Why Do Canadian Gamblers Turn to Offshore Bookmakers?

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Tuesday, May 31st, 2016 | Written by Stephen Smith

In Canada, provincial lotteries are legally allowed to accept bets on sporting matches, so one would expect that incidences of offshore betting in the country would be few and far between. Nevertheless, billions of dollars are spent in Canada every year on illegal sports wagering, but now some Canadian lawmakers are hoping to change all that, although there will be an uphill battle ahead for those looking to reform the current system.

The State of Sports Betting in Canada

As previously mentioned, sports betting through provincial lotteries is legal in Canada; however, there are strict restrictions on what kinds of bets can be placed. At the present time, provincial lotteries can only accept bets on parlays, meaning that Canadian bettors must wager on two games at a time and win both games to receive payout. Offshore sites are able to attract players who want to bet on single event match-ups. Even when bettors do wish to bet on parlays, they typically still turn to offshore gambling sites because the payouts are higher than what the provincial lotteries pay. Each year, provincial lotteries receive roughly $500 million in sports wagers, while it’s estimated that offshore sports betting sites rake in more than $4 billion annually.

Canada’s Grey Market

Some of the offshore gambling sites of choice for Canadian gamblers are those located in countries such as Antigua, Gibraltar, the Isle of Man and the U.K. Gamblers are easily able to place their wagers at these sites via the internet, and despite being illegal for offshore companies to accept bets, no one has ever been convicted of a crime. This has led offshore sports books to view Canada as a grey market, especially with the country’s federal criminal code not having caught up with the internet gambling era. As gaming lawyer Chad Finkelstein explains:

“The criminal code was written decades ago, and these provisions with respect to gaming were drafted in the 1960s and haven’t really been updated since. These provisions were not drafted with anything remotely resembling the internet ever contemplated. So we have outdated, antiquated provisions, which makes it difficult to apply to a modern gaming business.”

Just as no offshore operator has successfully been prosecuted for contravening the Criminal Code of Canada, online gamblers similarly are able to deposit and withdraw funds from their online betting accounts using credit cards based with major Canadian banks. Ultimately, it is left up to the bank to decide whether its client is involved in illegal activities, although Canadians still have other options available if they did find themselves barred by a bank. As one anonymous gambler known only as Steve states:

“I’ve been [betting] on the same site for the last 20 years. I deposit [funds] either by credit card or through a third party. I have never had any problems whatsoever. And my winnings go directly into my bank account, a big Canadian bank. There was a time when my credit card wouldn’t work, so I used online vouchers, just one extra step, takes 10 minutes. So literally within seconds I can have money in my account.”

An Argument for Change

Canadian politician Brian Masse is well aware of how much Canadians are currently spending placing illegal bets on sporting matches via offshore sites. In the hope of allowing provincial governments to benefit from that revenue, he has introduced a piece of legislation called Bill C-221 that would reform the current gambling code and hopefully encourage more Canadians to bet locally. The bill would make it legal for provincial governments to accept bets on single sports events, not just parlays.

Masse has stated that changing the law could help to provide much-needed funds for education, health care and other social programs. He also argues that provincial governments have more safeguards in place to protect consumers than offshore sites, so bettors would benefit from enhanced safety, security and fairness if the law was passed.

Resistance on All Sides

While it’s easy to see how Masse’s Bill could benefit Canadian provinces, experts believe that the legislation will likely never get far because it is faced with many different opponents. One of the biggest obstacles to reforming gambling is the Kahnawake Gaming Commission, a tribal group that issues licenses for offshore betting sites. If Canadians were suddenly able to place single bets on sporting events, offshore sites would likely see a major decline in revenues, affecting the Kahnawake Gaming Commission’s bottom line. Experts believe that the Kahnawake Mohawks tribe will fight any move to change the law by arguing First Nations rights.

Another obstacle will be professional sporting leagues, including the National Hockey Association, which has expressed concerns about the potential for cheating and game fixing. Plus, many Canadians still view gambling on sports as taboo and are unlikely to lend public support to any law that seems to condone or sanction sports betting.