Birgitte Sand, who has been recently named Ontario boss, must play her cards right if she wants to prevent the province from busting at the regulatory blackjack table.

Sand, the former head of the Danish Gambling Authority, has a track record of protecting licensed businesses from unlicensed offshore competition, which is exactly what the Ford government wants as it moves to open up the province’s online gambling business to private-sector competition. She was appointed earlier this month to flesh out Ontario’s strategy to privatize online gambling, which entails licensing, regulation, and — somehow — holding the money earned by a booming industry within the province’s cage.

As a result, the stage is set for a showdown in the high-stakes and controversial world of blocking access to websites that provide otherwise legal internet content. Sand possesses all of the required skills for that job. She won a landmark case two years ago when a Copenhagen court upheld an order requiring Danish internet companies to block access to 25 foreign-based gambling websites that compete with the country’s licensed providers. This is exactly the sort of thing Ontario will be looking to do.

Sand said following the March 25, 2019 ruling that “We use our authority to block websites on an ongoing basis. We do this to protect the operators who do have a license to offer gambling in Denmark. But we also do so to protect the players.” And, of course, the treasury.

Sand’s potential to replicate that success will be of immense provincial governments’ interest in protecting their digital borders and the revenue they reap from gambling. Others will be still watching to see if her influence leads to a change in Canadian behavior when it comes to cracking down on pirated content. Danish internet providers are already collectively to voluntarily block websites when one of them is ordered to do so by a court — a strategy that Canadian operators are disinclined to adopt based on past behavior.

Lots of money is at stake. Ontario is the center of Canada’s gambling industry, which is a multibillion-dollar industry with a compound annual growth rate of just over 28% as of 2019. Although venue-based casino gambling was already in decline prior to COVID-19, the national online gambling industry was booming, with live dealer games, keno, blackjack, roulette, baccarat, slots, table games, video poker, and card games earning around $31 billion per year. Canadians are among the world’s most enthusiastic gamblers per capita, ranking in the top ten. It’s no surprise that businesses with such diverse interests as Torstar’s want to get into the game.

All of this might be for naught if the Ford government doesn’t learn from its provincial neighbor to the east, which got mired in a regulatory and legal swamp when it tried to enforce its domestic monopoly by messing with the internet.

When Quebec tabled Bill 74 in November 2015, it stated that “An internet service provider that receives the list of unauthorized online gambling sites . . . shall, within 30 days after receiving the list, block access to those sites.”

After being signed into law in 2016, the legislation was challenged in court by internet providers, and the Quebec Superior Court ruled it unconstitutional in July 2018.

The court emphasized the threats of site blocking poses to freedom of expression, pointing out that interference with digital signals in Canada is restricted to “the power to modify the signal to eliminate network threats.”  There was “no proof” that such threats existed, according to the court. Quebec filed its appeal in last September. But an outcome favourable to would-be gambling regulators is by no means a sure thing.

Add to that the fact that, while gambling regulation is a provincial jurisdiction, the internet is clearly federal turf, regulated by the Canadian Radio-television and Telecommunications Commission (CRTC). When Quebec, which has never conceded Ottawa’s authority over communications, put its cards on the table, the regulator remained polite and quiet, but that’s standard Ottawa practice vis-à-vis Quebec. An invasion of federal jurisdiction by Ontario is less likely to be danced around in bureaucratic softshoe.

The Ford government has avoided missteps on this project so far by taking a structured, consultative approach with stakeholders. And, as popular as it is in Canada, moving to privatize the industry is the right thing to do. Sand has worked for both the gaming industry and internet service providers in the past. But if Ontario is to keep all of its aces from here on in, she’ll have to be at the top of her game.

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