Online gambling regulation top of mind for BCLC as market grows

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The growing popularity of the online betting market is putting a squeeze on the B.C. Lottery Corp.’s revenues and also raising concerns about a lack of regulation to combat youth gambling and money laundering.

Estimates from the corporation’s most recent budget submission show online gambling revenue is expected to increase from $469 million to $576 million over the next five years, while revenue from conventional lotteries is expected to drop slightly from $570 million to $560 million over the same time frame.

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Revenue from casinos and community gambling is expected to remain mostly steady, increasingly slightly from $1.92 billion to $1.94 billion.

A pending problem for BCLC, however, is that young users aren’t buying lottery tickets or attending casinos as often as past generations, potentially creating challenges for the organization’s two primary revenue streams.

This isn’t the case with its online site, PlayNow.com, which it says is doing a good job of attracting a younger audience, demonstrated by its expected explosion in income. If this is to continue, however, analysts say investments need to be made to keep users happy through a focus on betting experiences, such as an expansion to how it offers sports books.

With this increased emphasis on online betting, experts say a lack of government regulation could negatively impact users and lead to an increase in gambling addiction, money laundering and youth betting.

Luke Clark, a University of B.C. psychology professor and the director of the university’s centre for gambling research, says the government is trying to keep up with the pace of change in the sector but, even as new regulations are implemented and research conducted, the playing field has already shifted.

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“B.C. was the first province to introduce online gambling back in 2004. That trajectory has accelerated over the last few years,” he said.

“It’s really the smartphone access that has created constant eye accessibility, where you can access the gambling app within seconds, wherever you are, whether if you’re kind of away on vacation, or whether you’re at home, or at work, or on transit.”

Clark said this has increased the potential for harms associated with gambling addiction, ranging from mental-health disorders, such as anxiety, depression and suicidal thoughts, to bankruptcy and divorce.

The Ministry of Public Safety and Solicitor General didn’t respond to a request for comment in time for publication, but internal briefing notes published on the province’s website show that in 2020, the minister at the time, Mike Farnworth, was told the “rapidly changing” nature of the online betting market posed new risks to the province.

“This means that an increasing share and number of people are gambling in an environment that may not have appropriate responsible gambling and integrity controls, that may allow minors to gamble and that may carry an increased risk for fraud and money laundering.”

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Changes made by the federal government in 2021 to allow betting on individual sport events and by Ontario in 2022 to allow for the privatization of online betting have also led to a flood of online ads across the country, including in B.C. during hockey games and other TV programming.

Nigel Turner, a scientist at the Centre for Addiction and Mental Health’s institute for mental-health policy research, said he doesn’t understand why Ontario has allowed this as research shows a direct link between gambling ads and an increase in gambling.

He said that, at the very least, the Canadian Radio-television and Telecommunications Commission and Advertising Standards Canada should prevent these ads from being shown outside of Ontario.

“What we’re concerned about with the ads is this encourages people to begin thinking about gambling on sports,” explained Turner.

“Youth, because they can’t go to the legal casinos, most youth will gamble with their buddies, with their friends, in a non-regulated setting, or they may set up their own sports book, for example. So it’s likely that we’re establishing with people who are younger to gamble and to engage in non-regulated types of gambling.”

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As for illegal online gambling, the BCLC said unregistered sites, including those operating in Ontario, are greatly reducing their potential market share and driving up costs for PlayNow.com when it comes to advertising and sports sponsorships.

It said it has partnered with four other provincial gambling corporations to raise awareness of misleading advertising and has co-ordinated with the Gaming Policy and Enforcement Branch on new standards for online gambling.

Buy-in limits, both at casinos and online, have also been implemented in an effort to target money laundering and, if a user cashes out with $10,000 or more, they must report it to the Canada Revenue Agency.

Canada’s financial intelligence agency has found, however, that illegal online betting sites still remain a boon for money launderers and even legal sites have fallen victim to money laundering through the depositing of money on prepaid cards into gambling websites, which is then withdrawn through Canadian banks as winnings.

“To ensure the safety of our operations online, we are working to enhance our registration process and implement appropriate tools to help detect and deter any fraud on PlayNow.com,” said the BCLC.

“We will also continue implementing new anti-money-laundering software to enhance our ability to electronically monitor transactions and make it easier to respond to evolving compliance requirements.”

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