Troubled Road Ahead for Loto Quebec

Loto Quebec, the official body for gambling in the state of Quebec is going ahead with its plan to blacklist close to 2,200 online gambling operators in the state. Last week the state passed a very controversial legislation under the name of bill 74. This bill prohibits any online player who fails to stick to the compliances. Even ISPs would be required to pay a heavy fine if blacklisted companies are allowed to operate in the state without the Quebec Government’s approval.

Bill 74 is expected to be legally challenged by a number of online players in the province. This bill is seen as extremely unconstitutional and violates the federal communication law of Canada. This move will give Loto Quebec undue advantage over its competitors. The reason cited by the state for bill 74 is to eradicate the black market in this space.

Whether Loto Quebec will force the ISPs to follow the legislation and start fining heavily from next month remains to be seen. ISPs have till mid of next month until their fate gets sealed. Many officials from the Loto Quebec and the Federal Office have continued to push the legality of Bill 74. The reason claimed for this bill is to ensure public health. The real reason however is monetary. The official body now receives 10 percent of the revenue earned in the state where as 90 percent goes in the black market. Loto Quebec is eyeing at the extra dollars by completely ceasing the operations of most online players that provide popular games such as Tiki Island slot and creating a monopoly. At the moment the state only earn revenue of close to $27 million a year.

Loto-Quebec is expected to on board 3 online gambling players as official partners. Games provided by these players would in turn be used by the Loto-Quebec official site- Amaya, a Montreal based online gambling site is expected to receive an official license from Loto-Quebec.

For ISPs however, there is a little breather. The first task would be to deactivate all the non-license players in the online space. Post this all the ISPS would be given a month to follow compliance. Failure to do this would lead to a fine of close to $100,000.

There is another complication though. Most of the European countries tried this blacklist approach in the past decade but it did not work. Most online players switched their base location from the parent country to a different address in the virtual world. Thus the move became a futile exercise as soon as it was released. There are very good chances that bigger online gambling companies would follow suit yet again.

Another strong challenge could be faced from the Kahnawake Reserve- a combined body of Mohawk Internet Tech and Kahnawake Gaming Association. This body offers regulatory immunity for a host of online companies that Loto-Quebec is trying to suppress. Although the Canadian Government has already declared that Kahnawake Reserve is illegal in the country, they have never quite disappeared. On the contrary they are running an extremely profitable business since 1999.

It remains to be seen how this move unfolds in the coming days.

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