Can Canada regulate the internet?

• Author: Kenyon-Schultz, Tristan
• Position: Special Report on Internet Law

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Cutting Across Borders

The world is composed of 202 sovereign nations and each of these nations relies upon physical borders to objectively define the limits of their national authority. Problems arise, however, when technology challenges the viability of these borders. A perfect example is the Internet. The Internet is a loose network of computers communicating with each other that transcends national and international borders.

The worldwide reach of the Internet makes the world much smaller and interconnected. The problem is that this interconnectedness challenges the ability of nations to regulate cross-border interaction. Many nations, including Canada, encourage the globalizing effect of e-commerce. But e-commerce also allows unregulated content to flow across national borders. Since the flow is unregulated, criminal conduct can be part of this flow of information and commerce. The situation becomes even more complex because criminal conduct is defined by specific national laws, thus allowing what is illegal content in one nation to lawfully be created and supported in another nation.

Online gambling is a business that cuts across borders. Players anywhere in the world can participate in an online game located thousands of kilometres away. This has become an issue because while most western democracies strictly regulate gambling within their borders to prevent real or perceived social ills, territorial sovereignty strictly limits state attempts to regulate Internet gambling. Thus, many nations are aware of foreign online gambling, but are unable to unilaterally prevent their own nationals from participating. Gambling houses are acutely aware of the territorial limits of national sovereignty and have utilized the Internet to carryout illegal transactions in many jurisdictions while remaining safe from prosecution. Yet despite these impediments, a number of government law enforcement agencies have developed creative ways to curtail online gambling.

Most prominently, agencies have discovered that online gambling requires the participation of third-party participants such as banks and online payment services to securely facilitate the transfer of wagers and winnings. It is thus the third-party payment services that have become the target of recent antigambling legislation and prosecution. The recent arrest of two founders/corporate officers and three separate settlement agreements between Neteller, Canada, the United...