History of Gambling in Canada

The history of gambling in Canada begins with gambling as a normal part of community life which is interrupted by a blanket ban, followed by a long, slow trend towards liberalization and decentralization.

Article summary

  1. History of Gambling in Canada
  2. Gambling Laws in Canada: Legalization and After
  3. Development of the Online Gambling Industry
  4. Licensing of the Gambling Business in Canada
  5. How Canada Regulates Gambling Today
  6. Gambling Taxes in Canada
  7. State Profits From Gambling
  8. Popular Casinos in Canada
  9. Gambling Statistics in Canada
  10. Summary

First Nation peoples enjoyed various forms of gaming and gambling long before the arrival of Europeans, who introduced playing cards. Through the 16th, 17th, and 18th centuries, various card and dice games became popular. However, the 1892 Criminal Code, which was modeled on English laws of the time, prohibited all forms of gambling. A 1901 amendment allowed for games of chance where the profits went to religious or charitable organizations.

As is often the case, the ban fostered a culture of underground gambling. Betting on horseracing was common despite the ban, as authorities often chose not to enforce the law. In 1909, race promoters successfully argued that the legalization of horserace betting would reduce illegal activity and provide revenue for the state, resulting in the legalization of pari-mutuel betting in 1910.

Gambling Laws in Canada: Legalization and After

In 1969, a landmark amendment was added to the Canadian Criminal Code that decriminalized a variety of previously banned activities. Among other things, the amendment allowed lotteries and gave provinces the right to legalize and regulate other gambling activities. This led to a struggle between provincial and federal governments over the authority to hold lotteries and the rights to the money raised from them. Ultimately, the provinces won, and in 1985 gained the exclusive right to hold lotteries.

Provinces were also granted exclusive authority over slot machines and games taking place via computers or other video devices. 1998 saw the repeal of prohibitions against dice games. Starting in 2009, the provinces began to allow and regulate online gambling.

Development of the Online Gambling Industry

Online gambling wasn’t legalized and regulated in any of Canada’s provinces until 2009. However, this didn't stop Canadians from gambling on offshore casino sites, which still retain a high level of popularity today. Since its legalization, online gambling has experienced rapid and substantial growth. We’ll look at the statistics later in this article.

The first province to open a legal online casino for its residents was British Columbia. In July 2010, the British Columbia Lottery Corporation (BCLC) launched its website, PlayNow. To date, this is the only legal online gambling platform in British Columbia.

Later that same year, Quebec opened its own online gambling platform, based on the BCLC’s model. In 2013, Manitoba authorities launched an online gambling site to try and tap into the estimated $37 million being spent on unregulated online gambling in the province annually.

Licensing of the Gambling Business in Canada

Nationwide, it is illegal for any person or corporation without a legitimate license to offer gambling services to a Canadian citizen. It is the right of the provincial governments to issue licenses. This can create some legal gray areas, as while governments recognize provincial borders, the internet often doesn’t.

Online operators licensed in a province are allowed to operate in that province only; even provincial governments cannot offer gambling services to residents of another province without an agreement between the two governments.

However, thousands of foreign gambling sites offer their services to Canadians, regardless of the country’s laws. As the Canadian government does not regulate gamblers themselves, only platform operators, Canadian punters are generally left to gamble wherever they wish.

These offshore sites are often based in areas with regulations that are hospitable to online gambling platforms, such as Gibraltar, Cyprus, and Malta. As provincial governments have no means to enforce laws outside their own jurisdiction, offshore operators often face the Canadian market with impunity.

A recent attempt by the government of Quebec to block foreign-registered gambling platforms was blocked by Canada’s Supreme Court.

A large number of online casino operators are licensed by the Kahnawake Gaming Commission (KGC), which issues permits to online and land-based casinos and bookmakers. This organization, one of the earliest to embrace online gambling, was established in 1996, and has since become very highly regarded in the world of online gambling licensing and regulation.

The KGC is based in the Mohawk territory of Kahnawake, near Montreal. Due to Kahnawake’s status as a tribal reserve, it is regarded as an offshore jurisdiction. Though there is some debate over whether federal law applies to the tribal reserve in this aspect, the federal government has made no attempt to infringe on Kahnawake’s sovereignty.

Today, KGC licenses are in high demand from operators seeking access to the Canadian market. The Commission has already issued 50 licenses to companies from different gambling segments. The basic requirements for operators are:

  • transparent and safe gaming;
  • prompt payouts;
  • licensed software;
  • credibility in the business community;
  • partnership with independent auditors.

The KGC has the right to revoke a license if the operator fails to comply with any or all of the above requirements.

The KGC issues 4 types of licenses:

  1. Interactive Gaming License (IGC): gives providers the right to register one hosting in Kahnawake.
  2. Client Provider Authorization (CPA): gives the right to operate online casinos, bookmakers or poker rooms in Kahnawake.
  3. Inter-Jurisdictional Authorization: issued to operators that already hold a valid license in another jurisdiction and want to operate in Kahnawake.
  4. Key Persons License (KPL): issued to the persons who perform managerial or operational functions for an entity that holds a CPA.

The licensing process requires the payment of some fees, some of which can be refunded if the application is denied. These include:

  • $20-25,000 in processing fees for the application
  • $15,000 for the Due Diligence investigation of the applicant company (Non-refundable)
  • $10,000 to cover the first annual licensing fee
  • $5000 for each Key Person License application fee
  • $3500 (approximate) to review the Control System Submission
  • $1900 to open a Bank Account
  • $1500 to open a Merchant Account

Once the fees have been paid, however, the operator will pay a 0 percent tax on their casino income. The first license issued is valid for six months. After that, licenses are issued for a maximum of two years. Licensees are hosted on servers operated by Mohawk Internet Technologies (MIT). All necessary information about the licensing process and the casinos operating under Kahnawake licenses can be found on the KGC’s official website.

How Canada Regulates Gambling Today

Articles 204, 206, and 207 of the Criminal Code regulate gambling in Canada.

  1. Article 204: rules governing horse racing and parimutuel betting;
  2. Article 206: a listing of prohibited gambling activities;
  3. Article 207: the list of allowed gambling games and actions. This article allows the provinces to create their own lotteries and gambling establishments.

Provinces have the right to open and regulate their own gambling sites. Regulations vary on a province-by-province basis, and a license to operate in one province only allows an operator to serve gamblers in that province.

Some regions allow all forms of gambling from the age of 19, while others only allow certain activities.

In all provinces, betting on a single sporting event is prohibited. Only parlay betting is allowed.

Below, we’ll take a closer look at the specifics of gambling regulation in each of Canada’s 10 provinces and 3 territories.

Province Min. Age Permitted activities Regulatory Body
British Columbia 19 Slots, sweepstakes, bingo, and lotteries. The only legal online gambling platform is the BCLC’s PlayNow. Gaming Policy and Enforcement Branch of the Ministry of Finance, British Columbia Lottery Corporation
Alberta 18 Horse racing, Video Lottery Terminals (VLTs), Sports betting, casino games, online games, lotteries, and charitable gaming. Alberta Gaming and Liquor Commission
Saskatchewan 19 Horse racing, VLTs, charitable gaming, casinos, lotteries and sports betting. Online providers cannot be based in the province, but offshore sportsbooks and casinos can face the market. Saskatchewan Liquor and Gaming Authority, Indigenous Gaming Regulators
Manitoba 18 Casinos, horse racing, lotteries, charitable gaming, sports betting, and VLTs. The only online gambling service operating in the province is PlayNow Manitoba, but over 1000 offshore sites also operate in the province. Liquor and Gaming Authority of Manitoba
Ontario 19 Casinos, slot machines, horse racing, lotteries, charitable gaming, sports betting, online gambling on PlayOLG Alcohol and Gaming Commission of Ontario
Quebec 18 Casinos, horse racing, lotteries, online casinos, sports betting, VLTs, charitable gaming. Régie des alcools, des courses, et de jeux; Société des loteries du Québec
New Brunswick 19 VLTs, horse racing, online gambling, sports betting, lotteries, and charitable gaming. The only land-based casino is located in Moncton. Gaming Control Branch of the Department of Public Safety
Prince Edward Island 19 Sports betting, lotteries, horse racing, charitable games, and online gambling. There is one legal casino. Prince Edward Island Lotteries Commission; Department of Environment, Labour, and Justice
Nova Scotia 19 Lotteries, charitable gaming, casinos, horse racing, sports betting, VLTs, online gambling through offshore casinos and sportsbooks. Alcohol, Gaming, Fuel and Tobacco Division of Service Nova Scotia
Newfoundland and Labrador 19 Horse racing, Video Lottery Terminals (VLTs), Sports betting, casino games, lotteries, and charitable gaming. Online gambling is available through offshore casinos and sportsbooks. Consumer and Commercial Affairs Branch of Service NL
Northwest Territory 19 Lotteries, sports betting, online gambling. Land-based casinos are legal, but none exist due to the low population. Department of Municipal and Community Affairs
Yukon 19 Charitable gaming, lotteries, sports betting, online gambling. Permanent casinos are not permitted, with one exception, but 3-day casino events may be conducted by charities or religious organizations. Department of Community Services
Nunavut 19 Horse racing, Video Lottery Terminals (VLTs), Sports betting, casino games, online games, lotteries, and charitable gaming. Department of Community and Government Services

Gambling Taxes in Canada

According to the Income Tax Act, residents of Canada who are lucky enough to win a lottery or other game of chance do not pay an income tax on their winnings. The same applies to sports betting. However, if gambling is the main source of income, not a hobby, then the win is taxed.

How does the government distinguish between amateur gamblers and professionals? Gamblers are classified based on the following criteria:

  • Whether the player has special skills;
  • The amount of payments;
  • The frequency of payments.

For example, Ontario taxes income between $42,201 and $84,404 at a rate of 9.15 percent. If a gambler earns between $84,404 and $150,000, the tax increases to 11.16 percent.

In many provinces, licensing conditions require casinos to turn over a portion of their profits to the provincial or municipal government in a revenue sharing agreement, sometimes in lieu of paying other taxes.

State Profits From Gambling

In 2014, Canada’s total gambling income amounted to $13 billion. The industry has continued to grow in the succeeding years. According to a Fantini Gaming Research report for 2017, the gambling industry in Canada grew by 5 percent compared to the previous year, and the total income of the industry (lotteries, land-based and online casinos, charitable gaming) amounted to 17.3 billion dollars.

The gambling revenue leader was Ontario, which brought in 43 percent of all winnings ($7.5 billion) and reported an increase in gambling revenues of 12 percent (compared to the previous year).

According to Fantini Gaming Research, one of the reasons for the growth in Ontario is the privatization of casinos. Most casinos in Ontario are operated by the Ontario Lottery and Gaming Corporation (OLG), but the organization has recently begun allowing more casinos to be privately operated.

ONTARIO

About 40 percent of the country’s population live in Ontario, and the province earned roughly the same proportion of national gambling revenue. Revenue increased in all sectors of Ontario’s gambling sector, but the most dramatic area of growth was in iGaming, which saw a surge from $8.39 million to just over $49 million - an increase of 485.5 percent.

The province with the second-highest income was Quebec, where profits from land-based casinos, lotteries and online games increased by 2.12 percent and amounted to $3.6 billion. Revenue from online gambling increased by nearly 30 percent, from $35.6 million to $45.8 million.

QUEBEC

As for British Columbia, the province’s gambling industry brought in $3.14 billion in 2017. The figure rose by 1.36 percent from the previous year. According to figures available from the BCLC website, 2017-18 saw their website PlayNow earn over $180 million.

BRITISH COLUMBIA

On the whole, analysts at Fantini Gaming Research predict significant growth of the offline and online gambling industry, marked by a continued increase in profits in the future.

Popular Casinos in Canada

Offline

Two of the most famous gaming houses in Canada are Casino Niagara and Niagara Fallsview Casino Resort, in Ontario. They offer gamblers a variety of gambling options, from slot machines to card games.

Another famous complex in Ontario is Woodstock Racetrack and Slots. Here, visitors can play on 100 slot machines and bet on horse racing. In total, there are over 100 casinos across the country.

Online

The most popular province-run gambling resources in Canada are:

  • Espacejeux.com, run by Loto Quebec, the state lottery of Quebec;
  • BCLC’s PlayNow, the official gambling site in British Columbia;
  • Manitoba Liquor and Lotteries’ PlayNow, based on BCLC’s site.

Among non-governmental online casinos in Canada, the most popular are:

  • Betway casino, a UK-registered platform which has 500 slots from top providers and offers bonuses of up to $1500;
  • Jackpot City, a Maltese mobile casino with a KGC license offering 300 slots from software provider Microgaming;
  • Royal Vegas, registered in Malta, an online casino with progressive jackpots starting at $1 million;
  • Gaming Club, a KGC-licensed Maltese casino with 450 games and registration bonuses of up to $800;

Spin Palace, which offers 450 games and large bonuses of up to $1000. Spin Palace is registered in Malta, and since 2016 has also operated under the license of the KGC.

Gambling Statistics in Canada

According to the Canadian Gambling Digest, gambling participation is prevalent across the entire country, with almost 80 percent of adult Canadians taking part “in some form of gambling” at least once a year. In Quebec, this number sinks to roughly 66 percent, but in Ontario, Canada’s most populated province, it rises to nearly 83 percent. The province with the highest percentage of respondents who participated in some form of gambling was Nova Scotia, with 87 percent. According to the same report, the average percentage of problem gamblers is 0.9 percent.

The province with the most gambling opportunities is Quebec. There are 10,448 gambling venues, including all forms of gambling, from lottery outlets to full casinos. Second place belongs to Ontario, with 9,992 venues across all gambling sectors. British Columbia is in third place, with 3,818 gambling venues.

According to a study by the University of Lethbridge:

  • The average household income of online gamblers is $74,600 per year.
  • The average age of online gamblers in Canada is 35.5.
  • 70 percent of gamblers fall in the age range of 18-39, with 47.3 percent falling between 20 and 29, the largest single age demographic.
  • 49 percent of internet gamblers are single, and 33 percent are married.
  • 82.4 percent of internet gamblers are male and 17.6 percent are female, whereas in non-internet gambling the split is closer to 50/50.

According to a survey by the Nova Scotia gaming corporation:

  • 76 percent of Canadian respondents consider online gambling harmless;
  • 67 percent refer to online gambling neutrally.

At what age do Canadians start gambling? According to the same survey by the Nova Scotia gaming corporation:

  • 19 percent – aged 15 to 17;
  • 15 percent – at the age of 18;
  • 12 percent – 19-20.

As for problem gambling, according to the Problem Gambling Institute of Ontario:

  • An estimated 3.2 percent of Canadians are dependent on gambling.
  • The average age range of Canadians addicted to online gambling is 15-24.

It is also important to note that more than one hundred and thirty thousand residents of Canada work in the gambling business.

Summary

The Canadian gambling market is thriving. Canada has a significant population with a widespread cultural acceptance of gambling, and the revenues earned by the gambling sector are substantial. Online gambling revenues and popularity have been increasing steadily, and sometimes drastically, since the advent of the technology. Several provincial governments have adopted a philosophy of if you can’t beat them, join them--or at least try to keep up; British Columbia, Quebec, and Manitoba have launched their own platforms in order to compete for their share of the market instead of making futile efforts to regulate something effectively beyond their control. The nature of the iGaming business, along with the KGC’s easy, effective, and popular route to licensing, mean the market has very few barriers to entry. Thousands of online operators, particularly those offshore, have already found success in the Canadian market.