PublicationsProposed Amendments to the Criminal Code to Expand Sports Betting Options By Michael D. Lipton, Q.C. and Kevin J. Weber Canadian pari-mutuel horse-racing associations and provincial lottery corporations have begun floating the idea of petitioning the federal government to bring forth a bill amending the Canadian Criminal Code (the “Code”)(1) to remove restrictions that make it harder for provincial lottery corporations to compete with offshore online gaming and betting establishments in the area of sports wagering. (2) Removing these restrictions would benefit Canadian bettors as well, offering them more wagering options and better odds. However, it is important to note that prior to the influence of online gaming being felt in Canada, the provincial lottery corporations used these Code restrictions to their advantage, increasing their revenue by “stacking the odds” against a captive market of sports bettors. Canadian institutions, which the Code favours with government monopolies on gaming and betting, frequently decry online gaming operators as predatory and inherently untrustworthy. However, in this instance it is the “legitimate” providers of gaming and betting services who are tilting the odds against the Canadian betting public, and it is the “illegitimate” offshore online gaming and betting enterprises that may soon force them to stop. The Code provisions which set out what kind of betting services the provincial governments and their licensees may legally offer Canadians were enacted in 1985. Specifically excluded from those services were betting on:
The primary reason for the prohibition against betting on single sport events or athletic contests was historical. When the federal government was negotiating the 1985 amendments with the provinces, it took great pains to establish that the amendments would not “expand” the gaming and betting available in Canada. To that end, it was determined that the provinces would be permitted to offer every type of gaming and betting service that was then being offered, or which had in the past been offered, by any of the provinces. To that point, the only sports betting services which had been offered in Canada were “sports pools” in which the bettor had to predict the outcome of more than one sporting event or contest. As a result, the 1985 amendments to the Code “froze” sport betting offerings in a multiple-sport format. When provincial lottery corporations began offering “sports betting lotteries” in early 1990, they obeyed the law by offering all sports betting in a “parlay” format, whereby the bettor had to predict outcomes on a minimum of three sporting events, and all of the predictions had to be correct before the bettor could win. These requirements were, and remain today, considerably more than what the Code requires of the provincial governments:
There are no legal reasons for these additional restrictions, but one can easily surmise that they were imposed to maximize revenue for the lottery corporations by tilting the odds against the bettors. Parlay betting offers the bettor some of the worst odds in sports wagering. By choosing the parlay model, the lottery corporations made a virtue of necessity – from their point of view. However, what was a virtue from their point of view was a definite move against the interests of the sports bettors of Canada. The model described above worked as long as Canadian sports bettors could not take their sports betting dollars elsewhere; the Code prohibits provincial governments from offering gaming and betting services to the residents of other provinces, and in part because of this the lottery corporations all offered the same poor deal. The nearest available sports betting alternative involved hopping a flight to Nevada. Now, however, technology has done what technology does best: eliminated the obstacles posed by distance. The advent of online commerce turned the tables on the lottery corporations; their no-longer-captive audience could avoid all restrictions on their betting (both those imposed by the Code, and by the self-interest of the lottery corporations) with the click of a mouse. Had the Internet existed in 1985, there is no doubt that the 1985 amendments to the Code would not have imposed restrictions against “single-sport betting.” Had the provincial governments been forced to compete with the real world of sports wagering from the outset, they never would have entered the market using a “sport pool” model, and the Code would not have frozen this unwieldy model in time. There is no reason for Parliament not to grant amendments to the Code that would allow the lottery corporations to offer the public a full menu of betting options. However, we have noted the behind-the-scenes public relations offensive they have embarked upon in order prepare the public to accept their desired amendments. It makes heavy use of rhetoric designed to demonize online betting and gaming. In that context, we believe the debate could use a salutary dose of perspective, one that acknowledges that if Canadian (non-online) sports bettors are soon to enjoy better odds, it will not be because the provincial lottery corporations wanted to give them better odds. It will be because the democratizing influences of the Internet allowed free market forces to intrude upon the government monopoly. Michael D. Lipton, Q. C. is a senior partner and head of the Gaming Law section of Elkind & Lipton LLP in Toronto and the current president of the International Masters of Gaming Law. Kevin J. Weber is an associate with Elkind & Lipton LLP and a member of the Gaming Law section.
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