‘Missing out on millions’: Law punts Super Bowl gambling action into foreign hands

With the scent of Super Bowl chicken wings and nachos lingering on fingers, it may be too early to estimate just how much money changed hands on online betting platforms during Sunday’s game.

The colour of Gatorade dumped in celebration on the winning coach, in this case, Bruce Arians of the Tampa Bay Buccaneers, is a closely-watched subject of proposition betting. It was blue. But one can imagine the companies and lawmakers who have been pushing to legalize such wagers in Canada were seeing red. Once again, the proceeds of this popular betting type flowed beyond their reach on the biggest betting day of the year.

In Canada, the Criminal Code outlaws betting on single sports events, with the exception of live horse racing. So-called “parlay” wagering is meant to ease concerns around match fixing. At the same time, the Canadian Gaming Association (CGA) estimates, offshore firms like Bet365.com and homegrown illegal bookmakers rake in a combined $14 billion in wagers annually from sports fans, many of whom want to bet on just one game at a time. The trade association pegs yearly bets on legal provincial sports lottery products at $500 million.

“We’re missing out [on] millions of dollars for our communities,” Saskatchewan Conservative MP Kevin Waugh said Friday during a parliamentary debate. “Unfortunately, almost all of that money will be going to offshore websites and criminal organizations.”

Waugh’s private member’s bill (C-218) seeks to nix the portion of the Criminal Code blocking provinces from broadening the types of bets they regulate. At the same time, the Liberals are backing their own Bill C-13, which would similarly let provinces regulate single-sports wagering, with the exception of federally-regulated horse racing. Each aims to cut off funds for organized crime and generate revenue for health care and education, just like provincial lotteries.

The House of Commons adjourned on Friday until Feb. 16. Members will wait until Feb. 17 to vote on Bill C-218, the fourth private member’s bill brought forward in the past decade related to single-sports betting. The government-backed Bill C-13 won’t come up for debate until Feb. 19.

For CGA president and CEO Paul Burns, the passing of another Super Bowl without provincial rules allowing bets on things like the result of the coin toss, the colour of the celebratory Gatorade shower, or simply the winner of the game, amounts to another roughly $150 million in bets going to illegal and offshore operators.

This year’s lost Super Bowl action comes as the COVID-19 pandemic strains government budgets, and casinos and sports leagues struggle to survive amid lockdown conditions.

In Windsor-Tecumseh MP Irek Kusmericzyk’s riding, the focus is on the roughly 2,500 workers normally employed by Caesars Windsor. Kusmericzyk said less than 10 per cent were left prior to the latest province-wide lockdown. He worries the MGM Grand Detroit, a stone's throw across the Detroit River, will lure away desperately needed customers when casinos open their doors again. Michigan is among the handful of U.S. states where casinos can offer single-sports betting following a 2018 Supreme Court ruling.

“Now is the time for the government to act and begin competing on a fair playing field with the United States and other countries,” Kusmericzyk, a Liberal MP, said at Friday’s second reading of C-218. “It means jobs.”

Conservative MP Michael Kram sees a way to prop up the Canadian Football League. He said provinces could have shared revenue from single-sports gambling as a lifeline to save the 2020 season. The league opted not to play last year after failing to secure a $30 million dollar loan from Ottawa to support a shortened season.

“It would be nice if we could save this great Canadian institution without being a burden to taxpayers,” he said on Friday. “I believe that single-sports gambling will allow the CFL to do exactly this.”

CGA president Burns said while lawmakers are rightly focused on the pandemic, Bill C-13 has the better chance of becoming law first. Each have strong support, but government bills take precedence over private member’s legislation in the Senate.

Preparation at the provincial level has been underway for some time now in Ontario. The 2019 budget reaffirmed Finance Minister Vic Fedeli’s commitment to make legal single-sports betting a reality.

Ontario’s plan is to create a subsidiary of the Alcohol and Gaming Commission of Ontario (AGCO) to be responsible for managing and regulating “iGaming” sites operated by private third parties. Other provinces, such as British Columbia and Quebec, plan to play a more direct role through their respective lottery corporations.

“I fully expect that we could be within a very short number of months from the legislation passing and single sports betting being offered. If not weeks, in some cases,” Burns told Yahoo Finance Canada on Monday.

“I like to say we’ve been able to sell six-packs of beer. Now we want to sell 2-4s. The product is in essence the same. It’s betting on sports. It’s just the ‘how.’”

Several companies are waiting on the sidelines, ready to roll-out “product” when the rules change.

Score Media and Gaming (SCR.TO) pegs the market potential for online gaming in Canada between US$3.8 billion and US$5.4 billion in annual gross gaming revenue.

“Ontario alone is a huge market with a population larger than all but four U.S. states. It is now clear that there is cross-party support and strong momentum to amend Canada's outdated federal laws, and enable a legal sports betting market to flourish,” CEO John Levy told analysts on a Jan. 13 quarterly earnings call.

The company said $55 million in wagers were placed on its U.S. betting app during the three-months ended Nov. 30, up 535 per cent year-over year.

Bragg Gaming (BRAG.TO) rang the virtual opening bell at the Toronto Stock Exchange in late January, when it uplisted from the venture exchange.

The Toronto-based online gambling software firm recently recruited gaming industry veteran Richard Carter after his sports betting company was acquired by U.S. industry giant DraftKings (DKNG). Bragg also appointed Paul Godfrey, Canadian publishing magnate and former chair of Ontario Lottery and Gaming Corp., to aid its expansion in Canada.

Waugh said he is unconcerned with which bill before the House moves ahead. He sees the cross-party support for channeling funds away from offshore operators and criminals, and towards provincial governments, as a good sign.

“It’s not often you get members from the Conservatives, the Liberals, the NDP, the Bloc all rising in favour of a given initiative,” he said. “But that is what we have here.”

Jeff Lagerquist is a senior reporter at Yahoo Finance Canada. Follow him on Twitter @jefflagerquist.

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