We finally have a complete picture of how the first year of the Ontario online gambling sector stacked up to similar gambling jurisdictions across the United States.
Bottom line: While Ontario has improved its standing, a PlayCanada analysis finds that the province still has a long way to go to catch comparable US regions.
The Ontario Lottery and Gaming Corporation recently released its annual report for 2022-23, revealing how much the Crown corporation’s wagering options contribute to the province’s thriving online gambling — also known as iGaming — scene.
Revenue figures for online gambling operators are released quarterly by iGaming Ontario. In fact, the second quarter numbers for the fiscal year 2023-24 were released last week.
But, OLG numbers are not included in any iGO figures. And, since the OLG is one of the province’s largest online gambling operators, that leaves the iGO figures woefully incomplete. Until now.
Earlier this year, PlayCanada tested iGaming Ontario‘s claim that the Ontario online casinos, poker and sports betting sector is “among the top five iGaming jurisdictions” in North America. While the claim checked out, the available numbers and relative lack of context didn’t exactly tell the full story.
Now equipped with the full set of numbers — thanks to the addition of OLG’s online gambling revenue figures — we’re running the same test to answer the ultimate question:
Where does Ontario truly stand amongst its North American online gambling contemporaries?
How Ontario online gaming compares to NJ, Pennsylvania, Michigan
Some states report handle figures differently. So, about the only consistent measure is revenue reports.
Back in April, PlayCanada reported revenue for Ontario’s online operators — minus the OLG totals — of $1.4 billion for the first full year of operation (April 2022 to April 2023). Adding the OLG’s digital operations revenue of $561 million for that same time period, Ontario’s total online gambling revenue for year one was $1.961 billion in Canadian dollars.
We then converted that to US dollars using the average Bank of Canada rate from that same time period (0.76). In US dollars, Ontario’s total online gambling revenue was $1.49 billion in year one.
That produced the following ranking of the top five jurisdictions in terms of online gambling revenue from April 1, 2022 to March 31, 2023:
- New Jersey – $2.47 billion
- Pennsylvania – $2.38 billion
- Michigan – $2.07 billion
- Ontario – $1.49 billion (USD)
- New York – $1.3 billion
For comparison purposes, we also included New York which has not, yet, legalized online casinos. In the states with both sportsbooks and online casinos, sports betting accounts for between 23% and 30% of the total iGaming revenue. So, New York, on just sportsbooks alone, already produces almost as much revenue as Ontario does with both casinos and sports betting.
Yes, New York’s population of nearly 20 million is also much higher than Ontario’s 15.1 million. But Ontario has a higher population than all the rest.
Ontario has the highest population and number of operators
Now, let’s compare by population and the number of live gambling operators in each jurisdiction.
Just looking at the regions that have both online casinos and sportsbooks, Ontario is king. By population it is as follows:
- Ontario – 15.1 million people
- Pennsylvania — 13 million
- Michigan — 10 million
- New Jersey — 9.26 million
- Connecticut — 3.6 million
- West Virginia — 1.8 million
- Delaware — 1 million
The number of live gambling operators in each area was as follows at the end of March 2023:
- Ontario: 47
- New Jersey: 33
- Michigan: 15
- Pennsylvania: 14
- West Virginia: 6
- Connecticut: 3
- Delaware: 3
OLG delivered $2.5 billion to province
Overall, the OLG delivered a net profit to the province of $2.505 billion in fiscal year 2022-23. That’s up 60% from the previous fiscal year figure of $1.562 billion. This year’s return to the province exceeded the OLG’s budget expectations of $2.332 billion by 7.4%.
In 2022-23, the breakdown of that net profit to the province by the major sectors was:
- Retail gambling — $1.366 billion
- Lottery — $1.088 billion
- Digital gambling — $302 million
Note: These figures do not include the OLG “loss” directed to the horse racing industry ($159 million) and charitable gambling ($80 million).
OLG growth came from online and retail gambling sectors
According to this year’s annual report, Ontario’s government-owned gambling provider experienced marked growth in two key areas.
We already know one of those sectors, digital gambling operations, generated some $561 million in the 2022-23 fiscal year. That’s an increase of 31% compared to last year’s total of $427 million which came prior to the open market. So, the OLG actually performed better when it had competition.
The OLG attributed the rise to higher spend per player, stemming from the launch of several new online products, as well as an improved customer experience.
Retail casinos and other land-based gambling centres also saw significant year-over-year growth.
The 30 facilities under OLG’s purview produced some $2.112 billion in revenue, up over $1 billion or 94% from 2021-22 figures of $1.089 billion. In short, the reason for the boom in casino revenue is simply that brick-and-mortar gambling facilities remained open for the entire fiscal year, with fewer COVID-19-related restrictions than the year prior.
However, the most recent fiscal year was not as kind to the OLG’s lottery sector. Revenue decreased by $65 million to $1.857 billion. That’s down 3.4% compared to 2021-22 ($1.922 billion).
While not a drastic fall, any decrease in lottery revenue is disappointing for the OLG considering it serves as the province’s lone lottery supplier. Company reports suggest the drop in revenue is related to lower proceeds of $4.357 billion, which fell by $112 million from last year’s figure of $4.469 billion.
Will Ontario be able to improve on most recent revenue figures?
After injecting $561 million in OLG funds into its year one revenue total, Ontario’s iGaming market generated just shy of $1.5 billion (USD). Now, the next question we want to know is will that number improve?
Based on iGaming Ontario’s Q2 (April 1 – June 30) revenue report from last week, there is reason to be optimistic that it will.
Although total gambling revenue was down $5 million or 8.3%, that largely had to do with a decline in sports betting revenue. For the Q2 period, sports betting revenue decreased by $20 million or 14.5%. However, that’s to be expected considering sports betting volume is seasonal, and that specific segment of the calendar features fewer betting options than others.
For that reason, sports betting revenue should experience a resurgence in Q3 with a greater menu of options becoming available.
On the other hand, online casinos proved, once again, to be the engine that drives Ontario’s iGaming industry.
Despite the drop in total gambling revenue, casino revenue climbed 3.8% from $392 million in Q1 to $407 million in Q2. For context, online casino revenue accounted for 75.4% of the overall revenue figure ($540 million).
Between FY 2022-23 Q2 and FY 2023-24 Q2, total gambling revenue grew by 102% from $267 million to $540 million. In this same measure, total wagers rose 135.1% from $6.04 billion to $14.2 billion. Further, the number of active player accounts, average monthly spend, operators, and gambling websites all grew significantly.
Although an ascent up the North American online gambing market power rankings seems extreme, Ontario has fared well against more mature markets so far.