The long-awaited reform of Canadian gambling law may finally be approaching. Several attempts to legalize sports betting for individual events have stalled over the past decade. However, recent support from federal and provincial governments has renewed efforts to modernize the sports betting industry in Canada in hopes of aligning the sector with other global markets.
The federal government has introduced new laws that would allow provinces and territories to regulate and license sports betting for individual events in their respective jurisdictions. If the law is passed, Canadian bettors will be able to bet on individual sporting events in a legal and regulated sector, either through online platforms or through stationary locations.
After one of the biggest sports betting days of the year on Super Bowl Sunday, this is a great opportunity to review the current legal framework, take a look at the proposed regulatory system, and discuss what this could mean for the sports betting industry in Canada.
Current legal framework
As sports betting has evolved rapidly and become more widely used in other markets, Canadian policymakers have for some time opposed a number of attempts to implement changes to existing legislation.
At present, betting on individual game sports is largely prohibited in Canada under Section 207 (4) B of the Criminal Code. Canadians are only allowed to bet on sports by placing bets on the outcome of a combination of several sporting events, commonly known as a parlay.
These restrictions have created a lucrative “gray market” for illegal and unlicensed sports betting channels. According to the Canadian Gaming Association, Canadians wager approximately $ 10 billion annually through illegal bookmaking operations, often operated by criminal organizations. In addition, an additional $ 4 billion will be deployed through offshore online sports betting websites. Currently, only $ 500 million is being used through the province’s legal sports lottery products, meaning many Canadians have bet on illegal and potentially dangerous outlets.
There are significant financial incentives for the Canadian government to legalize sports betting for one-off events, as it gives them the opportunity to access untapped revenue streams, create new jobs, and reduce criminal activity. Some may argue that this is particularly true in response to the financial impact of COVID-19 on the Canadian economy.
Proposed regulatory regime
On November 26, 2020, the federal government introduced Bill C-13, a law amending the Criminal Code (Sports Betting for Individual Events) that, if passed, would decriminalize sports betting for individual events in Canada. The proposed legislation would allow provinces and territories to regulate and license sports betting for individual events (other than horse racing) in their respective jurisdictions.
The proposed legal framework allows the provinces and territories to adopt a private operator model for single bet sports betting. This model would allow third-party vendors to apply for a license and create a competitive marketplace for sports betting products and platforms that can be offered online or at brick and mortar locations. The emergence of a new sports betting industry in Canada has drawn a lot of attention from companies that have been successful in other markets such as the United States. It is also an exciting opportunity for Canadians looking for the right channels to practice sports betting in a legal and regulated environment.
On November 5, 2020, the Ontario government published plans to modernize its online gaming market in its annual budget. The plans were to create a subsidiary of the Ontario Alcohol and Gambling Commission, which is responsible for the administration and regulation of online gambling sites operated by private companies and third-party providers. In the Ontario gaming industry, the provincial government is expected to rapidly implement regulatory changes to modernize the provincial online gaming industry and enable entry into the lucrative market.
Although Bill C-13 has not yet passed the legislative process, initial signs suggest that it has received support and continues to gain momentum. Some speculation that the legislation could be passed this coming spring.
The discussions on reforming Canadian gambling law have received overwhelming support from both the gambling industry and professional sports leagues. Last summer, commissioners from the NHL, NBA, MLB, MLS and CFL jointly tabled a letter to Prime Minister Justin Trudeau urging the federal government to re-examine the legalization of sports betting for individual events.
The successful legalization of sports betting in the United States, which includes 18 states and the District of Columbia, has set a precedent. In May 2018, the United States Supreme Court ruled in favor of repealing the Professional and Amateur Sports Protection Act that opened the gates for sports betting for individual events in other states outside Nevada. In the past two years, online gaming revenue has grown significantly in the United States. It is estimated that US $ 20 billion has been deployed during this period.
The introduction of Bill C-13 has sparked speculation among stakeholders that the next sports betting boom may take place in Canada. Private companies and service providers continue to watch with great interest as Bill C-13 progresses through the legislative process. If passed, those who are well positioned will have significant opportunities to capitalize on the lucrative and untapped market for single event sports betting in Canada.
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