Should Canada legalize and tax online gambling federally?

legalize and tax online gambling

All over the world, different governments have taken unique approaches to dealing with online casino gambling. Some, such as the UK, were quick to legalize it and reap the tax benefits, while others, like the United States, banned it and drove their online gambling dollars offshore.

Canada took a very different approach to online gambling: we simply ignored it. The law officially says that it should be regulated by the provinces, and only governments can run online gambling of any kind, but there have been no clear moves by the Federal Government regarding private operators.

What is this potentially costing Canada? Would we be better off taking the UK’s approach and legalizing? Let’s find out together.

legalize and tax online gambling

What do Canadian gamblers spend each year?

The clearest numbers available right now are those from 2017. In those, we learned that Canadians gambled CA $17.3 billion annually. A lot of this is accounted for lottery tickets, but a sizeable chunk of it goes to online casinos.

Who’s spending those dollars? Gambling participation was highest in Ontario with 88% of people saying they had gambled in the past year, followed by Quebec with a 66% participation rate.

Lottery came out top with the most participants followed by poker, with online casino games and sports betting making up about a third of the action.

So, what’s the problem? It’s simple: there are no legal slot sites or casinos of any kind in Canada. Because of the unclear regulations and laws, Canadians gamble offshore when they want to play casino games online, and until recently they did the same when they wanted to bet on sports.

If we assume that these activities make up one third of the revenue listed above, that’s well over $5.7 billion leaving Canada for offshore sites every year.

In a nation known for its progressive policies in other areas such as marijuana legalization, you have to wonder what the government is trying to achieve by letting that money leave Canada.

How to fix this $5.7 billion problem

Remember, the numbers above are from 2017, and iGaming continues to grow year-on-year globally, so it’s probably safe to say the numbers have grown significantly, especially after the lockdowns of the past year.

So, how do we get that money to come back to and stay in Canada? We can follow the lead of the United Kingdom.

  • First, we need to properly legalize and regulate online casino games and sports betting at a federal level. Before any entrepreneurs invest millions into opening legal (taxable) sites, they need regulatory clarity. That’s step one.
  • Second, we need to set up a licensing regime. The UK leads the world in this regard. The UKGC rakes in millions per year in licencing fees, and billions more into the coffers of Her Majesty’s Government. Offshore casinos don’t dare accept UK players without a proper UK gambling license. Which leads us to the third point…
  • Third, we need to set up an enforcement agency with teeth to chase offshore sites that sign up Canadian players. Sure, we can make reciprocal agreements with friendly countries, but offshore sites in countries like Panama and Costa Rica have to go. They’re unregulated and don’t have the interests of players in mind.

Legalization has a host of other benefits aside from finances, as we’ve already found out in other industries.

  • It allows us to reduce harm by funneling Canadian players into safe, regulated casinos that abide by the law.
  • We can quickly identify and get help for problem gamblers. National gambling organizations already exist, and by connecting them with Canada-made casino sites, we can reduce problem gambling in the country.
  • Regulation would also allow us to stamp out money-laundering and other financial crimes associated with offshore online gambling. Clean money is good money, especially when we can tax it and use it for the social good.

Which leaves us with just one question…what is the government doing and why are they sleeping on this issue?

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