Ontario projects over $400M revenue from first 3 years of iGaming

Provincial market already bringing in $100M annually

Ontario‘s regulated online gambling industry is two years old this week and figures from the Ontario budget suggest that the industry is already capturing $100 million in annual revenue for the province.

The 2024 Ontario Budget published last week showed that iGaming Ontario‘s activities generated $87 million in net income for the government in the 2022-23 fiscal year. That period covered the first 12 months of the market being open, from April 1, 2022 to March 31, 2023. Ontario’s regulated online gaming and betting market officially opened to private operators on April 4, 2022.

The budget projected that iGO will have provided $162 million by the time the figures are in from the current fiscal year 2023-24, rising to $174 million for the new fiscal year 2024-25. All told, that adds up to an estimated $423 million in revenue for Ontario through the first three years of the market.

If that total is realized, it would far exceed the early expectations.

An Ontario Auditor General report in May 2022, a few weeks after the launch of the market, had predicted that online betting and gaming in the province would generate around $75 million in net revenue for the provincial government over the first three years. The current trajectory is for the actual total to be more than 500% of that early projection.

Ontario’s iGaming market now has around 50 operators offering a variety of sports betting and online casino games through a total of approximately 70 websites. That’s a fast expansion from the 13 private online gaming and betting sites that went live on day one in 2022.

OLG’s slice not accounted for in iGO numbers

It’s worth noting that Ontario is getting more from legal gaming than the budget suggests.

The iGO revenue totals do not take into consideration the revenue the province also receives from the Ontario Lottery and Gaming Corporation‘s land-based, online, and lottery gaming businesses. OLG‘s activities brought in $2.5 billion in net revenue for the province in 2022-23, per the budget, and that figure is expected to hover close to that same number both this year and next year.

A look at OLG’s financial report for last year suggests digital gaming represented only around 7.3% of the OLG’s gross proceeds in 2022-23, its first year with private-sector competition in the online gambling market. Lottery and land-based gaming were fairly evenly split, representing 47.4% and 45.4% respectively of the crown corporation’s gross total income.

Start-up costs limited iGO’s year-one revenue

iGO gets around 20% of the revenue generated by private operators in the provincial market while the gaming companies themselves keep around 80%, but iGO has its own operating costs that eat into its slice.

In its first year, when it earned $87 million in income for the government, the iGO generated $1.26 billion in total gaming revenue from $35.5 billion in wagers, as laid out in iGO’s annual report for 2022-23. From that gross $1.26 billion figure, 20% would be $252 million.

However, the iGO paid out more than $1.14 billion, split between $1 billion to operators, $133.7 million in sales taxes, $8.8 million in salaries and benefits, and other costs. That yielded a net income of $96.2 million for 2022-23, which was cut down to the $87 million number due to a nearly $9 million loss incurred in the months leafing up to launching.

Including sales tax, iGO said its total contribution to the province was $145.7 million for 2022-23.

iGO still hunting for self-exclusion solution

Meanwhile, as the Ontario market continues to grow, iGO is still looking for a centralized self-exclusion solution to better protect players.

The government agency announced last month that it has now opened its RFP process and is seeking proposals from prospective partners for its software-as-a-service (SaaS) project until April 24.

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