Ontario’s online casino and sports betting market just turned one. We’ve seen some successes during that first year, but there’s plenty of room for improvement.
The province reached the milestone at 12:01 a.m. on April 4, marking the end of a year of growth and growing pains. Simultaneously, it offers starting point for everything yet to come.
You could say that the market is officially entering its toddler years. Much as it is for a human toddler, this will be a period of learning and growth for Ontario.
Editor’s Note: Since Ontario is a Canadian market, dollar values are given in Canadian currency, with US conversions mentioned parenthetically. iGO cautions that its numbers are “unaudited and subject to adjustment.”
Ontario’s First Year by the Numbers
Numbers released by iGaming Ontario (iGO) on the market’s birthday indicate that Ontario gamblers wagered $35.6 billion (US $26.5B) with private operators over the past 12 months, not counting bets made with promotional credit. Those companies collected $1.4 billion (US $1B) in gross revenue, returning $34.2 billion (US $25.4B) in player winnings, for an aggregate hold of 4%.
The market has grown to include over 43 operators and 74 sites. That’s considerably more than even New Jersey, the longest-running and most crowded online casino market in the US. In the first year, players in or visiting Ontario opened over 1.6 million active accounts with those regulated operators.
That list of operators includes the market’s latest entry, NeoBet by Reactive Betting. However, it doesn’t include the casualties of the first year. Coolbet, Play-On Casino, and Play-On Mansion all threw in the towel before reaching the market’s anniversary.
Coolbet’s owner, GAN Ltd., cited Ontario’s steep competition as a driving reason behind its retreat during a recent investor call.
As CEO Dermot Smurfit said last week:
For those markets where we don’t see a clear and rapid path to profitability outside of Latin America, we will pull back resources and/or exit those markets.
To that end, we have exited the Ontario market described by some industry experts as the most competitive market in the world.
Ontario Online Gambling Sees Strong First-Year Growth
Ontario differs from US markets in that those private sector operators compete directly with similar products offered by the provincial lottery.
In FY 2021-2022, Ontario Lottery and Gaming (OLG) reported record-setting gross revenue of approximately $427 million (US $317M). Adding this to the private sector numbers, we get a total market of $1.8 billion (US $1.3B).
The lottery expects further growth in the current year. Meanwhile, quarterly revenue breakdowns in the privatized market show it is growing explosively.
iGO hasn’t yet released official figures for the latest quarter. However, according to its audited reports, Ontario’s private operators brought in nearly $886 million (US $660M) through the first three quarters. Subtracting that from the full-year total implies $514 million (US $383M) in gross revenue for the latest quarter.
That’s approximately a 12% increase from $457 million (US $340M) in the market’s third quarter (i.e., Q4 2022).
As the markets stabilize post-launch, we should expect growth to slow. But how soon that will happen and whether the impending seasonal sports lull will have a dampening impact is unclear.
Things are Good, but They Could be Better
Revenue numbers aren’t the only positive metrics backing Ontario’s decision to regulate.
In October, the Alcohol Gaming Commission of Ontario (AGCO) won the Regulatory Excellence Award from the International Association of Gaming Regulators (IAGR). The win recognized AGCO’s work developing and implementing Ontario’s new online market.
Additionally, several operators, including PointsBet Canada and theScore, established Ontario-based operations, so investments like office space and salaries can be attributed back to Ontario’s online regulation.
However, it’s not necessarily all sunshine and roses. Humans rarely get things right the fifth time, let alone the first.
More than a few elements of Ontario’s online gambling experiment could use tweaking. However, what those things are and how they should change likely vary depending on who you ask.
Here are a few ways I hope the Ontario online gambling industry evolves as it finds its feet.
Reporting and Transparency are not AGCO and iGO’s Strongsuit
I’m far from the last to be left wanting more information and transparency from AGCO and iGO.
This issue figured prominently in today’s Gaming News Canada report on the anniversary.
I wholeheartedly with GNC’s Steve McAllister that AGCO and iGO should be more open to answering questions from journalists. AGCO has even temporarily blacklisted some affiliate news sites (including at least one belonging to Bonus’s owner, Catena Media) for unspecified infractions.
Additionally, the information iGO provides in its quarterly revenue reports is very sparse compared to US regulators. There’s great interest, from various sides, in monthly numbers and a more thorough breakdown beyond the total market handle, revenue, users, and average spend.
Fortunately, there have been suggestions that future reports may include more detail. That could include data like operator market share and revenue by vertical, though no specifics have materialized.
Hopefully, AGCO and iGO will read the room and make more effort to communicate effectively with the media and the public. Doing so can only benefit the industry.
We Need Innovation in Responsible Gambling Strategy
Don’t get me wrong, Ontario did many things right when considering responsible gambling.
While I still believe banning all public advertising of bonuses or promotions makes players work harder to find the perks best for them, it’s a stand that sends a strong message about the importance of RG and player health.
Requiring all operators to get accredited by the Responsible Gambling Council’s RG Check goes a step further. And in combination with self-exclusion and time and spending limits, these tools and more create a solid RG foundation.
This is less a gripe about Ontario and more a wish for the global gambling industry.
The tools above are a great starting point, but they shouldn’t be where our commitment to advance responsible play ends.
And, as positive as the FanDuel and BetMGM announcements pledging to include RG messaging in all future ads, at this point, doing as much should be an industry standard.
Perhaps there’s a good reason I haven’t considered, but from the outside, I don’t understand why operators wouldn’t take the RG lead. Establish robust industry standards, and implement them in every legal operating jurisdiction regardless of local regulations.
The only tweaks necessary would be tightening specific conditions where required.
The industry must underestimate the potential positives of such leadership not to give RG momentum more attention.
Exciting research has opened up possibilities to better steer the industry and individuals toward new standards for sustainable, responsible play.
Unfortunately, legislators are considering over-corrections like banning advertising instead of courting this evolution in some jurisdictions.
And instead of working to avoid these reactions, much of the industry has its head in the sand.
Channelization Efforts Aren’t Complete
Unlike Clairol’s ad campaign from the 1950s, Ontario hasn’t “washed all the gray out.”
Yes, regulated operators have put a significant dent in the offshore market. However, many Ontarians still use these former gray market sites, which AGCO now considers a black market.
Yesterday, AGCO released the results of a study conducted by Ipsos that showed 85.3% of respondents who gambled online in Ontario over the past three months played on regulated sites.
By contrast, 70% of online gambling occurred on unregulated sites before the privatized market debuted last April.
However, there’s an important caveat here. That 85.3% includes 19.5% of respondents who did a mixture of legal and illegal gambling.
Framed differently, we can say that 34% of Ontario’s online gamblers still use offshore sites. That compares unfavorably to a similar report by Pennsylvania State University. That study found that only 13.3% of Pennsylvania online gamblers were using black market sites, including those who also used legal sites.
That said, Pennsyvlania’s market launched in 2019, so it has a significant head start on Ontario. Still, there’s considerable room for improvement in Ontario, where black market operators like Bodog continue advertising on television, using play money dot-net sites to promote their real money brands.
First Nations Interests Habitually Ignored
First Nations rights are an issue bigger than the province of Ontario.
The relationship between Indigenous people and the Canadian government is a fraught one. Our national history includes broken promises, violence and genocide.
In many ways, the present-day relationship between First Nations and Canadian citizens isn’t much better.
Regarding gambling, the federal and Ontario provincial governments have repeatedly passed up opportunities to do better and honor the principles of reconciliation. As a result, the gambling industry faces multiple legal challenges led by First Nations groups.
One challenge, mounted by the Mohawk Council of Kahnawà:ke (MCK), questions the legitimacy of Ontario’s entire online framework.
That case is complicated and won’t move forward until February 2024. The outcome is critical to Kahnawà:ke because the community depends heavily on revenues from operating its historic online gambling industry.
The MCK first established the Kahnawà:ke Gaming Commission (KGC) in 1996. Ever since, KGC has been licensing and regulating online and land-based gaming within and from traditional lands found south of Montreal, Quebec.
However, MCK felt forced to pull its longtime online gambling site, Sports Interaction, from Ontario a few months after the market launch. A little later, Entain, which had recently purchased Sports Interaction’s owner, Avid, relaunched Sports Interaction in Ontario through a subsidiary, Electraworks Maple Ltd.
MCK still operates the Sports Interaction brand in other Canadian provinces and territories. However, the retreat has affected Kahnawà:ke’s bottom line.
Can Ontario Raise the Bar?
Perhaps it’s naive, but I think a better gambling industry in Ontario and beyond is possible. The goal should be to do business responsibly without relying so heavily on courts and regulatory intervention.
But getting there will take effort, and whether the industry is up to the task remains to be seen.
If nothing else, April 4 offers us a chance to reflect and take stock of where we’ve been, where we are, and where we want to go.
Let’s not waste the opportunity.
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