Legality Of Ontario Online Gambling Sector Awaiting Judge’s Verdict

Written By Matthew Lomon on February 23, 2024
Female judge is banging a gavel. The words

The fate of Ontario’s open online gambling market now rests in the hands of one Ontario Superior Court Judge.

Unfortunately, it will be a few months before Justice Lisa Brownstone renders a verdict in The Mohawk Council of Kahnawà:ke’s case against iGaming Ontario.

This is according to reports from GME Law, which covered the eventful two days of proceedings in person, beginning Tuesday, Feb. 20. Per a blog on GME Law, the MCK (plaintiff) had day one of the hearings to outline its case for Brownstone.

The Québec-based indigenous government organization first challenged the constitutionality and legality of Ontario’s current iGaming regime back in November 2022. The MCK filed a Notice of Application to the Ontario Superior Court against iGO and the Attorney General of Ontario, claiming the province’s current iGaming system is illegal because the Ontario government does not “conduct and manage” its iGaming scheme.

If proven, this finding would leave Ontario in violation of s. 207(1)(a) of the Federal Criminal Code.

Lawyers for the defendant, iGaming Ontario, launched their first official counter on Wednesday. In it, iGO referred to itself as “the house,” and that all private operators in Ontario fall under its command.

Initially expected to take three days, the proceedings concluded after just two. Now, Justice Brownstone will ultimately determine whether the current Ontario online casino, sports betting, and poker regime continues as normal or if it requires a full-scale teardown.

MCK drills down on ‘conduct and manage’ duties on day one

According to GME, MCK representatives wasted no time digging into its assertion that iGO is failing to appropriately “conduct and manage” the current iGaming scheme. In particular, the MCK says iGO is delegating this mandated role to private operators.

During its argument, MCK lawyers laid out several key aspects of the gaming scheme, which it argues private operators have substantial control over. This specifically includes:

  • Compliance obligations
  • Marketing duties
  • Operating their platforms
  • Executing payment processing agreements with providers
  • Having their boards of directors make key decisions
  • Being the main beneficiaries of the scheme’s revenue proceeds

While delivering its arguments, GME says Justice Brownstone “interjected with probing questions, seeking clarity on the heart of the matter.” One of these questions asked if iGO could potentially subcontract with private operators without contravening the current rules.

MCK, without hesitation, responded with the following.

“Yes, but they cannot subcontract or delegate all functions. Private operators are both conducting and managing, yet this is a function that cannot be shared [by iGO],” said MCK lawyers in GME’s report.

Justice Brownstone returned the explanation with another query: “if what the MCK was arguing were to be true, would that mean that iGO would have to fully perform absolutely all operations and quirks of the iGaming scheme?”

Per GME, the MCK answered by saying they wouldn’t go that far. But, they did acknowledge the potential for private partnerships to enhance operational efficiency while maintaining the province’s regulatory control.

However, the indigenous community with a long-standing presence in the online gambling industry reiterated their position that the provincial government must control functions of conducting and managing, not private operators.

Ontario rolls out three-pronged defense on second and final day

Day two consisted of iGO teaming up with the Ministry of the Attorney General to deliver a three-tier defense plan. The former began with a history lesson on the legislative evolution of gambling in Ontario.

In short, iGO remarked that Canada’s and Ontario’s approach to gambling had transitioned from a “moralistic (and even “Presbyterian”) stance to a modern regulatory framework aimed at safeguarding the public through responsible gaming practices.”

It then turned towards a semantic interpretation of “conduct and manage” and what it means in a contractual context. Essentially, they attested that Ontario unequivocally conducts and manages the gaming regime through carefully crafted contractual agreements with operators, ensuring they retain dominion over private companies.

For that reason, iGO sees operators merely as agents executing its mandates. In that case, iGO has the power to terminate any licenses should operators fail to make good on delivering mandates. This power difference is what the government says reinforces the control it has over its agents.

Justice Brownstone probed if choosing agents that could potentially comply with iGO’s requirements would imply “growing pains along the way.” The response from iGO went into the stringent selection and vetting process that all prospective operators undergo. It said that in the end, all operators must execute the same operative agreement, ensuring iGO always has permanent, one-sided control.

The conversation again circled back to the semantics debate around “conduct and manage.” According to GME, iGO, and cited dictionaries, these words mean:

“To carry on, take part in management, lead position of command, take charge of control and exercise executive administration, among others, which overall, result in a higher level of direction, not operating the games themselves.”

Day two ends with musical analogy from iGO

The government agency attempted to harmonize its definition of “conduct and manage” with a musical analogy. Using the example of an orchestra conductor, iGO argued said conductor never touches the instruments. But, they are responsible for the symphony, and that is precisely what happens with the current iGaming scheme.

Unsurprisingly, radio silence cast over the courtroom, by GME’s account. It didn’t last long, however, as Justice Brownstone offered a follow-up regarding the dictionary definition of “conducting.” By these standards, Brownstone says, “conducting” does not necessarily mean that iGO must carry out its functions on a granular level of operation. The agency confirmed that this is its interpretation of its role in Ontario’s regulated gambling market.

It was at this time that MAG took the floor on behalf of Ontario. The Attorney General’s representatives doubled down on iGO’s stance, also dismissing paramountcy conflicts. They continued by challenging MCK’s purported public interest claims, questioning their legitimacy, and accusing MCK of pursuing private agendas, per GME.

Justice Brownstone opened the floor for a reply from MCK in the winding moments of Wednesday’s session. They started by highlighting historical inaccuracies in iGO’s statement before going further into the musical analogy.

MCK says that under the current system, iGO’s role is more in line with someone hiring musicians to play a symphony rather than conducting it directly. The group’s final rebuttal claimed that the purpose of running a top-down gambling scheme (federal government down to provincial) is for the province to conduct and manage it directly, not to choose operators to do so on their behalf.

“This approach grants operators licenses and powers that they should not have in the first place as per constitutional principles.”

These were the final words spoken on the matter, as both sides now patiently await the landmark verdict.

Photo by PlayCanada
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Matthew Lomon

Matthew Lomon has been a contributor at Catena Media’s network of regional sites since July 2022. He first broke into covering the legal North American gambling industry with PlayCanada. Since then, Matthew's reporting has extended to PlayMichigan, PlayPennsylvania, and PlayIllinois. Based out of Toronto, Ontario, Matthew is an avid (bordering on fanatic) sports fan.

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