Loto-Québec to offer online gaming by year's end

The plan has received the blessing of the Quebec cabinet, which wants to "cannibalize illegal gambling"sites and would see a common electronic platform created for Loto-Québec, B.C. Lottery Corp. and Atlantic Lottery Corp., which covers the four Atlantic provinces.

The adult population of the six provinces is needed to provide enough "liquidity" - available players with cash - to make online poker economically viable for the lottery corporations, Loto-Québec CEO Alain Cousineau said. "Each jurisdiction protects its fiscality. The revenue generated by Quebecers will return to Quebec," said Cousineau, adding with a chuckle that he hopes Quebecers are good poker players.

While a memorandum of understanding has been signed by the three corporations, details about rules governing the new games were not available to reporters yesterday, other than some extraordinary measures to prevent minors from accessing the Quebec site. Of interest will be the betting limits for the first government-regulated poker site in Canada.

B.C. Lottery Corp. this year raised the weekly betting limit for its online games - which include pseudo-poker games but not the real thing - from us$ 120 to us$ 9,999.

Quebec and its new poker partners will need high betting limits if they hope to compete with existing online operations, Michael Lipton, a Toronto lawyer specializing in gaming law, said in an interview yesterday.

And even with high limits, it's not a sure bet that the new partnership will succeed in luring players from existing sites, said Lipton, whose client list includes provincial corporations, gaming companies and industry associations. "I question whether there will be sufficient liquidity (number of players) to make the site popular and therefore profitable," he said.

"The operators out there are miles ahead of these new entrants in terms of the number of games they offer and the liquidity. Some sites may have 20 or 30 million players ... and poker games going on 24 hours a day," he said.

At yesterday's media conference in Montreal, Cousineau and Finance Minister Raymond Bachand focused on the legitimacy, regulation and protection that provincially run online gambling would offer consumers. "Inasmuch as this is a sector that is developing exponentially in an illegal way,

Loto-Québec is being given the responsibility of working to redirect this ... to a site that is secure, legal and trustworthy," Bachand said. "I believe this to be an efficient way of fighting the underground economy," said Bachand, who estimated that the online games would generate about us$ 50 million in new revenue for Quebec in 2012.

Quebec will be drawing on the experience of Sweden, where the online gaming market generated sales of us$ 600 million in 2008, Cousineau said. The day the publicly owned Swedish lottery corporation launched its online poker site, it took 25 % of the market share from non-regulated sites within four hours, he said.

The Quebec site will be open only to Quebec residents who are physically within the province, but those players will be able to engage players in the other participating jurisdictions. Age verification will be done by an outside firm using a process that could take days and, in some cases, require the player to show up in person, Cousineau said.

The software for the online operations will be provided by outside firms. Last month, The Gazette reported that Britain-based Orbis Technology Ltd. was as a contender for the supply contract. Yesterday, Cousineau said Orbis is among the companies under consideration.

While Cousineau and Bachand insisted state-sanctioned online gambling would not increase problem gambling in Quebec, the provincial opposition parties yesterday accused the government of closing its eyes to the social impact of gambling.

The director of public health in Montreal, Richard Lessard, said he was extremely surprised by yesterday's announcement and concerned about the impact of online gambling on young adults. Between 2006 and 2008, the percentage of Quebec students gambling online doubled, Lessard said.

One of the largest hubs of online gambling in the world is located on Montreal's South Shore on the Mohawk reserve, where the Kahnawake Gaming Commission regulates permit holders whose servers are located in the community. Although the gaming commission has been operating for years, it is routinely described as illegal by government authorities.

Asked about Kahnawake, Bachand said "illegal gaming exists" and described how the RCMP heads a multi-agency squad looking into illegal gambling in Canada.