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In this article, we embark on a journey through the rapidly changing landscape of online gambling regulation in Ontario.
Canada has its own regulation of the gambling industry. In order to carry out any gambling-related activity in Canada, you must obtain regulatory approval (usually at the provincial level).
At the same time, the provisions of Section 6 of the Criminal Code of Canada indicate that provincial regulators cannot grant permission to third parties to conduct gambling that takes place on a computer, video device, slot machine (i.e. online gambling). Thus, these provisions of the Criminal Code of Canada only authorize provinces to conduct online gambling themselves.
According to statistics, the money turnover in the gambling sector in Canada in 2021 was $12.5 billion, and the same figure was in 2022.
Considering the popularity of gambling, the province of Ontario, Canada has come up with its own model on how to make online gambling legal and supplement its budget with it. To this end, Ontario has utilized iGO and AGCO iGaming Ontario (hereinafter – “iGO”) и Alcohol and Gaming commision Ontario (hereinafter – “AGCO”). What these bodies are and why they are needed – let’s take a look at them next.
It is worth starting with the fact that the regulator of gambling in Ontario is the Alcohol and Gaming commision Ontario -AGCO.
The main regulation that governs gambling in Ontario is the Gaming Control Act of Ontario (1992).
In June 2021, lawmakers approved Bill C-218, known as the Safe and Regulated Sports Betting Act. This Act gave the provinces the ability to implement single sports betting systems in Canada and effectively gave the provinces the right to conduct online gambling.
Ontario’s regulator, the AGCO, has created a subsidiary company for this purpose, iGaming Ontario, which is authorised to carry out online gambling.
Given the strict limitations of the Criminal Code (prohibition on licensing third parties to conduct online gambling) – Ontario has devised an approach whereby iGaming Ontario enters into a commercial agreement with a third-party gambling service provider (usually from other jurisdictions) and effectively “leases” its licence. Clearly, the business model is as follows.
It is mandatory for organisations operating Internet gaming sites in Ontario to register as Internet gaming operators. Based on the variety of structures and practices of companies, there is no definitive list of activities that defines what is meant by “operating a gaming site”. In general, operating a gaming site in the gambling industry involves ongoing responsibility for the entire gaming site, including:
In order to legally operate a gambling website in Ontario, a regulatory fee must also be paid. For example, the operator of an Internet gambling site is required to pay a regulatory fee of $100,000 annually for each gambling site.
It is also important to emphasise that the subject of the authorisation is the website. Thus, in order to conduct online gambling through a network of websites – it will be necessary to register each website.
In addition, the step-by-step procedure for registering with AGCO and iGaming Ontario is outlined on the official iGaming Ontario website. The steps required include, among others, the following:
At the time of application for authorisation to the AGCO, it is necessary to provide detailed information on the business activities of the Gaming Platform Operator (website), financial statements, corporate structure, incorporation documents and other necessary documents.
Additionally, the legal aspects of applying to the AGCO are regulated in the Internet Gaming Operator Application Guide.
The AGCO Standards require Internet gaming operators to comply with stringent AML/CFT measures.
For example, an Internet gaming operator must ensure that anti-money laundering policies and procedures are in place to support its obligations under the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA).
AGCO requires that operators, as a minimum, develop the following control measures:
Thus, the Ontario government has developed a model whereby third-party suppliers can enter the online gambling market in Canada. This solution helps to fill local budgets and also brings the online gambling business, which was previously in Canada, out of the shadows.
The ability to get authorisation to provide their services in Canada is also terrific news for Gaming Website Operators. With a clearly regulated registration procedure and clear requirements – the latter can expand their business to Canada and do so with absolutely clear legal consequences.
Are Internet gaming operators required to have a registered entity in Canada?
No. There is no such requirement.
Do players have to be residents registered in Ontario?
A player’s residency status is not a factor in determining whether they can play on websites offered by registered and authorised operators. The requirement is that players must be physically located in Ontario to play legally.
Notwithstanding the above, players can register and operate their account (e.g. deposit or withdraw funds) while physically located outside of Ontario.
How long does it usually take to complete the registration and authorisation process for an Internet gaming operator?
Each case is different, but typically operators should expect a minimum of 90 days to complete all registration procedures with the AGCO and sign an Operating Agreement with iGaming Ontario.
The content of this article is intended to provide a general guide to the subject matter, not to be considered as a legal consultation.