The top three legal mistakes real-money gaming startups make in Canada

The real-money gaming sector in Canada operates within a legal and regulatory environment that is significantly more complex than most founders initially anticipate. 

Multiple bodies of law can apply simultaneously, including gaming regulation, anti-money laundering and anti-terrorist financing requirements, consumer protection rules, advertising standards, privacy and data obligations, and broader corporate and securities considerations. 

The following are three core mistakes that early-stage operators commonly make when entering the Canadian market.

Mistake 1: Misunderstanding how real-money gaming is regulated

The starting point for gaming law in Canada is the federal Criminal Code. Sections 197 to 206 prohibit betting and gaming operations where players pay money for the chance to win something of greater value. The language of these provisions is broad and captures almost any form of wagering. The reason casinos, lottery products, and online wagering platforms exist lawfully in Canada is because section 207 creates a narrow exception permitting provinces to conduct and manage gaming within their borders. Each province therefore designates a gaming authority—such as the British Columbia Lottery Corporation (BCLC)—which is responsible for directing and overseeing lawful gaming operations.

Provinces differ in how they implement this authority. For example, Ontario has established a regulated iGaming market in which private operators may register with the Alcohol and Gaming Commission of Ontario and enter into a commercial agreement with iGaming Ontario. In contrast, British Columbia has not adopted a comparable private-operator licensing regime. A private business cannot legally operate a real-money gaming site directed at British Columbian users unless it is doing so as a contracted supplier to BCLC. Operating independently would fall outside the Criminal Code exception and would therefore be unlawful.

For real-money gaming startups, this means that jurisdictional planning should be an early consideration rather than something addressed after launch. Founders should begin by identifying which province or territory they intend to serve and determining whether a lawful pathway to market exists in that jurisdiction. From there, they can assess the province’s specific regulatory and operational requirements. Approaching product design and business planning only after this jurisdictional analysis helps ensure that the model can be deployed legally and sustainably in Canada.

Mistake 2: Assuming that skill alone removes an offering from gambling law

A common misconception among founders is that if a game involves skill, such as poker, then it is not considered gambling. This misunderstanding comes from the idea that gaming law only applies to “games of chance.” In Canada, however, the Criminal Code does not draw the distinction in that way. 

Whether an activity is considered gaming generally depends on whether three elements are present: 

1. Consideration: the player pays to participate

2. Chance: some element of randomness or uncertainty affects the outcomePrize: the player may win something of value 

If all three elements are present, the activity is likely to fall within the Criminal Code gaming prohibitions. If any one of these elements are removed, the activity may fall outside those prohibitions.

This is why certain formats are lawful. Free-to-play games, for example, do not involve consideration because players do not pay to enter, and there is often no prize of value at stake. Similarly, promotional sweepstakes contests frequently include a free or “alternative” mode of entry. These contests also typically require a skill-testing question so that the outcome does not depend entirely on chance.

The misconception arises when founders assume that removing or minimizing the chance element alone is enough to take the product outside gaming law. Some gaming-related offences in the Criminal Code expressly apply to games of mixed skill and chance; even if skill plays a meaningful role in determining the outcome, the activity may still be considered gaming where players pay to participate and can win something of value.

Relying on the presence of skill is not a viable strategy for avoiding gaming law in Canada. While it is theoretically possible to avoid the Criminal Code by offering a game of pure skill with no element of chance, this is rarely applicable to real-money gaming. As soon as players pay to participate and can win something of value, even a minimal element of chance will bring the product back within the scope of the Criminal Code. 

Mistake 3: Overlooking anti-money laundering and reporting requirements

In addition to Canada’s federal and provincial gaming regimes, RMG operators must also comply with national anti-money laundering (AML) and anti-terrorist financing (ATF) requirements. Real-money gaming operators offering lawful wagering in Canada are considered reporting entities, which means they are subject to mandatory compliance, monitoring, and reporting obligations on an ongoing basis. 

As a reporting entity, a real-money gaming operator must register with the Financial Transactions and Reports Analysis Center of Canada (FINTRAC), establish and maintain a written compliance program, verify player identity, maintain transaction and account records, conduct ongoing monitoring, and report certain transactions. Even where an operator relies on third-party partners who are themselves reporting entities, the operator itself remains responsible for compliance.

This is a mandatory component of real-money gaming in Canada. It is not possible to operate a lawful wagering product without satisfying anti-money laundering and anti-terrorist financing obligations. Platforms that do not build compliance systems early often find themselves unable to onboard users, open payment accounts, or raise capital, as investors now routinely request evidence of FINTRAC readiness.

What to know as a founder

The regulatory environment for real-money gaming in Canada requires careful planning and structured implementation. Provincial gaming law determines whether and where a product can be offered, while the federal AML/ATF regime dictates ongoing operational obligations for those operating lawfully. Understanding and integrating both the gaming law framework and AML/ATF obligations from the outset is essential to building a compliant, scalable, and durable RMG business in Canada.

Segev LLP is a highly ranked, full solutions business law firm with services offered across Canada, the United States, and India. The firm advises leading companies across gaming and betting, technology, corporate finance, M&A, real estate, litigation, and emerging industries, delivering practical, business focused legal solutions.

If you have questions about gaming and betting law, regulatory compliance, or operating in regulated markets, our Gaming & Betting team would be pleased to assist. Contact Segev LLP at 1-800-604-1312 or visit https://segevllp.com/contact-us/.