Canadians betting on the exchanges?

[3rdeye]

Hello,

I would like to bet on UK horse raching on the betting exchanges, but I live in the US, so this is a legal problem for me.  I think that betting on the exchanges in Canada is legal, which might solve my problem.  Does anyone know if betting on the exchanges in Canada is legal according to Canadian laws?  I assume that you are not lawyers, so I will take your responces as such, but your input would be appreciated.  Thanks in advance<br>

[Malc Smith]

From what I understand I believe it’s illegal for anyone within the US to do any form of betting over the internet.  So if you are in the US then you are stuffed.

I don’t know how this law applies to US citizens abroad (some US laws seem to apply to every citizen no matter where they live!) as I haven’t seen the small print.

Then there is the matter of getting your bet on.  American Express, for example, have stopped their cards being used on gambling sites.   There’s been a few other ones like this too and I read the other day that Capital One have announced the same.

So, the next issue is to get yourself a non-US credit or debit card.

As for you Canadian question I would imagine that if you’re not in the US then this would be legal.  After all, the Queen is on their currency and it would be a poor show if one couldn’t back her horses.

[cormack15]

Would it be legal for someone in the UK to place bets on behalf of US citizens (assuming of course that they never planned to go to the dreaded country)?

[3rdeye]

Thank you for the replies so far.  My understanding is it would be legal for me to place bets outside of the US from the US legal view point, as I would be subject to the laws of the country from which I was placing bets, and not subject to US laws.  Opening an account with Betfair or another exchange would be a small problem, but one that could be overcome once I establish proof that I am outside of the US.  I have spent years developing systems as a hobby and now feel ready to give it a go, I just wish I could place bets from here!  Darn this government!  

[Malc Smith]

I am not sure about this; I think that the law prevents any internet betting, particularly those which go outside the state which you’re in.

Then again, they have to catch you first.  Your next trick is to find somewhere where you can open a non-US bank account.

Best of luck.

[wit]

3rdeye

My understanding is that its not the punter but the bookie / operator that those jurisdictions target, the overriding motivator being protectionism and tax revenues, and the driver usually being an ambitious local politician or government official.

With the proviso that I’m not admitted to the bar of any state or province of the US or Canada:

For Canada:

1.Part VII of the Canadian Criminal Code makes all activities related to operating or acting in support of a commercial betting enterprise an offence, unless it is an enterprise licensed by a provincial government.

2.However, by Section 204(1)(b) of the Code, its betting prohibitions do not apply to "a private bet between individuals not engaged in any way in the business of betting".

3.Possibly it is on this basis that for example Betfair seems to accept bets from Canadian residents (which it does not from US residents)  – it does offer to run an account in Canadian dollars if desired.

4.Also, even if  a non-Canadian bookie was to target the Canadian market from offshore, there is the interesting factor of the Kahnawake Mohawks.

http://www.kahnawake.com/gamingcommission/

On the back of being a sovereign nation and (as they maintain) internet gambling expressing ancient aboriginal customs – plus the fact of residual tensions from a stand off they had in 1990 with the Canadian military – they host a few dozen internet websites for cybercasinos, racebooks and sportsbooks.    Neither Quebec nor the federal government has shown any inclination to take them on again.

5.Now in my experience Canadians are a very decent people in terms of meeting their international obligations – indeed Canada took the part of Antigua against the US in respect of  the General Agreement on Trade in Services (GATS) when the US tried to hit Antigua in respect of its offshore gambling industry.  

If Canadian criminal law was used to frustrate internet access by non-Canadian betting suppliers to the Canadian market, that would violate Canada’s obligations under GATS if at the same time the Kahnawake could offer such services to non-Canadians.    

So while the Kahnawake are left alone, chances are that the likes of offshore bookies will be also.

6.So, while in the case of SOCAN v Canadian Association of Internet Providers, the Supreme Court indicated that it regards itself as able to exercise jurisdiction over those running offshore servers and where only the bettor is in Canada., in practice (as I understand) nobody has actually been prosecuted to date – despite some very provocative advertising in Canada by various offshore boookies –  and there’s no evidence its regarded as a priority by the authorities.

7.The position is different for those operators who have a server in Canada and take bets from Canadian residents.     Starnet Communications had most of  its servers in Antigua but did have one in Vancouver – it was prosecuted and pleaded guilty to one specimen count: fined CAD 100,000 and had to forfeit around USD 4 million as its "proceeds of crime" from such activity.

<br>For the US (and apologies if I’m saying things you already know):

Last week’s legislation – snuck through as section 802 of the totally unrelated SAFE Ports Act – amends the Wire Act of 1961 by providing for "a prohibition on acceptance of any financial instrument for unlawful internet gambling" through regulations yet to be drafted:

http://thomas.loc.gov/cgi-bin/query/D?c … 1095PuMzD::

[links to the Library of Congress have a limited life:  if expired, hit the "Bills, Resolutions" link along the top, type "internet gambling" in the search box, enter, then click result 7,  SAFE Ports Act, HR 4954 ENR]

It applies to "a person engaged in the business of betting or wagering" – so again arguably not  punter-facing but  operator-facing.    

It also does not define what is "unlawful internet gambling"

This is in line with the legislative scheme in the US as regards gambling – it’s a matter for state laws to regulate and define:  the federal laws are just there to help the states out when their laws are sought to be circumvented by those in other states and other countries.

<br>As I understand it, therefore, reviews like the 2002 one of the underlying US position made by the US General Accounting Office still hold good:

http://www.gao.gov/new.items/d0389.pdf# … ambling%22

and – to the extent you want to do anything from within the US (rather than travel to Canada) – the main issue for you legally would seem to be applicable state laws.

Although the US asserts a wide extra-territorial jurisdiction over its passportholders – eg you can’t break US anti-corruption laws even while you’re in a foreign environment under which they are not reflected in local  criminal law – I’ve not heard of it holding you to US gambling law when abroad.

Tax law yes – since, unlike most countries, the US taxes its citizens fundamentally on the basis of holding the passport rather than  hy reference to their residence or domicile.   So you’ll have to declare gambling winnings wherever made in the world (and get no deduction for losses).

<br>I agree the main practical issue for you – in Canada or the US – would seem to be finding a financial institution willing to service the remittances between you and the betting operator, as per the main focus and review of that GAO report.    

Which ultimately means finding a financial institution not bothered about being able to clear dollars through New York – ie effectively not dealing at all in USD.

<br>Corm,

some comments on using a UK intermediary:

1. it doesn’t help the US legal position, since the Wire Act would still apply

2.it would almost certainly breach the "know your customer" contractual terms with the relevant betting exchange, risking potential freezing/forfeiture of funds

3.depending on the set-up. the UK intermediary could find itself in breach of UK anti-moneylaundering and deposit-taking / financial intermediary laws, with criminal and forefeiture consequences

4.if the arrangement got too far up the  wrong US nose, under the current extradition arrangements it wouldn’t take much to get the UK intermediary hauled off to the US.

<br>Also, remember section 44 of the UK’s Gambling Act 2005:  

" A person commits an offence if he does anything in Great Britain, or uses remote gambling equipment situated in Great Britain, for the purpose of inviting or enabling a person in a prohibited territory to participate in remote gambling…. "prohibited territory" means a country or place designated for the purpose of this section by order made by the Secretary of State".    

In other words, it would just take a request from those US chappies to whom the UK government is always most accommodating, and the UK betting exchange  involved would likely ban the intermediary sharpish.

best regards

wit<br>

(Edited by wit at 7:26 pm on Oct. 7, 2006)

[3rdeye]

Thank you so much for the time you all have spent to post your replies.  It is much appreciated.

[cormack15]

That’s a ‘no’ then is it Wit!  

[wit]

<br>Correct – to the original question:

>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>><br>Does anyone know if betting on the exchanges in Canada is legal according to Canadian laws? <br><<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<

no, nobody knows…

….though an exchange punter in Canada has three things going for him/her:

–  is not the target

–  Section 204(1)(b)

–  the Kahnawake Mohawks

best regards

wit

[robert99]

Wit,

So where are the loopholes?

[wit]

that’s the bit you charge for ;)

[War Admiral]

From what I understand I believe it’s illegal for anyone within the US to do any form of betting over the internet.  So if you are in the US then you are stuffed.

I have done this in the past. Are the feds going to come get me? ;)

(Edited by War Admiral at 11:01 pm on Oct. 9, 2006)

[Shadow Leader]

I actually believe that it is now an offence for a bank in the US to authorise payments to a bookmaking firm [for US citizens presumably].  Most bookmaking firms are now red hot about not taking bets from anyone thought to be a US citizen because of the trouble they can be landed in – the policy tends to be an across the board "no bets accepted from US citizens – all accounts from such will be closed".

[3rdeye]

I believe you are correct, although if you can prove you reside outside of the USA, some them will allow you to place bets.  As it should be, the US citizen would not be breaking US laws under those circumstances.

[wit]

http://news.yahoo.com/s/nm/20061002/tc_ … ambling_dc

and look back also to

<br>http://www.gao.gov/new.items/d0389.pdf#search=%22canada%20internet%20gambling%22

best regards

wit

[Author]

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