Monday, October 23, 2006

Ontario is looking to quash Internet gambling by introducing a bill today that will ban such Web sites from advertising, a move legal experts say oversteps the province's authority. Gerry Phillips, Minister of Government Services, will table a bill of amendments to Ontario's Consumer Protection Act, including a section aimed at banning media organizations from running ads by gambling Web sites. The primary driver behind the legislation is the dramatic rise in Internet gambling addiction among teenagers, according to ministry spokesman Paul de Zara. A recent survey by the Responsible Gambling Council found that addiction among people aged 18 to 24 rose 400% between 2001 and 2005. "The addiction rates for children are pretty startling," Mr. de Zara said. The legislation is only targeting illegal sites -- namely those that take money bets -- and will exclude "for-fun" sites. Mr. de Zara said all Web sites that take money bets from Canadians are illegal under the Criminal Code because the provinces have exclusive authority over all forms of gambling. "You can't advertise something that is illegal," he said. "We don't let drug dealers advertise crack houses." Mr. de Zara said the government's secondary motivation was to stem the outflow of gambling money from the coffers of provincially approved, taxed and regulated organizations to Web sites that are generally not based in Canada. The legislation is based on a similar private member's bill introduced by MPP Jeff Leal this year, which was supported by Woodbine Racetrack, and follows a major U.S. crackdown on Internet gambling last month. The U.S. Congress passed a bill banning financial institutions and credit card companies from taking payments from U.S.-based bettors, effectively crippling the industry there. Legal experts say the U.S. and Ontario actions are similar in that neither government has made Internet gambling illegal outright, but both have put a chill on the industry through indirect moves against it. John Tuzyk, a partner at Blake, Cassels & Graydon specializing in gaming law, said Criminal Code violations are a federal matter, and Ontario's attempt to regulate online gambling through the Consumer Protection Act will add to what is already a legal grey area.

"It begs the question about whether the activity itself is illegal," he said. "They're kind of implying it's illegal, but to be convicted of breaching the [Consumer Protection Act] they would still have to show that Internet gaming is illegal, which has not been definitively established in Canada yet."

Danielle Bush, a partner at McCarthy Tetrault, which represents several large media companies, said the legislation would introduce uncertainty for those firms and put an unfair onus on them to decide which ads may or may not be illegal. She also objected to the government's stated moral purpose.

"They're overstepping their bounds somewhat," she said. "You simply can no longer say that gaming and gambling are an evil that should be eradicated. You can't take that position and continue to offer the services yourself."