History will look back on the 2020s as the decade when North America began to see online gambling as an acceptable pastime and introduced legislation to legalise, regulate and tax one of the most popular (though controversial) online activities.
The US repealed it’s PASPA (Professional and Amateur Sports Protection Act) laws in 2018, paving the way for individual states to make gambling legal. Since then, New Jersey, Michigan, Pennsylvania and New York amongst others have all regulated betting on sports and casino games and others including California, are expected to follow close behind. Meanwhile, north of the border in Canada, things are happening a little more slowly. This April, Ontario became the first province to allow private betting firms to operate legally within their borders. Others are expected to do the same in the near future.
In this article we look at why attitudes to gambling have changed in North America and show the journey Canada is going on to a fully regulated market.
Why Are the US and Canada regulating online gambling?
Like all so-called ‘vice’ industries, gambling enjoys a volatile relationship with the law. Periods of prohibition are often followed by periods of lax regulation before fears about problem gambling lead to stricter laws once again. For proof of this, just look to the UK, one of the most liberal gambling markets since 2005 when the British Gambling Act set the stage for extraordinary growth over nearly two decades. Right now, the UK industry is preparing for a big review of laws that could see stake and deposit limits that will severely damage profits in the future.
In the US and Canada the opposite is true. After many decades of strict rules against gambling in the US, and limitations on licensing in Canada, these markets are opening-up. Here are a few reasons why.
- If people are going to gamble anyway, then it’s better they do it at licensed sites. Both counties have come to understand that online gambling is better when it is regulated and taxed than when citizens turn to black market sites from offshore territories who operate outside the law and don’t manage the dangers of problem gambling.
- Since the pandemic, the need to raise public funds has become greater across the globe as governments deal with the economic damage of lockdowns and strain on health services. Gambling represents a big opportunity to raise funds through taxes quickly and easily.
- North America is behind the curve. Surprisingly, North America finds itself well behind other countries where gambling has been legal for years. European territories like the UK, Sweden, Germany, Spain and now Holland, have all regulated gambling effectively and are earning good tax revenue from it. It’s no surprise that North America is now keen to catch up.
Canada’s Grey Market and State-Run Lotteries
Until 2021, Canada’s gambling market worked as follows. State run lottery companies like OLG.com and Playnow.com were authorised to run weekly lottery draws and offer online casino games. Sports betting was restricted to accumulator, or Parlay betting.
This left the online customer with a sparse choice from within Canada. However, the vagaries of the law meant that offshore casino and sportsbook sites, including 100s licensed in European jurisdictions like Malta and Gibraltar, were able to take bets from Canadian players without fear of legal reprisals.
The ‘grey market’ gave Canadian players the option to spend with either state-run lottery sites or offshore operators. That is until 2021, when things changed.
Single Event Sports Betting Legalised 2021
After many years of debate, and with a keen eye on progress towards regulation south of the border, Canada finally embarked on the road to a fully regulated gambling market in 2021. Initially, single-even sports betting was legalised. That meant gamblers could bet on the outcome of a single match rather that being restricted to Parlay or Accumulator bets.
This was a catalyst for a review of gambling law at a national level that would allow each province of Canada to set its own rules and allow private betting firms to set up operations in the country. Businesses would be required to pass strict audits to show that their games were fair and secure, and their business practices safe, and revenue would be taxed at a level set by the provincial governments.
The first to begin issuing licenses was Ontario.
Ontario Market Opens in April 2022
Online gambling in Ontario is regulated by the Alcohol and Gaming Commission of Ontario (AGCO) and its subsidiary, iGaming Ontario. Under their rules, the market opened-up on 4th April 2022. Now, in August 2022, there are more than 20 sportsbook and casino operators legally taking bets in the province, paying a 20% tax on gross gambling revenue (calculated as wagers-wins).
Amongst the names on the list of licensees are 888 Casino, Bet365, BetMGM, Leo Vegas, White Hat Gaming, Skill on Net and PointsBet. Many more are expected to follow. These brands are required to follow strict laws on advertising which include a ban on using inducements to bet as marketing messages.
What Does The Future Hold?
It is not yet clear how quickly the other provinces of Canada will regulate, or if indeed they will. However, it seems unlikely that the opportunity to raised much needed public money through taxation of the industry will pass by regions like British Colombia where gambling is already a hugely popular pastime. Just as we are seeing in the states, over the next decade we can expect to see Canada transition towards a mature regulated market where gambling is a safe, fair and enjoyable pastime.