Justice Committee on Feb. 23rd, 2021

[The Chair, Liberal, Iqra Khalid]

We will start the second hour of this meeting.

For the duration of our study of Bill C-218, I welcome Mr. Masse, who will be replacing Mr. Garrison throughout this study.

Brian, welcome to our committee. It's really good to have you.

I know we're all quite familiar now with the Zoom technology, but I'll remind members to speak slowly and clearly, to please unmute when they are speaking and to mute when they are not speaking.

With that, I welcome Mr. Waugh, who is here by video conference, even though he's in Ottawa.

As a reminder, I have a one-minute card and a 30-second card for members as we go through our questioning, just to make it easier for everyone.

Mr. Waugh, you have five minutes to make your opening remarks.

[Kevin Waugh, Conservative, Saskatoon—Grasswood, SK]

Thank you very much, Madam Chair and all members of the justice committee, for inviting me here today to discuss Bill C-218, the safe and regulated sports betting act.

This important piece of legislation seeks to make a rather simple change to the Criminal Code to remove the long-standing restriction against betting on single-sport events, fights and races.

By the way, I was very happy to see the broad support this legislation received in the House of Commons last week and the positive remarks made by all colleagues from all parties.

Single-event sports betting already takes place in this country, and it is a massive industry. According to some estimates, the single-event sports betting industry is worth $14 billion per year. Unfortunately, due to the fact that it is banned under the Criminal Code, this betting all takes place through offshore betting websites and black market bookmakers, most of whom have ties to criminal organizations like the Hells Angels.

This, in and of itself, spawns a variety of problems. First of all, the fact that single-event betting remains prohibited means that the provinces, which are typically responsible for management of lottery and betting systems, are totally unable to regulate this industry. As such, none of these websites or bookmakers are subject to any regulation or taxes.

Not being subject to regulation or government oversight, these websites have no consumer protection requirements, aren't required to maintain or support problem gambling programs, and don't reinvest or spur any further economic activity in the communities that they generate their profits from. This means that all of the profits from such wagers go straight into the pockets of foreign website operators and criminals. In the case of criminal organizations like the Hells Angels, which operate the black market betting rings and websites across this country, the money generated goes on to fund other forms of criminality, providing increased risk to the safety of our communities.

While parlay betting, which requires bettors to select the winners of multiple games correctly, is legal and already exists as a product available in Canada, parlay-betting products like Pro-Line and Sport Select generate only a small fraction of the sport betting in this country, approximately $500 million per year. These products are naturally less attractive to bettors, as the odds of succeeding in their wagers are greatly reduced, so they seek avenues to bet on single events and go toward avenues that most bettors don't realize are actually restricted in this country.

By removing these restrictions in the Criminal Code and putting single-event betting into the hands of the provincial governments, the provinces will be able to offer the products that bettors actually want to bet on and take betting out of the hands, then, of this black market. Organizations such as the Western Canada Lottery Corporation, Lotto-Quebec, Ontario Lottery and Gaming Corporation and others that the governments might entrust with these products have experience in these industries and are highly regulated to ensure that consumers are well protected.

It also means that the billions of dollars that currently go to offshore sites and criminal organizations are actually going back into our communities, creating jobs and supporting community programs.

Many provincial governments and their regulators have expressed their support for this proposal, as have amateur sport organizations like Canada Soccer; professional sport leagues, including the National Hockey League, the National Basketball Association, Major League Baseball, the Canadian Football League and Major League Soccer; and community organizations, plus municipal governments.

In closing, Madam Chair, the legalization of single-event sport betting provides a much-needed opportunity to tackle illegal gambling in this country and create new opportunities for economic development and new avenues for a variety of sectors, especially given the difficult times that we find ourselves in.

Bill C-218 has widespread support, both in the House and across this country.

I trust that in the name of good policy we can work together to get this legislation through this committee and to the rest of the legislative process.

Again, thank you, Madam Chair, and all members of the committee, for your time here today. I'm more than happy to answer some questions.

[The Chair, Liberal, Iqra Khalid]

Thank you, Mr. Waugh.

That was five minutes on the dot. We appreciate that.

We're now going to go into our first round of questions, six minutes each, starting with Mr. Cooper.

Go ahead, sir.

[Michael Cooper, Conservative, St. Albert—Edmonton, AB]

Thank you very much, Madam Chair.

It's great to see my good friend Mr. Waugh here. Kevin, congratulations on the very decisive vote at second reading stage of your bill.

I also acknowledge Mr. Masse, who championed this issue in the last Parliament. That demonstrates this really has support across all party lines, and has for some time.

I want to allow you to elaborate a little bit on a few points you made in your presentation, Mr. Waugh.

You noted towards the end that this legislation has support among sports leagues like the NHL and CFL. Can you broadly speak to the impact this bill might have on the sports industry in Canada?

[Kevin Waugh, Conservative, Saskatoon—Grasswood, SK]

Thank you, Mr. Cooper, for the question.

Last June, I received endorsements from all five professional leagues. This was a change in their policy. This is the fourth time this bill has come forward to the House of Commons—the second time, actually, to the justice committee—and a lot has changed over the years. It started way back in February, believe it or not, of 2011. Ten years later, we're still back here trying to get this bill moved on.

The sports leagues, many years ago, did not endorse regulated gaming. They have since changed their opinion. It was because of a Supreme Court decision in New Jersey in 2018, which changed everything. It legalized other states in the United States to actually operate single-event betting. Not only Nevada, but of course New Jersey, New York, Michigan, Montana and so on have hopped on board in the last two to three years.

When you look at these five professional leagues, they still supply the data to Nevada for betting in Las Vegas, so they're still very heavily involved in this. They want the single-event betting, because they have seen the need to get it regulated. In this country, it is regulated by the provincial bodies. That's why they came on board, Mr. Cooper, in June to talk about the need in Canada for a regulated single-game betting authority.

[Michael Cooper, Conservative, St. Albert—Edmonton, AB]

Just to pick up on that point, Mr. Waugh, in terms of the importance of regulation and oversight for single-event sports betting, can you elaborate on how important that is?

[Kevin Waugh, Conservative, Saskatoon—Grasswood, SK]

I think it's very important, Mr. Cooper. If you look at society today, they want to be entertained, and sports is entertainment. It's big business. When I started in broadcasting over 40 years ago, I was a sportscaster on radio and TV in Saskatoon. The change in the market, to tell you the truth, came with sport industries like TSN, which started in 1984, and Sportsnet, which started in 1998. These were channels that went 24-7 on sports. In the industry, you have to fill black, as we say, and so they realized the need for eyeballs on their channels. Everybody watched the NFL. We got cable from the United States in the eighties, so Sunday sports was big. The NFL is the most bet-on sport in the world.

It's all come together, I would say. You have Mr. Masse in committee. We had his bill in 2016, which did not pass the House of Commons, and there were others. But I think now is the time in this country to move forward. We have seen the United States adopt this in 2018, and I think now professional leagues are on board 100% and they want this regulated.

[Michael Cooper, Conservative, St. Albert—Edmonton, AB]

You mentioned the United States, and the court ruling that arose out of actions that took place out of the state of New Jersey. Prior to that, only Nevada had it. You cited a few other states, but I think there's been really significant movement. I just wonder if you could perhaps expand upon that in the United States, in terms of how many states have moved in this direction following the court decision.

[Kevin Waugh, Conservative, Saskatoon—Grasswood, SK]

It all started in 1992, when the U.S. Congress enacted the Professional and Amateur Sports Protection Act, prohibiting states from authorizing sport gambling. However, in a landmark ruling in 2018, the United States Supreme Court declared that the PASPA was unconstitutional. New Jersey challenged it and won.

Since then, we're well into 20 states in the United States that today have single-game betting. Many of those are on the Canadian border, which causes some issues with Niagara Falls and Windsor, but we'll get into that a little later. Many of the states are now looking at this legislation, and we will have between 40 and 45 of them take this up in the next year in the United States. You can see that single-game event betting is exploding in the United States.

[Michael Cooper, Conservative, St. Albert—Edmonton, AB]

Thank you for that.

[The Chair, Liberal, Iqra Khalid]

Thank you, Mr. Cooper.

I will now go to Mr. Kelloway for six minutes. Go ahead, sir.

[Mike Kelloway, Liberal, Cape Breton—Canso, NS]

Thank you, Madam Chair.

MP Waugh, it's a real pleasure to meet you virtually. Hopefully some day soon we'll have a coffee. I'd like to learn more about your underlying passions around this bill, because it becomes evident very quickly that there is a passion for this.

I have a couple of questions for you. Appreciating that mental health and addictions fall under provincial jurisdiction, I'm wondering what you think the role of the federal government should be to address gambling addictions.

[Kevin Waugh, Conservative, Saskatoon—Grasswood, SK]

That's a great question, Mr. Kelloway.

You are 100% correct. It is a provincial jurisdiction, but they can't get there without this bill passing third reading and going to the Senate for study. There have been a lot of studies in this country. The most recent study was two years ago and came out of the international symposium on April 24-25, 2019, held by the Ethical Sport Symposium. It is a great document, about 26 pages. I've spoken in the House, as have others, to this bill. We need to do more for addictions and mental health. We all know that.

Provincial governments right now are putting millions of dollars away to deal with this. I can tell you right now that with unregulated single-game betting, we don't know who is next door in their basement going on Bodog, Bet365 or any of the criminal organizations. We have no idea. We have an idea that well over $14 billion per year are being bet, but we don't know the problem gambling. There's an old saying that the Hells Angels don't have a gambling program. Why would they? They're into this.

Provincial governments have been regulating gaming in this country for over 30 years. They have the expertise. They're ready for this bill to pass, and they're ready to legislate it in their provinces and territories.

You bring up a good point; we have talked about it lots in the House because there is a stigma with this bill. What we are going to do with addictions and mental health is a big question across the country, whether it's opiates, drinking, smoking or so on.

[Mike Kelloway, Liberal, Cape Breton—Canso, NS]

Thank you so much, MP Waugh, for that.

You mentioned the provinces supporting it. Is that from coast to coast? What is the breakdown in terms of provinces that are behind it? Is it all of them, 70% of them or...? Can you give us a sense of that?

[Kevin Waugh, Conservative, Saskatoon—Grasswood, SK]

The Western Canada Lottery Corporation, which looks after Alberta, Saskatchewan, Manitoba and the territories, is ready for this. British Columbia is ready for it. Alberta certainly is, as well as Ontario and Quebec. I would say Ontario, Quebec and B.C. are the three jurisdictions that are ready today to move forward. They're looking at an app on your mobile device that would—

[Mike Kelloway, Liberal, Cape Breton—Canso, NS]

Interesting.

[Kevin Waugh, Conservative, Saskatoon—Grasswood, SK]

Yes. There is lots of competition in this market. DraftKings and Score Media you will meet later, I think, in testimony. This is moving very quickly. I would say 100% that some will be up before others. Quebec will be one of the first provinces to move forward if this bill is passed, along with British Columbia. Ontario has done a lot of work in this. You're going to meet, from my province, the Saskatchewan Indian Gaming Authority—Zane Hansen is coming to your committee. They employ hundreds or thousands of indigenous workers in their casinos. They want to bring this to Saskatchewan, and you're going to hear Zane's story.

All jurisdictions are ready for this. They're working behind the scenes to make sure that, if this is passed, they can get up and running within weeks.

[Mike Kelloway, Liberal, Cape Breton—Canso, NS]

Madam Chair, how much time do I have?

[The Chair, Liberal, Iqra Khalid]

You have two minutes.

[Mike Kelloway, Liberal, Cape Breton—Canso, NS]

Okay, great, because I am really interested in this bill.

You mentioned organized crime, MP Waugh. You might have addressed this, and I may have missed it, but do we have anything quantifiable in terms of the money that is made by organized crime on single-sport betting?

[Kevin Waugh, Conservative, Saskatoon—Grasswood, SK]

Paul Burns from the Canadian Gaming Association came up with $14 billion. He's been working on this for many years, and $4 billion is offshore websites like Bodog, Bet365 and so on, because people in this country were parlay betting. I mentioned $500 million coast to coast. For parlay betting, as I mentioned in my speech, the odds aren't as good. If you wanted to do single-game betting, you can't do it legally in this country today, so $4 billion goes to the offshore websites, and up to $10 billion goes to organized crime.

We're not getting any benefit in any jurisdiction in this country when that money, in essence, is leaving the country and doesn't go back into the provincial coffers.

[Mike Kelloway, Liberal, Cape Breton—Canso, NS]

Thank you for that, MP Waugh.

How soon would single-sport betting be legalized if this bill passes?

[Kevin Waugh, Conservative, Saskatoon—Grasswood, SK]

Well, like I said, I think Quebec was ready three to four weeks in. They could pull this off. Let's say we get this passed through third reading into the Senate, and it comes out of the Senate. I think that, within a month, single-event sport betting could take place in this country, which would really be a bonus in Canada.

[Mike Kelloway, Liberal, Cape Breton—Canso, NS]

Thank you so much.

[The Chair, Liberal, Iqra Khalid]

Thank you.

Thank you, Mr. Kelloway.

Mr. Fortin, the floor is yours for six minutes.