Exclusive to Gambling.Re, Donald Bourgeois, Counsel at Fogler, Rubinoff LLP, delves into the recent ruling by the Superior Court of Justice for Ontario in Mohawk Council of Kahnawà:ke v. iGaming Ontario, providing crucial insights into the interpretation of the phrase "conduct and manage" within the Canadian gaming landscape.
Background
The Superior Court of Justice for Ontario ruled on the meaning of the uniquely Canadian phrase “conduct and manage” in Mohawk Council of Kahnawà:ke v. iGaming Ontario, 2024 ONSC 2726. Justice Brownstone, in doing so, concluded that iGaming Ontario (iGO, a Crown corporation) was in law and fact “conducting and managing” the lottery schemes operated online by iGaming operators who were registered under the Gaming Control Act and had operating agreements with iGO and were acting as agents on iGO’s behalf.
The Criminal Code (Canada) is federal legislation that applies across Canada. The Criminal Code prohibits most gambling activities in Canada – but since 1969 has exempted from the Code lottery schemes “conducted and managed” by the provincial government pursuant to provincial legislation. The term “conduct and manage” has been the subject of some litigation in the past – including with respect to charitable gaming licensees who “conducted and managed” bingo and similar lottery schemers. But this case is the first substantive one dealing with online gaming.
The Ontario Government had carefully structured its own approach which would allow iGO to offer recognized leading igaming products as an agent of the Crown. The decision confirms that the Government’s approach was compliant with the Criminal Code which will provide a high level of comfort for operators who have operating agreements with iGO. But it also may provide guidance to governments in other provinces (such as Alberta and British Columbia) on how to implement a similar model both for online and land-based gaming.
The Mohawk Council of Kahnawà:ke (Council) challenged the lawfulness of the iGO arrangements with operators, arguing that operators were effectively the “conductors and managers” of igaming in Ontario. iGO and the Attorney General for Ontario argued that the arrangements demonstrated that iGO and not the operators “conducted and managed” the lottery schemes as provided for in the provincial legislation. The Court examined both the dictionary definitions of the words “conduct” and “manage” and how the phrase has been interpreted in previous case law.[1] Justice Brownstone also distinguished between lottery schemes “conducted and managed” by a licensed charitable or religious organization pursuant to a licence in paragraph 207(1)(b) of the Criminal Code and the broader exemption that applies to lottery schemes conducted and managed by provincial governments under para. 207(1)(a).
Defining “Conduct and Manage”
Justice Brownstone’s thorough and purposive review of the phrase “conduct and manage” provides much greater clarity about what each province may or may not do under section 207 of the Criminal Code. She recognized explicitly that “gambling” under Canada’s Constitution Act, 1867 has both a federal and provincial aspect and that the there was no conflict between the federal and provincial statutory schemes for constitutional law purposes. She also explicitly recognized that the “bingo” and other charitable gaming cases can assist in applying the phrase to government lottery schemes – but in a limited way. For example, profit-sharing has a much greater role to play with respect to charitable gaming than for government managed gaming.
The reasons for decision, though, are perhaps most important for setting out a clearer set of criteria to be considered in reviewing provincial statutory schemes and arrangements for compliance with para. 207(1)(a). Compliance with that paragraph is necessary for the “decriminalisation” of the lottery scheme to be implemented.
However, her Honour also noted the relevance of para. 207(1)(g) which allows for the private entities to be involved in the “conduct, management and operation” of the lottery schemes – notably, this case is one of the few times that the Court has considered 207(1)(g) other than in passing for purposes of “how” a provincial government and provincial legislature determine how to implement lottery schemes in the province. Mme. Justice Brownstone notes at paragraph 94 of her reasons:
The terms used, including the term “operate” which is used in s. 207(1)(g) as distinct from “conduct and manage”, contain a significant degree of overlap in their dictionary definitions. Determining the meaning of “conduct and manage” requires more attention to be paid to other interpretive methods – the purpose of the provisions, their statutory context, the existing caselaw and the principles of co-operative federalism.
Judicial Analysis
She continued:
I find that the legislative purpose for the Code provisions was to decriminalize gaming in instances where the provincial legislature exerted a sufficient degree of management and control to maintain public safety, fairness, and integrity in gaming. I do not agree with the Council’s characterisation of these provisions as opening the door “just a crack”. … The statement does not, in my view, erase the clear legislative history that indicates that Parliament intended to provide the provinces with substantial room to conduct and operate provincially-run lotteries as they saw fit, in accordance with local attitudes: Siemens; Surrey. It trusted the provinces to do so in a responsible manner with
overriding concern for public safety. Purely private gaming schemes were to continue to be subject to the Code provisions; public schemes under sufficient provincial control were not.
The words of then Minister of Justice Turner and the subsequent statements of the courts,
including the Supreme Court of Canada in Siemens, make it clear that Parliament intended to exclude gaming that had a sufficient level of provincial control from criminalisation. In leaving the details to the provincial legislature, Parliament intended provinces to be sensitive to local sentiment on the issue and respond accordingly. The province would minimise the potential for public harm (Antonopoulos) and ensure that gaming would be conducted responsibly and in the public interest (Moreira).
In implementing its lottery scheme in accordance with s. 207(1)(a), the province is permitted to engage private entities in an operational capacity. The province must not, however, delegate to such entities the conduct and management of the scheme. In order to be conducting and managing a lottery scheme itself, the province must exert a sufficient level of control to maintain its position as the “operating mind” of the lottery. It must do so in a manner that protects public safety and fosters responsible gaming. It must do more than distantly oversee or regulate the scheme; the province must exert direction and control over it. It need not be involved in granular operations, but it needs to be far more than a “hands-off” licensor.
She concluded that the operating agreement – which is non-negotiable – between iGO and operators met the requirements established in the Criminal Code and the jurisprudence and were not illusory as the Council argued.
Appeal
The Council has a right to file within 30 days an appeal of the Mme. Justice Brownstein’s decision to the Ontario Court of Appeal.
Implications
There are two significant implications from the reasons for decision. The first is obvious – the Court has determined after a thorough review that the provincial legislation and the iGO approach to “conduct and manage” met the test for “conduct and manage”. Operators who have signed agreements with iGO and those who are considering doing so have a clear case on which to rely.
The second implication is that other provinces – such as Alberta and British Columbia – have clear judicial analysis that they could also move forward with the iGO model. Similarly, those and other provinces can use the decision with respect to land-based gaming, such as casino gaming, where provincial corporations “conduct and manage” lottery schemes (table games, slot machines and electronic gaming machines) using private sector operators.
[1] The Council argument included a quotation from the author’s text, The Law of Charitable and Casino Gaming, with respect to the dictionary definitions of the two words. The argument may have misconstrued the author’s comment about the usefulness of the dictionary definitions.