Canada is about to dramatically change gambling landscape

Sports betting and online poker and casino gambling are set to expand in Canada, finally.

Among other gambling laws that may change in Canada, single-game sports betting is on the horizon

For over a decade now, bills have been introduced in Canada to try and end the law that prohibits single game sports betting. Canada's criminal code has a single paragraph that requires sports wagers to contain at least two selections, so when a sports betting lottery was created in Canadian provinces, it required parlay type bets. Unfortunately for the provinces, the high odds on the lottery, the requirement of betting multiple games and the lack of betting options, dissuaded serious sports bettors from playing it. Consequently, politicians introduced bills legalizing single game sports betting and they hoped that would boost attendance and betting at land-based casinos and would attract American sports bettors, who until 2017 could not bet legally on sports in the United States.

Single-game sports betting

The first bill was introduced by Member of Parliament Joe Comartin of Windsor, passed with all party support in the House, but was struck down in the Senate for various reasons. The bill was reintroduced two years later by Brian Masse, also from Windsor, but was voted down in the House after almost every member of the newly elected Liberal government opposed it. The bill was really never heard from again until last year when a Conservative member of parliament from Saskatchewan, Kevin Waugh, introduced bill C-218, which had similar language. The bill was only introduced when it was clear that all former hesitations by the Liberal party had gone away. It easily passed a first reading in the House in 2020 and was adopted by a 303-15 margin in the House just this week. It will need to pass a third reading and then be signed by the Senate, which according to all analysts have dropped their previous objections to the bill and are prepared to rubber stamp a House vote.

sports betting law changes CanadaAside from the fact that many Senators who objected the first time are no longer in the Senate, the opposition by the sports leagues, which was a key sticking point the first time, has disappeared as many leagues like the NBA, NHL and CFL are urging the government to legalize sports betting to help bolster interest in their sports. Moreover, since the United States has already legalized sports betting and over half the states have passed bills to offer it in short time, concerns about backlash from the U.S. government are gone as well. The context of bill C-218 is like previous bills and contends that single game sports betting would help raise taxes for provinces, would dissuade Canadians who bet over $4 billion offshore through unregulated websites and would help eliminate the underground betting economy. It also notes that only $500 million is bet on the sports lotteries, so that isn’t a realistic alternative.

The general feeling in the Canadian gaming industry about the inevitable passing of the law is mixed. Many casino operators and organizations like the Canadian Gaming Association are applauding the decision, saying it's about time the law is amended, but many others are saying that this law provides too little too late and that Canada has missed the boat. They claim that had the Senate simply passed the House bill as they have on every other bill previously, Canada could have had a huge head start on the United States and instead of now reaching for scraps from American sports bettors they could have led the way and attracted a steady and loyal clientele from the U.S. Ironically, Canada actually lost a lot of potential sports bettors to New Jersey, Pennsylvania and New York who already legalized sports betting and provided a great option for Canadian sports bettors who didn't want to travel all the way to Nevada to wager on sports. As one Canadian analyst said, "what could have been a major earthquake in significance will now likely be a small tremor at best."

It seems, however, that the Canadian government has heard the disappointment from their failure to pass a timely sports betting amendment, so there is now a discussion about changing the way provinces can offer other forms of betting as well. Under current law, any gambling must be owned or licensed by provincial governments to be legal. For that reason, casinos are generally owned by the government such as Fallsview Casino in Niagara Falls or Casino Nova Scotia in Halifax. Or, they are licensed to other operators such as Caesars Windsor and regulated by the Ontario government. Smaller casinos are generally government run. Most racetracks also have slots, and the horse racing industry is given a small percentage of the wagering for hosting the slot machines.

Online gambling

A more recent development has been online gambling and again this has generally been run by the governments, although the B.C. and Manitoba governments  outsourced their website to Paddy Power-Betfair, now controlled by SG Digital. Since SG Digital supplies data and gaming services to Flutter Entertainment it’s quite possible that is simply an integrated platform of both companies. In any case, the government still controls the site even if SG Digital provides the information and systems.

Several sources, however, have indicated that the Canadian government is preparing to lift restrictions under the criminal code which would allow provinces to offer products to a multitude of operators without requiring provincial control, and by all accounts Ontario, Quebec and possibly some western provinces are ready to pounce.

online gambling in CanadaThe Ontario government set out a gambling modernization plan in 2011 that was prepared to change the landscape for both land-based and online gambling. In the land-based sector, the government wanted to scrap slots only casinos in racetracks and build 29 larger casinos in every major population center, including four casinos in the Greater Toronto Area. The downtown casino was the main draw and attracted bids from all the casino bigwigs, including MGM, Caesars and the Las Vegas Sands, among others. Unfortunately for Ontario Lottery and Gaming, they never foresaw the local opposition that would arise. Despite strong support by mayor Rob Ford (the brother of Ontario's current Premier), all Toronto casinos were defeated soundly by city council. Moreover, several casinos in other cities were nixed by their councils too. This false promise led to the major casino operators indicating they had no intentions of bidding in Ontario again. A source close to MGM said the company invested over $10 million on the bid and it was such a colossal failure that some who pushed for the bid were let go by the head office. Eventually the city and province agreed to allow two resort casinos at Woodbine racetrack and in the eastern suburb of Pickering, but the licenses were given to Great Canadian Gaming when no others showed much interest. As well the idea to scrap the racetrack casinos was abandoned after the horse racing industry called foul and said that eliminating any slots would kill horse racing in Ontario so the province agreed to allow both.

While the land-based casino fiasco was a black eye, Ontario thinks their real future is with iGaming. The recent COVID-19 pandemic proved the point when land-based casinos were forced to close while iGaming on the website exploded. The changing demographics in Ontario also point to a population that prefers to wager online. So, Ontario is looking to take advantage of the new way of betting and by all accounts is set to open up the iGaming market to any private gambling websites without government interference.

Global operators

The plan mentioned would require operators to pay a tax on gross profits, expected to be about 18% to 20%. This is in line with other regulated iGaming jurisdictions like the UK and by all accounts there will be no need to have a physical presence in Ontario to offer iGaming products. So, companies like Bet365, William Hill and 888 Gaming who currently offer their products to Canadian residents, will still be able to do so, but now it will be legal and sanctioned, opening opportunities for promotion and advertising. Those who do not apply or receive a license would be declared illegal sites. And while Flutter Entertainment left the Canadian market about a decade ago due to uncertainty about Canadian law, it is almost certainly they will come back into the market, likely with the Betfair brand. While the Betfair betting exchange was unpopular in the U.S., it was always very popular in Canada, along with Betfair's sportsbook, poker and casino. As well some sites like Pinnacle Sports, and sites located in Costa Rica, Antigua and Kahnawake may be allowed to operate as well as long as they agree to segregate bets from residents of the province and pay the tax. They will no doubt also be required to meet strict regulatory guidelines that prove the owners of the sites are not criminals, that the sites have enough reserve funds to pay any winning wagers and that they meet requirements regarding geo-locating and preventing problem and underage gambling.

online poker CanadaOnline Poker

Poker is not currently offered in any province, but it is on the list of the next things to be legalized in Ontario and when that happens it's almost certain that PokerStars will steal the show. Canadians can already bet at PokerStars, so there would not be a major change for PokerStars or the government other than for the company pay an agreed to tax rate and possibly use a different URL to log into to identify Canadian betting.  The last part of the revitalization will likely include a law which clearly states that daily fantasy sports is legal, but the operators must pay taxes.

So, Canada seems prepared to radically change their gambling landscape. It’s about time and will finally provide Canadians the opportunity to wager without feeling like criminals. As well with the uncertainty surrounding gambling lifted it is likely that banks will lift their restrictions on betting with credit or debit cards. It is a new world and it’s nice to see that Canada is about to join the fray.

Read insights from Hartley Henderson every week here at OSGA and check out Hartley's RUMOR MILL!

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