Published: May 14, 2024

Ontario iGaming Model Ruled Legal By Courts, Bodes Well For Potential Expansion

After months of uncertainty, an Ontario Superior Court Judge has dismissed The Mohawk Council of Kahnawà:ke’s case against iGaming Ontario. As a result, the province’s current open online gambling model is considered constitutional under The Criminal Code of Canada.

The MCK launched the court challenge. It alleged the Ontario regime is illegal because iGO is delegating conducting and managing duties to private operators.

While Justice Lisa Brownstone did agree that The Council had the “public interest standing” to warrant a challenge, she ultimately dismissed the application.

Instead, Brownstone concluded that “Ontario, through iGO, is conducting and managing the iGaming scheme.”

“Ontario has established such a system,” Brownstone said in her official reasons for judgement. “It has not delegated its powers to private operators but has retained its position as operating mind of the iGaming scheme. It has carefully constructed the iGaming scheme to ensure safety, integrity, and fairness.

“There can be no frustration of purpose when the province has acted within its constitutional authority in a manner that is consistent with the exemption provided for in the Code.”

Impact of Ontario court’s ruling will reverberate across Canada

As industry players across Canada’s most populous patiently awaited Justice Brownstone’s verdict, so too did stakeholders beyond Ontario’s borders.

Should the court have deemed Ontario’s iGaming system unlawful, it would be back to the drawing board for the provinces hoping to install privatized online gambling regimes.

Alberta, and to a lesser extent Quebec, have been pegged as two potential iGaming destinations. The former is actively exploring expansion opportunities, as PlayCanada confirmed in February. The latter, however, is still experiencing pushback from the province despite evidence showing Quebecers are in favour of privatized iGaming.

Differences in momentum aside, both jurisdictions have cited the Ontario online casino and sports betting model as proof regulation works. Now, with Justice Brownstone’s verdict, each region has the legal backing to pursue an Ontario-like model.

And, it would be wise to do so. In its second year of operation (fiscal period from Apr. 1, 2023 to Mar. 31, 2024), Ontario’s combined online gambling sector generated $2.4 billion in total gambling revenue. For context, that’s the highest figure for the second year of any online jurisdiction in North America that offers both online casinos and sports betting.

MCK has option to appeal court’s decision

Monday’s decision was a bitter blow for the MCK, especially after months of preparation.

The indigenous community with a long-standing presence in the online gambling industry finally got its day in court. That day came some 450 days after filing a Notice of Application to the Ontario Superior Court against iGO and the Attorney General of Ontario.

The notice was delivered in November 2022, while the hearings began on Feb. 20 at 10 a.m. at the Superior Court of Justice in Toronto.

As noted in Justice Brownstone’s statement, the MCK’s main complaint questioned who was truly calling the shots under Ontario’s iGaming regime.

“The Council argues that the provisions impermissibly allow private owners and operators of gaming websites to conduct and manage lottery schemes in the province, and the doctrine of paramountcy renders the iGaming scheme inoperative. The Council takes the position that the iGaming scheme is, in effect, a disguised licensing scheme that impermissibly outsources the conduct and management of internet gaming to private sector enterprises.”

While the court deemed said position invalid, The Council still holds the right to appeal the ruling.

iGaming Ontario to remain province’s online gambling authority

With Monday’s ruling officially on the books, iGaming Ontario will maintain its position as Ontario’s online gambling authority.

Justice Brownstone ultimately determined that Ontario, through iGO, is upholding its duties as outlined in the criminal code. She equated the province’s iGaming model to a previous case, referred to as Surrey, in which operators are not “their own masters.”

“They are not able to decide which games are eligible. They are restricted to using their data only in connection with the use of their website or with iGO’s preapproval. They are limited in their ability to subcontract. They are not free to determine their own advertising methods or materials. They may not freely manage issues of customer care or dispute resolution. They must adhere to requirements related to responsible gambling, good governance, game integrity, and player awareness.

As such, the regulator will continue to conduct and manage iGaming in the province as planned.

“We have always been confident in our model and are pleased that the court has ruled in our favour, and that Ontarians can continue to play with confidence in our regulated iGaming market,” said Martha Otton, Executive Director of iGaming Ontario, in a statement following Monday’s decision.

“Ontario’s model meets the requirements and contributes to the public good by protecting players, their data and their funds, while helping to fund priority public services in Ontario, and bringing well-paid, high-tech jobs and economic development to Ontario”

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