The fate of Ontario’s plan to pair daily fantasy contestants and poker players with competitors abroad is now in the hands of the province’s highest court.
Ontario's potentially landmark hearing regarding online gambling and international play concluded on Thursday in Toronto after three days of arguments before a five-judge panel of the provincial Court of Appeal.
One of those judges, Chief Justice Michael Tulloch, said the panel would reserve its decision for a later date. It could be weeks or months before that opinion is published.
When it is delivered, the decision could be significant for DFS and poker lovers in Ontario, Canada’s most populous province. There could be broader effects that ripple through the legal system and gambling industry as well, as Ontario is seeking an answer to a question no one has really ever put to the courts.
The hearing for Ontario's court reference regarding DFS/poker/iGaming/pooled liquidity — which asked if it's legal for provincial bettors to play with users outside Canada — has wrapped up. The five-judge panel for the Court of Appeal reserved their decision for a later date.
— Geoff Zochodne (@GeoffZochodne) November 28, 2024
The provincial government is asking the Court of Appeal if legal sports betting and iGaming would remain legal if Ontario-based users could play peer-to-peer games — such as paid DFS contests and poker — involving bettors outside of Canada. If not, Ontario wants to know to what extent it wouldn’t be allowed under Canada’s Criminal Code.
Ontario believes its proposal would be legal. Moreover, the provincial government wants the proposal to be legal so it can bolster the Ontario sports betting and iGaming market, which is chock full of online bookmakers and casinos but, because of the province's rules, has a limited poker player pool and no provincially regulated DFS options.
While most online gamblers in Ontario use provincially regulated operators, there are still some who don’t. Ontario would like the Court of Appeal to rule in its favour to provide additional online gambling offerings that could attract even more bettors to the province's system of oversight and consumer protection.
At the moment, Ontario’s regulated iGaming market has no paid DFS contests and a ceiling on how large its poker scene can grow. That is because the province’s rules include one that requires all players to be in Ontario to participate, which limits the size of DFS contests and poker games.
DraftKings and FanDuel shuttered their DFS operations in Ontario more than two years ago because of the province’s rules. If the Court of Appeal rules it is legal for international players to be added to Ontario’s player pool, it’s possible those paid DFS contests could return and that provincial poker players could access bigger games and tournaments.
First things first
First, though, the Court of Appeal must settle the issue. Even when it does, it may not be the final word on the matter, as Ontario could appeal the decision to the Supreme Court of Canada, as it did with federal “carbon tax” legislation.
The Court of Appeal has a lot to chew on, as it was presented numerous arguments this week by lawyers for the Ontario government, its allies, and those who oppose the province’s plan.
One of Ontario’s opponents is a familiar face, as it also opposed the province’s iGaming model overall in a lawsuit that was dismissed earlier this year. This time around, though, the Mohawk Council of Kahnawà:ke (MCK) is taking issue with Ontario’s proposal to pool its iGaming “liquidity” with that of other countries.
The MCK, which has long regulated and operated online gambling from its reserve to the south of Montreal, says Ontario’s model would be illegal because it would not be “in” Ontario.
Furthermore, the council argues Ontario is asking the appeals court “to play the role of legislator” by expanding the meaning of the words “in that province” in the Criminal Code, which they say was not the federal Parliament’s intent when it first permitted provincially run gambling in 1969.
“These are the kind of debates we should be having, respectfully, in Parliament, rather than trying to shoehorn a scheme, that's far beyond anything Parliament would have contemplated in 1969, into the legislative amendments it made to address the policy challenges of the day,” said Olthuis Kleer Townshend LLP lawyer Nick Kennedy, speaking on behalf of the MCK, during the court hearing on Thursday.
Ontario was given the opportunity to reply on Thursday to the arguments put forward by the MCK and several government-owned lottery corporations, which are also opposed to the province’s plan for pooled liquidity.
Cracking the code
A lot of time was spent during the hearing on a section of Canada’s Criminal Code that states it is legal for a provincial government, alone or with another provincial government, to operate a “lottery scheme in that province.”
Ontario, for example, is considered to “conduct and manage” iGaming in the province through an agency, iGaming Ontario, that has contracts with private-sector operators. Those contracts outline the province’s control over those sites, such as what games can be offered.
What’s at issue in Ontario’s DFS reference is whether the province will comply with that Criminal Code section if the province is linking its players to those based abroad. Is Ontario then the one conducting and managing the “scheme”? Is the scheme "in" Ontario? Also, what even is the “scheme” in this proposal? Is it the game being played? Is it regulatory systems wrapped around the games?
Ontario’s Court of Appeal will likely have answers to these questions. Ontario, however, has argued it would be conducting and managing gaming in the province even with international players involved for a few different reasons.
The province claims its players would access DFS contests and poker games using iGaming Ontario sites (such as DraftKings or FanDuel) and be subject to provincial regulations. Meanwhile, international players would use their local sites and be subject to their local regulatory systems.
Ontario would also strike agreements with international operators and regulators setting out the conditions for connecting the province’s players to those located outside Canada. Eventually, iGaming Ontario could do the same with other provinces, although that was not part of the question put to the court.
“In order to open that door, Ontario has to agree to all the rules, all the protections that are being provided,” said Josh Hunter, a lawyer for Ontario’s Ministry of the Attorney General, on Thursday.
