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Can Quebec ISP Block Gambling Companies?

Sitting at a crossroads: the i- gaming dilemma in Canada Last year, I wrote an article on the legal framework of Canada’s online gaming industry, specifically discussing the concept of the ‘Foreign Operators’ Principle’ and how these operators legally offer their i-gaming products to Canadians without facing criminal prosecution1 . But recently, with all of the rumours circulating about Canada being in the midst of reforming its current gaming framework, some questions have arisen as to whether foreign operators taking on Canadianfacing businesses will still be able to operate without any adverse legal consequence. It goes without saying that Canada’s provinces have failed in their attempt to launch their own self-run i-gaming platforms. British Columbia had complications with privacy controls, while Loto-Quebec just never met the targets it had initially forecasted. Although we cannot confirm nor deny these rumours, it’s pretty fair to assume that a regulated i-gaming regime, based on a licensing model, might finally help the provinces increase their bottom lines. But just what might this model look like? Will it be something like the United States, where each province will have the discretion to determine whether or not it will regulate gaming, or will it be similar to the British model, where gaming will be regulated throughout the country? Will there be only a handful of licences issued to existing Foreign Operators, or will any operator be allowed to apply? And further, will this new model govern all forms of gaming (i.e. poker, casino, sports betting, fantasy), or will it be limited to just one type? For years, and still today, our office has taken the legal position that as long as there is no link between Canada and the online gaming operator (i.e. physical offices, servers, staff, etc. located in Canada), the operator cannot be found to be in breach of Canadian gaming laws, for the simple reason that the Criminal Code of Canada, the governing statute on the matter, does not have extra-territorial application2 . Furthermore, if Canada were ever to regulate online gaming, foreign operators will continue to operate, as Morden Lazarus, Senior Partner with the Law Offices of Lazarus Charbonneau, states, “legally, out there in cyberspace,” unless legislative change occurs. On 19 October Canada’s Liberal Party successfully won a majority federal government that would make it very easy to pass and enact legislation. However, in the last five or so years, the only significant gaming Bill that was presented for decree was Bill C-290, which if passed would have allowed for singlesport betting, and we all know what happened there: the Bill died a very, very slow death. That being said, I don’t foresee an amendment to the Criminal Code happening any time soon. As a result, the only real way for the provinces to prevent foreign operators from entering the Canadian marketplace would be to force Canadian ISPs to block them. It is no secret that more people prefer to gamble online than in traditional brick-and-mortar casinos. In fact, Loto-Quebec, the Provinces considering blocking access to i-gaming websites government agency responsible for gaming in the province, saw its net results over the last decade decline by 4.2%, notwithstanding that its online gaming revenues increased from CAD $50 million in 2005 to CAD $250 million in 20123 . As a result, in its 2015-2016 budget, the Quebec government indicated that a “legislative amendment will be proposed to introduce an illegal website filtering measure. In accordance with this measure, Internet service providers will not be allowed to provide access to an online gaming and gambling website whose name is on a list of websites that are to be blocked, drawn up by Loto-Québec.”4 Never before has a Canadian government, federal or provincial, ordered an ISP to block access to a website, as it has long been Canadian policy not to control what Canadians can or cannot access out there in cyberspace. Oddly enough, Quebec’s proposed plan to block websites seems to contradict another of its previously released reports, the ‘Report of the Working Group on Online Gambling,’ which was mandated with the task of studying the online gaming industry. Therein, the commission issued five recommendations, including the need to create an independent regulatory body that will issue licences to private operators wishing to enter the Quebec marketplace5 . So, here we are, sitting at a crossroads. The Canadian provinces realise there is a need for change in Canada’s online gaming industry, but aren’t really certain of how to go about it. Do they block access to all foreign operators therefore forcing Canadians to play only on provincially operated i-gaming platforms, or do they create a licensing regime allowing licensed foreign operators to continue to serve their Canadian players? What is certain, is that either scenario will require a change in legislation at the federal level, as the Telecommunications Act strictly prohibits ISPs from interfering with what the public can or cannot view (arguments on freedom of speech come into play) 6 , and the Criminal Code of Canada does not have application to foreign operators that respect the ‘Foreign Operators’ Principle,’ as decided by the Supreme Court of Canada.

Cory R. Levi Associate Attorney Lazarus Charbonneau, Montreal cory@lazchar.com

Will Quebec ISP Block Gambling Companies?

1. ‘Canada’s provinces look for solutions to i-gaming woes,’ World Online Gambling Law Report, December 2014. Online at: http://www.e-comlaw. com/world-online-gambling-lawreport/article_template.asp?Contents=Yes &from=woglr&ID=2137 2. Criminal Code, RSC 1985, c C-46, s. 2. 3. http://www.budget.finances.gouv.qc.ca/budget/2015-2016/en/docum ents/BudgetPlan.pdf 4. Ibid. 5. http://www.groupes.finances.gouv.qc.ca/jeu/pub/AUTEN_OnlineGamb ling_ENGsummary.pdf 6. Telecommunications Act, SC 1993, c 38, s. 36


WOGLR October 2015 – To block or not to block