Ontario iGaming may be under threat. On Nov. 28, a Notice of Application was filed in the Ontario Superior Court of Justice by the Mohawk Council of Kahnawake against iGaming Ontario (iGO) and the Attorney General of Ontario.
The application filed at a downtown Toronto courthouse could significantly impact the maturing iGaming market in Canada’s largest province. The applicant, the Mohawk Council of Kahnawake, seeks several declarations and orders. They could see the private Ontario online casino and sports betting market disappear if granted in full.
The Notice of Application follows several apparent concerns and rumored lawsuits that had occurred before the launch of the private marketplace.
While the current application is merely the commencement of the litigation process, the consequences could be significant if the filer prevails.
What Is a Notice of Application?
The Notice of Application is filed under Rule 14.05 (3) (h) of the Rules of Civil Procedure under the Courts of Justice Act. Under the act, a Notice of Application is appropriate in some circumstances, including:
in respect of any matter where it is unlikely that there will be any material facts in dispute requiring a trial.
In the United States, the equivalent of this proceeding would be most similar to a motion for summary judgment. However, the Notice of Application is somewhat more direct than the federal system in the United States.
What Is the Council Seeking?
If the applicant receives all that it asks from the Ontario Superior Court of Justice, it will receive:
- A declaration that the Ontario government does not “conduct and manage” the online gaming scheme in Ontario consistent with the Criminal Code of Canada;
- An order that the Ontario Legislature exceeded its authority in approving the iGaming scheme, to the extent it allows online gaming not conducted and managed by the province; or
- An order that schemes should not be allowed to the extent they are not conducted and managed by the province;
- The costs of the application; and
- Any other relief the court finds appropriate.
How the Council Sees Things
The council argues that the 2019 announcement of plans for a privatized iGaming market set in motion an impermissible scheme. It argues that the scheme would see the Ontario government depart from the standard approach of having the Ontario Lottery and Gaming Corporation (OLG) manage gaming. It says the scheme would, instead, grant the Alcohol and Gaming Commission of Ontario (AGCO) the authority to both “conduct and manage” iGaming and serve as the regulator.
The Notice of Application argues that the province went through legislative maneuvering, enabling Ontario’s lieutenant governor to make regulations. Through this maneuvering, the province’s lieutenant governor created iGO. That entity subsequently published application instructions for private market operators to enter the future iGaming market in Ontario.
The Notice of Application highlights that the Application Guide stated:
The Guide explains that in general, private operators operating a gaming site would have “control” over the site, and “ongoing responsibility for the gaming site as a whole, including key decision-making activities.”
The filing argues that the private management (and conducting) of gaming was reinforced in the published Registrar’s Standards for iGaming, where the applicant argues:
Among other things, the Standards make private operators that are registered, and which have entered into commercial agreements with IGO, responsible for the conduct
and management of their online gaming platforms.
The application then goes on to argue lingering questions about the scheme’s legality.
In January 2022, the province announced that the iGaming market would open for Ontarians on April 4. Indeed, the market did open on schedule.
The Problem with the Scheme?
The application argues that the problem with the regulatory scheme is that it is incompatible with the requirements of Section 207 of the Criminal Code of Canada. That section of the Criminal Code allows provinces to “conduct and manage” lottery schemes.
Among other things, the Notice of Application argues:
- Private operators, not the province, are the owners and operators of the iGaming platforms;
- Private operators are the key decision-makers;
- Private operators are responsible for ensuring compliance with the standards;
- Private operators are the primary beneficiaries of the revenue from the iGaming scheme.
In the view of the applicant, this combination of factors amounts to the private operators serving as those conducting and managing iGaming in Ontario, not the province.
What to Make of This?
The Notice of Application is significant, as it will serve as the first real test of the vital question faced by the Ontario market since the scheme was proposed in 2019-2020.
We are still likely some time away from a decision in this matter. Alternative outcomes, including settlement, could be possible.
However, the case is undoubtedly drawing significant interest from other provinces. They have been shy about following in Ontario’s footsteps and privatizing iGaming or sports betting markets.