Pulse
Ontario: North America’s largest gaming market?
By William - 10 March 2022
On 4 April, Ontario will open the first licensed and regulated iGaming market in Canada.
According to several estimates, the post-regulated province will become the most attractive iGaming market in North America for both players and brands, surpassing all its US online counterparts when it goes live.
Ontario’s largest city, Toronto, is home to MLB, MLS, NBA, NHL, and Canadian Football League teams. The nation’s capital, Ottawa, has NHL and CFL teams, whilst Hamilton also has a CFL team.
Hailing the ‘milestone achievement’, Paul Burns, President and CEO of the Canadian Gaming Association, says one of the challenges Ontario faces that people may not truly appreciate is it’s unlike any other market that’s open. Customers have already been playing online for 10-15 years on the grey market, making the province a ‘semi mature’ market.
“The Canadian Gaming Association has been calling for a fully regulated igaming market since 2006,” explains Paul. “Previously, only the provincial lottery corporations have been able to offer igaming and, as a result, we’ve seen a grey market flourish.
“The laws in Canada were vague and it has long been an obvious choice for the government to either create some form of regulated marketplace or change the laws and go down the route of enforcement.
“In many parts of the country land-based businesses didn’t have access to online gaming. Now that private sector operators in Ontario have access, it allows them to enhance their product offering to customers. It’s been a long time coming and, combined with the fact operators previously couldn’t have a sportsbook until the last twelve months, the two things combined finally offers operators a level playing field.”
FIRST OFF THE BLOCKS
PointsBet, theScore and Rivalry Corp. were amongst the first to announce their status as registered online gaming operators with the Alcohol and Gaming Commission of Ontario. According to an Eilers & Krejcik estimate, operators could generate up to CAD$570m in sports betting revenue this year.
“How consumers behave now they are faced with plenty of choice will be interesting, particularly when it comes to those players with operators who are making the transition from the grey market to the regulated market. Will they stay with the brand or move towards the strong land-based casino brands such as Hard Rock, Caesars, and Mohegan?”
Describing the benefits this newly regulated gaming market will give consumers, Paul says Ontarians will see more choice in front of them: “A lot of the grey market operators didn’t really advertise that much.
“There is a comfort and protection with the regulated market that operators are held to a standard. People will get paid and know their games are fair. There are now highly regulated and reputable operators to gamble with that will serve customers well. Players will have more products on offer that are easier to access. There are huge benefits to be had.”
Once registered with the AGCO, operators must finish procedural requirements and sign operating agreements with AGCO subsidiary, iGaming Ontario. Established in July last year, iGaming Ontario is working with the Government of Ontario and the AGCO to establish a new safer, online gaming market that will help protect consumers and provide more choice while ensuring a level playing field for new businesses.
“The regulatory framework that has been created is very thorough,” remarks Paul. “It holds operators to a high standard. The games and gaming equipment will be independently tested before it is permitted in the market. There is very thorough regulatory framework for advertising, promotions, and responsible gaming with lots of measures for player protection.
“There are integrated sets of regulations for all forms of online gaming – sportsbook and casino games come under the same framework – making it easier for operators. We have created a good market and it will be great to see how it all unfolds. The proof is in how it operates so that is the next measure, but the high number of operators entering the market is testament to standards that are balanced, fair and thorough.”
Governed by a Board of Directors, iGaming Ontario will enter into operating agreements with operators who meet these rigorous standards of game and operator integrity, fairness, player protections and social responsibility. A share of revenues generated by these relationships will be returned to the Government of Ontario to support provincial priorities.
“Consumers can be assured that companies who successfully enter the new Ontario market will have met rigorous standards of game and operator integrity, fairness, player protections and social responsibility, allowing all players to play with confidence,” said Martha Otton, Executive Director of iGaming Ontario.
“Prevention of underage access, ensuring compliance with applicable laws including anti-money laundering rules and regulations, and measures to enable more responsible gambling are just a few of the assurances consumers can expect in the new market as of April 4.
“Today, most internet gaming by Ontarians takes place on websites not conducted and managed by the province. Our new internet gaming market will give consumers enhanced entertainment choice, support the growth of a new, legal market and generate revenue that can help fund programmes and services that benefit all of us.”
THE DISCONTENT
Not everyone is happy or onboard with Ontario’s pending iGaming launch, however. The Mississaugas of Scugog Island First Nation are ‘outraged’ by what it describes as a ‘flawed’ online gaming regime.
The Mississaugas of Scugog Island First Nation moved into southern Ontario from their former homeland north of Lake Huron around the year 1700. The Mississaugas, a branch of the greater Ojibwa Nation, are one of the largest native groups in Canada.
In a statement, the tribe said that the government’s decision will devastate MSIFN’s economy and set back decades of community development efforts. The Mississaugas maintain that contrary to section 35 of Canada’s Constitution, the Ford government failed to hold formal consultations with Indigenous governments amounting to a violation of its duty to consult and accommodate impacted Indigenous groups.
“Today’s announcement by the Ford government is a slap in the face of First Nations, and reduces their promises of reconciliation to a joke,” stated Kelly LaRocca, Chief of MSIFN. “The government completely and utterly failed to consult our First Nation – leaving their iGaming launch open to constitutional challenge. We intend to challenge the province’s iGaming scheme in court.
“The Ford government has recklessly ignored our concerns and has not offered any strategies to address the impact that their inadequate plan will have on our First Nation, our culture and our ability to provide services to our community. It is a real and significant threat. It will not stand. If the Ford government is not willing to address the harms caused by its decision, we will have to make them accountable, in an election year.”
What will be the impact of regulation in Ontario on the take-up of legacy online licences? Now there is no longer a grey market, operators will have to make a choice according to Paul.
“It will be black and white so they must make a choice. The land-based casinos have a different arrangement with the Ontarian government. Those operators have been very supportive of having access to online gaming and are keenly interested in making sure they have a level playing field from a regulatory perspective and a fair level of taxation.
“The casino operators will have two parallel regimes to work in, so they will be looking for a single regulatory framework. Streamlining this going forward will be of great benefit to integrate players reward programmes and a single wallet.
“As the market opens, we are encouraged that the government is aware of the significant amount of capital investment casino operators have made and are in the process of making to improve their offering in the province. Most of the operators are very excited about the opportunity to create that omnichannel experience for their customers and the integration of their businesses.
“Rich Roberts, (President, Digital Gaming at Mohegan) was on a panel with me at SBC North America and spoke about seeing a younger demographic showing up at the casino because of online integration in Connecticut. Folding online players who have been playing elsewhere into the brand and database is a priority.”
BIGGER THAN NEW JERSEY?
According to Bonusfinder.com’s latest Bonus Index results, Ontario will become North America’s most important online casino and sports betting market. The Bonus Index predicts that a combination of its 15 million population, a strong volume of sportsbook and casino players, and an estimated 70+ brands looking to acquire a licence means that brands will be entering a highly competitive market and battling for players by offering the continent’s most appealing casino and sportsbook bonuses.
“Our Bonus Index accurately plots and tracks how successful every North American state and province is month-on-month across sports betting and casino and Ontario will blow everyone out of the water,” predicted Fintan Costello, Managing Director, BonusFinder.com.
“New Jersey, although second on our list and punching above its weight, will look like it’s spitting out loose change from a slot machine compared to what we’re about to see from Canada’s largest province. It may have six million fewer people than states such as New York but its large number of licences across both sportsbook and casino will see it become North America’s largest gaming and betting market.”
Paul is less sure. “I don’t know if it will blow them out of the water in the first month to be frank. There will be challenges for those sportsbook operators who haven’t sharpened their NHL offering as spring brings the playoffs. If you ever wanted a time to get the attention of Canadians, that time is a good one so we will see.
“Canadians love to bet on the NFL and NBA. I am curious and don’t want to predict one way or the other about what will happen, but all signs point toward a robust opening, and we will see a good number of new operators on day one, as well as some transitioning into the regulated market.
“I don’t know if it’s going to eclipse New York and New Jersey initially, but it’s going to be a healthy market. Unlike other jurisdictions, it’a a full casino and sports betting market and not a straight up sports betting market like New York.”
Ontario’s long-term success is not determined by how many enter the market, but by how many of those who stay. The barrier to entry is relatively low compared to other markets – anybody who wants to come need only apply for a licence, pay the fees, and set up shop. With rumours of over 30 operators entering in the first six months, making room for them to compete is vital.
“The Canadian Gaming Association will be making sure that the market performs for operators through ensuring a fair balance of regulatory compliance costs and fostering competitiveness.
“The staying power of the market, level of competition, and product offering will determine long-term success. From an industry association perspective, we will be keeping an eye on the mechanisms – the regulatory oversight and compliance regimes – and ensuring they don’t hinder market opportunities by making it too difficult or too costly.”
With a lot of operators dipping their toes in the water, other states and provinces will be watching closely to weigh up their options should they wish to join Ontario in creating a fully regulated igaming market.
“As an association, we have always asked how provinces will deal with their grey markets. Undoubtedly, they will be looking at Ontario with a lot of interest. I don’t think an open licensing market will be the right thing for every jurisdiction, but inviting and creating a regulatory market, whether it’s with limited licences or a more open manner, is a process we want to encourage.
“The grey market is strong outside of Ontario and we know that casino operators and land-based businesses in places like Alberta want access to an online offering and omnichannel experience. Single offerings from a lottery corporation don’t always satisfy customer’s needs, and that is why the grey market has flourished.”
