Following the groundbreaking success of Ontario’s iGaming framework launched in 2022, the province seeks to implement a new model: enable Ontario-based players to participate in online gaming platforms alongside foreign players (the “Model”). This system, known as international pooled liquidity, would allow players from different jurisdictions to compete together in peer-to-peer gaming, like online poker and fantasy sports.
The Canadian Criminal Code (the “Code”) is silent on whether sharing liquidity between a province and a non-Canadian jurisdiction is lawful, making the Model’s legal status controversial at best.
To clarify the legal status of the Model, the Attorney General of Ontario (“Ontario” or the “Province) asked the Court of Appeal for Ontario (CAO) through Order in Council 210/2024, to answer the following question:
Would legal online gaming and sports betting remain lawful under the Criminal Code if its users were permitted to participate in games and betting involving individuals outside of Canada as described in the attached Schedule? If not, to what extent?
The debate is mainly focused on the interpretation of Section 207(1)(a) of the Code, which provides that, notwithstanding any of the provisions of Part VII relating to gaming and betting, “it is lawful for the government of a province, either alone or in conjunction with the government of another province, to conduct and manage a lottery scheme in that province, or in that and the other province, in accordance with any law enacted by the legislature of that province.”
If the CAO were to find the Model legal, Ontario would see another transformative leap in its gaming ecosystem. Ontarians could benefit from larger prize pools, expanded gaming options, and more competitive odds or experiences. Most significantly, there are currently no fantasy sports operators active in Ontario. Permitting international liquidity sharing would provide a real incentive for these operators to expand to Canada, which would be a net benefit for both players and the province.
Ontario’s Stance
The session opened with Ontario presenting its case.
The Province framed the Model as a safeguard for Ontarians against unlawful gaming sites. Referring to an April study showing that 86% of Ontario’s online gamblers now use regulated sites, the Province emphasized how its iGaming framework has greatly reduced illegal operators’ influence. According to the Province, the Model would improve channelization for peer-to-peer games, to ensure safe, controlled gaming through the Alcohol and Gaming Commission of Ontario (“AGCO”) and iGaming Ontario’s (“iGO”) stringent regulatory oversight.
Under the Model, only players physically located in Ontario would be eligible to participate and the Province’s regulations would apply fully to these players. iGO would oversee critical functions, including data management, anti-money laundering compliance, and responsible gambling measures. Additionally, all of the Model’s revenue would remain within the Province (except for international players’ payouts).
At this point, the Court raised a critical question: how would Ontario players be safeguarded against money laundering, cheating, and fraud when participating in games with players from other jurisdictions if iGO does not impose the rules for foreign operators?
The Province explained that there would be two regulatory systems interacting with each other: Ontario’s Model (regulated and protected by AGCO) and the foreign scheme overseen by the foreign regulator. To ensure the operability of these two schemes, iGO and the foreign operator would need to enter contractual agreements to mutually set the rules required for the operation. Through these agreements, the Province can potentially ensure that the minimum expectations to protect Ontarians are satisfied.
Ontario then turned to the interpretation of section 207(1)(a) of the Code, focusing on the expression “in that province”. According to the Province, it is true that the provision imposes a territorial requirement, however, this should not be interpreted as a restriction. Moreover, while the Code includes several prohibitions, they do not apply to international lottery schemes because this was not the parliamentary purpose in the first place. On the contrary, provinces were empowered to conduct and manage gaming schemes as they saw fit to protect their players. In this case, a literal interpretation of “in that province” is too restrictive and disregards the Model’s particular elements and broader context.
Ultimately, the Model has a real and substantial connection with Ontario because it will only be used by Ontario-based players and international players would not be brought into the Model. Further, the Model will be conducted and managed by the Province, just as it is now.
The next group to argue in support of the model was the Canadian Gaming Association (“CGA”).
The CGA’s Take on the Model
The CGA presented three key submissions regarding the Model.
First, the Model is lawful under the Code regardless of whether it is an Ontario-only lottery scheme or one connected to international schemes. The Court should focus on the “what” and “where”. In this case, Ontario decides who can play, what games are offered, and how the revenue is managed, all within its jurisdiction’s boundaries. Ontario will not conduct or manage any part of the scheme outside the province but will enter agreements with foreign operators to facilitate cross-border participation. Canadians outside Ontario would be barred from participating in the Model.
Second, Ontario’s question is legal, not factual. Therefore, the Court should focus solely on the legal scope of the question, not on hypothetical or factual issues. That said, if the Court’s opinion is that part of the Model is not lawful, then what part of it is?
Lastly, the CGA cautioned against assuming that all operators outside Ontario are unlawful. The characterization of certain gaming operators as illegal has not been legally established in any court. Therefore, the Court should exercise caution in how it frames its opinion, as there is no concrete evidence supporting claims of illegality, only legal assertions. Simply put, the Court’s role in this case is to determine the legality of Ontario’s Model, not to assess the lawfulness of gaming operators (within or outside Ontario).
Today’s session will provide further insight as opposing parties present their cases. Notably, the Atlantic Lottery Corporation, and the Mohawk Council of Kahnawà:ke, among others, are expected to challenge the legality and implications of the Model.
Stay tuned for more updates as the Model’s future unfolds!
