Day Two Recap
The second day at the Court of Appeal for Ontario (“CAO”) mainly focused on hearing contrasting opinions of Ontario’s peer-to-peer international pooled liquidity model (the “Model”). Flutter Entertainment PLC (“Flutter”) backed Ontario’s argument, commenting on the evolving nature of online gaming. Flutter urged the Court to consider modern realities and use principles of dynamic interpretation when reviewing Section 207(1)(a)1 of the Canadian Criminal Code (the “Code”). On the other side, the Lottery Corporations2 (the “Lotteries”) opposed the Model, arguing that any involvement in an international framework by Ontario would violate the Code’s clear territorial restrictions. The Lotteries warned that Ontario’s broader interpretation stretched legal boundaries, suggesting the Model would require Ontario to conduct and manage a foreign scheme, which would be illegal. For a full recap, check our day 1 and 2 reports here and here.
Yesterday was the third and final session. The hearing opened a final argument from the Lotteries before the Mohawk Council of Kahnawà:ke (“MCK”) presented its case.
The Lotteries’ Final Take
The Lotteries argument on the final day focused on the principles of statutory interpretation. The first step when reviewing legal provisions is to analyze their plain and natural meaning. If there is ambiguity, the next thing to consider is the context in which the provision is intended to apply. If, at this point, the law is still unclear, the final step is to review legislative history and parliamentary intent.
In the Lotteries’ opinion, the expression “in that province” of Section 207(1)(a) is clear. They argue that the phrase is not ambiguous whatsoever and, therefore, there is no room for further interpretation. If the Court were to believe that the plain and natural meaning of “in that province” is ambiguous, it should next consider the context that it was intended for – to grant authority to conduct and manage gaming schemes. Parliament intended this freedom to apply only within provincial borders, not beyond. Further, none of the precedents on file suggest that an existing territorial restriction intended by Parliament should be supplanted for international reach as proposed by Ontario.
The Lotteries then addressed Flutter’s dynamic interpretation request. The Lotteries agree that dynamic interpretation is very much needed depending on the utility it serves and should be applied on a case-by-case basis. However, dynamic interpretation is not a hard and fast rule, which is why Canadian courts have refused this approach on past occasions. In this case, the natural and ordinary meaning of “in that province” is not ambiguous, so there is no need for the Court to dig any further for background principles of interpretation.
Next, it was the MCK’s turn to present their case.
The Mohawks’ Opposition to the Model
Similar to the Lotteries, the MCK urged the Court to limit their interpretation of “in that province” to the natural and ordinary meaning of the words.
According to the MCK, applying a different interpretation when terms are clear is unnecessary and risks “running away from parliamentary intent”. They argue that section 207(1)(a) clearly limits the Province’s power to conduct and manage to within their own borders. Additionally, the Code’s principle of territoriality prevents enforcing prohibitions on foreign operators running international schemes. This means that the model would be unlawful because Ontario would either (i) not have control over the operation (breaching the Code), or (ii) would be operating an international scheme (also breaching the Code).
The Court called for a quick break and then gave Ontario the chance to reply to the respondents.
The Province Strikes Back
Ontario seized its last chance to remind the Court that the reference question was carefully designed to avoid hypothetical scenarios. This means that current or potential situations happening within Canada and across its provinces are irrelevant. The Province noted that any participation in the Model by players outside Ontario but within Canada would be a “crack” in the system and a violation of the Code. However, that is not what is being asked in the reference, nor should it matter to the Court.
Ontario clarified that all games under the Model would be part of a larger scheme managed by the Province. While Ontario wouldn’t regulate foreign operators directly, it would maintain control through contractual agreements. As such, every single rule of those games is within Ontario’s control under said agreements. Moreover, the Province can decide not to pair with a jurisdiction (or an operator) if it considers that it lacks sufficiently stringent regulatory safeguards against fraud, cheating, and money laundering.
The bottom line is that the Model will be operated by Ontario for Ontarians exclusively through iGO, nothing further.
Chief Justice Michael Tulloch concluded the reference by announcing the Court reserved its decision for a later date.
It will be a couple of months before we get to know the Court’s decision. Even then, the Model’s future won’t be completely sealed, as appealing the CAO’s decision to the Supreme Court of Canada remains a possibility.
1 207 (1) Notwithstanding any of the provisions of this Part relating to gaming and betting, it is lawful (a) 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.
2 Atlantic Lottery Corporation, British Columbia Lottery Corporation, Lotteries and Gaming Saskatchewan and Manitoba Liquor & Lotteries Corporation
