Canadian Government Investigates Revenues from Online Sports Betting

By Ben Hamill - January 09 2016
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Canadians are avid sports betters, laying hundreds of millions of dollars on their favourite athletes and teams every year. When the sports betting site is within Canadian jurisdiction, the provincial governments gain a percentage of the action through the provincial Lotteries and Gambling Corporations that operate the procedures.

Observers, however, are noting that there’s an increasing percentage of sports betting that takes place outside of Canadian jurisdiction, via online sites, and the provincial governments are missing out on millions of dollars in sports wagering revenues.

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Criminal Code

According to the Final Report prepared for the Ontario Problem Gambling Research Centre, of Canadians who gamble online, 16.7% bet on sports. Sports betting in Canada is regulated by the federal Criminal Code which gives provinces control over how betting and gambling activities are conducted.

Some provincial corporations offer sports betting options thorough their lotteries or, in some provinces, at their online gaming sites. In many of these cases, bettors don’t have as wide a choice as they would with a regular sportsbook. In addition, the margins in the provincial lottery sports betting tend to be wider than average and bettors feel that the value for their money is not at a premium.

Online Betting Options

There is no prohibition on Canadian sports enthusiasts who want to put money down at an online bookmaker.

For these bettors, one of the main advantages of online betting is that, at the online site, they can bet on the outcome of a single game. This is illegal at Canadian gambling venues where the rules of Canadian Sports Gambling state that a person must make at least three bets on at least two separate sporting events. In this type of parlay betting a single bet links two or more individual wagers and payouts are generated when all of those wagers win together.

Another benefit of the offshore betting options involves the mobile option which is not available through most provincial Canadian Corporations’ online sites but is featured at almost every offshore online betting site.

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Canadian Gaming Association Vice-President Paul Burns summarizes the situation “Sports betting is a global business. The Canadian casino operators and lottery corporations can’t offer that product, but Canadians still have access to it through the Internet.”

Sports Betting in Canada

At present, sports betting in Canada is facilitated through the provincial Lotteries and Gaming Corporations, as part of their Lottery activities (such as the OLG’s Sports Select) or at Corporation-supervised casinos. Sports betting can also be organized through Sports Pools which are licensed by the provincial Lotteries and Gaming corporation and run by charities as a fundraiser or as a charity-related Sport Betting Event.

In addition to the online sports betting that operates through offshore sites, Canadians also bet on privately organized sports betting events (personal recreational sports such as golf or tennis), sports pools that friends or co-workers organize to bet on a big event (i.e. NHL playoffs) and charity events. Sports bookies also operate throughout Canada, though this is highly illegal and is punishable by jail time.

Revenue Lost

Burns said Canadians spend an annual $4 billion on online sports betting which compares with $500 million on official sports lottery products offered by the provinces — i.e. the Ontario Lottery and Gambling Corporation (OLG)’s Pro-Line Sports bets. There are no taxes or revenue-sharing on online sports betting so the profits on that $4 billion just leaves the country which many Canadian gambling observers see as an unnecessary financial loss for the community.

“Why not allow for Canadian operators to fight for some of that money to allow the benefits to stay in Canada?” Burn said. He expanded by saying that gaming operators, including Canadian casinos and race tracks, would like to offer sports bettingin order to apply Canadian standards to poorly regulated overseas bookmakers.

Legal Moves

The Canadian Gaming Association estimates that Canadian gambling revenues amount to $16 billion a year. Of that, 8.7 billion goes to local charities as well as federal, provincial and localgovernments.

In 2012 bill C-290 was introduced into Parliment. If passed, the bill would have allowed single-game betting in Canadian casinos. The bill passed the House of Commons but stalled in the Senate. Senators who were opposed to the bill said it would make it easier for Canadians to gamble. “I don’t know how much easier it can get than clicking on your Internet browser” Burns commented.

Advocating for Reform

Burns would like to see the federal government reform the law and allow more sports betting. He believes that such a reform could address negative consequences of gambling, including addiction. He explained that “people may have problems with sports wagering today but when they’re betting with people who don’t take the responsibility seriously like Canadian gaming operators do, then we just don’t know.”

Other Canadian gambling advocates agree and add their own thoughts. Chad Finkelstein, partner and registered trademark agent in Dale & Lessmann's Corporate Commercial Group, notes that allowing overseas betting sites to operate creates a huge risk. “Who knows if you’re funding organized crime, if it’s fixed, or if you’ll ever get paid out,” Finkelstein says.

Finkelstein would like to see the Criminal Code reformed in the face of the increasing popularity of sports betting. “A lot of the concepts that are in there are outdated, antiquated and simply not applicable to the commercial realities of gaming today.” He says that evidence shows that consumers want new and different ways to gamble on sports.

“The horse has left the barn. It’s happening anyway, and it’s happening in ways the Canadian government isn’t overseeing or controlling or getting any revenue from.”

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