Opening up the Quebec online gambling market

It’s taken the best part of four years for an independent commission to report back on the Quebec online gambling market, presently the exclusive preserve of the provincial government, but it has finally tabled its report, and there are positive implications in its findings.

The commission appointed by the Canadian province began its work in 2010, the same year that licensed and regulated online gambling became a reality with the launch of Espace-jeux.com.

Led by University of Montreal professor Louise Nadeau, the commission was tasked with assessing the impact of Espace-jeux from a problem gambling and government revenue standpoint, along with whether it would be effective in countering the activities of unlicensed offshore operators.

Nadeau’s 200 page report suggests that the market would benefit if the provincial government allowed carefully vetted private operators to enter it, although the report acknowledged that this could be a time-consuming exercise requiring changes to the national Criminal Code.

The commission suggests that a temporary solution might be for the Quebec government to allow private operators access through a new government-operated and strictly controlled website.

Nadeau’s team found that online gambling through Espace-jeux has hardly influenced the amount of gambling done by Quebecoise, reporting that in 2012 – two years on from the launch of the site – public participation rates were barely 0.1 percent up at 1.5 percent for the province compared with the situation three years prior.

The province’s sally into online gambling contributed just $6.7 million to government coffers in Q1 if its latest fiscal year, the commission found, also noting that more communication was needed to inform Quebecoise that Espace-jeux is the sole government-regulated and approved online gambling venue in the province; apparently almost 70 percent of respondents were ignorant of that fact.

However, the report warns that building overall success in online gambling can be adversely impacted by imposing tax levels that are not fair and reasonable, and it uses the French debacle as an example of operator resistance.

The commission estimates the number of online gamblers in the province at 95,000, but only 18,000 of these are currently using Espace-jeux.

Some tough counter-measures against unlicensed operators active in the province are suggested, including:

* Informing such operators of the legal status of Espace-jeux and suggesting they withdraw from the Quebec market without prejudice;

* Imposing penalties and possibly ISP blocking on those that do not take the hint, allied to tougher enforcement action.

* Withholding or cancelling government contracts as a means to pressure online gambling software and other suppliers into persuading unlicensed operators to leave the Quebec market.

* The formation of a focused online gambling regulatory authority to police and regulate the operational, marketing and social responsibility aspects of online gambling, perhaps through the existing provincial Alcohol, Racing and Gambling Board;

* The introduction of a more effective system, preferably independent of Espace-jeux, to communicate the dangers of problem gambling to the public and monitor the social responsibility conduct of operators in the future.

The initial reaction of the provincial government to the Nadeau report has been positive, with Minister of Finance Carlos Leitao asking Loto-Quebec to consider the findings and make its own recommendations on how these can be introduced.

The minister appears to be serious in his follow up, and has communicated with other provinces that have legalised online gambling to establish agreement and the best strategy for furthering the idea of private operators and the necessary changes to the national Criminal Code.

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