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Canadian Gambling Legislation

The long-awaited reform to Canadian gaming law may finally be approaching. Over the last decade, several attempts to legalize single-event sports betting have stalled. However, recent support from governments at the federal and provincial levels has renewed efforts to modernize the sports betting industry in Canada in the hopes of bringing the sector up to speed with other global markets. Although Bill C-13 has yet to successfully pass through the legislative process, early indications suggest that it has gained support and continues to build momentum, with some speculating the legislation could be passed this upcoming spring.

Canadian Gambling Legislation

The federal government has introduced new legislation which would allow the provinces and territories to regulate and license single-event sports betting in their respective jurisdictions. If the legislation passes, Canadian bettors would be permitted to wager on single sporting events in a legal and regulated sector, either through online platforms or brick and mortar locations.

Following one of the largest sports betting days of the year on Super Bowl Sunday, it is a fitting opportunity to review the current legislative framework, look ahead at the proposed regulatory regime, and discuss what this could mean for the sports betting industry in Canada.

Current Legislative Framework

As sports betting has rapidly evolved and become more prevalent in other markets, policymakers in Canada have resisted a number of attempts to implement changes to the existing legislation for quite some time.

Currently, single game sports betting in Canada is broadly prohibited under Section 207(4)(b) of the Criminal Code. Canadians are only permitted to wager on sports by placing bets on the outcome of a combination of multiple sporting events, which is commonly referred to as a parlay.

These restrictions have created a lucrative "grey 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 run by criminal organizations. Furthermore, an additional $4 billion is wagered through offshore online sports wagering sites. As it stands now, only $500 million is wagered through legal provincial sports lottery products, meaning that many Canadians have relegated to placing bets through illegal and potentially dangerous outlets.

There are significant financial incentives for the Canadian government to legalize single-event sports betting, given 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 that COVID-19 has had on the Canadian economy.

Proposed Regulatory Regime

On November 26, 2020, the federal government introduced Bill C-13, An Act to amend the Criminal Code (single-event sport betting), which if passed, would decriminalize single-event sports betting in Canada. The proposed legislation would allow the provinces and territories to regulate and license single-event sports betting (other than horse racing) in their respective jurisdictions.

The proposed regulatory framework provides the provinces and territories with the option to adopt a private operator model for single-event sports betting. This model would open the door for third party operators to apply for a license, creating a competitive marketplace for sports betting products and platforms which can be offered online or in brick and mortar locations. The emergence of a new sports betting industry in Canada has garnered much attention from businesses that have thrived in other markets, such as the United States. It is also an exciting opportunity for Canadians searching for the proper channels to engage in sports betting within a legal and regulated environment.

On November 5, 2020, the Ontario government released plans in its annual budget bill to modernize its online gaming marketplace. The plans set out to establish a subsidiary of the Alcohol and Gaming Commission of Ontario responsible for managing and regulating online gaming sites operated by private businesses and third-party service providers. The expectation within Ontario's gaming industry is that the provincial government would be quick to implement regulatory changes to modernize the provincial online gaming industry and allow for entry into the lucrative market.

Future Outlook

Although Bill C-13 has yet to successfully pass through the legislative process, early indications suggest that it has gained support and continues to build momentum, with some speculating the legislation could be passed this upcoming spring.

Discussions on the reform of Canadian gaming law have received overwhelming support from both the gaming industry and professional sports leagues. This past summer commissioners from the NHL, NBA, MLB, MLS, and CFL collaborated to submit a letter to Prime Minister Justin Trudeau urging the federal government to revisit the legalization of single-event sports betting.

The successful legalization of sports betting in the United States, which includes 18 states and the District of Columbia, has provided a precedent to follow. In May 2018, the United States Supreme Court ruled in favour of overturning the Professional and Amateur Sports Protection Act, which opened the gates for single-event sports betting in other states outside of Nevada. Over the course of the past two years, online gaming revenues have soared throughout the United States, with estimates of US$20 billion having been wagered during that period.

The introduction of Bill C-13 has led to speculation amongst stakeholders that the next sports betting boom could take place in Canada. Private businesses and service providers continue to watch with keen interest as Bill C-13 progresses through the legislative process. If passed, significant opportunities will be available to those well-positioned to capitalize on the lucrative and untapped market of single-event sports betting in Canada.

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.

Canadian Gambling Legislation

Bill C-218 adopted at second reading; Bill C-13 will not move forward in current House of Commons session.

What you need to know

On Feb. 17, 2021, the House of Commons voted overwhelmingly in support of adopting private member's Bill C-218, the Safe and Regulated Sports Betting Act, on second reading. Bill C-218 is now being referred to the last phase of hearings with the Justice Committee before moving to third reading in the House of Commons, the Senate and then to the Governor-General for Royal Assent.

Following its adoption at second reading, Bill C-218 was immediately scheduled for examination by the Justice Committee for their meetings on Feb. 23 and 25, 2021.

Industry stakeholders such as Bragg Gaming Group 1 , Score Media and Gaming Inc. 2 and Alberta Gaming, Liquor and Cannabis 3 applauded the result of the vote and its importance in moving Canada towards a modernized sports betting framework.

On Feb. 18, 2021, the Speaker of House announced that government Bill C-13, which also proposes to decriminalize single event sports betting in Canada, will no longer proceed in the current legislative session.

For full analysis of the implications of current federal and provincial proposals to modernize gaming laws, please read our recent article: "A winning hand? Combined changes to gambling industry could end Canada's drift."

Consolidated support for C-218

Until Feb. 18, 2021, there were two bills – C-218 and C-13 – which proposed decriminalizing single event sports betting in Canada. The bills were substantially similar, but C-13 excluded horse racing, as it is regulated by the Canadian Pari-Mutuel Agency.

There was confusion as to how the bills would co-exist in moving through the legislative process. The Speaker's decision to remove Bill C-13 from current consideration makes Bill C-218 the one to watch. Importantly, the Speaker's decision was made in the context of the government indicating its "strong support for single sport betting" and that "in the interest of moving forward with the legislation in the most efficient manner possible, the government will now focus its energy on supporting Bill C-218". 4

Following its adoption on second reading, Bill C-218 was immediately added to the Justice Committee's schedule –a positive sign for the bill's progress. However, as the bill is likely to face proposed amendments (specifically regarding horse racing), there will be an opportunity for further debate on the final form of the bill when it is brought back to the House of Commons for a vote. Despite the government indicating support for the bill's efficient passage, industry participants should keep a close eye on the proposed amendments to Bill C-218 at the committee stage so as to anticipate any potential difficulties with its further passage.

The deadline for written submissions on Bill C-218 is March 11, 2021 and the deadline for proposed amendments is March 23, 2021.

Assuming C-218 is enacted in the current legislative session, the ball will then be in the court of provincial regulators to determine how to implement and regulate single event sports betting.

Investor response

The capital markets continue to respond warmly to offerings from sports betting industry players, as indicated by Score Media and Gaming Inc.'s recent announcement of an upsized initial public offering in the United States. Per the announcement, the size of the offering has increased from five million to six million Class A Shares to be traded on the Nasdaq Global Select Market. 5

Takeaways

After decades of waiting, it appears the Canadian gambling industry has finally been dealt a winning hand. We will continue to monitor the progress of Bill C-218 and its corresponding reception from provincial regulators and keep gaming industry stakeholders apprised of new developments.

To capitalize on the potential of the proposed changes, gaming industry businesses, service providers and entrepreneurs need an effective engagement strategy with provincial regulators. Our experts in sports and gaming, governmental affairs and corporate and securities laws can help navigate the complex regulatory and legislative landscape of sports and gaming to identify opportunities and strategies in connection with the proposed decriminalization of single event sports betting. For assistance, reach out to any of the key contacts listed below.

4. Canada, House of Commons, Hansard, 43rd Parliament, 2nd Session, No 61 (2021-02-18).

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.

Path For Canada Sports Betting Could Become Clear At Hearing Next Week

This is crunch time for single-game wagering in Canada.

On March 9, the Canadian House of Commons Standing Committee on Justice and Human Rights held a hearing on Bill C-218, An Act to amend the Criminal Code. This is more widely known as the bill that would enable provinces to allow for single-game betting in Canada.

This hearing is one of the final steps before a third reading before Parliament, which would set in motion the bill for a final vote and then if successful would go to the Governor-General for Royal Assent before becoming law.

I’m going going, back back, to Canada Canada

For the better part of the last 10 years, efforts have been made in Canada to repeal a provision of the country’s Criminal Code that prohibits single-game sports betting. Despite the availability of parlay-style wagering on many sporting events across the country, the Criminal Code, via section 207 (4) (b), prohibits betting on single sporting events.

This bill would repeal that law. Much like the Supreme Court’s decision striking down PASPA in the United States, this move would then open the door for the provinces and territories of Canada to decide how to move forward with single-game betting.

While initially opposed by many of the major sports leagues in its earlier iteration in 2012 and 2013, this version of the bill has seen many former opponents come around, much as the professional sports leagues have largely embraced sports wagering in the United States.

The bill which had its second (of three) readings back in February is pressing along and is viewed by many as likely to pass, though just how legal sports betting would roll out remains less clear.

March hearing on Canada sports betting

The hearing on March 9 took place in person and over Zoom (it is available here). The meeting was broken into two separate blocks.

Chris D. Lewis, the retired commissioner of the Ontario Provincial Police

William (Bill) Ford, President of Racetracks of Canada Inc.

Jim Lawson and Christina Litz of Woodbine Entertainment Group

Mr. Lewis testified first, in his personal capacity, and noted that much like the decriminalization of marijuana, the decriminalization of single-game sports betting would bring the activity out of the shadows. He noted that the investigations into organized criminal operations are extremely resource-intensive.

Mr. Lewis concluded by noting that a regulated market is preferable to an illegal market and would better protect consumers.

How horse racing fits in

Bill Ford testified second and noted that over the last several months the horse racing industry has supported the legalization of fixed-odds single-game wagering.

Mr. Ford, however, argued that as currently drafted the bill could allow fixed-odds wagering on horse racing without supporting the industry. There is another bill that Mr. Ford noted would protect the industry and asked that preferable language in the second bill be added to protect the industry. Mr. Ford, additionally, asked that historical horse racing be legalized in Canada.

Lawson was joined by Christina Litz and testified about the importance of horse racing to Canada. Ms. Litz testified about horse racing’s impact on Canada and notes that the industry contributes more than 50,000 jobs and billions of dollars to the economy.

Ms. Litz argued that it is vitally important to consider the unintended consequences for the horse racing industry if it is not protected in legislation legalizing single-event fixed-odds wagering. Mr. Lawson piggybacked on Ms. Litz’s testimony arguing, like Mr. Ford, that Bill C-218 threatens to cannibalize the parimutuel industry without giving back to the industry.

Mr. Lawson articulated the need to adopt language protecting the horse racing industry.

The second block

The second block of witnesses represented:

The British Columbia Lottery Corporation (BCLC)

Club Jockey du Quebec

Horsemen’s Benevolent and Protective Association of Ontario

What they said

Murielle Thomassin, the racetrack manager of the Trois Rivieres Racetrack, was the first to testify. Like the witnesses in the first block, Ms. Thomassin noted the importance of the parimutuel industry to the horse racing industry.

Stewart Groumoutis and Dr. Jamie Wiebe of the BCLC testified second and noted that this bill would modernize Canada’s laws and provide protections for Canadian consumers. Mr. Groumoutis noted that this legislation is “long overdue” and that, currently, BC residents are either crossing the border and going to Washington casinos or betting offshore.

Mr. Groumoutis noted that their plan is to roll out single-game sports betting is on the BCLC’s online gaming website PlayNow.com. He further noted that BCLC is at the forefront of monitoring and protecting player health, winning numerous awards for their monitoring of problem gambling behaviors.

Mr. Groumoutis concluded by stating that single-game sports betting is something Canada is ready for.

Last to testify were Sue Leslie and Ian Howard of the Horsemen’s Benevolent and Protective Association of Ontario. Ms. Leslie argued that if fixed-odds horse racing wagers were allowed, it would break the industry.

Support for Canada sports betting legislation is there

There appears to be wide support for legalized single-game sports betting in Canada, though as currently drafted the bill appears problematic for the horse racing industry.

The vast majority of the witnesses on March 9 noted the devastating impact the bill would have on the industry. The fix of putting in protective language, however, appears relatively easy, though it is unclear what if any opposition there would be to the added language.

The briefs

In addition to the witness testimony on March 9, there was the release of written briefs that accompanied testimony from a hearing on February 25. The Responsible Gaming Council voiced support for requiring:

a robust regulatory framework that requires provincial regulators and operators to prioritize and integrate consumer protection within their strategy; including adherence and accountability to the highest standard of responsible gambling.

This would be accompanied by a continued commitment of the federal towards the prevention of addiction.

The Alberta Liquor and Cannabis Commission also voiced support of Bill C-218 and like the BCLC noted that it would provide new options for consumers on “Alberta’s only regulated online gambling website PlayAlberta.ca.”

What’s next

At the conclusion of the meeting it was agreed that there be a budget of $2,650 to study Bill C-218 and that at the next meeting on March 25, the committee undertakes a clause-by-clause evaluation of C-218 (the bill is only a few lines long).

Finally, the committee agreed that the Canadian Football League Players’ Association be invited to appear. Following the March 25 hearing, the timeline for single-game sports betting should become clearer.

Analysis: It’s Power Play Time For Canada Sports Betting Hopes This Week

An update from the Canadian Gaming Association (CGA) earlier this month noted a few key events coming soon that will shape the future of single-game sports betting in Canada.

This week sees the Canadian parliament doing double duty. According to the CGA, there are parliamentary events surrounding two bills that would enable single-game sports betting in Canada.

The private member bill option in Canada

The first event was the second reading vote on MP Kevin Waugh’s bill, which passed by a 303-15 vote Wednesday. The second reading and debate of the bill were held February 5.

The favorable vote sent the bill forward to what is likely a final round of hearings before the Justice Committee.

According to the House of Commons website, private members’ bills come in two varieties:

Public bills that deal with public policy issues under the purview of the federal government (e.g. criminal laws relating to sports gambling)

Private bills that deal with interests related to specific individuals or corporations

Public bills, like Waugh’s Bill C-218, must be introduced into Parliament via a designated procedure. Private members’ bills traditionally face a much greater number of obstacles to become law.

In the 100 years between May 4, 1910, and September 7, 2008, Canada passed a mere 229 private members’ bills. However, private members’ bills tend to fare significantly better when the party in power has a minority government, as is the case with Prime Minister Justin Trudeau’s Liberal government today.

The ‘competing’ sports betting bill

While private members’ bills rarely do well in terms of becoming law, the proponents of Bill C-218 should not be too nervous. There is a government bill, C-13, which ends in the same result: single-game Canada sports betting would no longer be prohibited by the Criminal Code of Canada.

The Government’s bill is lagging the private member’s bill ever so slightly, but according to the CGA, C-13 is slated for a second reading and debate on February 19, 2021.

I’m just a bill …

Like the Schoolhouse Rock song that taught decades of American children how a bill becomes a law, the process is similar in Canada with some slight differences, but no catchy song.

In Canada, there are three readings of bills before they can become a law.

In the first reading, the bill is read to either the House of Commons or the Senate, and it is printed.

A second reading occurs in the same chamber as the first reading, where that chamber can then send the bill for further study to a committee, or to subcommittee.

Committing to committees

In committee, a group undertakes a line-by-line review of the bill. This is also the time when witnesses and experts may be called to weigh in on the bill.

In a previous universe where the sports leagues opposed legalized wagering in Canada and the United States, their testimony went a long way towards sinking federal legislation to repeal the ban on single-game wagering.

The committee then produces a report which is sent back to Parliament with recommended changes or amendments. The recommendations are then debated and voted on by the Members of Parliament.

If the House of Commons chooses to move forward, the amended bill is then debated and voted on in the House of Commons. If the bill receives a favorable vote, it is sent to the Senate for consideration.

Unlike in the United States, Canadian Senators are appointed, not elected. While the upper chamber (the Senate) was traditionally viewed by some as a rubber stamp on legislation, the Senate has become more deliberative in recent years.

Likely to pass?

Despite the historical challenges and the appearance of competing bills, many expect Canada to get single-game sports betting legislation done at the parliamentary level this year. This would then open the doors for the provinces to begin contemplating how to roll out products.

We can expect to see a great deal of back and forth at the provincial level with just what model Canada sports betting should roll out under.

The appetite for legislation that would enable single-game sports betting across Canada is not without its detractors including at least one prominent member of the Liberal Party. Some experts have also highlighted that the bill to repeal the provision of the Criminal Code is not being accompanied by consumer and market protection mechanisms.

The system that requires multiple readings of bills means that things are never sure things until they are done.

What’s next for sports betting in Canada?

Even with the optimism surrounding single-game betting coming to Canada, the real winds facing, or favoring, the bills will show themselves as we get closer to a third reading. In the period leading up to the third reading expect both those in favor and opposed to ramp up their efforts to convince lawmakers of their point of view.

If all goes well and the bill makes out of the House of Commons and the Senate it will go to the Governor-General for Royal Assent, at which point the bill will become law. If all goes according to advocates’ plans it is a possibility that legal single-game betting could be around for the start of the next NFL season, though a number of pieces still need to fall into place.

Trudeau government moves to legalize single-event sports betting

Kait Bolongaro and Sandra Mergulhao , Bloomberg News

The DraftKings Inc. app and FanDuel Inc. website are arranged for a photograph in Washington, D.C., Oct. 5, 2015. Bloomberg/Andrew Harrer

Justice Minister David Lametti unveiled legislation to legalize single-event sports betting in Canada, marking a change in direction for Prime Minister Justin Trudeau’s government.

The planned changes would allow provinces to issue licenses for companies to accept wagers on all sporting events except horse racing, which will remain under a separate system. It is currently illegal to bet on single games under Canadian law.

“The goal of the legislation is simple: it is to bring a common practice out of the shadows and into the open. To make it legal, regulated and safe,” Lametti told reporters Thursday in Ottawa.

The governing Liberal Party voted against a similar bill in parliament in 2016.

Canadians spend $10 billion (US$7.7 billion) per year on single-event betting through illegal bookies and a further $4 billion on international betting websites, according to Lametti.

Shares of Score Media & Gaming Inc. soared on the announcement. Previous laws were “outdated” and the changes will allow the legal sports betting market to flourish, said John Levy, founder and chief executive officer of the Toronto-based company, in an email. “Canadians deserve a modernized and regulated sports betting market.”

Other companies that could benefit from the change include FanDuel Inc., GVC Holdings Plc., Great Canadian Gaming Corp., DraftKings Inc., Mohegan Sun Casino and Hard Rock International, according to James Kilsby, a Washington-based analyst at Vixio GamblingCompliance.

Provinces would also earn a new tax revenue source as a second wave of COVID-19 depletes fiscal coffers and wreaks havoc on the economy. The gambling industry in Ontario alone could see $1.47 billion in revenue, Kilsby said.

Online sports wagers and iGaming created almost US$160 million in tax revenue in 2019 in the U.S., according to the American Gaming Association.

“Canada’s gaming industry has been severely impact by COVID-19 so having access to this new product will assist in the industry’s recovery,” said Paul Burns, CEO of the Canadian Gaming Association. “Our expectation is that it will now move expediently through the process to completion.”

A winning hand? Combined changes to gambling industry could end Canada’s drift

In a landmark announcement, the federal government has signalled the birth of a modern sports betting industry in Canada. New legislation has the potential to unlock the billions in gaming revenue currently being generated in the “grey market”.

What you need to know

After a decade of calls for gaming law reform, the federal government has proposed to decriminalize single event sport betting which, if passed, would permit provinces and territories to regulate and license single event sport betting in Canada.

The Ontario Government has announced plans to launch a regulated online gaming/gambling marketplace. Under these plans, a newly formed subsidiary of the Alcohol and Gaming Commission of Ontario would be granted authority to manage and regulate online gaming sites operated by private third parties.

The combined effect of decriminalization and online regulation provides an unprecedented opportunity for gaming industry stakeholders to potentially unlock the billions in “grey market” gaming revenue currently being generated through facilitating a legal and regulated online gaming marketplace for all types of single event sports betting in Ontario.

Current regime

Currently, Canadians may only legally wager on the outcome of a sporting event by way of parlay betting, which involves placing a bet on the outcome of multiple sporting events at once. Despite numerous calls for reform by gaming industry stakeholders over the past decade, single event sports betting in Canada has remained prohibited under Section 207(4)(b) of the Criminal Code. 1 This has led to the creation of an enormous “grey market” for single event bookmaking, with nearly $10 billion wagered annually in Canada 2 and an additional $4 billion 3 wagered annually through offshore online sports wagering websites and applications. Notwithstanding the tremendous revenue opportunity being missed by the provincial and territorial governments across Canada, and the great success witnessed in the United States through the rapid legalization of single event sports wagering, Canada has remained a laggard to the disappointment of many, until now.

Proposed change 1: Decriminalization of single event sport betting

On November 26, 2020, Federal Justice Minister David Lametti introduced legislation to decriminalize single event sport betting in Canada. If passed, Bill C-13, An Act to amend the Criminal Code (single event sport betting), would give provinces and territories the power and discretion to manage, regulate and license all types of single event sport betting on any sporting event, except horse racing, in their respective jurisdictions. 4

Under the new regime, provinces and territories could choose to adopt a private operator model for single event sport betting. Private businesses operating under licence would be able to bring competitive sports betting products to market – either online or in physical facilities. This serves as a long awaited and landmark proposal by the federal government that has the potential to create a new industry, offering Canadians an opportunity to place bets in a legal and regulated marketplace.

Bill C-13 is particularly notable in that it marks the first time that decriminalization of single event sports betting in Canada has been proposed under a government bill, which by its nature requires support from a Minister or Parliamentary Secretary (in this case, the Minister of Justice), thereby bolstering its chances of becoming law. All prior proposals over the past decade have been introduced by way of a private member’s bill which lacks the same level of governmental support and, in turn, likelihood of being passed.

Proposed change 2: Regulated online gaming marketplace

On November 5, 2020, the province of Ontario published the latest budget detailing plans to launch a regulated online market place for online gaming/gambling. Under these plans, the Ontario government is proposing to create a subsidiary of the Alcohol and Gaming Commission of Ontario which would be granted authority to manage and regulate online gaming operated by private third parties. At present, the Ontario Lottery and Gaming Corporation is the only operator approved to offer online gambling in the province. The new model is expected to be developed over the coming months, and if passed, will provide an unprecedented opportunity for gaming industry stakeholders to potentially unlock the billions in “grey market” gaming revenue currently being generated through facilitating a legal and regulated online gaming marketplace for all types of single event sports betting in the province.

Growth of U.S. legal sports gambling market

The proposals announced by both the federal and provincial governments follow similar efforts to decriminalize single event sports wagering in the United States which have culminated in tremendous success.

In May 2018, a United States Supreme Court decision overturned a federal law prohibiting states from authorizing sports gambling (the PASPA decision) 5 on the basis that such law was unconstitutional, thereby clearing the way for the legalization of single event sports betting in the United States.

In the two-and-a-half-years since the PASPA decision, 26 states have either launched legal sports betting or passed legislation and are waiting to launch 6 . In addition, more than $20 billion has been unlocked from the “grey market” and wagered on legal U.S. sportsbooks. 7

Investor response

The proposed federal and provincial changes are timely in recognizing the desire for increased consumption of online sports and e-gaming products.

The disruption caused by COVID-19 has further fuelled the pre-existing trend of sports consumption moving from traditional in-person gatherings to online virtual experiences. Sports betting and e-gaming in particular have benefitted from this online shift.

In March 2020, during the first wave of closures associated with COVID-19, New Jersey, Delaware, Nevada and Pennsylvania – the four U.S. states with legal online poker sites – all reported record-high online gaming revenues. 8 Further, New Jersey gamblers wagered more than $931 million on sports in November, the latest in a series of all-time monthly highs reported in 2020. 9

Online bookmakers such as DraftKings and Bet365 have sought to capitalize on these trends by offering an appeal to sports bettors seeking new opportunities through products related to e-sports specifically while traditional sports struggle to provide consistent offerings. Las Vegas and the casino industry have followed with the Nevada Gaming Control Board approving sportsbooks to take wagers on the ESL One: Dota 2, DreamHack Masters Spring, League of Legends European Championship, Overwatch League, FIFA League etc. 10

In response, the capital markets have warmly accepted a series of offerings from sports industry players with an online focus:

In April 2020, DraftKings, a daily fantasy sports company, completed a $3.3 billion reverse merger with a special purpose acquisition company to bring the company public and began trading on the NASDAQ. As of January 12, 2021, the company’s stock price had surged from $19 on its first day of trading to $53, a clear sign of investor enthusiasm and support for the company and the sector more generally. 11

In September 2020, payments company Nuvei Corp. closed the Toronto Stock Exchange’s largest tech IPO ever in raising $805 million in gross proceeds. Nuvei Corp. has already earned approvals allowing it to serve sports betting industries in Colorado, Indiana and West Virginia.

In December 2020, Score Media and Gaming Inc. (theScore), which operates its own digital sports media and sports betting products, closed a bought-deal offering for gross proceeds of $40 million. Net proceeds are to be used, in part, to grow and expand theScore’s sports betting application’s operations in both the U.S. and Canada.

It is expected that further such offerings will continue to be embraced by the capital markets as COVID-19 continues to push industry participants online and as the proposed federal and provincial changes move forward.

After decades of waiting, the Canadian gambling industry has finally been dealt a winning hand. In the weeks that follow, Bill C-13 will face a second reading, followed by committee review, and a third reading, before it is able to be considered and potentially passed by the House of Commons and Senate. We will continue to monitor the progress of Bill C-13 and Ontario’s new online model and will continue to keep interested gaming industry stakeholders apprised of new developments.

To capitalize on the potential of the proposed changes, gaming industry businesses, service providers and entrepreneurs need an effective engagement strategy with provincial regulators. Our experts in gaming, governmental affairs and corporate and securities laws can help to navigate the complex regulatory landscape of gaming to identify opportunities and strategies in connection with this potential unlocking of the billions in gaming revenue currently being generated in the “grey market”.

Current Status of the Pending Canadian Sports Betting Bill, With Chantal Cipriano

When will Canada legalize single-event sports betting?

A sports betting bill that seeks to change a section of the Criminal Code in Canada is up for review in the Justice Committee at the end of the month. We checked in with Canadian gaming legal expert Chantal Cipriano to talk about Bill C-218 and the future of Canadian sports betting.

Chantal Cipriano is the Senior Director of Legal & Compliance with Mazooma, a fintech company that provides bank-verified payment processing to gaming operators in regulated U.S. markets. Previously, Chantal worked as a lawyer in the Toronto office of Dickinson Wright, where she provided legal advice to clients involved in the land based and online gambling industry. Chantal can be found on LinkedIn.

What are the biggest similarities and differences that you see between the repeal of the
Professional and Amateur Sports Protection Act (PASPA) and the amendment to, or repeal
of Section 207(4)(b) of the Criminal Code of Canada?

Cipriano. The repeal of PASPA was arguably the biggest gaming industry story in 2018. It allowed the respective states to open their doors to the proliferation of sports betting and sportsbooks looking to enter their states. While there are still states that have no intention of regulating single-event sports betting today, it cannot be refuted that PASPA reformed the American sports betting landscape, giving it the ability to level the playing field with jurisdictions around the globe that legalized single-event sports betting many years ago.

Aside from the competitive, private operator model for iGaming that is set to roll out in Ontario which is also a major initiative, similarly, the potential legalization of single-event sports betting in Canada is the largest gaming development to hit the newsstands. It will revolutionize countless facets of the gaming industry in Canada – in person sporting events, online gaming, mobile gaming, tv, and so much more.

In this regard, a key difference between the U.S. and Canada is that many states allow a private operator model wherein sportsbooks are able to obtain a license from the respective gaming commission in the state and offer their sports betting product to consumers. The government monopoly over gaming is not as prominent in the U.S.

In Canada, gaming and betting is conducted and managed by the provinces. Accordingly, even if the Criminal Code of Canada is amended to contemplate single-event sports betting, the provinces are within their right to offer such products by way of a government only platform. Ontario has made the move to offer a competitive and open private operator model, whereby if legalized, consumers will be able to place bets on sporting events with their favorite licensed sportsbooks.

The issue that remains: even if Canada legalizes single-event sports betting at the federal level, certain provinces that solely offer a government run platform may struggle in competing with bookmakers that have brand loyalty and offer a superior customer experience.

Is Bill C-13 primed to pass this year? Why haven’t efforts in the past been fruitful?

Cipriano. As part of the potential legalization of single-event sports betting in Canada, two bills were on the table: a private members’ bill known as Bill C-218, which received government support and resulted in an additional government bill known as Bill C-13.

The two tandem bills that attempted to move this initiative forward posed a procedural hurdle. As such, Bill C-13 is now obsolete, while Bill C-218 received a rare display of approval and has moved forward to the Justice Committee. Hearing dates related to the matter were held at the end of February 2021, early March 2021 and will be held again at the end of March 2021.

The Justice Committee intends to begin a clause-by-clause review by the end of March 2021. As private members’ bills generally take longer than governments bills to move through the Senate, the timing may be not as expeditious as many would have hoped.

Past efforts relating to the previous two private members bills, Bill C-290 in 2012, and Bill C-221 in 2016, were not supported by the government, politicians, and sports leagues. For example, during the time of Bill C-290, the then President of the Toronto Blue Jays delivered a detrimental report to the Senate against a regulated sports betting market. This seriously hindered the ability of Members of Parliament to move the dial forward.

To exacerbate the matter, gambling has simply never been a priority in Canada, resulting in the bills receiving little attention, even though from a financial standpoint, legalization could have prompted an incredible source of revenue for the provinces, and an opportunity for the country to be viewed as a leader in the gaming space and the booming industries related to it, such as fintech.

Which sportsbooks are Canadian sports bettors expected to see?

Cipriano. I cannot comment on which sportsbooks may enter the market if legislation is passed. This will not only be based on desire to enter the market, but also on operators overcoming regulatory hurdles. However, I am confident that consumers will have access to the well-known industry players, as well as start-ups that have created innovative sports wagering related offerings.

Which sports are Canadians expected to bet on?

Cipriano. In June 2020, the commissioners of the five professional sports’ leagues operating in Canada being the National Basketball Association, the National Hockey League, Major League Baseball, Major League Soccer, and the Canadian Football League, sent a statement to Prime Minister Justin Trudeau, former Finance Minister Bill Morneau and Attorney General of Canada and Justice Minister David Lametti. The statement indicated support and urged prompt action of an amendment to the Criminal Code of Canada that would authorize provinces to offer betting on single sporting events.

Based on this statement by the leagues, we can expect Canadian sports fans to be able to engage in basketball, hockey, baseball, soccer and football, in a new and exciting way through single-event sports betting.

How profitable can the single-event sports betting market be for Canada? Will it match the
U.S.?

Cipriano. A recent study by Deloitte suggests that within five years of legalization, sports betting in Canada could grow from CAD$500 million to nearly CAD$28 billion in legal market wagering. According to Deloitte, at that rate, “the sector would grow to be nearly seven times the size of the country’s existing spectator sports market in just five years.”

VIXIO Gambling Compliance suggests that the U.S. market will be worth USD$3.2 billion in 2021 and between USD$6.3 billion and USD$8.4 billion by 2024, “considering market confidence coming from major U.S. sports and a projection of 45 states having legalized sports betting by 2024.” In addition, a recent report by JP Morgan suggests that the U.S. sports betting market could hit USD$9.2 billion by 2025.

Only time will tell whether Canada will surpass the U.S. in revenue, but one step at a time –first, Canada has to make this minor in form, yet major in substance, change to its Criminal Code.

This is provided for informational purposes only and is not legal advice. Please consult with a lawyer/attorney if you need legal advice related to sports wagering.

Canadian Bill On Single-Game Sports Betting Tabled Until After Christmas

House of Commons adjourns for Christmas break without hearing additional debate on sports betting bill

While Canadian gaming advocates have been pleased with the rapid developments in legislation on single-event sports betting in recent weeks, supporters of a closely watched bill will have to wait until after Christmas for political leaders to complete a key procedural step.

On Friday, members of the House of Commons of Canada adjourned for the Christmas break without hearing debate on single-game sports wagering. Debate on the bill, C-13, is expected to resume in late January when House members return from vacation.

Unlike previous incarnations over the last decade, the bill appears to have garnered widespread bipartisan support across both sides of the aisle. This week, however, House debate concerning expanded access to medical assistance in dying took precedence, and efforts to advance the gambling legislation stalled.

“It’s not a huge deal, as the bill can be picked up in January with no threats to it,” a Canadian gambling expert told Sports Handle. “We were never certain about a vote before [Christmas]. It doesn’t require lengthy debate, so it can move quickly.”

Little concern with slight pause

Prior to this week’s session, there was some optimism among supporters of the bill that it could be passed in the House before the end of the calendar year. Their optimism grew after Justice Minister David Lametti introduced the legislation on Nov. 26, when the bill received first reading. The Canadian parliamentary system requires a bill to go through three readings in the House of Commons before it is adopted and sent to the Senate.

The bill seeks to amend Section 202 of the Criminal Code of Canada, which prohibits single-game sports betting. Another section, Section 204, contains an exemption that allows provincial governments to offer parlay wagers through a lottery scheme.

“We are pleased to see the support that the bill has received since it’s been introduced, and we hope that all leaders will work together to pass these changes expeditiously,” a spokesperson for Lametti’s office wrote in a statement provided to Sports Handle.

Great news !! Canada’s gaming industry has been severely impacted due to COVID-19 and with 180,000 CDN’s directly employed in the industry it will provide a tremendous boost to the sector. https://t.co/jU2ZaMWeOo

— Canadian Gaming Association (@CanadianGaming) November 26, 2020

Trimming the illegal market

Lametti, who was first elected as the Member of Parliament for LaSalle-Émard-Verdun in 2015, spent nearly 20 years as a law professor at McGill University before entering politics. Lametti also holds a law degree from Yale University and a doctor of philosophy in law from Oxford University. The federal electoral district represents Quebec.

Lametti’s legislation “took over,” a previous bill, C-218, sponsored by House member Kevin Waugh (Conservative, Saskatoon-Grasswood). Upon introduction, Lametti emphasized that the objective of the bill is simple: to move Canadian single-game betting into a legal, regulated environment. Single-game betting refers to wagering on a certain event such as the Super Bowl or the Canadian Football League’s Grey Cup, unlike parlay betting which encompasses propositions on several outcomes at once.

Ultimately, it is Lametti’s goal to reduce the influence of the illegal, offshore market. According to estimates from the Canadian Gaming Association (CGA), bettors in Canada spend approximately C$10 billion ($7.82 billion U.S.) per year on single-event sport wagering among bookmakers connected to organized crime. Canadians, according to the CGA, bet an additional C$4 billion ($3.3 billion) on single-game sports through illegal, offshore websites. At present, Canadian bettors also spend about C$500 million annually through legal provincial sports lottery products, the CGA found.

Great news !! Canada’s gaming industry has been severely impacted due to COVID-19 and with 180,000 CDN’s directly employed in the industry it will provide a tremendous boost to the sector. https://t.co/jU2ZaMWeOo

— Canadian Gaming Association (@CanadianGaming) November 26, 2020

“Our Government knows that in order for gambling to take place in a safe and responsible way, it must be properly regulated,” Lametti’s spokesperson wrote in the statement.

“The changes we are proposing would give Canada’s provinces and territories the ability to regulate single-sport betting. By taking illegal betting profits out of the hands of organized crime, revenues could instead be directed towards health care and education initiatives, as has been done with other lottery revenues. These changes would also create opportunities to work with Indigenous communities to strengthen their participation in the gaming industry.”

The odds of passage grew slimmer by the minute on Wednesday evening amid efforts by a faction opposing the assisted suicide legislation to filibuster the bill. But the medical assistance bill passed on Thursday by a 212-107 margin, paving the way for a potential debate on expanded sports betting. Although Windsor West MP Brian Masse urged his colleagues to consider the bill in Friday’s session, House members apparently ran out of time.

Policy shift

Lametti’s bill to decriminalize single-game sports betting provides newfound hope for gaming advocates felled for years by resistance at the federal level. In contrast to previous attempts, the bill has backing from the government itself — authored by a member of Prime Minister Justin Trudeau’s Liberal Party. In 2016, another bill, known as the Safe and Regulated Sports Betting Act, was defeated decisively in the House of Commons, amid concerns of match fixing raised by some Liberal Members of Parliament (MPs).

When Lametti introduced the measure, he even fielded a question on the assurances in his bill that protect athletic competitions from corruption, given that the average salary for first-year players in the CFL hovers around $53,000 a year. In response, Lametti argued that a legal scheme regulated by the provinces helps reduce the possibility of match-fixing due to the enhanced visibility from tracking wagers in a public fashion.

In spite of the resounding 2016 defeat, there was never a groundswell of opposition to the measure, said Paul Burns, who serves as the president and CEO of the Canadian Gaming Association. Instead, the concerns resided with individual members of the Liberal Party, who took issue with gambling in general, not sports betting per se, he added.

Fast forward to today’s climate in the post-PASPA era, where leaders from several parties appear to have found common ground on single-game betting legislation. Take the efforts in Ontario, for instance. Last December, Irek Kusmierczyk, a Liberal MP (Windsor-Tecumseh), began working with Masse, a member of the New Democratic Party, on attempts to draft a bill. Masse has been one of the nation’s most ardent supporters of single-game sports betting in recent years.

“That is the exciting part, we now have all party alignment in the House of Commons, and the government that is controlling the agenda is the one that is driving the bill,” Burns told Sports Handle.

A competitive open market for iGaming in Ontario?

Separately, there are indications in Ontario that certain political leaders will take steps to end a monopoly the Ontario Lottery and Gaming Corporation (OLG) currently maintains on the online gambling market inside the province. When Ontario unveiled its fiscal year budget, the provincial government included a section on single-game wagering, a critical development in expanding sports betting throughout Canada’s most-populated province. An open market for iGaming in Ontario could bring upwards of C$545 million in annual revenue approximately five years after implementation, research from Vixio GamblingCompliance stated.

The Province will also continue to engage with the federal government to encourage the legalization of single-event sports wagering. Legal single-event sports wagering would help support the growth of a competitive online gambling market in the province, and as a popular form of wagering, would also benefit other parts of the gaming sector. — 2020 Ontario Budget

Last week, Burns appeared on a panel at Betting On Sports America focused on iGaming and sports betting advancement in Canada. On the same panel, Dave Phillips, COO of the Alcohol and Gaming Commission of Ontario (AGCO), noted that the province has advocated for single-game sports betting for a period of at least a decade. Another panelist, Ron Segev, a founding partner at Segev LLP, described the enormous scope of the Ontario market, considering the province has a population roughly double that of New Jersey.

The size of the Ontario market is not lost on top sportsbook operators such as DraftKings. During the company’s third-quarter earnings call with equities analysts in November, CEO Jason Robins outlined the company’s interest in the market.

“We have a very nice size user base there, and we think it could be a really great opportunity,” Robins said. “We’re very hopeful that we’ll be able to add both sports betting and iGaming in Ontario sometime next year.”

As Michigan nears the rollout of online sports betting, Windsor-area casinos are feeling the heat. One casino near the border, Caesars Windsor, is a stone’s throw from the Ambassador Bridge, which connects Detroit and Windsor.

Law firm McCarthy Tétrault outlines the proposed amendments to Bill C-13, what it means for gaming industry stakeholders and next steps. #sportsbetting #canadahttps://t.co/Fa9TAeJU5Q

— SportNation Bet Canada (@SNBET_ca) December 9, 2020

In Canada, the onus for licensing and regulating all forms of legal gambling falls upon provincial governments. If single-event sports betting is eventually legalized, five provincial lottery corporations will likely face the responsibility of regulating the activity. All five — the Atlantic Lottery Corporation (ALC), British Columbia Lottery Corporation (BCLC), Loto-Québec, Ontario Lottery and Gaming Corporation (OLGC), and Western Canada Lottery Corporation (WCLC) — offer parlay-style sports wagering products at the moment.

“If C-13 is legalized, BCLC would work with our casino service providers, regulators and partners in government to deliver the best playing experience possible for British Columbians across our online and land-based channels,” a BCLC spokesman wrote in an email to Sports Handle.

In the event that single-game sports betting is legalized, the activity could generate between $125 million and $175 million in annual revenue for the province, according to BCLC estimates.

Timeline for potential implementation in 2021

As the Canadian gaming industry turns to 2021, the timeline for implementation is still unclear. Burns is optimistic that widespread single-game sports wagering will be available at some point in 2021, with Labor Day as a reasonable target. The holiday represents the intersection of a number of disparate events on the sports calendar, namely the start of the 2021 NFL regular season. Other events such as the 2021 U.S. Open in tennis, the MLB playoffs, the CFL playoffs and the start of the English Premier League, NBA, and NHL seasons all take place during the fall calendar.

With bipartisan support on both the federal and provincial levels, gaming advocates are finally confident that a bill on single-game sports betting can pass through the legislative process with a fair amount of alacrity.

“We now have an alignment,” Burns told Sports Handle. “It truly puts them on a path to getting it done quicker.”

Canadian Lawmakers to Discuss Possible Changes to Sports Betting Bill Thursday

Posted on: March 25, 2021, 03:28h.

Last updated on: March 25, 2021, 11:44h.

Thursday stands to be a big day for those interested in seeing the expansion of legalized sports betting in Canada. A parliamentary committee is scheduled to hold a key meeting to discuss a bill that would give provinces the right to allow single-game wagering.

John Levy, CEO of theScore, testifies Tuesday during a Standing Committee on Justice and Human Rights hearing on a single-game sports betting bill. The committee will meet again Thursday to discuss possible amendments to legislation. (Image: parlvu.parl.gc.ca)

The Standing Committee on Justice and Human Rights will meet Thursday at noon ET to hold a “clause-by-clause consideration” hearing on Bill C-218. The in-depth review of the proposal takes place between the second and third readings of a bill.

It’s possible the committee may offer amendments to the legislation before that third reading. At that time, the House of Commons would decide whether or not to accept the amended bill. The deadline for lawmakers to submit amendments was Tuesday afternoon.

Once a bill gets a third reading in the House, it then goes to the Senate.

Currently, Canadian law allows only parlay sports betting, meaning bettors must wager on multiple games. The bill allows provinces to legalize single-game betting and issue licenses to sports betting operators.

Kahnawake Seek Inclusion in Sports Betting

On Tuesday, the committee received testimony on the bill from several interested parties, including Canadian indigenous people.

Chief Mike Delisle Jr. of the Mohawk Council of Kahnawake told committee members that reports of single-game sports betting being controlled only by only offshore and organized crime interests in Canada were untrue. The Kahnawake operates an online sportsbook in Canada that offers single-game betting as part of its gaming operations.

Delisle and Chief Gina Deer said the Kahnawake see C-218 as a “positive step” for the country’s gaming interests. However, they urged lawmakers to use the bill to undo decades of injustice instead of exacerbating them. They want the bill to recognize indigenous gaming rights and allow them to partner with sports betting operators in a similar fashion as the provinces.

“You have the power to accommodate and reconcile the interests of the crown with those indigenous peoples,” Deer said. “You have the power to urge Parliament to balance the interests of the wealthy and the powerful with the interests of indigenous communities.”

Gaming is a major source of revenue for the nation, and critical for its self-sufficiency. Since 2016, its Mohawk Online gaming operations have doubled its workforce to 60 employees. Those jobs are split evenly between nation members and outsiders. Plans call for hiring 15 more workers this year.

Horse Racing Amendment Sought

Others who spoke Tuesday include representatives of the National Hockey League and the country’s horse racing industry.

Racing stakeholders pushed for an amendment to C-218 that would mirror a similar bill filed by Canadian Justice Minister David Lametti (Liberal, LaSalle—Émard—Verdun). Lametti’s single-game sports betting bill included a provision that excluded Canadian sportsbooks from taking fixed-odds wagers on races.

Horsemen make their living off the takeout from pari-mutuel wagering at tracks. In other words, they receive a percentage of the betting pool to put toward purses for races. However, if sportsbooks offered fixed-odds betting on races, they would not be guaranteed a cut from that.

“I’m counting on the government to recognize the industry,” retired jockey Sandy Hawley told the committee. “Its hardworking people, its value, and make the right decision on the amendment… without the exclusion, it would kill the revenue string that supports the sport, all the people and the business that depend on it.”

That amendment also received support from theScore CEO John Levy.

Levy also urged members of Parliament to act quickly and pass the bill. He said millions of Canadians want to use a “safe and trusted” sports betting product, such as theScore’s app. The Canadian-based media company currently holds licenses in four US states.

Previously, Levy estimated the annual gross revenue for the online Canadian sports betting market to be upwards of US $5.4 billion.

“These gaming revenues represent a significant boost to a recovering economy, incenting job creation and regional economic development in many communities that will see direct and immediate benefits,” he said.

Is single-game sports betting gaining legal traction in Canada?

Betting on a single sports game is currently illegal under the Criminal Code of Canada. [1] While the Criminal Code prohibits single-game sports betting, it creates exceptions for a parlay-style system. [2] Parlay-style betting requires an individual to bet on two or more events and accounts for approximately $500 million in legal provincial wagers. [3] However, Canadians are betting close to $14 billion a year through offshore websites and illegal bookmaking operations. [4] Under a new bill recently introduced by Justice Minister David Lametti, the $14 billion that Canadians gamble offshore could soon be legalized in Canada.

Bill C-13 (the "Bill") [5], which was introduced last November, would remove the prohibition on single-game sports betting in Canada and allow the provinces to regulate the industry. [6] The Bill adopts suggestions forwarded in a private members' bill [7] introduced earlier this year and is expected to draw support across bipartisan lines. [8] The Bill comes at a time when Canada faces increased competition from America after the US Supreme Court paved the way for legalized sports betting in the States. [9]

Proponents for legalizing single-game sports betting in Canada point to the revenue potential gambling could funnel into the economy, bringing both jobs and economic benefits. [10] The Canadian Gaming Association stated allowing single-game sports betting would serve as an economic stimulus, create hundreds of employment opportunities, and generate a significant new tax revenue stream for cities across Canada. [11] Others claim removing prohibitions against single-game sports betting in Canada could have huge market impacts. In Ontario alone, one Canadian-based digital sports media company estimates $1.5-2.1 billion in annual gross gaming revenue. [12]

Those opposed to the legislation argue sporting events could fall prey to match fixing, undermining the integrity of professional sports. Declan Hill, an associate professor of investigations at the University of New Haven, argued in the Globe and Mail that the Bill is flawed. He contends Canada should also create a federal law targeting match fixing before legalizing single-game sports betting. [13] The Canadian Centre for Ethics in Sport notes similar match fixing concerns. [14] Further, legalizing single-game sports betting could contribute to growing addiction problems. Declan highlights easier access to sports betting could "fuel addiction in the demographic that is not always known for making sensible choices – men aged 14 to 35." [15] With the added difficulty in monitoring underage betting, addiction problems could become more acute.

Others opposed to the legislation claim single-game sports betting creates an arena to bankrupt customers and drain money from the economy. Liberal MP Adam Vaughan, in debating the mirroring private members' bill, noted casinos take four dollars out of the local economy for every dollar that goes into it. [16] Vaughan believes casinos are now looking to single-event sports betting as a way to supplement their income after bankrupting their previous clientele.

With the recent growth in the US gambling industry and Canadians appetite for gambling, the latest attempt to legalize single-game sports betting in Canada may prove successful. With the Bill garnering support from several multi-national sport organizations, the legislative change could come at a particularly poignant time when Canada's economy needs a boost from the COVID-19 pandemic. [17] Parliament is expected to debate the Bill in early 2021.

So, let's define, what was the most valuable conclusion of this review: The long-awaited reform to Canadian gaming law may finally be approaching. Over the last decade, several attempts to legalize single-event sports betting have stalled. at Canadian Gambling Legislation