The Standards-Based Approach

Under the Gaming Control Act, 1992 (GCA) and Regulation 78/12, the Registrar is authorized to establish risk-based standards to regulate Ontario’s gaming sector. The objective of a standards-based regulatory model is to shift the focus from requiring registrants to comply with a specific set of rules or processes, which tend to be prescriptive in nature, towards the broader regulatory outcomes or objectives they are expected to achieve. These regulatory outcomes are reflected in the “Standards” established herein. 

In most cases, these Standards are drafted at a high level of generality, with the aim being to capture the purpose behind the rule. This offers greater flexibility for regulated entities to determine the most efficient and effective way of meeting the outcomes required, which in turn helps reduce regulatory burden and support market innovation. Further, the flexibility inherent in a Standards-Based model allows the Alcohol and Gaming Commission of Ontario (AGCO) to focus its resources on key risks and to deliver a modernized approach to gaming regulation in a rapidly evolving industry.

The Standards were developed based on a comprehensive risk assessment conducted in consultation with key stakeholders, including the Ontario Lottery and Gaming Corporation (OLG), and social responsibility groups. The resulting risk themes are outlined in the next section and the risk inventory is attached as Appendix A. Going forward, risk assessments will be conducted periodically to ensure that the Standards continue to be relevant, and that the highest standards of integrity for gaming in Ontario are maintained. 

Registrar’s authority

OLG, Operators, gaming-related suppliers, sellers and gaming assistants are required to comply with the GCA and Regulation 78/12. Specifically, Sections 3.8 and 3.9 of the GCA require registrants, employees and other persons retained by OLG to comply with the Standards and Requirements established by the Registrar. The GCA provides the Registrar with the authority to establish Standards and Requirements for the conduct, management and operation of lottery schemes or businesses related to a lottery scheme or for related goods or services.

To whom the standards apply

Standards and Requirements established by the Registrar will apply to OLG and to all Operators of lottery schemes conducted in Ontario. Additionally, certain Standards and Requirements also apply to gaming-related suppliers, sellers and gaming assistants.

Specifically, the Standards and Requirements concerning registrants other than OLG and Operators are included below.

  • Gaming-Related Suppliers: 
    • 1.1, 1.2, 1.3, 1.4, 1.5, 1.6, 1.7, 1.9, 1.10, 1.11, 1.12, 1.13, 1.14, 1.15, 1.16, 1.17, 1.18, 1.19, 1.20, 1.21, 1.22, 1.23, 1.24, 1.25, 1.26, 1.27, 1.28, 1.29, 1.30, 1.31, 1.32, 1.33, 1.34, 1.35, 1.36, 1.37, 1.38, 1.39, 1.40, 1.41, 1.42, 1.43, 1.44, 1.45, 1.46
    • 2.4, 2.8, 2.8.1, 2.8.2, 2.8.3, 2.11
    • 4.1, 4.4, 4.5, 4.6, 4.6.1, 4.7, 4.8, 4.11, 4.11.3, 4.14, 4.15, 4.16, 4.19.1, 4.19.2, 4.22
    • 5.2, 5.7, 5.8, 5.10
    • 6.1
  • Sellers: 
    • 1.1, 1.17, 1.46, 1.48
    • 2.3, 2.4, 2.5, 2.6, 2.8.1, 2.8.2, 2.8.3, 2.10, 2.14
    • 3.2, 3.2.1, 3.2.2, 3.3
    • 4.1, 4.3, 4.3.1, 4.4, 4.11, 4.11.1, 4.11.2, 4.13, 4.16, 4.19.1, 4.19.2, 4.23, 4.24
    • 5.11, 5.12
    • 6.1
  • Gaming Assistant: 
    • 1.1, 1.17, 1.46, 1.48
    • 2.3, 2.4, 2.5, 2.6, 2.10, 2.14
    • 3.2, 3.2.1, 3.3
    • 4.2, 4.3, 4.3.1, 4.4, 4.11, 4.11.1, 4.11.2, 4.13, 4.16, 4.23, 4.24
    • 5.11
    • 6.1

The Registrar may direct any registered gaming-related suppliers, sellers and gaming assistants to comply with any additional Standards and Requirements as considered necessary to enhance and preserve the integrity of and public confidence in gaming in Ontario. The Registrar may also propose additional terms of registration specific to an Operator or other registrant to give effect to the purposes of the GCA.

These Standards and Requirements will not apply to lottery schemes conducted and managed by charitable organizations in accordance with section 207(1)(b) of the Criminal Code (Canada) or to suppliers, gaming assistants or other persons engaged in such lottery schemes. Existing standards, policies and terms and conditions will continue to apply to such lottery schemes, until such time as the Registrar determines.

Lottery Standards and Requirements for Sport and Event Betting

The AGCO recognizes that sport and event betting is an integrated part of gaming. The AGCO has embedded the standards and requirements for sport and event betting within the Registrar’s Standards for Gaming: Lottery Sector. This integrated structure means that the Registrar’s Standards for Gaming: Lottery Sector will generally apply to sport and event betting. The standards and requirements apply to all sports, esports, novelty, and fantasy sports products, and includes various bet types such as single- event, pool, and parlay. Virtual sports are not recognized as qualifying as an event that can be bet upon.

Registrar’s expectations

An Operator’s control environment and operating principles form an integral part of the standards-based framework. This section includes information from the Registrar to help guide Operators in the development and implementation of their control environment, as well as to establish key operating principles from a forward looking industry perspective. 

Control environment

  1. Operators will have appropriate and effective control activities in place to meet the Standards and Requirements.
  2. Operators will develop control activities based on the regulatory risks identified by the AGCO, taking into account how these risks apply or could manifest in the lottery sector.
  3. Operators will use control activities that can be audited or periodically reviewed for compliance with the Standards and Requirements, and will use systems-based solutions where appropriate.
  4. In developing their control environment, Operators will consider the Standards and Requirements in their entirety, as one control activity may be used to mitigate the risks associated with multiple Standards and Requirements.
  5. Operators shall develop an implementation and compliance plan for review by the Registrar prior to transitioning to a standards-based framework. An Operator’s plan must cover at a minimum the following elements: its process for developing control activities, including any industry standards or good practices it utilizes as part of its compliance framework; its corporate governance structure; the roles and activities of its internal and external auditors; and the timing for each phase of implementation and anticipated full implementation date.
  6. Operators shall develop and ensure an appropriate control environment that allow for Sellers to comply with these Standards and Requirements. Sellers and Gaming Assistants shall adhere to the controls established and implemented by Operators as required.

Utilize established effective practices

  1. Operators are encouraged to adopt industry standards, good practices and governance frameworks established by relevant standards-setting and standards-administering institutes and bodies to support an efficient and effective compliance framework. Similarly, Operators are encouraged to obtain certifications and accreditation, over time, to support continuous improvement of their operations and to contribute a degree of independent validation to their control environment and its design effectiveness.

Oversight and audit

  1. An Operator’s control activities must be reviewed by an independent oversight function for compliance with the Standards and Requirements. Independent oversight practices may vary by Operator depending on a number of factors, including the size, structure and complexity of the Operator’s organization. Whatever the case, the Registrar expects that there will be an appropriate role for both internal and external auditors in assessing the ongoing effectiveness and efficiency of internal controls.
  2. In addition to reviewing controls for compliance with the Standards and Requirements, audits should also take into account whether controls are consistent with appropriate and relevant industry standards, good practices and governance frameworks.