I-Gaming Update in Canada - June 3, 2008 by Michael D. Lipton, Q.C. and Kevin J. Weber Introduction The provisions of Part VII of the Criminal Code1 prohibiting gaming and betting were drafted to address terrestrial activity, and they have not been amended since 1975.2 No prosecutions have arisen against I-Gaming originating from foreign jurisdictions where it is lawful to offer such services for accepting Canadian customers. Canada's laissez faire approach has been a welcome contrast to the increasingly prohibitionist U.S. approach. The time for ambiguity has ended, as forces opposed to I-Gaming work to move Canada towards prohibition. For those interests that may be negatively affected, it is time to speak up, while being prepared to compromise with those who previously enjoyed a monopoly in Canada. Constructive regulatory solutions to the issues raised by I-Gaming must be proposed, for only by demonstrating the benefits of an open market to the public interest might Canadian governments be convinced to adopt a flexible approach.
Bill C-13 _ A "Stealth" Attempt to Introduce I-Gaming Prohibitions "wilfully and knowingly sends, transmits, delivers or receives any message by radio, telegraph, telephone, mail or express that conveys any information relating to book-making, pool-selling, betting or wagering, or that is intended to assist in book-making, pool-selling, betting or wagering..." Clause 5 of the Bill would amend this to read: "wilfully and knowingly sends, transmits, delivers or receives any message that conveys any information relating to book-making, pool-selling, betting or wagering, or that is intended to assist in book-making, pool-selling, betting or wagering..." In proceedings before the House of Commons Justice Committee on May 2, 2007, the Member of Parliament for the area that includes the Mohawk Territory of Kahnawá:ke ("Kahnawá:ke"), asked about impact of the Bill on I-Gaming websites hosted at Kahnawá:ke. Counsel for the Department of Justice acknowledged that the proposed amendment to ss. 202(1)(i) "would apply to situations involving Internet betting," but stated that "[t]he other controversy you raised is a significant one, and we are working on it at the department. However, it has not been included in this bill, which is more technical in nature, and non-controversial." Speaking later before the same committee, the Honourable Rob Nicholson, the Minister of Justice, responded to this question by stating that the Bill "...[is] not meant to introduce either controversial or large substantial changes to the Criminal Code, because that would be more appropriate, in my opinion, for a stand-alone bill." These two statements indicate that more wide-ranging prohibitions on I-Gaming have been under consideration by the government for perhaps a year. The Minister's statement that clause 5 of the Bill is "not meant to introduce either controversial or large substantial changes to the Criminal Code" presumed agreement on how ss. 202(1)(i) of the Code applies to I-Gaming at present, without clause 5 of Bill. Considerable disagreement over this issue would be seen in the proceedings before the Senate committee reviewing the Bill.
Proceedings Before the Senate Committee - November 21 and 27, 2007 Senator Raynall Andreychuk asked Hal Pruden, a senior official of the Department of Justice with expertise in Part VII of the Code, whether clause 5 would enhance the extraterritorial effect of ss. 202(1)(i). Mr. Pruden replied that clause 5 of the Bill would only update the old offence to include new technologies. He further stated that under ss. 202(1)(i) in its present form, if someone located offshore used the "archaic" technologies listed in the section to commit the offence in Canada, a prosecution might be able to proceed against that person if they were some day found to be in Canada.
The Submissions of PartyGaming PLC Before the Senate Committee PartyGaming took the position that ss. 202(1)(i) had historically been interpreted to apply only to betting "conducted inside Canada," and it sought assurances that offshore entities sending emails to customers inside Canada would not be captured by ss. 202(1)(i) of the Code as amended by clause 5 of the Bill. Mr. Pruden stated that ss. 202(1)(i) could presently be applied to a bookmaker in Florida who "uses the telephone or Internet to call people in Ontario, and engages in bookmaking" to commit an "offence [that] takes place in whole or in part in Canada." Citing the decision of the Supreme Court of Canada in Libman v. The Queen, he noted that a Canadian court may take jurisdiction over a criminal offence that takes place "in whole or in part" in Canada. When the Senate Committee tabled its report on the Bill on December 11, 2007, it appended an "Observation" addressing PartyGaming's concerns. Referring to "the fear expressed by a witness of the potential extra-territorial application of clause 5 of the bill," the Observation stated: "For the sake of clarity, the Committee wishes to note that it is satisfied that clause 5 of the bill will not have extra-territorial application." PartyGaming used the term "extraterritorial" to refer to the possibility that clause 5 might cause ss. 202(1)(i) of the Code to affect betting "conducted" outside Canada. Mr. Pruden, however, considered that clause 5 would only have "extraterritorial" effect if it rendered activities which occurred entirely outside of Canada unlawful. The effect of the Senate's "Observation" may depend upon which interpretation one accepts.
Status of the Bill
Interests Motivating Clauses 5 and 6 of the Bill Clause 6 seeks to amend ss. 204(2) of the Code to allow approved horse-racing associations to conduct online horse-race betting. Regulations enacted in 2003 purport to permit such online betting, but these regulations are of questionable validity, conflicting as they do with the plain language of the Code. Clause 6 of the Bill would amend the Code to remove this conflict, bringing it into accord with the current practice of the Canadian horse-racing industry. It is only logical to conclude that a shared identity might exist between the interests favouring clauses 5 and 6. Those interests identified themselves, and their intentions, more clearly as the Bill was being considered by the House of Commons. They raised the spectre of a Canadian version of the Unlawful Internet Gambling Enforcement Act of 2006 ("UIGEA"). In the next edition, we will explore the potential for such a "Canadian UIGEA", as well as recent challenges to the gaming regulatory authorities of the Kahnawá:ke. |