Parliament appears primed to lift Canada's longstanding restrictions on single-event sports wagering, opening the door to the emergence of regulated sports betting platforms in the Canadian market. Two bills with this purpose – one sponsored by the Government and another by the Official Opposition – are currently under consideration in the House of Commons. While the proposed Criminal Code amendments that would make this possible are a matter for the federal Parliament, any new sports betting marketplace would be implemented and regulated primarily at the provincial level.

Background

Limited forms of sports betting have been legal in Canada since the early 1990s, but single-game wagering has continued to be prohibited by Section 207(4)(b) of the Criminal Code. On November 26, 2020, however, the Minister of Justice introduced legislative amendments to the Criminal Code in the form of Bill C-13, which would, in effect, enable provinces to create a "lottery scheme" involving single-event sports wagering.1 Bill C-13 is similar in substance to Bill C-218, a private member's bill introduced by a Conservative MP in February 2020, which remains on the Parliamentary agenda (although there are certain differences that relate mainly to horse-racing).

These developments follow a similar trend in the United States. In May 2018, the U.S. Supreme Court overturned the Professional and Amateur Sports Protection Act providing each state the autonomy to regulate sports wagering within their borders. Since the decision, eighteen states have passed legislation to legalize some form of sports wagering, with others likely to follow.2

Economic Potential

The longstanding reluctance to legalize single-event wagering in Canada – reflected in the failure of previous bills of this type in recent years – may have been softened by the revenue needs of Canada's governments during the pandemic. For example, in the Ontario Budget of November 5, 2020, the government referred to gambling regulation as part of its plan to move the province out of the COVID-19 Pandemic.3 This statement also indicated that Ontario plans to open the "iGaming" market to the private sector, with the oversight of the Alcohol Commission of Ontario, rather than remaining reliant on a single-operator system under the Ontario Lottery and Gaming Corporation. The Atlantic Lottery Corporation4 and British Columbia Lottery Corporation5 have also commented on the feasibility of the potential introduction of single-event wagering in the jurisdictions they represent.

The Canadian Gaming Association (the "CGA") estimates that Canadians spend upwards of $14 billion every year on illegal or offshore single-event sports wagering. This is compared to the approximately $500 million wagered through provincial sports lotteries, such as Ontario's "Pro-Line".6 Furthermore, the CGA estimates that Ontario's iGaming market, presently valued at $547 million annually, would immediately balloon to roughly $1.47 billion upon legalization.7

Canadian jurisdictions are likely looking to replicate the experiences of U.S. states that have passed sports-wagering legislation. For example, in Pennsylvania a limited number of licenses are offered to private sector licensees who must agree to a one-time fee of $10 million and having their wagering-related revenue taxed at a rate of 36%.8 Under this arrangement, Pennsylvania has seen over $45 billion dollars in total "handle" (the aggregate amount wagered), directly generating just under $98 million in tax revenue for the state.9

Next Steps

Bill C-13 has yet to be given a date for its second reading. However, Bill C-218 is scheduled to receive second reading on February 17, 2021. It appears that each of the three major opposition parties supports Bill C-218, which may provide it with enough support to proceed to the Justice Committee and thereafter to third reading. It would then have to undergo a similar process in the Senate before becoming law. However, regardless of which of the two Bills ultimately prevails, with growing support and increasing traction within Parliament the legalization of single-event sports wagering appears to be more a question of when rather than if.

We will continue to monitor and publish developments related to Bills C-13 and C-218, and the legalization of single-event sports wagering.

Footnotes

1. "Federal Government introduces legislation to decriminalize single event sport betting in Canada, support jobs" (Department of Justice Canada, November 26, 2020).

2. Rodenberg, Ryan, "United States of sports betting" (ESPN, November 3, 2020).

3. "Ontario's Action Plan, 2020 Ontario Budget" (Queen's Printer for Ontario, 2020).

4. Campbell, Kerry, "Atlantic Lotto ready to score should Ottawa allow single-event sports betting" (CBC News, December 11, 2020).

5. Fletcher, Robert, "BCLC urges government to pass single-even betting amendment" (iGB North America, February 2, 2021). 

6. Mergulhao, Sandra, "Online gambling firms expect Ontario to lift key operator ban" (Bloomberg News, November 2, 2020).

7. "Canadian Gaming Association urges quick action on legislation for sports betting" (Canadian Gaming Association, November 3, 2020).

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