CANADIAN ONLINE GAMING BAN UNLIKELY (Update)

7 March 2008

History shows that Canadians prefer regulation to prohibition


News earlier this week that the Canadian federal government was considering the introduction of financial movement restrictions on Internet gambling websites licensed by the Quebec tribal enclave held by the Kahnawake (see previous InfoPowa report) has been debated at length by industry observers.

The consensus appears to be that, short of pressure from the United States on its northern neighbour, it is unlikely that such a drastic and provocative move against a First Nation's sovereignty enshrined in historical treaties would be taken. The authority of individual provinces, especially the ultra sensitive Quebec would also be impacted, and this had to be considered.

The clearly commercially motivated protectionist attempts by existing gambling entities such as the horse racing industry trying to shield to its own online gambling facilities by seeking to ban competing initiatives was discounted. This would be seen as too discriminatory, bearing in mind the WTO difficulties that the Americans had found themselves in as a result of legislative carve-outs for online lotteries and horse racing.

Casino City spoke to Michael Lipton, a recognised gaming law expert and the senior partner at a Toronto law firm, and his opinion was that if history has anything to do with it, the industry could expect to see regulated as opposed to prohibited Internet gambling in Canada in time.

"History demonstrates that over the past 50 or 60 years the trend [in Canada] is to regulate, not prohibit. It happened with horse racing about five years ago. It happened with land-based casinos in 1969 and then it happened again about seven years ago when those casinos were allowed to start offering craps so they could compete with the border casinos," Lipton opined.

"If the public wants something regulated, and the regulation benefits the country, it usually happens."

According to Lipton, the Kahnawake isn't sovereign, but it is protected by Section 35 of the Canadian Constitution that says the government must recognise and respect traditions and customs that are integral to their culture. Whether or not gaming would fall under that category is up for debate, but Lipton does not envision a scenario where the government would test it by moving into Kahnawake territory.

"Practically speaking, I don't think the government is looking to move on this because it could lead to violence," Lipton said.

He added that the latest talk chatter about the government looking to consider new measures against the Internet gaming sites stems from the urging of the Woodbine Entertainment Group.

"This is all about Woodbine trying to protect their monopoly," said Lipton, who added that Woodbine was also the force behind a bill a few years ago that attempted, but failed, to ban all online gaming sites from advertising in Canada.

"Woodbine's argument is that these sites are hurting their business but I don't follow that logic. Are they trying to say that if Internet gambling is shut down, all of a sudden people are going to flood the race track to bet the horses? That just doesn't make sense."

Lipton doubted that there was any major public demand for banning legislation in Canada. "From all of the information that I've seen, I don't see any hue and cry from the public about banning Internet gaming," he said. "I think the public would like to regulate. And the Kahnawake would be absolutely delighted. It would also give the gaming software industry that is so big here a huge boost.

"There are 85 countries worldwide that have regulated online gaming. Maybe it's Canada's time to do the same."

Online Casino News courtesy of InfoPowa