Provincial Powers and Online Gambling: Ontario as Legal Precedent
A licensed provincial market, a federal criminal exemption, and one phrase the Supreme Court of Canada will construe in October.
Canada does not give its provinces a general power over gambling. It gives them an exemption. Everything Ontario has built since April 2022, a licensed online casino and sportsbook market carrying dozens of private operators, rests on a single paragraph of a federal criminal statute, and on a phrase inside it that the country’s highest court has never definitively construed. On October 7, 2026, the Supreme Court of Canada will hear argument on how far a province may go before its “lottery scheme” stops being its own. For American readers accustomed to thinking about gambling federalism through Murphy v. NCAA, the Canadian structure is a useful inversion.
A carve-out, not a power
Gambling in Canada is governed through the criminal law. Sections 201 through 206 of the Criminal Code prohibit keeping a gaming house, running a lottery, and betting for gain, and the authority to enact those prohibitions comes from Parliament’s criminal law power under s. 91(27) of the Constitution Act, 1867. The provinces hold no enumerated power over gambling at all.
What they hold instead is s. 207(1)(a) of the Criminal Code, which makes it lawful “for the government of a province, either alone or in conjunction with the government of another province, to conduct and manage a lottery scheme in that province” in accordance with provincial law. The present allocation dates to 1985, when Parliament withdrew the federal government from lottery schemes and left the field to the provinces. In 2021, Bill C-218 removed single-event sport betting from the activities excluded from the definition of a lottery scheme, which is why every Canadian sportsbook launched after August 27, 2021 is a provincial product rather than a federal one.
Two consequences follow. Provincial gambling authority is conditional: it exists only while the province satisfies the terms of a federal criminal exemption. And the resulting fights are interpretive. Nobody in Canada argues about whether Ontario may regulate gambling; they argue about what “conduct and manage” requires, and what “in that province” modifies.
Ontario builds a market
Ontario’s market opened on April 4, 2022. Its architecture separates two functions that most jurisdictions combine. The Alcohol and Gaming Commission of Ontario registers operators and enforces standards; iGaming Ontario, a subsidiary agency, executes an operating agreement with each registered operator and is the entity that formally conducts and manages the scheme. Private brands run the platforms and own the customer relationship, but they do so as iGO’s contractual counterparties.
The first challenge arrived quickly. In November 2022 the Mohawk Council of Kahnawà:ke sought judicial review, arguing that iGO does not genuinely conduct or manage anything, having outsourced the substance to commercial operators, and that the model therefore falls outside s. 207(1)(a). Brownstone J. dismissed the application in Mohawk Council of Kahnawà:ke v. iGaming Ontario, 2024 ONSC 2726, holding that the operating agreements, standards, and continuing oversight were consistent with what the Criminal Code permits. The decision was not appealed.
Four years on, the model’s ordinariness has itself become a legal fact. Consumer coverage of the best Ontario online casinos now sorts registered brands by payout speed and game catalogue rather than by legal exposure, and a market survey from nationalpost.com reads as a guide to a settled retail category. That normalization bears on the litigation. A court asked to narrow s. 207(1)(a) in 2026 is not writing on a blank page; it is unsettling a market that operators, the province, and players have relied on for four years.
The pooled-liquidity reference
The harder question is geographic. Peer-to-peer games, poker above all, require liquidity, and a player pool confined to a single province is a thin one. Ontario asked whether it could seat its players at tables with players outside Canada without forfeiting the s. 207(1)(a) exemption, and put the question to its Court of Appeal by reference rather than waiting for a prosecution.
In Reference re iGaming Ontario, 2025 ONCA 770, released on November 12, 2025, a five-judge panel answered yes, four to one. The majority held that the proposed model would remain lawful so long as Ontario continues to conduct and manage the Ontario component of the scheme: the operating agreements, the regulatory standards, and iGO’s control over what is offered to players in the province. Reading the text, context, and purpose of the provision together, the majority concluded that the Criminal Code does not require every participant to be physically present within the province. The model stops at the national border in one direction only, since players elsewhere in Canada stay out of the pool unless Ontario reaches an agreement with the province or territory where they sit.
Van Rensburg J.A., dissenting, construed the same words the other way: the exemption is granted for a lottery scheme “in that province,” and a scheme drawing international participants contains elements Ontario neither conducts nor manages nor authorizes by its own law. Because the case arose as a provincial reference, the appeal to the Supreme Court of Canada lies as of right; no leave application was required.
Why the American comparison is instructive
American gambling federalism runs in the opposite direction. States hold plenary police power over gambling as an original matter, and the federal question is whether Congress has preempted them. In Murphy v. NCAA, 584 U.S. 453 (2018), the Court held that the Professional and Amateur Sports Protection Act’s ban on state authorization of sports wagering commandeered state legislatures, and struck it down; states then legislated as they chose. No state must justify its sportsbook by reference to a federal permission.
The parallel is therefore useful rather than exact. The United States has its own version of Ontario’s geographic problem, and it is likewise statutory: the Wire Act, 18 U.S.C. § 1084, and whether it reaches non-sports gambling across state lines. The First Circuit held in New Hampshire Lottery Commission v. Rosen, 986 F.3d 38 (1st Cir. 2021), that the statute is confined to sports betting, the premise on which multi-state online poker compacts operate. Ontario’s reference asks the same structural question under differently worded text: when does a locally licensed game become something else because the players are elsewhere?
The closer domestic analogue may be cannabis, where states have built licensed markets inside a subsisting federal prohibition that they cannot repeal. The licensing pathologies that follow are recognizable across the border, as in the account of how Los Angeles administered its social equity retail rounds. Provincial gambling in Canada sits on firmer ground, because s. 207(1)(a) is a genuine statutory permission rather than mere non-enforcement. But it is permission on terms.
What the Supreme Court of Canada will decide
Atlantic Lottery Corporation, et al. v. Attorney General of Ontario, SCC No. 42141, is set for hearing on October 7, 2026. The appellants are the Atlantic Lottery Corporation, the British Columbia Lottery Corporation, Manitoba Liquor and Lotteries, and Loto-Québec; an intervener list running to the Canadian Gaming Association, Flutter Entertainment plc, NSUS Group, and the Attorney General of Alberta suggests the parties expect the outcome to govern a good deal more than poker liquidity.
The question presented is narrow; its consequences are not. Should the Court read “in that province” as a hard geographic limit, Ontario’s market survives but its expansion halts, and any province contemplating international pooling loses the option. Should the Court affirm, the working content of “conduct and manage” grows markedly more accommodating of private operation and cross-border play. Either way, the Court will construe a 1985 allocation of authority against an activity that has since moved online and offshore.
For an American reader the instructive point is where the argument takes place. In the United States, gambling federalism was settled as a constitutional question and handed to fifty legislatures. In Canada it remains a question of what a handful of words in a criminal statute mean, and nine judges will answer it in October. The appeal is followed in the case tracker, with related analysis in the commentary archive; this publication offers analysis and commentary, not legal advice.
Questions readers ask
Where does provincial authority over gambling in Canada come from?
From an exemption, not from a head of power. The Criminal Code prohibits gaming and betting generally, and s. 207(1)(a) makes it lawful for a provincial government to conduct and manage a lottery scheme in that province in accordance with provincial law.
What does “conduct and manage” require of a province?
That is the contested question. Ontario’s position, accepted by the Ontario Superior Court of Justice in 2024 and by the Court of Appeal majority in 2025, is that operating agreements with registered operators, binding standards, and continuing regulatory control satisfy the requirement even though commercial brands run the platforms.
What did the Ontario Court of Appeal decide in 2025?
In Reference re iGaming Ontario, 2025 ONCA 770, a five-judge panel held four to one that Ontario could permit its players to join peer-to-peer games with players outside Canada without losing the s. 207(1)(a) exemption, provided Ontario continues to conduct and manage the Ontario component of the scheme.
Why is the case reaching the Supreme Court of Canada as of right?
Because it began as a provincial reference. An opinion pronounced by a provincial court of appeal on a reference may be appealed to the Supreme Court of Canada without a leave application. The appeal is scheduled for hearing on October 7, 2026.
How does this differ from the American position after Murphy v. NCAA?
Substantially. Murphy struck down a federal statute that commandeered state legislatures, leaving states free to authorize sports wagering under their own police power. Canadian provinces have no equivalent original authority; they act inside a federal criminal exemption, so their disputes concern the meaning of that exemption rather than the limits of federal power.
Does the outcome affect single-event sports betting in Ontario?
Not directly. Single-event sport betting became available to provincial schemes when Bill C-218 took effect on August 27, 2021, and nothing in the reference disturbs that. The reference concerns whether participants outside the province may be included in a provincially conducted scheme, which matters most for peer-to-peer formats such as poker.
