Status Of Online Gambling Laws In Canada

Status Of Online Gambling Laws In Canada

Online gambling has been growing rapidly around the world for some time now. Countries are engaged in regulating this activity in the way they deem fit for their citizens. The online gambling laws in Canada have also undergone change and are still in a state of evolution. Before you start on this entertaining and rewarding activity, it is a good idea to be aware of the terrain and what the future holds out.

On this page we explain the current laws in Canada with respect to online casino gambling, and other verticals as well. There are several doubts floating around on various Internet sites. Our researched views backed by solid references will clearly inform you what is legal and what is illegal. We will also discuss the few areas where law experts have divergent views. Finally we will unfold possible scenarios of the future of online gambling in Canada.

The issues will be dealt through the following sections.

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History of Gambling in Canada

The Criminal Code of Canada 1892

Prior to 1892 there was no legislation to control gambling in Canada. Gambling was largely in the domain of organised mobs and conducted in a disreputable manner.

The Criminal Code of Canada received royal assent on July 9, 1892, and came into force on July 1, 1893. Sections 196 onwards define gambling; proclaim gambling as illegal and prescribe punishments [1]. All forms of gambling were made illegal because the activity was considered an offence against religion, morals and public. Table 1 lists some of the important sections in the original code.

Table 1: Important Sections Related to Gambling in Criminal Code 1892

SectionDescription
196Common gaming house defined
199Playing in gaming house is illegal
204Betting is illegal
205Lotteries are illegal

Relaxation of Gambling Laws

The beginning of the 20th century saw a gradual relaxation in the gambling laws by amending and creating exceptions to the 1892 Criminal Code. In 1900 bingo and casual raffles were allowed for charitable events only. In 1910 horse races were legalized. Over the next 30 years games of chance were legalised in a social setting provided the organisers did not profit from the games.

Provinces Are Given Control

In 1969 control was transferred to the provinces when the federal government decided to allow them to hold their own lotteries in order to fund various local projects. The Code was amended to read [2]:

207 (1) Notwithstanding any of the provisions of this Part relating to gaming and betting, it is lawful

  • (a) for the government of a province, either alone or in conjunction with the government of another province, to conduct and manage a lottery scheme in that province, or in that and the other province, in accordance with any law enacted by the legislature of that province;

In 1985, the federal government decided to devolve all control of gambling to the individual provinces. This meant that each province could enact gambling laws to legalize most forms of gambling as they chose. As a result, casinos started to appear in the provinces as gambling operations started to become more and more popular among local players [3].

Just for the record, horse racing, which is regulated by the Canadian Pari-Mutuel Agency, a unit of the Agriculture Department is the only form of gambling regulated by the federal government. According to section 204 of the Criminal Code pari-mutuel betting does not constitute illegal gambling actions [3].

Online Gambling

Online casinos came to Canada through offshore operators, as they did elsewhere in the world. Canada became a popular market for online casinos, with most of them accepting payments in Canadian dollars to make it convenient for players. Since these sites had no presence in Canada, they were able to bypass the legal gambling prohibitions to start with. Concerned with the revenue flight some of the provinces enacted laws to offer online gambling. The online gambling had to be provided by a designated government agency. Players from other provinces were not allowed to bet, unless specific agreements were in place.

British Columbia took the lead through the British Columbia Lottery Corporation (BCLC). The time line is displayed in Table 2 below [4].

Table 2: Online Gambling Time Line for British Columbia

YearEvent
2004PlayNow.com launched for online play
2010The first state regulated online casino in North America launched on PlayNow.com
2011Online poker started in conjunction with Loto-Quebec
2012Manitoba residents allowed to access PlayNow.com

Despite the emergence of state owned online gambling, traffic at offshore sites has not abated. Sandra Rubin, a Toronto-based writer and strategic consultant estimated that Canadians placed at least $4-billion worth of bets a year outside the reach of provincial regulators [5].

Sports Betting

Sports Betting is available, offline and online, through the provinces, but there is an important rider. This form of gambling is limited to parlay bets, requiring punters to successfully wager on two or more games in order to receive a cash payout. This restriction is driving bettors away from state owned service providers to offshore online sports books.

Attempts were made between 2012 and 2016 to amend the Code to include betting on a single sports event. Bill C-290 was passed through the House of Commons, but was stalled in the Senate till it expired [6]. In 2016, a new proposal through Bill C-221 was defeated at the House of Commons [7].

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Canadian Provinces and Online Gambling

Status Of Online Gambling Laws In Canada

Since Canada offers online gambling services through its provinces, territories and Kahnawake, each of them will be reviewed in detail. The focus is on online gambling that is licensed and operated by the government.

Ontario

Residents of Ontario can play casino games online at PlayOLG.ca, which is regulated by the Ontario Lottery and Gaming Corporation.

  • StarOperating since 2016
  • StarOffers casino games from IGT and Bally Technologies
  • StarGames include slot games, progressive jackpots, table games and video poker
  • StarCan bet on horse races through HPIBet

Ontario permits sports betting through Pro-Line. Bets can be placed online or through lottery centres.

Land based forms of gambling include casinos, slot machines, horse racing, lottery and charitable gaming.

Quebec

Residents of Quebec can play casino games online at Espacejeux, which is regulated by Loto Quebec.

  • StarOperating since 2010
  • StarOffers casino games from IGT, Amaya, Williams and others
  • StarGames include slot games, live casino, table games, virtual sports and keno
  • StarAlso offers sports betting (through Mise-O-Jeu), poker and bingo

Land based forms of gambling include casinos, sports betting, video lottery terminals, charitable gaming and lottery.

Nova Scotia

There is no province regulated online casino or poker gaming in Nova Scotia. However, the Alcohol, Gaming, Fuel and Tobacco Division Service regulates lotteries and some games of chance through the Atlantic Lottery Corporation.

Land based forms of gambling include government owned casinos, horse racing, video lottery terminals, charitable gaming and lottery.

New Brunswick

There is no province regulated online casino or poker gaming in New Brunswick. However, the New Brunswick Lotteries and Gaming Corporation regulates lotteries and some games of chance through the Atlantic Lottery Corporation.

Land based forms of gambling include casinos, harness racing, video lottery terminals, charitable gaming and lottery.

Manitoba

Residents of Manitoba can play casino games online at PlayNow.com, through Manitoba Liquor & Lotteries. PlayNow.com is the online gambling site operated by the British Colombia Lottery Corporation. The province subscribes to the lotteries of the Western Canada Lottery Corporation. Tickets can be purchased online or at licensed retailers.

Land based forms of gambling include casinos, horse racing, lottery, charitable gaming and video lottery terminals.

British Columbia

Residents of British Columbia can play casino games online at PlayNow.com, which is regulated by the British Columbia Lottery Corporation.

  • StarOperating since 2010
  • StarOffers casino games from IGT and Bally Technologies
  • StarGames include slot games, progressive jackpots, table games, blackjack, live casino, instant wins and video poker
  • StarAlso offers lottery, poker, sports betting and bingo

Land based forms of gambling include casinos, horse racing, sports betting, lottery and charitable gaming.

Prince Edward Island

There is no province regulated online casino or poker gaming in Prince Edward Island. However, the Lotteries Commission offers online lotteries through the Atlantic Lottery Corporation.

Land based forms of gambling include casinos, horse racing, lottery, video lottery terminals and charitable gaming.

Newfoundland and Labrador

There is no province regulated online casino or poker gaming in Newfoundland and Labrador. However, residents can participate in the lotteries of the Atlantic Lottery Corporation. The Pro-Line service offers parlay sports wagering

Land based forms of gambling include horse racing, lottery, video lottery terminals and charitable gaming.

Saskatchewan

There is no province regulated online casino or poker gaming in Saskatchewan. The lotteries are conducted by Saskatchewan Lotteries and sports betting through Sports Select.

Land based forms of gambling include casinos, sports betting, horse racing, lottery, video lottery terminals and charitable gaming.

Alberta

There is no province regulated online casino or poker gaming in Alberta. However, the Alberta Gaming and Liquor Commission offers online lotteries through the Western Canada Lottery Corporation. The Sport Select service provides parlay style sports betting online.

Land based forms of gambling include casinos, sports betting, horse racing, lottery, video lottery terminals and charitable gaming.

Table 3 summarises some important statistics of the three province owned casinos for the fiscal year 2018-19.

Table 3: Gross Revenue v Population Statistics for Provincial Online Casinos in 2018-19 [8]

ProvinceOnline SiteYear EstOnline Gambling Revenue in C$ mPopulation in m
OntarioPlayOLG201692.014.3
QuebecEspacejeux2010105.48.4
British ColumbiaPlayNow2010149.85.0

Territories

The three territories in Canada are Yukon, Nunavut and Northwest Territories. They are under the federal government and hence cannot enact online gambling legislation on their own. Their residents do not have access to state owned online casinos. Lotteries can be accessed through the Western Canada Lottery Corporation and sports betting through Sport Select. Online access is available for both.

There are no land casinos in any of these territories. Charitable gambling is permitted in Yukon and Nunavut. Nunavut also offers video lottery terminals and slot machines in bars and taverns.

Kahnawake

Kahnawake is a First Nations reserve belonging to the Mohawk tribe situated within the borders of Quebec. The position of Kahnawake is perhaps unique in the history of online gaming. The First Nations tribes in Canada are permitted to operate land based casinos in their reserves. However, the federal law allows only provinces to license online casinos and therefore it does not apply to Kahnawake. The Mohawk tribe, that claims a sovereign authority of its own, has refused to recognise this law and has created one of the oldest online gaming regulatory bodies, the Kahnawake Gaming Commission. The Kahnawake Gaming Commission has licensed several online casinos and other online gambling verticals that offer services across the world, including in Canada.

The online casinos licensed by regulatory authorities located outside Canada can claim that they are not violating Canadian law in accepting Canadian players on the grounds that they do not have a physical presence in the country. This does not apply to the Kahnawake Gaming Commission. Though this has led to strained relations between the province of Quebec and the Kahnawake Gaming Commission, no legal action has been taken against the Commission. [9]

Legal Implications For Operators And Players

When you get down to legal brass tacks, you will find grey areas in the Canadian online gambling system. These have to be seen from two different perspectives – the players' and the online casino operators'.

Players' Perspective

The general opinion is that it is not illegal for a player to place bets an online casino or stake real money at any other online gambling vertical. However, contrary views have been expressed by legal experts.

201 (2)(a) that states in effect – “Everyone who is found, without lawful excuse, in a common gaming house or common betting house is guilty of an offence punishable on summary conviction.” The definition of “common gaming house” under the relevant portions of 197(1) could arguably apply to the online casino. The question arises whether a player sitting at home playing at an online casino whose servers and offices are obviously elsewhere can be considered to be in a common gaming house. Valerie Jepson refers to 206(1)(b) and concludes that this section makes it illegal for any Canadian to participate in a game of chance. [10]

Michael Lipton, partner at the law firm Dickinson Wright, provides the opposite view. He opines, “As far as I'm concerned, you as a player aren't committing any criminal offence by being in a position where you are engaged with an offshore operator playing poker, playing slots, or whatever the case may be." [11]

If you believe the old adage, the proof of the pudding is in the eating, then keep in mind that no player in Canada has ever been prosecuted for engaging in online gambling. If you are spinning slots at an offshore online casino, whatever else may happen, a member of the Royal Canadian Mounted Police will not knock at your door. At least not until the government has made its intent clear in advance.

Casino Operators' Perspective

Online casinos that are licensed and regulated by institutions designated by the provincial governments are legal. There can be no questioning that. The issue is regarding the offshore operators that are providing online casino services to Canadian players.

Michael Lipton opines that the law is not grey [11]. He states, “ … I can point to a particular provision in the Criminal Code and I can tell an offshore operator, under the circumstances, that if you do such and such then you could be prosecuted under that particular section of the Criminal Code."

He was referring to 202(1) that runs into 10 sub clauses. The import of this section is that if the online casino operator has a presence in Canada then it is breaking the law. The most easily detected presences are tangible ones like offices or servers. Also easy to pin down are real world advertisements in Canada and contracts registered in Canada.

This has been tested in the British Columbia Supreme Court in 2001 in a case involving Starnet Communications International, a Delaware based corporation. The company, which had a gambling licence from Antigua, also kept an office in Vancouver, where their server was located. The court judged that the company was guilty of violating Canadian gambling laws and forced them to forfeit almost $4 million in revenue and pay a fine of $100,000 [12].

In 2013 Ontario authorities conducted raids in Markham and seized cash at a “Super Bowl Party” organised for invitee customers by Platinum Sports Book, a Costa Rica based online gambling site. In 2018, David Hair of Platinum Sports Book was sentenced to two years' imprisonment and $3 million in fines [13].

The trickier issue is of offshore online gambling sites that have zero physical presence in Canada, and there are several hundreds of them. It can be argued that since the player is in Canada when he places the online bet the money transaction has taken place in Canada and therefore the law has been broken. The legality of this has yet to be tested in court. According to Lipton, until that happens, uncertainty will linger over the legal status of this aspect of offshore online gambling sites [11].

Such a test is not likely to happen in the near future. Without any assets to seize or personnel to arrest an investigation and court case is likely to prove fruitless. The online casino will not participate in the proceedings and no judgement can be enforced.

Future Of Online Gambling In Canada

It is easier to state what is unlikely to happen in the foreseeable future. The United Kingdom model will not come in to play. In this model the state licenses and regulates private online casinos and collects a share of the revenue through fees and taxes. With self-owned casinos, the provinces in Canada are getting the full revenue so why would they be willing to share it with private operators. The funds are much needed for deployment in projects that will benefit society.

There is another reason for the provincial governments retaining absolute control over online gambling. There is concern among some segments, though perhaps unfounded, that the existing offshore online casinos are not being operated fairly and that players are succumbing to gambling addiction. Directly establishing online casinos will give the government greater control in preventing these issues rather than having merely oversight powers.

The tussle in Canada will therefore be between the province owned sites and the offshore sites. The money involved is huge and growing fast. Most of it is estimated to be going offshore. The provincial governments will try to attract players directly and by making it more difficult for offshore players to operate. The offshore online casino operators will try and find innovative ways of beating these efforts. This battle is expected to be long drawn. Let us look at some of the specifics.

More Provinces To Get Involved With Online Gambling

Only four of the bigger provinces offer government owned online gambling sites. Six of the smaller ones and the territories do not. It is perhaps not economical for them to start such a venture given their small population. But sooner, rather than later, they will associate with one of the existing provincial online casinos.

Provincial Online Casinos Will Improve Their Products

It is reasonable to assume that if the provincial casinos and offshore casinos are on par Canadian players will prefer the former. The provincial casinos are obviously lacking in certain areas and this will be addressed soon.

  • There are very few games suppliers to the provincial online casinos. These are no doubt among the best, but very few. Many offshore online casinos offer games from over 20 software providers. Players seeking iconic games from Microgaming, Playtech or NetEnt will have to go offshore. Soon we should see the provincial online casinos embracing these games suppliers.
  • Online poker requires large pool of players in order to be viable. British Columbia and Quebec already offering combined online poker products [14]. The other provinces are likely to join hands.
  • Online sports betting will remain a problem area. Offshore sites offer the complete range of bets while the provincial sites are constrained by federal law to offer only parlay bets, which are the least preferred. A few years ago an attempt was made to amend the federal law, but was unsuccessful. The Canadian political establishment is probably concerned with more serious issues and the sports betting amendment will lie on the backburner for a while.

Canadian Government Will Get More Proactive Against the Offshore Sites

While legal action against the offshore online casinos is not likely to be an immediate option, there are many hurdles that the Canadian government can place in their path.

  1. Making deposits and withdrawals is the weakest link in the operations of offshore online casinos, particularly from countries where they are not welcome. Many offshore casinos transact in Canadian dollars so as to make the process easier. They try to hide the trail by carrying out the transactions through third parties. However, it is likely that the government will use its resources and abilities to trace this money flow and take action based on the laws.
  2. Deposits to online casinos are mainly made using credit cards and electronic wallets. For the companies offering these services, the online casino transactions form an insignificant part of their business. The government is likely to exert greater pressure on these service providers forcing them to stop the casino business or risk jeopardising their entire business.
  3. An extreme but effective step is forcing ISP blocking of offshore online casino sites. It had been tried by the provincial government of Quebec, which had to relent in the face of opposition. It was considered a violation of fundamental rights [15]. If implemented, this could be a game changer in the war over the online gaming market.

More Offshore Bitcoin Online Casinos

One way that can be used to avoid the hassles involved in national regulations on currency transfer is to go the crypto currency route. Many online casinos are transacting deposits and withdrawals in Bitcoin and other virtual currencies. Some even hold player balances in Bitcoin and allow players to place bets in that currency. More and more online casinos offering services to Canadian players will go the Bitcoin way so as to offset any action taken by the provincial governments with regard to currency and payment method control.

Frequently Asked QuestionsFrequently Asked Questions

There are two types. The first type is that which is licensed and regulated by one of the provincial governments. The second type is that which is licensed by an offshore jurisdiction like Malta, Gibraltar or Curacao.

The general legal opinion is that it is legal for players to place bets at offshore online casinos and other gambling verticals. No player has been prosecuted by the law for playing at offshore online casinos, and the numbers that play are huge. However, you should be aware that the law does not explicitly allow players to wager at offshore casinos.

Offshore online casinos offer larger number of games and greater variety of games. This stems from the fact that many of them are powered by multiple games suppliers, often in excess of 20. Provincial online casinos on the other hand are powered by very few games suppliers and as yet offer limited numbers and variety.

The biggest advantage is that you have recourse to the Canadian legal system. Consider that you have a dispute with an offshore online casino. You can approach the licensing authority or the independent dispute resolution provider. The Canadian government, provincial or federal, will not recognise your claim. On the other hand, provincial online casinos are subject to Canadian law and can be taken to Canadian courts should the need arise.

Yes. Just as offshore casinos do, provincial casinos also offer bonuses to new and existing players. They also host promotional events from time to time. You will need to check the promotions page of the casino web sites for the current offers.

Slots are the main fare. You can also play table games like blackjack and roulette as well as video poker games. Some provincial casinos have live dealer games as well. Apart from casino games you also have online poker, online bingo and online sports betting at some of these online gambling sites.

British Columbia, Ontario and Quebec host their own sites. Residents of Manitoba can play at the British Columbia site through a special arrangement.

No. You can play only at the online casino site hosted by your province or a site with which your province has an agreement.

Then you are constrained to play at offshore online casinos only.

Though the Kahnawake region lies within Canada, it is governed by the First Nations tribe. The Canadian government does not accept these online casinos as legal but has up till now refrained from taking any action against them.

Offshore online sportsbooks are much better because they offer the complete range of bets. Provincial online sportsbooks are allowed to offer only parlay bets. This means that you have to bet on two or more of the offered events and win on all in order to get paid.

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