Quebec plans to order ISPs to block unlicensed gaming sites

Online gambling revenuesA controversial bill tabled by the Quebec government that will compel Internet service providers to block unlicensed gambling websites is an expensive, futile, and unconstitutional endeavour that raises concerns about the neutral role of Internet providers, according to gaming and telecommunication experts.

The proposed legislation, tabled last November, will amend the province’s Consumer Protection Act and require Internet service providers (ISPs) to “block access” to a list of “unauthorized gambling sites” that will be drawn up by Loto-Québec, a government agency that operates and develops lotteries in the province. Internet service providers face steep fines — up to $100,000 and twice that amount for subsequent offences — if they fail to comply.

“It is absolutely urgent that anyone looking at this oppose this,” remarked Bram Abramson, the chief legal and regulatory officer at TekSavvy, an independent Canadian ISP. “Clearly it would establish precedence. It would be the first time that any Canadian government has ordered ISPs to routinely block content and to engineer our networks in such a way as to be able to block content in this routine manner. That’s not the kind of Internet that Canadians want.”

The contentious plan is being closely watched by other provinces who have, with the exception of Saskatchewan, online gaming offerings. Like Quebec, British Columbia, Manitoba and Ontario offer a full slate of online casino-style gambling while the Atlantic Lottery Corp. which oversees gaming for New Brunswick, Newfoundland and Labrador, makes lottery tickets and sports betting available on the Internet. Much is at stake. H2 Gambling Capital, a leading supplier of gambling data and market intelligence, predicts that the value of the global online casino and bingo market will surge to approximately US$13.5 billion by 2018, representing a compound annual growth rate of more than 10 per cent from 2014. The Quebec government predicts that by directing online gambling to its own website, Espacejeux, that it will bring in an additional $13.5 million in revenues in 2016-17, and $27 million annually after that.

“The landscape for gaming in Canada is going to change very shortly,” predicted renown Montreal gaming lawyer Morden Lazarus. “The provinces have decided that they want to get into online gaming and they want to be able to generate these revenues for their own benefit. The Quebec government is leading the charge.”

The Quebec initiative however will likely end up before the courts, according to legal observers. Quebec is moving forward under the guise of improving public health. According to the 2015-16 Quebec budget, “illegal websites do not apply the same responsible gaming rules as Espacejeux,” and that poses a risk to the population, especially young people. Since it will enact the new provisions under the Quebec Consumer Protection Act, the provincial government is also expected to argue that establishing a firewall to prevent online gaming competitors is a matter of consumer protection, which falls under the jurisdiction of provinces.

But industry observers don’t buy that reasoning. The Quebec bill clearly breaches federal jurisdiction over telecommunications, pointed out Chris Tacit, a telecommunications lawyer based in Ottawa. It also appears to infringe s. 36 of the federal Telecommunications Act, which prevents Canadian carriers from controlling the content or influencing the meaning or purpose of telecommunications, added Tacit. “What is an ISP supposed to do it if it is ordered to block unlicensed gambling websites by the Quebec government which under s.36 of the Telecommunications it is prohibited from doing,” asked rhetorically Tacit. “It is an untenable situation. This can only lead to litigation.”

ISPs are “content neutral” utilities that simply provide access to a service, and are not in the business of picking and choosing what Canadian consumers should have access to, added Abramson. If the Quebec initiative goes unchallenged, Abramson fears that other provinces may follow suit and would be emboldened to establish different telecommunication regulatory rules that would likely differ from one province to another. “I have no doubt that if this were allowed to proceed, other provinces will follow,” said Abramson.

Critics also point out that the proposed legislative scheme amounts to censorship, likely infringes the Canadian Charter of Rights and Freedoms, and sets a dangerous precedent. The bill would unlikely be able to survive a freedom of expression challenge, and Quebec would have a hard time arguing that compelling ISPs to block unlicensed gambling websites is a reasonable limitation. “Just imagine it wasn’t about gambling,” observed Timothy Denton, a CRTC commissioner from 2008-2013. “Suppose it was about being unable to reach controversial political websites, people would be up and screaming about it. But because it concerns the vice of gambling, it’s more defendable in public.” Or as Tacit pointed out, if the Quebec government can get away with blocking online gaming websites, “what lays next?”

The lack of clarity in the bill also poses problems, said gaming lawyer Stuart Hoegner. Bill 74 does not define what wagers and bets are. Nor does it spell out whether the definition will be identical to the one found in the Criminal Code of Canada or whether the Quebec government will forge ahead and establish a new definition of wagers and bets. And while the bill plainly states that an ISP may not “give access” to an online gambling site whose operation is not authorized under Quebec law, it does not define what the term access means, added Hoegner. “The term access is pretty broad,” remarked Hoegner. “What if an ISP makes good faith efforts to block but a customer circumvents it? Have they violated that provision or is there a safe harbour? We don’t know.”

Forcing ISPs to establish firewalls on unauthorized online gambling sites would also be very expensive because it would require “wholesale changes” to telecommunication networks, said Abramson. “It’s very difficult to do what is being asked because in many cases telecommunication networks do not treat Quebec as a distinct network. That would require some re-architecture – and that’s expensive,” explained Abramson. It would also be for naught, given the porous nature of the Internet. Growing numbers of Canadians are becoming increasing familiar with virtual private networks (VPNs) to skirt around intellectual property protections governing websites such as Netflix, and gambling aficionados will not hesitate to dodge restrictions the Quebec government may try to impose on them, added Abramson.

A working group that studied the issue of online gambling for the Quebec government already provided the framework that would allow the Quebec government to recoup more monies from online gambling, without having to resort to ISPs, remarked Lazarus. Ironically the 2014 “Report of the Working Group on Online Gambling” does not recommend the “systematic filtering of illegal websites.” Instead it recommends either the creation of a portal through which private operators can offer online gambling to Quebecers or establishing a licensing system, which is favoured by many jurisdictions around the world.

Under the portal model, the Quebec government would be held responsible for the management of online gambling offerings by establishing standards and precise rules in order to comply with s. 207(4)(c) of the Criminal Code, which allows only for provinces to set up and operate a lottery or game of chance on or through a computer. Under the portal model the government would also have to define gaming compliance rules, the rate of returns, the types of games offered, and security measures pertaining to fraud and money laundering. “Going the ISP route will cause more anguish and more issues more than anything else,” said Lazarus. “They should focus on the creating a process where online gaming providers provide managed services to the province, and all of the activity will go through the provincial government’s portal.”

In the meantime, the Quebec government can expect ISPs to fight back if they follow through with their controversial proposal. “This has not made the Quebec government popular among a lot of telecommunication providers,” said Abramson. “It is just a very surprising initiative, especially one that is so clearly outside their jurisdiction, that is so expensive, and likely to be ineffective.”

This story was originally published in The Lawyers Weekly.

About Luis Millán 351 Articles
I am a law and business journalist. I write for Canadian Lawyer, the National, a magazine published by the Canadian Bar Association, and The Lawyers Weekly, an independent legal Canadian publication. This blog is in no way affiliated with any of these publications.

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