International edition
September 18, 2020

Experts say

Canada could be susceptible to DFS scandals like the ones in the U.S. if industry not regulated

Canada could be susceptible to DFS scandals like the ones in the U.S. if industry not regulated
Trade groups, lawyers and doctors warn the lack of legislative clarity concerning the legality of daily fantasy sports in Canada could leave the industry susceptible to the scandals now making headlines in the U.S. and that risks abound if the industry is
Canada | 12/15/2015

Trade groups, lawyers and doctors warn the lack of legislative clarity concerning the legality of daily fantasy sports in Canada could leave the industry susceptible to the scandals now making headlines in the U.S. and that risks abound if the industry is not regulated.

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ldquo;The scandal in the U.S. has only heightened the need for changes to the Criminal Code and for clarifying of the law,” said Paul Burns, vice-president of the Canadian Gaming Association, a lobby for the regulated gaming industry.

Burns adds that “provincial lottery corporations are hugely frustrated. They’ve watched the rise of daily fantasy sports over the past two years. Other folks have access to the market with no repercussions.”

The CGA estimates that offshore sports betting sites attract $4 billion to $5 billion from Canadians each year. Meanwhile, Canadians spent only about $500 million on the legal sports lotteries run by the provinces.

Daily fantasy sports operators allow customers to draft virtual teams of professional athletes under a salary cap. Teams compete against each other and accumulate points based on athletes’ real-world performance. It typically costs from 25 cents to $1,000 to enter a single game, but ubiquitous television advertisements, especially during the first half of the 2015 NFL season, promise to make millionaires out of even the most casual fans.

The Fantasy Sports Trade Association estimates that close to 57 million people now play fantasy sports games in North America, up from 41.5 million people in 2014.

In Canada, only provincial lottery corporations are allowed to offer gaming products. Canadians are barred from paying for any other games that include an element of chance or randomness.

This is where the legal status of daily fantasy sports becomes murky: Operators argue that picking players is a skill and therefore legal. But others assert that sports contests are riddled with elements of chance: athlete injuries, dropped passes, referees’ decisions and the weather are all random or unforeseeable occurrences that affect sporting outcomes.

“No court has had to interpret the Criminal Code to give us an answer one way or another,” says Chad Finkelstein, a partner at Dale & Lessmann LLP in Toronto. “We’re just having educated guesses.”

Last month however, the CGA asked Don Bourgeois — the former general counsel to the Alcohol and Gaming Commission of Ontario — to examine the legal status of daily fantasy sports.

“The gist of the opinion,” Burns says, “is that they are games of mixed chance and skill, making them illegal under the Criminal Code.”

Burns says that while he has shared the opinion with the provincial lottery corporations, the CGA has yet to receive any feedback. Getting the provinces on board is important because the CGA hopes to persuade the federal government to reconsider legalizing single-event sports betting. The provincial lotteries offer only “parlay” sports betting, where customers can bet on multiple contests.

A private member’s bill that would have legalized this type of betting languished in the Senate this year and eventually died. Passing this type of legislation is seen as a first step towards getting some clarity on the status of fantasy sports.

“Last time, (the provinces) wrote letters to the government asking it to add an amendment to the Code,” Burns says.

“We’ve started that process again and we’re hoping everyone will recommit to the cause.”

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