BCLC bets big on single-game sports betting

Grey and black markets account for $14 billion in wagers annually: industry group

New regulations allow provinces to ditch parlays in favour of single-game sports betting as part of an effort to staunch the flow of gambling dollars into the black market | Getty Images/Andresr

Might B.C. be in the waning days of the bookie?

Two weeks after Ottawa gave Canada’s provinces the power to regulate single-game sports betting, the B.C. Lottery Corp. (BCLC) began accepting wagers the first day it was permitted: August 27.

Other provinces are taking their time – Alberta, for example, won’t be ready until the fall – while B.C. is going all in as soon as possible.

The rapid deployment of single-game sports betting means the Crown corporation will be navigating challenges from both a technological and legal perspective to ensure all goes smoothly.

“U.S. authorities would not look kindly on people from the U.S. being able to wager on systems in Canada, particularly underage,” Boston-based lawyer Mark Hichar of Greenberg Traurig LLP told BIV.

“So I would expect that they [Canadian operators] are all over these issues.”

Hichar specializes in the American gaming industry and the U.S. Wire Act, which takes aim at organized crime by targeting cross-border gambling.

“The U.S. regulatory structure requires that people who are within a state [must] wager only on systems that are within that state,” Hichar said.

A lottery corporation or gaming operator in Canada not sufficiently ensuring their systems prevent Americans from placing online bets by basic means, such as a virtual private network, risk drawing the ire of federal authorities south of the border.

And licensed vendors and suppliers could also find themselves at odds with the law if systems they are facilitating do not adequately comply with regulations.

While virtually all American states now allow or are pursuing sports betting, the differences in legal gambling ages across jurisdictions make the situation trickier.

For example, the introduction of single-game sports betting in Canada may draw an underage person in Iowa, where the gambling age is 21, to place a single-game bet through BCLC’s PlayNow.com website, which requires players to be 19.

Geofencing technology can do the trick to stymie those efforts, but as many Netflix Inc. (Nasdaq:NFLX) users have learned over the years, some types of geofencing can be outmanoeuvred with ease.

BCLC spokesman Matt Lee told BIV his organization’s system can determine a player’s approximate locations, such as with an IP address, to confirm they are betting within the proper jurisdiction. It also requires a driver’s licence or bankcard upon registration to confirm the player’s identity.

Lee said it took the Crown corporation’s technical teams about one work week to reconfigure PlayNow.com to allow wagers for single-game sports betting rather than only parlays.

And BCLC has been tapping vendors such as the U.K.’s Genius Sports Group and Las Vegas-based Scientific Games Corp. (Nasdaq:SGMS) to provide everything from geofencing capabilities to real-time sports data.

Meanwhile, Sightline Payment LLC, a Las Vegas-based vendor specializing in supporting digital wallets for bettors looking to place wagers, expanded into Canada in anticipation of providing its services for single-event sports betting. The company is first targeting Ontario.

But Tamara Tenenbaum, Sightline’s Montreal-based vice-president of marketing in Canada, said she’s concerned that Ontario and some other provinces do not require vendors to be licensed.

“There’s no real regulated entity that’s going to say, ‘OK, Sightline: You must do this, you must do that, you have to adhere to this law or that law.’ That will be the operator’s responsibility to make sure that they’re in compliance with whatever guidelines they receive,” she said.

“It just means that they can choose vendors that are shady; they can choose vendors that do things that are cutting corners or have bank accounts offshore.”

Lee said in a followup email that vendors on the West Coast “are required to register with the Gaming Policy and Enforcement Branch (GPEB) in order to conduct work with BCLC.”

GPEB is an arm’s-length organization separate from the BCLC that regulates gambling within the province.

Prior to the August 27 regulatory change, Canadians were still able to use regulated operators to bet on sports. But those wagers could only be parlays of two events or more.

For example, bettors would have to place wagers on the BC Lions either defeating or losing to their opponents in multiple games. If just one wager in the parlay is wrong, the bettor loses everything.

The regulatory changes allow Canadians to place wagers on one game at a time.

It’s part of an effort to stamp out the black and grey markets for sports betting, which account for $14 billion in wagers made annually by Canadians, according to a Canadian Gaming Association 2020 estimate.

The trade association estimates that bets placed through legal provincial operators amount to $500 million annually – a sizable gap operators can now begin making up.

Canada’s new legislation follows a 2018 U.S. Supreme Court ruling that struck down the Professional and Amateur Sports Protection Act (PAPSA).

The PAPSA ruling gave way to American state to legalize betting on sports – and with it, the need for those states to ensure bets are placed in proper jurisdictions.

The decision turned into a windfall for one Vancouver-based company specializing in geolocation technology: GeoComply Solutions Inc., which secured a US$1 billion valuation this year following an investment of an undisclosed amount.

“There’s absolutely the opportunity for growth,” Lindsay Slader, GeoComply’s managing director of gaming told BIV, adding that her company will be seeking out opportunities in Canada much like it has in the U.S.

“We’re currently not providing those integrity services to any of the Canadian lotteries at the moment. But that being said, the demands of U.S. federal law that still impact Canada’s borders and the industry participants that are required to comply with all of those laws to uphold their own licences … very much have that full integrity picture in mind.”