Regulation

Quebec Planning to Censor Unlicensed Betting Sites

The Huffington Post reported on Friday that the Canadian province of Quebec is planning to order internet service providers (ISPs) to block unlicensed online betting sites. Premier Phillippe Couillard revealed the plans as a part of the provincial budget unveiled last week. If the motion is implemented, residents of Quebec may soon find themselves unable to access popular offshore gaming sites.

The stated goal of the move is to increase revenue for the government-run gaming website espacejeux.com. Revenue at the site has struggled for years in the face of stiff competition from overseas sites that operate in Canada despite lacking proper licensing. If implemented, the move would give Loto-Quebec the ability to create a list of websites that Canadian ISPs would be required to censor.

At least one ISP showed resistance to the idea. The Globe and Mail spoke with Bram Abramson of Canada’s ISP TekSavvy Solutions. Mr. Abramson said that ISPs “should not be put in a position of picking and choosing what people have access to.”

Is this move even legal?

Dr. Michael Geist, law professor at the University of Ottawa, doesn’t seem to think this move is legal. In a blog post published on March 27th, he explained that this move may be an “illegal plan as the government seeks to censor the Internet for its own commercial gain.”

He goes on to explain that this move may be challenged on both free speech and jurisdictional grounds. The free speech implications are fairly straightforward – does the government have the authority to restrict access to information? If so, you have to wonder what the government will censor next in order further its own interests.

Potential jurisdictional problems arise when we consider that regulation of the internet falls under the authority of the federal government, not individual provinces. Quebec may not even have the legal authority to force internet providers to implement such filtering measures. Dr. Geist predicts Quebec will argue that it does have the authority to regulate issues of gambling at the provincial level and is therefore free to implement web censorship.

This is what happens when government enters the gambling business

Governments around the world have long found gambling to be an attractive business venture. Time and again, we have seen government entities regulate gambling under the guise of protecting consumers and then entering the business themselves.

As we’ve also seen time and again, the government is horribly inefficient. Politicians with no experience in gambling jump into the business with little understanding of the business and inevitably release products that are of lower quality than their more experienced competitors.

Espacejeux.com serves as a prime example of this conundrum. The government-run betting site has seen falling revenue for several years running. Offshore alternatives provide better odds, more games and greater marketing know-how.

However, the government has an Ace up its sleeve – the ability to dictate its dominance through brute force. Why compete when you can simply declare the competition illegal? Problem solved.

This understandably leaves gamblers miffed. The government exercises the power of the law to take away choice and force gamblers onto less-desirable websites. Gamblers end up placing fewer bets, competition is stifled and everybody loses out.

Past experience in regulated markets has proven that the industry benefits better as a whole when competition is allowed to flow freely. The situation in the UK serves as a prime example of regulation done right. The government there regulates the industry but stays out of the business, leaving it to the market to provide services to customers.

Estimates put the total tax revenue collected from remote gambling in the UK as high as £300 million per year. Compare that to the $13.5 million collected by government-run betting sites in Quebec last year. Granted, the UK is a significantly larger market but even when you account for the disparity in market size, the UK is far more effective at collecting revenue from online gambling.

With a population of roughly 8 million, Quebec is currently collecting roughly $1.65 per resident through its legal betting options. Meanwhile, the UK with a population of 64 million brings in roughly $4.69 per resident by simply staying out of the business and fostering a free market.

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