Threat Of Out-Of-Market Ontario Sports Betting Ads Could Be Solved By Regulation

Written By Matthew Lomon on April 25, 2024
3D Map of Canada with the Canadian flag on it behind two hands holding up a sign that reads

The revolt against Ontario-based sports betting ads received a jolt following a brief dormant period after the 2023-24 NFL season. However, the group responsible for supplying said jolt, also inadvertently implied that regulation is the most effective solution to its grievances.

This week, the Canadian Lottery Coalition told CBC News that ads for Ontario sportsbooks should not be broadcast nationwide. The coalition, whose members include the Atlantic Lottery Corporation, Manitoba Liquor and Lotteries, and British Columbia Lottery Corporation, among others, denounced the presence of private online operators within their respective provinces.

“We are in a fight with people that are operating illegally in our provinces,” said Canadian Lottery Coalition spokesperson Marie-Noëlle Savoie in an interview with CBC. Savoie also serves as the BCLC’s chief compliance officer and vice-president of safer play & enterprise integrity.

“We’re obviously not very happy about it.”

There is an obvious solution: regulate, tax and control online gambling

The CLC’s commitment to protecting citizens from illegal wagering sites is commendable. There’s no arguing that. What is perplexing, however, is the lobby group’s decision to treat private operators as external threats. The reality of the situation, both now and in decades past, is that players tend to favour “grey market” operators to provincial lottery sites.

Likely, that is an indication that the limited provincial online gambling options in provinces other than Ontario are not to consumers’ liking.

Maybe Sun Tzu’s timeless cliché, ‘Keep your friends close, and your enemies closer’ trivializes things. But, if you’re worried about someone or something running around your backyard unabated, wouldn’t the logical solution be to gain control, or at the very least keep a watchful eye over it?

Obviously, failing to legalize online gambling operators above and beyond the provincial lottery options has not stopped those other entities from existing or consumers from gambling with them.

Instead, the CLC has taken an antiquated, myopic stance towards the modernization of online gambling. On the surface, it’s hard to fault them for it, lottery providers are businesses too. But, there’s no reason to fear extinction, or even cannibalization for that matter.

Just look at Ontario.

Ontario proof both private and provincial operators can thrive under regulation

When it was first announced that Ontario would be opening up to private operators, critics envisioned an overpopulated market that would eventually result in a Lord of the Flies-esque hierarchy where the strong reign over the weak. Sounds scary, right?

While, yes, there is some merit to the idea of overpopulation, the market has otherwise proven quite affable. And, for the Ontario Lottery and Gaming Corporation, especially. Despite competing with 70-plus online gambling sites, OLG experienced marked growth alongside the regulated market in the 2022-23 fiscal year.

The Crown corporation’s digital gambling operations generated some $561 million in FY 2022-23. That’s an increase of 31% compared to the previous year’s total of $427 million which came prior to the open market. So, the OLG actually performed better when it had competition.

In that same timeframe, iGaming Ontario reported $1.4 billion in total gaming revenue from the combined Ontario online casinos, poker, and sports betting sectors.

Not only is there a piece of the pie for everyone, but there’s also enough for seconds and thirds. Those numbers have since improved drastically, meaning the amount of taxable revenue will too follow suit.

For the full fiscal year that ran from April 1, 2023 to March 31, 2024, iGO reported that total online gambling revenue was $2.4 billion. For those doing the math at home, that’s an increase of $1 billion or 71% year-over-year. As a result, that $2.4 billion makes Ontario the number one online gambling market in North America by revenue.

The staggering figure will only balloon when OLG releases its annual report later this year.

With co-existence possible, so too is the moulding of enemies into allies

One of the CLC’s main gripes with Ontario ads is that they play as competition in jurisdictions where they aren’t legal.

“It’s not ideal when you have competitors, but they’re actually not competitors in your market, showing up as if they are competitors,” Savoie said to CBC.

That criticism is certainly valid, but again, it misses the point. These sportsbooks, whether from Ontario, Curacao, or Latvia, are direct competitors with provincial corporations. Right now, there is absolutely nothing preventing people from using a grey market site.

That could change, of course, with one simple solution: legalize an activity that is already happening. This way, provinces gain control over another taxable revenue stream, keep said tax dollars local, and greatly enhance consumer protection and problem gambling resources.

How much money are we talking about here? Well, according to Brian Miller of Lotteries and Gaming Saskatchewan, the coalition estimates illegal or grey market sites divert nearly $1.8 billion away from legal operators across Canada annually. Using Ontario’s annual tax rate of 20%, that’s roughly $360 million leaving the country every year for an activity that’s already happening.

If that’s not an endorsement of legalization and regulation, I’m not sure what is.

Regulation also addresses CLC’s ad-specific concerns

Not so subtly pushed as the answer to many of the CLC’s gripes, regulation, once again, offers an effective solution to its ad-specific concerns. In fact, the group’s main grievance that operators shouldn’t be allowed to advertise outside of their registered domains would be moot with regulation. Why? Because the majority of operators who do advertise would be legally permitted to do so. And, the provinces would have oversight over them while also profiting from their presence.

That said, don’t confuse this as a promo for more ads, that’s not the point. The point is regulating online gambling would enable provinces to have greater control over who and what can air. That’s exactly what the Alcohol and Gaming Commission of Ontario did in response to public outcries against the volume and messaging of sports betting ads.

On Feb. 28, the AGCO installed its new rules that prevent athletes and other celebrities from appearing in online operator ads. Although, this does come with the caveat that famous faces can still appear if they’re promoting responsible gambling in Canada. Specifics aside, Ontario continues to serve as an example of what provinces can accomplish with regulatory control over third-party online operators.

Jury still out on perceived problems with ads

There’s long been a disconnect between the legitimate and perceived problems with gambling ads. For example, recent studies from Maru Public Opinion and CBC’s Marketplace conflict with findings by PlayCanada.

Maru, which surveyed 1,534 of its Canadian panelists to gauge their feelings toward online sports betting, leaned heavily into the advertising side of things. As such, 59% of respondents were in favour of an immediate, outright ban on sports betting commercials.

The results were analyzed by Maru Voice Canada data collection experts on Feb. 7 and 8, 2024. A probability sample of this size has an estimated margin of error (which measures sampling variability) of +/- 2.5%, 19 times out of 20.

But, keep in mind, this is not a random sample. It is the opinion of people that already interact with Maru Public Opinion. That has limited value since it says little about the feelings of the Canadian populace as a whole.

CBC’s Marketplace, on the other hand, found that TV viewers in Canada are exposed to gambling ads roughly three times per minute during a game broadcast. This equates to approximately 20% of every game.

The problem there is that study counted any mere visual of a gambling brand, including in-arena messaging shown during broadcasts and logos next to game graphics such as the score. It’s highly-questionable whether a logo showing up on the screen, along with many other logos for many other products and services, is the same as a full-on gambling ad. So, likely the amount of “gambling advertising” was overstated in that analysis.

Volume of gambling ads much lower by PlayCanada’s count

However, separate PlayCanada analyses found the volume of ads much less frequent. The first analysis from last December found that only 9.3% of promotions across six NFL games were gambling-related. Overall, that amounts to just 65 of the 698 ads shown between four separate networks.

February’s Super Bowl ad analysis produced more of the same. A total of 175 ads aired between 6 p.m. and 10 p.m., only six were gambling spots. A quick trip to the calculator app says that’s just 2.9%.

Of course, both studies are merely a snapshot and not science. That said, each set of results casts enough doubt over the notion that provinces or gambling regulators cannot control ads. Again, it’s not science, but it’s also not something critics should overlook.

For the CLC, this kind of information can go a long way in turning a perceived weakness into a strength.

Photo by PlayCanada
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Matthew Lomon

Matthew Lomon has been a contributor at Catena Media’s network of regional sites since July 2022. He first broke into covering the legal North American gambling industry with PlayCanada. Since then, Matthew's reporting has extended to PlayMichigan, PlayPennsylvania, and PlayIllinois. Based out of Toronto, Ontario, Matthew is an avid (bordering on fanatic) sports fan.

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