A Quebec court has struck down a law intended to force internet service providers to block access to all online-gambling sites.

Loto-Quebec’s plan to create an online gambling monopoly in Quebec by blocking access to all unofficial online gambling sites appears over after the Quebec Superior Court ruled that a law forcing the province’s ISPs (Internet Service Providers) to implement blacklists is unconstitutional and violates Canada’s Telecommunications Act.

The Superior Court ruling effectively nullifies Bill 74, a law that was envisioned by Loto-Quebec, the province’s state-owned lottery, to capture all gambling revenue generated by Quebec’s online punters simply by making all competing sites unavailable throughout the province. The proposed law was envisioned by the lottery’s officials as early as 2010 and planned for in earnest in 2014. It was passed into law as part of Quebec’s 2016 fiscal-year budget, despite widespread censorship-based concerns. The new rules were then immediately challenged by the?Canadian Wireless Telecommunications Association (CWTA), an industry group representing many of the ISPs.

The Superior Court ruling weighed in on the side of the CWTA and of Canada’s federal-level Telecommunications Act, which retains the overriding rights to determine the rules and conduct of all communication media in Canada, including the Internet. In the ruling, however, the Court dissected several problems with Quebec’s Bill 74, inferring that even without the superseding federal law, the Loto-Quebec-engineered blacklist plan was still doomed to legal defeat.

Revenue shortages triggered initial blacklist plan

Loto-Quebec’s long-standing desire to force all of Quebec’s online gamblers to wager exclusively on its site dates to 2014, and an ongoing and increasing shortfall by Loto-Quebec and its online offering, Espacejeux, to meet the revenue projections assigned to it within Quebec’s yearly budget projections.

With the backing of provincial legislators, the state-run lottery opted to force the issue by calling for the blocking of all “unlicensed” online operators, which meant all sites except Espacejeux, since Quebec lacked (and still does lack) an online-gambling licensing framework. The plan was for Loto-Quebec to assemble and maintain a blacklist of all unofficial sites available to Quebecois punters, which would be forwarded via Loto-Quebec’s parent agencies to all ISPs operating in the province. Those ISPs faced stiff penalties for non-compliance.

However, as part of their battle against the blacklist law, those ISPs and the CWTA also argued that they were unlawfully forced to become unpaid and unlicensed agents of the government, a point that the Superior Court ruling also upheld. As the ruling noted, “The essence of the impugned provisions is to enforce the exclusive right of the province to exploit online gambling by imposing an obligation on ISPs to block signals or data from content providers that the province considers illegal. These powers fall under federal jurisdiction.”

Public-health claims also quashed

As part of the rationale for implementing the blacklist and related provisions, Loto-Quebec and its supporting lawmakers argued that effectively granting the online monopoly to Espacejeux offered better control over possible addictive- and problem-gambling behaviors. Quebec’s Attorney General, in arguing the case, also claimed that “the protection of vulnerable consumers belongs to its competencies”.

The Superior Court ruling also examined these claims and found them to be virtually void of basis in fact. “The association of this provision with consumer protection is only superficial,” the Court found. “None of the desired measures regarding pathological gamblers or the prevention of their increase are provided for in the [law’s framework] or any other measure adopted or announced at the same time. In addition, the government has recognized that Quebec does not really have a pathological gambling problem.” Elsewhere, the ruling cited that Quebec has a researched addictive-gambling rate lower than other Canadian provinces, despite the public-health claims.

To add insult to legal injury, the ruling also asserted that Loto-Quebec’s and Espacejeux’s consumer protections were often no better – or in selected cases arguably worse – than the competing sites the state-run service sought to blacklist. “The report also notes that Loto-Quebec has reduced the scope of some of the responsible gambling measures (the introduction of personal time limits and expenditures) that it claimed to have put in place. These facts undermine the Attorney General’s argument that Loto-Quebec sites are safer, especially for vulnerable players.”

Pith and substance

Boil it all down from the Superior Court’s ruling, and it was all about money, and not about protecting vulnerable players. The court noted: “In short, the analysis shows that the pith and substance of the provincial provision is to force the ISPs to block the [unauthorized] sites that Loto-Quebec deems illegal (which the provincial provision does) in order to increase the province’s revenues.”

The Superior Court ruling did not need to delve into the flaws of the Loto-Quebec scheme as thoroughly as it did; simply reasserting the federal Telecommunications Act’s supremacy would have sufficed. The ruling’s excessive attention to Bill 74’s legal flaws, despite it being a moot law, may be meant to dissuade Loto-Quebec and the province’s lawmakers from pursuing another blacklist-based plan in the future.

Quebec’s Attorney General’s Office still has the option of appealing the matter into Canada’s federal system, though that appears unlikely in the wake of the highly one-sided ruling.

“We have always been clear that Canadians are better served by a proportionate and symmetrical set of federal regulations than a patchwork of provincial regulations,” said Tiéoulé Traoré, CWTA’s manager of government relations.