CANADA Law and Practice Contributed by: Danielle Bush and Matthew Kelleher, McCarthy Tétrault LLP
agencies involved). The fines for advertising breaches that have been levied to date in Ontario are discussed in 11.3 Financial Penalties . 10. Acquisitions and Changes of Control 10.1 Disclosure Requirements No Canadian gaming registrations may be assigned. If all the shares of a registered gaming entity are or will be sold to another company, the provincial regulator in question will generally amend the current registra- tion to reflect the new shareholder, but only after a full review of the share purchase agreement and the sub- mission and acceptance of all the required disclosures from any new direct or indirect shareholders. Most Canadian regulators either require or very strongly recommend that the proposed changes be provided to the regulator as early as possible for initial review and pre-approval. The changes are then recorded by the regulator when the transaction closes. 10.2 Change of Corporate Control Triggers All changes to shareholders, directors and officers must be reported to the applicable gaming regula- tor as soon as they occur. A transfer of more than 5% of the shares of a gaming operator will trigger a full disclosure requirement for the acquiring entity. By default, the transfer of 50% or more of the shares of any registered gaming entity will constitute a change of control that will permit the regulator to require a new application for registration. 10.3 Passive Investor Requirements Passive investors may be treated as persons of inter- est by the applicable gaming regulator and required to provide full disclosure.
a registrant may be assessed for a monetary penalty as a result of specific breaches of Ontario’s Gam- ing Control Act and regulations. The amount of the monetary penalty is based on the Gaming Control Act 1992 Schedule of Penalties. Each type of infraction has a certain maximum monetary penalty associated with it. The AGCO will impose an amount up to that maximum. Registrations may be suspended for any number of reasons but only after disciplinary action short of revo- cation. In Ontario, registrants who are not in compli- ance with the law usually receive a warning first, fol- lowed by a monetary penalty if still non-compliant. If the registrant continues to be non-compliant, the AGCO will issue a notice advising the registrant that they have 15 days in which to appeal the decision to a separate government appeal tribunal (the Licence Appeal Tribunal) that is not associated with the AGCO. If the registrant does not appeal or loses on appeal, the registration will be revoked. Typically, provincial gaming control acts provide for penalties for officers and directors who are implicat- ed in the illegal acts of their corporation. As noted in 11.3 Financial Penalties , there is no record of any individual being sanctioned for actions taken by the government lottery corporations, which are the only regulated operators in Canada. Having said that, the applicable provincial gaming control legislation does provide for that hypothetical situation. For example, Ontario’s Gaming Control Act makes it an offence for any director or officer of a corporation to cause, authorise, permit, or participate or acquiesce in the commission by the corporation of a gaming offence. An individual convicted of an offence under the Gam- ing Control Act is liable to a fine of not more than CAD50,000 or to imprisonment for a term of not more 11.2 Sanctions See 11.1 Powers . Personal Sanctions
11. Enforcement 11.1 Powers
than one year, or to both. 11.3 Financial Penalties
Regulators can impose monetary penalties as well as suspending or terminating a gaming registration. These penalties vary from province to province but are typically similar. Ontario is used as an example here. As an alternative to suspensions or revocations,
The means of calculating financial penalties is quite complex and differs from province to province. Giv- en that provincial government entities are the legal
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