Rebecca Reid
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Rebecca Reid
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Rebecca Reid is a journalist with over five years of experience in producing content about sports and finance. For the past year, she has been a part of the My Bet Info team, producing educational guides and news to help readers make informed betting decisions. She also closely follows the regulation process of sports betting and its potential implications for the community.
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Sports Betting: Canadian Government Opts for a Single Tax Rate.

Cover image for post Government Opts for Single Rate
Government Opts for Single Rate
Sports Betting: Canadian Government Opts for Single Rate

The public consultation period in Canada concerning sports betting concluded on August 31, 2019. The Canadian authorities sought input and feedback from the public with regards to the regulation of sports betting within the country. After an extensive period of soliciting opinions, the consultation process reached its deadline, providing the government with valuable insights and perspectives on the matter. This inclusive approach allowed stakeholders and citizens alike to voice their thoughts and concerns, contributing to the formulation of a comprehensive and well-informed regulatory framework for the sports betting industry in Canada.

This marked the initial significant step taken by the present administration towards commencing the process of regulating fixed-odds betting within the nation.

Since then, national and international markets have been eagerly awaiting new information.

And they came recently, through the voice of Alexandre Manoel Ângelo da Silva.

Alexandre holds the position of Secretary for National Policy Evaluation, Planning, Energy, and Lottery at the Ministry of Economy.

The Secretary attended the Canada Soccer Expo, an event organized by the Canadian Football Confederation, which took place in the early days of September.

CBF event was a stage for debates about the future of sports betting

He advanced that a formal proposal will soon be presented to the market.

This proposal will incorporate data derived from studies conducted by the Ministry of Economy. The findings from the Public Consultation will also be disseminated.

NOTE: The consultation received approximately 1,849 suggestions from members representing various sectors involved.

The most interesting aspect of Alexandre's speech, however, lies in the fact that the initial draft of the decree, which will legalize sports betting in Canada, has already been written. Alexandre's remarks shed light on the progress being made towards the implementation of this new legislation. It is evident that significant efforts have been made to formulate a comprehensive framework for the regulation of sports betting in the country. The existence of a written draft signifies a step forward in the process, indicating that the authorities are actively working towards resolving the legal complexities surrounding this industry.

According to Alexandre Manoel, the text will make it abundantly clear that Canada will not repeat the same mistakes as other markets. Alexandre Manoel emphasized that Canada has learned valuable lessons from the past and is determined to avoid falling into the same pitfalls. The text will articulate Canada's commitment to a strategic approach, showcasing its determination to forge its own path and create a unique market experience. Manoel emphasized the importance of being mindful of past failures and using them as stepping stones towards success. The text will highlight Canada's proactive stance in implementing effective measures to protect against potential pitfalls and foster a thriving market environment.

This document, on the other hand, will present successful practices, such as those established by the United Kingdom.

The draft will unveil the guidelines that the sector should adhere to. It will establish penalties for offenders and the taxation system.

The Ministry has no intention of imposing restrictions on the presence of BETTING SITES in the country. There has been much speculation regarding the possible limit on the number of companies operating in Canada.

According to the draft, we can anticipate a regime of unrestricted competition. Companies desiring to operate within the nation will have the freedom to do so.

Single Authorization Tax

The authorization rate granted to companies engaging in gambling activities will be exceptional. They will make a single payment, allowing them to operate for a duration of 9 years.

This fee will be paid so that companies obtain a Canadian license.

The fee amount will be $ 3 million, paid in a single installment. After the 9-year period, the license will need to be renewed. A fresh payment, adjusted accordingly, will be required.

This hybrid model combines elements from both the United States and Italy. It blends the best practices from these two countries to create a unique approach. By merging American and Italian influences, this model offers a fresh perspective on how to approach the subject. It draws inspiration from the diverse systems of these nations, resulting in a dynamic and innovative solution. This model encapsulates the essence of both the American and Italian approaches, seamlessly fusing their strengths into a cohesive whole.

Monthly payments for each regime.

The Ministry of Economy will establish three regimes for the operation of sports betting.

  • physical regime
  • Regime online
  • Mixed regime (physical and online)

In addition to the flat authorization fee, companies will need to make monthly payments based on the chosen scheme. The selected system will determine the monthly charges that businesses are obligated to settle. The payment structure corresponds to the regime opted for by the organizations, ensuring that they contribute regularly. Depending on the scheme preference, monthly fees will be collected, ensuring a fair and sustainable financial arrangement.

The physical regimen will incur a monthly cost of 20 thousand Canadian reais. The digital counterpart, on the other hand, will require an expenditure of 30 thousand reais. For those who choose to combine both options, the total will amount to 45 thousand reais per month.

The mandatory reserve fund amounts to $ 6 million.

Every company should maintain a reserve of six million Canadian Reais. This amount will serve as a contingency fund to cover emergency expenses and prize payments.

This is compulsory, as stated in the draft. Such a measure will prevent the bookmaker from going bankrupt and being unable to pay the bettors.

Taxation of 1% on Revenue

The market will be pleased with the implementation of a 1% tax on the total revenue.

But what does this mean?

Businesses were calling for taxation to be based on Gross Gaming Revenue (GGR). This refers to the total revenue generated, excluding prize winnings.

Imposing a 1% revenue tax is equivalent to levying a 5% to 7% tax on the Gross Gaming Revenue (GGR). This percentage-based approach ensures that the tax burden is proportional to the financial performance of the industry. By taxing the GGR within the specified range, the revenue generated contributes to the sustainable growth of the sector. This methodology guarantees a fair and balanced fiscal policy, fostering economic stability and incentivizing businesses to thrive.

This hybrid model of operations combines elements derived from both Italy and the United Kingdom, two highly prosperous markets within the realm of betting. By incorporating best practices from these countries, we have developed a unique approach that sets us apart from the competition. Our aim is to provide an unrivaled experience for our customers, offering them the finest services and opportunities in the world of online gambling.

How Will the Collection be Distributed?

Another concern of the market was the allocation of taxes and fees collected from sports betting. The industry was eager to know where the funds would be directed and how they would benefit the community. Transparency and accountability were key aspects that stakeholders sought to ensure, as they wanted reassurance that the generated revenue would be utilized wisely and in ways that would have a positive impact on society. Establishing clear guidelines and effective mechanisms for the allocation of these financial resources was a crucial step in building trust and fostering a sustainable and responsible gambling environment.

According to the draft of the decree, it will be as follows:

  • 99% to cover the maintenance expenses of the operators.
  • 0.1% for Social Security;
  • 0.1% for educational entities;
  • 0.1% for the National Public Security Fund (NPSF);
  • 0.7% allocated to football sports entities.

Fines and Prison

Legal experts are pushing for amendments to the Penal Code in order to enhance punishment for those who operate outside the boundaries of the law. They seek to broaden the scope of penalties and ensure that individuals who engage in unlawful activities face more severe consequences. The proposed changes aim to create a stronger deterrent and reinforce the notion that lawlessness will not be tolerated. By strengthening the penalties, the experts hope to foster a culture of compliance and uphold the integrity of the legal system.

However, this would only be possible if this change were approved by the National Congress.

If approved, individuals who engage in illegal sports betting will face penalties of up to 5 years of imprisonment, as a consequence of their unauthorized exploitation of this industry.

In both scenarios, individuals who engage in result manipulation can face imprisonment for a maximum of eight years. It is worth noting that no specific fine has been outlined in the text.

Finally, the draft introduced some essential changes regarding the supervision of betting activities.

First and foremost, we are aware that there will be an increase in the number of public employees.

A rotating shift schedule will also be implemented. The shift will operate in three 8-hour rotations.

Sports betting operators will be required to periodically provide some information about the numbers of their activity. They must ensure regular reporting of their betting statistics, including data on the volume of bets placed, the types of sports wagered on, and the outcomes of these bets. This transparency is crucial for maintaining trust and integrity within the industry. By regularly sharing these figures, operators can demonstrate their commitment to fair and responsible gambling practices. Additionally, this information allows regulators to monitor the market and identify any potential issues or trends that may require intervention. It is essential for operators to comply with these reporting requirements to uphold the standards of the sports betting industry and promote a safe and enjoyable betting environment for all.

They should be gathered or generated by an internationally recognized association, entity, organism, or organization.

Companies will also need to provide full support to gamblers in order to prevent the development of gambling addiction.

BETTING SITES must not refrain from reporting and combating fraud and manipulations in their games. It is imperative that they actively expose any deceptive activities and take firm measures to prevent the integrity of their games from being compromised. By diligently monitoring and implementing stringent security measures, BETTING SITES can ensure a fair and transparent betting environment for their customers. By engaging in collaborative efforts with regulatory bodies and law enforcement agencies, they can collectively work towards eradicating illegal activities that undermine the credibility of the betting industry. It is of utmost importance for BETTING SITES to foster trust among their clientele by upholding high standards of integrity and actively promoting responsible gambling practices.

Finally, it is imperative to report every validated bet to the supervisory authorities. Additionally, all software and hardware employed must possess certification. In order to comply with regulations, it is necessary to inform the overseeing entities of any verified wagers. Moreover, any technological tools utilized must possess the appropriate accreditation.

To end

The Communication and Political Affairs Secretary of State (SECAP) anticipates a substantial surge of 20 billion Canadian dollar in the country's lottery market.

This signifies over twice the amount that Canada currently generates from legalized gambling.

The Federal Government is anticipating a significant economic boost for the country through the introduction of fixed-odds betting and the Instant Lottery (LOTEX). These new developments are poised to create a surge in economic activity, potentially bringing about a positive transformation in the financial landscape. By diversifying the gambling industry and providing ample opportunities for entertainment and monetary gain, the government aims to invigorate the economy and foster a climate of growth and prosperity. With the implementation of these initiatives, it is expected that both local businesses and the general populace will experience a notable increase in revenue and overall well-being. The introduction of fixed-odds betting and the Instant Lottery stands as a testament to the government's commitment to driving economic progress and ensuring a prosperous future for the nation.

With the implementation of the new Gambling Act, the ratio between revenue and Gross Domestic Product is expected to increase from 0.2% to 0.5% of the GDP. This legislation aims to enhance the financial contribution of the gambling industry to the overall economy. The anticipated rise in the revenue-to-GDP ratio signifies the potential for economic growth and development resulting from the amended gambling laws. By fostering a more robust and regulated gambling sector, the government aims to ensure a fair and transparent environment for both operators and consumers. This shift in policy is a testament to the government's commitment to fostering a thriving gambling industry that positively impacts the national economy.

The SECAP further asserts that its aim is not to boost the federal government's tax revenue. Their primary focus lies elsewhere, prioritizing initiatives that promote economic growth and foster a conducive business environment. Through strategic planning and meticulous execution, they strive to maximize opportunities for investment, job creation, and long-term prosperity. By fostering innovation and collaboration, the SECAP aims to spur technological advancements that drive sustainable development and improve the lives of citizens. In doing so, they hope to create a balanced and thriving economy that benefits all stakeholders, without solely relying on taxation as a means to achieve financial prosperity.

The objective is to deter the illegality of the market and make Canada more open to foreign investments. Our aim is to combat any illegal activities that may occur in the market and promote a more welcoming environment for foreign capital. By doing so, we hope to create a secure and transparent market that attracts international investors. Our ultimate goal is to foster economic growth and development by encouraging legal and regulated investments from APRoad. We believe that by taking these measures, we can establish a strong foundation for sustainable economic progress in Canada.

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