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The Criminal Code of Canada makes it illegal to gamble or conduct any gaming activities within Canada unless they fall within recognized exceptions set out in the Criminal Code. The exceptions include "lottery schemes" that are conducted and managed by a province (such as casinos and electronic gambling), a narrower range of lottery schemes that are licensed by a province (to a charity, a fair or exhibition, and, rarely, to a private individual), bets made between individuals not engaged in the business of betting, pari-mutuel betting on horse races (regulated by the federal Minister of Agriculture) and some lottery schemes conducted in Canada on international cruise ships. Under the Criminal Code, only provincial governments are permitted to offer a lottery scheme on or through a computer and only to residents of that province; they may not license others to conduct one. Therefore, in order to offer online gambling in Canada, a provincial government would have to operate the sites itself. It would also need to ensure that residents of other provinces could not participate unless cooperative agreements existed.
In addition, commercial land-based betting on single sporting events is prohibited in Canada and therefore would not be permitted over the Internet. A recent case from the Prince Edward Island Supreme Court (Appeal Division) held that an Internet lottery ticket website licensed by the Province of Prince Edward Island would not be conducted and managed in the province as required by the Criminal Code. The court found that even though the server was located in the province, the lottery would violate the Criminal Code by offering gambling to a worldwide market. In addition, since it was licensed to a charity and not conducted by the province, it violated the Criminal Code requirement that only provinces conduct computerized lottery schemes.