An Ontario court has thrown out a legal challenge to the province's competitive market for online sports betting and internet casino gambling, a shot of confidence for what is a first-of-its-kind regulatory framework for Canada.
Superior Court Justice Lisa Brownstone wrote in her reasons for judgment, released Monday, that she found the Quebec-based Mohawk Council of Kahnawà:ke (MCK) had the “public interest standing” needed to bring the challenge, but the application itself was dismissed
The MCK, which has longstanding ties to the online gambling industry, had asked the court to void two sections of Ontario law enabling the province’s competitive iGaming market.
According to the council and its lawyers, the provisions clashed with the federal Criminal Code, because they allegedly made it so that private-sector gambling operators, and not the province, are actually “conducting and managing” that iGaming.
Justice Brownstone disagreed, saying she found federal lawmakers aimed to decriminalize gambling in instances where provinces “exerted a sufficient degree of management and control to maintain public safety, fairness, and integrity in gaming.”
Exactly how to do so was to be left up to the provinces and their ways of doing things, Brownstone wrote.
“Ontario has established such a system,” Brownstone said. “It has not delegated its powers to private operators but has retained its position as operating mind of the igaming scheme. It has carefully constructed the igaming scheme to ensure safety, integrity, and fairness. There can be no frustration of purpose when the province has acted within its constitutional authority in a manner that is consistent with the exemption provided for in the Code.”
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 decision keeps the legal foundation for Ontario’s competitive iGaming market intact, which should inspire confidence in the nearly 50 operators that have joined the market since its April 2022 launch.
Billions have since been wagered in Ontario with private-sector operators of online sportsbooks, casinos, and poker rooms. This deviates from the norm in Canada, where most provinces have thus far granted government-owned lottery and gaming corporations a legal monopoly on internet gambling.
The ruling could give other provinces the legal cover they need to pursue a similar regulatory framework and create Ontario-like markets elsewhere in Canada. Alberta is one such province considering a broader online gambling sector.
In Ontario, private-sector operators can offer online gambling via an agreement with a government agency, iGaming Ontario. And that agreement is “extensive,” Brownstone wrote, giving iGO control over which games can be offered to residents, among other things.
“I do not accept the Council’s argument that many of these controls are illusory or serve a different purpose (for example in the case of the data requirements, compliance with privacy legislation),” the judge wrote. “The controls are detailed and extensive. They show that iGO retains ultimate decision-making authority on a breadth of issues central to the igaming scheme.”
Hear me out
The ruling comes after a two-day hearing in Toronto for the MCK’s application, during which a variety of arguments were aired about Ontario’s iGaming market. Those debates covered the long and winding history of gambling law in Canada, which has undergone several revisions over a half-century of legislative tinkering, such as decriminalizing single-game sports betting in 2021.
In one corner of the legal battle was the MCK, which has its own gaming commission and a company that operates the Sports Interaction online sportsbook and casino outside of Ontario.
“The Council argues that the provisions impermissibly allow private owners and operators of gaming websites to conduct and manage lottery schemes in the province, and the doctrine of paramountcy renders the igaming scheme inoperative,” Justice Brownstone wrote. “The Council takes the position that the igaming scheme is, in effect, a disguised licensing scheme that impermissibly outsources the conduct and management of internet gaming to private sector enterprises.”
In the other corner of the legal battle was the Ontario government and its agency, iGaming Ontario, which pushed back on the MCK’s eligibility to even challenge the province’s online gambling scheme.
“They also argue that Ontario conducts and manages the igaming scheme, that the matter can be resolved on the basis of statutory interpretation and does not raise a division of powers issue, and in any event, the impugned provisions respect the division of powers,” Justice Brownstone wrote.
Where do we stand on this?
The standing issue is a bit messy, as the judge said the MCK launched its legal challenge without first addressing its standing to do so and then said it had no notice the province would object. There was some back-and-forth between the two sides right up to and during the hearing earlier this year when the judge said it became "clear" the council was seeking so-called "public interest" standing, which Ontario opposed.
Ontario claimed the MCK had no "genuine interest" in the matter and that it was inappropriate for a civil court to consider the case. The MCK, meanwhile, argued the venue was appropriate and that it did have a genuine interest in law relating to gambling in general.
Justice Brownstone ultimately sided with the MCK, and agreed it met the test for public interest standing.
“The Council has demonstrated sufficient interest and expertise in the matter to quell any disquietude about it being a 'mere busybody,'” the judge wrote. “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.”
But the application itself was rejected by Justice Brownstone, who found Ontario’s iGaming scheme to be more like what was described in a previous decision, wherein operators are not “their own masters.”
“They are not able to decide which games are eligible,” Brownstone wrote. “They are restricted to using their data only in connection with the use of their website or with iGO’s preapproval. They are limited in their ability to subcontract. They are not free to determine their own advertising methods or materials. They may not freely manage issues of customer care or dispute resolution. They must adhere to requirements related to responsible gambling, good governance, game integrity, and player awareness.”
While the case touches on federal law, the federal government did not intervene despite being “duly served,” Brownstone noted. The absence of the Attorney General of Canada “is not determinative but is a factor to consider,” the judge added.
The MCK, which first announced its challenge to Ontario's iGaming regime in Nov. 2022, may pursue an appeal, although it had yet to issue a statement as of Tuesday afternoon in response to the Superior Court decision.
Nevertheless, the council has said Ontario’s system is effectively “disregarding Kahnawà:ke's Aboriginal right to conduct, manage and regulate gaming activities.”
Justice Brownstone also wrote that any party seeking costs can make their submissions within seven days.
In the meantime, and for the foreseeable future, iGaming in Ontario will carry on as the government intended.
“We have always been confident in our model and are pleased that the court has ruled in our favour, and that Ontarians can continue to play with confidence in our regulated igaming market,” said Martha Otton, executive director of iGaming Ontario, in a press release on Monday. “Ontario’s model meets the requirements and contributes to the public good by protecting players, their data and their funds, while helping to fund priority public services in Ontario, and bringing well-paid, high-tech jobs and economic development to Ontario."
