DL: The Canadian market has gone through a lot of change over the last few years and OpenBet has worked closely with a number of provinces on delivering a service that enables citizens access to a safe, secure, and legal gaming offering. Operators in the Canadian market have a very specific set of criteria for partnering companies and we were very pleased that OpenBet ticked all the boxes. We have a flexible platform that allows operators to bring in various third-party providers to tailor their final offering. But more importantly, we have a proven track record in compliance and that is essential when partnering with governments in newly regulating markets.
GS: OLG will offer a full range of products and services to be delivered on the internet, through an online site accessible via personal computers, laptops, and other internet-connected devices. This will include lottery ticket sales, casino-style games, and peer-to-peer games like poker and bingo. This state-of-the-art site will include responsible gambling tools to set spending and time limits and a secure sign-in and registration system to protect player data and transaction information. Ontarians currently spend about $400-million a year on offshore internet gaming sites. Within five years of operation, OLG’s iGaming program could potentially deliver $100 million or more in net profit to the Province of Ontario.
The iGaming project is in the final stage of procurement and once the vendor selection process is complete and a contract agreed to, an announcement will be made. The first phase of OLG’s iGaming program is an online educational presence to inform customers of its status, what Ontario’s iGaming program will include, and information about OLG’s Responsible Gambling program. This site will be available in December 2013 and online game play will begin in summer of 2013.
Is iGaming on the rise? What are the indicators?
TR: We have seen estimates that between $1.3 to $1.5 billion dollars a year is wagered through internet gaming in Canada, and the amount wagered on iGaming doubles every four or five years. It is also a pretty clear indicator that an activity is popular and socially acceptable when governments decide to engage and offer those services. When governments are prepared to enter the market, it's a pretty good indicator that the public is already supportive of it.
DL: Certainly, iGaming is on the rise. Two years ago we had no presence in Canada and now we provide the underlying infrastructure to a number of provincial lotteries with our player account management system, casino content offering and sportsbook software. There is no denying the demand for online gaming is on the rise. If there is not a legal offering then punters will look to ‘grey’ operators from offshore. Our partnership with Canadian lotteries is providing a legal alternative that keeps revenue and tax within a jurisdiction and protects the best interest of the final customer. We believe that this trend will been seen in numerous new territories as the gaming market continues to develop globally.
GS: Globally, online gambling is a $20 billion a year industry. An estimated $400 million is estimated to be played annually in Ontario. The momentum toward online gaming is happening worldwide and is similar to the movement toward online retailing, online banking, and even online journalism. It is the way of the future in the gaming industry.
Today, Ontarians are estimated to have between 400,000 and 500,000 accounts with internet gaming providers that are not regulated in Ontario. OLG’s research indicates that customers are more interested in playing on sites with responsible gambling features as it builds trust and confidence in gaming online. Furthermore, the majority of European Union states license and regulate online gaming. British Columbia, Quebec, and Atlantic Canada also have online gaming systems in their respective jurisdictions. A bill has passed a committee of Congress requiring the Treasury Department to license and regulate online gaming in U.S. states.
What are some of the challenges of conducting iGaming in Canada. How are these being addressed?
AB: The biggest challenge to iGaming in Canada can be summed up in two words: Conduct and manage. When you talk to provincial organizations, everybody understands the international playing field, but 'conduct and manage' has become almost like a set of handcuffs in terms of being able to adopt a regulatory model here. What you see, then, is when provinces launch, they launch with a monopoly model. And in terms of offering casino and lottery products they're doing quite well. But for games that require liquidity like poker, that's proven to be a very significant challenge because we just don't have enough players to support that—especially when you have other online companies who have been at this for a decade. These are highly sophisticated companies, so when you look at a provincial organization that's just getting into it now, we're not saying you shouldn't have an online platform, but when it comes to games of liquidity—where you need to have access to tens of thousands of players on a daily basis—it just doesn't make sense to recreate the wheel when you could easily tap into the expertise that's there already.
DL: All new jurisdictions have their challenges, but our systems are designed to overcome whatever hurdles are thrown up by any given regulating process. In this sense, Canada was no different to any other jurisdiction. Working with BCLC, and the other Canadian provincial lotteries, has taught us the lengths to which the regulators will go to ensure that the probity checks cover what they feel is needed. This is a lesson we have learned throughout our company’s 16-year history, and we are proud of our strong reputation as the leading sportsbook and gaming software supplier and trusted partner not just to the Canadian lotteries, but to some of the world’s biggest gaming operators, whether in North America or Europe.
Our business and platform is built to be flexible in every aspect of its operations. At the very heart of our business is the necessity to be 'open'. OpenBet Account (Player Account Management system) allows operators to integrate with many other products and services, while OpenBet Casino allows the lotteries to continuously add new content both from OpenBet Casino portfolio or integrate any other third-party games into the same system ensuring the overall casino offering is constantly refreshed and meeting the players' ever-evolving demands for new and engaging entertainment.
GS: OLG’s move into internet gaming as an opportunity; our program will be fun, competitive and attractive in a crowded market. Plus, we will offer a secure environment with a trusted brand name in the lottery and gaming industry, along with a gold standard approach to responsible gambling in the online gaming market. Our gaming site will focus on customer service and maximum player enjoyment, while our products and games will be designed for to bring a new level of excitement and security to internet gaming in Ontario. At OLG, we encourage healthy player behaviour with a strong player education program. We will have tools for customers to manage their online play, such as time and money limits, and the option to take breaks. Players can learn about their own play habits with the use of our self-assessment test and personalized messaging based on data analytics. For customers who have concerns about their gambling, we will be offering access to free resources and the opportunity to exclude oneself from play.
Addressing security challenges, OLG’s site will offer the maximum security possible to protect player data and transactional information. The sign-in process also confirms one’s identity and age which protect against fraud and to prevent minors from accessing the site.
How, in general, can iGaming help and/or improve the Canadian gaming experience?
AB: When you look at the members who provide services globally in regulated environments, they do so under licenses and those licenses have more stringent requirements attached to them than land-based casinos do, and because it's so reliant on technology, they can recreate everything. They can track financial keystrokes and recreate events. The technology can help identify problem gamblers, ensure fair play on behalf of the operator and players, and even help identify and prevent money laundering. What's more, player protections are built in in terms of time limits and spending limits, and the background checks are very, very rigourous. From our point of view, we feel the security and the controls around online are much stronger than they are land-based.
DL: The evidence proves that if there is not a 'legal' offering for online gaming in Canada then people will look elsewhere. They will use illegal sites and operators that are not governed by any set of regulation. In essence you are leaving online gamers vulnerable to serious risk. A government-backed product ensures that gamers have access to state of the art offering that is regulated, safe and secure.
In BCLC’s own words, the move online was designed to, “Respond to evolving player and online gaming market demand and offer British Columbians legal gaming options where revenue generated stays in British Columbia to benefit all residents.” With the help of OpenBet, the Canadian lotteries were keen on building both the liquidity and the critical mass needed to make the product attractive to the customer while also providing the safe playing environment inherent in trading under the state lottery banner.
GS: iGaming improves the gaming experience by making gaming more accessible. As noted, OLG will offer a full range of products and games, through an online site accessible through players' personal computers and other internet-connected devices.
When it comes to responsible gambling online, all play on OLG’s site will be identified and tracked—there will be no anonymous play online. Data analytics will help us further support players at risk with appropriate resources. OLG’s Responsible Gambling program has already been recognized by the World Lottery Association with Level 4 accreditation, the highest level possible. OLG approaches every aspect of responsible gambling online with the same commitment to excellence that it has demonstrated in its other lines of business.
What's next for iGaming?
TR: What we're really going to see is the convergence of iGaming and iGambling. This generation of young adults has grown up with personal computers, mobile phones, and constant access to the internet and console gaming; they've never known a world without these devices. They are completely comfortable with any number of activities using these technologies. More and more, you can gamble on non-traditional forms of gambling on the internet. You can go online now and challenge somebody halfway around the world to a game on your Xbox 360 to a game of Halo, and you can place a wager on the outcome of that game. And the site that's hosting the activity will take a cut of that wager, and they'll pay out the winner. From my perspective, the convergence between gaming and gambling is the next big development. More and more, that type of activity is going to become acceptable, and more and more the big game manufacturers will start to get involved.
DL: The online gaming market is forever innovating—it is built into the DNA of the industry. If we review the last couple of years, we have seen a meteoric rise in mobile gaming with the introduction of smartphones and tablets, and the inclusion of services such as 'in-play' betting that has immeasurably enhanced the product offered to customers. Right now, operators are focused on delivering on their investments in these areas. Social gaming and smart televisions are areas that could provide some exciting developments by bringing online and offline products together in a fully integrated fashion.
GS: Our goal is to go-live with gaming on our site in summer 2013. We will offer exciting products and services that customers enjoy and to offer an online service in the most socially responsible and secure manner possible. As an OLG product, we can leverage our reputation as a socially responsible company which contributes to the economy of Ontario. Our iGaming project is consistent with the overall modernization of OLG, as we transform the way we do business; this includes greater involvement of the private sector, becoming a more customer focused organization, and renewing our focus on responsible gambling.
The profits from iGaming will increase our annual contribution to the province. The Ontario government uses money from OLG for priority programs such as healthcare and education, and also for communities.
For more about the Interactive Gaming Council (IGC), visit www.igccanada.com.
For more about OpenBet, visit www.openbet.com.
For more about the Ontario Lottery and Gaming Corporation, visit www.olg.ca.