The Duality of Online Gambling Regulations

Gambling and betting in online casinos for real money in Canada is one of the most popular entertainment activities in the country. A question often pops up whether or not online gambling in Canada is legal or not. The situation is complex as the answer to whether it’s illegal or not is both yes and no. As in many other countries in the world, with a few exceptions of state-owned casinos, private Canadian companies are generally not allowed to operate online casinos in Canada. However, foreign online casinos can offer their services online where Canadian customers can access and play casino games online. From a Canadian person’s point of view, it’s not illegal to play at an online casino. Laws state that gambling online is prohibited, but there are technically no restrictions in place when it comes to depositing or withdrawing money and playing, so each citizen is free to gamble in online casinos if they want to. These market conditions, where Canadian companies are forbidden to operate while foreign companies can offer casino services online and Canadian consumers can freely access the services, are what’s called a grey zone with murky and unclear rules and laws.

Should Canada Introduce Local Online Gambling Regulations?

Just because the operators offering their services don’t hold a licence in Canada does not mean they are operating illegally – all operators are strictly regulated through third party regulatory and licensing bodies, such as the United Kingdom Gambling Commission or Malta Gaming Authority. Licenses are only granted and provided to legitimate businesses who abide to strict licensing guidelines. There is a lot of talk about regulating the Canadian market to better safeguard citizens and combat social problems. Regulating a thriving market with a functioning ecosystem is not the easiest task for policymakers, as we will outline in this article. The examples provided below highlight a massive issue, where legitimate online casinos become marginalized when new regulations are introduced, and casino operators outside the local licensing system stand to benefit.

Recent Examples of Regulated Markets

Germany is the most recent country in the west to enforce strict regulations on online gambling. The authorities in the country are currently working out all the details of the legislation, and so far the proposed regulations have been met by criticism. Stakeholders argue that the planned regulations won’t be sufficient enough to attract players to regulated online casinos and that the legislation will push the players to unlicensed casino websites.

A couple of years ago, when Swedish authorities announced that an online gambling regulation was going to be introduced on the 1st of January 2019, many stakeholders braced themselves for an uncertain future while hoping for the best. Today, over one and a half years later, the relationship between operators and the authorities is frosty at best. There is open criticism of the governments’ inability to listen and cooperate when it comes to the concerns raised by regulated operators. Some operators have drawn parallels between the strict regulations and a complete ban on business activity. The most major criticism is that it’s become difficult for consumers to play in regulated online casinos, as effect channelization to unregulated casinos has increased. As a matter of fact, there has been an increase in unregulated online casinos targeting Swedish consumers since the 1st of January 2019. As a result, the Swedish government is killing legitimate businesses and boosting those online casino operators, who do not hold the national license, but still offer their services online in Sweden.

Incompetent Policy Makers

A new gambling policy can only be effective if it ensures that licensed gambling websites are more attractive than unlicensed websites. Largely, the same casino offering, products and bet offerings can be found in both a licensed and unlicensed online casino. If there is a lot of friction and restrictions in a licensed casino, then customers will simply find their way to an unlicensed casino. The problem with unlicensed casinos is that they can, in some cases, have less customer protection and safeguards when it comes to responsible gaming. One of the main aspects of online gambling regulation is exactly the social responsibility and consumer protection. The duality of online gambling regulations becomes apparent when these safeguarding measures imposed by the authorities come back to bite them, as the consumers they strive to protect run off to unlicensed casinos. These unlicensed outlets are not catering to local license requirements which gives them unfair advantages. Policymakers need to co-operate better with gambling industry stakeholders in order to stimulate consumers and give online casinos a fair market to compete in with an equal playing field.