Despite clear prohibitions against non-governmental Internet gaming, the online gaming industry is rapidly growing in both Canada and the United States. The pace of expansion and the intentional violation of current gambling laws may leave little choice for governments but to regulate the online gambling industry. The following is an overview of some of the current laws in Canada that affect online gaming.
Criminal Prohibitions
Part VII of the Criminal Code of Canada (the “Code”) makes it an offence to operate a commercial gaming enterprise. Although these sections were enacted to deal with traditional gambling in Canada, they have also been applied to most forms of Internet gaming. Except for gaming conducted over the Internet by a provincial government, online gaming continues to be illegal in Canada.
What if only some of the relevant gaming activities occur on Canadian soil?
According to R. v. Libman (1985), 21 D.L.R. (4th) 174, a person may be convicted for acts undertaken in Canada in pursuit of a commercial gaming enterprise even where Canadians are not involved in the gaming or the placing of bets or wagers.
On the issue of Internet jurisdiction, the Federal Court of Appeal in SOCAN v. Canadian Association of Internet Providers (2002), 215 D.L.R. (4th) 118 (“Tariff 22”), found that the location of the host server was not conclusive in determining the jurisdiction of Internet activity. The most significant connecting factors to Internet activity were held by the court to be the location of: 1) the content provider, 2) the end user, and 3) the intermediaries, in particular the host server.
According to R. v. Nelson, [1997] M.J. No. 654; affirmed [1999] M.J. No. 382 , the purpose of the gaming, betting and wagering sections of the Code are to prevent persons from attempting to profit from the gaming of others. Accordingly, courts will consider both the intent and effect of an Internet enterprise where Canadian residents are either spending money on, or profiting from, commercial gaming in order to determine whether sufficient “connecting factors” exist to justify extending criminal jurisdiction over the activity.
The Mohawk reserve of Kahnawake is a community of approximately 8,000 Mohawk Indians located on the south shore of the St. Lawrence River, twenty minutes from Montreal, Quebec, and occupies approximately 50 square kilometres.Despite the legal prohibitions against online gaming, for a number of years the Mohawks of Kahnawake have been issuing “licenses” for the operation of Internet gaming businesses.
History of Aboriginals and Gaming
In Canada, courts have explicitly rejected First Nations’ claims to an inherent right to conduct gaming activities. Section 35(1) of Canada’s Constitution Act, 1982 recognizes and affirms aboriginal rights. However, only certain activities fall within the ambit of being an “aboriginal right.” In 1996, the Supreme Court of Canada in R. v. Pamajewon (1996), 138 D.L.R. (4th) 204, held that gaming, or the regulation of gaming, was not an integral part of the cultures of two Ontario First Nations at the time of European contact.
The Legality of the Mohawks’ Activities
Despite the decisions of courts to date, the Mohawks of Kahnawake assert that they are a sovereign nation and as such, they have jurisdiction to issue gaming licenses for gaming operations. Thus, the Mohawks continue to host Internet casinos on their reserve.
Although the Quebec Minister of Public Security has spoken out against the operation of online casinos, there has been no action to halt the activity on the reserve.
Currently, the Mohawks of Kahnawake play host to about 30 cyber casinos and have expressed an interest in negotiating with other jurisdictions, including Quebec and Canada, to harmonize their respective legislative provisions concerning gaming. Specifically, the Kahnawake community would like the federal government to pass legislation designating Kahnawake, and perhaps other reserves, as Internet gaming jurisdictions.
Interactive Gaming Regulations
Having recognized the need to create a regulatory environment designed specifically for the interactive gaming industry, the Kahnawake community created the Kahnawake Gaming Commission which in turn enacted a regulatory framework for online gaming, the Kahnawake Regulations Concerning Interactive Gaming (the “Regulations) pursuant to Section 35 of the Kahnawake Gaming Law. The Regulations were designed to ensure that all interactive gaming and gaming related activities conducted within, or from the Mohawk Territory of Kahnawake, satisfy three basic principles:
that only suitable persons and entities are permitted to operate within Kahnawake;
Canada ’s federal and provincial governments are faced with substantial challenges in determining the appropriate course of action to be taken concerning Internet gambling. The rapid growth of the industry and the huge revenues generated, make it an industry that requires regulation. The only issue remaining is whether the federal or provincial governments will step in to regulate or whether regulation of online gaming will be left to non-governmental entities such as native groups like the one in Kahanwake.
Brown, C. Donald
(416) 972-9001, Ext. 236
clientservices@heydary.com
Heydary, Javad
(416) 972-9001 Ext. 201
clientservices@heydary.com
Yu, Daisy
(416) 642-2026
clientservices@heydary.com
