Bonnie Lysyk, Ontario’s auditor general has revealed a series of her concerns regarding the legal status of the province’s planned iGaming and sports betting market in a recent report.
The report specifically covers whether Ontario’s proposed internet gaming model is legal under the criminal code, the proposed structure iGaming in the province, and how fair and balanced internet gaming will be in Ontario.
Lysyk has recommended that all of these issues need to be addressed by the government, prior to the planned launch of the regulated space, as the province runs the risk of encountering legal challenges.
At the moment, the Ontario Lottery and Gaming Corporation (OLG) is the sole legal provider of iGaming in the province and also operates its only legal online sportsbook, PROLINE +. New applications for private online casino and sportsbook operators are being handled by the Alcohol and Gaming Commission of Ontario, and its subsidiary, iGaming Ontario.
Paul Burns, the Canadian Gaming Association President has set off waves of speculation after announcing that the province would open up to private operators by the first quarter of 2022. These operators are leveraging enormous amounts of pressure on the province’s government to get the market opened by February 2022, in time for the Super Bowl, the biggest betting event on the calendar.
Lysyk’s report puts forward three main recommendations for the way forward. This first advises that the government needs to ensure it can enforce the compliance of approved operators to the Criminal Code. To this, the ministry responded that it is prepared to take the necessary steps to protect consumers within the regulated market. And that the Criminal Code prohibits any unregulated gambling.
However, upon reviewing the Alcohol and Gaming Commission of Ontario’s (AGCO) compliance guide, the auditor’s assessment in her report was that there is “legal risk with respect to whether iGaming Ontario meets the ‘conduct and manage’ threshold set out in the Criminal Code Consideration for whether a province has illegally delegated the ‘conduct and manage’ function in a gaming scheme to a private entity has been the subject of past legal challenges in Canada. We conclude that iGaming Ontario’s business model could be subject to legal challenges.”
The second recommendation contained within the report highlighted the importance of addressing the governance of and regulatory risks that come with the creation of an iGaming market, advising the Ministry of the Attorney General that iGaming Ontario should no longer be governed and managed by the AGCO. The report reasoned that the body should be able to independently manage conduct and requirements under the Criminal Code.
In its response, the Ministry said the regulation establishing iGaming Ontario compels its Board of Directors to establish a conflict of interest policy for its directors, officers, and employees. It also put forward that the AGCO’s conflict of interest policy is undergoing an update to ensure that its relationship with iGaming Ontario would endure the strictest scrutiny.
Lysyk’s report also brought attention to the government would be leaving private operators to largely self-regulate.
“Under Ontario’s new model for internet gaming, key responsibilities to maintain integrity and fairness have been entrusted to the private sector such as direct testing of internet gaming systems, game design, gaming systems, determination of payouts, and odds-setting,” it stated.
The third and final recommendation examined the governance structure of iGaming Ontario and how the entity intends to fulfil its mandate, suggesting that the Ontario Legislature should be involved in any pre-launch planning.
The ministry retorted that any integrity concerns are already addressed by the AGCO’s existing standards and that all online games would be tested by an independent lab.
It stated that the AGCO’s has an iGaming Compliance Unit that would “conduct intensive compliance oversight of registered iGaming operators and suppliers.” adding that iGaming Ontario is already developing a Customer Care and Dispute Resolution Policy.
The Lay of the Land
With the vague launch deadline of Ontario’s iGaming rapidly drawing near, it may not be logistically possible for the entities to fully align with the auditor’s suggestions by the time the Superbowl arrives.
In the interim, grey-market operators are counting their days of being able to freely profit from their dominance in the province as the OLG generates a fraction of their revenue. The Canadian Gaming Association approximates that around $10 billion is being spent annually on illegal bookmaking wagers with $4 billion going to offshore sports wagering sites while provincial sports lotteries only took in around $500 million.