The launch of Ontario sports betting is slated for Monday, April 4.
But before that happens, those Ontarians who prefer the daily fantasy sports version of gambling will likely need to find another platform to play on. Both DraftKings and FanDuel announced their intentions to leave Ontario ahead of the online gaming and sports betting launch.
The move by the companies is likely not a shock to those who spent a significant amount of time looking at the new rules for the regulated sports betting market.
The Alcohol and Gaming Commission of Ontario rules, released in September of last year, revealed that fantasy players could expect some changes ahead when the regulator specified that free fantasy games would not need registration. However, pay-to-play fantasy games would require registration with the provincial regulator.
Did Ontario kill fantasy sports?
The Registrar’s Standards and Requirements for Sport and Event Betting state that the regulations apply to “all, sports, esports, novelty, betting exchange, and fantasy sports products.”
The Definitions section of the document then proceeds to define fantasy sports as:
“Any pay-to-play sport betting product (fantasy sports contests are considered a type of sport betting for the purpose of these Standards) provided by an operator wherein consumers can assemble a virtual team composed of real in a given sport and compete against other virtual teams based on the performance of those players in real matches.”
The Standards differentiate between virtual sports betting and real sports. But at no point do the regulations appear to delineate season-long fantasy sports from daily fantasy sports.
By categorizing all fantasy sports within the scope of “sport and event betting,” it seems likely that a mass exodus of pay-to-play fantasy providers could be underway. While free-to-play (or “free to play” — the document confusingly uses both spellings) fantasy operations may be outside the new regulations, it appears that at least some aspects of the rules apply to them, including that players cannot be misled about the odds of success.
Taking a closer look at the possible end of daily fantasy sports in Ontario
Friday, April 1, 2022, is slated to be the last day that Ontarians will be able to enter FanDuel and DraftKings contests in the province.
The Fantasy Sports and Gaming Association issued a statement blaming high regulatory costs, though it is not clear that the organization has up-to-date information. They cite a tax rate of 25% of revenue as opposed to the widely circulated 20% rate.
The FSGA argues as they have before that:
“Paid fantasy sports contests operate differently than sports betting, iGaming or brick and mortar casinos, with low margins and player pools from multiple jurisdictions. Large registration fees are especially prohibitive for smaller operators and reduce competition as witnessed in U.S. states such as Indiana and Delaware. Ontario’s fees and regulations are large enough, however, that even the largest operators can no longer offer contests in the province.”
According to the organization, constituents should contact their elected representatives and ask for provisions to be made to allow for pay-to-play fantasy sports.
A good plan gone bad?
It is possible that FanDuel and DraftKings are pulling their DFS products out of Ontario because of costs associated with registration.
It seems, perhaps, equally likely that the companies are pulling their products over the fact that it may be difficult to offer a desirable product without access to multi-jurisdiction player pools. Ontario will not allow for the pooling of players beyond the province’s boundaries.
While the province has more than 14 million people, daily fantasy sports and Canada online poker have shown that the more users in a player pool, the better the product.
By restricting player pools to Ontario, it would seem unlikely that DraftKings or FanDuel could consistently create the same experience that users have become accustomed to. The effect will likely be similar for poker. Without access to multi-jurisdiction player pools, it is unclear if the province can create an environment in which players will want to be.
If we look at Pennsylvania, with a population of roughly 12.5 million people, there are times when the online poker marketplaces simply do not have enough liquidity at times to create a product that all players want to be a part of.
What to make of this?
At first glance, one might think that the AGCO inadvertently created regulations that will cut out paid fantasy sports from the province.
On closer inspection, while it may not have been the goal to drive the products away, it is not clear that the products would be viable without access to a larger pool of participants. The restrictions have led some to question whether Ontario’s poker market is going to get onto its feet without access to more players.
Perhaps the AGCO has a plan. But at the moment, things appear bleak for Ontario’s daily fantasy and poker players.
