The Rise and Fall of Kahnawake and the Future of Online Gambling in Canada
The Kahnawake Gaming Commission is a regulatory and licensing body that issues permits to online and physical gambling operators.
The KGC was established by the Mohawk Council of Kahnawake, in 1996. The Mohawk Council of Kahnawake established the KGC to enforce the Kahnawake Gaming Law, and the regulations that guided this commissions licensing activities was put into action in 1999.
Initially, the purpose of the KGC was to issue permits for casinos and poker rooms that operated or received players from the Kahnawake Mohawk Territory. It is a First Nations reserve locate in Quebec, Canada.
First Nation Gambling
Kahnawake operates like any independent nation would, and the Iroquois Confederation even issues its own passports to Kahnawake natives. Individuals who even marry outside the territory are encouraged to leave. This is the level of autonomy that has guided the First Nation in its policies, and its economy.
Kahnawake allows several physical casinos to operate in its territory, including many poker rooms, lotteries and similar establishments.
The enactment of the Kahnawake Gaming Commission created a powerful pull on the industry in its time and hundreds of gaming providers rushed to get their license from the KGC.
Today, the KGC is the licensee of 50 individual operators or “game providers.” These 50 operators are equivalent to about 250 separate sites and casino brands..
Hard Line Stance
The KGC’s tendency to swerve into hard line stances is probably the reason why it is now considered an obsolete gambling commission. A notable action from the KGC that began turning heads (and not in a good way, not really) was the 2009 Ultimate Bet cheating scandal. Tokwiro Enterprises was the affected gambling operator.
After a long investigation on the purported cheating carried out by Tokwiro Enterprises, the Kahnawake Gambling Commission enforced several sanctions on the Ultimate Bet casino website.
In addition to a commission fine amounting to $1,500,000, Tokwiro Enterprises was also ordered to return $22,000,000 to its players on the Ultimate Bet website. Regulatory measures have also been put into place to ensure that Tokwiro Enterprises will no longer be able to carry out any cheating against its players.
While seemingly helpful to consumers, the KGC’s hard line stance definitely has repercussions throughout the international gambling providers’ community, and this will have consequences through the years.
Since the First Nation lives as autonomously as possible, even the Quebec Superior Court refuses to intervene with the Kahnawake Gaming Law. In the 2007 case Horne vs. Kahnawake Gaming Commission, et.al, the Quebec Superior Court ruled that it found no reason to rule on the validity of the Kahnawake Gaming Law.
The Quebec Superior Court’s decision wholly favours the KGC, but we believe that it is another nail in KGC’s coffin, since the Horne vs. Kahnawake Gaming Commission, et.al case was about the commission’s refusal to issue Client Provider Authorizations.
The New Jersey Agreement
The KGC made amendments to its rules in 2010, ruling that all licensed gaming providers must also be hosted by Mohawk Internet Technologies. Mohawk Internet Technologies has a data center called Continent 8. Of course, this benefits Kahnawake natives, as the data center and all associated services generates jobs for First Nation natives.
Recently, the Kahnawake Gaming Commission has engaged in talks with the New Jersey Division of Gaming Enforcement, and has agreed to put a ban on license holders that are offering gambling services to New Jersey. Bovada Casino is one of the casinos that got hit by the agreement with the New Jersey Division of Gaming Enforcement, and other casinos are in line for removal from Continent 8.
Take note that the KGC no longer accepts casinos that are offering wagers to players from the US market. The US market is one of the largest gambling markets around, and is considered the bread and butter of many gaming providers and casino websites.
Without access to the US market, plus the hard line stances that the KGC enforces from time to time, the KGC is now viewed as an obsolete gambling commission. Surprisingly, the KGC considers the agreement as a win, because the commission believes that it puts the KGC at the forefront as a recognized gambling commission, globally.
Bill 74 is another huge threat to the validity of the KGC and its operations, as the bill stipulates that internet service providers should block websites that are in direct competition with Loto-Quebec. The KGC has condemned Bill 74, saying that this bill will have a direct impact on more than eight thousands natives from the First Nation.
The condemnation is wide in circulation and the KGC is now working with several internet service providers to block the full enactment of Bill 74 as it will cause plenty of harm to the Kahnawake economy, which generates its income from the sale of alcohol, tobacco, and gambling operations. In this situation, even the federal Canadian government may step in.
In other Canadian provinces like Ontario, gambling commissions like the Ontario Lottery and Gaming Commissions are having a tough time competing with other casino websites that offer poker, slots, and other casino games online. PlayOLG.ca, OLG’s brainchild that was launched in 2015, suffered a huge loss in 2017 and continues to decline because of the global competition against established gaming providers.
The main problem with operations run by government commissions is the notably low RTP or return to player rate. Gamblers are aware that casinos have a house edge (e.g. 3%), and that’s how casinos generate income. They can also not compete with the offers granted by these established online casinos. If you look here and compare it to the measly offer at PlayOLG.ca, it becomes quite obvious.
If the RTP rate is low, then the casino is taking too large cuts from the wagers, and that’s not a good business model. Eventually, players catch on and easily move to greener gambling pastures.
Despite having the noble intention of trying to provide a safe platform for Ontario players, OLG is unable to compete with the financial capacity of international gambling brands and the “sticks and stones” approach of startups that have mastered the art of operating at maximum while reducing overhead costs to a minimum.