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Canadian single-event sports betting is closer to becoming a reality as Bill C-218 heads toward its third reading with unanimous support from the Standing Committee on Justice and Human Rights.
C-218, aka the Safe and Regulated Sports Betting Act, went back to the House with a crucial change that protects horse racing from the proposed changes. Specifically, it will disallow regulated Canadian sportsbooks from offering lines on horse races.
Industry watchers are surely unsurprised by the amendment, as it brings C-218 in line with Bill C-13, a Government Bill put forth by Justice Minister David Lametti last November. C-13 was abandoned when C-218, tabled in early 2020 by Conservative MP Kevin Waugh, passed second reading by 303-15 on February 17.
Historically, when it comes to legal Canadian sports betting, parlays have been the only option. But, an apparent sea-change in the perspective of former detractors has led to recent cross-party federal support. It’s also the first real chance to legalize single-event sports betting since the last attempt, Bill C-290, died in the Senate in 2015.
In some sense, betting on individual events has been legal in Canada for decades. In fact, it was the only form of legalized gambling in Canada until 1969. However, it was restricted to parimutuel betting on horse races.
Under a parimutuel system, both odds and payouts fluctuate until horses leave the starting gate. Sportsbooks typically use a fixed odds system, in which the payout is locked in once a bet has been placed.
The passing of the Criminal Law Amendment Act in 1969 introduced legalized gambling by establishing provincial lotteries. It also included protections for the federally-managed horse racing industry. Under the existing system for parimutuel betting, a portion of the profit gets reinvested via track maintenance and support of breeding programs, horse associations, and other industry elements.
Without the amendment, Bill C-218 would have allowed the newly-legal sportsbooks to offer fixed odds betting on races, which would be a major blow to the existing industry. The Canadian horse racing industry relies on parimutuel betting for the lion’s share of its revenue. Insiders leveled concerns at the Justice Committee over what fixed-odds betting would do to the industry.
“The horse racing industry’s primary source of revenue is wagering through the pari-mutuel system of betting,” said MP Vance Badawey, Liberal-Niagara Center. “We must, Madam chair, move to protect this revenue stream for the benefit of approximately 50,000 jobs across Canada.”
Fortunately for those stakeholders, the amendment’s inclusion means we won’t find out, as horse racing remains federally protected. It may be unfortunate for bettors, as the hold on parimutuel betting tends to be larger.
The horsemen make a valid point, however, in saying that this is because the proceeds from race betting go to fund the tracks and the jobs surrounding them. Many Canadian racetracks operate on a not-for-profit basis and rely on betting to pay for salaries, maintenance and veterinary care for the horses.
This model would be unsustainable with a smaller house take. That makes it impossible for the industry to compete with sportsbooks which do not have to contribute to that overhead.
Racing industry advocates are also asking for the legalization of historical horse racing to help the industry stay competitive.
HHR allows players to wager on the outcome of races that have already happened. Identifying information about the race gets scrubbed, preventing betters from identifying the winner before making a wager. The game is often accompanied by spinning reels and symbols, instead of or in addition to footage of the race itself.
Effectively this makes an HHR terminal a slot machine, just with a database of historical horse races instead of the conventional number generator. Its legalization would allow industry vendors to offer something similar to casino gaming without overstepping the bounds of parimutuel race betting. Several US states allow such machines at their racetracks, and Oregon is experimenting with doing it online.
“We can see the writing on the wall,” said Racetracks of Canada President Willian Ford, in witness to the Justice Committee. “The legalization of single-event sports betting will see the influx of massive foreign companies and leagues entering the Canadian wagering market. Competition will be severe, and racing will see market share shrink over time.”
Racetracks of Canada represents more than 40 racetracks Canada-wide. Adding his voice to that organization’s is Jim Lawson, CEO of Woodbine Entertainment, Canada’s largest racetrack operator.
“With this potential emergence of sports betting in the near future, our industry will face increased competition in the legal wagering market and must pursue additional sources of revenue to further protect our industry.”
For many in the industry, it seems HHR is one way to gain that extra security.
Bill C-218 is now in the reporting stage when Members can propose further amendments to the legislation. During reporting, debates focus solely on the amendment, not the bill as a whole.
Once finalized, the bill goes back to the house for a third and final reading. The next step after that is, potentially, adoption. If the bill passes the third vote, it heads to the Senate for consideration. The Senate can suggest amendments, but it can also accept the bill as is, granting it royal assent.
If the Senate does make changes, however, it goes back to the House. Both the House and Senate must agree on the final language for a bill to ascend into law.
Although momentum behind Bill C-218 seems strong, there are still roadblocks it could hit along the way. The most significant of these, which could completely derail the sports betting bill is the possibility of a snap election this spring. This is always a possibility in Canada when the ruling party holds only a minority.
The Liberals say they have no plan to send Canadians to the voting booth early. However, a non-confidence vote from the opposition could trigger a return to the polls. One likely moment for this would be when the Liberals release their budget on Apr. 19.
On this front, it’s worth noting the Liberals are urging passage of another bill, Bill C-19. This ensures a safe election if one is called during the pandemic, and suggests the Liberals see this as a realistic threat.