Vic Fedeli, the province’s finance minister, recently wrote to his federal counterpart, Bill Morneau, requesting an amendment to the Criminal Code, which currently prohibits single-event sports betting across the country.
The request comes after two failed attempts in the last decade by federal NDP MPs to legislate the same change via private member’s bills brought in the House of Commons.
“Maybe it’ll be third time lucky,” says Chantal Cipriano, a lawyer in the Toronto office of international law firm Dickinson Wright LLP. “I think it’s really time to start moving forward, having been stuck in this archaic state for so long.”
“It makes absolutely no sense in my mind to prevent single-event betting,” adds Ilkim Hincer, a partner in McCarthy Tétrault LLP’s Toronto office, who notes that wagers are allowed on accumulator bets involving three games or more.
“It’s a frankly outdated situation that exists in no other jurisdiction in the world,” says Hincer, who, in addition to his role as the head of his firm’s gaming, lottery and eSports practice group, also acts as president and CEO of MT Play, its affiliated global gaming consultancy.
Back in 2011, NDP MP Joe Comartin came closest to eliminating the criminal ban when his proposed bill cleared the Commons — only to get held up in the Senate before finally dying after years on the order paper when Parliament dissolved for the 2015 election.
A second attempt was shot down at an earlier stage in 2016 when MPs in the new Liberal government switched their position on the issue and voted down the private member’s bill brought by the NDP’s Brian Masse at second reading.
But Hincer points out that a major development in the intervening years south of the border has increased the urgency for Canadian authorities to act.
Last summer, the U.S. Supreme Court struck down the Professional and Amateur Sports Protection Act. Originally passed in the early 1990s, the law effectively limited single-event sports betting to the state of Nevada, but its demise has opened the way for most other states to get in on the action.
“If they can’t do it lawfully in Canada, folks are going to cross the border and participate in betting there,” Hincer says. “When you have the likes of the NBA and NHL saying they’re fine with the idea, and you consider the reality that it has been going on for years anyway in the grey market of unregulated online betting, it makes sense for us to change the law, modernize and remain competitive.”
According to Cipriano, Ontario’s heavily regulated lottery and gaming market means it wouldn’t be such a huge leap to add single-event sports betting under the existing regulatory umbrella. For example, she says the infrastructure is already in place to license casino operators, slot machine manufacturers and others involved in the industry.
“As part of that process, companies and individuals have to disclose a ton of information about their finances, tax compliance, any litigation history and a laundry list of other items,” Cipriano says. “The nuts and bolts are all there, so it would be more about tailoring that rigorous due diligence framework to apply to a new offering.”
If Fedeli’s pitch to Morneau is ultimately successful, Cipriano says, the province will have three main options for putting a sports betting offering into practice. First, it could run a provincial monopoly along the lines of the Crown corporation that operates online casino PlayOLG.ca.
Alternatively, she says, the province could launch a request-for-proposals competition to identify a suitable operator to run the enterprise on its behalf. Finally, Cipriano says the market could be opened up to private businesses operating under licence, provided the Criminal Code is amended.
Cipriano says she favours the latter option, citing the recent implementation of the private storefront regime for cannabis sales as a regulatory template.
“In my opinion, the private operator model is the one that would truly allow for a free market in which companies and individuals who have been involved in the industry for years would be able to bring competitive products to market,” she says. “If Canadian players feel they’re being forced to play via a government-run corporation or website when there are sites in other jurisdictions with new and more exciting features, I don’t think it’s going to do enough to minimize the unregulated territory that exists.”
For Hincer, single-event sports betting is just the poster child for Canada’s broader problem with gambling regulation.
“We have this very odd, bifurcated model whereby the provinces have jurisdiction to operate and regulate gaming, but the federal government is limited to the high level of the Criminal Code, which basically overrides everything else,” he says.
“It’s a big challenge when you’re trying to shove a lot of modern concepts into outdated laws,” adds Hincer, noting that the last substantial legislative amendments at the federal level occurred in the mid-1980s.
Few in the business can match his breadth of experience, which covers most bases in the gambling industry. After an introduction to the field as general counsel to the British Columbia Lottery Commission, Hincer took up a similar job in the private sector at Ontario’s Casino Rama, which was then owned by a large U.S. lottery operator.
“It ended up being a very operational role, where I learned what it takes to run a casino,” he says of a job that gave him responsibility for 300 staff, aspects of security and surveillance, First Nations relations “and a whole bunch of other things that were critically important to the running of the property.”
Hincer’s next move took him to a private equity firm looking to invest in Ontario’s gaming industry, before he returned to private practice in 2015, ahead of the move to McCarthys last summer.
“I’ve made a lot of connections over the years, wearing multiple hats in both the public and private sector,” he says. “I’ll be able to tap into that experience and hopefully do some interesting and transformative work.”
“We want to be holistic problem solvers and true partners with the industry to elevate its status,” Hincer adds.
According to Peter Czegledy, a member of the gaming practice group at Aird and Berlis LLP, the complexity of the industry and the stakeholders involved gives larger firms an advantage.
“Client needs do vary,” he says, noting that he serves a wide range of businesses, running the gamut from young entrepreneurial enterprises to established multinationals.
“As part of a full-service firm, there isn’t much I can’t offer, directly or indirectly,” Czegledy adds. “I have a large group of specialists that can be drawn on for any given matter,” including employment issues, tax matters, financings and more.
He got involved himself in the mid-1990s after helping a large global gaming firm expand into the North American market via local acquisitions, and he says the new line of work nicely complemented his existing involvement with technology-based businesses.
The sector has grown significantly since then and continues to do so in many areas, including the customer base, product offerings and distribution channels, Czegledy says. Competition has intensified, too, both within the industry and among the law firms that service them:
“There’s more clients involved and more dollars, and people see that opportunity,” he says. “Increasingly, gaming lawyers — or at least those who can provide the most value to their clients — will need a much broader skillset than ever before.”
Editor’s note: The online version of this story was updated Monday April 15, 2019 to clarify Chantal Cipriano’s comments.