Canadians lead software bonanza

a Canadian technology mini-boom with massive prospects. A group of software firms based in Calgary, Quebec, B.C. and Ontario is leading the development of computer games for gamblers, even though many of their products aren't yet legal in North America.

The companies include a subsidiary of Crown corporation Loto-Quebec which holds the worldwide patent on instant win CD-ROM lottery games and CryptoLogic, Inc., a Toronto software company that calls itself the world's largest publicly traded Internet casino software enterprise.

Other players include Calgary's Chartwell Technology Inc., which provides online casino software to gambling empires such as Harrah's and Horseshoe casinos and Vancouver's Inphinity Interactive, a firm that sprang out of an Internet porn operation and holds the dubious honour of being one of Canada's most legally troubled, but successful corporations.

"We're very much at the forefront in Internet gaming development," said Ivan Sack, publisher of Canadian Gaming News. "I would think we're probably the world leader."

And, even as researchers say some of these new made-in-Canada games pose a danger to would-be addicts and kids, the industry shows no sign of going away.

"I don't know how long the U.S. is going to stand by and watch billions of dollars go offshore," said Steven Latham, director of sales and marketing with Chartwell.

The United States, like Canada, does not allow domestic companies to run play-for-real casino operations on the Internet.

The one North American exception is based on Quebec's Kahnawake Mohawk Nation, which considers itself sovereign land unaffected by Canadian gambling laws.

So companies such as Chartwell, Inphinity and CryptoLogic sell or license their software offshore, to a global Internet gambling industry worth an estimated $3.5 billion US. Many North American gamblers then bet on those sites.

But most of the gambling software companies expect it's only a matter of time until that changes.

At least one Liberal MP has argued Canada should legalize Internet casinos, then regulate them and scoop some of the proceeds.

Several U.S. politicians have advocated similar measures.

"When the U.S. gets around to it, we're going to be in a great position," said Latham.

Loto-Quebec's research and development subsidiary, called Ingenio, has made huge strides in recent years. Unlike Canada's other big three gambling software firms, Ingenio's products aren't Internet casino games, and are legal in Canada.

Loto-Quebec's efforts began in the late 1980s, as video games and electronic entertainment began to hit their stride.

Loto-Quebec has reaped $2 million from sales, including to the Western Canada Lottery Corporation, which last fall offered the games in Alberta, Saskatchewan, and the territories.

But the provincial lottery's product has also registered complaints.

Jeff Deverensky, co-director of McGill University's International Centre for Youth Gambling Problems and High-Risk Behaviour, said computer gambling software, such as Ingenio's, poses considerable risks for young people.

"There's a whole generation of kids who've grown up on computer games who will now see this as an exciting challenge," said Deverensky, who is a child psychologist.

The Western Canada Lottery Corporation has discontinued the games.