Expert: Canada not likely to ban online gaming

The Canadian government announced this week it was considering a move to restrict banks and credit card companies from conducting financial transactions with Internet gaming operators in the country, much like what the U.S. attempted to accomplish with the Unlawful Internet Gambling Enforcement Act (UIGEA) that was introduced in October, 2006.

But if history has anything to do with it, the days of regulated Internet gambling in Canada are not so far off in the distant future, says Michael Lipton, a gaming law expert and the senior partner at Elkind & Lipton in Toronto.

"History demonstrates that over the past 50 or 60 years the trend in [Canada] is to regulate, not prohibit," says Lipton. "It happened with horse racing about five years ago. It happened with land-based casinos in 1969 and then it happened again about seven years ago when those casinos were allowed to start offering craps so they could compete with the border casinos.

"If the public wants something regulated, and the regulation benefits the country, it usually happens."

Nearly 500 Internet gaming sites hold a permit issued by the Kahnawake Gaming Commission, which is based in the Kahnawake Mohawk Territory near Montreal. The Commission, which was established in 1996, claims that it is empowered to regulate and control gaming and related activities within and from its territory since it is a sovereign nation.

But according to Lipton, the Kahnawake isn't sovereign, but it is protected by Section 35 of the constitution that says the government must recognize and respect traditions and customs that are integral to their culture. Whether or not gaming would fall under that category is up for debate, but Lipton does not envision a scenario where the government would test it by moving into Kahnawake territory.

"Practically speaking, I don't think the government is looking to move on this because it could lead to violence," Lipton said.

He added that the latest talk chatter about the government looking to consider new measures against the Internet gaming sites stems from the urging of the Woodbine Entertainment Group.

"This is all about Woodbine trying to protect their monopoly," said Lipton, who added that Woodbine was also the force behind a bill a few years ago that attempted, but failed, to ban all online gaming sites from advertising in Canada. "Woodbine's argument is that these sites are hurting their business but I don't follow that logic. Are they trying to say that if Internet gambling is shut down, all of a sudden people are going to flood the race track to bet the horses? That just doesn't make sense."

In Lipton's mind, what the issue boils down to is doing what the public wants and what's most beneficial to the country as a whole.

"From all of the information that I've seen, I don't see any hue and cry from the public about banning Internet gaming," he said. "I think the public would like to regulate. And the Kahnawake would be absolutely delighted. It would also give the gaming software industry that is so big here a huge boost.

"There are 85 countries worldwide that have regulated online gaming. Maybe it's Canada's time to do the same."