Ontario’s regulation of online sports betting and casino is another major milestone for the North American industry and it will be interesting to see how the market dynamics will apply in a province that has had grey market activity for many years. From a regulatory perspective the Alcohol and Gaming Commission of Ontario will also have its work cut out.
The stats are well known: Ontario is the wealthiest region in Canada and its economic capital (as well as its administrative one) and if it was in the US it would be the fifth biggest state by population (14.5m). As a result it is the second biggest North American jurisdiction to regulate sports betting behind New York.
Analysts estimate the province could be worth close to $1bn in gross revenues in its first year of operation and many of the most well known betting brands have already received their licenses.
So far they include: BetMGM, FanDuel, bet365, LeoVegas, Ontario Lottery and Gaming (OLG), Caesars, PointsBet Canada, Rivalry, Leo Vegas’ Royal Panda, BetRivers, theScore Bet, Unibet, World Series of Poker, 888, LottoGo, Colbet, Fitzdares, Casigo, Casimba, DreamVegas, FireVegas, Gate777, HelloCasino, JackpotVillage, Playzee.
The only major absentee so far is DraftKings and the reasons for its no-show are unclear. Some players have speculated that it might be linked to the province allowing daily fantasy sports for Ontario-based players only.
Promising province
Much is expected from the province in terms of growth and all the major brands (bar DraftKings) set to compete there from day 1.
In terms of the operators that are likely to compete hardest for market share, Toronto-based sports media outlet theScore and its theScoreBET mobile app has major plans and, likely as with many other brands, has been pre-registering players in advance of the opening.
There is a lot riding on Ontario and Canada, if the other provinces eventually regulate, for theScoreBET and its parent company Penn National Gaming, which also owns Barstool Sportsbook.
This is because The Score’s reach is largely limited to its home market. It doesn’t have a sports betting (or media) presence in the US to speak of and with Penn National acquiring the group for $2bn in October, it needs to make good in Ontario’s online sports betting market.
The Score’s management team, led by CEO and founder John Levy, as expected is bullish on its ‘home prospects’, even if it has not made things easy for itself by deciding to develop its betting platform in-house. Many things can go wrong and prove costly, for both the bottom line and the brand, if high profile mistakes are made or the technology fails.
36 minutes and counting, Ontario…@theScoreBet pic.twitter.com/rPhizsdCEs
— John Levy (@scorecommish) April 4, 2022
Long-standing market
For all the talk of Ontario opening up to regulated sports betting however, the province and the rest of Canada has been a highly active and prosperous market for online sportsbooks for many years and the industry, from suppliers to operators, has a long history there, with Canadian firms contributing greatly to the industry’s worldwide expansion.
But that long-standing activity and Canada’s position as one of the biggest grey markets for online gambling also mean that many brands have established major market shares and some unregulated brands will continue to market to Ontarians, just as they will to Canadians in other provinces.
But as Wagers wrote recently, the biggest regulatory headache for Ontario is likely to come from First Nations such as Kahnawake. They have built up a sizeable business licensing and regulating operators over the past 20 years and in Sports Interaction have developed a major Canadian sportsbook.
Sports Interaction was recently acquired by the UK group Entain, which is also MGM’s joint venture partner in BetMGM, for CA$300m in early February and has been clear that it will not apply for an Ontario license.
Its press release announcing the Entain takeover stated that “although Entain has made the decision to apply for licensure with iGaming Ontario for other brands under its umbrella, Sports Interaction will continue to be licensed under Kahnawake jurisdiction”.
What this means is that Sports Interaction has no plans to get licensed in Ontario or to stop taking bets from Ontarians after April 4. It’s also interesting to note that so far Entain has not licensed its bwin brand in Ontario, despite it being one of the grey market leaders in the province.
Nightmare scenario
As Wagers wrote a month ago, this is a nightmare scenario for both Entain and AGCO, because as a sovereign First Nation Kahnawake, and the Mohawk Gaming Council that operates SIA, are not worried about operating in the province without a license and there doesn’t seem much that AGCO can do to stop it anyway.
For Entain, a group listed on the London stock exchange and always keen to comply with existing regulations wherever it operates, there is a real possibility that one of its high profile brands will launch in one of the biggest North American market openings of recent years without a license and, technically at least, operate in flagrant breach of the legislation governing sports betting in Ontario.
The SIA situation presents a fiendish conundrum for AGCO, Entain but also for the other licensed operators who will not look kindly on such an important rival operating in the province without a license, regardless of its First Nation sovereign rights.
But what are the options available to either AGCO or Entain?
- AGCO could state that SIA is illegal and attempt to ban it outright from Ontario, but as one industry contact told Wagers, “ no one wants to see that.”
- One option could see Ontario pay the Mohawk Gaming Council that operates SIA a revenue share of the revenues generated by its licensed operators, but that is far form ideal and would make many stakeholders unhappy.
- Entain could apply for an Ontario license at the same time as it retains its Kahnawake license.
- But that would make both Kahnawake First Nation and MGC deeply unhappy.
And as Wagers’ industry contact says: “The other reality is that the grey operators that currently target Canada on the whole don’t use Kahnawake licenses. They operate out of Malta, Jersey and other jurisdictions.”
In other words, even if AGCO, Entain, SIA and the MGC/Kahnawake resolve their particular issues, many grey operators will continue targeting Ontario.
For AGCO it also raises questions about regulatory enforcement and providing licensed operators with a level playing field in this hotly anticipated new market. All these issues would also not play well with the many operators that have made the effort to get licensed in the province.
Ontario holds great promise for online sportsbooks, but we should expect sparks to fly if there is too much uneven competition and regulatory uncertainty continues for too long.
