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Why Canadian sports gamblers bet billions offshore

Part 2 of our series on sports betting in Canada examines why gamblers are wagering billions each year with offshore websites rather than deal with their provincial sports lotteries, and what's being done to try to keep those dollars here.

Provincial sports lottery games offer poor value, limited wagering options

A U.K. woman holds a winning betting slip with long shot Leicester City to win the Premier League title. Single-game wagering is legal in the U.K., but not in Canada, which is just one of the factors pushing sports bettors to offshore websites. (Leon Neal/AFP/Getty Images)

Editor's Note: This is the second in a three-part series of stories on sports betting in Canada. Here, we examine why gamblers turn to offshore bookmakers rather than bet with their provincial sports lotteries, and how efforts to change the current system could impact all Canadians — whether or not they gamble.

In gambling terms, it's a sucker's bet.

For many of the thousands of Canadians who contribute to the billions of dollars wagered on sports each year through offshore websites, the idea of actually placing a bet here in their own country never crosses their mind.

That's because, for shrewd gamblers, the sports betting options offered by their provincial lottery agency represent an inferior product.

In Canada, wagering on a single game is prohibited. Instead, the law requires gamblers to correctly predict the outcomes of a minimum of two games, known as a parlay.

Parlays can attract recreational gamblers by offering more enticing payouts, but they're also more difficult to win than single-game wagers and only get tougher as more games are added to the ticket (if you get just one pick wrong, you lose). On top of that, if bettors do manage to cash parlays with their provincial lotteries, they receive a lower return than they would get from betting the same parlay with an offshore book.

For example, a $50 bet on a three-game parlay placed through the Point Spread game offered by the OLG (Ontario's provincial lottery corporation) pays $250 (five times the amount wagered). That same play on Bet365, a popular offshore site, pays $300 (six times the wager).

It's a no-brainer, then, for sharp bettors to turn offshore, where they're also allowed to bet single games, as they would be at a Las Vegas casino or in a country like the United Kingdom that has legalized sports betting. Plus, as detailed in part 1 of this series, the Canadian government allows online bookmakers and their customers to operate more or less freely.

"Anyone who is betting to win money is going to look at the odds," says Steve (not his real name), a Toronto criminal lawyer who estimates he bets thousands annually on sports via his account with an offshore bookmaker. "The return on investment is better offshore."

Steve is hardly alone in his thinking. The Canadian Gaming Association estimates Canadian gamblers are sending roughly $4 billion every year to a growing number of online sports books based offshore.

In contrast, it's estimated only about $500 million is wagered through provincial sports lotteries.

"We cannot offer in Canada the product these people are seeking offshore," says CGA vice president Paul Burns.

Offshoe betting not taxed or regulated by Canada. 4:04

'It affects your life even if you don't bet'

Brian Masse is trying to change that. The NDP MP is pushing a longshot private members bill on Parliament Hill (Bill C-221) that would allow Canadian bettors the opportunity to wager on single games, and give the Canadian government the ability to tax and regulate it.

"This is low-hanging fruit in terms of the discussion about something that is going on in our society whether we like it or not," Masse says. "It's not an insignificant issue. It's billions of dollars disappearing without any real public benefit. It affects your life even if you don't bet."

Masse says if his bill is passed, it would allow provincial lottery outfits a chance to be competitive "so that this offshore betting activity is actually translated back to the taxpayer to ensure we have revenue for health care and education."

If I could go the corner store and bet a single game, I would do that. It makes more sense.- "Steve," an avid online bettor

In Ontario, the OLG says that if the legislation passes it would "investigate what we can offer on our site in the future." Currently, the agency's website, PlayOLG, has no sports offerings. The site offers players a suite of casino-style games, but if they want to bet on sports they have to venture out to a local lottery retailer.

What the provincial lotteries do offer, says OLG spokesperson Ryan Bissonnette, is security and a focus on responsible gaming unmatched by offshore sites. Bissonnette also points out that provincial lottery agencies pour profits back into the province. In Ontario, that accounted for $2 billion in 2014, including nearly $40 million that was directed toward promoting responsible gambling.

"This money goes to health care, education and community infrastructure in Ontario," Bissonnette says.

Ask someone who gambles through offshore sites, and odds are he'd like to place his bets here in Canada — if he was offered a comparable product in terms of betting options, payouts and convenience.

"If I could go the corner store and bet a single game, or go to a casino and bet a single game, that's more convenient than putting my credit card online. I would do that. It makes more sense," says Steve.

Masse also has the support of the Canadian gaming industry, which understands why bettors are turning offshore.

"People have gravitated to these [offshore] sites. They like to bet on their favourite team, so they go where they can do that," says Burns, the Canadian Gaming Association executive. "They use their credit cards, they don't have to leave their homes. They have chosen to spend their money there."

'It is only getting bigger'

Where exactly is "there?" Most offshore sports books have their servers located in so-called online gambling or licensing jurisdictions, usually found in exotic locales. Antigua, Belize, Panama, the Isle of Man and Gibraltar are among the handful of countries currently offering this status. Within these jurisdictions, there's usually an organization that's responsible for issuing licenses and regulating the licensees. 

One of the biggest licensing authorities is right here in Canada. The Kahnawake Gaming Commission (KGC) is the "official licensing and regulating authority for gaming activity within and from the Mohawk Territory of Kahnawake," according to its website.

Not a lot of politicians want to stand up for gaming.- Chad Finkelstein, gambling law expert

The KGC was one of the first jurisdictions in the world to offer licensing and regulation to offshore gaming websites. Currently it licenses nearly a hundred international gambling sites that must be hosted on servers located within Kahnawake territory. The Mohawks themselves operate one of the world's more popular sports gambling sites, Sports Interaction.

Just don't assume the Canadian government is getting its cut.

"Most Canadians will tell you they believe what is going on is legal and they assume that somebody is paying what they should be paying to the Canadian government," says Burns. "They are not."

To some, it would appear the ingredients are in place for some kind of regulatory and legal change — at least the "low-hanging fruit" of single-game bets.

"There seem to be overwhelmingly intuitive arguments in favour of regulating online gambling because it is here, it is not going anywhere, it is only getting bigger," says Toronto lawyer Chad Finkelstein, a gaming law expert who has advised casino operators. "We have a ton of Canadians spending a ton of money on  businesses that are entirely unregulated, not to mention all the money being left on the table that the Canadian government could be taxing and collecting. For the safety and public interest of Canadians, there seems to be an overwhelming number of reasons in favour of regulation."

'No shouting from soccer moms'

But some lawyers who work closely on the gaming file are wary. There are mitigating factors, says lawyer Michael Lipton, a gaming law expert with Dickinson Wright in Toronto.

"If you are going to do something about enforcing the law in relation to these offshore sports books, you better be ready to tell that to the Kahnawake Mohawks, who are, to their credit, seeking to regulate this in a very open matter," Lipton says. "So you are getting into an area of First Nations rights. These are big questions."

Lipton also points out that there really is no public outcry around the issue of unregulated sports gambling — no "screaming and shouting from soccer moms."

Finkelstein adds: "Gaming has always been a really, really sensitive, kind of taboo area. Not a lot of politicians want to stand up for gaming or stand in defence of gaming."

That could be a problem for Brian Masse's private members bill, which already appears to be in trouble.  

Liberal Sean Casey, the Parliamentary Secretary to the Minister of Justice and Attorney General, said last week in the House of Commons that the government "will be opposing the bill."

Casey cited a number of factors, including concerns that "legalizing single-event sports betting could encourage gamblers to fix games" — an argument that's been trotted out by professional sports leagues, including the NHL, when they've voiced their opposition to the expansion of single-game wagering to new jurisdictions.

It should be noted that some of these same leagues have partnered with so-called "daily fantasy" sports sites that allow gamblers to wager money on their ability to predict how well individual players will perform. 

Casey also raised concerns about possible social costs, pointing to a 2011 letter from the Centre for Addictions and Mental Health in Toronto that warned "an increase in legal gambling could lead to an increase in problem gambling." The letter indicated a concern for sports betting in particular.

But for Canadians like Steve who like to bet on sports — and even many who don't — these arguments don't hold water.

"People are going to bet on sports. It's going to happen," says Steve. "Why shouldn't the government be taking its piece?"

Until they do, he'll pass on that sucker's bet.

Part 3 of our series on sports betting in Canada will look at what the future may hold as attitudes toward gambling evolve and other governments take steps to update their policies.

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