Before 2021, the Canadian Criminal Code placed strict limitations on online gambling. While the Code prohibited Canadians from operating or participating in unauthorized online gaming, Section 207 allowed provincial governments to conduct and manage gambling activities within their jurisdictions. However, provinces faced a major restriction: they could not legally offer single-event sports betting, nor were they permitted to manage wagering on horse racing. Only multi-leg parlays were allowed.
(Ontario), and Loto-Québec (Quebec). These bodies were authorized to run provincial gaming, including lotteries and some online gambling products. Certain licensed charitable organizations were also allowed to offer limited gaming services.
Despite these advancements, Lottery Corporations did not have full control over land-based casinos or private gaming operations. Instead, provinces created strict regulatory frameworks that required all casino operators, manufacturers, and even croupiers to be registered. In Ontario, for example:
- AGCO (Alcohol and Gaming Commission of Ontario) registers casinos, staff, and suppliers
- OLG acts as the legal operator of all land-based casinos
- Private casinos must sign a Casino Operating Services Agreement to legally operate on OLG’s behalf
View the list of Ontario-licensed online casinos
Although Lottery Corporations were authorized to offer a wide range of gaming products, most were hesitant to expand aggressively. Only in recent years have they started introducing online casinos and sports betting. Instead of partnering with major international brands, provincial operators built their own platforms—often with less sophisticated technology than offshore competitors.
The Rise of the Gray Market
Before online gambling became widespread, illegal gaming typically involved underground bookmakers or unlicensed poker rooms. The internet changed everything. Suddenly, hundreds of offshore gambling sites became available to Canadians, operating outside provincial jurisdiction.
Regulating these websites proved nearly impossible. Offshore casinos use advanced tools such as:
- IP masking technology
- Encryption software
- Anonymous payment systems
These tools allow Canadians to access unregulated gambling platforms with little risk of detection.
A major loophole in Section 6(2) of the Criminal Code makes enforcement even more difficult. The section states that Canada cannot prosecute offences committed outside the country. As a result, offshore gambling companies—who have no physical presence in Canada—enjoy a form of legal immunity even while serving Canadian players.
Although Lottery Corporations have long urged the federal government to close these loopholes, many believe lawmakers preferred to leave the system unchanged to avoid opening the door to broader online gambling legislation.
Ontario Breaks the Mold: New iGaming Legislation
Ontario chose to treat these legal gaps as an opportunity rather than a problem. Recognizing the limitations of the existing framework, AGCO proposed the creation of an open online gaming market. The goal was simple:
- Attract international operators with modern gaming technology
- Redirect players from the gray market to a regulated environment
- Increase provincial revenue
- Improve player protection
In 2020, Ontario allocated funding to amend the law and allow AGCO to manage online gaming (iGaming). In 2021, after extensive consultation with industry stakeholders, the province launched iGaming Ontario (iGO)—the body responsible for overseeing commercial operators.
This historic change made Ontario the first Canadian province to open its market to private online casino and sportsbook brands.
Ontario’s iGaming Framework: Key Features
Ontario’s model is unique in Canada. Here are the most important components:
- iGO serves as a gaming service provider, not an operator
- Operators must complete a dual-registration process—approval from AGCO and a commercial agreement with iGO
- Offshore operators can legally apply for a license
- Each casino brand requires its own registration
- There is no cap on the number of licensed operators
- Taxes and revenue-share payments are made through iGO
- All suppliers providing gaming services must also be licensed
- Operators need a separate Ontario-specific website
- All games must meet strict fairness, security, and anti-money-laundering standards
Ontario’s model has already attracted major global brands and significantly reduced the presence of unregulated casinos within the province.
Single-Event Sports Betting: A Historic Change
For decades, Canadian bettors were limited to parlay wagers. This changed in August 2021, when Bill C-218 officially legalized single-event sports betting across the country.
Ontario’s sportsbooks immediately expanded their markets, offering more competitive odds and betting options than ever before.
What About Other Provinces?
Unfortunately, most Canadian provinces have not followed Ontario’s lead. Without updated legislation, they:
- Lose substantial revenue to offshore casinos
- Cannot legally license or attract international operators
- Offer fewer regulated gaming options to residents
- Struggle to protect players from unlicensed or fraudulent websites
Unless provincial laws evolve, the gray market will continue to dominate outside of Ontario.
