Canada: Gambling 2018

1. Relevant Authorities and Legislation

1.1 Which entities regulate what type of gambling activity in your jurisdiction?

The overarching statute that governs gambling activity in Canada is the federal Criminal Code (the "Code"). Sections 201 through to and including section 206 make all types of gambling, betting and lotteries illegal throughout Canada, with very limited exemptions such as pari-mutuel betting on horse races (provided for in section 204). In 1985, the federal government agreed with the provinces that gambling would be provided exclusively by the provincial governments. The Code was amended to reflect this structure by amendments to section 207 which today permits all provincial and territorial governments to provide lottery schemes to their respective residents, to join forces with each other to provide lottery schemes in common to their collective residents, and to grant licences to charities to provide gambling activities for charitable purposes. Each provincial government has the exclusive right to decide what types of gambling activities, if any, it will provide (or permit to be provided by charities) within its jurisdiction. Such decisions are generally policy-driven and so subject to change from time to time and particularly upon a change in the party forming the government of the applicable province.

As a result of these changes to the Code, Canada now has a prohibitory statute which is federal whereas all of the regulatory statutes are provincial. It follows that all gambling regulators are provincial. The one exception in this landscape is pari-mutuel betting on horse races. According to section 204 of the Code, pari-mutuel betting does not constitute illegal betting under section 201 or section 202. The pari-mutuel betting system therefore continues to be governed by a federal agency, the Canadian Pari-Mutuel Agency.

The operation or provision of casinos, bingo, ticket lotteries, betting (other than pari-mutuel betting), poker and other card games, electronic games such as slot machines and video lottery terminals ("VLTs") are activities that constitute gambling unless they fall within one of the few exceptions in the Code. This is true whether the activities are provided in brick-and-mortar facilities or virtually (including online).

Set out below are the entities that regulate gambling activity in each Canadian province and territory (territories also referred to henceforth as "provinces" for ease of reference). Unless otherwise noted, the named entity regulates all forms of gambling in the province other than pari-mutuel betting.

1. Alberta

Alberta Gaming and Liquor Commission ("AGLC").

2. British Columbia

Gaming Policy and Enforcement Branch of the Ministry of Finance.

3. Manitoba

Liquor and Gaming Authority of Manitoba.

4. New Brunswick

Gaming Control Branch of the Department of Public Safety.

5. Newfoundland and Labrador

Consumer Affairs Division, Consumer and Commercial Affairs Branch of Service NL.

6. Northwest Territories (Territory)

Department of Municipal and Community Affairs.

7. Nova Scotia

Alcohol, Gaming, Fuel and Tobacco Division of Service Nova Scotia.

8. Nunavut (Territory)

Consumer Affairs, Department of Community and Government Services.

9. Ontario

Alcohol and Gaming Commission of Ontario ("AGCO").

10. Prince Edward Island

a. Prince Edward Island Lotteries Commission.

b. Consumer Services section of the Department of Environment, Labour and Justice (regulates bingo, raffles, casino nights, and charitable gaming).

11. Quebec

Régie des alcools, des courses et des jeux (authority over, amongst other things, the operation of casinos as well as contests, certain types of lotteries, and VLTs other than those in casinos).

Société des loteries du Québec ("Loto-Québec"), a provincial government agent (i) operates the casinos located in Quebec, and (ii) regulates traditional lotteries and bingo as well as gaming machines located inside casinos.

12. Saskatchewan

a. Saskatchewan Liquor and Gaming Authority ("SLGA"). SLGA has purview over the following:

i. conducts and manages the majority of the province's electronic gaming machines including the province's network of VLTs and slot machines at First Nations casinos;

ii. regulates the province's casinos;

iii. licenses and regulates most other forms of gaming including charitable bingo, raffles, break open tickets, and poker tournaments; and

iv. regulates the province's horse-racing industry.

b. Indigenous Gaming Regulators ("IGR"). Effective April 2007, IGR was delegated the responsibility for licensing and regulating charitable gaming on most First Nations reserves in Saskatchewan (i.e., bingo, break open tickets, raffles, poker tournaments, and table games at casinos operated by the Saskatchewan Indian Gaming Authority). IGR's activities are conducted in accordance with a Licensing Agreement signed with SLGA that ensures charitable gaming is regulated on- and off-reserve in essentially the same manner.

13. Yukon Territory

Professional Licensing & Regulatory Affairs Branch of the Department of Community Services.

The majority of provincial governments have established a separate body, typically a corporation, to provide gambling services in the jurisdiction. Less populous provinces and territories have joined together to create one entity to provide those services for the member provinces and territories. Set out below are the government-controlled entities that provide gambling services in Canada:

1. Alberta: In Alberta, the regulator (AGLC as referenced above) fulfils the same functions as the lottery corporations in the other provinces. It therefore conducts and manages gaming in Alberta as well as regulating the activity.

2. British Columbia: The British Columbia Lottery Corporation conducts and manages gaming in British Columbia.

3. Saskatchewan:

a. Saskatchewan Gaming Corporation. Conducts, manages, and operates two non-First Nations casinos (Casinos Regina and Moose Jaw), as well as operating the slots at all Saskatchewan casinos including SIGA casinos (see below).

b. Saskatchewan Indian Gaming Authority ("SIGA"). The Federation of Saskatchewan Indian Nations created SIGA as a non-profit corporation in order to carry out its casino gaming operation interests. Pursuant to a casino operating agreement with SLGA, SIGA operates all of the First Nations casinos in the province.

4. Manitoba: Manitoba Liquor & Lotteries manages and conducts gaming activities, including commercial casinos and casinos operated by First Nations groups, VLTs, and the sales/distribution of lotteries by the WCLC.

5. New Brunswick: The New Brunswick Lotteries and Gaming Corporation conducts and manages provincial gaming in New Brunswick.

6. Nova Scotia: The Nova Scotia Provincial Lotteries and Casinos Corporation conducts and manages gaming in Nova Scotia.

7. Ontario: The Ontario Lottery and Gaming Corporation ("OLG") conducts and manages all non-charitable gaming in the province as well as certain charitable gaming operations.

8. Quebec: Loto-Québec is the Quebec government's lottery corporation. Loto-Québec and its subsidiaries provide the following services:

a. Loto-Québec is responsible for the sale and marketing of instant and terminal-based lotteries, as well as sports pools.

b. The Société des casinos du Québec builds and operates all of the casinos in Quebec.

c. The Société des bingos du Québec markets network bingo products in bingo halls.

d. The Société des loteries vidéo du Québec markets and manages a network of VLTs operated in licensed bars and pubs.

9. Western Canada Lottery Corporation ("WCLC"). Manages, conducts and operates lottery and gaming-related activities on behalf of its members (namely, the governments of the provinces of Alberta, Saskatchewan and Manitoba) and the three Canadian territories (Nunavut, Northwest Territories and Yukon). In Saskatchewan, the WCLC acts as an agent for the provincial government in the operation of the SLGA's provincial network of VLTs as well as the slot machines at SIGA casinos. WCLC conducts and manages ticket lotteries as a joint enterprise with Alberta, Saskatchewan and Manitoba.

10. Atlantic Lottery Corporation ("ALC"). Its shareholders are New Brunswick Lotteries and Gaming Corporation, Nova Scotia Provincial Lotteries and Casino Corporation, Prince Edward Island Lotteries Commission and the Province of Newfoundland and Labrador. ALC is the operator of land-based and online lotteries, sportsbooks, bingo, and VLTs in New Brunswick, Nova Scotia, Prince Edward Island and Newfoundland.

1.2 Specify all legislation which impacts upon any gambling activity (including skill, prize competitions and draws, fantasy, egaming and social games), and specify in broad terms whether it permits or prohibits those activities.

In Canada there is no statutory definition of "gambling". Rather, the debate revolves around what activities are contrary to the Code. There are a number of activities that are prohibited by the Code but may not be thought of as "gambling" in the colloquial sense of the word. For example, a competition or draw for a prize may fall into any one of a number of baskets depending on its structure. If, for example, no consideration is payable in order to enter the competition, Canadian case law has made it clear that any person hosting or offering such a competition is not illegally operating a common gaming or betting house. Furthermore, the Code, and the little case law there is on the subject, draw fine distinctions between games of pure skill, games of pure chance, and games of mixed chance and skill. As a result of the archaic language in the Code, a number of idiosyncratic "rules" have evolved, the best example being the "mathematical skill-testing question" which is added to contest rules in order to transform a competition from an illegal contest of pure chance to a legal contest of mixed chance and skill. In sum, any competition for a prize must be examined through the lens of section 206 of the Code in order to determine whether it might constitute an illegal lottery.

Games of pure skill do not fall within the definition of an illegal lottery in section 206(1) of the Code and so can be legally provided without the consent of a regulator or any other government body. It is important to note that Canada's highest court, the Supreme Court of Canada, has made it quite clear that if there is any element of chance built into the structure of a game, it will be considered a game of mixed chance and skill and not a game of pure skill. The concept of a "dominant factor" is not recognised by the courts in this country. Poker, for example, is considered to be a game of mixed chance and skill as there is an element of chance in the game flowing from the dealing of cards. Games of chance, and games of mixed chance and skill are considered illegal lotteries unless no consideration is paid to enter, play or win a prize. Based on generally accepted interpretations of section 206, it is possible nonetheless to structure a game of either nature so as to render it legal.

The conduct of daily fantasy sports (i.e., "DFS") competitions is not currently addressed by any federal or provincial statutes or regulations. There is presently an active debate amongst gaming regulators and Canadian lawyers about the legality of DFS, some taking the position that it is merely a form of sports betting and therefore illegal, while others take the position that it is a game of pure skill and therefore a legal competition. The same is true for egaming (now referred to as "eSports"), which has only recently come to the attention of Canadian regulators. It is unlikely that we will see any regulations specifically addressing eSports in the foreseeable future; regulators and law enforcement are far more likely to analyse DFS and eSports using the existing paradigm provided in the Code (i.e., is it a game of pure chance, does it constitute illegal betting, is consideration payable in order to play or win a prize?).

Social games (as traditionally defined, e.g. Angry Birds and Candy Crush Saga) are not regulated per se by any government body although, like any other consumer product, they are subject to review and regulation by provincial consumer protection ministries and the federal Competition Bureau.

Set out below are the national and provincial statutes that apply to activities that are generally agreed to constitute gambling.

National:

At the federal level, the Code is the primary legislation that impacts gambling in Canada, as it contains both the primary prohibitions and exceptions respecting gambling and the federal penal law concerning proceeds of crime including money laundering (Part XII.2) and the financing of terrorism (sections 83.02, 83.03, and 83.04).

The Code's provisions regarding proceeds of crime and financing of terrorism synchronise with the federal Proceeds of Crime (Money Laundering) and Terrorist Financing Act ("PCTFA"). The PCTFA was enacted (and has been subsequently amended) to implement measures to detect and deter money laundering and the financing of terrorist activities, to facilitate the investigation or prosecution of money laundering and terrorist financing offences (including establishing record-keeping and client identification requirements for financial services providers and other persons that engage in businesses, professions or activities that are susceptible to being used for money laundering, and the financing of terrorist activities), and to respond to the threat posed by organised crime by providing law enforcement officials with the information they need to investigate and prosecute money laundering or terrorist financing offences. Section 5(k) specifically identifies casinos as a type of organisation that must comply with all requirements in Part 1 (Record Keeping, Verifying Identity, Reporting Of Suspicious Transactions And Registration) of the Act. The Financial Transactions and Reports Analysis Centre of Canada ("FINTRAC") was established in 2000 by the federal government to act as Canada's financial intelligence unit. FINTRAC is the regulatory body overseeing compliance with the PCTFA and its regulations.

The Competition Act is the only federal statute that is applicable to contests and competitions. Section 74.06 of the Competition Act prohibits any promotional contest that does not disclose the number and approximate value of prizes, the area or areas to which they relate, and any important information relating to the chances of winning such as the odds of winning. Any person who is found to have contravened this section is liable to a fine. While this provision is rarely enforced and the levying of fines is even rarer, that is likely due to the fact that most people are aware of these requirements and structure contests accordingly. Interestingly, section 74.06 applies to games of pure skill even though they do not constitute illegal gaming under the Code.

Provincial:

In most provinces, the structure of legislation governing gambling consists of a statute that sets out the regulatory framework (typically a "gaming control act") and another statute that establishes the provincial government's lottery corporation. The regulations under each statute contain most of the operational and regulatory details. Set out below are the primary gambling statutes in each province.

1. Alberta

Gaming and Liquor Act.

2. British Columbia:

Gaming Control Act.

3. Manitoba

a. The Liquor and Gaming Control Act.

b. The Manitoba Liquor and Lotteries Corporation Act.

c. Orders in Council (designating municipalities to license raffles with prizes under $3,000 and First Nations Gaming Commissions to license on-reserve charitable gaming).

4. New Brunswick

Gaming Control Act.

5. Northwest Territories

Lotteries Act.

6. Nova Scotia

Gaming Control Act.

7. Saskatchewan

a. The Alcohol and Gaming Regulation Act, 1997.

b. The Saskatchewan Gaming Corporation Act.

8. Ontario

a. Gaming Control Act, 1992.

b. Ontario Lottery and Gaming Corporation Act, 1999.

9. Quebec

a. Act respecting the Société des Loteries du Québec.

b. Act respecting Lotteries, Publicity Contests, and Amusement Machines (N.B. Quebec is the only province that has legislation addressing the operation of competitions and contests, including a competition of pure skill if it is "carried on for the object of promoting the commercial interests of the person for whom it is carried on").

10. Yukon:

Lottery Licensing Act.

2. Application for a Licence and Licence Restrictions

2.1 Who can apply for a licence to supply gambling facilities?

As noted above, gambling in Canada is a provincial Crown monopoly pursuant to section 207 of the Code. With a very few exceptions, no person other than a provincial government is legally permitted to supply gambling facilities or services in Canada.

The primary exception, which is found in section 207(1)(b), permits provincial governments to issue licences to charitable and religious organisations (henceforth, "charities") to conduct and manage lottery schemes in that province, provided that the proceeds from the lottery scheme are used for charitable or religious objects or purposes. The other exceptions set out in section 207(1) permit the provinces to issue licences to the boards of fairs and exhibitions, and to any person who will conduct a lottery scheme in a public place of amusement where the cost to participate is no more than $2 and the value of any one prize does not exceed $500. One important restriction on any such licence is found in section 207(4)(c) which prohibits provinces from granting licences for any lottery scheme that would be "operated on or through a computer, video device or slot machine". Dice games are also prohibited to licensees under the same subsection.

Notwithstanding the foregoing, all provinces do require registration of any person supplying goods and services for use in the operation of gambling facilities and the provision of gaming services by the province. As the provincial governments, out of necessity, must contract out the vast majority of such services, in reality this is the "licensing" scheme in Canada. Theoretically, any company that wishes to supply gambling facilities may approach a provincial government with a proposal for a gambling facility which the government would, by law, be required to conduct and manage, with the proponent of the plan acting as the operator under contract with the government. Practically speaking, however, provincial governments decide on the number, nature and location of gambling facilities that they wish to have in their province from time to time, and then tender out the construction and operation of those facilities to the private sector.

As an example of the tender process, the Province of Ontario recently decided to permit a number of new casinos to be built and operated in the province. A number of geographic sectors were identified and then the province, through the OLG, put in motion a full tender process, beginning with a Request for Information, followed by a Request for Pre-Qualification and finally by a Request for Proposals. In order to submit a Request for Pre-Qualification, it was necessary for the applicant to have first obtained registration as an Operator and to have paid all of the expenses related to the risk assessment and security clearances conducted by the AGCO. While the process started in early 2012, the primary geographic areas only saw casino operators selected in 2017. An applicant tendering for a contract to build and operate a provincial government monopoly project such as a casino should assume that it will take at least two to three years before they are advised whether their tender has been successful.

2.2 Who or what entity must apply for a licence or authorisations and which entities or persons, apart from an operator, need to hold a licence? Are personal and premises licences needed? Do key suppliers need authorisation?

The persons who are required to be registered as gaming suppliers differ from province to province, but only to a minor extent. An overview of the system of registration in the Province of Ontario is therefore sufficient to provide a sense of what will be required in other provinces. Ontario has the following classes of registration for gaming suppliers:

1. Operator (person who operates a gaming site (that is, either a casino or a slot machine facility)).

2. Gaming-Related Supplier (person who manufactures, provides, installs, tests, maintains or repairs gaming equipment or who provides consulting or similar services directly related to the playing of a lottery scheme or the operation of a gaming site).

3. Non-Gaming-Related Supplier (person who provides goods or services that relate to the construction, furnishing, repair, maintenance or business of a gaming site or a related business but who is not directly related to the playing of a lottery scheme or the operation of a gaming site).

4. Trade Union (a trade union that represents registered gaming assistants employed in or at a gaming site).

5. Category 1 Gaming Assistant (individual who is employed in the conduct, management or operation of a lottery scheme or in the operation of a gaming site and who exercises a significant level of decision-making authority or has significant supervisory or training responsibilities with respect to the lottery scheme or the site).

6. Category 2 Gaming Assistant (individual who is employed in the conduct, management or operation of a lottery scheme or in the operation of a gaming site but who does not exercise a significant level of decision-making authority or have significant supervisory or training responsibilities with respect to the lottery scheme or the site).

2.3 What restrictions are placed upon any licensee?

As persons are registered within a particular class of gaming suppliers, they are by definition restricted with respect to the activities in which they can legally engage. They are then restricted by the terms of the contract entered into with the provincial lottery corporation or other agent of the Crown to whom they will be supplying goods or services.

There are no firm residency requirements or restrictions on persons applying for registration. Each applicant will, however, be required to pass the risk assessment outlined in question 2.4 below and provincial regulators could take a position on what constitutes "honesty and integrity" that would preclude the registration of a company that, in the regulator's view, had not complied with Canadian law (for example, by providing offshore online gaming services to Canadian residents).

2.4 What is the process of applying for any gambling licence or regulatory approval?

Each province has its own process for applying for gaming supplier registrations but, again, they are relatively similar, and Ontario provides a good example of what is required in most provinces. In order to be registered as an operator or supplier, a company must complete three forms: (i) an application for registration; (ii) an enterprise disclosure form; and (iii) a personal disclosure form.

The initial risk assessment involves the review of an applicant's completed application materials as well as information obtained based on a standard background check. This information is evaluated based on five criteria which are considered key indicators of an individual's or business's appropriateness to be registered. The five criteria related to businesses (e.g., suppliers) applying for a gaming registration are: (i) honesty and integrity; (ii) financial responsibility; (iii) compliance with the law; (iv) registration type; and (v) financial gain from registration.

A business may be exempt from the requirement to register as a non-gaming-related supplier if: (i) the value of the goods or services to be supplied in the following 12-month period will be less than $750,000; and (ii) the OLG has carried out a due diligence investigation of the business that satisfies the AGCO that the person would meet the standards and requirements that would apply to the provision of goods and services if the business were registered.

2.5 Please give a summary of applicable time limits and potential for expiry, review, revocation and nullification.

Each province differs in this regard but as the organisational structures are similar, Ontario will be used as an example. The AGCO issues registrations with expiry dates. Prior to expiry, the registrant must complete and submit the same form as used for the initial application for registration. Each registrant must also pay an annual fee (e.g., $100,000 for casino operators) in order to maintain their registration.

Registrations may be revoked for any number of reasons but only after disciplinary action short of revocation. In Ontario, registrants who are not in compliance with the law usually receive a warning first, followed by a monetary penalty if still non-compliant. If the registrant continues to be non-compliant, the AGCO will issue a notice advising the registrant that they have 15 days in which to appeal the decision to a separate government appeal tribunal that is not associated with the AGCO. If the registrant does not appeal or loses on appeal, the registration will be revoked.

2.6 By product, what are the key limits on providing services to customers? Please include in this answer the material promotion and advertising restrictions.

The key limitation arises from the fact that all gambling products and services must be provided exclusively by (or through a licence from) a provincial government. The lottery corporations in each province will decide which types of products they wish to carry from time to time and are able to change those policy decisions at will. As the provider of the products and services, they will exercise significant control over the performance of the products, the locations in which they are placed, and the marketing that is permitted.

While no product or service is fixed and the situation is fluid from province to province, there are general broad trends that provide some guidance with respect to the provision of gambling products and services. Ticket lotteries tend to be provided exclusively by provincial lottery corporations and licensed charities (albeit using private product and service providers). Casinos are operated both by private operators (e.g., Caesars Windsor Hotel and Casino in Ontario) and by lottery corporations using private suppliers and service subcontractors (e.g., Quebec's Casino Charlevoix). Bingo and raffles are generally left to charities. Betting other than pari-mutuel betting is provided by provincial lottery corporations through their websites. See question 3.3 below for information concerning machine-based gaming.

Unlike in the United States, there are no rights specifically granted to aboriginal bands to provide gambling services in Canada. Any band or other aboriginal group that provides legal gambling services does so as a service supplier to the applicable provincial government. In some provinces such as Saskatchewan, the government has made a policy decision to contract out the provision of a significant portion of gambling services to aboriginal groups but this is a purely contractual relationship. The bands in question have no independent right to provide gambling services, nor could Saskatchewan or any other province purport to grant them that right, given the underlying federal gaming prohibition in the Code.

2.7 What are the tax and other compulsory levies?

As the majority of private corporations operating in the gambling industry in Canada are, of necessity, merely registered suppliers of gambling products and services to the provincial governments, there are no industry-specific taxes or levies. Such companies are required to comply with generally applicable federal and provincial income tax laws but there is no separate regime of taxes within the industry.

2.8 What are the broad social responsibility requirements?

As the providers of gambling services in their respective jurisdictions, the provincial lottery corporations have all addressed social responsibility in their regulations and policies, if not in their statutes. Any private companies that provide services to the public on behalf of the lottery corporations are required to conform with those policies and regulations. Those policies generally include training programmes for employees regarding responsible gaming, advising and informing all players concerning responsible gaming and how to make informed choices about products and play in general, and the operation of voluntary exclusion programmes. Once again, using Ontario as an example, the OLG has a Responsible Gambling Centre at all sites, with staff from the Responsible Gambling Council at eight locations; there is mandatory training for all front-line and management staff; and they run a self-exclusion programme that uses technology such as facial recognition. It is a given that minors are excluded from all forms of gambling activity including the purchase of lottery tickets.

2.9 How do any AML, financial services regulations or payment restrictions restrict or impact on entities supplying gambling? Does your jurisdiction permit virtual currencies to be used for gambling and are they separately regulated?

As noted above, the only entities that can legally supply gambling in Canada are provincial governments (either directly through their respective lottery corporations or through service suppliers to those lottery corporations) and charitable organisations licensed by provincial governments. In all cases, those entities are subject to Canada's anti-money laundering ("AML") legislation (namely (i) the PCTFA, and (ii) Part XII.2 (Proceeds of Crime) of the Code and, in particular, section 462.31 which outlines the offence of laundering the proceeds of crime). At present, section 5(k) of the PCTFA states that the record-keeping, identity verification and reporting requirements apply to "casinos, as defined in the regulations, including those owned or controlled by Her Majesty". The relevant regulations then define "casino" as a person or entity that is licensed, registered, permitted or otherwise authorised to do business pursuant to the Code.

In 2014, the PCTFA was amended to clarify the application of the statute to casinos. The amendments clearly identify the "government of a province" as the organisation to which the statute applies in the case of both land-based and online casinos. These amendments were likely made as a result of the confusion arising in cases involving lottery corporations fined by FINTRAC for failure to comply with reporting requirements concerning activities occurring at casinos operated by private companies (albeit under contract with the lottery corporation). Until these amendments were introduced, many commentators took the position that the statute would, in those cases, apply to the operators rather than the provincial lottery corporation.

At present, virtual currencies are not recognised by any level of government in Canada. They are regulated but only to the extent that virtual currency dealers are required to comply with Canada's anti-money laundering laws. Having said that, the Canadian Securities Administrators (an umbrella organisation of Canada's provincial and territorial securities regulators) recently issued a guidance document on cryptocurrency offerings which included advice on the application of Canadian securities law to certain types of those offerings.

3. The Restrictions on Online Supply/Technology Support/Machines

3.1 Does the law restrict, permit or prohibit certain online activity and, if so, how?

There is no accepted legal definition of online gambling in Canada. For the purposes of this section, we use the term "online gambling" to refer to any form of gambling that is virtual rather than tangible, including any gambling activity that is mediated through a computerised system (including applications, software and websites).

Provincial governments, alone or in concert, are permitted to provide any online gambling activity that they desire, subject only to the restrictions in section 207(4). That section provides that permitted lottery schemes (that is, those that a provincial government may offer) do not include the activities of "bookmaking, pool selling or the making or recording of bets ... on any race or fight, or on a single sport event or athletic contest". Most provinces have read this to prohibit any type of sports betting other than parlay betting. Legal online sports betting therefore does not permit betting on single games or other types of sporting events.

While there is no legislation or case law that specifically criminalises or otherwise prohibits the provision of online gambling by private companies, it is generally accepted by the industry that private online gambling operated from within Canada for Canadian players will be caught by the prohibitions found in the Code. There is less certainty around the issue of online gaming provided by persons whose operations are located entirely outside of Canada. To date, there have been no charges laid against any such offshore operator, and so the law in that regard remains untested. Having said that, all levels of government and all of the provincial regulators have taken the position that such operations are illegal and should be closed down.

Only one province has addressed the advertisement of online gaming. In 2006, Ontario amended its Consumer Protection Act to add section 13.1 which prohibits the advertisement of an "internet gaming site" in the province if it is operated contrary to the Code. To date, there are no reported cases that consider this section or the prohibition.

3.2 What other restrictions have an impact on online supplies?

There are no material restrictions on legal (that is, government-run) online gambling in Canada. With respect to offshore online gambling, neither the provincial governments nor the federal government have taken steps to limit access to such sites. While there are presently no statutory or regulatory restrictions on payment processing by such operators, or that constitute ISP blocking, blacklisting or currency restrictions, the Province of Quebec passed legislation that would, when in force, require internet service providers to block Quebec residents from accessing private online gaming sites. The Quebec legislation is suspended pending review by the courts. See question 5.1 below for further details.

3.3 What terminal/machine-based gaming is permitted and where?

Provincial governments are allowed to provide any form of terminal or machine-based gaming that they choose. Therefore, all such gaming is "permitted" by law. For policy reasons, there are varying restrictions from province to province with respect to the nature of the games and their locations within the applicable jurisdiction. For example, VLTs are provided to the public by provincial lottery corporations in all provinces other than British Columbia and Ontario. Similarly, provincial lottery corporations provide slot machines in casinos and/or at race-tracks in all provinces other than Newfoundland and Labrador. There are no slot machines available in two of the three territories (Nunavut and Northwest Territories), while they are available in Yukon. Fixed-odds betting terminals ("FOBTs") have not appeared in Canada, although it would be legal for a provincial lottery corporation to provide FOBTs to residents of their jurisdiction. Private companies are prohibited from operating any type of gambling machine anywhere in Canada except pursuant to a registration issued by a provincial regulator.

4. Enforcement and Liability

4.1 Who is liable for breaches of the relevant gambling legislation?

Breaches of the federal Code are a matter of criminal rather than civil law and thus the ambit of liability is, in practice, quite narrow. While the Code is drafted broadly, Canadian courts have exercised their discretion under the principles of statutory interpretation to ensure that such sections are read narrowly, given that they are penal in nature. For example, while section 201 of the Code states that everyone who "keeps a common gaming house or a common betting house" is guilty of an indictable offence and liable to imprisonment for up to two years, in practice, courts (particularly in the last few decades) have gone to some pains to parse this section and the underlying definitions to preclude conviction in all but the clearest of cases. On the other hand, the courts do not appear to be as concerned by a broad application of section 201(2) which provides that every person found without lawful excuse in a common gaming house or common betting house is guilty of a summary conviction offence. As summary conviction offences are the most minor offences in the Code and typically result in a small fine, courts are willing to convict individuals who are caught in sweeps of illegal sports betting events and large poker operations. The Code makes it possible for directors, officers and senior management to be charged and convicted of a criminal offence with respect to the activities of their corporation pursuant to the sections of the Code concerning aiding and abetting and parties to an offence (sections 21, 22, 22.1, and 22.2).

Breaches of provincial gambling legislation involve, almost by definition, breaches of the requirement to obtain a registration for the supply of gaming services and to comply with the regulations concerning such activity. The service supplier (registered or unregistered, as the case may be) is liable, as well as the directors and officers in some cases. For example, section 46(3) of the Ontario Gaming Control Act makes it an offence for any director or officer of a corporation to cause, authorise, permit, or participate or acquiesce in the commission by the corporation of a wide range of offences under the Act. In practice, culpability does not typically flow to individuals if the service was being supplied by a corporation unless there is egregious conduct involved.

4.2 What is the approach of authorities to unregulated supplies?

Prosecution of gaming offences is not common, primarily because of the monopolistic nature of the industry and the resulting lack of private operators. As the legislation governing gaming at the top level is criminal, most prosecutions will be criminal. Provincially, prosecutions are administrative for the most part.

4.3 Do other non-national laws impact upon liability and enforcement?

While there are no reported cases in which Canada has attempted to extradite an individual from another country in order to face gambling charges in Canada, Canada has agreed to extradite Canadians to the U.S. to stand trial for gambling offences. There are no reported cases in which a Canadian court has chosen to take jurisdiction over a case involving gambling activities that took place outside of Canada, or over cases involving gambling services provided to Canadians by persons located outside of Canada.

4.4 Are gambling debts enforceable in your jurisdiction?

If the debt is incurred in a legally operated gambling facility, such debts are considered a form of consumer debt and are treated accordingly. However, if the gambling debt is incurred in the course of illegal or private gambling, provincial gaming laws prohibit the use of civil proceedings to collect such debts. As an example, section 47.1 of Ontario's Gaming Control Act states that "no person may use civil proceedings to recover money owing to the person resulting from the [sic] participating in or betting on a lottery scheme .... unless the lottery scheme is authorized under subsection 207 (1) of the Code".

5. Anticipated Reforms

5.1 What (if any) intended changes to the gambling legislation/regulations are being discussed currently?

On May 18, 2016, the National Assembly of Quebec passed its budget into law pursuant to an omnibus act (Loi concernant principalement la mise en oeuvre de certaines dispositions du discours du budget du 26 mars 2015, L.Q. 2016, ch. 7 and hereinafter the "Budget Act"). Section 12 of the Budget Act amended Quebec's consumer protection act (namely La Loi sur la protection du consommateur) to put into place a regime whereby internet service providers ("ISPs") would be required to block Quebec residents from accessing illegal internet gaming sites. While the consumer protection statute has been amended, the amendment itself is not yet in force. On July 8, 2016, the Public Interest Advocacy Centre (on behalf of itself and all Canadian ISPs) brought an application before the regulator of telecommunications in Canada (the Canadian Radio-television and Telecommunications Commission, hereinafter the "CRTC"), requesting that the CRTC declare the Budget Act unconstitutional, ultra vires the Province of Québec and a violation of Canada's Charter of Rights and Freedoms. On July 27, 2016, the Canadian Wireless Telecommunications Association (on behalf of its ISP members) filed a motion in the Quebec Superior Court requesting that the court find the ISP-blocking provisions to be invalid, primarily on the basis that they are unconstitutional. On September 1, 2016, the CRTC issued an open letter to Canada's Attorney General stating that in the CRTC's preliminary view, the ISP-blocking provisions were very likely unlawful. The matter is now in front of the Quebec Superior Court with a court date scheduled for March 2018. It is expected that it will be appealed to the Federal Court of Appeal and then, given the significant constitutional issues raised, it will end up in front of the Supreme Court of Canada. The conclusion of most legal commentators is that the provisions are certainly unconstitutional and will be struck down, likely on appeal.

Originally published by International Comparative Legal Guide to Gambling 2018.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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