Alberta Separation Vote Could Bring New Headaches for Booming iGaming Market

_{The "Forever Canadian" initiative, seen here on a yard sign in Canmore, Alberta, is a grassroots, pro-unity movement launched to oppose Alberta's separatist push, which faces its first ballot challenge in less than two weeks. (Photo: Autumn Sky)}

Alberta is gearing up for a referendum on independence mere months after launching its new iGaming market, potentially creating some awkward timing for the gambling companies that have piled into North America’s newest regulated market.

Albertans will go to the polls Oct. 19 to vote on 10 provincial referendum questions covering everything from immigration and public services to constitutional reform.

But Question 10 is the big one: Should Alberta remain part of Canada, or begin the legal process that could ultimately lead to Alberta separating from Canada?

The vote would not itself make Alberta an independent country. Rather, a victory for the separation option would direct the provincial government to begin the process required to hold a later, binding referendum on independence.

Call it Alberta independence, Alberta separation or, colloquially, “Albexit.” Whatever the terminology, the prospect has potentially significant consequences for an online gambling market that opened only July 13, and now has 35 licensed operators.

And one of Alberta’s leading economists says gambling companies might want to pay particular attention to what separation could do to the people placing the bets.

“A smaller economy means lower incomes and less consumer spending, especially on more discretionary items and services,” Dr. Trevor Tombe, a University of Calgary economics professor and director of Canada’s Productivity Initiative at the university’s School of Public Policy, told Casinos.com.

Tombe is one of the authors of The Economic and Fiscal Implications of Alberta Separation, an independent analysis commissioned by the Alberta government and released by the University of Calgary’s School of Public Policy in September ahead of the referendum.

The report estimates Alberta’s GDP could fall 2.2% even under a relatively smooth separation from the rest of Canada.

If negotiations turned hostile and trade barriers increased, the economic hit could be considerably larger. Under some scenarios examined by the researchers, Alberta could lose more than 10% of its GDP while average wages could fall by nearly CAD$12,000 annually over the long term.

For Alberta online casinos and sportsbooks, less money in players’ pockets means less money available to gamble.

“[Online casinos] would be affected in the same way as most other businesses if economic activity in the province is disrupted," Tombe said.

Alberta iGaming Licenses Should Survive an ‘Albexit’

Operators in Alberta’s new online gambling regime can at least take comfort in the fact that they are licensed at the provincial level.

Tombe explained that “any direct material implications” of separation would be limited, but it also wouldn’t be just business as usual.

An independent Alberta would have to determine what happens to a long list of federal laws and regulations that currently apply to gambling businesses, creating potential headaches for operators as well as the lengthy supply chains sitting behind them.

Among the biggest questions would be anti-money laundering requirements.

Canada’s Proceeds of Crime (Money Laundering) and Terrorist Financing Act would cease to apply if Alberta left Canada, meaning its requirements would presumably have to be transposed into Alberta law or replaced with a new provincial regime.

Most gambling advertising regulation is already handled provincially. But federal rules, including the Competition Act and nationwide broadcasting standards, also apply to gambling marketing. Those requirements could change following separation.

There is little reason to expect existing Alberta gambling registrations to simply disappear. The greater risk would be uncertainty and regulatory delays while a newly independent government works through the considerably larger task of replacing federal institutions and laws.

However, a senior representative of a major gambling operator active in Alberta told Casinos.com that the company is not particularly concerned about the possibility of independence and expects to continue operating even if Alberta eventually leaves Canada.

Alberta the 51st State?

Alberta is not the first Canadian province to attempt to break away.

French-speaking Québec held referendums to secede in 1980 and 1995, but chose to remain part of Canada both times.

Alberta’s independence movement, however, has an additional wrinkle: the United States.

Reports this week that Alberta separatists have met with Republican political operatives in both Alberta and Washington have raised concerns among Canadian politicians about possible U.S. involvement in the independence campaign.

The meetings also give new relevance to an idea that has long hovered around the edges of Alberta separatism: that an independent Alberta could eventually develop much closer economic ties with the U.S. — or even seek to become part of it.

Several political figures south of the border have encouraged that speculation.

“It might be like our own little frozen Texas of the North,” Utah Sen. Mike Lee has said. “They may even want to join us.”

Alberta supplies huge amounts of oil to the United States, and supporters of closer U.S. ties have argued that the oil-rich province would be an attractive economic partner.

Canada, meanwhile, is moving to reduce that dependence. With the separation vote approaching, Prime Minister Mark Carney’s government has fast-tracked a proposed pipeline that would carry Alberta oil to the Pacific Coast and open greater access to Asian markets.

For gambling companies, the question is less dramatic but more practical.

Most of the major operators currently live in Alberta are also active in at least one U.S. state.

An independent Alberta would also have to decide what currency to use. It could continue using the Canadian dollar, establish its own currency or potentially adopt the U.S. dollar.

Any change would create currency-switching challenges for operators, payment providers and gamblers making deposits and withdrawals.

Long Odds on Alberta Leaving Canada

For all the talk of “Albexit” and a possible 51st state, Alberta is not expected to leave Canada anytime soon.

A new CBC News poll released on Monday found 72% of Albertans intend to vote for the province to remain part of Canada, compared with 23% who support beginning the legal process toward separation.

There is an interesting political wrinkle, however: 53% of respondents who said they would vote for Alberta’s governing United Conservative Party supported the separation option.

And, importantly, Albertans are not actually voting Oct. 19 on whether to become an independent country.

Instead, provincial citizens are being asked whether the government of Alberta “should commence the legal process required under the Canadian Constitution to hold a binding provincial referendum on whether or not Alberta should separate from Canada.”

A victory for the independence side would therefore mean another vote at a later date, not an immediate exit from Canada.

The reverse option on the ballot — “Alberta should remain a province of Canada” — nevertheless makes clear what is at stake. A victory for separatists would put the province on a path toward a binding independence vote.

Alberta Premier Danielle Smith is campaigning to remain part of Canada, despite allowing the referendum to proceed. After the latest polling, Smith said the level of support for separation was “still too high for my liking.”

For now, gambling companies in Alberta do not appear to be making plans for an independent future and remain confident they can adapt to any surprises.

But the long odds don't make the consequences irrelevant.

For a regulated iGaming market that opened only three months ago, even beginning the process of untangling Alberta from the rest of Canada could create a host of questions over federal regulation, banking, currency and the broader economy.

And as Tombe’s research suggests, the biggest concern for gambling companies may ultimately be just how much money Albertans have to spend.