

By the late 1960s, social attitudes were liberalizing towards many things, including gambling. In 1967, then-Justice Minister Pierre Trudeau introduced legislation that would allow for lotteries.

This bill called for a very loose interpretation of the word “lottery.” It potentially allowed for a number of different types of gambling, well beyond the usual drawing of tickets or numbers. Even now, Canadian law uses the phrase “lottery scheme” to mean, essentially, gambling in general.

The legislation, however, did not pass during Trudeau’s term. It would not succeed until after John Turner had succeeded him as Justice Minister.

After the new legislation had amended the Criminal Code, many provinces adopted lotteries, as did the federal government itself. Much of those early proceeds were used to help fund the 1976 Olympics in Montreal. However, the amendments created a fracture between the provinces and the federal government, which were now competing against each other for Canadians’ lottery spending.

Finally, in 1985, the federal government handed the authority over the lotteries to the provinces. In return, it received $100 million in funding for the Calgary Olympics.

Casino Gaming Emerges

Within a few years, casinos began popping up, first in Winnepeg and then in Montreal. These early examples were followed by provinces formally allowing casino gambling. They were able to do so because of the broad definition of “lottery scheme” under federal law.

Of course, by the early 1990s, brick-and-mortar casinos were already starting to face a form of competition that lawmakers hadn’t anticipated. When the Criminal Code was amended in 1985, the internet was still in its infancy. It took a decade before the appearance of the first online gaming operators, who now existed in a largely borderless world.

The New Plan

In 2019, the Ontario government announced its intention to create a competitive market for online gaming and single-game sports wagering. The shared system of governance as it relates to gaming in Canada, however, meant that even Ontario, the most populous province, could not dance alone. Its plans were also nebulous at first, and the arrival of the COVID-19 pandemic the following year pushed them down the province’s list of priorities.

Nevertheless, in June 2021, the provincial government created iGaming Ontario. It gave this new agency the responsibility to conduct and manage online gaming in partnership with the new private sector operators. iGaming Ontario is structured as a subsidiary of the Alcohol and Gaming Commission of Ontario, which regulates gambling in the province.

Despite concerns about the private market from the province’s auditor general, the privatized online gaming market launched on April 4, 2022. The market has established incredibly low barriers to entry, including regulatory fees of only $100,000.

The plan called for companies that had previously serviced Ontario in a period without regulation to cease unregulated operations and cut ties with any suppliers still serving unregulated operators. It was an olive branch of sorts, giving gray market operators a clear and easy path to legitimacy.

Where will Canada Go From Here?

Canada’s online gaming future remains unknown. However, there are undoubtedly a number of provinces watching Ontario’s privatized market very closely. They will be looking to see how the market performs, with an eye to emulating the strategy should it prove successful. Alberta has already made its first steps in that direction, for sports betting at least.

About the Author

John Holden

John Holden is a writer at Bonus, focused on legal and regulatory issues in the gambling industry. He is a full-time academic but has been writing for a number of gaming publications since 2018. He is the author of more than 50 academic publications and hundreds of mainstream articles on the regulation of the gaming industry.

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