Mitch Davidson, the chief of staff at iGaming Ontario has added some insight to the province’s latest online gambling numbers via the latest Gaming News Canada podcast.
PlayCanada reported last week on yet another record-shattering quarter for Ontario’s online gambling market. Here, the province achieved all-time quarterly highs in both online gambling bets and revenue during the third quarter of the 2023-24 fiscal year covering Oct. 1 through Dec. 31 of 2023.
Specifically, total online bets rose 21% from $14.2 billion in Q2 (July 1 through Sept. 30) to $17.2 billion in Q3. Further, total Ontario online gambling revenue in this timeframe grew to $658 million. That’s good for a 22% increase over the $540 million generated in Q2.
Overall, total bets grew by 49% compared to the third quarter of the 2022-23 fiscal year ($11.53 billion). Gambling revenue is up 44% from the same quarter a year ago ($457 million). Through three quarters alone, these two figures have already exceeded what the sector produced in all four quarters of its first fiscal year.
Davidson joined the most recent Gaming News Canada Show to share additional insight into the state of the province’s bustling iGaming market, along with a sneak peek at what the provincial agency has in store for 2024.
Illegal market conversion a key factor for iGO
During last June’s Canadian Gaming Summit, Ontario Attorney General Doug Downey said about 85% of the grey market joined the legal sector in a year’s time. This number, although improvable, was key to strengthening Ontario’s offering.
“Last year, we released a survey by Ipsos in conjunction with the AGCO that showed some 85% of Ontario players had played on a regulated site,” Davidson said. “But, that still means 15% of players were not playing on regulated sites.
“So, even just converting those players over to the legal avenues where we have better player protections, AML responsibilities, better RG and responsible gambling tools in place, we’re going to see revenues and wager totals increase just by doing that kind of thing.”
To improve the conversion rate, Davidson told Gaming News Canada that operators are constantly working on creating more attractive and competitive products. He added that these latest results are an indicator that the work is beginning to pay off.
“I think we’re starting to sort of bear the fruits from that labour and the hard work they’ve put in,” said Davidson. “It really is a performance upgrade, whether you look at casino, sports betting, or peer-to-peer poker to be honest, all three categories have seen increases and we’re pretty proud of that and hope to see the trend continue.”
While year-over-year growth between 45-50% is unlikely moving forward (credit the influx of operators between years one and two), iGO is still keen on continued quarterly growth, or at the very least stability.
Online casino product helped provide successful foundation
Obviously, Ontario online casinos drive the market forward. In Q3, it accounted for 79% of the total wagers ($13.7 billion) and 71.6% of the revenue ($471 million).
Its success, however, depended on the work iGO did well before the open market launched on April 4, 2022. If not for laying a proper foundation, Davidson says, players in the grey market would have no reason to convert.
“If you wanted to play online casino and we didn’t have it, you’d have to go to the illegal market to do so and you’re probably placing sports wagers there too,” he said. “It allows for a better capture by having all of the products.”
The product not only needed to exist, it also had to be attractive to effectively secure player conversion.
“Certainly, I think the legalization of casino play was a key factor in creating a strong market and creating a strong market so quickly into regulation.”
Davidson also mentioned other contributing factors, including a competitive tax rate, no cap on licenses, and balanced regulatory burdens.
Second Deloitte economic report in the works
iGaming Ontario and consultation firm Deloitte are joining forces once again to deliver a second economic assessment report on the Ontario online gambling market, Davidson announced.
“We’ve actually commissioned them [Deloitte] to do a follow-up for year two because we had in the back of our minds the idea that perhaps this market hadn’t reached full maturity yet and we’d have a better understanding in year two than year one.
“We’re working on that right now and we’ll have an update in the near future to update those numbers and see if they actually are contributing more in terms of jobs, GDP, tax revenue than we even put on the table at the Canadian iGaming Summit last year.”
While still in the early stages, the finished report will offer an in-depth analysis of the Ontario iGaming market, where it currently stands, and where it might go.
iGO remains open to adding more operators to Ontario market
Ontario is already home to 52 live operators running more than 70 separate gaming sites. But, that won’t discourage iGO from at least exploring the idea of welcoming some more.
Davidson told GNC Co-founder Steve McAllister the gaming authority is “still open to the conversation of onboarding new operators.” No further details, for example, how many more operators, were offered by Davidson.
He instead made mention of the upcoming ICE London 2024 gaming conference picking up Feb. 6. Ontario AG Downey will join iGaming Ontario for the summit, which Davidson says is exciting to see such attention paid to the industry.
Sights already locked on two-year anniversary of market launch
Ontario’s online gambling market will turn two on April 4, 2024, and that’s cause for excitement at iGO.
“This will really give us an opportunity to look back at not just how the market has been performing because each of our quarterly reports has kind of been captures of what it’s been, but to make some inferences about the totality of the market, what player behaviour looks like, which sports are popular, all those types of things that allow us to do a bit of an exercise looking back with a real data set instead of just three or six months of operations.
“We can make some real trends.”
In year one of operation, total handle reached about $35.6 billion and some $1.4 billion in total gaming revenue. Since then, the market’s continued to blossom, now standing as one of the world’s most competitive iGaming environments.
“The market’s healthy, the market’s stable, it’s strong, it’s continuing to grow, and we really are excited about providing options and choices for Ontario players, especially when you add in OLG,” said Davidson. “Vixio said we were the sixth-largest market in the world, that was before these numbers so we’re trending up and players have more choice than they’ve ever had before.”
It will be a little while longer before the full 2023-24 fiscal year numbers are released, but that might be a good thing. It’s the third week of January and the online gambling world is already swimming in a tide pool of information. That said, it’s an exciting time for the industry and one that iGO isn’t taking for granted.
“It’s a really exciting time for us, but it would be a lie if I said we’re just going to sit on our hands and be happy with the numbers,” said Davidson. “There’s still a lot of work to do to make sure that it can be competitive, not just for the next quarter but for years to come.”