Premier Doug Ford’s government is seeking a precedent-setting court ruling on whether Ontario’s regulated online gaming sites can legally allow gamblers in the province to play with people outside Canada.
The case, which is scheduled to be heard in a Toronto courtroom this fall, was triggered by an order-in-council from Ford’s cabinet earlier this year.
That cabinet order asks the Ontario Court of Appeal to rule on this question: “Would legal online gaming and sports betting remain lawful under the Criminal Code if its users were permitted to participate in games and betting involving individuals outside of Canada?”
At stake in the case, according to industry insiders, are hundreds of millions of dollars in potential wagers on online poker and daily sports fantasy betting sites, which currently cannot legally allow Ontarians to mix with their global pools of players.
“You could see, I think, a significant increase in the poker business in the province,” said Paul Burns, president and CEO of the Canadian Gaming Association, which represents the industry and is an intervenor in the court case.
Online gaming companies say many Ontario poker players are skipping the provincially regulated sites and opting for international ones in search of higher stakes games. They say a ruling in favour of allowing Ontario players to mix with non-Canadians would bring those gamblers into the regulated system – and along with them, more revenue to the province.
The case is drawing national attention, with lottery and gaming agencies from nearly every other province asking the court to rule against the international player expansion that Ontario is seeking.
Governments in Canada have the right to seek a pre-emptive legal opinion from court, known as a reference, but only use it rarely. The last significant reference case launched by Ontario was in 2019, seeking a ruling on the constitutionality of the federal carbon tax, a case the province ultimately lost.
Ontario plan would exclude gamblers from other provinces
A spokesperson for Ontario Attorney General Doug Downey says the province is bringing the online gambling reference case to get clarity on whether a model that permits international play would be lawful.
“The federal Criminal Code is not sufficiently clear on whether Ontarians can participate in online gaming with players in other countries,” said Downey’s press secretary Jack Fazzari in an email to CBC News.
“It’s important that we get this right to provide the most legal certainty to operators and players as this new industry grows in Ontario,” Fazzari said.
The model proposed by Ontario would prohibit players from other provinces from participating along with the offshore gamblers.
However, the lottery and gaming agencies that oppose Ontario’s plan — those that manage gambling in British Columbia, Saskatchewan, Manitoba and the four Atlantic provinces — say in a court document they’re concerned that it “could lead to the further proliferation of illegal online gambling in the jurisdictions in which they operate.”
The other provincial agencies have submitted evidence to the court that Canadian players outside of Ontario can currently register and bet on the international websites of Ontario-regulated online gambling companies, even though that’s technically illegal.
The Canadian Gaming Association asked the court to block public access to that evidence, arguing it could harm the reputation of the companies involved, but a judge ruled against that request in July.
The case comes amid complaints that many of these same Ontario-regulated online gambling companies are bombarding other provinces with advertising for their sports betting and casino websites.
It also comes on the heels of a May ruling in a separate case, brought by the Mohawk Council of Kahnawà:ke, upholding Ontario’s existing online gambling regime as lawful.
While provincial lottery and gaming agencies across the country offer their own online gambling sites, Ontario was the first to allow private companies a legal route to operate.
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That began in April 2022 with the creation of iGaming Ontario, an agency wholly owned by the province through the Alcohol and Gaming Commission of Ontario.
While iGaming Ontario conducts and manages online gambling in the province, it has licensed 47 companies as operators. Over the past two years, those companies have attracted tens of billions of dollars in wagers, earned billions in profits and generated hundreds of millions of dollars for the provincial treasury.
$790M: Ontario’s take from online gambling in 2023-24
The province takes 20 per cent of the regulated gambling sites’ revenues (defined as wagers minus payouts). Including taxes, Ontario collected an estimated $790 million from the online gambling industry last year.
Ontario’s attorney general has submitted more than 700 pages of documents to the Court of Appeal to weigh in on whether its online gaming regime would remain legal under the Criminal Code if its Ontario-based participant pool is expanded to include players based offshore.
Under the current system, with Ontario gamblers relegated to playing online poker amongst themselves, the peer-to-peer poker sites are attracting only a fraction of the wagers of Ontario’s online casino and sports betting sites.
Figures from iGaming Ontario for the 2023-24 fiscal year show $51.7 billion wagered on provincially regulated online casino sites and $9.7 billion on sports betting, compared with $1.6 billion on peer-to-peer poker.
A spokesperson for iGaming Ontario says pay-for-play daily fantasy sports products are not currently offered by any registered operators, and says peer-to-peer poker accounts for just two to three per cent of wagers on the province’s regulated sites.
“An open and competitive market that players want to participate in is the single biggest thing iGaming Ontario can do … to reduce the unregulated market and shift players into the regulated one,” said the spokesperson in an email to CBC News.
Current system ‘drives players to black market’: poker operator
Lawyers for two online gaming companies argue the province’s current system for online poker undermines the government’s goal of bringing Ontario gamblers to provincially regulated sites and apps.
“There is a much greater diversity of poker game types and player experiences available in the international market compared to a closed market such as Ontario,” say lawyers for NSUS Group, the owners of GGPoker, billed as the world’s largest online poker room, in a court filing.
“The diminished online poker experience available in Ontario … drives players to unregulated black market operators who are able to offer better experiences in the international market,” say the company’s lawyers.
Flutter Entertainment, the owner of PokerStars and FanDuel, argues in its submission to be granted intervenor status that the company “has a significant interest in the outcome of the litigation as its business interests could be significantly impacted.”
Industry officials say online poker and daily fantasy sports betting work best with large numbers of available players, known as “pool liquidity,” something that Ontario alone doesn’t provide.
“That’s the important part, trying to give more options to consumers and better product offering,” said Burns, the Canadian Gaming Association chief executive, in an interview.
Gamblers on Ontario-regulated sites can’t join offshore players
Before Ontario regulated the online gaming market, people in the province played on international poker and daily fantasy sports sites, says Burns. Sites regulated by the province aren’t currently allowed to mix Ontario players with their international pool.
Burns says this means that Ontario players often can’t find the level of poker games they’re looking for. He said the province’s proposal is “about creating opportunity for giving back to players some of the products that they had lost.”
CBC News requested interviews with lawyers and officials for other participants in the case, and all but the Canadian Gaming Association declined.
Don Bourgeois, a lawyer with the Toronto-based firm Fogler, Rubinoff who is not acting in the case, says while the Criminal Code is clear that Ontario cannot attract players from elsewhere in Canada to its gambling platforms without the consent of other provincial governments, it’s silent on international gamblers.
“It’s an important business issue as well as a legal issue around who can participate in gambling in Ontario,” said Bourgeois in an interview.
Bourgeois, who has 25 years of experience in gambling law, says a key part of the province’s proposal is that the offshore players would be accessing the international sites of the Ontario-registered gaming companies, not their Ontario sites.
The province’s proposal says iGaming Ontario would ensure the identity, legal age, and eligibility of players located in Ontario who join the online international pools, would maintain “robust” anti-money laundering programs and “rigorous” responsible gambling initiatives.
Many European countries that have regulated internet gambling within their borders allow international participation in online poker, including the U.K., Germany and Sweden.
According to a report commissioned by the Alcohol and Gaming Commission of Ontario, 86 per cent of online gamblers in the province are currently using regulated sites. Before the launch of iGaming Ontario, when the only legal site in the province was Ontario Lottery and Gaming’s PlayOLG, the report estimates that 70 per cent of online gambling occurred on unregulated sites.