Daily fantasy sports a quandary for Ontario operators

When Ontario’s online betting and gaming market goes live on Monday, April 4, the status of daily fantasy sports is a little complicated.

Providing daily fantasy sports (DFS) offerings will be more difficult for licensed operators as the Alcohol and Gaming Commission of Ontario (AGCO) regulatory standards have included DFS as a gambling product, meaning that companies wanting to offer fantasy games would need to pay a $100,000 annual licensing fee to the province as well as paying 20 per cent tax on revenue.

As reported by Covers, bookmaker and leading DFS operator FanDuel has said that “due to a change in government regulations,” it will not be able to offer free or paid DFS contests in Ontario beginning on April 1. FanDuel added that entries submitted before April 1 will run as usual and that any winnings will be withdrawable. “Ontario residents can participate in daily fantasy contests while physically located in other provinces and within US states where daily fantasy is permitted,” added the company in a statement. “Additionally, Ontario residents will be able to utilize the FanDuel Sportsbook and Casino products launching in Ontario beginning April 4.”

Meanwhile, DraftKings will reportedly shut down its own DFS offerings in the province shortly before the market opens. “Upon our sports betting and iGaming launch, customers physically located in Ontario will not be eligible to play in paid or free Daily Fantasy Sports contests,” DraftKings said, per Covers. “However, you can continue to play on DraftKings as permissible when located in other Canadian provinces or U.S. states.” Its website says its online sportsbook and casino will be available in Ontario in April, and customers in the province will be able to keep playing in the company’s DFS contests until shortly before then.

RotoWire president Peter Schoenke, who chairs the Fantasy Sports & Gaming Association’s government relations committee, told The Parleh the FSGA was “kind of blindsided” by the AGCO’s rules around fantasy sports. “We’re working with the stakeholders to try and find a solution,” Schoenke said. “The licensing fee (in Ontario) is double what it is in the U.S. That pushes out the small operators and companies that only do fantasy sports.”

An FSGA statement adds that the regulations have made operating paid fantasy sports contests in the province “impossible for almost every operator”. It cites the examples of U.S. states such as Indiana and Delaware as evidence that large registration fees are prohibitive for smaller operators and reduce competition.

Canadian Gaming Association President and CEO Paul Burns told Covers that the altered regulations and payments around DFS could discourage smaller, “pure-play” DFS operators. He added that there is no cross-jurisdictional “liquidity” allowed in the new, regulated market, “so you can’t ‘mingle’ players from other jurisdictions with players from Ontario”. Burns described that as “the most significant barrier to offering DFS”.

Much like online poker, DFS typically relies on a critical mass of players to generate big prize pools and game variety. That may be hard to achieve given the lack of liquidity, even with Ontario’s population of over 14 million.

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