Date of Currency: December 4, 2020

There has been considerable excitement this week about news that Canada is finally entering the next phase in potentially legalizing single-event sports betting. Proposing changes to the Criminal Code, Federal Justice Minister and Attorney General David Lametti introduced Bill C-13, “An Act to amend the Criminal Code (single-event sport betting)”, in the House of Commons on November 26, 2020.

Why has the industry made such a fuss about this and why is it important?

These changes, giving Provinces and Territories the power to offer and regulate most single-event sport betting and associated products and services, would be a big step towards curbing the illegal black market that many Canadians currently turn to for single-event sports betting.

Currently, Provinces are restricted by federal legislation to only provide betting on the outcome of multiple events. For example, they can take a bet from a punter who is betting on the outcome of multiple matches in the same wager. Most bettors prefer to bet on single events, and the restriction imposed by the federal legislation has cut the Provinces out of serving this large market. The vacuum has been filled by offshore operators, and as that action goes offshore, so does Provincial revenue.

Another reason Bill C-13 is noteworthy is the expected new online gaming regime to be adopted by the Province of Ontario. The Ontario government has recently undertaken to open its market to third-party B2C operators who are registered and licensed with the Alcohol Gaming Commission of Ontario. Opening a potentially lucrative market of this size while the legacy parlay betting requirement is still in place would be missing a big opportunity to properly welcome the international industry to participate fully in the market opportunity.

A curiosity in the legislation proposed by Bill C-13 is that gaming operators would continue to be restricted in taking pari-mutuel bets on horse races. In other words, the proposed new law won’t allow a bettor to bet on one winning horse.  Why this is to remain on the books is anyone’s guess, but some progress is better than none.

What’s in the bill? What kind of sports betting will become legal if the bill passes?

Bill C-13 proposes to change the wording of Criminal Code s207(4)(b).

Right now, it is lawful for the government of a province to conduct and manage a lottery scheme[1]. Therefore, if something counts as a lottery scheme, then it’s legal for the Provinces to run and/or regulate it.

 The section currently defines “lottery scheme” and looks like this (emphasis added):

  • lottery scheme means a game or any proposal, scheme, plan, means, device, contrivance or operation described in any of paragraphs 206(1)(a) to (g), whether or not it involves betting, pool selling or a pool system of betting. It does not include: …
    • (b) bookmaking, pool selling or the making or recording of bets, including bets made through the agency of a pool or pari-mutuel system, on any race or fight, or on a single sporting event or athletic contest; …

As you can see, bets on single sporting events in Canada are currently excluded from the definition a lottery scheme, meaning that the Provinces can’t run single-event sports betting.

If Bill C-13 succeeds, the relevant exclusions will look like this:

    • (b) bookmaking, pool selling or the making or recording of bets, including bets made through the agency of a pool or pari-mutuel system, on any horse-race …

Thus, Bill C-13 aims to effectively erase single sporting events and athletic contests from the exclusions of the definition of “lottery scheme”.

If this bill succeeds, both online and in-person single-event sports betting would potentially be available to the Canadian market if the Provinces choose to allow it. All sports could be on the table except single-event bets on horse racing, which would remain pari-mutuel only.

Who’s on board with this?

There’s been growing support for legalization across Canada. Provincial governments such as the provincial government of Ontario has already expressed support[2] for legalizing single-event sports betting, along with provincial lottery operators such as the British Columbia Lottery Corporation (BCLC)[3].

The Canadian Gaming Association also made a statement[4] expressing support. In a time of economic uncertainty in the face of a global pandemic, it is unsurprising that, like many industries, the Canadian gaming industry has suffered. The CGA’s president Paul Burns has described this year as “horrendous” for the gaming industry [5], with people staying away from in-person casinos and racetracks due to safety concerns. Therefore, legalization is considered a welcome way to boost the industry and Canada’s economy.

Is single-event sports betting legal elsewhere?

Absolutely. Over twenty-five[6] American states have already voted to legalize single-event sports betting, leaving Canada behind the times as communities like Windsor and Niagara struggle to compete with more comprehensive gaming regimes south of the border.

What happens next? How close is Bill C-13 to becoming law?

This week’s first reading of the bill is only the latest step in legalization. It still needs to go on for a second and third reading, which must be passed by the House and the Senate before becoming law. It could take months or even longer for a bill to work its way through the legislative process.

Is this a good idea?

We at Segev LLP think this is a positive development for the Canadian economy and the gaming industry.  In addition to moving away from a paternalistic, prohibition-based legal framework, the legalization of single-events sports betting in Canada paves the way for:

  • better regulations that allow for consumer protection, responsible gaming, and the reduction of gambling-related harm;
  • taking business away from the black market and giving it to law-abiding sports betting operators, reducing the likelihood of money laundering;
  • more taxable income that grows the Canadian economy; and
  • more fun for those who enjoy gambling responsibly

Have any questions? Contact our talented and knowledgeable lawyers at Segev LLP at 604-629-5400 or via email at [email protected].

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Disclaimer
The above blog post is provided for informational purposes only and has not been tailored to your specific circumstances. This blog post does not constitute legal advice or other professional advice and may not be relied upon as such. 

References

[1] Criminal Code, RSC 1985, c C-46, s 207(1)(a).

[2] https://windsorstar.com/news/province-confirms-support-for-single-event-sports-betting

[3] https://www.igbnorthamerica.com/bclc-and-thescore-back-canadian-single-event-betting-push/

[4] http://canadiangaming.ca/canadian-gaming-association-urges-quick-action-on-legislation-for-sports-betting/

[5] https://www.cbc.ca/news/politics/legalize-single-event-sports-betting-1.5816059

[6] http://www.canadiangamingbusiness.com/USGamblingIndustryWinsBigatElection.aspx