Ontario’s iGaming framework faces court challenge
As previously profiled, the approval of Bill C-218, the Safe and Regulated Sports Betting Act, and corresponding amendments to the Criminal Code has paved the way for provinces and territories to offer single-event sports betting in their respective jurisdictions, and many provinces, including Ontario, quickly acted to take advantage of the new opportunity. In fact, in addition to introducing single-event sports betting through the Ontario Lottery and Gaming Corporation, the Ontario government has opened up sports betting to private third-party operators, allowing them to offer single-event sports betting to the public under a licensing regime that is managed by iGaming Ontario, a subsidiary of the Alcohol and Gaming Commission of Ontario.
However, this multi-billion-dollar regime is now being challenged by the Mohawk Council of Kahnawà:ke (“MCK”).
MCK initiates claim against iGaming Ontario
According to its initial press release, the MCK stated it is challenging the “legality and constitutionality” of Ontario’s “re-interpretation” of the amendments to the Criminal Code pursuant to which Ontario has introduced this licensing regime. In a separate press release, the MCK elaborates on its position and goes on to state that “iGaming [Ontario] is allowing operators to conduct and manage themselves” in contravention of the Criminal Code which requires the province to “conduct or manage” certain gaming activities, including single-event sports betting.
In addition, the MCK states that Kahnawà:ke has already built a third-party licensing model in the online gaming industry “on the strength of its inherent Indigenous jurisdiction” which has been operating over the last 25 years, and the Ontario licensing regime will result in significant losses to economy of the Kahnawà:ke community:
The MCK has a longstanding interest in the facilitating, conducting and regulation of gaming activities on behalf of the Mohawks of Kahnawà:ke, which is grounded in a long history of gaming and wagering (prior to European contact). Since 1996, the Kahnawà:ke Gaming Commission (KGC) has been licensing both land-based and online gaming operators and providing players with access to safe, well-regulated and responsible gaming options for over 25 years. Mohawk Internet Technologies (MIT), an entity wholly owned by the MCK has been facilitating online gaming through its hosting facility since 1999. All online gaming operators hosted by MIT must be licensed by the KGC. Mohawk Online (MO), a gaming operator is wholly owned by the MCK. […] Ontario’s iGaming regime threatens to undermine this important contributor to our economy because it prevents all other gaming regulators, including Mohawk Online, and gaming operators licensed by the KGC, from carrying out gaming activities in Ontario—unless they are also registered with the AGCO.
Counsel to the MCK filed a notice of application with the Ontario Superior Court of Justice to commence the challenge on November 28, 2022.
What does this mean for internet gaming operators?
This challenge may impact private third-party operators in the betting space and the sports industry. Moreover, this challenge may affect other areas seemingly unrelated (at least at first instance) to sports, such as the capital markets. Recall stock exchanges in Canada were hesitant – and in some cases even reluctant – to accept companies for listing where the company had cannabis operations in the US given the US federal prohibition related to cannabis. Accordingly, it will be interesting to see whether stock exchanges take a similar approach to listing private third-party operators, whether licensed by the Mohawk Internet Technologies or otherwise, based on this challenge. We will continue to monitor developments related to the challenge and the online and betting industry as a whole.