Igaming Focus: First Nations claims present Ontario with first major regulatory problem

Igaming Focus: First Nations claims present Ontario with first major regulatory problem

  • Jake Pollard, CDC Gaming Reports
February 24, 2022 3:00 PM
  • Jake Pollard, CDC Gaming Reports

Ontario’s upcoming regulation presents Entain and its newly-acquired sportsbook Sports Interaction with a serious dilemma and raises questions about the market before it has even launched.  

The upcoming regulation of the online sports betting and gaming industry in Ontario is a welcome addition to the number of regulated jurisdictions in North America. As has been widely reported, great things are expected of the province and it is predicted to be the fifth largest North American jurisdiction when it comes to handle and gross gaming revenues.    

By population (c.14.5m), Ontario would be the fifth biggest U.S. state and thus is the second biggest market in the regulated North American sports betting and igaming sector to open to date. Analysts estimate it could be worth close to $1bn in GGR in its first year of operation.

In fairness, the province, along with the rest of the country, has long been a highly active and prosperous market for online betting and casino brands. As a whole, Canada, from Toronto to Vancouver, also holds an illustrious place in originating many of the online gambling industry’s major operators and suppliers and contributing to its growth and expansion. 

Balancing act 

That activity, and the way operators have targeted Canada thanks to being licensed by the Kahnawake Gaming Commission for many years, has long functioned as part of a dot com balancing act that saw First Nation jurisdictions such as Kahnawake license and regulate online sportsbooks, poker and casino sites. 

Once they had their KGC licenses, the operators would then go and target the Canadian and U.S. players that were on their digital doorstep, with seemingly little risk or legal uncertainty and minimal regulatory oversight.        

The U.S. is now largely out of bounds, but Canada isn’t, and the topic of how Kahnawake and its operators can navigate upcoming regulations in Ontario is particularly salient; Canada’s biggest and most prosperous province will be fully regulated from April 4 onward.  However, it seems obvious that the topic will come up again when the country’s other provinces, as is widely predicted, put forward and eventually enact their own online gambling regulations. 

Closed market 

When a jurisdiction regulates, the last thing it, and the operators licensed there, want is unlicensed operators openly targeting players in the newly-regulated market. In Europe, one of the most common complaints has always been Italy- or France-regulated brands (loudly) criticizing regulators for not going after the unlicensed operators that continue to market and recruit players from those countries. 

So it was surprising to read the Mohawk Council of Kahnawake-Entain press release and the more recent announcement of its mutual cooperation agreement on gaming with the Six Nations of the Grand River. The announcements make it clear that the MCK, KGC and SNGR have no plans to stop their operators from targeting Ontario or Canada as a whole, which of course wholly contradicts Ontario’s regulatory objectives, and, eventually, those of Canada’s other provinces should they regulate their respective OSB and icasino industries. 

The situation is particularly delicate for Entain. Its CA$300m acquisition of Avid Gaming means it now owns Sports Interaction (SIA), one of Canada’s biggest online books. SIA is operated by  Mohawk Online, which is part of the MCK and is licensed by the KGC. 

The MCK-Entain press release states that “although Entain has made the decision to apply for  licensure with iGaming Ontario for other brands under its umbrella, Mohawk Online and Sports Interaction will continue to be licensed under Kahnawake jurisdiction”. 

In other words, Sports Interaction will continue operating in Ontario through its KGC license and has no plans to stop doing so after April 4, while Entain has stated on the record that its bwin, PartyCasino and BetMGM brands will be licensed and active in Ontario.   

“First Nations shut out”

The MCK-SNGR statement is clear about their communities’ biggest gripes. It said: “Both have been frustrated by recent changes to Canada’s Criminal Code that have effectively shut out First Nations by willfully ignoring the legitimate interests of Indigenous Peoples in the gaming industry. 

“This is being clearly demonstrated by the recent actions of the government of Ontario, which has unilaterally reinterpreted the ‘conduct and manage’ provisions of the Criminal Code of Canada and established an ‘igaming’  initiative  under  its  authority,  iGaming Ontario.

“This  new  model does  not  provide  accommodations for, and will not benefit SNGR or  Kahnawà:ke’s socio-economic business, Mohawk  Online, as it closes off access to one of its  largest local markets.”

Cleary, there are major historic, political and cultural reasons for the MCK and KGC to set out such plans of action, but the prospect of KGC- or SNGR-licensed operators openly marketing to Ontario players after April 4 surely defeats the whole point of the province regulating its OSB and icasino sector. 

Surreal scenario 

It would also place Entain in the somewhat surreal situation of having three to four brands licensed in Ontario, while its newly-acquired Sports Interaction, one of the biggest online sportsbooks in the market, continues marketing and taking Ontario wagers from Kahnawake. And one can only guess at how other operators such as theScore, DraftKings or FanDuel will react to such a situation. 

Entain told CDC Gaming that its “understanding is that the Mohawk Council of Kahnawake is working towards recognition of their claim to have an inherent indigenous rights to offer gambling services and that an understanding to that effect is being sought with the relevant authorities, including Ontario. Entain continues to work towards securing licences for its brands in Ontario ahead of the envisaged launch of the market on 4 April, 2022.”

Clearly discussions are ongoing, but other than KGC telling its operators to stop targeting Ontario, it will be fascinating to see what solutions all those bodies come up with. It is also astonishing that the issue hasn’t been addressed before now.