Ontario’s success in channelizing online gambling from the unregulated market to the regulated market has rightly been lauded, but a new report suggests that a “notable” proportion of business is still being done in the grey market.

Prior to Ontario’s commercial regulated iGaming market opening in April 2022, it’s estimated that at least  70% of online gambling in the province was occurring on commercial sites and apps rather than on Ontario Lottery and Gaming’s (OLG) government-run platform.

Since the end of the first financial year of Ontario licensing commercial operators to do business, that proportion has been down at around 15%, with roughly 85% of play taking place via licensed operators.

Last year, per iGaming Ontario (iGO) figures, 86.4% of Ontarians surveyed said they did their online gambling on regulated sites.

Last week, an IPSOS study commissioned by the Alcohol and Gaming Commission of Ontario (AGCO) and iGO revealed that the rate had slipped slightly to 83.7%. The study, which surveyed 2,003 Ontarians over the age of 19, found that 16.3% of the respondents who had gambled online over the previous three months did so only on unregulated websites. That number was up from 13.6% last year.

However, in addition to the residents who said they only gamble on unregulated sites, more than one-fifth (20.2%) of the 83.7% who said they gambled via licensed operators disclosed that they have also wagered on unlicensed and unregulated platforms.

While iGO’s latest revenue reporting shows that Ontarians gambled $82.7 billion via regulated sites in the third full year of the open market, up 31% from last year, the AGCO said in its summary of the IPSOS report that the data “underscores that a notable amount of gaming continues to occur on unregulated sites.”

“Those players are therefore not safeguarded by Ontario’s high standards of game integrity and player protections,” added the gaming regulator. “The AGCO continues its efforts to address illegal gambling sites in Ontario and to increase public awareness about the benefits of choosing regulated iGaming sites.”

AGCO COO says agency lacks enforcement power

The AGCO said publicly back in January that it is working on “a comprehensive strategy” to limit industry access to the unregulated market in the province “by delivering a second generation of high-impact, coordinated and relevant regulatory activities.”

Exactly what that entails was not specified.

“Building off of our early channelization success, we continue to work with industry stakeholders and other jurisdictions to combat the unregulated market while continuing to work towards crafting a comprehensive strategy with our government partners,” the AGCO’s Raymond Kahnert told Canadian Gaming Business in January.

iGO’s most recent regulated market report was published shortly before the AGCO’s Chief Operating Officer, Dave Phillips, spoke to attendees at the International Masters of Gaming Law (IMGL) spring conference in Vancouver late last week.

Phillips told attendees that while the AGCO can do “a lot of work to remove the oxygen from the unregulated market,” the agency suffers from “a real significant lack of authority at the provincial level to take action.”

“We, to this point in time, have not been endowed with the investigative enforcement authorities that [are] required,” Phillips said. “My compliance enforcement staff don’t have those investigative authorities that we need. We don’t have the ability to issue cease-and-desist orders or lay charges and so forth. So that’s really restricted our ability to act.”

As some neat North American context, Phillips was speaking on a panel on which he was joined by state regulators from Michigan and Washington. In the U.S., states such as Michigan do have the authority to send C&Ds and even pursue criminal action against unlicensed operators. For instance, the Michigan Gaming and Control Board’s Deputy Director of Licensing & Investigations, Tina Alagna, said on the IMGL panel that the MGCB has sent around 200 C&Ds to offshore operators in a little more than a year, with around one-third of recipients complying with the order.