Business Law

Canada is Moving Closer to Single-Event Sports Betting

Following recent legislative developments in the Canadian Parliament, the longstanding limitations on single-event sports betting may be nearing their end, opening the Canadian business market to a new regulated model, similar to the opportunities provided by the legalization of recreational cannabis.

Although some sports betting has been legal since the 1990s, single-game betting remains prohibited under sub-section 207(4)(b) of the Criminal Code. Under the legislation, most gaming is classified as “lottery schemes” which is defined to prohibit single-event or single-contest betting. This restricts individuals from placing a bet on the outcome of just a single game. However, there are exceptions for parlay-stye betting, which allows wagers involving the outcome of more than one match or game within a single ticket.  There are currently two bills progressing through the House of Commons which would amend the prohibition on single-game betting.

The Road to Legal Single-Event Betting

Bill C-13, An Act to Amend the Criminal Code (single event sport betting) was introduced by Justice Minister David Lametti and had its first reading on Nov 26, 2020. The Bill would remove the current restrictions, giving the provincial and territorial governments the discretion to manage single-event sports betting within each jurisdiction. Rather than repealing subsection 207(4)(b) of the Criminal Code, it would leave the section in place, removing some single-event betting acts from falling under the “lottery scheme” classification.

Similar to the government-sponsored bill, Bill C-218, Safe and Regulated Sports Betting Act also attempts to decriminalize single-event sports betting. This private member’s bill was sponsored by Member of Parliament Kevin Waugh and was introduced in February 2020. As presently drafted, the proposal would completely repeal sub-section 207(4)(b). Bill C-218 currently has widespread support across political parties and was recently adopted at second reading with 303 votes in favour and 15 against, before being referred to the Justice and Human Rights Committee.

These recent initiatives are not the first attempts at legalizing single-game wagering in Canada. An earlier private member’s bill, Bill C-290, was proposed in 2012 by NDP Member of Parliament Joe Comartin. The Bill received widespread support and passed through the House of Commons before languishing in the Senate. An almost identical proposal resurfaced in 2016 as Bill C-221. However, several professional sports leagues, including the NHL, NBA, MLB, and NFL opposed the Bill, and Liberal Party members voted against the Bill, citing concerns that the Bill would fail to discourage illegal gambling and could aggravate problem gambling. Significantly, the current Bill C-13 marks the first time that the lifting of single-event sports betting is proposed through a government-sponsored bill.

Is an Increasingly Competitive Environment Driving the Action?

The entertainment and gaming environment has undergone a transformation in the time since the failure of the previous attempts at legalization. The prospect of increased competition in the sector from the United States is likely fueling a renewed impetus this time around. In May 2018, the United States Supreme Court, in the case of Murphy v. National Collegiate Athletic Association, struck down as unconstitutional a federal law that had prohibited sports betting in most states. The Professional and Amateur Sports Protection Act originated in 1992 and banned sports betting except in Nevada, which was permitted to regulate and license betting. Since the decision, numerous states have passed legislation to legalize aspects of sports betting within their borders, Delaware being the first, with others including New York, New Jersey, and Pennsylvania. Even before the Supreme Court decision, American sports leagues began to acknowledge that a new regulatory approach was needed, with those organizations now forging partnerships with sports betting providers. Some of the same organizations had opposed Canada’s Bill C-290.

There is growing enthusiasm for allowing provinces to create legal and regulated single-event sports betting regimes. Sports organizations, broadcasters, and those in the gaming industry can look forward to developing new revenue sources. The Commissioners of the National Basketball Association, the National Hockey League, Major League Baseball, Major League Soccer, and the Canadian Football League issued a joint statement to the federal government encouraging an amendment to federal laws that would permit single-event wagering. They cited this as another way for fans to engage with the sports they love. The Canadian gaming industry acknowledges that increased competition from American jurisdictions and other entertainment options is a factor encouraging reform.

Sports Betting to Spur New Economic Opportunities

The Canadian Gaming Association has suggested that single-game sports betting would act as an economic stimulus, generating employment and new tax revenues for governments. There is also the prospect that it could support growth in tourism and prompt investment and innovation in the sector. A report by Deloitte has indicated that within five years sports betting could grow from a $500 million industry to nearly $28 billion. With governments facing fiscal challenges, new sources of economic activity like expanded sports betting could deliver economic results. Additionally, a legal and regulated market would hinder illegal gaming profits from flowing to organized crime. The Canadian Gaming Association has estimated that $15 billion was bet on sports in Canada with only $450 million of that going through legal channels.

Next Steps

Of the two bills that are currently before Parliament, Bill C-218 has cleared second reading in the House of Commons and is progressing slightly ahead of Bill C-13. With a greater chorus of voices now in favour of amending the Criminal Code prohibitions, it appears that Canada is closer than ever to moving forward with the legalization of single-event sports betting.

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