While the online gambling industry in Canada is much smaller than in the United States, it is still a big business. The gross sales amount is estimated at over $31 billion per year. Related purchases to online gambling are estimated to be over $15 billion per year. If we go back to its roots, card-playing started with the settlers during the 16th century. Much like the evolution of gambling in the United States, although gambling has always been integral to life in Canada, it became significantly more so with the advancement of computer and internet technology. Similarly to the US, Canada is made up of territories, called provinces. Each province has its own jurisdiction when it comes to gambling. What all jurisdictions have in common is that nearly all types of gambling are legal in Canada - except for online gambling.
Gambling in Canada is tightly regulated by provincial gaming authorities, such as Ontario Lottery and Gaming Corporation and Alberta Gambling and Liquor Commission. A couple of the local gaming authorities run their own online casinos. Ontario, for example, has the OLG. However, none of the provincial online casinos hold a very high standard, partly due to lack of competition and lack of competence in providing world-class online gambling services.
However, despite tight regulations, it is still possible for online casinos to offer online gambling services outside the reach of provincial gaming authorities. Canada is a so-called grey zone where online gambling on sites regulated by MGA or Curaçao licences is largely prohibited but still accessible by Canadian players without any legal consequences. In short, it is illegal for Canadian online casino operators to offer their services to Canadians. At the same time, it is perfectly safe and legal for Canadian players to play at any offshore online casino. And, most importantly, a Canadian player is not at any legal risk by playing at an offshore online casino site.
Additionally, winnings derived from online gambling activities are not taxable as long as the activity is not seen as a form of employment.
The United States was for the longest time in a similar state as Canada. Where online gambling was prohibited but still accessible through offshore online casinos. In 2006, they passed a new law targeting offshore online casinos. Through the “Unlawful Internet Gambling Enforcement Act of 2006”, the government effectively put the activity of gambling at offshore online casinos to a minimum. The law prohibited banks and payment processors from conducting transactions to such sites. Almost all online casinos withdrew from the US, closed down and stopped new players from the country from playing in the online casinos. This is a key difference from Canada, there are no specific laws targeting offshore casinos and related activity, such as financial transactions. With that law, the US becomes a so-called black market with very limited access to online gambling. In contrast with Canada that is considered a grey market, or Sweden that is a white market where online gambling is prohibited given that online casinos carry a valid license from a relevant gaming authority.
Recent developments have opened up the United States on a state-by-state basis. Where certain states are now white markets where online gambling is freely available to players in that state and services offered by private companies subject to local licences. Three such states are New Jersey, Delaware and Nevada, where online gambling is legal. Opening up for online gambling while retaining tight regulations is positive from the aspect that authorities can control the gambling activity to a larger extent, minimize social problems and collect taxes efficiently. Something that is much harder in a grey market where money seeps out of the country into the hands of foreign offshore operators. In a black market, it is possibly even worse, the activity is entirely illegal, but people could still gamble illegally, and there is no monitoring for gambling problems or how much money there is in the activity.
Several territories in Canada offer online gambling to some extent, including Ontario, British Columbia, Manitoba, and Atlantic provinces. The Alberta Gambling and Liquor Commission (AGLC) recently made lottery tickets available online. They are joining the growing list of provinces that allow online gambling. The same site from AGLC also offers online slots, virtual sports and live casino tables. There are plans to add sports betting in 2021. This is a big step to take for Alberta. And any other provincial gaming authority, for that matter. However, on the flip side, a smaller local retail business that is not allowed to offer these services online are marginalized. This is true for every province where the authorities create an unfair playing field for competitors. A playing field that could only be levelled if Canada legalizes online gambling in the way the United States is doing. That way, the authorities could offer online gambling services through their outlets, while local competitors could compete on the same terms. The process could also reduce the number of offshore online casinos offering services to Canadian players. And instead, allow the reputable offshore casinos to apply for Canadian licences and provide services legally. Legally and according to policies and guidelines around responsible gambling. It would also enable the government to collect taxes and boost the economy instead of gambling revenues channelled to offshore online casinos.
