The legal Ontario online gambling market has been live for only two months. As the brand-new industry continues to grow and evolve, other Canadian provinces should be paying attention.
To be clear, the Ontario gaming industry didn’t happen overnight; it’s been 10 years in the making.
In fact, iGaming Ontario (iGO) executive director Martha Otton referred to Ontario as a “10-year overnight success” during last week’s Canadian Gaming Summit.
From creation to launch, Alberta, Quebec, British Columbia and Manitoba could learn a lot from the regulated Ontario sports betting and casino industry.
What did the Ontario gambling industry do right?
According to Canadian Gaming Association, Canadians spend $14 billion annually on offshore betting. With much of that spending originating in Ontario, the lost revenue led the government to welcome private operators to a newly regulated market.
The first steps to legalize the gambling market began in 2012. Since April 4, residents can enjoy a full suite of legal online casino and sports betting products.
According to industry professionals, here are the ways Ontario got its legal gambling model right:
- Legalizing sports betting and online casinos at the same time.
- No limit on the number of operator licenses.
- Licensees are not tethered to retail casinos.
- A competitive 20% tax rate.
Pros of Ontario gaming
To create a sustainable market, Ontario invited private operators to grow their businesses long-term. However, they have to follow specific rules.
A 20% tax rate
Ontario introduced a 20% gambling tax rate, which is good for commercial operators, especially in comparison to New York’s 51% tax. Also, the licensing fee is $100,000, a far cry from the $25 million fee online sportsbooks pay in the Empire State.
Focus on responsible gambling
To prevent problem gambling, OLG and the Responsible Gambling Council teamed up to provide responsible gambling information in every casino in the province. Together, they aim to inform players of safe ways to gamble and drive people away from illegal offshore sites.
In September 2021, the Canadian Centre on Substance And Addiction released Lower-Risk Gambling Guidelines to promote responsible gaming in Canada and temper gambling addiction.
Advertising and inducements
The risk of increased acceptance of ads’ omnipresent nature was a prominent concern. AGCO’s regulatory standards explicitly forbid using the terms “free” and “risk-free.” Regulations specify all advertisements must be straightforward and not promote “free” or “risk-free” wagers — unless the bets are truly free.
Only one month after Ontario’s market went live, AGCO fined two of its registered operators over off-side advertising. BetMGM and PointsBet Canada were the first examples of what happens to operators that overstep the rules.
AGCO fined BetMGM $48,000 for “advertising of inducements, bonuses or credits” and misleading marketing. For PointsBet, it was a $30,000 fine for advertising-related breaches.
Operators coming to Ontario cannot advertise bonuses publicly. They can only offer players rewards on their website or through direct customer marketing.
Transparent application process
Industry professionals have also said the AGCO simplified things with its well-defined application process.
Alex Henderson, head of compliance for GIMO (payroll solutions), said during a webinar on May 31, that the advantage of the Ontario market is the transparent application process. He said:
“While it’s not an easy application process, the guidelines and steps you have to take along the way are very clear, and you can tell that a lot of effort has gone into proactive regulation and engagement so that there is not as much of a need for reactive enforcement later.
“It’s, by far, one of the best application processes we’ve had to go through just because it is so clear.”
Another unique feature is the dedicated account manager for each operator interested in licensing.
Mitchell Davidson, iGO’s chief of staff, said at SiGMA Americas:
“We have account managers who personally work with the operators and guide them through all the decisions, so they share information, they share operational guidelines, they share all the policies. And they have daily conversations, weekly conversations, whatever is needed to help them through standards and then testing and all those different requirements you [operators] have to do before you go live in this market. “
Amanda Brewer, Kindred Group’s country manager for Canada, called Ontario a “kick-ass model.” She said:
“The AGCO allowed operators to offer almost every sports betting product — DFS, esports, live in-game wagering, and iGaming – to cater to their players’ needs and preferences. All credit goes to AGCO; they did a lot of studying and consulted with a lot of different jurisdictions.”
Benefits of legal gaming in Canada
By following Ontario’s example, Alberta, Quebec, British Columbia and Manitoba could mitigate gambling-related problems in their respective provinces.
Perhaps even borrow from the AGCO’s model should they decide to expand local regulations. Most importantly, each province could generate additional tax money from gambling revenues.
Legalizing online gambling could significantly refill the province’s funds. That money, in turn, could fund social spending on education, health care and gambling addiction support.
In Ontario, online gambling will bring high-value jobs to the local economy. Many casino and sportsbook operators, suppliers and regulators are looking to hire in Ontario.
Which province will offer legal gambling next?
Other provinces will need political willpower to implement an Ontario-like model; optimism isn’t enough.
Canadian gaming industry veteran and consultant Troy Ross pointed out during the SiGMA summit:
“Other provinces were interested in this (Ontario’s) model but didn’t have the political support at the top of the food chain.”
With Ontario’s online gambling market now running successfully, there is hope other provinces will follow suit.
Currently, only Alberta and Saskatchewan provinces are looking to implement a smaller model market, and neither intends to welcome private operators. British Columbia might consider an expansion, but if and when that happens remains to be seen.