21 Oct

Canada Teeters on Fence of Online Gambling Legality

Who presents the best regulatory model should our federal government script a framework for legal online casinos in Canada?

UK or US: Which Model of Law Best Suits Legal Online Casino Sites in Canada?

When it comes to questionable legal matters, particularly those where the people are divided on moral grounds, some federal governments will take the ‘wait and watch‘ approach. That’s exactly what we’ve seen from multiple jurisdictions in regards to internet-based gambling. There are forerunners, like the United Kingdom, followers like Australia and the United States, and then there are those that freeze up, like a deer in headlights, not daring to make a move until a clear path lays itself out before them.

Canada’s federal government is the deer. That’s not necessarily a bad thing, though. In fact, it’s given us, as players, the freedom to choose our own path. We can bet on sports or play casino games, poker, bingo, and more, at any online operation we please. Only websites hosted within Canada – those not by the crown corporation of their local province – are illegal, and the fault for using them lies solely with the operator, not the players.

By all means, we are among the most liberal online gambling nations in on the planet! However, our government has been ‘waiting and watching‘ for an awfully long time. Our provinces are doing their best to capitalize on the opportunities provided, launching ring-fenced iGaming operations within most provinces, but they are tired of losing money to foreign markets. If and when our federal government decides to heed their call and make a change, which regulatory framework is best suited for mimicry?

Top Model for Legal Online Casinos in Canada

There are two major options to consider here; the United Kingdom or the United States. For the last five years, the UK has been praised for setting the bar all other jurisdictions should follow, and is widely considered the most successful iGaming jurisdiction in the world. Oddly enough, no jurisdiction has moved to follow them step for step.

The US took an entirely different approach, but one that seems to be working well enough for its 50-state environment. And should our head-honchos decide it appropriate to leave ambiguity behind and script a modern framework for the online gambling age, which regulatory model should they follow? Let’s take a closer look…

The UK Online Gambling Model of Law

I’m not going to get too deep into the legislative aspect here, because there’s only one feature that truly sets the UK apart from almost every other legal iGaming jurisdiction in the world. It’s not a ring-fenced market.

Operators can be located in or outside of UK, and still apply for a license. Likewise, any UK-licensed operator can accept players that reside in or outside the UK, so long as the country of residence does not expressly prohibit online gambling.

For example, UK licensed operators can accept Canadian players, because it’s not illegal here, but not US players, since US states ring-fence their player pools. As such, the UK makes millions of dollars per year in licensing fees, and much more in 15% point-of-consumption taxes.

US Guidelines for iGaming Regulations

The US federal government took a different approach – understandable, considering its girth and 50-state segmentation. From a federal standpoint, all forms of gambling are illegal unless a state choose to legalize and regulate them. Therefore each state manages its own laws on the matter.

So far, only 3 US states, Delaware, New Jersey and Pennsylvania, have legalized online casino games. Nevada regulates online poker only. A few more have conceded to online lotteries. Aside from the shared liquidity between poker networks in Delaware and Nevada, all of these jurisdictions have one thing in common – they are ring-fenced markets.

Only players physically located in New Jersey can play at New Jersey’s state-run online casinos. The same goes for Delaware and Pennsylvania. Furthermore, laws are in place preventing any operator not licensed by the respective state from accepting players within it.

Conceptualizing the Laws of Canadian iGaming

Which route should Canada go, if our federal government decides a change is necessary? Well, on the one hand, going the UK route would preserve the freedom of choice already provided to the people. It would also give provincial governments an added revenue stream, requiring foreign operators to pay license fees and taxes, and at the same time staunching the flow of countless dollars from leaking offshore.

Taking the US route would change things entirely. First, it would eliminate our ability to wager with offshore operators. Secondly, it would make room for competition in each province. Instead of a single legal operation run by the crown corp, multiple operations would be allowed to open under provincial authorization. The end result would be choices, but not nearly as many of them.

Unfortunately, either route would spell the end of betting on single-event sports. A federal-level regulatory scope would ban any activity not expressly legal in the country. The fact is, any change to the status of legal online casinos in Canada would take away something we currently have access to. While the UK option seems preferable to mimicking US regulations, I think most of us can agree no change would be best – at least, for the players who enjoy online gambling.

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