News broke last week that single-game sports betting was all but a done deal in Canada. It’s exciting for a country long forced to choose between playing parlay cards or choosing any number of largely unregulated alternatives.
Even before the announcement of an upcoming government-introduced bill, DraftKings CEO Jason Robins talked on the company’s earnings call about the potential growth into Ontario, which would be the sixth-biggest state if Canada were part of the U.S.
The single-game sports betting bill would represent a departure from the country’s long-established ban on single-game betting. Though it is not a done deal yet, it appears likely to pass, finally.
Background on Canada ban on single-game betting
The criminal law system in the United States is split between federal and state jurisdiction. In the realm of gambling regulation, jurisdiction has historically rested with the states, with some notable exceptions like the Wire Act and PASPA.
However, in Canada, the federal government has principal authority in establishing criminal laws throughout the country. Provincial authorities maintain the ability to regulate minor offenses, dubbed provincial offences.
Though not a perfect analogy, one can think of the Canadian federal government as having authority to regulate felonies, while the provinces have the ability to oversee misdemeanors.
Section 202 of the Criminal Code of Canada is the law that currently bans the operation of gambling businesses and forbids single-game sports betting. Section 204 of the Criminal Code created the exceptions that allowed for the parlay-style system that has become popular across the country.
Time for a change?
The last major change to Canadian gaming laws came in 1985. The adoption of single-game sports betting is a position that has been pushed several times in recent years. Indeed, members of parliament from the Windsor area pushed aggressively to legalize single-game sports betting during the early days of the Christie lawsuits in New Jersey.
The opposition to legalization came from many of the same parties who sued the state of New Jersey to oppose the legalization efforts in the Garden State.
Back in 2012, many of the major U.S. sports leagues and the NCAA (who has a single member institution in Canada) sent last-minute letters reiterating their greatest hits about why they oppose single-game sports betting to members of Canadian Parliament. That effectively killed bill C-290, which had nearly skated by to its final reading without much opposition.
The 2012-2013 effort was only the first of a number of recent efforts often initiated as private members bills, which historically have little chance of passing, though single-game betting had more support than most private member bills. Even the most recent effort appeared to start as a private members bill until Federal Justice Minister David Lametti introduced legislation seemingly aligning nearly all major government parties in favor of legalizing single-game sports betting.
Legal single-game betting a game-changer?
The hope with single-game betting is that it will provide a boost to the economies of the various provinces that offer the contests when allowed. An economic jump-start for the casino industry in the border city of Windsor has long been a catalyst for the region’s politicians supporting the expansion initiatives.
That issue becomes more pressing with the city’s neighbor, Detroit, having a casino industry that has now legalized Michigan sports betting.
Of course, the success of single-game sports betting is going to depend a lot on what the market looks like, much like we have seen with the rollout of sports betting around the U.S. Some jurisdictions have had great success, whereas others have built systems that are built with obstacles to success, effectively limiting revenues to the state.
What to expect when expecting sports betting in Canada
The first area where single-game sports betting in Canada may appear different (at least at first) than much of the United States is that the provinces currently operate monopolies on the provincial gambling operations.
Not only do the provincial lottery and gaming authorities control the current parlay sports betting offerings across the country, but they also control the casinos and online poker in the province of Quebec.
While the Ontario provincial government released a budget that would allow for private entities to enter a new iGaming space with potential inclusion of sports betting under the umbrella, this has not yet played out. The move would see iGaming fall under the jurisdiction of the province’s Alcohol and Gaming Commission, which oversees a variety of industries including aspects of the horse racing industry and Ontario’s legal cannabis stores.
Not the first rodeo for Canadian iGaming
The idea of establishing an iGaming market previously appeared in the 2019 budget. The process of building an iGaming market in any of the province is likely to be lengthy, with stakeholders on both sides likely to engage in a heated debate.
Ontario, in particular, has a history with efforts to bring privatization to government monopolies (called Government Business Enterprises) that has long been a sore spot, including the privatization of the 407 toll-highway for $3.1 billion in 1999, which in 2019 was valued at more than $30 billion and has been called one of the worst deals ever made.
While this effort would effectively create a new market, as opposed to privatizing an existing market, it is uncertain how this will play out and if it would generate a different reaction.
Efforts to privatize Ontario’s provincially run monopolies like the LCBO (provincially owned and operated liquor stores) have appeared periodically over time; in fact, both liberal and conservative governments have floated the idea at various times.
Ontario faces a challenge with a recently projected budget deficit of more than $38 billion in 2020 and another $33 billion projected in 2021. Historically, various provincial leadership regimes have looked at privatizing government-owned monopolies like the LCBO and the Ontario Lottery and Gaming Commission (OLGC) to shore up stretched budgets. But this plan is different from traditional models of privatization.
Time will tell whether the Ford government is able to follow through on this aspect of the budget, but it could allow for a U.S.-style online gaming marketplace that includes sports betting if the pieces fall into place.
Room for partners?
Even without a ‘free market,’ there could still be room for private enterprises to participate.
If the iGaming market does not develop immediately and sports betting is instead under the oversight of the OLGC, there might still be room for partnerships.
Ontario previously worked with Caesars World to build and operate a casino as a joint venture, though the province maintains ownership. A similar type of deal could conceivably be possible for sports betting products should the provinces choose to depart from their current sports-based branding of Proline in Ontario, the Western Canada Lottery provinces and Atlantic Canada, Sports Action in British Columbia, and Mise O Jeu in Quebec.
The other key area for development is the expansion of mobile betting. Provincially-regulated online gaming in Canada remains nascent and has room for growth. A number of provinces still do not allow for the placing of parlay bets online, though both Quebec and British Columbia do allow for wagering online via the lottery retailer websites.
Change is coming for sports betting in Canada
After spending years being unable to legalize single-game sports betting, Canada appears poised to finally cross that bridge.
An effort that began as an opportunity to gain a competitive advantage and provide a different product offering in border cities than was available on the U.S.-side has transformed into a need to remain competitive with the products being offered south of the border and through offshore competitors.
While single-game sports betting appears poised to finally be coming to Canada, now with the support of nearly all major professional sports leagues, there are remaining questions as to just what it will look like when it arrives.