Ontario has finished the process it began in December to separate iGaming Ontario (iGO) from the Alcohol and Gaming Commission of Ontario (AGCO). The latter is the province’s longstanding regulatory body, while iGO was created in 2021 to “conduct and manage” privatized online gambling in the province. The split was finalized on Friday, according to the provincial government.
Canadian federal law requires that all “lottery schemes” (meaning gambling) be conducted and managed by the provinces. The Ontario government under Premier Doug Ford wanted to allow private operators into the market and came up with iGO as a sort of legal compromise.
Technically speaking, companies like DraftKings and BetMGM aren’t licensed to operate as private companies in Ontario. Instead, they sign business agreements with iGO to offer services on its behalf. This echoes the structure of the province’s retail casinos, where Ontario Lottery & Gaming (OLG) owns and manages the physical properties, while companies like Caesars and Great Canadian Gaming operate the games.
The Ontario model survived one legal challenge, questioning whether iGO really did as much to conduct and manage its partners as OLG does. The absence of a physical property to manage makes iGO’s role less outwardly obvious.
However, despite prevailing in that case, some questions remained around iGO. Specifically, whether there was a conflict of interest stemming from the fact it was structured as a subsidiary of AGCO, the agency responsible for its oversight. Last year, a bill called the iGaming Ontario Act set out to restructure iGO as a subsidiary of the Ministry of Tourism, Culture and Gaming. That process is now complete.
Will the split of iGO and AGCO have any effect?
Ontario online casino players aren’t likely to notice any immediate difference. The structural change is meant to eliminate any possibility of the relationship between the two affecting AGCO’s regulatory decisions. The actual day-to-day function of each body should remain unchanged.
That said, there are also changes happening to iGO leadership at the same time. Former executive director Martha Otton resigned in March and a successor hasn’t been named yet. Because of the change in structure, the new leader will have the titles of CEO and President, rather than Executive Director. New leadership could mean a gradual shift in policies, though any changes are likely to be subtle.
The more noticeable impact may be on other provinces considering following Ontario’s lead. In the US, New Jersey was the first state to create a regulated multi-operator market and its rules have become a template many other states follow. The same is beginning to happen in Canada, starting with Alberta. Its privatization bill passed last week, emulating Ontario’s revised format down to the name—the iGaming Alberta Act.
Few other provinces seem likely to follow suit immediately. However, that may change over time if the privatized markets live up to their promise of capturing gambling revenue that is otherwise flowing to offshore sites. If, in the future, most provinces do privatize online gambling, many will likely look to Ontario’s experiments for lessons in the dos and don’ts. Structuring the management body as an independent crown corporation rather than a subsidiary of the regulator can now be said to be one of those lessons.
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