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First Nations Gambling Law is not a proud area for the Canadian government – the US has set an example in this regard.

The following article has been published in Gaming Law Review and Economics.

Historical evidence confirms that aboriginal gaming, or First Nations Gambling, in Canada is older than Confederation, and dates back to well before the arrival of Europeans to the shores of this country. For Canada’s aboriginal peoples, wagering and gaming has always formed an integral component of their culture, serving as a means of settling disputes and regulating conflict, and as an important means of leisure, enabling members of the community to interact on a social and communal level.

Accordingly, gaming has emerged as one of the most important engines driving the economies of aboriginal communities across the country, from the Maritime provinces on the country’s east coast, through Quebec and Ontario, across the prairies, to British Columbia. From bingo halls, charity gaming events, casinos, to Kahnawake’s world famous server park – Mohawk Internet Technologies – the Canadian aboriginal gaming sector is a genuine success story, bringing in hundreds of millions of dollars to aboriginal communities around the country; providing funding for countless community projects and services, from hospitals to schools, and bringing a new spirit of dignity and economic self sufficiency to Canada’s aboriginal peoples.

Aboriginal gaming in Ontario, between 1993 and 1995, saw the provincial government (through the Ministry of Consumer and Commercial Relations) negotiate and sign charitable gaming agreements with three aboriginal communities, which gave those communities authority to license charitable gaming events such as bingo, break-open tickets, raffles, and table game events on their reserves. Although the agreements recognize the authority of on-reserve licensing bodies, commercial gaming suppliers that provide supplies or services to the events on the reserve must be registered by the Alcohol and Gaming Commission in accordance with the Gaming Control Act.

On the casino side, the Ontario government has operated Casino Rama since 1996. The net revenue from Casino Rama is distributed among all Nations in the province (the First Nations Fund) in accordance with the Casino Rama Revenue Agreement, as negotiated between the province and the Chiefs of Ontario on behalf of First Nations bands in the province. Since 2008, Ontario has changed its formula for distributing gaming revenues to First Nations. It is no longer based on Casino Rama’s revenues but is 1.7% of the global gaming revenue generated from all gaming activities in Ontario. The distribution formula for the net casino revenue was developed by the Chiefs of Ontario and is based on a per-capita formula, weighted for population and isolation. First Nations may use the net casino revenues for economic development, community development, health, education, and cultural development.

Unlike other provinces of Canada, Quebec does not contribute any funds to First Nations from its global gaming revenues.

Arrangements between aboriginal groups and the Quebec provincial government are mediated by the province’s Regie des Alcohols des Course et des Jeux, known as “La Régie”. In terms of reserve based gaming, the Régie allows VLTs, but only in liquor licensed establishments. Bingos can also be operated on reserves provided they have been licensed by the Régie. Despite requiring official approval, super bingos have been held and super bingo licences have been issued by the Mohawk Council of Kanesetake and the traditional government known as the “Long House”, without provincial authorization.

In stark contrast to these limited gaming ventures, the Mohawk community of Kahnawake, located ten miles south of Montreal, entered the age of internet gaming in 1996 with the establishment of the Kahnawake Gaming Commission (“KGC”). Over the past 16 years, the KGC has developed into a world class online gaming regulator. The KGC’s Regulations Concerning Interactive Gaming have served as the model for many other jurisdictions in the online gaming space. Kahnawake’s server park, operated by Continent 8 Technologies PLC, is considered among the most advanced in the industry, with Kahnawake internationally recognized as one of the pre-eminent e-gaming jurisdictions in the world. Moreover, as the first, and at present only, aboriginal community in Canada to successfully develop an e-gaming enterprise, Kahnawake remains the model which aboriginal communities across the country seek to emulate. Section 35(1) of the Canada Constitution Act of 1982 entitles the Mohawks of Kahnawake, through the exercise of their Aboriginal rights granted therein, to pursue their e-gaming enterprise as it effectively protects activity which formed an integral part of an aboriginal group’s particular culture prior to contact with Europeans who first set foot in North America four hundred and seventy years ago. As gaming played a pivotal role in the Mohawks of Kahnawake culture prior to the aforesaid European contact, their e-gaming venture is protected by section 35(1). Their right to host e-gaming is further reinforced by the failure of both the federal and Quebec provincial governments to challenge this activity since its inception in 1999.

Saskatchewan’s aboriginal peoples have developed an active presence in the gaming sector as a result of successive agreements with the provincial government. In 1993, the White Bear First Nation opened a small casino on its reserve near Carlyle and asserted that it had jurisdiction over gaming. The RCMP closed the casino, seized the equipment and laid charges under the Criminal Code of Canada. The Federation of Saskatchewan Indian Nations (“FSIN”) and other First Nations supported the White Bear First Nation’s assertion of jurisdiction. The resulting negotiations between the Province of Saskatchewan and the FSIN, which represents 72 of the province’s 73 First Nations, led to an agreement in 1994. This agreement envisioned a Crown corporation with Regina and Saskatoon each having a casino, the FSIN holding three of seven seats on the board of the Crown corporation, and the corporation committed to achieving at least 50% aboriginal employment in the casinos. However, plans for a Saskatoon casino were cancelled after a plebiscite in the City of Saskatoon rejected the casino. A further agreement between the province and the FSIN, known as the 1995 Gaming Framework Agreement, was reached in February 1995. The agreement set out a process for the FSIN to develop four community-sized casinos through a subsidiary body known as the Saskatchewan IndianGaming Authority. The agreement also sets out the terms for revenue sharing from the venture. With numerous casinos having been opened in the province, including the Regina casino in 1996, and with aboriginal employment rates at the Saskatchewan Gaming Corporation maintained at 50% or higher, it is clear that arrangements between the province’s aboriginal peoples and the provincial government of Saskatchewan have been very productive.

In Manitoba, the province’s First Nations have developed extensive authority over reserve based charitable gaming. Through orders-in-council, Manitoba’s First Nations may enter into agreements with the provincial government to license lottery schemes in accordance with section 207(1)(b) of the Criminal Code of Canada. These agreements, known as First Nations Gaming Commission Agreements, establish charitable gaming licensing authority on reserves. The First Nations Gaming Commissions established in Manitoba under this authority have exclusive licensing authority to license specific lottery schemes on reserves, including bingos, break-open tickets, raffles, and other lottery schemes. All profits from licensed events remain in the hands of the licensees on the reserve. The provincial government does not share in the profit from these events in Manitoba.

First Nations communities and governments situated in British Columbia have had little or no success in establishing forms of First Nations gaming in the province. First Nations are essentially non-distinguishable from other British Columbia residents and local governments who seek to engage in the British Columbia gaming industry. In other words, if a particular First Nation wants to be involved in gaming in British Columbia, they are expected to follow the same rules and restrictions that apply to others in British Columbia engaged in the gaming industry. As a consequence, there is only one casino in British Columbia that benefits First Nations in any way. The St. Eugene Resort and Casino, built on a site that was a school designed by the Canadian government to attempt to assimilate indigenous youth and historically seen as a tool of oppression, is an isolated example of indigenous gaming in British Columbia. This casino and resort is the result of a partnership between the province and the Ktunaxa Nation, and is managed and operated by the British Columbia Lottery Corporation (BCLC) in accordance with the hosting agreement executed between the aforesaid entities. The Ktunaxa Nation, which has occupied the Upper Columbia Basin for over one hundred centuries, has a rich ancestry as the first post-glacial inhabitants of the Kooteny Region. Despite that rich and proud history, the deal struck between the Ktunaxa Nation and the BCLC was arguably not one that favours aboriginal heritage, but one of convenience, location and business acumen on the part of the First Nation. Ultimately, it can be suggested that the Ktunaxa Nation was subject to the same rules that would have applied to any other private and/or public owner of that particular real estate.

British Columbia’s failure to acknowledge any kind of unique relationship between gaming and its First Nations has been a sore spot for some First Nations in the province. This resulted in the creation of the British Columbia First Nations Gaming Initiative, which was created after years of failed attempts at negotiations, between the province and the British Columbia First Nations, to address the alienation of First Nations from the gaming industry in British Columbia. In 2013, this group reportedly advocated the opening and running of casinos on reserve land without any involvement or authorization from the provincial governments or their respective agencies. It remains to be seen how this will play out but it is certainly clear that the Canadian aboriginal gaming experience is plagued with inconsistencies and in dire need of reform.

Recent developments across Canada have demonstrated that the state of aboriginal gaming in this country is active and varied. It covers a range of activity from on-reserve charitable gaming events, major off-reserve casino projects, to internet oriented hosting activity, including the regulation thereof. Indeed, aboriginal gaming in Canada is as diverse and varied as this country’s aboriginal peoples. Although making predictions in an area as complex and variable as the Canadian aboriginal gaming sector is difficult, it is fair to say that aboriginal groups in Canada will increasingly seek to develop internet based gaming activity, spurred by the successful example set by the Mohawks of Kahnawake and the progressive dominance of the internet in the gaming sector as a whole.

The time has come for change in Canada at the federal level, to allow the provinces, acting together, to create a process whereby a First Nations group claiming an Aboriginal right under section 35(1) of the Canada Constitution Act of 1982, including a claim to an Aboriginal right to gaming, could have that claim processed without first requiring recourse to the Supreme Court of Canada to determine their entitlement to claim that Aboriginal right, which is a very lengthy and costly process.

At the present time, there is no mechanism or methodology in Canada equivalent to that which exists in the United States in the forms of the National IndianGaming Commission, the Indian Gaming Regulatory Act or the recognizedprocess of establishing a “compact” between a First Nations group and a particular state in the country, which could give rise to the recognition of a First Nations right to carry on, regulate and license certain forms of gaming on First Nations lands in the United States.

In Canada a First Nations group, like the Mohawks of Kahnawake, cannot force the governments of Canada and/or Quebec, which controls the administration of gaming in the province of Quebec, to sit down and negotiate with them an agreement, equivalent to a United States compact, that recognizes a First Nation group’s entitlement to exercise its Aboriginal rights granted under Section 35(1) of the Canada Constitution Act of 1982; which, in this instance, would entitle the Mohawks of Kahnawake to legitimately, in the eyes of the world and Canada, pursue their e-gaming activities as an internationally recognized, respected and regulated e-gaming jurisdiction.

At the present time, the only option available to a First Nations group in Canada is to claim and establish an Aboriginal right to gaming via recognition by the Supreme Court of Canada through years of litigation. The time has come for Canada to pass legislation implementing the United Nations Declaration on the Rights of Indigenous Peoples, which was adopted on September 13th, 2007 and recognized the urgent need to respect and promote the inherent rights of indigenous peoples which derive from their culture, spiritual traditions, histories and philosophies. As delineated above, this could be realized by establishing a process in Canada to recognize an entitlement to an Aboriginal right claimed by a First Nations group, which now exists in the United States but unfortunately not in Canada without that First Nations group first seeking recourse to the Supreme Court of Canada.

Surely, Canada will one day see the need for change without waiting for a wake-up call from the United Nations.

First Nations Gambling Law is not a proud area for the Canadian government – the US has set an example in this regard.

This article was authored by Brian Thomas Hall and Cookie Lazarus.

Brian Thomas Hall is an Associate Partner at Lazarus Charbonneau.