Gaming Law 2023 Comparisons

During 2021 and 2022, the Canadian gaming landscape changed significantly for the first time in many years. Long-awaited amendments to the gaming provisions of Canada’s Criminal Code (the "Criminal Code") came into force allowing provincial government gaming operators (each a "Provincial Gaming Operator") to offer betting on single events in Canada. In addition, despite significant political headwinds, in April 2002 the igaming market in the Province of Ontario was opened to private sector gaming operators. Ontario’s igaming market is regulated by the Alcohol and Gaming Commission of Ontario (AGCO), the longstanding provincial agency responsible for regulating the alcohol, gaming, horse racing and cannabis retail sectors in Ontario. Since the Criminal Code requires a Provincial Gaming Operator to ultimately conduct and manage all gaming activity in a province, the Ontario government established iGaming Ontario (iGO) to be the legal provider of online gaming in Ontario, which can engage private sector operators to deliver games and other operational services.

The status quo remains for the rest of the country, with government monopolies in both land-based and online gaming remaining in place in every other province. By most measures, the generally prevailing view is that Ontario’s initiative has been a success, with minimal controversy, many major offshore gaming operators becoming registered under Ontario’s regime, and meaningful net new revenue for the province. Accordingly, although no formal announcements have been made, the authors expect that other Canadian provinces have closely monitored Ontario’s initiative and will likely follow suit (although potentially using a different model).

Pursuant to the gaming provisions of the Criminal Code, all activities that would fall within the categories enumerated in the Criminal Code (pay-to-play games, slots, betting, casinos, lotteries, poker) are illegal throughout the country. However, Section 207 of the Criminal Code provides an exception to the blanket prohibition that allows the governments of the provinces to provide a range of gaming products and services (with some exceptions) to individuals located within their respective jurisdictions.

The Criminal Code stipulates that no provincial government can provide gaming services in another province. The analysis of situations where, for example, province A allows players from province B onto a gaming website run by province A is less clear. The one significant case to consider the legality of one province offering online gaming services to residents of another province involved a charity that was licensed by the provincial gaming regulator to run an online interprovincial lottery. The Prince Edward Island (PEI) Court of Appeal held that the province of PEI did not have the authority to offer services to players located outside of its jurisdiction.

In any event, the Criminal Code resulted in the establishment of a series of provincial government lotteries that were each able to provide any and all gaming products to individuals located in its province. The Criminal Code also permitted the provinces to license charities to provide gaming products and services in their sole discretion. The Criminal Code does not state that provinces cannot license third parties to provide gaming services to the residents of their respective jurisdictions. Rather, it has been assumed that this would be the finding of a Canadian court if required to consider the matter.

It follows that those products that fall into the gaming sectors listed above (namely, betting, bingo, casino, poker and lotteries) are illegal unless provided by a Provincial Gaming Operator in its home jurisdiction.

Fantasy sports products, depending on the manner in which they are structured, may or may not fall into the category of games of pure skill. While the status of fantasy sports products has yet to be tested in a Canadian court, the AGCO has, in its Registrar’s Standards for Internet Gaming (the “AGCO iGaming Standards”), categorised fantasy sports products as a form of sports betting that will require the provider of same to register as an igaming operator in Ontario.

In most provinces, social games are not categorised as gambling and are not otherwise regulated, assuming that the operation of the games complies with the Criminal Code. However, the AGCO has recently introduced a social gaming licence category for community groups and social service clubs. This Iicence allows these groups to conduct small stake social gaming events (eg, bingo, cribbage and bridge). Casino games are not permitted.

Esports competitions are not regulated because they are viewed as games of pure skill. Accordingly, the AGCO does not require that persons providing esports competitions register as operators. On the other hand, betting on esports constitutes a form of sports betting that will require registration in Ontario.

There is almost nothing to differentiate the treatment of products, such as betting, poker and gaming machines, in a land-based facility from those same products when provided online. A Provincial Gaming Operator can provide all of these products legally and can engage private sector service providers to deliver those products if it so chooses. Charitable licensees are typically restricted by provincial legislation to the provision of a limited range of products, including, most notably, bingo and true lottery products, such as scratch-and-win and break-open tickets.

Gaming machines are, of course, permitted in land-based casinos and certain other venues, such as horse race tracks, depending on the jurisdiction. In the latter venues, those machines are typically provided directly by the Provincial Gaming Operator. Video lottery terminals (VLTs) are provided to the public by the Provincial Gaming Operator in all provinces other than British Columbia and Ontario. There are no slot machines available in two of the three territories (Nunavut and Northwest Territories), while they are available in Yukon. Gaming machines that offer games of pure skill are legal and unlicensed.

The overarching statute that governs gambling activity in Canada is the Criminal Code. Sections 201–206 make all types of gambling, betting and lotteries illegal throughout Canada, with very limited exemptions, such as pari-mutuel betting on horse races (provided for in Section 204). While the federal Code is the applicable prohibitory statute, all the regulatory statutes (and regulators) are provincial, with the one exception being pari-mutuel betting on horse races, which is governed by the federal Canadian Pari-Mutuel Agency.

Gambling Activities Under Canadian Law

The operation or provision of casinos, bingo, ticket lotteries, betting (other than pari-mutuel betting on horse races), poker and other card games, and electronic games such as slot machines and VLTs is an activity that constitutes gambling unless it falls within one of the few exceptions in the Criminal Code. This is true whether the activities are provided in a land-based facility or online.

There are a number of activities that are prohibited by the Criminal Code but may not be commonly thought of as “gambling”. A competition or draw for a prize may fall into any one of a number of baskets depending on its structure. For example, if no consideration is payable in order to enter the competition, Canadian case law has established that any person hosting or offering such a competition is not illegally operating a common gaming or betting house. Furthermore, the Criminal Code, and the little case law there is on the subject, draws fine distinctions between games of pure skill, games of pure chance, and games of mixed chance and skill. As a result, a number of idiosyncratic “rules” have evolved, the best example being the “mathematical skill-testing question” that is added to contest rules in order to transform a competition from an illegal contest of pure chance to a legal contest of mixed chance and skill. In sum, any competition for a prize must be examined through the lens of Section 206 of the Criminal Code, together with the exceptions provided in Section 207 of the Criminal Code, in order to determine whether it might constitute an illegal lottery.

Games of Chance and/or Skill

Games of pure skill (that is, skill games and competitions with no element of chance) do not fall within the definition of an illegal lottery in Section 206(1) of the Criminal Code and so can be legally provided without the consent of a regulator or any other government body. It is important to note that Canada’s highest court, the Supreme Court of Canada, has made it clear that if there is any element of chance built into the structure of a game, it will be considered a game of mixed chance and skill and not a game of pure skill. The US concept of a game or competition being “predominantly skill-based” is not recognised by the courts in Canada. Poker, for example, is considered to be a game of mixed chance and skill as there is an element of chance in the game flowing from the dealing of cards. Games of chance and games of mixed chance and skill are considered illegal lotteries unless no consideration is paid to enter, play or win a prize. Based on generally accepted interpretations of Section 206 of the Criminal Code, it is possible nonetheless to structure a game of either nature so as to render it legal.

Fantasy Sports

The conduct of fantasy sports is not currently addressed by any federal or provincial statute or regulation. In Ontario, however, the AGCO iGaming Standards apply to all sports, novelty, betting exchange and fantasy sports products. There continues to be some debate amongst gaming regulators and Canadian lawyers about the legality of daily fantasy sports, some taking the position that competitors are merely engaged in a form of betting and therefore engaging in illegal conduct, while others take the position that it is a game of pure skill and therefore a legal competition. Having said that, it is generally agreed that if a person other than a competitor bets on the outcome of a fantasy competition, that constitutes illegal betting.

Social Gaming

Social gaming with no prize in money or money’s worth is not regulated per se by any government body. However, like any other consumer product, such games are subject to review and regulation by provincial consumer protection ministries and the federal Competition Bureau. However, the AGCO has recently introduced a social gaming licence for social service clubs and seniors’ groups that allows them to host small-stake social events (casino games are not permitted). Further, the outcome of a number of Canadian class actions alleging that the provision of loot boxes in videogames constitutes illegal gaming is still awaited. 

Federal and Provincial Statutes

Set out below are the federal and provincial statutes that apply to activities that are generally agreed to constitute gambling.

Federal

At the federal level, the Criminal Code is the primary legislation that impacts gambling in Canada, as it contains both the primary prohibitions and exceptions respecting gambling and the federal penal law concerning proceeds of crime, including money laundering (Part XII.2) and the financing of terrorism (Sections 83.02, 83.03 and 83.04).

The Competition Act is the only federal statute that is applicable to contests and competitions. Section 74.06 of the Competition Act prohibits any promotional contest that does not disclose the number and approximate value of prizes, the area or areas to which they relate, and any important information relating to the chances of winning, such as the odds of winning. Any person who is found to have contravened this section is liable to a fine.

Provincial

Set out below are the primary gambling statutes in each province.

• Alberta:
1. the Gaming, Liquor and Cannabis Act.
• British Columbia:
1. the Gaming Control Act.
• Manitoba:
1. the Liquor, Gaming and Cannabis Control Act; and
2. the Manitoba Liquor and Lotteries Corporation Act.
• New Brunswick:
1. the Gaming Control Act.
• Northwest Territories:
1. the Lotteries Act.
• Nova Scotia:
1. the Gaming Control Act.
• Ontario:
1. the Gaming Control Act, 1992; and
2. the Ontario Lottery and Gaming Corporation Act, 1999.
• Quebec:
1. the Act respecting the Société des Loteries du Québec; and
2. the Act respecting Lotteries, Publicity Contests, and Amusement Machines.
• Saskatchewan:
1. the Alcohol and Gaming Regulation Act, 1997; and
2. the Saskatchewan Gaming Corporation Act.
• Yukon:
1. the Lottery Licensing Act.

There is no definition of “gambling” in any Canadian statute. Rather, the Criminal Code prohibits the offering of certain services and products, which, read as a whole, serves to criminalise all activities that would colloquially be called “gambling”.

There is no definition of “land-based gambling” in any Canadian statute.

There is no statutory definition of “online gambling” available at the federal or provincial level. Each province typically refers to this activity in its guidance on the subject but has not addressed it in its gaming statutes. Ontario, as the first jurisdiction to register private sector online gaming operators, uses the term “igaming” rather than “online gambling”. In the AGCO iGaming Standards, it is stated that “igaming refers to lottery schemes conducted and managed by Ontario Lottery and Gaming Corporation or iGaming Ontario that are played or operated through the internet, but does not include OLG lottery products”. This language is a direct reference back to the provision of the Criminal Code that permits provincial governments to provide gaming services in their jurisdiction.

It is a criminal offence to provide any form of gaming that is not permitted by the Criminal Code. Breaches of the Criminal Code are a matter of criminal rather than civil law and thus the ambit of liability is, in practice, quite narrow. While the Criminal Code is drafted broadly, Canadian courts have exercised their discretion under the principles of statutory interpretation to ensure that such sections are read narrowly, given that they are penal in nature. On the other hand, the courts do not appear to be as concerned by a broad application of Section 201(2) of the Criminal Code that provides that every person found without lawful excuse in a common gaming house or common betting house is guilty of a summary conviction offence. As summary conviction offences are the most minor offences in the Criminal Code and typically result in a small fine, courts are willing to convict individuals who are caught in sweeps of illegal sports betting events and large poker operations.

The Criminal Code makes it possible for directors, officers and senior management to be charged and convicted of a criminal offence with respect to the activities of their corporation pursuant to the sections of the Criminal Code concerning aiding and abetting and parties to an offence (Sections 21, 22, 22.1 and 22.2).

Breaches of provincial gambling legislation involve, almost by definition, breaches of the requirement to obtain a registration for the supply of gaming services and to comply with the regulations concerning such activity. The service supplier (registered or unregistered, as the case may be) is liable, as well as the directors and officers in some cases. In practice, culpability does not typically flow to individuals if the service was being supplied by a corporation unless there is egregious conduct involved.

Gaming offences are classified as an indictable offence or a summary conviction offence under the Criminal Code, depending on the severity of the offence. It is left to the discretion of the police and Crown counsel to decide which type of offence will apply when laying charges.

Every person who is found to have kept a common gaming house or common betting house contrary to Section 201 of the Criminal Code is guilty of:

• an indictable offence and liable to imprisonment for a term of not more than two years; or
• an offence punishable on summary conviction.

Everyone who commits an offence under Section 202 (which prohibits all betting activities) is guilty of an indictable offence and liable:

• for a first offence, to imprisonment for not more than two years;
• for a second offence, to imprisonment for not more than two years and not less than 14 days; and
• for each subsequent offence, to imprisonment for not more than two years and not less than three months.

Every person who is found to have operated an illegal lottery contrary to Section 206 is guilty of an indictable offence and liable to imprisonment for a term of not more than two years or is guilty of an offence punishable on summary conviction.

Federally, no further amendments to the gaming-related provisions of the Criminal Code for the foreseeable future or new federal legislation that would have the effect of regulating or restricting gaming are anticipated. Provincially, no new legislation has been passed or is pending save in the province of British Columbia. On 5 October 2022, a bill was introduced in the B.C. Legislature (namely Bill 32, Gaming Control Act). The Bill would replace the current Gaming Control Act. The Bill clarifies the roles and responsibilities of the British Columbia Lottery Corporation and its General Manager and expands the General Manager's powers to regulate the lottery corporation, registered gaming service providers, registered gaming workers, gaming event licensees and horse racing licensees. The Bill has gone through the entire legislative process and received royal assent on 3 November 2022, but its changes have yet to come into force by regulation. The Bill is generally seen as a political response to the Cullen Commission’s report concerning significant money laundering activity taking place in British Columbia’s casinos.

The federal government is not active in the gambling sector and has no regulatory function. The regulators in the provinces and territories of Canada are listed below.

• Alberta:
1. the Alberta Gaming, Liquor and Cannabis Commission (AGLC).
• British Columbia:
1. the Gaming Policy and Enforcement Branch of the Ministry of Finance (GPEB).
• Manitoba:
1. the Liquor, Gaming and Cannabis Authority of Manitoba.
• New Brunswick:
1. the Gaming, Liquor and Security Licensing Branch of the Department of Justice and Public Safety.
• Newfoundland and Labrador:
1. the Consumer Affairs Division of Online Government and Service NL.
• Northwest Territories (Territory):
1. the Department of Municipal and Community Affairs.
• Nova Scotia:
1. the Nova Scotia Gaming Corporation.
• Nunavut (Territory):
1. the Department of Health.
• Ontario:
1. the Alcohol and Gaming Commission of Ontario (AGCO).
• Prince Edward Island:
1. the Prince Edward Island Lotteries Commission; and
2. the Consumer, Corporate and Insurance Division of the Department of Justice and Public Safety (regulates bingo, raffles, casino nights, and charitable gaming).
• Quebec:
1. the Régie des alcools, des courses et des jeux (the authority over, amongst other things, the operation of casinos as well as contests, certain types of lotteries, and VLTs other than those in casinos); and
2. the Société des loteries du Québec (“Loto-Québec”), a provincial government agent, (i) operates the casinos located in Quebec, and (ii) regulates traditional lotteries and bingo as well as gaming machines located inside casinos.
• Saskatchewan:
1. the Saskatchewan Liquor and Gaming Authority (SLGA); and
2. the Indigenous Gaming Regulators (IGR), which licenses and regulates on-reserve charitable gaming activities of the First Nations that have designated IGR as their regulator through Band Council Resolutions.
• Yukon Territory:
1. the Professional Licensing & Regulatory Affairs Branch of the Department of Community Services.

Given that all gambling services must be provided directly or indirectly by a government entity, the regulatory approach is generally highly prescriptive. Having said that, the approach taken by the AGCO in Ontario changed a few years ago to a focus on general standards as opposed to detailed prescriptive requirements. Furthermore, it must be remembered that all private gaming companies must be treated as contractors to a government entity and so are all required to enter into agreements with the relevant Provincial Gaming Operator. Those agreements are very lengthy and highly restrictive, resulting, practically speaking, in two layers of regulation.

There are no changes on the horizon, either federally or provincially.

Gambling in Canada is conducted and managed by Provincial Gaming Operators pursuant to Section 207 of the Criminal Code. With very limited exceptions such as those for charities and local fairs, no person other than a provincial government is legally permitted to supply gambling facilities or services in Canada. Notwithstanding the foregoing, all provinces require registration of any person operating a “gaming site” or supplying goods or services for use in the operation of gambling facilities and the provision of gaming services by the province. As the provincial governments must contract out the vast majority of such services, in reality this is the “licensing” scheme in Canada.

Any company that wishes to supply gambling facilities may approach a provincial government with a proposal for a gambling facility. Even if such a proposal was accepted, the government would, by law, be required to conduct and manage the gambling activity, with the proponent of the plan acting as the operator or service provider under contract with the government.

There is no substantive difference in the treatment of land-based and online gaming anywhere in Canada other than Ontario. In provinces other than Ontario, companies that offer online gaming products are only permitted to supply their products to the applicable provincial government operator, which will then provide the product to consumers in its jurisdiction. The operators in these cases do not have any communication with consumers and their brands do not appear on the products being provided by the applicable Provincial Gaming Operator.

Ontario, on the other hand, has opened its online gaming market to private operators. While the AGCO continues as the regulator of all gaming activities of any nature in the province, iGO is the legal conductor and manager of all online gaming in the province that is not provided directly by the OLG. iGO is, for all intents and purposes, a conduit through which private gaming operators supply their gaming products and services to individuals located in Ontario. Each operator must enter into an operating agreement with iGO (the "Operating Agreement") but will otherwise deal directly with Ontario players on a website run by the operator that is dedicated to Ontario play. Online gaming services must comply with the AGCO iGaming Standards and the operator must be in compliance with all the terms of the Operating Agreement.

Any suppliers of products or services to an online gaming operator with an Ontario registration must be registered in Ontario as a gaming-related supplier (GRS). GRS companies are not required to enter into an agreement with iGO but will otherwise have to go through the same application process as operators. Notable exceptions to the registration requirement for GRSs at this time are affiliates and payment service providers.

There are no residency requirements for persons applying for registration. Each applicant will, however, be required to pass a risk assessment and provincial regulators may take a position on what constitutes “honesty and integrity” that would preclude the registration of an applicant that, in the regulator’s view, has not complied with Canadian law.

Licences per se are not available in Canada. In every instance, a private gaming company must enter into a services agreement with the applicable Provincial Gaming Operator to provide that entity with gaming services. Generally speaking, the Provincial Gaming Operators have kept the number of suppliers they deal with quite low. Once a supplier has an agreement with a Provincial Gaming Operator, it must then apply for registration by the applicable gaming regulator as a gaming service supplier or, in the case of facilities such as casinos and bingo halls, a gaming operator. This model has changed in Ontario to the extent that the province is registering an unlimited number of private companies as online gaming operators and online gaming service suppliers.

This varies from province to province and depends on the nature of the registrations, but all registrations will be linked to the registrant’s continued relationship with the applicable Provincial Gaming Operator. For example, the AGCO offers igaming operators the choice of a one- or a two-year term for their registration but the registration will terminate automatically upon termination of their agreement with iGO.

Each province has its own process for applying for gaming operator and supplier registrations but they are relatively similar. Generally, in order to be registered as an operator or supplier, a company must complete two forms, an application for registration and an enterprise disclosure form, and have all its directors and officers complete and submit personal disclosure forms. The same process is then required of all shareholders of the applicant who hold more than 5% of the shares of the applicant.

The initial risk assessment involves the review of an applicant’s completed application materials as well as information obtained based on a standard background check. This information is evaluated based on five criteria, which are considered key indicators of an individual’s or business’s appropriateness to be registered. The five criteria related to businesses (eg, suppliers) applying for a gaming registration are:

• honesty and integrity;
• financial responsibility;
• compliance with the law;
• registration type; and
• financial gain from registration.

Typically, an application for a provincial gaming operator registration will take a minimum of three months and may take up to six months to complete. The timeline for service supplier registrations may be shorter depending on the nature of the registration. For example, all individuals working in casinos must be registered. These registrations are relatively quick, taking between one and two months.

The fees for applications for registration vary by province and are also dependent on the nature of the registration being sought. As an example, an application to obtain an operator registration in Ontario costs CAD100,000 plus any additional investigation charges that the AGCO incurs in processing the application. The cost of those investigations can be quite high and is impossible to predict ahead of time. To date, the highest investigation seen was CAD80,000. See 4.10 Ongoing Annual Fees.

Ongoing annual fees vary by province and by type of registration, and may change on an annual basis at the discretion of the applicable provincial government. The AGCO operates on a cost recovery basis and so has recently started issuing invoices to registered operators for the costs incurred by the AGCO to date in regulating Ontario’s online gaming market. The amount of the invoices appears to be quite standard, generally running at around CAD200,000 per site. Operators operating more than one site will pay the same amount for each site they operate. This cost-recovery fee will be charged annually and is over and above the annual registration fee of CAD100,000 (also per site).

Gaming premises are not licensed per se. All gaming premises are operated by the applicable Provincial Gaming Operator. The operator of the premises is registered by the applicable gaming regulator. The premises must be operated in compliance with the regulations and pursuant to the terms of the operator’s agreement with the Provincial Gaming Operator.

There are no recent or forthcoming changes to report.

There are no B2C licences available per se. If a company will be providing online gaming to residents of a province, they will be doing so as a contractor to the applicable Provincial Gaming Operator. The company will be required to obtain a registration as an operator from the applicable provincial regulator. Having said that, Ontario’s registered gaming sites will appear to their players to be B2C offerings as the players will be engaging directly with the operators.

Companies that are providing services to online operators that are registered in the applicable province must obtain a registration as a service supplier in that province.

Affiliates are not required to be registered anywhere in Canada. There is some pressure on the AGCO to start registering affiliates in Ontario but this is unlikely to occur (at least in the short term), given the AGCO’s firm position on the issue.

These entities would be classified as B2B suppliers; see 6.2 B2B Licences (Suppliers, Software, Etc).

See the responses in other sections (in particular 1.1 Current Outlook and Recent Changes and 4.4 Types of Licences) with respect to Ontario’s new online gaming framework.

There are no technical measures in place at this time in Canada.

As provincial government entities are the legal suppliers of gaming in their respective jurisdictions, they are responsible for ensuring that their contractors meet responsible gaming standards. Such standards may change in the details from province to province but generally speaking focus on the following: all available tools reasonably available to an operator must be employed to ensure that no one who is below the age of majority is allowed to engage in gaming activities and to allow players to self-exclude and be barred from gaming activities.

All Provincial Gaming Operators have robust responsible gaming policies that will generally include:

• training programmes for employees regarding responsible gaming;
• advising and informing all players concerning responsible gaming and how to make informed choices about products and play in general; and
• the operation of voluntary exclusion programmes.

Using Ontario as an example, the OLG maintains a Responsible Gambling Centre at all gaming facilities, with staff from Canada’s Responsible Gambling Council at certain locations; there is mandatory training for all front-line and management staff; and it runs a self-exclusion programme that uses technology such as facial recognition. The AGCO Standards as well as iGO’s policies require that all registered online operators ensure that no under-age, self-excluded or banned individuals can play or bet on their registered sites. iGO will regularly circulate a list of such individuals to all of the operators who are then required to ensure that those individuals are either not on their site or are blocked from the site.

To the authors’ knowledge, there are no recent or forthcoming changes to RG measures.

All casino operators are required to ensure that no under-age or self-excluded players enter their premises. The tools used to do so are chosen by the operator.

The Criminal Code’s provisions regarding proceeds of crime and financing of terrorism synchronise with the federal Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCTFA). The PCTFA was enacted (and has been subsequently amended) to implement measures:

• to detect and deter money laundering and the financing of terrorist activities;
• to facilitate the investigation or prosecution of money laundering and terrorist financing offences (including establishing record-keeping and client identification requirements for financial services providers and other persons that engage in businesses, professions or activities that are susceptible to being used for money laundering, and the financing of terrorist activities); and
• to respond to the threat posed by organised crime by providing law enforcement officials with the information they need to investigate and prosecute money laundering or terrorist financing offences. 

Section 5(k) of the PCTFA specifically identifies casinos as a type of organisation that must comply with all the requirements in Part 1 (record-keeping, verifying identity, reporting of suspicious transactions, and registration) of the Act. 

The Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) was established in 2000 by the federal government to act as Canada’s financial intelligence unit. FINTRAC is the regulatory body overseeing compliance with the PCTFA and its regulations. The only entities that can legally supply regulated relevant products in Canada are provincial governments (either directly through their respective Provincial Gaming Operator or through suppliers to those Provincial Gaming Operators) and charitable organisations licensed by provincial governments. In all cases, those entities are subject to Canada’s AML legislation (namely, (i) the PCTFA, and (ii) Part XII.2 (Proceeds of Crime) of the Criminal Code and, in particular, Section 462.31, which outlines the offence of laundering the proceeds of crime). 

At present, virtual currencies are not recognised by any level of government in Canada. They are regulated but only to the extent that virtual currency dealers are required to comply with Canada’s AML laws. For example, entities dealing in virtual currencies, money services businesses (MSBs) and other FINTRAC reporting entities are now subject to new compliance obligations with respect to transfers of virtual currency exceeding CAD10,000 and know-your-client (KYC) record-keeping, as updates to the PCTFA and its associated regulations came into force on 1 June 2021.

Canada’s 2022 federal budget included proposed new regulations that would extend AML and ATF obligations to payment service providers (PSPs) and crowdfunding platforms, as well as changes to a number of statutes to strengthen Canada’s AML oversight; the statutes that will be amended include the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (Act) and the Criminal Code. Certain PSPs will be required to register with FINTRAC.

The order (prior to being revoked) required certain PSPs (which invariably will include some fintechs), as well as crowdfunding platforms, to register with FINTRAC and to comply with the relatively significant reporting requirements that come with registration.

See 8.1 AML Legislation.

The advertising and marketing of regulated gaming products and services is subject to the provisions of the applicable provincial gambling statutes and guidelines. For example, in Ontario, any entity that supplies the OLG with gaming services and products must comply with the OLG’s Marketing and Advertising Standards, which, in turn, incorporate the standards for marketing and advertising established by the AGCO (the "AGCO Standards"). In addition, the AGCO Standards for advertisements and promotions run by online gaming operators are very strict. The Registrar has levied a number of fines against registered online operators, in some cases only weeks after the market opened, in response to non-compliant marketing and advertising. It is also important to note that, at this time, both operators and affiliates are prohibited from using bonus offers in order to drive traffic to online gaming sites. Operators may only offer bonuses and other gambling inducements to individuals who already have opened accounts on the applicable site.

As well, the advertising of all gaming products and services must comply with the general legislation applying to any products and services in Canada, including the federal Competition Act and provincial consumer protection acts such as Ontario’s Consumer Protection Act.

Additionally, Section 13.1 of Ontario’s Consumer Protection Act prohibits the advertisement of an “internet gaming site” in the province if it is operated contrary to the Criminal Code. To date, there are no reported cases that consider this Section or the prohibition set out therein. It is possible that this Section may now be used as an enforcement mechanism by the AGCO in order to continue throttling the grey market.

The word “advertising” is not defined in the federal Code. There is no definition of that word in Ontario’s Gaming Control Act or the AGCO Standards; the word is used without capitalisation throughout the Standards indicating they expect operators to adopt a common sense interpretation of the term. On the other hand, iGO’s Operating Agreement defines “Marketing and Advertising” as “materials, processes, measures, actions and techniques used to promote, sell or raise brand, products or services (including the Operator Websites and Operator Offerings) through any channel or method to existing or prospective eligible consumers in Ontario”. There is no definition of advertisement in British Columbia’s Gaming Control Act or in Quebec’s Act Respecting Lotteries, Publicity Contests And Amusement Machines. On the other hand, a definition of “advertisement” is found in Section 146(3) of Manitoba’s Liquor, Gaming and Cannabis Control Act: “In this section, 'advertisement' includes (a) any advertisement on radio, television, the internet or any other electronic medium, in a newspaper, magazine or other periodical, or on a billboard, bus or other property normally used for commercial advertising; and (b) any poster, handbill, leaflet, letter, card, sign or banner”. The definition is used here within the context of evidence of illegal gaming operations. Manitoba is the outlier in providing a definition of the term as opposed to simply using it as a commonly understood English word. 

See 9.1 Regulatory/Supervisory Agency.

See 9.1 Regulatory/Supervisory Agency.

Until the Ontario online gaming market opened in April 2022, the only gaming advertising in Canada was being placed either directly the applicable Provincial Gaming Operator or by an operator of a land-based gaming facility that was being run on behalf of a Provincial Gaming Operator. Given that, in essence, those ads were government-run, there were no sanctions or penalties (or at least none that would be visible by any person outside of the government agencies involved). The fines for advertising breaches that have been levied to date in Ontario are discussed in 11.3 Financial Penalties.

While the authors are not aware of any changes to generally applicable regulations concerning gaming advertising, it should be noted that the AGCO’s position on gaming advertising is continuing to evolve, making it difficult for operators (and affiliates) to determine how far they may push the envelope without triggering fines. For instance, the AGCO has now banned athletes (whether active or retired) in Ontario igaming advertising in order to protect minors. This new restriction comes into effect on 28 February 2024.

No Canadian gaming registrations may be assigned. If all of the shares of a registered gaming entity are or will be sold to another company, the provincial regulator in question will generally amend the current registration to reflect the new shareholder but only after a full review of the share purchase agreement and the submission and acceptance of all the required disclosures from any new direct or indirect shareholders. Most Canadian regulators either require or very strongly recommend that the proposed changes be provided to the regulator as early as possible for initial review and pre-approval. The changes are then recorded by the regulator when the transaction closes.

All changes to shareholders, directors and officers must be reported to the applicable gaming regulator as soon as they occur. A transfer of more than 5% of the shares of a gaming operator will trigger a full disclosure requirement for the acquiring entity. By default, the transfer of 50% or more of the shares of any registered gaming entity will constitute a change of control that will permit the regulator to require a new application for registration. 

Passive investors may be treated as persons of interest by the applicable gaming regulator and required to provide full disclosure.

Regulators can impose monetary penalties as well as suspending or terminating a gaming registration. These penalties vary from province to province but are typically similar. Ontario is used as an example here. As an alternative to suspensions or revocations, a registrant may be assessed for a monetary penalty as a result of specific breaches of Ontario’s Gaming Control Act, 1992 and regulations. The amount of the monetary penalty is based on the Gaming Control Act, 1992 Schedule of Penalties. Each type of infraction has a certain maximum monetary penalty associated with it. The AGCO will impose an amount up to that maximum.

Registrations may be suspended for any number of reasons but only after disciplinary action short of revocation. In Ontario, registrants who are not in compliance with the law usually receive a warning first, followed by a monetary penalty if still non-compliant. If the registrant continues to be non-compliant, the AGCO will issue a notice advising the registrant that they have 15 days in which to appeal the decision to a separate government appeal tribunal (the Licence Appeal Tribunal) that is not associated with the AGCO. If the registrant does not appeal or loses on appeal, the registration will be revoked.

See 11.1 Powers.

The means of calculating financial penalties is quite complex and differs from province to province. Given that provincial government entities are the legal operators of gaming throughout Canada, there is no major history of financial penalties. Ontario is, again, an outlier at least with respect to online gaming. Significant (by our standards) monetary penalties have been levied against online gaming operators who breached the strict advertising standards set by the AGCO. The operators in question were sent a communication advising them of the non-compliant advertising and ordered to remove it without delay. Operators who did not manage to get the ads removed within a narrow 24-48 hours were fined. To date, it is understood that none of them have appealed the fines. There is no clear means of calculation but, in Ontario currently, the fine for each individual non-compliant advertisement is approximately CAD12,000.

Typically, provincial gaming control acts provide for penalties for officers and directors who are implicated in the illegal acts of their corporation. As noted in 11.4 Financial Penalties, there is no record of any individual being sanctioned for actions taken by the government lottery corporations, which are the only regulated operators in Canada. Having said that, the applicable provincial gaming control legislation does provide for that hypothetical situation. For example, Ontario’s Gaming Control Act makes it an offence for any director or officer of a corporation to cause, authorise, permit, or participate or acquiesce in the commission by the corporation of a gaming offence. An individual convicted of an offence under the Act is liable to a fine of not more than CAD50,000 or to imprisonment for a term of not more than one year, or to both.

The Lottery Corps are taxed on the revenue that they generate as the legal operators of gaming in their respective provinces. They flow the tax through to their gaming contractors by deducting it, as well as many other charges, from the amount that is paid to the contractor. The tax rate payable by the Lottery Corps varies from province to province. In Ontario, the tax rate for online gaming is 20% of gross gaming revenue, which is paid by iGO to Ontario’s Minister of Finance then flowed through to the operators as a revenue share. Each operator must set up a separate bank account (not necessarily in Canada) into which they deposit all of their gross gaming revenue from their Ontario site on a weekly basis. At the end of each week, the operator transfers all of the funds in the account to an iGO account. iGO then deducts 20% and returns the resulting net gaming revenue to the operator’s account.

There are no reforms anticipated.