Checking in on Canada: Where we’ve been and where we’re going

SBC Summit North America panel assessed state of play

Ontario’s regulated gaming market has fulfilled its goals of providing a wide range of choice to consumers and bringing in revenue for the province. That early success can serve as a launchpad for the rest of Canada if and when further provinces choose to regulate gaming.

Those were two of the main conclusions from a Canadian-focused panel at the SBC Summit North America.

The Checking in on Canada panel, moderated by Canadian Gaming Association president and CEO Paul Burns, broke down the state of play north of the border and what may come next.

Featuring experts from the Alcohol and Gaming Commission of Ontario, multiple operators, and the affiliate market, the panel began as one might expect: with a look back at iGaming Ontario’s year-two financial report. The period from May 2023 to April 2024 saw $68 billion wagered with the province’s 47 operators across 77 legal gambling sites. Those operators collectively took $2.4 billion in gross gaming revenue.

The results also revealed that despite a strong appetite for sports betting in Ontario, online casino still rules the roost financially. Three-quarters of that total year-two GGR, $1.8 billion, came from casino play, with sports betting yielding $588 million.

“You dig a little bit deeper and you see the sports vertical grew about 39% year over year and casino was 88% so we see it’s a very casino-driven market,” noted Brooke Hilton, head of casino at PointsBet Canada. “There was a lot of speculation pre-regulation that it was very casino-driven but the numbers themselves are underscoring that that is the case.”

The AGCO’s chief legal officer, Brent McCurdy, acknowledged that in building Ontario’s regulatory framework, the AGCO “stole shamelessly” from the UK and certain jurisdictions in the U.S. by cherry-picking “what we thought was the best of all worlds.”

Two years on, it seems to have worked pretty well.

Ontario’s slow burn

One strong focus for Ontario has been channelisation. All stakeholders were very clear in stressing that bringing gamers and bettors in the province out of the shadows of the grey market and into the regulated light was critical for the health of not only the industry but also players.

Burns noted that Ontario saw “a slow kind of roll” in 2022 as players in the province moved to regulated offerings.

“The Ontario trajectory was quite different to U.S. regulated states,” Hilton added. “Because the goal was more about moving those dollars across to the regulated market, it was a bit of a slower burn initially. The first few months, perhaps a few eyebrows were raised asking where was this big dollar amount we were expecting to see. But year two put up quite impressive numbers.”

Bruce Caughill, Rush Street Interactive’s managing director of Canada, admitted it was a learning curve for many operators.

“The bottom line was that the province chose channelisation as the ultimate public policy goal, so everything fell on that altar,” he told attendees. “So you end up needing to create an environment that is commercially attractive in order for that to happen. That means accepting grey market operators and making it viable for them to do business.”

Again, it seems to have worked.

The AGCO published an estimate in April that 86.4% of all Ontarians who gambled in the final weeks of 2023 and the early months of 2024 did so on regulated sites. Caughill said that represented “absolute success,” while McCurdy called the figure “remarkably high.”

“It started off at 85% and now it’s 86%,” noted McCurdy. “It’s pretty amazing given where we were just before April 2022. Our objective was to let operators come in and bring players across. I think given the numbers, we’ve really gotten there early.”

Competition serves all

If channelisation was the core goal, Ontario’s administrators also had other end results in mind for opening up the gaming market. Covers senior journalist Geoff Zochodne noted that regulation was not framed around revenue generation — although that’s obviously a piece of the pie — but consumer protection and choice. By those metrics, he stressed, those goals have been met.

On the protection front, Burns pointed to operators’ largely robust responsible gaming measures as well as the AGCO and iGO’s own policies, which have included prohibiting mass-market promotion of bonus incentives and the adjustment to prevent athletes from being used to market anything other than RG programs. Ontario, he added, is one of the only regulators in North America actively monitoring players for risk.

Some of those consumer protection protocols go hand-in-hand with boosting consumer choice.

“The [rule on] no incentive bonusing forces operators to compete on product,” noted Caughill. “That’s what we want to do, that’s what we are doing. To a certain extent, Ontario has really raised all boats and that’s been welcomed and supported.”

Ontario mandated itself to ensure that consumers would have a variety of options to choose from. The market opened in April 2022 with European giants and leading former grey market players alongside made-in-Canada offerings, land-based brands that have expanded into the digital realm, and more.

We cannot know for sure given the lack of individual operator data currently provided. But the general consensus is that unlike many U.S. jurisdictions, where FanDuel and DraftKings together dominate the market share battle, Ontario has established a playing field that is more balanced. That benefits all, emphasised the panelists.

“Everyone’s come to participate,” Hilton added. “Whatever affinity you have as a player, it’s likely represented. It’s amazing both as a player and an operator. Within the first year, there’s more than two or three times the amount of content available in the new market than there was in the most mature sister market in the U.S. after 10 years.”

A foundational characteristic of Ontario gaming is that while the regulated market itself may only be two years old, the propensity to gamble certainly is not. Many players had been gambling in a mature grey market for years, and brands such as bet365, widely held to be a market leader in the province, had leveraged significant brand awareness before regulation.

As Zochodne noted, that player maturity leads to higher consumer expectations.

“They’ve been through potentially several sites or operators at this point and they know what they’re getting at certain places,” he told attendees. “You already have an educated bettor in Ontario and there are plenty of opportunities to innovate on products and provide different sorts of experiences.”

What’s on the Alberta agenda?

Other provinces will surely follow Ontario’s lead in opening up their gaming market.

While the likes of British Columbia and Quebec have been touted, there has been little tangible progress on those fronts, although Caughill did note that the latter has at least begun early discussions about alternatives to Loto-Québec.

Alberta looks likely to be the next through the door.

This year, the province devoted $1 million in its budget to review the feasibility of revamping the Gaming, Liquor, and Cannabis Act to open up the online gaming market. Minister Dale Nally has been tasked with leading that drive. His office told Canadian Gaming Business last month that the province will engage with casino operators, racetrack operators, First Nations, and other stakeholders this year.

Nally has said publicly that Alberta’s population, low corporate taxes and high disposable incomes set it up well to be a “premier” hub for iGaming. Burns added during the panel session that the province has had some of the highest per-capita spending on gambling in Canada for many years. “It’s a very robust gaming marketplace already,” added the CGA president. Caughill added that the province will soon create a separate conduct-and-manage agency to oversee iGaming and will likely look to white-label Ontario’s licencing regime.

For operators like PointsBet, who have earmarked Alberta as the next frontier and have built up significant brand recognition, that’s an exciting prospect.

“From an operator’s perspective, Ontario has provided a really big incubator launchpad-type situation where you can understand the player base, build up the product set, and then look to scale across Canada should we get that opportunity,” said PointsBet’s Hilton. “While the monopolies [lotteries] are great organisations, they’re not necessarily the most fast-paced to respond to player expectations or needs. Things like jackpots, free spins, high production quality and interesting mechanics all come with the expectation today. If we’re going to capture that market share back, we need to respond to the players and deliver good products.”

However, Nally’s office stressed to CGB that while Alberta is looking down the road, its iGaming strategy must “make sense for our unique gaming market and serve the interests of all Albertans.”

Therein lies the complexity of the issue.

“There’s a desire in the Alberta government to make this happen yesterday, but I think they’re starting to understand that to make things happen takes some time,” Caughill added. “I think the reality is probably more into 2025 based on where they are. There’s a long way to go still. It’s not tomorrow.”

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