The legal threat to Ontario’s competitive market for online sports betting and internet casino gambling looks like it is over, at least for now.
An Ontario court last week dismissed a challenge to the province's iGaming market brought by the Quebec-based Mohawk Council of Kahnawà:ke (MCK), an Indigenous government group with business and regulatory ties to the online gambling industry.
On Wednesday, the MCK told Covers they would not appeal the decision of Ontario Superior Court Justice Lisa Brownstone. The judge concluded that Ontario, via agency iGaming Ontario, was the entity “conducting and managing” the online gambling scheme, and not private operators as the MCK and its lawyers had alleged.
“Although the Council of Chiefs of the Mohawk Council of Kahnawà:ke are disappointed in the decision, the silver lining is that the Superior Court of Ontario has recognized that MCK has public interest standing having demonstrated sufficient interest and expertise in the operation and regulation of gaming in Ontario,” said Lisa Lahache, political press attache for the council, in a statement to Covers. “The MCK has opted not to appeal the decision and will instead focus on the pursuit and assertion of its interest over gaming via other avenues.”
The decision to stop pursuing the matter closes the book on a legal threat to Ontario’s iGaming market that had loomed for more than a year and that the province’s auditor general had warned about back in December 2021. While there may be future lawsuits, for now, it appears that the coast is clear.
"I accept that it is extremely unlikely that a challenge to the iGaming scheme would otherwise be brought before the courts and note that none has been brought to date," Brownstone wrote in the decision.
The end of the MCK lawsuit also does away with any uncertainty operators might have had about the legal foundation of Ontario’s iGaming scheme. It is still the only one of its kind in Canada and it includes more than 70 sites offering legal sports betting, casino games, and poker.
Approximately $63 billion (Canadian) was wagered in Ontario's iGaming market from April 1, 2023, to March 31, 2024, and around $2.4 billion in revenue was generated, of which 20% or so was kept by the province.
The legal success in Ontario could embolden other provinces to adopt a similar regulatory framework. Alberta is in the process of doing just that, with expectations growing that the Western province could launch an Ontario-like system by next year.
“The controls [of iGaming Ontario] are detailed and extensive," Brownstone wrote. "They show that iGO retains ultimate decision-making authority on a breadth of issues central to the iGaming scheme. It retains a high degree of control over the operators in a wide array of the iGaming scheme’s aspects.”
Some fairly big news here for online sports betting and iGaming in Ontario, as it looks like a Superior Court judge has dismissed a legal challenge of the province's online gambling model: pic.twitter.com/tJzsuOCbAT
— Geoff Zochodne (@GeoffZochodne) May 13, 2024
The MCK is approaching a council election scheduled for July 6. Elected chiefs are in a media blackout and unable to comment further until after the vote, Lahache said.
Yet the council has maintained that the Mohawks of Kahnawà:ke have an “Aboriginal right” to conduct, facilitate, and regulate gambling within and from their community, which is located near Montreal. The MCK has exercised that right by establishing a gaming commission and owning a company that operates the Sports Interaction sportsbook and casino outside of Ontario.
Ontario’s iGaming system, the MCK has charged, has effectively disregarded Kahnawà:ke's Aboriginal right, as it requires operators to register with a provincial regulator and enter into contracts with iGO.
The Alcohol and Gaming Commission of Ontario’s rules also prohibit operators and suppliers from entering into agreements or arrangements with gambling-related companies that are not registered with the regulator. That could cost the council and the community business, as the MCK is not a registered entity in Ontario.
In this way, the MCK’s concerns are similar to the ones they voiced during the debate around decriminalizing single-game sports betting in Canada, which happened in 2021.
“If, as currently drafted, the amendments to the [Criminal] Code explicitly authorize provincially regulated single event sports betting, but are silent as to sports betting regulated pursuant to inherent Indigenous gaming rights, we expect that third parties will be hesitant to partner with our sports betting platform, and will instead prefer to partner with provincial sports betting platforms,” the MCK said in a submission to a parliamentary committee in March 2021.
Some sober second thought?
Federal lawmakers ultimately approved single-game sports betting legislation without including an acknowledgment of an Aboriginal right that the MCK had sought. Ontario then launched its iGaming market in April 2022, creating a massive market for online gambling that pulled in companies who could have previously done business with the Mohawk.
There is an attempt in Ottawa to address some of the fallout for Indigenous communities from the single-game sports betting authorization. This could be one of the “other avenues” the MCK said it would use instead of appealing the recent court decision.
In Ottawa, Sen. Scott Tannas introduced Bill S-268 in June 2023. The legislation proposes to amend Canada’s Criminal Code “to provide that the governing body of a First Nation has exclusive authority to conduct and manage a lottery scheme on its reserve."
This would “parallel the authorization of provinces to conduct and manage gaming in their jurisdictions,” Sen. Brent Cotter said on Tuesday in the Senate. “This would extend this gaming jurisdiction to any First Nation that wishes to take up the opportunity.”
Not asking for permission
It's a long shot that S-268 ultimately becomes law, much as it is for any bill that starts in the Senate and not the House of Commons. Its progress has been slow thus far, as it has yet to even make it to the committee stage despite being introduced nearly a year ago.
But S-268 would only enshrine the gaming right for First Nations on their reserves, not from them, as the MCK has done for years. That could be an issue for the council. MCK officials recently traveled to Ottawa to meet with Sen. Tannas and others to propose changes to his bill, although they did not specify exactly what.
“We have always asserted our jurisdiction over Gaming, and the Kahnawà:ke Gaming Law and Regulations are not dependent on the ratification or approval of any other jurisdiction or regulatory body,” Ohén:ton Í:iente ne Ratitsénhaienhs Kahsennenhawe Sky-Deer said in a press release. “Kahnawà:ke has blazed the trail on First Nations Gaming regulation, and we feel that we created the space for external governments to consider how this can work for other First Nations on a global scale.”
