Industry Doubts Report Claiming Online Gambling A Bust For Ontario

Written By Robyn McNeil on January 17, 2022 - Last Updated on March 9, 2022
Multiethnic group of people looking skeptical

According to a report Monday, Ontario’s plans to open its online gambling market will be a bust for the provincial coffers.

But proponents of Ontario’s forthcoming internet gaming market disagree.

As the Ontario online casino and sports betting saga continues, a commissioned study is the latest hurdle for an industry launch that seems still a couple of laps away from the homestretch.

Great Canadian study crying foul for land-based futures

The contested study, conducted by HLT Advisory Inc., warns of substantial job loss and hundreds of millions in losses provincially. CBC News reported the Ontario Gaming Market Assessment findings on Jan. 17, after obtaining the “Private & Confidential” document.

Dated Jan. 11, the review apparently claims that despite incoming tax revenues from the newly regulated online market, the province still loses. And it blames the funding dip on an expected shift in spending from land-based casinos to online gaming.

As many have pointed out, Great Canadian Gaming Corporation commissioned the report. And as the operator of 26 of Canada’s land-based casinos, 14 in Ontario, undoubtedly GCGC has an interest in minimizing industry competition.

Specifically, they question the assumption grounding the report: that existing casino customers will spend less money in physical casinos.

“When the regulated market opens in Ontario, nothing is going to change in respect to players’ entertainment habits,” said Jeffrey Haas, senior vice president of DraftKings, a US leader in online sports betting and casino, one of the major players coming north.

“People who are playing in online casinos and online sportsbooks and online poker rooms will continue to do so, except they’re going to go from playing offshore to onshore,” Haas told CBC News. “And anybody who continues to walk into real casinos in order to play games there will continue to do so.”

Currently, in Ontario and much of Canada, players can wager on online casino games and sports through provincially run lotteries. Since Aug. 27 that has included single event bets, which became a legal option for the provinces after the passing of Bill C-218.

This conflict deals specifically with Ontario’s expansion of online casinos and sports betting to include private operators.

Comparisons from different markets may not be accurate

Precisely how much online gaming will cannibalize Ontario’s casino revenue is a hot topic, according to Paul Burns, president of the Canadian Gaming Association.

CGA is an industry group that represents companies across gaming sectors, including land and internet-based operations.

According to the report, if Ontario implements an open-licence internet model, online casinos would capture a significant market share. The conclusion, however, is primarily based on what the UK experienced after launching online gaming in 2005.

Said Burns, “drawing comparisons from different markets in different jurisdictions” may not be an accurate picture of what will happen when Ontario starts regulating online gaming.”

“Online gaming is [in Ontario], it’s just not regulated, it’s not controlled,” he added to CBC. “It’s not put to the same regulatory standards the casinos are held to.”

Online gambling could add to Ontario’s gaming pie

But, if you’re going to make comparisons, there are better jurisdictions to compare, according to internet gaming proponents.

A spokesperson for an operator expected to be part of Ontario’s online gambling marketplace told PlayCanada that internet gaming will enhance the industry.

“If you look at New Jersey, even Pennsylvania in the US, those revenue numbers show that online gaming is additive,” the spokesperson said. “It’s all incremental and strengthens the overall gaming industry. Not to mention, it gives land-based operators who didn’t previously have it an opportunity to establish a digital strategy.”

Industry estimates say Ontarians spend nearly $500 million on internet gambling each year. However, the provincial government puts the figure at almost $1 billion. But, regardless of the number, the lion’s share goes to companies operating outside of Canada. Those are companies that don’t pay taxes and don’t have a responsibility to protect Canadian customers.

The spokesperson said the report seems a “self-serving attempt for an organization that isn’t prepared for this market.”

Reactions run the gamut, depending on where you stand

“I am deeply concerned about the impact this is going to have on jobs, but also the overall impact on our communities and province,” said Jerry Dias, national president of Unifor, to CBC. Unifor is the union that represents most of Ontario’s 10,000 casino workers.

“From a job’s point of view or an economic strategy point of view, it’s a fool’s game,” Dias said. “It doesn’t make any sense to me at all.”

According to HKT’s report, Ontario municipalities hosting casinos would lose out on $35 to $40 million in annual revenue, too.

However, apprehension is not universal.

“There is cause for concern, but we’re not overly concerned,” said Dave Ryan, the mayor of Pickering, Ontario. Pickering hosts a casino with 2,400 slot machines that opened last summer. The municipality expects to reap $14 million in annual proceeds.

“We believe that there is always going to be room for the bricks-and-mortar gaming,” Ryan told the CBC. “We’re social animals. People like to get out, congregate and enjoy that experience. Plus, there’s the entertainment factor that you don’t have online.”

Great Canadian Gaming responds with concern for the industry

Just before publication, PlayCanada received an email from Chuck Keeling, GCGC’s executive vice president of stakeholder relations and responsible gaming.

The email included a statement on the report from Tony Rodio, GCGC’s CEO.

In the statement, Rodio asserts that GCGC offers Ontarians a best-in-class gaming experience, employs thousands, and invests hundreds of millions in the province. The text also notes that GCGC asked HLT, a respected firm with extensive Canadian gaming experience, to consider the impact of Ontario on the existing land-based market.

“This research, which has been reported in the media, is very concerning,” Rodio said, in the statement.

“The independent report finds that almost 2,600 jobs will be lost, $3 billion less in revenue will be generated for the province, and $191 million less for municipalities hosting gaming facilities.”

Great Canadian CEO: US states haven’t returned to pre-COVID levels

The statement also notes the report’s current relevance, given the impact COVID-19 has had on land-based gaming.

In particular, it notes that US states that have rolled out legalized iGaming have yet to rebound to pre-COVID revenues.

“While we support iGaming in principle, the Ontario government needs to take the time to get this right,” Rodio said in the statement. “We are committed to working closely with the provincial government to achieve an integrated, optimal solution that reflects the voices of all key stakeholders and does not jeopardize the industry’s ongoing recovery.”

Which, honestly, sounds reasonable.

But it also begs the question: Did GCGC respond when AGCO initially consulted with the industry?

And, most significantly for Canadian consumers, when will they be able to download the full market of online gambling apps?

Photo by Shutterstock/pathdoc
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Robyn McNeil

Robyn McNeil is a Nova Scotia-based writer and editor. She lives in Halifax with an awesome teen, a mischievous cat, and a penchant for good stories, strong tea, cheeseburgers, yoga, graveyards, hammocks, gardening, games, herb, and hoppy beer.

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