Debate over sports betting bill shines light on billion-dollar grey zone

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Canadians like the Super Bowl and they like gambling. When the two combine, the result is a massive payday for this country's underground market in sports betting.

Bettors will wager about $150-million on sports this weekend through offshore websites and illegal bookmakers, according to the Canadian Gaming Association, a lobby group for the regulated gambling industry. Over the entire year, Canadians are expected to bet up to $15-billion through those same shadowy channels.

The huge amounts being wagered through bookmakers outside the reach of Canadian regulators demonstrate the difficulty in policing gambling in an Internet age, according to economists and lawyers. It also spotlights the grey areas in Canadian law.

Bringing a substantial part of Canada's unregulated gambling activity back into the legal arena, where it could be regulated and taxed, holds the potential to provide tens of millions of dollars in new revenues for fiscally challenged provinces. But the first step toward that goal is proving to be highly controversial.

Bill C-290, a private member's bill that would allow wagers on single sporting events, has languished in the Senate for more than two years, despite being passed in the House of Commons.

The bill, if it ever becomes law, would mark a major change in the Canadian gambling landscape, where the Criminal Code has long banned bets on the outcomes of single games.

Current law permits provincial lottery corporations to offer only "parlay" bets that involve the outcomes of two or more games. Most bettors prefer the more enticing payoffs of single-game wagers, so backers of Bill C-290 argue that passing the legislation would help provincial lottery corporations win back many of the billions in dollars that are now bet through foreign or illegal rivals. Opponents retort that legalizing betting on single sports events will encourage gambling addiction and provide an incentive for cheaters to bribe athletes and fix games.

The debate over the bill demonstrates how difficult it is for any national or provincial regulator to put strict limits on gambling in an age where a bookmaker is just a click of a computer mouse away. In theory, the provinces are supposed to control all gambling in Canada. But offshore websites such as Bet365, Bodog and Sportingbet have been a growing draw for Canadian gamblers. They exist in a legal grey zone because they have no offices or employees in Canada. Despite their willingness to accept single-game wagers from Canadians, none has been charged with a criminal offence in Canada.

The practical difficulties involved in defending national borders against online bookmakers makes many economists side with supporters of Bill C-290. "The arguments used against legalizing betting on single sports events are just weak," says Brad Humphreys, an associate professor of economics at West Virginia University who has done extensive research into gambling. "Any Canadian with a computer already has access to online wagering on single events [through offshore websites] and nobody's being prosecuted for it. So why not bring it within the fold of the law and raise tax revenue from it?"

Prof. Humphreys, who previously taught at the University of Alberta, says gambling addiction is a serious problem for a small percentage of the population and must be addressed through education and prevention, but he has seen no evidence to suggest that the incidence of problem gamblers rises in countries, such as the United Kingdom, that have legalized sports betting.

A stronger argument against legalized betting on single games may be its potential to corrupt sports. Vernon White, a Conservative senator and former Ottawa police chief, says that legalizing single-game wagers will encourage gamblers to fix games, especially in areas like junior hockey where players don't earn a lot and might be susceptible to bribes.

"To my mind, [Bill C-290] opens up all sorts of potential for trouble," Mr. White says. He argues that the current parlay system makes it unattractive for anyone to fix a game since the only way to achieve a guaranteed payout is to rig the results of multiple events. Single-game bets would make a fraudster's task far easier, since he would have to fix only one event.

For decades, all the major pro sports leagues in North America were adamantly opposed to any expansion of legalized betting on single games. However, the picture became more complicated last year when National Basketball Association commissioner Adam Silver announced he had changed his mind and was now in favour of legalized sports betting across the United States.

Mr. Silver's change of heart is, in part, an acknowledgement that online betting makes it next to impossible for a government to put effective limits on wagering. In Canada, for instance, the CGA estimates that offshore sites attract $4-billion to $5-billion a year from Canadian bettors – much more than the $500-million or so that Canadians gamble through the legal sports lotteries run by the provinces.

Most Canadians don't recognize that many of their favourite sports are already prime gambling material for bettors elsewhere in the world. Sportradar, a U.K.-based firm that serves legal bookmakers around the world, says more than 220 companies take bets on National Hockey League games, while approximately 120 handle bets on Canadian Football League games. Even the distinctly low-profile Canadian Soccer League is covered by at least 130 global bookmakers.

"If you think that a ban on legal betting on your sport will hold back betting activity, you're fooling yourself," says Alex Inglot, a spokesperson for Sportradar. He argues that rather than increasing corruption, legitimate bookmakers act as a counterweight to game fixers. Legal gambling companies, like the U.K. giants William Hill and Ladbrokes, have a compelling reason to police sports: They don't want to lose money on rigged games.

Sportradar, for its part, employs 35 full-time investigators in London, Hong Kong and Sydney to spot suspicious betting activity in nine sports ranging from soccer to handball. The company, which provides its fraud-detection system to clients that include UEFA and Major League Soccer, says its reports helped lead to 18 convictions for match-fixing in 2014, in countries from Austria to Australia.

Danielle Bush, a partner at the law firm Miller Thomson in Toronto and an expert on gambling law, says that if Canadian legislators are concerned about corruption in sport, they should directly address the issue with legislation that addresses match fixing.

Canadian law regarding online gambling continues to be a grey area, Ms. Bush adds. "It's grey and it's grey for this reason: There are no reported cases that have directly addressed this activity." Prosecutors and police forces have shied away from charging offshore websites with no presence in this country because it's not clear those operators are breaking the law in Canada simply by accepting bets from Canadians. Similarly, it's not clear if a gambler who uses such a website has committed an offence.

The current requirement that sports bets must meet a parlay standard is "a clumsy and archaic provision of the Criminal Code that should be removed," says Ms. Bush, who believes passage of Bill C-290 would be a good thing.

However, it's not clear if the legislation will ever come to a vote or simply die in the Senate when the next election is called.

"I'm still hopeful the bill will be dealt with," says Conservative Senator Bob Runciman, the bill's sponsor in the Senate.

Mr. White begs to differ. "It will never be voted on," he says. "It's a private member's bill, so it's not a priority. And if it did come to a vote, I hope we have the numbers to defeat it."