On Monday May 29, Ontario Lottery and Gaming Corporation CEO, Duncan Hannay, appeared before the Legislative Assembly of Ontario’s Standing Committee on Public Accounts. There, officials asked for his thoughts about the boom of online gambling advertising in the open market era.
The main takeaway from his response: operators should rein in their advertisement output. For Hannay, that starts with achieving better balance in a densely populated market.
“We are facing 47 new legal operators… in the iGaming space,” said Hannay. “I think it would be appropriate to have a better balance of advertising, on balance. And I know that’s how the regulator is looking at this issue and reviewing input from stakeholders across the province, within the operator community, with outside interests, with public health organizations, and from OLG.”
Hannay’s response drew questions posed by New Democratic Party Member of Provincial Parliament France Gélinas. As a mother and grandmother, Gélinas’ concerns stem from increased exposure to younger generations, especially during the Stanley Cup playoffs, which she says seems to feature ads from operators almost every commercial break.
“I have kids and grandkids,” said Gélinas. “They all know more about iGaming than I do. And I was wondering if you’re as worried about this as I am. How could it be that I learned more about iGaming watching the Stanley Cup than I ever cared to know about iGaming?”
Hannay and Gélinas echo sentiments from other interest groups
By now, the story of Ontario’s blossoming market and everything it entails is well-documented. But, in recent months, new questions have arisen.
April 4, 2023 marked the one-year anniversary of the province’s regulated online gambling market. In that time, almost 50 private-sector operators have joined, generating about $35.6 billion in handle and $1.4 billion in total gaming revenue, per iGaming Ontario.
Naturally, with the influx of operators vying for market share, a noticeable increase in advertisements soon followed. In the sports betting sphere, specifically, companies are relying on partnerships with superstar athletes and celebrities to boost credibility. However, this tactic has irked both bettors and non-bettors alike, as well as regulatory bodies like the Alcohol and Gaming Commission of Ontario.
In mid-April of this year, the AGCO announced its plan to ban athletes and notable figures from appearing in online gambling advertisements.
On Monday, during the same committee meeting, Deputy Finance Minister Greg Orencsak shared an update regarding the AGCO’s proposal. Along with furthering the ban, the AGCO is also in the process of reviewing its advertising rules, a decision Hannay sees as “wise.” Orencsak added that they expect more information to be available at a future date.
While the AGCO continues their push, another opponent of iGaming advertising is taking things a step further. About two weeks ago, the Canadian Mental Health Association urged the AGCO to ban such advertisements altogether. Though the move may appear drastic on paper, members of The Campaign to Ban Advertising for Gambling deem the surge of sports betting ads a “public health danger.”
With so many interest groups gaining steam, is there anything for the OLG to worry about?
Although separate, OLG’s online gambling business still competes with new market
Prior to Bill C-218, the OLG was Ontario’s sole authorized online gambling operator. But since its passing, ‘new market’ operators, which run through iGaming Ontario, present a bevy of new competition.
Under the new system, the concern is that the competition will affect the funding which OLG provides the provincial government. As it stands, the company is one of Ontario’s largest non-tax sources of revenue. Moreover, OLG’s own iGaming business is supposed to perpetuate company growth, especially as online gambling flourishes.
Per Hannay, figures from the fiscal year ending March 31 showed OLG’s iGaming business produced an expected net profit of $302 million for the province. This number would exceed what the entire ‘new’ online gambling market provided the government in its first year of operation.
For context, the public accounts committee determined OLG’s overall market share to be roughly 20%.
Ontario Auditor General reports slower growth of OLG revenue amidst market opening
The original purpose of Monday’s meeting was to discuss Ontario Auditor General Bonnie Lysyk‘s review of OLG from last November.
Lysyk’s primary finding saw that OLG began experiencing slower growth of internet revenue after private-sector operators joined the market. In the three months ended September 2022, OLG netted $108 million in iGaming revenue, up 7% from the previous quarter. Comparatively, private operators earned $267 million in revenue, a 65% increase quarter-over-quarter, for the same period.
“Although a part of this growth could be attributed to iGaming Ontario adding six new operators, average monthly spending per active player on iGaming Ontario websites also increased by 25% over the same period,” Lysyk’s report stated. “There would be a significant revenue advantage for the Province if OLG’s Internet gaming revenues could be maximized… the Province receives approximately 45% of OLG’s Internet gaming revenue, compared to only 5.7% of gaming revenue from play on private Internet platforms registered with iGaming Ontario.”
As such, Lysyk’s office also made a few recommendations to the OLG, including:
- Creating a “comprehensive strategy” for introducing new products
- Exploring options to offer more real-time games; and
- Leveraging its lottery business to drive customers to its iGaming business
OLG has its own plan in place to maintain market share
Current company forecasts expect their iGaming market share to remain between 25 to 30%, along with online gambling revenue to hit $530 million by the 2025-2026 fiscal year. The OLG plans to maintain its market share through faster product releases, live dealer games, and customer-acquisition strategies.
According to OLG’s response to the Auditor General, the company plans to expand its live dealer category and introduce new products, such as peer to peer poker. Further, it also plans on introducing its core lottery players to other online products offered by OLG.
Hannay noted Monday that OLG has completed or made progress on 76% of “actions related to” Lysyk’s recommendations.