Ontario’s auditor general, Bonnie Lysyk, released a report Wednesday detailing her concerns regarding the legalities of the planned market for internet-based casino gambling and sports betting in the province.
In the 15-page document, she examines the legality of Ontario’s proposed internet gaming model under the
criminal code, the governance structure for internet gaming in the province, and the fairness and integrity of internet gaming in Ontario. Lysyk concludes all of these issues should be reviewed before the market is opened up to private operators, or the Ontario government could face legal challenges.
Currently, the provincially run Ontario Lottery and Gaming Corporation is the only legal provider of iGaming in the province. The OLG also runs the only legal online sportsbook in the province, PROLINE +. The Ontario government is using the Alcohol and Gaming Commission of Ontario, and its subsidiary, iGaming Ontario, to review applications for private-sector operators of online casinos and sportsbooks.
There’s speculation that online markets could be opened up to private operators in the first quarter of 2022, according to Canadian Gaming Association President Paul Burns. The CGA is a national trade association that represents leading operators and suppliers in Canada’s sports betting, gaming, eSports, and lottery industries.
Ontario’s government is getting immense pressure from these private operators to open the market in time for the biggest betting event of the year, the Super Bowl, in February. The Winter Olympics, also scheduled for February, is another huge betting event that sportsbook operators don’t want to miss out on.
From Lysyk’s report: “To address the legal risks associated with the proposed construct for Internet gaming in Ontario, we recommend that the government take appropriate steps to ensure compliance with the Criminal Code prior to launching the new internet gaming market.”
Government’s response: ” Ontario is committed to creating a safe, regulated and competitive online gaming market to help protect consumers. The government will take any additional steps it considers necessary to address any legal risks associated with the proposed framework for Internet gaming in Ontario.”
All commercial gambling is prohibited unless it’s conducted and managed by a province, according to the Criminal Code of Canada. After reviewing the compliance guide released by the AGCO, the auditor determined there’s “legal risk with respect to whether iGaming Ontario meets the ‘conduct and manage’ threshold set out in the Criminal Code,” the report stated. “Consideration for whether a province has illegally delegated the ‘conduct and manage’ function in a gaming scheme to a private entity has been the subject of past legal challenges in Canada. We conclude that iGaming Ontario’s business model could be subject to legal challenges.”
We picked out the key bits that will affect individual operators & how the market will develop:
— SNBET (@SNBET_ca) November 17, 2021
From the report: “To address the governance and regulatory risks associated with the proposed construct for Internet gaming in Ontario, we recommend that the Ministry of the Attorney General remove the governance and operating responsibilities for iGaming Ontario from the Alcohol and Gaming Commission of Ontario, and should the business model of iGaming Ontario meet the conduct and manage requirements under the Criminal Code, transfer the reporting relationship.”
Ministry’s response: “The regulation establishing iGaming Ontario requires that the Board of Directors develop and maintain a conflict of interest policy for the directors, officers, and employees of iGaming Ontario. Similarly, the Alcohol and Gaming Commission of Ontario’s (AGCO’s) conflict of interest policy is being updated to account for its relationship with iGaming Ontario. These policies will deal with potential and actual conflicts that may arise between the regulatory interests of the AGCO and conduct and manage (operating mind and revenue generation) interests of iGaming Ontario.”
iGaming Ontario launches to create an open, competitive igaming market and to strengthen consumer protection https://t.co/PeuZKECbKV
— AGCO (@Ont_AGCO) July 6, 2021
Lysyk is particularly concerned about the responsibilities the government is leaving to the private operators.
“Under Ontario’s new model for internet gaming, key responsibilities to maintain integrity and fairness have been entrusted to the private sector such as direct testing of internet gaming systems, game design, gaming systems, determination of payouts, and odds-setting,” Lysyk wrote.
The auditor lastly raised issues about the governance structure of iGaming Ontario and about how the entity will ensure the integrity and fairness of games. She also suggested they inform the Ontario Legislature of this plan prior to the launch of the internet gaming market.
The ministry provided a long-winded rebuttal in the report, insisting the AGCO has already developed standards for the iGaming market that include integrity concerns. An independent lab will be testing and certifying all online games, and the AGCO has an iGaming Compliance Unit in place to “conduct intensive compliance oversight of registered iGaming operators and suppliers.” A Customer Care and Dispute Resolution Policy is also being put in place by iGaming Ontario to monitor players and any concerns they might have regarding private operators.
It’s clear there are still many legal issues to be sorted out prior to private-sector operators of online sportsbooks being able to legally conduct business in Ontario, which is the only province in Canada currently considering such a model. It’s hard to imagine the AGCO and iGaming Ontario streamlining their legal compliance issues prior to Feb. 13, the date of Super Bowl LVI, but the pressure is on to get the private online gaming sector up and running in the province.
In the meantime, gray market online gaming outlets will continue to dominate the Ontario market, with the OLG taking its relatively small, legal cut. The Canadian Gaming Association estimates $10 billion (CAD) is being wagered on sports through illegal bookmaking operations each year, $4 billion through offshore sports wagering sites, and only $500 million via provincial sports lotteries.
#PointsBet Canada is eagerly awaiting the opening of the private sports betting market in Ontario and the rest of Canada.
— Sports Handle (@sports_handle) November 24, 2021