CANADA Law and Practice Contributed by: Danielle Bush and Matthew Kelleher, McCarthy Tétrault LLP
3. Legislative Framework 3.1 Key Legislation
the category of games of pure skill. While the sta- tus of fantasy sports products has yet to be tested in a Canadian court, the AGCO has, in its Registrar’s Standards for Internet Gaming (the “AGCO iGaming Standards”), categorised fantasy sports products as a form of sports betting that will require the provider of same to register as an igaming operator in Ontario. In most provinces, social games are not categorised as gambling and are not otherwise regulated, assum- ing that the operation of the games complies with the Criminal Code. Esports competitions are not regulated because they are viewed as games of pure skill. Accordingly, the AGCO does not require that persons providing esports competitions register as operators. On the other hand, betting on esports constitutes a form of sports betting that will require registration in Ontario. 2.2 Land-Based Gambling There is almost nothing to differentiate the treat- ment of products, such as betting, poker and gaming machines, in a land-based facility from those same products when provided online. A Provincial Gaming Operator can provide all of these products legally and can engage private sector service providers to deliver those products if it so chooses. Charitable licensees are typically restricted by provincial legislation to the provision of a limited range of products, including, most notably, raffles, bingo and true lottery products, such as scratch-and-win and break-open tickets. Gaming machines are, of course, permitted in land- based casinos and certain other venues, such as horse-race tracks, depending on the jurisdiction. In the latter venues, those machines are typically pro- vided directly by the Provincial Gaming Operator. Vid- eo lottery terminals (VLTs) are provided to the public by the Provincial Gaming Operator in all provinces other than British Columbia and Ontario. There are no slot machines available in two of the three territo- ries (Nunavut and Northwest Territories), while they are available in Yukon. Gaming machines that offer games of pure skill are legal and unlicensed.
The overarching statute that governs gambling activ- ity in Canada is the Criminal Code. Sections 201–206 make all types of gambling, betting and lotteries ille- gal throughout Canada, with very limited exemptions, such as pari-mutuel betting on horse races (provided for in Section 204). While the federal Code is the appli- cable prohibitory statute, all the regulatory statutes (and regulators) are provincial, with the one excep- tion being pari-mutuel betting on horse races, which is governed by the federal Canadian Pari-Mutuel Agency. Gambling Activities Under Canadian Law The operation or provision of casinos, bingo, ticket lotteries, betting (other than pari-mutuel betting on horse races), poker and other card games, and elec- tronic games such as slot machines and VLTs is an activity that constitutes gambling unless it falls within one of the few exceptions in the Criminal Code. This is true whether the activities are provided in a land- based facility or online. There are a number of activities that are prohibited by the Criminal Code that may not be commonly thought of as “gambling”. A competition or draw for a prize may fall into any one of a number of baskets depend- ing on its structure. For example, if no consideration is payable in order to enter the competition, Canadian case law has established that any person hosting or offering such a competition is not illegally operating a common gaming or betting house. Furthermore, the Criminal Code, and the little case law there is on the subject, draws fine distinctions between games of pure skill, games of pure chance, and games of mixed chance and skill. As a result, a number of idiosyncrat- ic “rules” have evolved, the best example being the “mathematical skill-testing question” that is added to contest rules in order to transform a competition from an illegal contest of pure chance to a legal contest of mixed chance and skill. In sum, any competition for a prize must be examined through the lens of Section 206 of the Criminal Code, together with the excep- tions provided in Section 207 of the Criminal Code, in order to determine whether it might constitute an illegal lottery.
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