Ontario Releases Online Gambling Revenue Figures, Mulls Regulatory Changes

Better late than never? After many months of delays, iGaming Ontario (iGO) has finally released preliminary revenue figures for the province’s newly-privatized online gambling market.

Having launched on April 4, the market is less than a week from entering its fifth month. However, iGO’s revenue numbers only cover the first three months, up to June 30.

During that time, it says that private sector operators generated $162 million in gross gaming revenue. That figure combines revenue from Ontario online casinos, sports books and poker rooms.

Dave Forestell, iGO’s Board Chair, said:

Our aim is to be the best gaming jurisdiction in the world and these positive results are an early sign that we’re on our way. With a competitive revenue share rate and low barriers to entry, Ontario is an attractive igaming market with a strong player base.

Is it actually a good start? That depends on what your expectations were. If the next three quarters were similar, it would mean about $650 million in the first year. That’s less than the $1 billion estimated by VIXIO Gambling Compliance and the $1.875 billion “best case scenario” projected by the Bonus news team (then writing for Online Poker Report).

There are, however, several things to consider before calling it a disappointing number.

Why Are Ontario’s Early Revenue Numbers So Low?

Recent US state launches are the best points of reference for evaluating Ontario’s performance. The two most significant of these are Michigan and Pennsylvania.

We can learn from these that not every market gets up to speed equally quickly. Michigan took its time preparing to launch but hit the ground running. Pennsylvania, on the other hand, stumbled at the starting line and only hit its stride in its second year.

To quantify that, consider each market’s annual online casino growth in its 18th month. Michigan hit that milestone this June and was showing a decent 36% year-over-year increase by that point.

Pennsylvania’s 18th month was December 2020. Its year-over-year increase from December 2019? 779%. 

Qualitatively, Ontario’s launch was somewhere in between those two extremes. Many operators were ready to go on day one, but many others have been trickling in.

Pennsylvania online casinos couldn’t even offer blackjack at launch, so Ontario will not likely see eight- or ninefold growth in the coming year. However, it could easily grow enough to beat VIXIO’s projection and perhaps come close to ours in its second year.

iGO’s numbers also exclude the province’s lottery-operated site OLG.ca and revenue for the remaining gray market operators. The latter, at least, should soon cease to be a problem.

AGCO to Revise Its Regulatory Policies

That gray market has recently been a hot-button topic among Ontario operators. There’d been talk about AGCO cracking down on unregulated operators after a three-month grace period. However, the regulator insists it never promised any particular timeline.

Now, though, it seems that the grace period is in fact ending. AGCO has released a discussion paper titled Ending Ontario’s Transition Period for Unregulated iGaming Operators. It proposes a date of October 31, 2022, to bring its new standards into effect. At that point, all operators would have to cease any remaining unregulated activities or face black-listing by AGCO.

That isn’t final, however. The purpose of the discussion paper is to solicit feedback from stakeholders, including thoughts on whether this is a reasonable deadline.

Other regulatory changes could be coming, too. A second discussion paper has also gone out, titled Potential Amendments to the Registrar’s Standards for Internet Gaming for Live Casino Products.

It states:

The AGCO has determined […] that amendments to the Registrar’s Standards may be necessary to address the potential risk related to the use of physical gaming equipment [and] live presenters.

The proposed changes would add new testing requirements for the physical equipment, restrict access to it to avoid tampering, and oblige operators to ensure that dealers don’t influence the games’ outcomes.

A Sparsity of Detail in iGO’s Report

Compared to the monthly or weekly spreadsheets released by US regulators, iGO’s report is very light on detail.

It doesn’t, for instance, provide a revenue breakdown by product (casino, poker or sports betting), let alone by operator. There’s no way of knowing, then, how local brands like theScore and NorthStar Bets are doing or whether those with a prior gray market presence hold the upper hand over new rivals from the US.

It does reveal that there were over $4 billion in wagers over the first three months. That implies a margin of just under 4%, which is pretty typical of casino products. Sportsbooks tend to hold considerably more unless they’ve had a bad month, so we can probably guess that casino games provide the bulk of the revenue. That is as expected.

The Average Ontarian Online Gambler Loses Over $100/Month

iGO does tell us one thing other regulators typically don’t, which is the number of active player accounts. It says about 492,000 Ontarians were betting online in that first quarter. The average spend (i.e., loss) per user in a single month was $113.

That’s a number that some might find troubling. The Canadian Centre on Substance Use and Addiction (CCSUA) recommends that players should cap their gambling at no more than 1% of household pre-tax income to lower their risk of developing a gambling problem.

The 2016 Canadian census found a median household income of $74,287 in Ontario. According to CCSUA’s guidelines, that would mean a monthly loss of $62 is safe across all forms of gambling combined, and the average Ontarian online gambler is currently losing nearly twice that.

Of course, the CCSUA’s guidelines are intentionally very conservative. We also don’t know how those losses are distributed among gamblers and across income demographics. Nonetheless, it’s a figure that’s likely to come up in discussions of problem gambling.

About the Author

Alex Weldon

Alex Weldon is the Casino News Managing Editor for Bonus. He’s a former semiprofessional poker player and has been writing about online gambling professionally since 2014. Prior to his current position, he was Managing Editor at Online Poker Report and, before that, the GameIntel Poker Update, a subscription newsletter for industry executives. Alex provides insightful content on the regulated online casino and poker industries, with an emphasis on legislation, regulation, responsible gambling and business strategy. His writing about poker has earned him multiple nominations for the American Poker Awards over the years.

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