23 March 2021 Posted By :

Regulated online sports wagering could open door for M&A and dealmaking: BLG

A federal proposal to decriminalize single-event sports betting, along with Ontario’s plans to launch a regulated online gaming and gambling marketplace, will likely increase merger and acquisition activity and other dealmaking, lawyers at Borden Ladner Gervais say.

“The reality is, at the end of the day, governments know that billions of dollars are being spent by Canadians now to offshore companies engaging in the gray market,” says Galen Flaherty. “So, having it legalized means not only are there revenue opportunities that can go into government coffers, but it also gives governments a chance to regulate the industry and make sure that consumers are protected.”

In November, Federal Justice Minister David Lametti introduced legislation to decriminalize single-event sports betting in Canada. If passed, Bill C-13, An Act to amend the Criminal Code (single-event sports betting), would give provinces and territories the power to manage, regulate and license all types of single-event sports betting on any sporting event. Right now, horse racing is the only single sport that can be bet on legally in Canada.

Under the new regime, provinces and territories could adopt a private operator model for single-event sports betting. Private businesses operating under licence would bring competitive sports betting products to market — either online or in physical facilities.

The Ontario government quickly jumped on this news and has announced plans to launch a regulated online gaming and gambling marketplace. Under these plans, a newly formed subsidiary of the Alcohol and Gaming Commission of Ontario would be granted authority to manage and regulate online gaming sites operated by private third parties.

At present, the Ontario Lottery and Gaming Corporation is the only operator approved to offer online gambling in the province. A new model is expected to be developed over the coming months. If passed, it would be an opportunity for gaming industry players to unlock the billions in “grey market” gaming revenue already being spent.

The combined effect of decriminalization and online regulation provides an “incredible opportunity” to take part in single-event sports betting, says BLG’s Cameron MacDonald, which is already allowed in the United States and other jurisdictions. Currently, Canadians may only legally wager on the outcome of a single sporting event (except for horse racing) by way of parlay betting, which involves placing a bet on the outcome of multiple sporting events at once.

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