Superior Court dismisses First Nation challenge over Ontario regulation

The Ontario Superior Court has ruled in favor of iGaming Ontario (iGO) and deemed the regulatory framework in the province does not breach existing First Nation regulations in a win for the regulator.

The decision comes after an application was put forward by the Mohawk Council of Kahnawà:ke (MCK) that contested iGO’s ability to permit online gambling based on aspect of Canada’s Criminal Code 1985 legislation.

However, the court made clear that iGO is fit to conduct and manage igaming within Ontario. 

In the province, iGO works as a subsidiary of the Alcohol and Gaming Commission of Ontario (AGCO) and alongside the government to regulate the industry. In turn, firms wanting to go live in the Ontario must sign an operating agreement with iGO before being able to launch any product.

The First Nation had argued this resulted in operators serving as “backdoor private contractors” given the Criminal Code only allows some forms of gambling to be controlled by provincial governments.

Martha Otton, executive director at iGO, expressed her delight at the verdict while insisting that the decision will allow players in the province to remain protected.

“We have always been confident in our model and are pleased the court has ruled in our favor, and that Ontarians can continue to play with confidence in our regulated igaming market,” Otton explained.

“Ontario’s model meets the requirements and contributes to the public good by protecting players, their data, and their funds, while helping to fund priority public services in Ontario, and bringing well-paid, high-tech jobs and economic development to Ontario.”

The Canadian province’s market has now been regulated north of two years, however certain forms of gambling and lottery schemes remain criminalized under the country’s Criminal Code of 1985. However, the code is clear that some lottery schemes which are conducted and managed by provincial governments remain exempt from criminalization.

The Kahnawà:ke Gaming Law enables the Mohawks of Kahnawà:ke to regulate, facilitate, and conduct land-based and online gaming through an inherent right to self-determination as part of section 35 (1) of the Constitution Act, 1982.

Nonetheless, section 4.1 of the Gaming Control Act 1992 states that “no person shall provide goods or services for a lottery scheme conducted and managed by the Ontario Lottery and Gaming Corporation or the lottery subsidiary unless they are registered as a supplier or providing the goods to a registered supplier.”

Within this context, “supplier” also means operator, which has in turn sparked the MCK to challenge that it is impossible to adhere to both the Gaming Control Act and the aforementioned Criminal Code because in order for private operators to provide goods and services, the operators would have to conduct and manage lottery schemes themselves.

When following the rules set out within the code, only schemes that are conducted and managed by the MCK are exempt from criminalization.

The second piece of legislation disputed by the MCK is similar to the first, with the council claiming that the AGCO regulation that states a lottery scheme offered on a gaming site of a registered operator must be prescribed as an online lottery scheme is impossible to comply with.

The MCK argued that the private operator in charge of the lottery scheme would once again be conducting and managing the scheme internally, falling foul of the Criminal Code’s provisions.

Delivering a verdict this week, Superior Court Justice Lisa Brownstone said: “It [Ontario] has not delegated its powers to private operators but has retained its position as operating mind of the igaming scheme.

“It has carefully constructed the igaming scheme to ensure safety, integrity, and fairness. There can be no frustration of purpose when the province has acted within its constitutional authority in a manner that is consistent with the exemption provided for in the Code.”