I-Gaming: Is there any progress?

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Richard Swayze

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I-Gaming: Is there any progress?


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Even a casual glance at the history of gaming shows the progressive transformation that the industry has undergone: from land-based mechanical machines, to land-based digital machines, to the digital world of online gaming. The consumers – for the purposes of this article, the Canadian public – have embraced online gaming as a form of legitimate entertainment, and have ushered in a new era of Internet gambling. This means it’s time for government to embrace this activity and listen to what consumers want.

While it’s hard to present absolute figures about the growth of the industry, it’s no stretch to say that it has been explosive in the past decade. The number of digital gambling websites is well into the thousands. And industry insiders have pegged the current value of online gaming in Canada alone at over $1 billion a year. So safe to say, this form of entertainment is here to stay and we need to deal with it, because the fastest growing group of players is playing online – not in land-based casinos. And that means that traditional policies need to be reconsidered.

To that end, what bears closer scrutiny is the matter of the regulation of the online gaming industry. The reality is that this industry will continue to expand to meet consumer demand and would greatly benefit from having provincial governments regulate. To date, no Canadian province has moved to regulate and tax this lucrative sector. Some provincial governments are introducing their own online gaming product which has been viewed as an expansion of gaming by the public and the media. Regulating the sector, would not be seen as an expansion of gaming but rather about providing consumer safeguards.

The international community has already moved in this direction: the United Kingdom, Malta, Isle of Man, Gibraltar and Alderney, as well as other jurisdictions have already passed laws to regulate online gaming. Key lessons can be learned from observing their efforts: that the industry can be regulated, effective regulation protects consumers, and it can also offer economic benefits in the manner of jobs and investments from global technology companies, taxes, licensing fees, and potential revenue sharing, all achieved through reasonable taxation.

There is no doubt that governments have an important role to play in setting standards, as of paramount importance is the ability to provide consumer protection, promote responsible gaming and youth prevention, and from the company’s perspective, implement protocols and procedures to ensure integrity and accountability.

The public needs to be assured of the legitimacy of the operators and governments are expected to provide the public with those protections. Provinces have systems of regulation in place for land-based operators to ensure the best of breed are able to do business. So why not adopt the same policies for online operators? Online gaming companies have already demonstrated they’re willing to adopt strong models to protect their customers. Take youth prevention as an example: unlike land-based casinos were someone can just walk in and play, online players need to register their detailed information in all cases prior to playing for real money and this information need to be correct before any player can deposit or withdraw.

A strong argument can be made for the need for government oversight. And there really are only three options, given the irrefutable evidence that the industry is not slowing down – or disappearing – any time soon: prohibition, status quo and regulation.

The first two can be dealt with in short order. Prohibition simply does not work. Just think back 80-90 years and look at the way in which the public dealt with the ban on alcohol. Prohibition only serves to drive the industry underground, which means that there is little or no ability to monitor, regulate or control it. The status quo is unsustainable because all interested parties – government, consumers and companies – need clarity about the industry so that they can operate effectively and with certainty.

Given the growth of Canada’s online gaming industry, together with the lost economic opportunities not being realized, and in some cases, the lack of safeguards in place for the consumer, the question to regulate should be one of “when”, not “if”.

The world has moved in the direction of regulation and Canada needs to follow. What needs to begin now, however, are discussions about how to achieve an open, regulated marketplace for Internet gaming in Canada. There will be no shortage of committed partners – the IGC included – to help bring about responsible and effective gaming policies in order to embrace a form of entertainment that the public clearly wants.

By John FitzGerald, CEO of the Interactive Gaming Council.