Slow Start But Early Signs Are Positive For Legal Gambling In Ontario

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It is now nearly six weeks since Ontario, Canada, opened-up a legal online gambling market where private operators could compete with state-run lottery for the betting dollars of Ontarians looking to play casino games and bet on sports online. 

Whilst the hysteria around the first days betting back on 4th April didn’t quite match that in New York at the start of the year there are still big expectations for Ontario. Some are even predicting it will outstrip all other regulated markets in North America for revenue figures over the next decade. 

So how has the first month’s business been, and how can we expect things to progress over the rest of the year? Here we have pulled together the highlights of the story so far.

24 Gambling Websites Live and Taking Bets

There are now 24 gambling websites covering casino and sports bets in Ontario from more than 12 different operators. Big names include 888 Holdings, running 888 Casino and 888 Sports, Hillside, running Bet365, BetMGM, Leo Vegas, NorthStar Bets, Fan Duel and PointsBet. 

And many more licensees are expected to join the market over the course of the summer. US fantasy sports firm, Draft Kings, recently announced that it had been registered by the Alcohol and Gaming Commission of Ontario (AGCO) and would be live by the end of May. 

Meanwhile, European white label specialists, Skill on Net and White Hat Gaming, both of whom have already been established in Ontario as grey market operators before the new regulations were implemented, are both expected to be granted licenses in the very near future. This will pave the way for brands like Play OJO, Dream Vegas and CasiGO to start taking bets on casino games. 

The relatively low entry fees – $100,000 CAD annually per license compared to $25 million US in New York – combined with a 20% tax rate compared to 51% in New York – have made the market accessible to more operators than other regulated markets in the States. 

Of course, at the same time, the high number of licensees will also make Ontario more challenging for the many new casinos like these who are looking to break into the market.

Advertising Restrictions and Early Fines

The Alcohol and Gaming Commission of Ontario has wasted no time in issuing fines to operators who have breached its strict codes of conduct around advertising. 

It is against the law in Ontario to advertise free bets to anyone who has not first given their consent. Nor is it legal to imply that gambling with higher stakes gives you more chance of winning.

Between them, BetMGM and PointsBet managed to breach both rules within the first week of business. BetMGM announced a launch party with a $100,000 bonus prize pool, and 100 free spins on Jimi Hendrix slot to anyone who followed the company twitter account. And PointsBet advertised free bets on the GO train system in the province.

The fines issues were relatively low – $48,000 and $30,000 respectively – but it shows that the AGCO means business and will not tolerate any misbehaviour from its licensees. With Responsible Gambling top of their agenda it is expected that these standards will be maintained going forward.

Commercial Partnerships Signpost The Future

Just as in the States, commercial partnerships will be a big feature of the online gambling landscape as sports franchises and broadcasters look to sell advertising rights to sports betting operators.

Amongst the deals like this was a partnership between BetMGM, Fan Duel and the Canada Hockey League (NHL). Here an existing deal in the States was extended into Ontario, giving the two betting brands the rights to publish odds tickers during NHL games and advertise in NHL literature and on NHL social media accounts.

Elsewhere, two Flutter subsidiaries, BetMGM and Fan Duel, have partnered-up with Maple Leaf Sports and Entertainment (MLSE) who own sports teams in the States and Canada, including the Toronto Maple Leafs (NHL) and their home ground, Scotia Bank Arena. NHL fans can therefore expect to see betting tickers and adverts across any spare space at their home games from next year.

Commercial partnerships like these have been successful in the States and are typical of a regulated gambling market. But whilst they might be thriving this side of the Atlantic, in the UK’s more mature gambling market, there are calls to have them banned as anti-gambling charities demand less exposure to gambling ads at sporting events offline and on TV. 

Government Auditors Expect $75 Million Tax Revenues Over Three Years

And lastly, whilst the industry awaits the first reports from the AGCO setting out wagering and revenue figures for the first month’s play, a government auditor has predicted $75 million in taxes generated over the first three years of business. 

Those numbers come from an independent audit of the government’s budget forecasts for 2022-23. It is the first time that the provincial government will be collecting tax revenues from bets placed at sites owned by private gambling operators. Previously profits were collected offshore and taxes paid in jurisdictions like Malta and Gibraltar in Europe.

Summary

It has been a steady, if slow start for Ontario’s new market with some who expected to be licensed and operational by now still awaiting the green light. However, the early signs for those who are up and running are good. We are still waiting for the first revenue reports from AGCO but the projections in the government budget look strong and with more new casino sites waiting to go live, growth should be quick. Advertising restrictions present challenges not seen in other regulated markets, but that should only inspire more creative marketing efforts by brands who are more than capable of showing a sophisticated edge. 

The views expressed in this article are those of the authors and do not necessarily reflect the views or policies of The World Financial Review.