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How Are Online Casinos Regulated in Canada?

By Stephen Atcheler
March 8th, 2022
BURLINGTON, ON

The popularity of online gambling is steadily increasing in Canada, but bettors are concerned about the lack of unified regulations across the country’s ten provinces and three territories.

This post sets out to show where one can play online casino games in Canada and how these gambling businesses are regulated.

A Convenient Loophole

Gambling operators are not allowed to run Canadian online casinos, but they have found a loophole in this law installing all of their servers in Quebec’s Kahnawake reserve.

So, many online gambling providers like Cyber World Group, operator of the world’s largest online casino Golden Palace.com, have moved their servers to Kahnawake.

Online Casinos Are Thriving in Kahnawake

As all online casinos in Canada are in Kahnawake, they need to have all of their servers properly maintained 24/7. This is the job of a special company called the Mohawk Internet Technologie (MIT).

The MIT guys must be very busy because experts have estimated that 60% of the online gambling traffic passes through the servers they manage.

A Billion-Dollar Business

And while Canada’s online gambling legislation is still a work in progress, figures show that online casinos have generated revenues of over $12 billion in 2021.

When Quebec’s provincial government slammed Cyber World Group with a $2 million fine over two counts of illegal online gambling, the company wanted to minimize court expenses, pleaded guilty, and promptly paid it.

Kahnawake’s Online Gambling Regulator

This First Nations reserve is located on the south bank of the Saint Lawrence River and is classified as an offshore zone. It’s got its own gambling regulator – the Kahnawake Gaming Commission, which grants licenses to online casinos, poker sites, and sportsbooks.

However, the motion against Cyber World Group has cast serious doubts on the commission’s authority to regulate online gambling in Canada.

Legal Contradiction

There seems to be a continuous tug-of-war between Canada’s federal government and the local authorities in Kahnawake reserve over the right to regulate online gambling businesses.

The Mohawk people have full title to their land and they govern their territory.

The country’s criminal code entitles provincial governments to license and regulate gambling activities, including those through the Internet.

However, the Mohawk people, represented by the Kahnawake band council, defend their right to housing online gambling servers in their lands, citing section 35 of Canada’s Constitution.

Who Regulates Online Gambling in Canada?

The above information makes it clear that the Mohawk Gaming Commission regulates online casinos through the band council.

Statistics show that the commission has so far licensed more than 440 online casinos, sportsbooks, and poker sites. However, Canada’s federal government seems to have become less tolerant of online gambling in the Mohawk territory.

No Taxes on Online Casino Winnings

The Mohawks’ strength to continue defending their rights to host online gambling servers in their reserves comes from Canada’s taxation code itself. It stipulates that gambling winnings are tax-exempt, as long as one is not gambling professionally.

The casino is a stunning piece of architecture.

If Canada’s provincial governments want to tap on the multi-billion-dollar online gambling sector, they have to either reach a legal agreement with the Mohawk people or fully legalize online casinos.

Once online casinos become legal, they will have to pay local and federal taxes, and will thus support the local economy.

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