NARROW ESCAPE FOR CANADIAN ONLINE GAMBLING

14 December 2007

Thanks to Liberal Senator George Baker, a legal ban is avoided


Story of the week comes from Ottawa, Canada, where an alert Liberal politician flagged a dangerous clause in a government "housekeeping" bill that could have made online gambling in the Great White North illegal.

Hats off to Liberal Senator George Baker, who stepped in at the crucial moment to halt the innocent-looking clause in the bill, according to a report in the Law Times.

The good Senator raised a red flag when the bill hit the Senate floor, saying minor amendments to modernise bookmaking laws by removing Criminal Code references to “telephone and telegraph” and substituting "any form of telecommunication" posed serious consequences for internet servers and home gamblers.

“There is a big market for internet gambling in Canada,” Baker said. “Online poker is huge. This bill will end that, and that has not been brought up by anyone.”

Baker subsequently told Law Times the legislation, amending more than a dozen Criminal Code sections, had gone through four House of Commons committee hearings with no mention of the bill’s potential effect on internet gamers.

Despite assurances from Justice Minister Rob Nicholson and his department lawyers that the change was minor and would not alter the legal status of offshore-based online gaming in Canada, top officials from PartyGaming plc, the online gambling group based in Gibraltar, later implored the Senate legal and constitutional affairs committee to amend the legislation.

The blue-ribbon PartyGaming delegation consisted of Mitch Garber, the company’s chief executive officer and a member of the Quebec bar, Montreal lawyer Brahm Gelfand, chair of PartyGaming’s international advisory committee and an attorney with Lapointe Rosenstein LLP, and former Royal Canadian Mounted Police commissioner Norman Inkster, now an adviser to PartyGaming.

Garber testified that it was unclear whether the new law would ban online gambling sites based abroad from serving Canadians. In Canada, offshore sites have remained legal, though domestic gaming sites are not allowed because of provincial licensing jurisdiction over casinos.

“The goal is to seek clarity, to ensure that if Parliament is to make an amendment, and is to make this amendment, that the intent of the amendment is not subject to interpretation, is not ambiguous, and that it is clear exactly to whom and what the amendment is meant to apply,” said Garber.

“I have heard some testimony about bookies,” he added. “Is this about sports betting, bingo, or poker? All of these things are important for companies such as ours to know. We do not have business operations in Canada. We do have Canadian customers.”

Former police commissioner Inkster acknowledged the senators might have been surprised at his association with online gambling.
“Let me say that before I agreed to work as an adviser for PartyGaming, I had to convince myself they were the gold standard,” he assured the committee.

“There is nothing inherently wrong with gambling or gaming, but it does attract bad people,” he went on. “That is why regulation is so important; not just regulation but crystal-clear regulation. I am here to reinforce the encouragement of my colleagues that amendments could be made to make the intent of the law clear.”

Nicholson and a department senior counsel, Anouk Desaulniers, assured senators the amendment only modernises existing Criminal Code provisions against bookmaking, where third parties profit from wagers.

“The situation will not change,” said Desaulniers, adding internet servers would not be vulnerable unless they wilfully and knowingly took part in bookmaking.

But even Conservative Senator Raynell Andreychuk, a former judge and Crown prosecutor in Saskatchewan who sits on the Senate legal and constitutional affairs committee, seemed unsure when she attempted to explain the change last week.

Andreychuk repeated the government position that the amendments affect only bookmaking, but she wasn’t clear about what forms of online gambling are currently legal in Canada, or whether bookmakers subject to the law would be outside or inside Canada.

“I don’t think situs matters,” she said. “It matters who does it, bookies as opposed to an individual. I think we need to clarify that law.”

But she wasn’t certain exactly how bookmaking works: “I don’t know. This is not my field. I’ve never used a bookie.”

Gelfand said the bill’s substitution of Criminal Code references to telephones and telegraphs with references to any form of telecommunication could have a long reach internationally. “If it has a long-arm effect, does that mean that an executive of an offshore corporation, which is a legally constituted property licence, who is coming into Canada will be arrested and charged with a criminal offence?”

A relieved Garber said later the Conservative chair of the legal and constitutional affairs committee, Senator Don Oliver, assured him the Senate would recommend that the Commons amend the bill to clarify the continuing legality of offshore-based online gambling in Canada.

“The senators said very emphatically this would not have an extraterritorial effect,” he told Law Times.

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