What’s the deal with Canadian Offshore Casinos?

Around the world, online gambling is a popular pastime. It is estimated that 1.6 billion people approx gamble each year. Gambling activity is split between land-based casinos and online. Each country has the right to ban or allow gambling in all forms. Currently, there are 56 countries which have banned some form of gambling. Canada sits somewhere in the middle due to lack of clear legal status.

Situation in Canada

Up until around 40 years ago, gambling was heavily linked to organized crime. In order to stop criminal activity, the federal government stepped in. Slowly, the government began to police gambling by issuing licenses for Canadian land-based casinos. Overtime gambling became safer with less criminal activity.

As gambling became more regulated, the Canadian government handed control to the local governments. After that provincial governments started to issue their own licenses. Some provinces chose to prohibit gambling. Others like Ontario and Quebec were happy to allow gambling. When it came to online casinos many provinces were happy to issue licenses. So-called ‘state-backed enterprises’ like Loto-Quebec and the OLG (Ontario Lottery and Gaming  Corporation). Overall, government supported enterprises have worked out well. In some places not so much, like in Quebec. Here, Loto-Quebec has been accused of trying to run a monopoly. A court case was brought against Loto-Quebec as they tried to stop other online casinos operating.

To be clear online gambling in Canada is perfectly fine. CasinoTrust research even indicates that around 70% of  Canadians have gambled in the past year. Canadian laws only become tricky when it comes to online casinos. Only online casinos with a government license can technically legally operate.

Offshore Casinos

To avoid the difficulties of getting a provincial license, offshore casinos set up. Offshore casinos, in short, are online casinos that are not based in Canada. Canadian players can access and play at offshore casinos via the internet. Legally this is where things start to become grey. There is little sign that the Canadian government will address offshore casinos.

So far, the government has only taken legal action against two offshore casinos:

• In 2001 an online casino was fined $100,000 based in Deleware was taken to court. The online casino lost their case. In addition to fines, the company was forced to hand over $4 million dollars. 
• In 2013 the state of Ontario took 19 people to court over an online sportsbook. The company ‘Platinum Sports Book’ was fined $2 million dollars. 

Both offshore operators were prosecuted for having their servers in Canada. Online operators have since started to base their servers out of Canada.

Getting a casino license from the Canadian Government is very difficult. Operators have to jump through many hoops and approvals are rare. Licenses from the Kahnawake Gaming Commission are not so hard to acquire. This has created a loophole for offshore casinos wishing to operate in Canada.

Kahnawake Mohawk Territory

Is a reserve of the first nations of the Mohawk Indians. Although it is located in  Quebec it is a sovereign territory. Meaning, that the Kahnawake Mohawk Territory is not governed by the Quebec government. Instead, there is an elected Mohawk Council of Kahnawake (MCK). Note: The Mohawk Council of Kahnawake is the only group that the Canadian Government will deal with.

All legislation is debated and decided by the elected council. Granting casino licenses falls under Kahnawake Gaming Commission. By having a Kahnawake Gaming Commission license offshore casinos can run legally. Monies, servers, and properties of that casino are also protected. Many American and European based online casinos in Canada have a Kahnawake license.