Canadian Local residents who enjoy sports betting have cause for excitement.
Single game sports betting appear after the introduction of the legislation by the liberal Government that would lift a ban in Canada’s Criminal Code that currently only allows parlay betting.
Additionally, Ontario Residents saw the province Conservative The government reiterates its interest in moving forward with iGaming, which could open the door to the online casino and potentially a competitive Canadian online sports betting market.
Ontario last month Office of Auditor published an audit of various provincial bodies. Its review of the Ontario Alcohol and Gambling Commission (AGCO) is likely to raise some questions.
The audit doesn’t appear to have any impact on previously announced plans, but it does identify a few flaws that should likely be addressed before the game’s expansion takes place.
What is the Ontario Alcohol and Gambling Commission?
AGCO is Ontario’s provincial regulator charged with overseeing the retail alcohol, games, horse racing and private cannabis sectors in Ontario, overseeing approximately 78,500 licensees in all four sectors.
The areas regulated by AGCO generate significant revenue for the province.
The Auditor General’s report identified a number of problem areas related to the gambling and horse racing industries.
Compliance and Inspections
The Auditor General identified a number of concerns regarding the industries that are under AGCO’s oversight.
One of the auditor’s findings was that AGCO did not clearly document why or to what extent companies were selected for audit. This followed a general theme that the agency should increase its transparency in the future.
The report found that the same inspectors repeatedly inspected the same facilities. The report also expressed concern about horse racing, noting:
The risk of compliance officers and horse judges not rotating is that their independence and judgment are compromised by long-term relationships with licensees.
Money laundering concerns
Money laundering concerns related to casinos were another issue identified by the Auditor General. It appears that while the number of suspicious transactions reported has increased, very few of these reports have resulted in criminal charges.
In this regard, it has been reported that numerous customers have been allowed to wager significant sums of money without justifying a source of the funds they wagered. It has been reported that even where individuals have been identified for suspicious use of funds (e.g. patron who listed and continued his profession as a restaurant chef $ 1.3 million over three years) the investigations usually only comprised a review of the criminal law background and not a detailed review.
Unregulated online gambling
The report documented this in 2015 AGCO reported that there were more than 2,200 Unregulated gaming websites for Ontarians. These websites were operated by more than 700 different companies.
The agency reported that it was considering some measures to curb the unregulated industry, including targeting suppliers supplying both regulated and unregulated industries, blocking payments and launching a public awareness campaign, but apparently none of the identified ways to restrict access to unregulated industry.
The Auditor General’s report stated that the agency had spoken to New Jersey Regulators on best practices to tackle the unregulated market. Efforts by New Jersey regulators to work with credit card providers to block transactions on unregulated websites and the use of multimedia advertisements to educate consumers received positive reviews.
Conflict of Interest?
Perhaps most timely in the Auditor General’s report was the comment on the AGCO and iGaming regulations. The Auditor General expressed concern that an AGCO subsidiary would be responsible for overseeing the iGaming industry.
[T]The government approved a plan to create a subsidiary of AGCO to take on the new role of running and managing Internet games. Although there are examples in other provinces of regulators engaging in gambling activities, this creates a potential conflict of interest.
The report stated that these functions are currently separated. The AGCO serves as the regulator and the Ontario Lottery and Gambling Commission (OLGC) serves as manager and operator.
The Auditor General then stated: “It would be advisable to have these functions for online games performed by different companies and not by a subsidiary of the regulator.”
The Auditor General’s report notes that AGCO has responded positively to the report and many of the recommendations identified by the auditor and is moving forward with plans to incorporate the suggestions.
AGCO stressed that the fight against money laundering (AML) and the elimination of illegal activity in casinos remain a priority.
Regarding the fight against money laundering, AGCO noted that it will improve its existing relationships with law enforcement agencies and work to close loopholes and report blind spots that allow suspicious transactions to slip through the cracks.
What does this mean for Canadian sports betting and online games?
It is not immediately clear what impact this report will have. It is unlikely that this will affect the changes being discussed to allow single game betting in Canada.
However, the report highlights a few regulatory flaws that appear to need to be addressed before a competitive online marketplace is fully implemented in Ontario
It is clear that the Auditor General’s recommendations are aimed at building an online marketplace that protects consumers. The audit appears to recommend that AGCO take more aggressive steps to discourage Ontarians from choosing unregulated gambling sites.
It seems logical that a step in the right direction would be a comprehensive regulated alternative. However, the Auditor General’s report remains before such confirmation.