Editor’s Note: The following is the second in a three-part series that is running Tuesday, today and Thursday on the grey area of offshore online gamb
We’ll call him Ernest.
He has a high-profile job in Halifax and a hobby that is probably legal.
“I don’t really know the legalities — I think it’s more of a grey area,” said Ernest.
“I do know that my credit card won’t accept the transaction so I have to use a bit of a workaround.”
Ernest’s great illicit activity is betting through offshore sites on sports games he sits down to watch with popcorn on a Friday or Saturday night.
Ernest isn’t alone.
According to H2 Gambling Capital, an online industry publication, Atlantic Canadians bet $90 million through offshore sites between January and November 2017. The Atlantic Lottery Corporation, meanwhile, did $10 million in online business during the same period.
Online gambling is a big business that’s only projected to get bigger — H2 Gambling Capital projects it will grow by 80 per cent in Atlantic Canada by 2022.
Meanwhile, legislation that governs gambling in Canada remains mired in the pre-internet world when Crown corporations, like Atlantic Lottery, could be set up as monopolies that sent all profits back to their respective provincial governments.
“Why hasn’t government done anything about this?” asks Michael Lipton, a Toronto-based lawyer with experience in online gaming. “There are more important things in Canada, like fighting terrorism and money laundering, than offshore gaming.”
From Lipton’s reading of the legislation, this is where online gambling stands:
• It’s legal for any Canadian to gamble via offshore sites.
• It’s illegal for a Canadian to operate offshore sites.
• A non-Canadian operating an offshore site that takes bets from Canadians could probably be prosecuted if they came to this country and the government took an interest — which thus far it hasn’t.
While Canada hasn’t sought to prosecute any of the owners of offshore sites, the Crown corporations created by the provinces to direct gambling income back into their own coffers are hamstrung to various degrees.
Provincial policy and federal laws prevent Atlantic Lottery from offering some of the most popular online games.
Ernest got into sports betting through Atlantic Lottery’s ProLine game. Through it he would pick his winners for three games (it’s now two) and if all three won then he would get a payout.
He liked it but then he discovered that through offshore sites he could just bet on individual games and get better odds.
“With my offshore account, I can make a bet on one game and if it wins I can win my money,” said Ernest.
“In ProLine there are factors to increase the odds of Atlantic Lotto winning and decreasing my odds.”
But federal law as it currently stands prohibits anyone from offering bets on single matches.
So Atlantic Lottery, and its fellow Crown corporations across the country, can only offer what they call “parlay” betting with multiple matches.
“Government is aware of our position (on not being allowed to compete),” said Joey Cormier, director of marketing for Atlantic Lotto’s iLottery.
“It is with them to evaluate. The case is becoming more and more compelling year after.”
Of the $90 million that Atlantic Canadians bet offshore this year, $22.4 million was on single-event sports games.
The other two most popular types of online gaming, casino ($28.9 million) and poker ($18.9 million), Atlantic Lottery hasn’t been given permission to offer.
“We believe we are well situated to offering competitive games,” said Cormier.
The decision the two levels of government haven’t been making is whether to enforce the laws that exist on offshore operators or to allow domestic entities like Atlantic Lottery to compete.
The Americans, so far, have largely taken option A.
“They’re done a good job at putting the fear of God into a number of these offshore sites,” said Lipton.
The Department of Justice and the FBI shut down the world’s three largest online poker games — PokerStars, Full Tilt Poker and Cereus. They seized the sites (later letting two of them restart if they didn’t allow Americans to play), charged 11 people and froze 76 bank accounts in 14 countries.
In other cases they’ve hauled people off planes connected to offshore sites when they landed in the United States.
And so when Ernest has travelled in the United States the offshore sites wouldn’t let him bet because they recognized where he was.
Though it might have stopped Ernest, industry analysts Eilers & Krejcik Gaming estimates that Americans bet $60 billion illegally each year on offshore sites.
It may soon become legal south of the border. On Dec. 4 the United States Supreme Court heard a challenge to the 1992 law that prevents all but four states from offering online sports betting. A decision is pending.
Analysts say that if New Jersey wins its challenge, it’ll result in a watershed that sees all forms of online gaming legalized in America.
With a potential gambling industry powerhouse nearby, that leaves Canada few options but to allow and regulate.
Russell Potvin is the editor of grizzlygambling.com, an online publication that researches gaming sites, both onshore and offshore, and offers advice to Canadian gamers.
While the Crown corporations set up by provinces claim it’s a Wild West on the offshore gaming sites, Potvin doesn’t agree.
His site seeks to help gamers navigate to gaming sites that can be trusted — many of which are regulated within the countries they are based. He says there are plenty of offshore sites that offer a secure gaming environment and that more players all the time are growing comfortable with them.
Where provinces have allowed their Crown corporations to operate online casinos, there has been some success. He points to PlayNow in British Columbia, which consulted with offshore sites and adopted their technologies to offer their online casino.
“They’ve done fairly well attracting B.C. residents,” said Potvin.
In Atlantic Canada, he thinks it might be more difficult simply because Atlantic Lottery crosses four provinces that would all have to agree.
“At this point it seems like there’s not enough political motivation to tackle the subject right now,” said Potvin.
Until they do, thousands of Atlantic Canadians won’t have any option but to send their gambling dollars offshore. Our friend Ernest will keep his probably legal hobby to himself.
Tomorrow: A Quebec First Nations is getting a piece of the offshore gambling action.