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Senate saves the day for online gambling

|Written By Tim Naumetz

OTTAWA - The so-called chamber of sleepy second thought, the Senate, stepped in at the last minute to amend an innocent-looking clause in a government “housekeeping” bill that might have inadvertently made online gambling illegal in Canada.

Liberal Senator George Baker raised a red flag when the bill hit the Senate floor, saying minor amendments to modernize bookmaking laws by removing Criminal Code references to “telephone and telegraph” posed serious consequences for internet servers and home gamblers.

“There is a big market for internet gambling in Canada,” Baker said. “Online poker is huge. This bill will end that, and that has not been brought up by anyone.”

He told Law Times the legislation, amending more than a dozen Criminal Code sections, had gone through four House of Commons committee hearings with no mention of the bill’s potential effect on internet gamers.

Despite assurances from Justice Minister Rob Nicholson and his department lawyers that the change was minor and would not alter the legal status of offshore-based online gaming in Canada, top officials from PartyGaming PLC, an online gambling site based in Gibraltar, later implored the Senate legal and constitutional affairs committee to amend the legislation.

The blue-ribbon PartyGaming delegation consisted of Mitchell Garber, the company’s chief executive officer and a member of the Quebec bar, Montreal lawyer Brahm Gelfand, chair of PartyGame’s international advisory committee and an attorney with Lapointe Rosenstein LLP, and former RCMP commissioner Norman Inkster, now an adviser to PartyGame.

Garber testified that it was unclear whether the new law would ban online gambling sites based abroad from serving Canadians, as the offshore gaming sites were in the U.S. following the September 2001 terrorist attacks, when U.S. officials feared internet gambling was a way of laundering money for terrorism.

In Canada, offshore sites have remained legal, though domestic gaming sites are not allowed because of provincial licensing jurisdiction over casinos.

“The goal is to seek clarity, to ensure that if Parliament is to make an amendment, and is to make this amendment, that the intent of the amendment is not subject to interpretation, is not ambiguous, and that it is clear exactly to whom and what the amendment is meant to apply,” said Garber.

“I have heard some testimony about bookies,” he added. “Is this about sports betting, bingo, or poker? All of these things are important for companies such as ours to know. We do not have business operations in Canada. We do have Canadian customers.”

Inkster acknowledged the senators might have been surprised at his association with online gambling.

“Let me say that before I agreed to work as an adviser for PartyGaming, I had to convince myself they were the gold standard,” he assured the committee.

“There is nothing inherently wrong with gambling or gaming, but it does attract bad people,” he went on. “That is why regulation is so important; not just regulation but crystal-clear regulation. I am here to reinforce the encouragement of my colleagues that amendments could be made to make the intent of the law clear.”

Nicholson and a department senior counsel, Anouk Desaulniers, assured senators the amendment only modernizes existing Criminal Code provisions against bookmaking, where third parties profit from wagers.

“The situation will not change,” said Desaulniers, adding internet servers would not be vulnerable unless they wilfully and knowingly took part in bookmaking.

But even Conservative Senator Raynell Andreychuk, a former judge and Crown prosecutor in Saskatchewan who sits on the Senate legal and constitutional affairs committee, seemed unsure when she attempted to explain the change last week.

Andreychuk repeated the government position that the amendments affect only bookmaking, but she wasn’t clear about what forms of online gambling are currently legal in Canada, or whether bookmakers subject to the law would be outside or inside Canada.

“I don’t think situs matters,” she said. “It matters who does it, bookies as opposed to an individual. I think we need to clarify that law.”

She wasn’t certain exactly how bookmaking works: “I don’t know. This is not my field. I’ve never used a bookie.”

Andreychuk joked she might try out online gambling, as she and other budding prosecutors in Saskatchewan would test Breathalyzers to familiarize themselves for putting evidence in court for impaired-driving cases.

“You’d have a drink, but they’d pick you up and drive you home,” she quickly explained. “We went through a learning process.”

Gelfand said the bill’s substitution of Criminal Code references to telephones and telegraphs with references to any form of telecommunication could have a long reach internationally.

“If it has a long-arm effect, does that mean that an executive of an offshore corporation, which is a legally constituted property licence, who is coming into Canada will be arrested and charged with a criminal offence?”

A relieved Garber said later the Conservative chair of the legal and constitutional affairs committee, Senator Don Oliver, assured him the Senate would recommend that the Commons amend the bill to clarify the continuing legality of offshore-based online gambling in Canada.

“The senators said very emphatically this would not have an extraterritorial effect,” he told Law Times.

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