Opinion: Long-Awaited Challenge To Ontario Sports Betting Finally Here

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Ontario sports betting

In the lead-up to private operator-regulated, single-game Ontario sports betting, there were rumors that challenges may be forthcoming to the plan.

The launch of single-game ON sports betting had a shadow cast over it by an Auditor General’s report, released months earlier, that questioned whether the proposed and ultimately adopted regulatory scheme would be sufficiently controlled by Ontario’s regulators to satisfy the “conduct and manage” requirements of Canadian law.

There was, however, another question left out in the wind before launch: whether the provincial government had followed its constitutional obligations to engage in meaningful consultation with Canadian First Nations communities. A lawsuit did not appear before sports betting or iGaming’s launch and fell off the radar of many.

However, a challenge has reportedly been filed. The Kahnawake Mohawk Council filed the challenge late last year against iGaming Ontario and the province’s Attorney General, Doug Downey, alleging that the province does not “conduct and manage” the new gaming market pursuant to the Criminal Code of Canada.

Who is filing what in Ontario now?

As reported by LSR, the Mohawk Council of Kahnawake filed a legal challenge to Ontario’s iGaming scheme. The challenge, according to a press release, is the result of “the provincial government’s unilateral changes to the way gaming is managed.”

The press release goes on to state:

It [the Notice of Application] says the changes are illegal and unconstitutional and is contesting Ontario’s re-interpretation of Section 207 (1) of the Criminal Code, which permits provinces to regulate single-event sports betting. MCK’s legal challenge asserts that iGaming Ontario is not “conducting or managing” the gaming that takes place on private operators’ sites. Instead, iGaming is allowing operators to conduct and manage themselves, subject to the payment of a portion of their revenues to Ontario.

Success on the challenge could throw a major wrench into the province’s shiny new market, though we are a significant distance from either side declaring victory.

What is the Mohawk Council of Kahnawake?

The Mohawk Council of Kahnawake “is the organization that provides governmental, administrative, and operational services to the community of Kahnawake.” The Mohawk Council of Kahnawake has also served as, perhaps, the longest-serving North America-based online gaming regulator.

The press release argues that Ontario’s new regulatory scheme fails to recognize the role that the Mohawk Council of Kahnawake has played in regulating gaming and that the new regulatory plan is financially detrimental to the Council, as well as the community of Kahnawake.

Is sports betting challenge in Ontario actually happening?

Yes. A notice of application was filed by the law firm Olthuis Kleer Townshend LLP in Ontario’s Superior Court of Justice on the morning of November 28.

The Notice of Application is much like a complaint filed in U.S. courts; it is a filing of a document commencing a legal action.

While many civil lawsuits in Canada are initiated by a document called a Statement of Claim, a Notice of Application is appropriate in certain circumstances where an individual or group might be seeking a remedy other than monetary damages, such as an injunction or relief for a violation under the Canadian Charter of Rights and Freedoms.

What does it mean to conduct and manage?

The Criminal Code of Canada in Section 207(1) specifies:

Notwithstanding any of the provisions of this Part relating to gaming and betting, it is lawful (a) for the government of a province, either alone or in conjunction with the government of another province, to conduct and manage a lottery scheme in that province, or in that and the other province, in accordance with any law enacted by the legislature of that province (emphasis added);

According to the Auditor General’s 2021 examination of the then-proposed iGaming Market, the phrase conduct and manage does not require the government to control every aspect of a gaming scheme, but it also does not allow the province to offload operational responsibility to a private entity wholesale. According to the Auditor General,

To fulfill the “conduct and manage” requirement, a provincial government needs to be actively involved in the delivery of gaming activity. An arrangement where the government only issues gaming licences to private operators and oversees their activities through a provincial regulator would be in contravention of the Criminal Code.

Ultimately, as no deals had yet been struck, the Auditor General’s report stopped short of concluding that the somewhat vague operating information, as of December 2021, was either conclusively not permissible or permissible with respect to the phrase conduct or manage. This leaves the question at least somewhat open.

What to make of Ontario sports betting challenge?

It is difficult to fathom putting iGaming and potentially sports betting back in the box anywhere, so will that happen in Ontario? It is one possible outcome, though probably not the most likely outcome at this point.

While we have seen sports betting come and go nearly overnight in Florida, Ontario’s sports betting and iGaming market with private operators has seemingly established itself. While that in itself is not evidence of anything as far as this case is concerned, it likely raises the likelihood that a resolution other than a total market shutdown is most likely.

Ultimately, what that is will play out over the coming months. While there are differences between Canada and the U.S., as gambling Twitter is more than happy to point out, neither country has a rapid and quick path through the courts, meaning any resolution involving a court decision is likely months away.