Kahnawake challenging Ontario on iGaming

The passage of Bill C-218, also known as the Safe and Regulated Sports Betting Act, and the subsequent amendments to the Criminal Code have paved the way for provinces and territories in Canada to offer single-event sports betting within their jurisdictions.

Provinces such as Ontario have wasted no time in seizing this opportunity, not only by introducing single-event sports betting through the Ontario Lottery and Gaming Corporation, but also by allowing private third-party operators to participate in the market. These operators are now able to offer single-event sports betting to the public under a licensing system managed by iGaming Ontario, a subsidiary of the Alcohol and Gaming Commission of Ontario.

The Mohawk Council of Kahnawà:ke (“MCK”) has raised concerns and is challenging the newly established multi-billion-dollar regime of single-event sports betting in Ontario.

On November 28, 2022, the Mohawk Council of Kahnawà:ke (“MCK”) initiated a constitutional challenge against iGaming Ontario and the Attorney General of Ontario in response to the provincial government’s unilateral changes to gaming management. MCK alleges that these changes are illegal and unconstitutional, specifically contesting Ontario’s re-interpretation of Section 207(1) of the Criminal Code, which grants provinces the authority to regulate single-event sports betting.

MCK’s legal challenge argues that iGaming Ontario is not truly “conducting or managing” the gaming that occurs on private operators’ platforms. Instead, iGaming Ontario is merely allowing operators to self-conduct and self-manage, while requiring them to pay a portion of their revenues to Ontario.

MCK has a long-standing history of effectively facilitating, conducting, and safely regulating gaming activities on behalf of the Mohawks of Kahnawake. The council argues that this new regime disregards their expertise in the gaming sector and is likely to result in significant revenue losses for the community of Kahnawake.

The Notice of Application has been filed in the Ontario Superior Court, with representation by Olthuis Kleer Townshend LLP on behalf of MCK.

MCK had vehemently opposed Bill C-218, the legislation that ultimately changed the landscape of iGaming and sports betting, adversely affecting Indigenous Peoples. The bill became law in June 2021, paving the way for Ontario to reinterpret the management of the gaming sector.

Consequently, in April 2022, iGaming Ontario, a subsidiary of the Alcohol and Gaming Commission of Ontario, launched its iGaming Framework, which included single-event sports wagering and relied solely on private operators.

MCK is deeply concerned that this Framework disregards the expertise and rights of First Nations to operate and regulate gaming in a safe and responsible manner. For the past 25 years, the Kahnawà:ke Gaming Commission has been providing players with access to safe, well-regulated, and responsible gaming. Although MCK had previously operated in Ontario through its wholly-owned subsidiary, Mohawk Online Limited, it has chosen not to submit to this new framework.

As a result, MCK is now being excluded from the Ontario market due to its refusal to participate in the iGaming framework.

“The harsh reality is that Ontario’s actions are causing a significant loss of crucial revenues for our community,” expresses Ratsenhaienhs (elected Council Chief) Mike Delisle, Jr. “We had been operating legally, safely, and successfully across Canada until these actions were taken. Being shut out of Ontario, which is the largest province in Canada, will have devastating effects on an income source that has supported programs and services in our community for the past two decades.”

The decision to challenge the legality of Ontario’s iGaming framework in the Ontario Superior Court of Justice was a last resort, as MCK’s attempts to engage in dialogue with government officials have been disregarded.

What implications does this legal challenge by the Mohawk Council of Kahnawà:ke have for internet gaming operators?

This legal challenge by the Mohawk Council of Kahnawà:ke may have implications for private third-party operators in the betting industry and the sports sector. Additionally, it could potentially impact other seemingly unrelated areas, such as capital markets.

In the past, Canadian stock exchanges have been cautious about listing companies with operations related to cannabis in the US due to federal prohibition. It remains to be seen whether similar concerns may arise regarding the listing of private third-party operators, whether licensed by Mohawk Internet Technologies or not, based on this challenge.

We continue to monitor developments related to the challenge and their potential impact on the online and betting industry as a whole.